Tick Failures (trapped traders)
Indicator for NinjaTrader® 8
Features
- Shows Tick Failure Breakouts from stop entries above/below possible signal bars
- Shows Failures To Reach Common Targets from these signal bars
- Set up to 20 different tick failures
- Shows signals in real-time (Calculate OnPriceChange) as the current bar is forming (useful to see where stop entry traders take profits and how many ticks/points they are in profit)
- Shows possible signal bars to enter counter to a tick failure
- Real-time alert feature
- Does not work on HeikenAshi, Kagi, Renko, PointAndFigure and LineBreak charts
- Achieves best results on liquid futures and equities (on centralized markets) with time based charts, where all participants see the same prices
There is 2nd indicator included in the package that also shows Tick Failures Breakouts of the LOD/HOD (the lowest low or highest high of the day defined by a certain swing strength) and the High/Low of Yesterday (HOY/LOY).
More on that further down.
Example Charts
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What are Stop Entry (SE) Signal Bars?
A Signal Bar can be a single candlestick or a bar within a pattern which signals a trader that a possible trade is likely setting up. Just about every bar is a potential Signal Bar. Many times a Signal Bar can be a setup for a trade in either direction.
Once the Signal Bar has completed, a trader places a stop entry order above or below the Signal Bar. A bar, that moves past the range of the Signal Bar triggers the stop entry order and puts the trader into that trade and makes that Signal Bar a Stop Entry (SE) Signal Bar.
What are Tick Failure Breakouts from SE Signal Bars?
Tick Failure Breakouts of SE Signal Bars are breakout failures from a stop entry above or below these bars which can trap breakout traders.
1 or 2 tick Tick Failure Breakouts of SE Signal Bars (on the ES E-mini) can be considered a failed breakout for traders, who entered on a stop entry above or below that bar. In stocks, Tick Failure Breakouts are often around one to a couple of cents, depending on the price and volatility of the stock.
What are Failures To Reach Common Targets from SE Signal Bars
5 tick Tick Failure Breakouts of SE Signal Bars (on the ES E-mini) can be considered a failure to reach a common (scalp) target, since a scalp for four ticks (one point) is a very popular trade. A six tick breakout is needed to fill a four tick profit target for a trader who entered on a breakout of the Signal Bar (one tick to enter on a stop, four ticks profit, and one more tick to fill the profit target limit order).
A 5 tick Tick Failure Breakout of a SE Signal Bar (on the ES E-mini) also often means, that there were sellers above that bar (for a bull SE Signal Bar), who also might have scaled-in one point (four ticks) higher. The same can be true for a 9 tick Tick Failure Breakout, where sellers were able to scale-in twice above that SE Signal Bar (one and two points higher).
Tick Failure Breakouts of SE Signal Bars can be found in all liquid futures markets that have many scalpers, like ES, NQ, CL, as well as ETFs like SPY or QQQ and highly liquid stocks.
Read more on this topic in Al Brooks book:
Reading Price Charts Bar by Bar: The Technical Analysis of Price Action for the Serious Trader
Chapter 9
Failed Signal and Entry Bars and One-Tick Failed Breakouts – page 222 and
Failed Scalps: Five-Tick Failed Breakouts and Failure to Reach a Scalper’s Profit Target – page 251
What do I need to set the Tick Failures to?
Tick Failure Breakouts largely depend on the market and time frame you are trading. Some common scalp targets are (add one or two ticks for the failure):
ES – 4/6, 8, 12, 16, 20, 24, 32, 40, 48, 60 and 80 ticks
NQ – 10, 20 ticks
CL – 5, 10, 15 ticks
SPY – 10 ticks (cents)
On the ES E-mini 5 min chart 1 or 2 tick failures are failed breakouts and 5 or 7, 9, 13 and 17 tick are failures to reach common scalp targets. Just add one tick to the common scalp targets from above.
If you trade the MES, load the indicator on the ES chart (the volume is much larger) and take the trades on the MES.
If you trade EURUSD Forex use the the 6E future to chart the Tick Failure Breakouts.
Best results are achieved on futures and equities.
Can I simply trade every signal?
This largely depends on context, trading style and stop loss (risk), also on your ability to scale in and the use of wide or swing stops (below the last higher low or above the last lower high in a trend).
Confluence is very important in trading and means to have several (at least two) reasons to take a trade. Your 1st reason is the Tick Failure Breakout and your 2nd reason can be e.g. Support / Resistance, measured moves, trend line / trend channel line overshoot, Buying/Selling Pressure, a 2nd attempt to reverse and many more.
As a start, use Tick Failure Breakouts with trend only and Buy/Sell Closes of possible signal bars or Buy below and Sell above them (especially bars with large wicks/tails) for an early pullback entry. Use a swing stop (below the last higher low or above the last lower high in a trend).
See also the scale-in approach discussed with another indicator here: Can I simply trade every signal?
What are the settings?
One can set up up to 20 different tick failures and corresponding text to print on the chart.
The current tick failure set is for the E-mini, but you can set your own tick failures or delete the ones you don’t want to see.
E.g. smaller time frames (less than 5 min / tick /range) might not have very often a failure to fill 15 points from a stop entry without a pullback.
The indicator is set to Calculate OnPriceChange to see what happens as the current bar is forming. This is also very useful to see where stop entry traders take profits and how many points they are in profit.
Indicator name: PATickFailures
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Tick Failures Breakouts from HOD/LOD and HOY/LOY
There is 2nd indicator included in the package that also shows Tick Failures Breakouts of the HOD/LOD (the highest high or lowest low of the day defined by a certain swing strength) and the High/Low of Yesterday (HOY/LOY).
Example Charts
Tick Failure Breakouts (also called failed breakouts) of the high/low of the day (HOD/LOD) or the High/Low of Yesterday (HOY/LOY) trap breakout traders.
1 or 2 tick Tick Failure Breakouts (on the E-mini) can be considered a failed breakout for traders, who entered on the breakout on a stop entry above/below HOD/LOD or HOY/LOY.
5 tick Tick Failure Breakouts of a prior swing high/low (on the E-mini) can be considered a failure to reach a common scalp target, since a scalp for four ticks (one point) is a very popular trade. A six tick breakout is needed to fill a four tick profit target for a trader who entered on a breakout above/below a prior swing point (one tick to enter on a stop, four ticks profit, and one more tick to fill the profit target limit order). With higher volatility (and larger range/bars) that four tick scalp often becomes a scalp for six or more ticks.
Tick Failure Breakouts largely depend on the market and time frame you are trading. Some common scalp targets are (add one or two ticks (futures) for the failure):
ES – 4/6, 8, 10, 12 and 16 ticks
NQ – 10, 20 ticks
CL – 5, 10, 15 ticks
SPY – 10 ticks (cents)
On the ES E-mini 5 min chart 1 or 2 tick failures are failed breakouts and 5 or 7, 9, 11, 13 and 17 ticks are failures to reach common scalp targets.
If you trade the MES, load the indicator on the ES chart (the volume is much larger) and take the trades on the MES.
Best results are achieved on futures and equities.
What are the settings?
One can set up up to 20 different tick failures and corresponding text to print on the chart.
The current tick failure set is for the E-mini, but you can set your own tick failures or delete the ones you don’t want to see.
Indicator name: PATickFailuresDay
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