Trading the Pivots

The Week in Review

The Pivot Trend turned Bullish and gave us a blast off of a week, during which the market rose, consolidated its gains, and after digesting them, rose again.

In revewing the weeks action there a couple of items that I want to bring to your attention as obvious mistakes that I made, in the hopes that you will learn from my experience (it kinda goes without saying that I'm supposed to be doing the same).

Trading
Monday - Market moved so fast I got left behind and tried to catch the downward move, it did happen, it just didn't happen that day.

Tuesday - Market retraced and then resumed its upwards movement, I stepped up to the pitch too early, but I definitely wasn't missing the second time around.

Wednesday - Market never actually touched a Pivot, Support or Restiance, so I should not have traded.

Thursday - Could have made something in the afternoon session, but some days are good days to take off.

Friday - Well, something good for a change. Resisted the urge to short at R1, after I saw it hold, went long and got the double bagger!

Information

6E, here I come!!! :D
***
I am enjoying this experience immensely, (yep, even the flaming, the better traders just come out and share more information when that happens).

While it's certainly taking a lot of effort, I'm getting back 10 times what I'm putting into it. The idea is to have that improvement reflected in numbers, that will be the proof of the putting (er, pudding, as in the proof of the pudding is in the eating).

But here's the thing ... it's very important that you the reader not just read the thread, but plug the numbers in for what ever market(s) you follow, study how price action responds to the key Pivots, Support and Resistance numbers, and practice, practice practice. Don't just rely on my setups, but use your own if you are familiar with them for generating market signals.

Read through this and other threads and study, study, study, apply yourself, be creative, and you will find that Elite Traders has more than enough information to make you solidly consistent professional trader.

Lots of clues here folks, lots of clues.

Best Regards,

Jimmy Jam
 

Attachments

Quote from BlowFish:

Anyway the whole profit risk think is a complex matter but in a nutshell with a winning approach I believe I can compound more, quicker, intraday than swinging. (Though I guess some people will do better with all there capital at work in a diverse portfolio).
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I couldn't agree more. I think IF, and it is a big if, you are a consistently successful intraday trader you will grow capital much faster than swing trading.

A couple of points. You get to start afresh everyday no matter what happened the prior day. I love always been flat MOST of the time. Carrying futures positions overnight can entail substantial risk. Anything could happen overnight. There might be a terrorist attack, for example, and the ES could gap down 20 odd points against your position. If you are trading overnight in markets that are 24 hours you might have to be on call during any time. My friend used to be an institutional FX trader in NYC. She would often get woken up in the middle of the night if one of her call levels in her trades got hit. Not my cup of tea. I like my sleep...:)

As you are trading more you also have the potential to make more profits albeit in several small bites. If the range is going nowhere you can still make money, even if it is only on 1/2 days out of 5. This week was a tough week for me. I only had one winning day and yet I ended the week net profitable.

Also, with intraday trading you can trade with a small account size and still manage your risk effectively. Trading longer term your account size has to be much larger to start with to manage your risk effectively.

I think over the long term I would like to do both. Primarily concentrate on day trading, but to have some longer term positions as well (primarily in multiple/different markets to the day trading). I think a combination of approaches probably has a much smoother equity curve over time. But, if I had to choose one approach it would be to daytrade.
 
Quote from JimmyJam:

6E, here I come!!! :D
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Hey JJ,
We are all students in this thread. Hopefully you find your "instrument of choice" be it 6E, ES or whatever. You seem to be doing ok with indexes though - will you shift over completely or partially or in a small way for diversification?

Myself I have rediscovered the magic in the Euro these past few days = got to love the worlds most liquid market.....throwing myself back in it 101%

Best,
EURSPeCIALISt
 
Quote from LondonUSTrader:

I couldn't agree more. I think IF, and it is a big if, you are a consistently successful intraday trader you will grow capital much faster than swing trading.
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I hold a similar opinion to you L.U.S.Trader, and am a daytrader, HOWEVER, at the end of the day, if you are good, there is not much in it between swing/micro-swing and day trading.

