Buy @ support, selling @ resistance, selling @ minor resistance, buy @ minor support

[dbphoenix]

Hi DBP,
Yes I now understand what you mean. You could have a HH before the HL, but you do not know for sure where exactly the HL is/will be (trying to pin-point the HL/pin the tail on the donkey - for a long entry). If you have a new HH, you can see for sure where the last HL was.
However, by the point that you have a new HH to confirm the last HL, you have often misses the majority of the swing high, and price will often reverse very soon after the new HH - unless a continuing trend establishes itself.
Therefore to go long at this new HH does seem a bit ropey to me.
.

This is part of what it means to be an aggressive trader vs a conservative one. It's also the same pitard upon which "Joe Ross" traders often hoist themselves. Or any trader who loves trading retracements.

The problem with buying the HL before you have a HH is that without the HH, you're still in a downtrend. Therefore, buying the HL means buying countertrend. If you'll return to the chart, you'll note that the first time you have a HL subsequent to a HH is 9, which takes us back to the question I asked way back about which long entry makes the most sense. Buying the green dot above 9 is no lock. However, there are a number of factors in place there that weren't there before, such as the shift in "power" between buyers and sellers in this area. Some people wait for the next HL before entering, but this brings its own problems, since the longer one waits, the more price risk he assumes.

As for what happens if price quickly reverses, that's part of the risk that an aggressive trader assumes. However, if price can't even make it to the top of the "cup" that he's in, waiting around for his stop to be hit doesn't make a great deal of sense. The market has not proved him right, and he has no reason to believe that the market will prove him right if he just stands there grabbing his ankles. What does he lose by bailing? He can always try again later.

As for what happens if price immediately reverses, that's part of the process of determining the entry with the highest possible probability of success. And, again, this won't be a lock. But if one chooses his entries with sufficient care, the number of instant reversals will be minimal.

As for successfully identifying turns in price direction earlier, this is where S&R prove useful. For instance, you'll notice that the peak that's reached around 1530 is on a level with the high established earlier at "2". Therefore, if one were looking to go short, or if he were looking to exit his long whether switching to a short or not, this would be the place he'd begin paying close attention to trader behavior.

Db

 

[JTrader]

This is part of what it means to be an aggressive trader vs a conservative one. It's also the same pitard upon which "Joe Ross" traders often hoist themselves. Or any trader who loves trading retracements.

The problem with buying the HL before you have a HH is that without the HH, you're still in a downtrend. Therefore, buying the HL means buying countertrend. If you'll return to the chart, you'll note that the first time you have a HL subsequent to a HH is 9, which takes us back to the question I asked way back about which long entry makes the most sense. Buying the green dot above 9 is no lock. However, there are a number of factors in place there that weren't there before, such as the shift in "power" between buyers and sellers in this area. Some people wait for the next HL before entering, but this brings its own problems, since the longer one waits, the more price risk he assumes.
......

Hi DBP

I see the points you are making.

i agree that looking for reversals is aggressive trading. Going long @ HH or short @ LL also seems like aggressive trading to me, with all the price risk that it takes on board.

What is it that makes us suspect that 9 might be a HL following on from the HH. Is it because price has gone down to/1 pip below the HL marked by the 2nd lower yellow dot?

If so, there seems to be a danger that 9 could easily have turned into a LL (as opposed to a HL) following a HH at 8.

Or, are we comparing 9 to 7, and not counting the second lower yellow dot as a HL?

Thanks again.

 

[dbphoenix]

Hi DBP

I see the points you are making.

However, what is it that makes us suspect that 9 might be a HL following on from the HH?

Is it because price has gone down to/1 pip below the HL marked by the 2nd lower yellow dot?

If so, there seems to be a danger that 9 could have turned into a LL (as opposed to a HL) following a HH at 8.

Or, are we comparing 9 to 7, and not counting the second lower yellow dot as a HL?

Thanks again.

You will likely find it worthwhile to distinguish between major and minor swings. The swing low at 7 may be classified as major. The "swing low" at the last yellow dot may be classified as minor. If you don't resolve this for yourself and you attempt to trade trend, you will forever be finding points that are simultaneously both higher and lower than other points and lose track of where you are.

As for suspecting that 9 will be a HL, this is a result of the energy behind the move resulting in 8. And if you stalk price downward, you won't be stopped into a long unless and until price resumes its advance. It may grab you and resume the decline, but as long as this possibility is part of your plan for the trade, it won't throw you.

Note that buying 9 is not the answer to your prayers. Price comes all the way back to the bottom of that swing. And momentum dries up to the extent that price takes an hour and a half to cover the same distance covered earlier in 20 minutes (this is another clue that your future may not lie in the upside and prompt you to pay even closer attention when price hits R). But you don't know any of this in real time, and you have to make the best decision you can given the information that is available to you.

Db

 

[JTrader]

Thanks DB

I'll be looking at HH, HL, LL, LH particularly closely for a HL subsequent to a HH, or a LH subsequent to a LL then. Also, any HH that breaks a supply line, or any LL that breaks a demand line.

 

[dbphoenix]

Some posts that may be of interest:

http://www.trade2win.com/boards/showpost.php?p=294931

http://www.trade2win.com/boards/showpost.php?p=294950

http://www.trade2win.com/boards/showpost.php?p=294966

http://www.trade2win.com/boards/showpost.php?p=295544

as well as many of the intervening and subsequent posts.

