It is a really hard and personal decision as to whether out of hours invalidates any pattern you are trying to trade.
Intuitively, no it doesnt. I think that is reasonable where the real underlying instrument is not trading and any price you get is fully synthetic (*). E.g. an individual stock (not that there are many making a market out of hours).
However, where it is genuinely traded at reasonable volume eg currencies, some metals etc then yes of course it does invalidate.
Then indices for example. Oh dear hard choice to make. Lots of overnight trading on synthetic prices occurs. But the underlying market is closed.
Intuitively this shouldnt invalidate since the price action is not real. But one could make an argument that the future isnt either so only cash prices should be considered.
Fwiw it is worth looking at the the underlying real market for patterns. At least i find it a bit clearer. It gets rid of the out of hours noise. Though that leave a different problem which can affect stops etc. That being cash/futures convergence around the open.
(*) strictly on a spread/cfd absolute every price is fully synthetic. But out of hours are more so.
I suppose my query was really this - Is the pattern invalidated by dint of the overnight out of hours action - which would have stopped out any trade placed at the time?
As is self evident (unless I was looking at the wrong "M") I took the short trade yesterday at 24820 when she was coming back down from the out of hours highs (24874 - which in itself was a perfect double top).
Had I got out at the bottom (approx 24715) I could have banked 105 pts. I was expecting a drop of much greater magnitude so I let it run until effectively I lost my nerve (it looked to me like it was beginning to retrace strongly). Nonetheless a decent trade.
That said, I like the idea of your "kamikaze" trades so if you spot any others do, please, let us know!
" BARCLAYS BANK (LSE:BARC) A day spent, applying nail varnish, tends explain the ridiculous sums people spend in "Nail Bars". It all started when a favourite keyboard began needing healthy thumps to make the space bar work, along with someone ..."
piggy, just checked on my small screen and it looks like the higher High of the falling M survived - that's the left hand High. The Stop is set by taking 1 point above the level on the Ask and adding up to 2 extra points to allow for the spread changing.
There is nothing more infuriating than getting an exact double top on the Mid Price, so the pattern looks like it has held, only to get stopped out because the spread had gone up out of hours.
What happened today was an excellent opportunity for what I call a "kamikaze" trade. This would have entailed waiting and waiting until it got so close to the "brick wall" set by the M; going Short would have had almost zero chance of surviving.
The risk to bank is minimal, stop just on other side of the "brick wall", the chance of success negligible BUT the potential reward is fantastic.
In terms of EWT the bounce back up is a retrace in the very high 90s percent wise, looks like 98 or 99%. For some reason these never seem to get a mention in the literature but I love 'em!
Previously there was one on the DOW where the Price dropped over 100 points and then bounced back but stopped short below the previous level by an amount that was in the SECOND DECIMAL place.
I've just been playing what looks to be an almost opposite play to yours ie long positions.
It looks like you made the smarter call with a net 85pts. I could only manage net +28pts due to a loss of 50pts on my 1st long attempt.
I am pretty much done trading this year. I only trade the FTSE 100 so this is what I measure myself against.
The FTSE 100 is up 5.6% year to date, my trading account is up 33.5%, SIPP up 12.8% and ISAs up 8.4%. My ISA return includes dividends reinvested and the SIPP is 75% VUKE and 25% SLA (legacy investment) which has rebounded massively this year. The overall blended return was 18.3%, all in all a great result.
I target 3% per month in my trading account but appreciate that some periods are flat so I look for 25% annual return.
ClearAirTurbulence used to post here and kept banging on about the need for record keeping. I guess it eventually sank in as I keep a close eye on my performance to ensure that I am getting the expected positive return on my funds.
Have a great Christmas and New Year and see you all in 2018.
Not trading at the moment so can post this without bias, or as close as to zero bias as is humanly possible
Yesterday, DOW Futures 15 min, lovely falling M shape on Price.
Minimise number of bars and check for alternate coloured chunky bodies.
Using 1 hr setting works well, so turn on RSI.
Confirmed falling M on RSI, entry using system would be Short, with Stop over the high point of the Price M.
That entry corresponded to an RSI of ~71.5, an alternative would be to wait for it to drop through 70.
Turn on Parabolic Indicator - lovely.
Turn on Bollinger Bands - lovely move outside and back in again.
Rapid drop follows - choose any risk reduction strategy you want BUT keep at least some of the position with the Stop in its original place!
Just when the internal moves on Price reach approx equality, the RSI ~50 and it hits the middle of Bollinger Bands it bounces rather than gather momentum. In real time it looked like it was about to speed up but it didn't.
The system rated it as a 90% chance of delivering a very meaningful drop - so if it doesn't then it was one of the 10% that don't, no matter how good they look.
If it fails to deliver then the most common result is not just a new High but at least a few hundred more.
thanks piggy. I read Caldaro now and again although in this environment it's a challenge to make each day sound interesting. Didn't realise he'd been so ill but his lack of posts were telling given he usually never misses a beat. Hope he's thoroughly on the mend.
" The Royal Bank of Scotland (LSE:RBS) It's time for our monthly moan about RBS, the bank that likes to say "doh". Oddly though, for four days earlier this month, the company share price actually managed to close a session above the trend since ..."
Got stopped out on a brief salvo down - went back in long at 24784 - stop 20 pts below because my sell orders begin 5 pts below that.
The rise could go on for months (some would say a couple of years) or it could all go wrong tomorrow.
"Fait vos jeux"
P.S. Stu I think (pretty sure) TC has actually been very ill in a life threatening way. His blog stopped for 2 days (no contributors) and the relief was palpable when they heard he was in "rehab". His bloggers fall into two camps (up or down - which is not very helpful) - but he at least gives you the options without telling you what to do. Whilst superficially that is unhelpful it at least gives you some numbers (two) at which to decide how to deal with your rectum.
Piggy (Can't make my mind up about EWT but won't rule it out)
I've just looked at this in more detail and I am actually starting to wonder about round 25's . It's got to crack it now surely.
But in my humble opinion FTSE is seriously lagging.
The Goldmans note that chart referred to is probably sensible advice to a market that's been on a tear. Taking some off the table would be prudent in my opinion to. But even their massive size and scale can't slow this dynamic . Where's the risk equation here ? And if money is taken off the table where does it go (that's the million dollar fiat question)
I'm no conspiracy theory guy but I do wonder what can derail this . Central banks as we all know have been manipulating this for years. Not directly but as a result of QE. That QE is all still sloshing around and will be for years.
I noted Charts New Year's Eve note to . Will it all change then.
I'm definitely backing 25k + for the next 5 working days anyway
I think Congratulations are due to Trends & Targets for not just Friday's comments but by providing and trying to make sense of the FTSE's intentions. Thoroughly, enjoyed reading each weeks comments when I can.
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