Previous post profit potential!
Compare this after shot with my last Idea.
The main point in my last post was that all-time highs can be pivot points for low time frame trades. Half of the chart showed price moving in a range between previous highs (yellow lines). The timing of that post was in a downtrend approaching the bottom line.
Now in this chart, we see what happened. Let's say I followed up and placed a limit buy at the yellow line. The lower left corner of the yellow box shows the point in time where price action would have triggered my order. In preparation while placing a limit buy order, I would have PLANNED to sell--and in this case it would have been at the nearest supply zone. When the buy order completes, the limit sell order should be entered because that's the next price with sellers. (too many sellers -> prices decrease -> pivot point from increasing to decreasing) [Or use bracket orders/OCO. This is also when to place the stop loss if using, out of scope of this post]
The yellow box shows what happened after it reached the previous all-time high: fast strong move away higher. Probability favored us! By automatically locking in profit at the supply line, we see in the gray area that price meandered away from the sell price. So, that particular supply zone was the highest point in time in the chart for the current time-frame interval--selling at the (nearly) perfect time. For an intra-day trade, it would have been successful.
The grey box also represents the part of the chart that doesn't factor into any of the analysis of when to buy and sell. Based on the point in time of my last post, the information needed to set up the buy level was already present in the chart, since it happened in the past. This analysi is NOT the same thing as picking points in the past with the frame of reference in the present. If we place a frame of reference on our chart (the point in time which shows what was known--the timing of my last post), we can properly evaluate whether the mechanical component of our trade plan has the potential of working.
The simplified plan for this chart is to buy at low demand prices and sell at high supply prices. The mechanic depends first on deciding whether to go long/short, then placing a limit order below/above the price line. Plan to exit the trade at the other level. For example, if you want to go long, place a limit buy at a demand line below current price, planning to take profits at a supply line above current price. Closer to current price decreases profit, decreases risk; the opposite further away. Place the second order after the first one hits (or use OCO bracket orders if you can), place a stop loss and walk away (or don't if the potential to watch trades is too great, pick your poison).
The main point in my last post was that all-time highs can be pivot points for low time frame trades. Half of the chart showed price moving in a range between previous highs (yellow lines). The timing of that post was in a downtrend approaching the bottom line.
Now in this chart, we see what happened. Let's say I followed up and placed a limit buy at the yellow line. The lower left corner of the yellow box shows the point in time where price action would have triggered my order. In preparation while placing a limit buy order, I would have PLANNED to sell--and in this case it would have been at the nearest supply zone. When the buy order completes, the limit sell order should be entered because that's the next price with sellers. (too many sellers -> prices decrease -> pivot point from increasing to decreasing) [Or use bracket orders/OCO. This is also when to place the stop loss if using, out of scope of this post]
The yellow box shows what happened after it reached the previous all-time high: fast strong move away higher. Probability favored us! By automatically locking in profit at the supply line, we see in the gray area that price meandered away from the sell price. So, that particular supply zone was the highest point in time in the chart for the current time-frame interval--selling at the (nearly) perfect time. For an intra-day trade, it would have been successful.
The grey box also represents the part of the chart that doesn't factor into any of the analysis of when to buy and sell. Based on the point in time of my last post, the information needed to set up the buy level was already present in the chart, since it happened in the past. This analysi is NOT the same thing as picking points in the past with the frame of reference in the present. If we place a frame of reference on our chart (the point in time which shows what was known--the timing of my last post), we can properly evaluate whether the mechanical component of our trade plan has the potential of working.
The simplified plan for this chart is to buy at low demand prices and sell at high supply prices. The mechanic depends first on deciding whether to go long/short, then placing a limit order below/above the price line. Plan to exit the trade at the other level. For example, if you want to go long, place a limit buy at a demand line below current price, planning to take profits at a supply line above current price. Closer to current price decreases profit, decreases risk; the opposite further away. Place the second order after the first one hits (or use OCO bracket orders if you can), place a stop loss and walk away (or don't if the potential to watch trades is too great, pick your poison).
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