jasinhbca's quest for discipline, knowledge & profits

[moonmist]

Slow, rangy rollover day. 1 trade -4 ticks. Sat on hands a lot. Voice in my head said, Nothing to see here, move along. So, called it quits early.

Yes. Today seems to be the rollover day. For the time being, VPOC volume for the July and August contract are 3,961 and 3,870, respectively.

 

[jas_in_hbca]

Not the cleanest PA to my eyes most of day. I did an excellent job of being patient which was the right thing to do. My second trade I increased my target based on my experience with the set up (range break) often providing larger moves. I had a target range of +26 - 30 ticks so went conservative and placed my exit order at +23.

Missed one trade due to distractions with plumbers. Overall a good day for discipline , patience and reading context.

Traded Live yesterday and today. +38 today ; +34 for week of live trading (including sim add another 11 ticks)

I'm very pleased Will do some review this weekend and will keep in mind that Mondays are not my best days.

 

[i960]

One thing about crude lately is it's been getting more and better moves in the European session than compared to the US day session. I know this because I trade that session for a couple hours before bed (PST timezone here). Hopefully RTH starts to pick up again.

I used to use time-based charts with indexes, crude, currency futures, etc. and remember those long periods of low volume non-movement being annoying and distracting from the rest of the action and found it muddied the waters of how price action visually appeared. In short, it diluted my read of things because the slow period occupied a disproportionate amount of time-space vs the higher volume periods resulting in less "resolution" where it mattered (high volume, faster periods taking up less time) and more "resolution" where it mattered less (low volume, slower periods taking up more time).

Now I would never recommend you change methods based on some dude on a trading forum, particularly if you already have some consistency, but what I did find for me was highly beneficial, particularly with crude (and quite honestly just about everything else), was switching to constant volume bars and the addition of volume profile. Constant volume bars (I use 2 charts, a low 300 contract chart and mid 700 contract chart) compress all of the slow/consolidation areas into tighter clusters of bars that are not a slave to time. What you see is consolidating action for directly what it is. The higher volume moves conversely occupy more bars and provide more resolution (rather than being crammed into a single 1 min or 5 min bar) when things are moving. Combined together the action is cleaner and more revealing IMO. The ability to read pattern-like behavior is more direct and clear when you let volume directly drive the bars. There's the additional aspect that less traders in the "herd" are using these types of bars and hence you may see things they do not. It's not going to make you invincible or anything but it might save you from some fake outs and/or provide insight into a developing move before it's apparent on a time-based chart.

Secondly, volume profile (which can be used with any kind of chart, time, volume, range, etc) shows the low volume "unfair value" areas where price might reverse or bust right through and high volume "fair value" areas where price is more likely to consolidate and chop (avoid). This is quite valuable by providing insight into multiple areas of support and resistance based on where prices have traded before (either the previous day, current session, whatever). Combined with price context of the current session it's fairly accurate where price may stall, reverse, or breakthrough. VP is less effective in trending days when it comes to the reversal aspect, but in range bound days it's highly effective. I would say that the "pauseability" or potential pullback levels are directly preditable with volume profile regardless of day type, though.

I took some chart captures of similar time periods (looks like we're in the same timezone) to the charts you posted just to give some perspective:

vs

vs

(note my PDL levels are different from yours because I probably use different session start/end times)

 

[jas_in_hbca]

Hi i960,

Thank you for taking the time to share that info. It's very much appreciated.

Yes, I'm in So. Cal. Send water

I used to use a Volume chart when trading the NQ. I liked it for live trading because it seemed to show the 'pace' nicely and also for the reasons you stated. What I found I didn't like was for post trade review the static snapshot of the day didn't provide the consistency to compare one day to the next. Basically I like seeing the same number of bars on the chart each day to analyze and compare the set ups. I also found on slow periods the Volume bars compressed too much data for my liking. But having said that I actually do use Volume bar charts still. I use 1000 & 200 Volume for CL. The 1000 does show a nice HTF view and for faster periods the 200 shows more detail. I use the 1000 much more often than the 200 but overall my primary focused is the time based charts. I think if I were to trade sooner after inventory reports I would use the 200; someday.

Fellow ET'er Ammo had also suggested Volume Profile. It's on my list of things to study. I've got one of Dalton's books on my shelf waiting to be read (Along with Volman's book on 5 minute TF). I can certainly imagine how it could be useful.

