S/R Emini Journal

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Quote from erierambler:

JJ,

Were you looking at yesterday's chart for resistance at 1282?

erie
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I was looking at the behavior of price action during the last three days (it kept bouncing around in a very narrow range, I figured the early drop was good - looking for a drop because we'd had the huge runup - and was a little frustrated when it bounced back-up, so when it dropped again I made sure to get on it).

When you have a small loss you can either double contracts or you can double range ... I perfer to double range myself, because I'm looking for the real move, the trend move, not just a 2 pt pop.

Later,

Jimmy

P.S. Interesting expreince though (the frustration). Every trader is going to get a little frustrated when their trade doesn't work-out as they iniitally thought it would, not matter how many previous wins they've had, or how well thought-out their method is.
 

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Quote from smilingsynic:

Why not a trailing stop, automatically moved along with the market? Moves like this late afternoon tend to steamroll, since traders get trapped and want (need) to get out.

Good trade. A really good trade.

I did not catch this move, but dodged a bullet avoided buying what at the time appeared to be a breakout at right after 2 PM on the e-mini Russell. I did not even consider shorting, since I considered this a range day, and range days tend to gravitate back to the open.
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Hey smilingsynic (heh), thanks for the comments. I normally wouldv'e taken half-off and then used a stop to trail the rest, however, my first trade was a loser, so I just didn't have the room to play with. I needed to make my points and call it a day, come back next week for the next trade (something I picked-up hanging around Gary in these here chat rooms).

I like to use what is logical to me and "makes sense" to enter what I think are "high probability" trades ... and then it is the market that does the rest.

Best,

James
 
Hey Guys,
I am back and sorry to say I missed the whole thing...JJ, way to go. I have noticed a marked improvement in your trading and your calls lately. It seems like you have been using a good mix of S/R and divergence for your trading, is this right?

Romik: I have to agree with your mid to long term calls in the cash market. I hope to see it soon.

I did finish legging into my CAL trade today. The market maker was jacking with me yesterday when I was trying to get my calls placed. Trying to run the price up so I would have pay more. I showed'em though. I let it come down this morning and got cheaper than yesterday and then the price jumped up pretty quick this afternoon. HeHe...

Looks like I missed some good action in the ES though...Did you guys leave some money in there for next week?

Gary
 
I was looking at the behavior of price action during the last three days (it kept bouncing around in a very narrow range, I figured the early drop was good - looking for a drop because we'd had the huge runup - and was a little frustrated when it bounced back-up, so when it dropped again I made sure to get on it).
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Thanks for the reply, and nice trade.

erie
 
Quote from 4re:

It seems like you have been using a good mix of S/R and divergence for your trading, is this right?
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Nope I only key off S/R in trend mode when I'm putting my money on the line. The divergence calls are just to give me something to do when observing the market action and waiting for the consolidation process to work itself out.

Trading is like Boxing in the sense that you have to be in perfect condition and have absolute faith in yourself and your skills to such a degree that you can take a punch (like I did today) or you can even get knocked down (like I haven't been in a long time, but heh, it could happen), shake it off and step back up to the plate with absolutely no FEAR.

To have this type of faith in myself I need to just concentrate on one method, and one method only, and know that I have a great method and the positive expectation of the system will carry me through any tough times.

Best Regards,

James
 
Quote from JimmyJam:

Nope I only key off S/R in trend mode when I'm putting my money on the line. The divergence calls are just to give me something to do when observing the market action and waiting for the consolidation process to work itself out.

Trading is like Boxing in the sense that you have to be in perfect condition and have absolute faith in yourself and your skills to such a degree that you can take a punch (like I did today) or you can even get knocked down (like I haven't been in a long time, but heh, it could happen), shake it off and step back up to the plate with absolutely no FEAR.

To have this type of faith in myself I need to just concentrate on one method, and one method only, and know that I have a great method and the positive expectation of the system will carry me through any tough times.

Best Regards,

James
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Well you are doing very well with it here lately...I was just wondering if you were starting to use a little divergence stuff when you started calling some reversals. I look at it in a sense of keeping up with where the market is heading but I don't trade divergences. Only because I am not as familiar with them as I am S/R trading.

Good weekend to you,
Gary
 
Quote from 4re:

I was just wondering if you were starting to use a little divergence stuff when you started calling some reversals. I look at it in a sense of keeping up with where the market is heading but I don't trade divergences. Only because I am not as familiar with them as I am S/R trading.
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In my experience, divergence trades will work well when the markets are consolidating, but not so good when the markets are trending.

