[Tradewinds]

Originally Posted by TheDude »

I usually have a level in mind as to where the market should get to. I the market looks weak, I will cut the trade, or bring a stop up just under/above the structure to give it a dogs chance. If the market looks very strong, I will hold and see if we go to the next level beyond that.

I keep the same things in mind. Sometimes price will just not break support or resistance. When I see that, I'll adjust the target to a lower profit. Judging "Strength and Weakness" in the price is a very subtle perception. I use 3 generic concepts to interpret all my indicators and price.

• Momentum
• Strength of the Move - Price, Indicators
• Higher or Lower real moves - price and indicators

Those 3 criteria have many different possible combinations in and of themselves. But then there are even more combinations if you look at patterns, and even more possibilities if you compare short and long term trends. So I look at the "net affect". For example, if the Strength of my indicator was weak, but the price move was strong, I view that as a divergence, and may give more weight to the indicator. In fact I will look for at least some retracement if price is moving much stronger than my indicators.

There are situations where there is a very strong move up in an indicator, but price doesn't go higher. So what does that mean? Sometimes it means that price is at the beginning of an even stronger up move. It depends upon the greater context.

[Tradewinds]

Originally Posted by SIUYA »

then you get into a whole other kettle of fish of then how many do i scale in or out at at different levels??

Right now I view scaling in like this:

• Minimum order at high probability fill
• Bigger order at good probability fill
• Small order at low probability fill

For example: Enter Long.

1 Contract at Support Line
2 Contracts lower than Support Line
1 Contract even lower

That combination puts the bulk of the position right in the middle. (Think of a standard Bell Shaped distribution curve.) If there is a big price move down at the long entry, everything fills. If only one contract is the total risk, rather than 4, then I'd put the order at the less likely fill, but better position. If 4 contracts are risked, the overall draw down is lesser. There is actually more profit potential if there is a big price move down at the long entry and everything fills. As long as the order eventually goes in your favor.

That combination almost guarantees a fill, and gets you into the trade. If you misjudged the entry price, then you are still in a great situation because you have more fills, and a greater profit potential.

All of this assumes that the trader has good setups for entry, and that the RANGE of price variation and draw down is a secondary issue. Sometimes the consolidation range is wider than at other times. It depends on the volatility and whether it's a longer or shorter term trend. The bottom of a yearly trend would probably have a much larger consolidation range than the bottom of a intraday trend.