For example, just for arguments sake, suppose a trader decides to take signals of the 4 hour chart (when it is "in the zone") trading euro and will hold out for 100 pips, no matter what. They may need to hold a day or two to get it, but if they have done there homework, waited for the correct settup, they will eventually get their reward with less hassle than going in and out for 20-30 pips here and there. In theory day trading looks like it is the fast way but in practise it is difficult in the heat of the moment to catch alot of those theoretical daytrades - unless your superman. Micro-swing (ie not holding on for weeks but a day or two), has excellent risk/reward, you can do 2 or 3 trades a week and it has less stress - because once you are in you simply hold on. The mindf*** with this style is that many days in the week there are no settups and you sit on your hands doing nothing all day long. The other mindf*** is when your ahead 90 pips and it comes back to break-even - we all know how that feels.

String together 3 x 100 pip trade winners on Euro (or is it 'Oiro' as the germans would say) and you double your account (if you compound), a small loss here and there is relatively insignificant - try doing the same with day trading and there is much more stress involved. Perhaps the best thing is to combine the two. IE Day trade of 15 min. and 60 min charts for example, and go for the micro swings on the 4 hour and if you get a trade that works of the daily chart then hold on for an even bigger score. Offcourse, talking about it is one thing - doing it ........

"I go slow, to get there quickly" <---------- ancient greek proverb
 
Quote from NZDSPeCIALISt:

At the end of the day, if you are good, there is not much in it between swing/micro-swing and day trading.

For example, just for arguments sake, suppose a trader decides to take signals of the 4 hour chart (when it is "in the zone") trading euro and will hold out for 100 pips, no matter what. They may need to hold a day or two to get it, but if they have done there homework, waited for the correct settup, they will eventually get their reward with less hassle than going in and out for 20-30 pips here and there. In theory day trading looks like it is the fast way but in practise it is difficult in the heat of the moment to catch alot of those theoretical daytrades - unless your superman. Micro-swing (ie not holding on for weeks but a day or two), has excellent risk/reward, you can do 2 or 3 trades a week and it has less stress - because once you are in you simply hold on. The real mindf*** with this style is that half the days in the week their are no settups and you sit on your hands doing nothing all day long. The other mindf*** is when your ahead 90 pips and it comes back to break-even - we all know how that feels.

String together 3 x 100 pip trade winners and you double your account (if you compound), a small loss here and there is relatively insignificant - try doing the same with day trading and there is much more stress involved. Perhaps the best thing is to combine the two. IE Day trade of 15 min. and 60 min charts for example, and go for the micro swings on the 4 hour and if you get a trade that works of the daily chart then hold on for an even bigger score. Offcourse, talking about it is one thing - doing it ........

"I go slow, to get there quickly" <---------- ancient greek proverb
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I agree with everything you say. Trading both approaches probably works best. However, you should have a lot of capital and different accounts to do that properly. Also, daytrading is much harder and the learning curve is longer. As you rightly point out it is far more intense and stressful than longer term trading. Most of the time on a daytrade you literally have a couple of minutes to make a decision when the market is moving. Then you have to not outhink yourself out of the trade once you are in it. That's also part of the attraction, the extra challenge. :) Like all trading, it probably comes down to your own personal preferences.
 
Quote from LondonUSTrader:

However, you should have a lot of capital and different accounts to do that properly.
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LondonUSTrader,
The way I do it (did it) is to go in with my scalpers/daytraders mindset just like I would with any trade - 13-15 pip stop on euro, but instead of getting out at the nearest pivot point, I hold of for 100 pips. The 4 hour chart for example tells me that I should hold out for more - because it is in the zone. I am still daytrading but I am using the higher tf's to tell me to wait for more because this move is relatively important and not just "intraday-noise".

You can make a good living with only 1 x 6e contract doing this once a week.

Quote from LondonUSTrader:
Like all trading, it probably comes down to your own personal preferences.
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Exactly.

I would say that daytraders burn out alot faster as well, micro-swingers could last alot longer.
 
Quote from NZDSPeCIALISt:

Hey JJ,
We are all students in this thread. Hopefully you find your "instrument of choice" be it 6E, ES or whatever. You seem to be doing ok with indexes though - will you shift over completely or partially or in a small way for diversification?

Myself I have rediscovered the magic in the Euro these past few days = got to love the worlds most liquid market.....throwing myself back in it 101%

Best,
EURSPeCIALISt
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Hey EURSpecialist :p,

When I pulled up the chart on the 6E and looked at through my proprietary model, the purity of the intra-day trends was simply amazing!

Then I backtested using a longer term model and I wasn't able to "game" it as well as I can the financials, they operate much more consistently on the classic Baseing (where the professional player accumulates shares) Accumulation (where the retail player accumulates shares) Consolidation (where the professional player distributes shares) Distribution (where the retail player distributes shares) Model, so they are much easier for me to "game" moving to a different level of operating.