I spent a lot of time trading the TI method and discovered this to be its overwhelming flaw.

If your trade goes against you when trading a trend, it's possible to makeup the loss (because the trend will continue for more than 2 pts), however with divergence trades you keep encountering the problem of having to have a greater than 66% hit rate just to do better than breaking even.

I don't know how Romik does it, but he manages.
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So here's how I use divergence trades:

I use them to assist me in identifying periods of market consolidation. It is after this period of market consolidation that I anticipate the market breaking out with a strong S/R trade with some momentum behind it.

If you pay attention to Romik's calls, he will do well for a couple'a days (this is the period when the market is consolidating) and then he'll try to take a divergence trade on a day when the market is trending (which to me is like stepping in front of a speeding linebacker - I ain't gonna do it) with the result that he gets squashed! :D (it's all good Romik, if you pick your battles more carefully, you'll avoid those trends and pull-off solid trades when the market is in its consolidation phase and the guys who are trying to find a trend are getting stopped out).

Having said that, divergence trades which show up on a daily chart versus an intra-day timeframe are often very powerful reversal signals.

Best,

James
 
Quote from JimmyJam:

In my experience, divergence trades will work well when the markets are consolidating, but not so good when the markets are trending.

I spent a lot of time trading the TI method and discovered this to be its overwhelming flaw.

If your trade goes against you when trading a trend, it's possible to makeup the loss (because the trend will continue for more than 2 pts), however with divergence trades you keep encountering the problem of having to have a greater than 66% hit rate just to do better than breaking even.

I don't know how Romik does it, but he manages.
***
So here's how I use divergence trades:

I use them to assist me in identifying periods of market consolidation. It is after this period of market consolidation that I anticipate the market breaking out with a strong S/R trade with some momentum behind it.

If you pay attention to Romik's calls, he will do well for a couple'a days (this is the period when the market is consolidating) and then he'll try to take a divergence trade on a day when the market is trending (which to me is like stepping in front of a speeding linebacker - I ain't gonna do it) with the result that he gets squashed! :D (it's all good Romik, if you pick your battles more carefully, you'll avoid those trends and pull-off solid trades when the market is in its consolidation phase and the guys who are trying to find a trend are getting stopped out).

Having said that, divergence trades which show up on a daily chart versus an intra-day timeframe are often very powerful reversal signals.

Best,

James
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Hi JJ, quite good summary, but same could be said for trading S/R, which I have been trading longer than divergences and that's where I still make my main returns. And I tell you, they also fail as you know, the secret to successfully trade any system is money/trade management applied. In the system that I use for S/R my point targets are limited to 1-2 points, though with divergences it could be as many as 100 points, though I did not catch such a move as yet, I saw B1S2 do it, using experience and I tell you, very unsophisticated techniques based on divergences, hardly rocket science. Benefits increase as capitalisation increases with longer TF based divergence trades. You are right about trend days and divergences, that's where it would benefit a trader to have 2 systems, as during trend days 1st system gains would offset the 2 system losses, of course not a rule of thumb.
 
For what it is worth, I think that in order for ES to reverse it needs a minimum of 2 independent signals before looking for a good entry point.
I take divergence seriously particularly at the end of a run, but it is in fact no more than a double top/bottom, sometimes equal and sometimes failing. If it happens around s&r then this adds weight to it and if the first pop had high vol and the 2nd had low volume that is your key. I imagine that it means the big boys unloaded on the first pop into the face of retail and then cleaned out the cupboard on the 2nd pop into the face of those traders waiting for a 123 hook or thought that were being left behind.

Here is a thought for some weekend homework.

I trade the RTH open almost every day using momentum.... I hardly ever miss banking points and it sets me up mentally for my session.
My reasoning is simple ...the open introduces so much volume that it overwhelms anything happening on the overnight session and emas or any long tailed indicators such as bbands need to be viewed in a different manner since their tail can be trailing in a pool of low volume.
It is a sorting out period for the price as it begins to establish it`s initial balance (IB) for the day

Take a close look on a 1M chart at the open from say 9.25 est going back over 20 sessions and see if you can see exactly what is happening.
I image that it is a mix of big boys and "market on open" orders, but to be honest I dont really care, I only look at price and volume sales.
I am 90% accurate in 20 trades ie 2 stop outs at 3 points each per contract.
On average I walked off with 8 pts per and so I was 5 mins into the day and 2 handles up per.
 
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