BTW, my PLOD notation was probably unclear. It was the day before yesterday low.

And yeah, the overnight action often has great moves. If I were trading full time I would be more inclined to take a look at different periods.

Again thanks for the charts and info ! Feel free to post anytime.

Good trading to you !

jas

 

[monoid]

Not the cleanest PA to my eyes most of day.

@jas_in_hbca: Looks like your trading is going in the right direction. Congrats.

The above quote caught my eyes, and wanted to share my thoughts. But, at the same time, I was very hesitant to write this post 'cos sharing my thoughts would mean revealing details of how I trade, which I do not want to divulge either over PM or out in the open. After a lot of introspection, and in the interest of helping a fellow trader, I thought to write a "subdued" post, which if properly understood can and should be helpful. With this said, here we go!

Do you know why you make money?

Before you attempt to answer the above question, let me start by asking another question: Why do geometric patterns form in markets? Obviously, the answer is: People repeatedly do the same stuff over and over again which results in a pattern. On the surface, this answer seem to address the issue. However, a question can be asked: why (or what makes) people repeatedly do the same stuff? You can see that the answer cannot be "geometric patterns" -- for, such an answer should beg the question what created the "geometric pattern" in the first place; in order words, such an answer would be recursive.

"Geometric Patterns" are created as an after effect. They are not a primary pattern. One has to understand the fundamentals of speculation to understand primary patterns. It is these primary patterns that make people repeatedly do the same stuff over and over again.

Theoretically, the take-away from the fundamentals of speculation is simple: when you recognize resistance, expect to short sell above resistance; when you see support, expect to buy below support. From a practical perspective, recognizing resistance and support is the hard part (and "Geometric Pattern" levels are not going to help 'cos they are an after effect). I, elsewhere in your journal said, I find trading hard -- it is because of the difficulty in correctly recognizing this support and resistance areas if and when they occur. Once you are able to identify them, markets are easier to "read".

Now, I don't trade CL yet. But I have been studying it with an intention of adding it to the portfolio of instruments to trade. The fundamentals of speculation works the same in ES as in CL (and am sure it is the same in other instruments too; well, I learned it from books written during the turn of last century, and it has not changed even though the market place of today is vastly different from the market place of yester years!). Here is my read of CL: Tuesday there was resistance around the highs. Wednesday short selling occurred as anticipated above resistance. Thursday the market showed unexpected strength. So, on Friday there was buying below area of Thursday strength (BTW, looking at charts can you tell there was buying on Friday? I would say, almost impossible). I expect an UP open on Monday, and a move up possibly moving above 61.50 (actual testing level is not what is indicated but is close enough) in the short term. I can assure you that the anticipation of Wednesday, Th, and Fr action was anticipated by the close of its corresponding previous day. I do not trade CL yet 'cos I want to understand its nuances and observer one complete "cycle" to see how it acts under various scenarios.

So, we are back to the first question: Do you understand why you make money? Do you make money 'cos you are intentionally aligned with the market's speculative fundamentals; or, 'cos you are being lucky to unknowingly become part of market's speculative fundamentals? George Douglass Taylor said it best:

The uninformed trader buys into the market more because it is on a reaction or a low point and by luck he hits the real trend just as the stock starts to rally then he sells out with a few points profit; but, on his next trade, he buys or sells on one of these cross currents and the trade promptly show him a loss ... taking a 'bite' out of his capital.​

Such a long "rant" for a seemingly naive comment -- "not the cleanest PA"!

As always, some food for thought -- nothing more nothing less. All the best.

Regards,
Monoid.

 

[jas_in_hbca]

Thank you Monoid. Thanks for sharing your thoughts and thanks for the well wishes. It's very much appreciated you would take the time to decide what to share from your personal plan.

"Do I know why I make money ? " I believe that was rhetorical however i'll share from the first page of my trading plan. This was written several years ago and while much of my plan has been revised or added to this still fairly represents my approach.


"A trading plan allows for easier decision making in an environment of uncertainty. The brain wants to find patterns and seeks certainty. Knowing which patterns to be looking for reduces stress, conserves energy and leads to taking trades which past study has shown to have an edge.




Theory of Market Behavior:


Tradable trends occur due to imbalance of supply/demand as well as from profit taking and wrong way bettors having to close their positions.



The conviction of market participants can be observed by watching how easily price moves through price levels, stalls before price levels or reverses at prior price levels.

