Well, a successful trader not so paranoid as to think that sharing some of his ACTUAL indicators will destroy his system. My hat is off to you, and thanks for sharing your experience in such an elementary way that even a Joe Lunch Bucket like my self can understand. This thread is an example of what a "perfect world" forum would be like. Dare I say, there is hope for us afterall.
Its all about "tests"
- Thread starter steve46
- Start date
Steve if you must embark on this journey, and you already have, it's imperative that you also start a thread on position management. It's simply amazing to me that there's been only a slight mention of it so far in this thread. And I do realize the subject matter, however you can't have one without the other. It's like surfing, you've caught the wave... now what?
Start another thread if you must.
Start another thread if you must.
steve46
TESTS, i am also a fan of tests. To put it in layman terms (relative to my way of trading tests ), you start the day with your usual tools, pivot points, your opening breakout lines, a printout of the last 5 days 5 min ES price action for eyeballing support/resist spots. Then you observe what the trade is doing relative to all those points as they TEST them for strength. What else is there for a daytrader to work with?
Test spots are visible to everyone out there and many eyeball them to see what happens, you then ( many orders have been pre-planned and pre-placed so you are in a decent spot in the "Q" ), take action as soon as you are filled always remembering the most important tick in any trade is the FIRST tick (LOL).
Tests are a roadmap is its simplest terms, you see where they have been and you see where they are headed, that is the easy part, the hard part is staying on the ride.
Have fun, just a quick synopsis of my thinking about TESTS.
Tests with following the character of any "RUNS" retracements is candy.
PS, as you probably assumed, i do not use a lrc line, i just use after 1030 ET the previous supp/resist spots. another little dittie is to take the breakout of the first hour range, that still works if not in yet from the +6 or -6 lines, etc.
PSS.....TA = The Essence of Daytrading /... and or position trading for slow thinkers.
TESTS, i am also a fan of tests. To put it in layman terms (relative to my way of trading tests ), you start the day with your usual tools, pivot points, your opening breakout lines, a printout of the last 5 days 5 min ES price action for eyeballing support/resist spots. Then you observe what the trade is doing relative to all those points as they TEST them for strength. What else is there for a daytrader to work with?
Test spots are visible to everyone out there and many eyeball them to see what happens, you then ( many orders have been pre-planned and pre-placed so you are in a decent spot in the "Q" ), take action as soon as you are filled always remembering the most important tick in any trade is the FIRST tick (LOL).
Tests are a roadmap is its simplest terms, you see where they have been and you see where they are headed, that is the easy part, the hard part is staying on the ride.
Have fun, just a quick synopsis of my thinking about TESTS.
Tests with following the character of any "RUNS" retracements is candy.
PS, as you probably assumed, i do not use a lrc line, i just use after 1030 ET the previous supp/resist spots. another little dittie is to take the breakout of the first hour range, that still works if not in yet from the +6 or -6 lines, etc.
PSS.....TA = The Essence of Daytrading /... and or position trading for slow thinkers.
Yes glad to hear from you.
In response to your question "What else is a daytrader to work with"?
the answer is as follows;
First it is important to study historical intraday charts. What one wants to know is;
1. When did price last move strongly, and what kind of volume preceded that move? What kind of volume sustained the move?
2. What was the structure of the move? was it a move on one wide range bar? or a series of smaller bars? What kind of volume did we see on each of the bars?
3. Did price have to move through a pivot or an area of previous congestion? If yes, what kind of volume was necessary for price to take out these areas.
4. How can we characterize the move? Was is one continuous move or were there retracements (pullbacks). What size were the bars? What size were the bars in the pullbacks?
5. Finally, what size move can we expect based on historical analysis? 2 points, 4, 6....
After getting filled, one has to deal with the classic question that occurs on each bar/candle.
"Do I stay in, or exit?
How does one decide?
Market Internals
Tick, Ticki, Trin, VIX, advancing/declining volume, Prem, tape reading, sector behavior, bellweather behavior.
