Quote from Bearbelly:
Spyder
re: your earlier posts. Are you trading each and every traverse and retrace in the channels of ES or just trying to ride the main channel?
Your question describes (what Jack calls) SCT (Sustained Continuous Trading) on the ES . I do not yet have the skills to perform in such a fashion on a consistent basis. However, I do
not recommend starting with SCT when one begins to learn - or even after one has reached the Intermediate Levels of Futures Trading. Instead, follow the examples shown by easyrider (and others - including myself) where one trades one specific aspect of SCT until one has learned both proficiency and consistency. In other words, reach a plateau level where you can regularly show profits before venturing forward.
Without knowing a great deal about how you utilize the tools mentioned in your post, my only advice would be: Stop Using the tools, immediately. Each of the tools mentioned has a specific function - providing specific input at a
specific time. Absolutely
none of the tools mentioned has a universal use. In other words, one should
not use all the tools, all of the time.
Jack refers to the input of the specific parameters of each tool (occurring at a specific time) as Coarse, Medium and Fine Sweeping. Knowing when to sweep, and in what fashion, is similar to knowing when to use the gas pedal, and when to you the brake pedal on your car. Sometimes its an easy decision (a red traffic light for example calls for the brake pedal). While on other occasions (passing a truck in the middle of a snowstorm) the clarity of the situation appears more muddled.
A four foot long (when printed) sweeps document outlines where to go (which tools to check) and what to do when sweeping (If someone has this document in digital format, please post it). Some people have found value in reading the document. Others (such as myself) have chosen to go the route of adding one tool at a time - once obtaining proficiency and experience. This route works quite effectively because using one tool at a time (before adding additional tools), allows the trader to train his / her mind in an effort to 'see' things clearly.
Think about it logically for a moment. When Jack first started trading Commodities Futures, he didn't have a DOM, Stretch / Squeeze, Time and Sales, a bouncing ball or any of the other tools available from the high powered computers of today. Jack had a chart (hand drawn) and a phone. Doesn't it make sense to start looking at the markets the same way Jack did? Then, after a time, when you see the need for a specific tool to aid your decision making, you'll not only know the right tool to choose, you'll also know the correct context in which to apply it.
So, I recommend you throw away all the tools for now. Forget about all of them for awhile. Focus on drawing channels and watching the interaction of Price and Volume.
Occasionally, glance down at the indicators to confirm holding or waiting (I assume you have your ES chart set up in the same fashion as Jack recommends with Volume levels and Indicator Settings as recommended). Learn to spot the FTT. Even if you don't 'see' the FTT's right away, keep at it until you do. By the time you spot the FTT's and trade them profitably, you'll have realized you need to have another tool to help you with decison-making.
Where to start - now that I have taken away all the tools?
The answer is: Price and Volume. Learn to do two things with volume. One, learn to use PRV (Pro-Rata Volume) to correctly anticipate where volume finishes at the end of the bar. Beginners should see 500 contracts in 15 seconds, 1000 contracts in 30 seconds or 2000 contracts in the first minute, before entering into a trade. (Yes, Yes, I know. Volume often 'dumps' into the market later (3rd, 4th or final minute) in the bar, but a beginner doesn't worry about these things for now). These higher levels for PRV
normally translate into the volatility required for beginning ES traders to profit (See
Mak's Post regarding contract volume and price volatility). Two, Compare the anticipated Volume in the current bar to the known volume in the previous bar. Do you anticipate improved volume? Is the volume headed in the same direction (red vs black)? Beginners should want to see improving volume (Jokari Window) moving in the same direction (red to red or black to black) in an effort to catch those nice 'Rocket Trades' made famous by easyrider's posts.
Now in the beginning, you will quickly realize how frequently a beginning trader spends
way to much time on the input gathering and decision making process. Remember, following the paradigm of information gathering, decision making and executing timely action provides for improved results. As one gains experience, notice how much faster your brain moves through each of the three steps, and focus your efforts on improving the bottlenecks.
With Price, I recommend 'sweeping for formations.' Watch for the Lateral Channel formations, as well as, the Pennants (flat top or flat bottom) and note when price does (and does
not) break from these formations. As noted before, look for the FTT's and anticipate accordingly.
Take your time at this step, no need to even punch buy and sell buttons on a simulator. You want to train your mind at this stage to begin to 'see' the market correctly. Practice the 'wash trades' (as Jack suggests) to learn when the market is asking you, "Are you sure?" with respect to your position.
Lastly, I'll go ahead and give you one tool to watch (if you
promise to use it only after you have completed the process above
).
Only use the DOM (in conjunction with Time and Sales) at areas of Support and Resistance (Previous Day Highs / Lows, Pivot points, All - Time Highs / Lows, Intraday Highs / Lows). Note the differences in the DOM (I use a ladder DOM) and the changes in the DOM at these levels. As I have stated many times in the past, the differences are striking once you know what it is you need to look for (Look for a 'Wall' of contracts, and note the changes to that wall, and as a result, how those changes effect price). Monitor the time and sales for size at this point (I filter for 50 contracts and above). Did size move in? What happened to the bid / ask on the DOM? No size? what happened on DOM again?
I realize a strong urge exists in everyone to obtain as many profits as possible in the most rapid amount of time. Everyone wants to trade at expert levels right away, and without any delay. However, with trading, the Journey really is as important (some claim more important) than the destination. Take the time now to train your mind, and you too will see what so many others now understand.
Once again, I apologize for the long post, but I hope you find the above information useful.
- Spydertrader
