Making of a method

Review:

The Opening upwards push was weak and it's rejection off the PM level of 35 should have confirmed the larger line for a short. Prep was lacking, in that I did not have a plan for what to do if the upwards push was a small thrust instead of a swing towards the ON High. Having not had a chance to get in to the short during ON, my prep reflected a bias in wanting to go short at those prior levels. But a short off the Open, would have still been close enough, given the extent of the rise and the prior importance of the 4050 level. This would have been the trade for today.

I did not see a case for a long, although the strong Reversal off 4010 certainly negated any plans to short the upswing until weakness was shown higher up towards the High.

Once two consecutive waves retraced more than 50% of their respective upswings, the line was appearing weak. I was looking for a Dog short off a final push to the Highs. There was one, but it wasn't high enough and the entry seemed to be inside short term congestion, so it was passed.





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Oct 28th

Trend:

The rise continues, with ON action once again leading to new highs. The swing from the 23rd onwards is worth 120 points. Unlike the sharp rise from the bottom, this swing has been more typical retracing and balancing, before rising again. It seems to be forming a rising base for what could be a push towards the UL of the weekly TC.

There were various attempts to break the ON high, leading to a clear R level at 4063. The DL of the ON rise has been broken and price is now around the mean of the TC drawn from the 23rd onwards, where it is congesting.

Value and levels:

Yesterday's mean at 4033

Potential Trades:

1. Long on new highs on break of 4063.
2. Long off 4051
3. Short on break of 4050
 
Review:

Trade 1: With the rise from the bottom of the PM range and relatively fast and shallow ret, price risk was high. Correct decision to exit once price showed signs of returning back inside ON range.

Trade 2: Confirmation of prep gave confidence to take the re-entry once price failed to fall back inside the range. Trade was given room and exits were fine.

Trade 3: Pace had been very dull. Longed on new high with the expectation that a sudden spike may wake people up. It returned to dullness and there was no reason to hang around at that level.


Better awareness through prep has brought about higher quality entries, which has led to more confidence in managing them according to their merit.

The next major area for improvement is exercising judgment in when to move away from prep's orientation in favor of just going with the immediate price swing. Looking back over my countless Sim trades, it is apparent that certain conditions favor following the immediate movement, while other conditions call for waiting for the levels from prep.

My task is to categorize these conditions and act only once the most compelling are present.


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1. What is the Trend and how did we get here?

Price continues to move up and away from the Weekly mean, although it's rise has been unusually fast. Yesterday's high of 4100 turned into a large after market Reversal of 60%. Resuming the pattern of the previous few days, it climbed to 91 before turning into a hinge.

2. Where is value?

Price is currently just a little below the mean of the 60 min TC. Other than the VAP of each day's climb, there is no clear lateral value. The 50% level of the rise from the 23rd is 4021. Using VAP from the 27th at 4032, this becomes a potential Support zone at 4021/32, should price reverse.

3. How has the market been moving?

Daily Range has been above average, but the movement has been dull. There were 5 ten point swing yesterday worth appox 61 points.

4. Potential Trades

1. Short failure of up thrust to test/LH off 4100
2. Short strong break off 4070 zone
3. Long off 4070 zone
3. Watch for strong surfing opps on either side of ON Hinge
 
Review:

Trade 1: Little impulsive on the exit. This was high price risk and the up line was not particularly strong. Opted not to re-enter and wait for new highs instead.

Trade 2: Was considering a SAR, but the pace dulled quickly. Opted for some more confirmation. Exit was fine, given that price was not falling quickly this early in the session.

Trade 3: Flat pace and intrabar chop led to doubt on the re-entry decision. But the short line was intact and the decision was made. It wasn't a bad trade and there is no need to optimize at this point.

Once the second thrust retested off 96, the short line was still intact. But the poor quality of the action cautioned against pressing for the short here. Decided to wait for price to clear 80 before entering for a potential down trend.


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Oct 30th

1. What is the Trend and how did we get here?

The uptrend shows signs of turning down. Price has moved well past the LL of the sharp 60 min TC. However, both yesterdays after report and today's ON down move, were met with sharp Reversals. A new 60 min down TC has formed, with the ON reversal occurring at it's LL. The line is slightly down but not clear.

2. Where is value?

Downside: 4021/32 as 50% of climb since 23rd and high VAP zone.
Upside: 4072 zone (both lateral and diagonal)

3. How has the market been moving?

Pace has picked up after yesterday's FOMC. ON and PM movement were strong.

4. Potential Trades

1. Long off 4043
2. Short strong down move off Open
 
Review:

At the Open, price was around the mean of the 60 min TC and just below a lot of the lateral value from yesterday. The larger line was a little weak and the TC was only about 40 pts. Saw no compelling reason to go long here. A strong rise was unexpected.

Once the unexpected came to pass, price was now back at the UL of the TC, having reversed the entire ON down move. Saw weakness developing at this level and considered a SAR short off the retest. However, there was no clarity. What was the upside in a narrow TC? Was it likely that Price would reverse 40 points once again for the third time in a matter of hours? And do so in a somewhat V Reversal manner? It did. And my reasons for staying out are valid. There is more nuance to this. But at this stage, what I need is clarity with respect to trend and value. If I am not seeing the line, I rather not take the trade.

There was nothing more to trade once the first two moves were done, as price was likely to bang around value.

The best short took place ON and the best long during PM off 44.

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1. What is the Trend and how did we get here?

The sharp uptrend launches off the mean of the weekly TC. There has been a 114 pt move since yesterday's ON low, of which 59 points occurred via an ON parabolic move. After retracing 30% of the 114 pt move, price has since once again climbed to just short of the highs where it is now congesting in a tight range of 9 points.

2. Where is value?

Price has moved approx 30% of the distance from the weekly mean to the UL. A new 60 min TC has formed and price is right on it's UL.

3. How has the market been moving?

Energy has picked up substantially. Likely to continue today as well.

4. Potential Trades

1. Short break of 4146
2. Short Failure off 4157
3. Long off 4103
 
Week Oct 27.png
Review:

Trade 1: The initial target for this trade was 4103, which would be the approx location of the TC mean coinciding with the ON breakout level. As price dipped below the PM range, the action became dull and flat. The expectation around such levels is activity. As price congested here, the likelihood of this becoming a strong down run decreased.

Trade 2: Normally this kind of trade location means the potential for high adverse energy, requiring an instant exit if it does not go. However, the pace was dull. Better awareness would have led to a hold here.

Once price got back inside the PM Range, there were no further trades to the long side. Doubtful whether I would go long here regardless. The dullness and quality ruled out any shorts for trend continuation.

Weekly themes:

1. Improvement in increasing trade quality: There were instances when the line was there but there was no clarity or compulsion to take it. Trusting this intuition has led to a reduction in trades taken.

2. Improvement in trade management: The structure set in place to manage adverse trades is working. There is more control in the entry pocket.

3. Improvement in exits: Visualizing the kind of trader I would like to be has helped decrease the impulse to take profits at the first sign of momentum break. Repeated visualizations create strong impressions that lead to cognitive dissonance whenever impulse tries to take over.

4. Getting attached to prep: The balance between relying on prep and letting it go is not there yet. There is a sense that certain conceptual distortions remain, keeping me removed from reality.

5. Insight of the year: It's not about trend or mean reversion. It's about value. All strategies arise from this.

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