[traderGeorge]

Bear with me I am brand new at this, but I've read everything I can get my hands on regarding the Wyckoff method including Db's eBook. I am at the stage where I'm Sim trading NQ. Here is the NQ 1 minute chart for Oct. 27th. I did abysmally trying to trade this and would appreciate some feedback as to what were really valid entries in foresight for a newbie.

I interpreted the 9:30 volume as a buying climax since in my brief experience I thought 4000 contracts was a hefty volume for 1 minute, so I prepared to go short. But as I waited for the indication of a downtrend I noticed the 1 minute bars were pretty wide ranging varying from 2.5 to 3. points. I remember Db cautioning against trading in WRBs so I aborted my entry. At the time time I thougt this was a pretty good decision since I'm prone, like most newbies, to jump in rather than be patient. In hindsight that seems to have been a terrible decision given that there was a 30 point move to the downside.

When I saw the 10:02 volume of 12,000 contracts I interpreted this as a selling climax and prepared to go long. I made my entry at 10:04 for 1731.00 and prompty got stopped out since my stop was set at 1727.0. I wasn't willing to set the stop at 1724.0 for a 7 pt. risk. Where was the proper stop? Or was this just not a good place to enter?

So now it's 10:43 and it appears that there might be a reversal; however, I have been burned many times by trying to catch the reversal only to have the price pivot and the trend continue on it's merry way. So I'm pretty cautious and don't go short until 10:51 at 1741.0. Get stopped out a lot since I manged the trade poorly.

In hindsight this downtrend, beginning at 10:44 would have been very profitable.
At what point does a knowledgeable trader know that this is a true trend reversal and what evidence tells him that it's not just a swing low in the uptrend. Where is the proper entry in foresight?

This is the most difficult area for me, i.e. determing when a true trend reversal is under way.

[wjrusnak]

I'll give you some feedback:

At first glance, you have a TON of levels. What is up with that?

Originally Posted by traderGeorge »

I interpreted the 9:30 volume as a buying climax since in my brief experience I thought 4000 contracts was a hefty volume for 1 minute, so I prepared to go short.

Try not to give too much energy to the first minute bar, considering that most days it will be one of the largest volume bars of the session. Seems like you're looking too hard to find some sort of climax.

Originally Posted by traderGeorge »

But as I waited for the indication of a downtrend I noticed the 1 minute bars were pretty wide ranging varying from 2.5 to 3. points. I remember Db cautioning against trading in WRBs so I aborted my entry.

You'll realize soon enough that these bars are nothing but a compilation of what really happened during that minute. What if you were looking at 10-second bars or 2-tick bars? You would see a different picture. Try to focus on waves rather than bars. For instance, I saw that first bar much differently, considering I watch a 1 tick chart.

Originally Posted by traderGeorge »

At the time time I thougt this was a pretty good decision since I'm prone, like most newbies, to jump in rather than be patient. In hindsight that seems to have been a terrible decision given that there was a 30 point move to the downside.

Don't beat yourself up over it. In hindsight, everything looks obvious. News reports also make things a bit wild, if you hadn't noticed yet.

Originally Posted by traderGeorge »

When I saw the 10:02 volume of 12,000 contracts I interpreted this as a selling climax and prepared to go long. I made my entry at 10:04 for 1731.00 and prompty got stopped out since my stop was set at 1727.0. I wasn't willing to set the stop at 1724.0 for a 7 pt. risk. Where was the proper stop? Or was this just not a good place to enter?

I, for one, wouldn't have more than a 2-point stop. That is completely up to you though. Whether you want to get at least eight to ten points using a four stop or nothing less than twenty points using a three point stop, it is solely your choice. You need to figure out how often you are right compared to wrong then adjust your stops accordingly. For me, I'm right only about 35-40% of the time, so I use a two-point stop and try to get at least six or more out of my winners. In that light, one of my winners should make up for three or more of my losses. Experiment and see what is best for you. DbPhoenix has a complete thread on stops in the Wyckoff forum. In short, you want your stop to be a couple ticks or so beyond the "danger zone" of the nearest level that you are "trusting".

Originally Posted by traderGeorge »

So now it's 10:43 and it appears that there might be a reversal; however, I have been burned many times by trying to catch the reversal only to have the price pivot and the trend continue on it's merry way. So I'm pretty cautious and don't go short until 10:51 at 1741.0. Get stopped out a lot since I manged the trade poorly.

This ends up being the bloody cycle of the over-trader. You miss, miss, miss, miss and finally you decide to quit because you're so afraid, then price finally does what you wanted it to in the first place. Just make every trade count and make sure each one is per your rules.

