Advanced Chart Lesson: Emini S&P Jan 17 to Jan 31, 2014 Waterfall Formation (Part 3)
By LawrenceOverview
Actual engagement on Jan 22, 2014 was pretty easy. Execution of the battle plan is just a matter of reacting to the possible outcomes and paying attentions to the development of the price actions. Positive expectancy is built implicitly into the approach hence you know that as long as you follow the plan you will perform.
This approach to trading is drastically different from the "calls" made by many so-called "strategists" and "analysts" that focused mainly on justifying the entries. A common example of these calls are often in the form: "XXX profit target vs. YYY stop loss giving you a 2 to 1 reward to risk ratio … making this a good trade …"
Such nonsense makes you wonder if they understand what they are writing themselves.
Lesson Requirement
- familiar with trend line techniques
- familiar with channel techniques
- already read part 1 and part 2
If you have not read the chapters on the above techniques, please read them first. Your understanding of using these tools from other sources are not likely to help you to understand the tactics I am going to explain below.
Link: Art of Chart Reading Index Page
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Keep em coming LC ! my mind needs to be filled, if you would throw in some numbers in money management part will be great ! many thanks !
what do you mean by that?
I mean, examples how you will enter the trade, size of trade, any need to add-on if it moves to your favour, sizing for exit etc…. thanks LC
Your closing comments about solving a puzzle really really fits with how I approach day trading. I think it would be super neat if you did a full week long piece like this. Showing a sequence of days using the methods you have already outlined in previous articles of the series would be very illustrative. It’s important to observe your thinking and how you handle things when the working theory is wrong. Running a sequence of days over a week would hopefully capture at least some instances were the working theory was wrong and see how you adapt to it.
With kind regards,
MK
I am. The title says it already. =)
Sorta what I meant, but not quite. I mean say for example, you would do this same sort of post at the end of the day that just traded and continue for each day of the week. It would be a rapid fire sequence to the puzzle solving and hopefully because it is done right after the day has traded, it will show how you had to adapt when the scenario didn’t play out. I know you are a man of high integrity and I feel it would be an honest account of what you are demonstrating without the pressure of doing real-time call stuff.
The main issue with having a write up after close is that I can only allocate limited time for trading and this website. Most of my time and attention are needed in other priorities.
What I have done in the real-time chatroom is a compromise that as long as it is not affecting my trading, I will type out what I am looking for and what I see in real-time. It is not easy to type out the analysis in full and trade at the same time though.
I am experimenting with new technologies to dictate my thoughts in real-time. It is proven, however, a very tedious post production process to edit the important messages into a shorted video for a complete trading day. Maybe there are other solutions. Will take time though to try them all out.
My apologies LC – I didn’t mean to put pressure on you for doing more. You do a lot already and I know you have some other more important personal matters to attend to. I’m sorry if my post came across rudely.
With all my best,
MK
Not a problem.
It takes new ideas to shape this site into something truly useful for traders.
New ideas are always welcome. =)
Thanks LC for all that you have shared and taught us !
Thanks LC for all that you do to let us get a glimpse of how your thought-process works.