Scalping: 3LZZ DSR

[Jhx]

On a strong downtrend, the bullish zz will be pushed down over and over and over again and vice versa. So it's not the answer to your worry.

What you need is a clear market bias and the courage to take the trade based on that bias. Of course, you won't get it right 100% of the time and this is where money management steps in; to guard you against catastrophic losing streak.

Some questions you need to answer:

1. When does a bias start?
2. When is it at its prime?
3. When will it end?
4. What constitute a good bias?
5. How can you benefit from good bias?
6. How not to waste less-than-good but not-too-bad bias?

If you want to have a monstrous R, do the same but on a bigger time frame and let this big tf be the TP for your entry. So you will use the info from the big tf and enter from the small tf. Nothing fancy.

If your bias is good, you can enter a position just about anywhere (though you'll have varying R as a result). Heck, you can even enter a position while the latest candle is still midway.

I'll admit that bias was always an issue for me. Trading with a higher TF candle color sometimes solved that problem sometimes BUT then that one closed I'd lose confidence because I'd see it flip/flop over the next couple of minutes.

Funny thing is I was never a fan of the moving averages, or pretty much anything that requires to set a 'period' for a formula because I wouldn't know how to use a period that worked for me. But so far the 20 makes sense on my charts and it's helping with bias.

Regarding those questions, based on what I see on the chart:

"1. When does a bias start?"

When the SMA has been red or green for a while. I don't feel too confident when it's just turning; because it could simply start to range. And I'd prefer to see that it's not ranging before I acknowledge the bias.

2. When is it at its prime?

When the SMA is at a deeper angle. Seems to go hand in hand with momentum and strong moves in that direction. Yes anything can happen but I'm better off going short when price is dropping like a brick for example.

3. When will it end?

That one I wouldn't know. I guess it's my first answer but backwards; when the other direction has started to run and price isn't in a range, but that's after the fact.

4, 5, and 6 I don't have answers right now; I'm treating them the same (a good one vs a not-so-good one) and just trading them anyway.

[IgazI]

General questions about the pattern / breakout:

1) Is this to find 'confirmation' regarding direction? Or is it used for something else? I'd like to know how to use this

2) So joining three 3's gets you 7? But in which cases should patterns be 'joined'?

3) Is there a reason why patterns are multiples of 3, and not 2 or 4? Just trying to understand.


I'm looking at the current chart, finding a pattern (group of 3) which the next candle closes over (breakout). Note that I might be -way- off:

GroupsOf3.png

The first one (long breakout) I can see clearly. Also the next candle closes above that; but that would overlap it with the previous one.
The second one (short breakout) too.
But the third one (long breakout) where the green candle closes over, if I consider the previous breakout they start getting overlapped.

Instead of filling your head with things that you do not need to understand, I will just say this:

the breakout of the 3's is the end of the previous price leg:

1. wait for the hourly to end an up swing (it's going down)
2. wait for a smaller chart to end a down swing (small chart is going up)
3. trade the end of the up swing in the direction of the hourly (lower closes on small chart)

how_swing.png (70.08 KiB) Viewed 1721 times

20 minute chart, hourly sets:
If I am trading based on the daily+ then I will wait for the hourly to end its up-swing,
and then I will buy as it starts an up-swing.
If I am trading based on hours then I will just trade the 20 minute closes in the direction of profit:

swings.png (66.44 KiB) Viewed 1715 times

[Yirbu]

On a strong downtrend, the bullish zz will be pushed down over and over and over again and vice versa. So it's not the answer to your worry.

What you need is a clear market bias and the courage to take the trade based on that bias. Of course, you won't get it right 100% of the time and this is where money management steps in; to guard you against catastrophic losing streak.

Some questions you need to answer:

1. When does a bias start?
2. When is it at its prime?
3. When will it end?
4. What constitute a good bias?
5. How can you benefit from good bias?
6. How not to waste less-than-good but not-too-bad bias?

If you want to have a monstrous R, do the same but on a bigger time frame and let this big tf be the TP for your entry. So you will use the info from the big tf and enter from the small tf. Nothing fancy.

If your bias is good, you can enter a position just about anywhere (though you'll have varying R as a result). Heck, you can even enter a position while the latest candle is still midway.

I'll admit that bias was always an issue for me. Trading with a higher TF candle color sometimes solved that problem sometimes BUT then that one closed I'd lose confidence because I'd see it flip/flop over the next couple of minutes.

Funny thing is I was never a fan of the moving averages, or pretty much anything that requires to set a 'period' for a formula because I wouldn't know how to use a period that worked for me. But so far the 20 makes sense on my charts and it's helping with bias.

Regarding those questions, based on what I see on the chart:

"1. When does a bias start?"

When the SMA has been red or green for a while. I don't feel too confident when it's just turning; because it could simply start to range. And I'd prefer to see that it's not ranging before I acknowledge the bias.

2. When is it at its prime?

When the SMA is at a deeper angle. Seems to go hand in hand with momentum and strong moves in that direction. Yes anything can happen but I'm better off going short when price is dropping like a brick for example.

3. When will it end?

That one I wouldn't know. I guess it's my first answer but backwards; when the other direction has started to run and price isn't in a range, but that's after the fact.

4, 5, and 6 I don't have answers right now; I'm treating them the same (a good one vs a not-so-good one) and just trading them anyway.

It really helps thinking about these questions so specifically.
My answers would be more or less the same as yours only;

1) My bias would start when the SMA starts turning and I can see a lower high or higher low on my TF
2) I also would like to see the steep angle but also bigger momentum candles and no overlaps of candles
3) I would think it ends when price gets back closer to the SMA, the candles become smaller and start overlapping
4) A good bias would be answer 2 I guess
5+6 also don't know. This is what happened today on a lot of pairs.....when price keeps going in one direction without retraces I just don't know what to do and keep staring at price.