• 
  
• I believe that price patterns repeat. Observing and acting on these patterns lead to actionable setups that can provide an edge"

I also like what trader/educator Lance Beggs said. If one were to go the shopping mall and watch the people and try to predict where or what store they would go to one would have a impossible time doing so. However if an alarm were to sound and someone yelled 'Fire' we could easily predict people would head for the exits.

So, my job is to watch the areas where the market may set off an alarm and become 'more predictable'. Which involves, what is the crowd behavior and expected behavior that is creating these patterns ?

I've found this can be tricky and that I over think and/or guess wrong. The fire was a mere spark quickly extinguished. Understanding context, HTF and S/R levels have helped me think/guess less and act more consistently and with better results.

Re: "fundamentals of speculation work the same in ES as in CL." While I don't disagree with you my belief is that ES is more of a hedging market than CL. I like CL because I believe it to be more of a "truer" speculators market. (I 've watched Gold a bit I like it also for the same reason. Haven't traded it though)

But I believe the important point you were bringing up is the determining of s/r levels and reactions at these levels. My time of study would be well served studying this topic. Perhaps the timing of your post after i960 is no coincidence. Hmmm.

So, we are back to the first question: Do you understand why you make money? Do you make money 'cos you are intentionally aligned with the market's speculative fundamentals; or, 'cos you are being lucky to unknowingly become part of market's speculative fundamentals? George Douglass Taylor said it best:

The uninformed trader buys into the market more because it is on a reaction or a low point and by luck he hits the real trend just as the stock starts to rally then he sells out with a few points profit; but, on his next trade, he buys or sells on one of these cross currents and the trade promptly show him a loss ... taking a 'bite' out of his capital.

Believe me, when you post this I give it a great deal of thought. I'm always open to questioning and learning about what I do. Thank you for that. Still pondering.

(As a complete aside, I read Douglas and his 3 day cycle and such and kept thinking , WHAT ?? . I was in a webinar once with linda B rashke who likes Douglas and I made that comment and she responded that he is hard to understand but worth the time. Felt better knowing a market wizard thought he was not the easiest read)

Thanks again Monoid.

Best,

jas

 

[jas_in_hbca]

(As a complete aside, I read Douglas and his 3 day cycle and such and kept thinking , WHAT ?? . I was in a webinar once with linda B rashke who likes Douglas and I made that comment and she responded that he is hard to understand but worth the time. Felt better knowing a market wizard thought he was not the easiest read)

EDIT: I meant to write George Douglas Taylor. (not to be confused with Mark Douglas)

 

[monoid]

(As a complete aside, I read [George Douglass Taylor] and his 3 day cycle and such and kept thinking , WHAT ?? . I was in a webinar once with linda B rashke who likes Douglas and I made that comment and she responded that he is hard to understand but worth the time. Felt better knowing a market wizard thought he was not the easiest read)

@jas_in_hbca:
I will have to agree that Taylor is a very hard read. I will also agree with Ms. Raschke that 'understanding' Taylor is 'worth the time'.

Should you decide to re-read his work in the future, please remember this: His 3-day model is a trading strategy. He, himself, has said:

Successful speculation is not based on one set of inflexible rules and a trader must be ready to change when conditions change.​

So, don't put much weight on the 3-day trading strategy. Unfortunately, most traders concentrate on the 'trading method' presented in his book, and really miss out on the essence of the book. What you must strive to extract from his work is his knowledge on how speculative markets work. Since that knowledge is not all clearly and cogently laid out in his book, you will have to fill in the gaps (which he assumes away). This is what makes his work so difficult to read. However, once you "get it" you will appreciate his work.

Once you 'understand' the fundamentals of speculation implicitly presented in Taylor's work, get back and apply it to today's markets. Then, only then, you will truly understand what Ms. Raschke said by 'worth the time'.

All the best.

Regards,
Monoid.

 

[jas_in_hbca]

Thanks again Monoid. I'll pull that book off the shelf and give it a read with those comments in mind. I think I have the Traders Press reprint of his writings.

jas

 

[jas_in_hbca]

Monday and first trade went to target. I thought that might be a good sign. Market got choppy and I did not bring enough patience to my trading today. A couple FOMO trades. Last trade I wanted to increase target based on airspace and set up but got filled before I could move it.

Happy to get through the day with only a small loss. - 4 Ticks today