Db

 

[JTrader]

Observations/thoughts/theories/ideas

Thanks DB

I'll be looking at HH, HL, LL, LH particularly closely for a HL subsequent to a HH, or a LH subsequent to a LL then. Also, any HH that breaks a supply line, or any LL that breaks a demand line.

Hi DB

It sounds obvious, and perhaps we've already covered some of this, but for an uptrend to start and establish itself a HH is needed, a HL will then follow the HH at some point. Likewise for a downtrend to start and establish itself, a LL is needed, and a LH will follow.

So when you get a LL you need to be looking for signs of weakness in any rectracements (LH) if looking to go short with a possible down trend, and after a HH, looking for signs of strength (HH) in any retracements after the HH, if looking to go long with a possible uptrend.

By paying close attention to the retracements up from a LL, or down from a HH, I'm thinking that perhaps a trader can become good at spotting when price is stalling within a retracement, and looking to continue its movement back towards the HH or LL, thus getting into a trade earlier (with less price risk, but more information risk), than if one waits for a new HH to confirm a HL before going long, or a new LL to confirm a LH - before going short.

This in effect is trading for reversals without S/R being present.

For such an approach to be successful, a trader would also need to get a good feel for identifying and defining both HL's and LH's, or distinguishing between a minor HL which price can sometimes move below to form a more major HL. likewise, distinguishing between a minor LH which price can sometimes move above to form a more major LH.



You can also get a LL, followed immediately by a HH in the very next swing. This can happen within a clear trend (perhaps price is then struggling to decide upon direction??), and the trend can continue in its original direction.
Or, this can occur when the market is in a range (perhaps this is a sign of a range, or a sign that trend has faltered and price is wanting to stop its advance/decline, reverse or enter a range?)

Thanks again.

 

[JTrader]

Observations/thoughts/theories/ideas

Thanks DB

I'll be looking at HH, HL, LL, LH particularly closely for a HL subsequent to a HH, or a LH subsequent to a LL then. Also, any HH that breaks a supply line, or any LL that breaks a demand line.

Hi DB

I've looked at a few charts and initial/preliminary chart inspections suggest it may also be worthwhile looking out for -
1. LL - LH - HL - and then a break above the HH before going long.
2. HH - HL - LH - and then a break below LL before going short.

However, these observations could be a trick of the imagination.

Do you think its worthwhile to look out for these sorts of "secondary" patterns and sequences within HH, HL, LL, & LH?

Or perhaps this is an example of hoping to spot new phenomenon that are fairly random and inconsistent in their nature which in the long term prove to be insignicant/non-advantageuous?

How far/deep does your interpretation and use of HH, HL, LL, LH extend?

Thanks again.

 

[dbphoenix]

Do you think its worthwhile to look out for these sorts of "secondary" patterns and sequences within HH, HL, LL, & LH?

I don't know that I'd call them "secondary". If price makes a new high, that tells you something. If it fails to make a new high, or to hold onto a new high just made, that also tells you something. By studying these movements, one learns how to speak the language and hear what's being said.

Or perhaps this is an example of hoping to spot new phenomenon that are fairly random and inconsistent in their nature which in the long term prove to be insignicant/non-advantageuous?

All part of the same exploration. We learn from what doesn't pan out a well as from what is successful.

How far/deep does your interpretation and use of HH, HL, LL, LH extend?

How far is far? Price movement is the result of traders looking for trades. By following price movement, one can gauge their apathy, their excitement, their doubt, their fear.

There are no Quick Tricks or 10 Rules for Trading HHs and LLs. At any given moment, you have to ask yourself whether traders are interested in this higher or lower price and, if so, how much. Which to a large extent is what those post links I gave you are all about.

Db

 

[JTrader]

There are no Quick Tricks or 10 Rules for Trading HHs and LLs. At any given moment, you have to ask yourself whether traders are interested in this higher or lower price and, if so, how much. Which to a large extent is what those post links I gave you are all about.

Db

Thanks DB

I can now see from those extra posts how traders/the market can show interest in HH, HL, LL and LH - evident when these levels then become S/R levels.

 

[dbphoenix]

Thanks DB

I can now see from those extra posts how traders/the market can show interest in HH, HL, LL and LH - evident when these levels then become S/R levels.

All of this can be studied in hindsight. What is important, however, is noting all of this in real time or via replay. One needn't be expert in order to determine in real time whether price is or is not exceeding some previous level. What is expert is determining in advance what one will or won't do if and when this event occurs.

Db

 

[JTrader]

A few more basic observations about price

Hi

I'm stating the obvious here, but before price can form a HH or LH it has to meet resistance.
Before price can form a LL or HL it has to meet support.

This S/R can form very quickly, seeing price reverse within the same bar.

However, price can take 2-3 bars or more, testing this S/R level, before reversing.

When price reverses very quickly it is easy to miss the trade opportunity.

When price reverses once it has been bashing against S/R for 2-3 or more candles, perhaps it should be easier to spot the S/R and any impending possible reversal.

I find it difficult to take a trade just because price has stalled. Because it may have stalled, but just because price may want to rise/fall any more, also doesn't necessarily mean that price (or traders) wants to go in the opposite direction.
For example, if I go short, and price stalls when I am 3 pips into profit, theres an argument for exiting the trade because price has stopped still. I may exit the trade, but then price can continue its decline, just as it could start to rise. Making a correct decision when this happens does seem to be fairly random sometimes - as either outcome is possible. Sometimes the decisions will go for me, other times against me....