Ideas for struggling traders

S

steve46

Here are a couple of comments aimed at traders who are having trouble seeing the markets

First, I think one has to find a context in which to operate

I like to to start with a daily chart and work towards a shorter framework

Here is a daily chart

I put in a long MA (200 period) in white and a shorter one (80 period) in blue.

This gives me the big picture
 

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I used to look at 60 and 15 min charts in much the same way.

Nowadays I simply go straight to the 5 min candles as shown in the attached chart

The white line is an 80 period MA

The yellow line is a shorter (3 period) ma

Notice I use a 24 hour chart.

I do this to get an idea of where we went during the ovenight session.

Sometimes the overnight will give you a "headsup" indication of where we are going during the RTH
 

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Once you have a general idea of trend the next difficulty is finding a way to enter with the odds in your favor.

My approach is to change from standard to constant volume charts.

There are a couple of ways to go with this approach. In general one wants to use a chart that slows down price moves and allows you to see price moving in waves

Again I use a long MA and a shorter one to provide a line in the sand.

The attached chart uses 2401V candles and I put about an hour of data on the chart

White line is the 200ma. Blue is the 80ma and the yellow is the 3 period ma

What you want to do here is observe how price acts around these moving averages.. how does it test. Does it respect the longer MA or does it move through with emphasis? Does it retest or does it continue.
 

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One of the nice things about using Constant Volume Chart is that you can see the entry points pretty clearly


Here on the attached chart you see price test the 80period MA and fail

The entry is (for me anyway) pretty clear below the yellow 3 period MA

In my opinon, you have to get at least 2 pts to make this work
and I am always targeting 10
 

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As can be seen in the chart, this market is breaking down pretty good.

The trade is going to be worth a few bucks

For newbies trading the ES contract, I would suggest going in with at least a few contracts and scaling out at 2, 5, 7 and 10

Good luck

Steve
 

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I don't want to give the wrong impression here

This is but one of a lot of possible entries available today to those who were trading this way (some people asked me about this a while back).

It works in both trend and chop.

If you set yourself up to see the market this way and scroll back through a few days of price action, it is easy to see where the opportunities are.

This is the easiest part of trading. For newbies the hard part obtaining the maturity and experience necessary to know where to jump in, and the control of emotions necessary to hold and not pussy out for small change profits. This is why it is a good idea to trade multiple contracts and scaleout..

Good luck

Steve
 
Just to set the record straight. I would like to give props to Proflogic, an ET member.

His comments about the utility of constant volume bars set me to doing to some research on that subject. I find that this approach
changing from standard to volume bars or candles seems to provide a nice way of filtering out some (not all) of the noise inherent in index markets. I am sure it would be advantageous for those trading any liquid market.

For those willing to do the legwork, I suggest going back and reading his posts on this subject (use the search function at the top of the home page).

Good luck

Steve
 
Here is another chart showing the move up, a previous trade stopped out and then another retest and failure move down

These are nice trading opportunities

As you can see, the constant volume bars show us nice movement and the MA's provide a good idea of where to look for entries. I also like to look at relative position of highs and lows for clues as to which side to be on...

Good luck everyone

Steve
 

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