So ultimately, I would look to intra-day trade the currency pair, and look to hold for 1 to 5 days the financials.

Best Regards,

Jimmy Jam

edit: as far as the thread is concerned, I'll stay focused on the ES, but I actually perfer trading the NQ, and after a couple of weeks (and maybe reading a book or two), I'll delve into the 6E.
 
Here are examples of the different traders types, as determined by their timeframes and holding periods.

1. Scalper - usually operates on a less than 5 minute time-frame, moves in and out of the market, looks for moves of $100 or less per contract/per transaction. (I personally don't care for this type of trading, but these guys are good at it).
Oh No, NOT Another S&P EMini journal...
http://www.elitetrader.com/vb/showthread.php?s=&threadid=71637
S/R Emini Journal
http://www.elitetrader.com/vb/showthread.php?s=&threadid=69230

2. Intra-day Trader - usually operates on anywhere from a 5 minute to a 15 minute time frame, tries for the larger moves which the indices cang generate every 2 or 3 days a week. (These guys have some skills, and they paid a price to get them)
Market Code Crack'd?
http://www.elitetrader.com/vb/showthread.php?s=&threadid=69740
MyMiniTrading
http://www.elitetrader.com/vb/showthread.php?s=&threadid=67537

as a sub-category of Intra-Day Traders I'm going to list the guys who use Pro Services. Now, that's not what I'm here for, and the fact of the matter is if you get your skills together, you will never need them ... also, if they ever go out of business/change their business model, you're out of luck. But you can still learn something from these guys, so have at it.
Intraday Dow, Sp500, Nasdaq and Nasdaq100
http://www.elitetrader.com/vb/showthread.php?s=&threadid=70418
The Chronicles of Rennick
http://www.elitetrader.com/vb/showthread.php?s=&threadid=65265

3. Swing-Trader - usually operates on anywhere from a 30 to 120 minute (or greater) time frame, looks to hold a position from 1 to 5 days. (in my opinion, B1S2 is one of the best at what he does on this site, I've seen him game multiple different markets in realtime, that kind of skill demands respect and tells me that he's looking at the same things consistently in the market place, over and over again).

Surf is also great at it. He had two different models, one for low vol and one for high vol markets, they are both pretty good, the high vol model called something like 10 out of 10 of the last market runs in a row ...

It was reading these guys that lead me to make the statement that the longer time-frame trader, once he masters his/her methodology, has the intra-day trader beat, hands down (and you gave a great example of NazSpecialst with your example where you had the same stop, but got 3 to 4 times the number of points out of the move ...).
ES Journal
http://www.elitetrader.com/vb/showthread.php?threadid=64965
FX Futures Journal
http://www.elitetrader.com/vb/showthread.php?threadid=64098
Grains Journal
http://www.elitetrader.com/vb/showthread.php?s=&threadid=63651
The Surf Report
http://www.elitetrader.com/vb/showthread.php?s=&threadid=5285

4. Institutitional Trader - moves huge volumes of money, makes strategic moves of accumulation/distribution based on long-term financial model. Read the classic Reminiscences of a Storck Operator by Edwin Lefevre to find out how these guys operate.

No examples here that I have found
 
Quote from JimmyJam:It was reading these guys that lead me to make the statement that the longer time-frame trader, once he masters his/her methodology, has the intra-day trader beat, hands down (and you gave a great example of NazSpecialst with your example where you had the same stop, but got 3 to 4 times the number of points out of the move ...).
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I had this realisation at the start of this year, to take trades from the high timeframes and when it was in the zone to move in with the scalping tools that I had with tight stops, and then to give the trade some time to develop.

Easier said than done. Our minds are somehow programmed to want action. Believe me it is tempting to take profits on the table and walk.

As an example, I remember exactly a month ago I got in long on a Euro trade just before that ECB interest rate hike, I swore to myself I would hold of for 100 pips. I got out at +55...the market came back to within like 15 pips of my breakeven and I thought I was smart. Guess what, the next day it shot back up again (NFP) and I would have hit my predecided target. I missed that move by the way. I could have turned of my computer on that ECB thursday (after putting stop to breakeven) gone for a holiday for 3 days and I would have been AHEAD come Monday morning.

Point is that to swing it is easy but hard in other ways. It looks easy and it is but that ingrained daytrading habit always wants to assert itself.
 
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