Speculation on S&P500 futures (analysis and trading signals)

Laissez Faire said:
Well, I use certain objective levels from day to day, but the level I was discussing with you was what I would call a supply (resistance) level. Drawing levels has an element of subjectivity, but what I picked up from another skilled trader was that he would usually draw his levels using the closing price and not the wicks.

So, by early this week we had a fairly well defined supply level at 3720.

Just observe all those wicks which essentially could be interpreted as price being sold each time the market pops above that level. There's sellers there.

At the end of Wednesday - I'm sure many people got excited as it looked like we would finally have a successful breakout, but observe how that hourly candled ended up once again with a larger wick.

It's not uncommon that a breakout point is tested, but when we dropped back inside that range I interpreted that as the market reverting at least back to the mid range. And early warning of that breakout failing could be that there was no more momentum to the upside. Price just went sideways and finally started dropping.

So, when Thursday's RTH session opened bidless and pretty much fell from the opening I didn't see any reason to go long.

EDIT: And if anyone thinks this is hindsight analysis, I actually posted this in real-time just as Wednesday's RTH session closed:

"The drop at the Close makes you wary it could be a false breakout."

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Yes, there is certainly logic in your vision.
And even in spite of the element of subjectivity, it all looks quite convincing.
Unfortunately, this approach cannot be fully formalized, so that it would be possible to create a trading algorithm on its basis and check it on the quotes history.
And psychologically it would be easier to trade when all actions are strictly regulated.
How do you set objectives in trading with such an analysis?
And do you limit losses? Or it all depends on the situation and your decisions on exiting a position are intuitive?
 
Scataphagos said:
I am unable to make predictions. I only react to price on the chart.
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But you make a choice between a long position and a short position, don't you? That means you're predicting a rise or fall :)
 
LCC said:
Yes, there is certainly logic in your vision.
And even in spite of the element of subjectivity, it all looks quite convincing.
Unfortunately, this approach cannot be fully formalized, so that it would be possible to create a trading algorithm on its basis and check it on the quotes history.
And psychologically it would be easier to trade when all actions are strictly regulated.
How do you set objectives in trading with such an analysis?
And do you limit losses? Or it all depends on the situation and your decisions on exiting a position are intuitive?
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There certainly is a degree of subjectivity to it, but I do have some rules which I adhere to, although I'll admit they are not written in stone. I think this can be both a weakness and a strength.

If it was easily programmable - I think it would soon stop working.

I guess there is both intuition and luck involved. Generally, I have a target in mind, but will always make sure I'm protected, so I will typically trail a stop behind price.

LCC said:
But you make a choice between a long position and a short position, don't you? That means you're predicting a rise or fall :)
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100% agree.

I know some people insist they're just reacting/anticipating, but that reaction and resulting action is nothing else than a short-term prediction, i.e., price continuing higher from here or price reversing from here.

I know some people are very persistent in saying they're not predicting anything, though.

For me, I like to have a vision of what's going to happen and map out a scenario. If I didn't, it would be hard to sit in a retrace as I would be very uncertain if it was a retrace or an actual reversal.
 
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LCC said:
But you make a choice between a long position and a short position, don't you? That means you're predicting a rise or fall :)
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Well of course. That's not what people/traders usually mean when they say "market prediction".
 
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