Guess the answer to 5 and 6 lies within question 4. I'll try to think about it in my sleep tonight...

[Jhx]

General questions about the pattern / breakout:

1) Is this to find 'confirmation' regarding direction? Or is it used for something else? I'd like to know how to use this

2) So joining three 3's gets you 7? But in which cases should patterns be 'joined'?

3) Is there a reason why patterns are multiples of 3, and not 2 or 4? Just trying to understand.


I'm looking at the current chart, finding a pattern (group of 3) which the next candle closes over (breakout). Note that I might be -way- off:

GroupsOf3.png

The first one (long breakout) I can see clearly. Also the next candle closes above that; but that would overlap it with the previous one.
The second one (short breakout) too.
But the third one (long breakout) where the green candle closes over, if I consider the previous breakout they start getting overlapped.

Instead of filling your head with things that you do not need to understand, I will just say this:

the breakout of the 3's is the end of the previous price leg:

1. wait for the hourly to end an up swing (it's going down)
2. wait for a smaller chart to end a down swing (small chart is going up)
3. trade the end of the up swing in the direction of the hourly (lower closes on small chart)

how_swing.png
20 minute chart, hourly sets:
If I am trading based on the daily+ then I will wait for the hourly to end its up-swing,
and then I will buy as it starts an up-swing.
If I am trading based on hours then I will just trade the 20 minute closes in the direction of profit:
swings.png

And by the end of the swing you mean waiting for a close in the opposite direction that breaks the previous 'set'?

So to recap, a short scenario. You wait for a lower htf close after an upmove > then wait for the lower timeframe to keep moving down and pull back up > and only then enter short, in the direction of profit (the htf short)?

If that's the case I'll try to mark up some charts with 5m as 15m sets.

I also just realized that your second chart is just 'custom candles' of 3s only showing the wick in direction of loss and body in direction of profit, is that right?


---


Edit: I was looking at your first chart and tried marking it up similarly on my end.

GU_CACB.png (149.25 KiB) Viewed 1680 times

Maybe I'm mixing up stuff but aren't those swing ends some sort of 'close above, close below' pattern? Could the entry be at the close of the candle that closes below?

[IgazI]

Keep in mind that I am not a day trader, so I am probably just scrambling your brain with two different trading styles.

Sometimes it is easier to draw the idea before looking for it on a chart:

does_this_help.png (77.21 KiB) Viewed 1674 times

I also just realized that your second chart is just 'custom candles' of 3s only showing the wick in direction of loss and body in direction of profit, is that right?

it is a range of closing prices, not a 'custom candle'.

It shows:
- a close made a high
- a close made made a low
- the following closes closed above or below range.

If gas prices are between $5.09 and $5.19 one day and 5.29 and $5.49 the next then you get a disconnected range which is represented as having a wick. . . something has suddenly changed for the better or for worse.

Keep in mind that the chart is not predicting the future, it is showing you what is happening NOW.

CH_it.png (55.89 KiB) Viewed 1648 times

[Jhx]

Keep in mind that I am not a day trader, so I am probably just scrambling your brain with two different trading styles.

Sometimes it is easier to draw the idea before looking for it on a chart:

does_this_help.png

I also just realized that your second chart is just 'custom candles' of 3s only showing the wick in direction of loss and body in direction of profit, is that right?

it is a range of closing prices, not a 'custom candle'.

It shows:
- a close made a high
- a close made made a low
- the following closes closed above or below range.

If gas prices are between $5.09 and $5.19 one day and 5.29 and $5.49 the next then you get a disconnected range which is represented as having a wick. . . something has suddenly changed for the better or for worse.

Keep in mind that the chart is not predicting the future, it is showing you what is happening NOW.

CH_it.png

Don't worry about scrambling my brain

But I guess I could still translate that way of reading price in lower timeframes, right?

I was confused regarding the wicks because the pair I'm looking at doesn't gap like that within closes. Another attempt:

GU_Candles.png (77.7 KiB) Viewed 1644 times

[IgazI]

You sure about that? these ARE NOT CANDLES, they are closing ranges. . .highest close in 3 to lowest close in 3:

And yes trade the close lowers

And yes the downward expansion has ended.

sure.png (79.09 KiB) Viewed 1626 times

[Don_xyZ]

Essentially, you either trade with convergence or with divergence. This is the core principle of using bigger tf and smaller tf together. The better play is to go with convergence because there will be no confusion about the market bias. Divergence though, is the one that will give the highest R particularly one that is at the ultimate top or bottom though it is a very tricky game if you don't have a clear idea about the market bias.

IgazI is showing you the Fractals and this is the cornerstone of every big and profitable trader. Understand the Fractals and you'll be making millions.

[IgazI]

ahhhhhhhhhhhhh.png (23.79 KiB) Viewed 1590 times

[Jhx]

You sure about that? these ARE NOT CANDLES, they are closing ranges. . .highest close in 3 to lowest close in 3:

And yes trade the close lowers

And yes the downward expansion has ended.
sure.png

Aaah, now I understand how those sets work!

GU_3ClosingRanges.png (143.82 KiB) Viewed 1549 times

PS. I tried drawing some by hand but the MT4 rectangle tool was snapping the shape slightly off and driving me nuts , so I drafted an indicator to plot the highest and lowest closes of these 3 sets; that did the trick.

GU_PatternMaybe.png (119.51 KiB) Viewed 1543 times