Also one can monitor indices (if you trade index futures) looking to identify where and when one index leads or follows another.
These are a few of the tools that a trader can use to help decide whether to stay or go.
We can talk about each in turn or you may have comments if you use them yourself.
Steve
In response to your question "What else is a daytrader to work with"?
the answer is as follows;
First it is important to study historical intraday charts. What one wants to know is;
1. When did price last move strongly, and what kind of volume preceded that move? What kind of volume sustained the move?
2. What was the structure of the move? was it a move on one wide range bar? or a series of smaller bars? What kind of volume did we see on each of the bars?
3. Did price have to move through a pivot or an area of previous congestion? If yes, what kind of volume was necessary for price to take out these areas.
4. How can we characterize the move? Was is one continuous move or were there retracements (pullbacks). What size were the bars? What size were the bars in the pullbacks?
5. Finally, what size move can we expect based on historical analysis? 2 points, 4, 6....
After getting filled, one has to deal with the classic question that occurs on each bar/candle.
"Do I stay in, or exit?
How does one decide?
Market Internals
Tick, Ticki, Trin, VIX, advancing/declining volume, Prem, tape reading, sector behavior, bellweather behavior.
Also one can monitor indices (if you trade index futures) looking to identify where and when one index leads or follows another.
These are a few of the tools that a trader can use to help decide whether to stay or go.
We can talk about each in turn or you may have comments if you use them yourself.
Steve
Great points in your last post Steve. I'm still here, actively listening to this good info. In an effort to keep this thread going, I'm going to provide a chart with some price levels that I have determined to be of value via my own proprietary means ~ its based on MP but again, its a homegrown method I am not willing to fully divulge
Here are the key price points, they are actually fairly obvious, they represent S/R levels in conjunction with value areas (aka consolidation zones).
1282 sticks out because of the volume associated with it on July 10th. 1277 - 1273 also has significance because it is a value area, a place where the market seems to want spend a certain amount of time. 1271-1268 is a rough guide for mood - it held once, got broken on the 11th and then became a subsequent value area late today.
What does this have to do with the discussion so far? Well, my main point is the role of history. Notice the head an shoulder formation from 1400 to 1200 on the 11th-12th. There's nothing predictable about this other than the clean avoidance of a strong 1282 break, also, please notice the 1277 touch ~ because of this break avoidance and "weak touch" my contention is that the market's mood was down and was "predictable by 10:30 am at the latest. Also yesterdays run-up also seemed a bit awkward (just my observations, nothing but intuition in that statement). A 1282 break was not attempted with any significant price strength and 1277 was just ignored via todays downmove, other than as a new R value.
Logically, these levels make sense to me and this is how I interpret price. Levels can be tested with light touches, strong touches, light breaks and strong breaks ~ price history, when combined with appropriate levels and market mood can be very informative in determining direction.
Here are the key price points, they are actually fairly obvious, they represent S/R levels in conjunction with value areas (aka consolidation zones).
1282 sticks out because of the volume associated with it on July 10th. 1277 - 1273 also has significance because it is a value area, a place where the market seems to want spend a certain amount of time. 1271-1268 is a rough guide for mood - it held once, got broken on the 11th and then became a subsequent value area late today.
What does this have to do with the discussion so far? Well, my main point is the role of history. Notice the head an shoulder formation from 1400 to 1200 on the 11th-12th. There's nothing predictable about this other than the clean avoidance of a strong 1282 break, also, please notice the 1277 touch ~ because of this break avoidance and "weak touch" my contention is that the market's mood was down and was "predictable by 10:30 am at the latest. Also yesterdays run-up also seemed a bit awkward (just my observations, nothing but intuition in that statement). A 1282 break was not attempted with any significant price strength and 1277 was just ignored via todays downmove, other than as a new R value.
Logically, these levels make sense to me and this is how I interpret price. Levels can be tested with light touches, strong touches, light breaks and strong breaks ~ price history, when combined with appropriate levels and market mood can be very informative in determining direction.
Well that is interesting and appreciated.
