First let me say that the way I trade may not be for you.
The set-up I use is a screen full of different stocks, indexes, and indicators like trin, tick, vix, etc etc. No where on my screen will you see an intraday chart. Stocks and indexes that I monitor are hopefully key ones....like IBM, INTC, MSFT, CSCO, C, GM, MMM, etc. I monitor bonds, SOX, the bank index, biotech index, the gold index, and others.
In short, I load up my screen with symbols so that I can get a feel for different sectors and key stocks. I review those stocks, and others that I don't monitor real time, in the evening to get a feel for where I think we're at.
I also actively monitor news. It helps to keep you in tune with what's happening...but more importantly, the markets reaction to said news.
I begin each day with my notebook. On it I have things like the important highs and lows for ES, NQ, and where important daily moving averages are for the important indexes....moving averages like the 10, 20, 50, and 200 day averages. As the day progresses, and I note anything of importance, I add it to my notebook.
OK, so that's my basic setup. What I'm looking for is a clue. The clue could come from anywhere, so I view my function as a sort of detective if you will.
Now here's what I don't do: I hate to chase things. So I don't buy breakouts for instance, I don't sell a breakdown. I'm looking for situations that aren't quite so obvious...because those are the situations where maximum potential occurs.
What I try to do is anticipate and capitalize on what other short term traders may do...and understand, I know they are all using the computerized software to generate their trades. LOL.
Now let's say the low of the day gets taken out. Clearly, there were some traders that were long, who are going to get stopped out. And probably there are some other traders who seeing the weakness are going to short it. It's possible that a point of that type is a point of maximum potential. Why? The guy who was short has a stop someplace...probably not too far away...he's a possible buyer. The guy who was long and got stopped out when we broke the low is bullish, but he's out now. If we start to go back up he's going to buy again. If we broke the low the chances are that most of the weak hands have sold.
Any upward price action that comes from such a spot is going to be explosive. We had an example this afternoon. What? 6-7 points up in about 15 minutes after we took the lows out. Not long after we took the highs of the day out.
Now, you can't routinely buy new lows...I'm not suggesting that. I watch the screen, I monitor the underlying instruments that make up the index. Hopefully I'm going to recognize the real moves from the false moves. That false move is one I'm going to be all over.
I also like the buy/sell reactions against the main trend. I rarely would buy a breakout. I'm either in before the breakout...or I wait for some type of reaction. The market's there everyday. I don't have to be part of the crowd...which is the surest way to lose money over time.
Stops? I don't like to enter them because they influence my thought. I get out of my trade when it isn't working, whether that is a few points, or 50 cents. But keep in mind that typically I'm buying at points where the market is extended to begin with, so chances are I can keep my loss to a minimum. My losses are normally going to be a few points.
I know that this is probably not giving you what you want. We all want certainty. And what I'm telling you is that the computerized methods that you currently use may give you the illusion of certainty....but are no substitute for rational thought, for an understanding of the market place.
I'll try to post more, but let me end with this story: I knew a guy on the floor who kept a point and figure chart by hand in the pit. He'd make his columns of X's and O's, and when the column of X's went past the last column of X's that was a buy signal, a sell was the same only with the O's. One day he explained how this chart worked to the biggest trader in the pit. The trader said: You mean you want to buy if it goes up here? The chartist said: Yes. So with a big flurry the big trader started buying...and drove it up to the spot where the chartist wanted to buy. When he stepped forward to buy, the big trader sold to him! Now he asked the chartist: You want to sell down here, right? And started selling until he drove it back down to the spot where the chartist sold, and the big trader bought from him. True story.
If you buy strength and sell weakness....you are at a maximum disadvantage. The big moves you'll make money on. But then again, anyone can make money on the big ones. It's all the other routine moves...which is most of them....you're at a severe disadvantage. Something to think about.
Hope this helps some.