Originally Posted by traderGeorge »

In hindsight this downtrend, beginning at 10:44 would have been very profitable. At what point does a knowledgeable trader know that this is a true trend reversal and what evidence tells him that it's not just a swing low in the uptrend. Where is the proper entry in foresight?

Honestly.... s/he doesn't. It's probabilities, sir. If someone KNEW that price was going to dive to the lows or highs and break out, this game wouldn't be very hard. You set yourself up with the best chance. For instance: price was nearing a swing high around 1748.50 (which was set in place at 9:50 a.m.) and there was an increase in volume during this time. 1749-50 was also an area of resistance. None of these things tell anyone "hey... it's time to go short and you're going to make a lot of cash!", but together they are multiple REASONS to take a trade that has a high probability of success.

Originally Posted by traderGeorge »

This is the most difficult area for me, i.e. determing when a true trend reversal is under way.

Yes, and it will probably will be. It's not an easy task and takes a lot of practice. If you're trading reversals, you need to be aware of the trading ranges occurring within the week or month, etc. Maybe it's a good idea for you to brush up on support and resistance (see our foresight thread, since we post on it daily).

All in all, you seem to have a good start, but you need to get a hang on finding important levels to trade (that is of course if you're going to trust Wyckoff's fundamental ideas). If you're constantly trying to catch reversals in the middle or at random levels, you're going to get burnt a lot.

[DbPhoenix]

Originally Posted by traderGeorge »

Bear with me I am brand new at this, but I've read everything I can get my hands on regarding the Wyckoff method including Db's eBook. I am at the stage where I'm Sim trading NQ. Here is the NQ 1 minute chart for Oct. 27th. I did abysmally trying to trade this and would appreciate some feedback as to what were really valid entries in foresight for a newbie.

What trading plan had you written down in advance of the trading day?

In hindsight that seems to have been a terrible decision given that there was a 30 point move to the downside.

Whether or not it was a "terrible decision" depends in large part on where you would have entered a short and why, where you would have placed your protective stop and why, how many times you would have tried to reenter and under what conditions after being stopped out and why, how you would have managed the trade if the trade had gone your way after your entry and so on. If you had not asked and answered at least these questions in advance, then a decision to stay out was the best one you could have made.

Where was the proper stop? Or was this just not a good place to enter?

Review the answer I gave to your last post in the Stops thread and apply it to this situation.

So now it's 10:43 and it appears that there might be a reversal; however, I have been burned many times by trying to catch the reversal only to have the price pivot and the trend continue on it's merry way. So I'm pretty cautious and don't go short until 10:51 at 1741.0. Get stopped out a lot since I manged the trade poorly.

Since you've been "burned many times" and "get stopped out a lot", do you understand what traders are doing at each of these points? Or do you find yourself playing Follow The Bouncing Ball? Again, have you written out a trading plan in advance of the trading day?

At what point does a knowledgeable trader know that this is a true trend reversal and what evidence tells him that it's not just a swing low in the uptrend. Where is the proper entry in foresight?

If you have not already done so, I suggest you begin with the first post in the foresight thread and study the linked material. These posts and charts will explain how to determine reversals, where to look for them, how to manage them. In the meantime, I strongly suggest that you stop trading and remain in observe and study mode until you've put together a consistently profitable strategy.

[firewalker]

Hi traderGeorge, you sound a lot like someone I used to know some time ago.
I believe that person was... me!

Studying the material and putting in hours of screentime, it's all a necessary but not sufficient condition. What you need, and from what you're telling looks like you lack, is a well thought out trading plan which tells you what to do when you see it.

I read in your post that "I was this and I thought...", or "I saw ... and I interpreted it as...". But most of the thinking and interpreting should've been done before the market opened, not during the day when the markets are open. Most likely you are not going to think straight when you see all that action happening and you'll be thinking "how can I get in", "why am I missing out on such a huge move"... A neutral position clears the mind, but unless you know exactly what you are looking for, you're not really better off than just trying to feel your way through the day.

Also, you're likely to experience many times that what appears to be a good decision in real time, is a bad one in hindsight or vice versa. That's where testing a strategy comes into play. You can't afford to think about "should I put this trade on, or is the stop too wide?" during the day. All that needs to be thought out, preferably written down, before the market opens.

For your final question, determining when a trend has reversed, that's a tough one. What looks like a trend reversal on a smaller timeframe, might only be a trend retracement on a bigger timeframe. But usually by the time it's clear that the trend has 'reversed' you will be far too late to take an entry, or price will be ready to pullback. There is no way for "a knowledgeable trader" to know that it is a "true" trend reversal until after the fact. But you don't need to know per se. If you have a plan for trade entry, trade management and trade exits, you will be prepared to take profits of whatever the market throws at you.