As I recall, in one of your posts you asked me if I thought that yesterday's rally would die out at 1273. I assume that your present system of evaluating price action doesn't provide enough data to give you an answer.
My own answer (and it is just one) was to suggest that you take note of volume. I may not have been specific enough in my comment. What I mean is;
How much volume is necessary to sustain a move? In my comments I suggest that it is at least 12,000 contracts for the ES market.
In the charts that I posted you can see that this is essentially correct AND that when a move is happening volume actually ramps up to more than double that level.
Furthermore, if you want in the future to get a quick answer to that kind of question, one thing that you might consider doing is to switch time frames (down from 5 min to 1 min) so that you can see if EARLY volume will supply the foundation for a move.
Lets say that you need 12,000 contracts per 5 min bar to supply the fuel for a move. If you change to a 1 min bar, that means you need to see AT LEAST 2400 CONTRACTS FOR EACH 1 MIN BAR.
AND preferrably you would want to see volume accelerate from below 2400 on the first bar to much more than that by the 4th or 5th bar (one min bars)
So for example (and I am taking this from experience rather than projecting from a rule here), you might see less than 1000 contracts on the first one minute bar, then maybe 870 or so on the next bar, then 2800, then 3800 and finally 5800.
Now if I am in the trade and I am watching this develop, you are going to have to get a crowbar to get me out of this position. As long as things continue to "develop" like this and price doesn't take a dive, I am going to hold on looking for a move
As I recall, in one of your posts you asked me if I thought that yesterday's rally would die out at 1273. I assume that your present system of evaluating price action doesn't provide enough data to give you an answer.
My own answer (and it is just one) was to suggest that you take note of volume. I may not have been specific enough in my comment. What I mean is;
How much volume is necessary to sustain a move? In my comments I suggest that it is at least 12,000 contracts for the ES market.
In the charts that I posted you can see that this is essentially correct AND that when a move is happening volume actually ramps up to more than double that level.
Furthermore, if you want in the future to get a quick answer to that kind of question, one thing that you might consider doing is to switch time frames (down from 5 min to 1 min) so that you can see if EARLY volume will supply the foundation for a move.
Lets say that you need 12,000 contracts per 5 min bar to supply the fuel for a move. If you change to a 1 min bar, that means you need to see AT LEAST 2400 CONTRACTS FOR EACH 1 MIN BAR.
AND preferrably you would want to see volume accelerate from below 2400 on the first bar to much more than that by the 4th or 5th bar (one min bars)
So for example (and I am taking this from experience rather than projecting from a rule here), you might see less than 1000 contracts on the first one minute bar, then maybe 870 or so on the next bar, then 2800, then 3800 and finally 5800.
Now if I am in the trade and I am watching this develop, you are going to have to get a crowbar to get me out of this position. As long as things continue to "develop" like this and price doesn't take a dive, I am going to hold on looking for a move
Steve, you are correct. Unfortunately, a toothpick can get me out a position at times ~ this is a flaw in my trading and unless I have 100% conviction, I will not HOLD A WINNER until its total fruition. I was able to execute an all day hold today, however, yesterday was a big mistake on my part. I was "biased" short yesterday and my reading of the volume signals you described was just as you outlined - I saw that move coming, knew it was going to happen (primarily because of past experience). Yet, my discretionary exit technique/price level bias got in the way. This is a great example of knowing when to override a plan AND more importantly, acting on it. The execution is where I often make a mistake ~ not the thought process.
This is the primary habit/practice that I work towards achieving on a daily basis (this is something I also believe all traders question/develop at one point), and it lies in your ability to execute a discretionary plan flawlessly and without bias. Much easier said than done, and as steve pointed out, a clear reading of information (volume) is critical, as is proper and unbiased execution.
This is the primary habit/practice that I work towards achieving on a daily basis (this is something I also believe all traders question/develop at one point), and it lies in your ability to execute a discretionary plan flawlessly and without bias. Much easier said than done, and as steve pointed out, a clear reading of information (volume) is critical, as is proper and unbiased execution.