OldTrader
The set-up I use is a screen full of different stocks, indexes, and indicators like trin, tick, vix, etc etc. No where on my screen will you see an intraday chart. Stocks and indexes that I monitor are hopefully key ones....like IBM, INTC, MSFT, CSCO, C, GM, MMM, etc. I monitor bonds, SOX, the bank index, biotech index, the gold index, and others.
In short, I load up my screen with symbols so that I can get a feel for different sectors and key stocks. I review those stocks, and others that I don't monitor real time, in the evening to get a feel for where I think we're at.
I also actively monitor news. It helps to keep you in tune with what's happening...but more importantly, the markets reaction to said news.
I begin each day with my notebook. On it I have things like the important highs and lows for ES, NQ, and where important daily moving averages are for the important indexes....moving averages like the 10, 20, 50, and 200 day averages. As the day progresses, and I note anything of importance, I add it to my notebook.
OK, so that's my basic setup. What I'm looking for is a clue. The clue could come from anywhere, so I view my function as a sort of detective if you will.
Now here's what I don't do: I hate to chase things. So I don't buy breakouts for instance, I don't sell a breakdown. I'm looking for situations that aren't quite so obvious...because those are the situations where maximum potential occurs.
What I try to do is anticipate and capitalize on what other short term traders may do...and understand, I know they are all using the computerized software to generate their trades. LOL.
Now let's say the low of the day gets taken out. Clearly, there were some traders that were long, who are going to get stopped out. And probably there are some other traders who seeing the weakness are going to short it. It's possible that a point of that type is a point of maximum potential. Why? The guy who was short has a stop someplace...probably not too far away...he's a possible buyer. The guy who was long and got stopped out when we broke the low is bullish, but he's out now. If we start to go back up he's going to buy again. If we broke the low the chances are that most of the weak hands have sold.
Any upward price action that comes from such a spot is going to be explosive. We had an example this afternoon. What? 6-7 points up in about 15 minutes after we took the lows out. Not long after we took the highs of the day out.
Now, you can't routinely buy new lows...I'm not suggesting that. I watch the screen, I monitor the underlying instruments that make up the index. Hopefully I'm going to recognize the real moves from the false moves. That false move is one I'm going to be all over.
I also like the buy/sell reactions against the main trend. I rarely would buy a breakout. I'm either in before the breakout...or I wait for some type of reaction. The market's there everyday. I don't have to be part of the crowd...which is the surest way to lose money over time.
Stops? I don't like to enter them because they influence my thought. I get out of my trade when it isn't working, whether that is a few points, or 50 cents. But keep in mind that typically I'm buying at points where the market is extended to begin with, so chances are I can keep my loss to a minimum. My losses are normally going to be a few points.
I know that this is probably not giving you what you want. We all want certainty. And what I'm telling you is that the computerized methods that you currently use may give you the illusion of certainty....but are no substitute for rational thought, for an understanding of the market place.
I'll try to post more, but let me end with this story: I knew a guy on the floor who kept a point and figure chart by hand in the pit. He'd make his columns of X's and O's, and when the column of X's went past the last column of X's that was a buy signal, a sell was the same only with the O's. One day he explained how this chart worked to the biggest trader in the pit. The trader said: You mean you want to buy if it goes up here? The chartist said: Yes. So with a big flurry the big trader started buying...and drove it up to the spot where the chartist wanted to buy. When he stepped forward to buy, the big trader sold to him! Now he asked the chartist: You want to sell down here, right? And started selling until he drove it back down to the spot where the chartist sold, and the big trader bought from him. True story.
If you buy strength and sell weakness....you are at a maximum disadvantage. The big moves you'll make money on. But then again, anyone can make money on the big ones. It's all the other routine moves...which is most of them....you're at a severe disadvantage. Something to think about.
Hope this helps some.
OldTrader
Doesn't make too much sense to me at this point, so i am not getting much from this, maybe further posts will clear this up.