Unholy Grail to Success

[saliva]

Quote from Imba:

At least slitt im really try to realize how ppl trade those "S&R levels" and/or "Price Actions" )

Im not trying to be a sarcastic badass, or rude person, but still... as for me, S-R and PA trades looks like a random trades really. You may go long, or short... dont care. Just use StopLoss.... andif you guess it right - you r fine.

Well.. that kind of trading DO have all possible right to exist, but i really would like to see any real-time posts with trades (intraday) or a video file.. how ppl trade those unvisible levels

Well, then, stick around. I just might make you into a believer!

 

[saliva]

TRAP - Introduction

Anyone who congregates in the ES Journal thread would know that I'm a big follower of market timing. Indeed, market timing is perhaps the most important aspect of trading. Granted, it is not easy. It is more art than science. However, it can be learned. It is for this purpose I have devised TRAP. TRAP is a strategy that I use to find potential reversals, from the daily highs and lows to intraday reversals on the 5-minute chart.

TRAP is part and parcel a strategy that is intended to be used with PMT. Whereas the PMT is the driving manual for your car, TRAP is the trip planner that gives detailed directions on how best to reach your destination. Hence, I suggest that you review PMT before proceeding.

TRAP involves a three-pronged approach: retro, macro, and micro. On a "retro" level, a daily chart is used to spot the high and the low for the next trading day. On a "macro" level, we're dealing with intraday trends. Lastly, on a "micro" level, we're focused on what I call individual price swings that collectively make up the trend.

Here's a macro analysis of today's price action.

 

[Spxdes]

Is TRAP and PMT limited to trading the ES or can you apply these strategies to other markets (equities, forex, etc.)?

Thanks!

 

[ammo]

it sounds like a fancy way of saying i trade off supp and res,now if i throw in a bunch of abbreviated definitions, trap,pmt ,i can call it a system,but it's really more of an art than a system and not much different than tech traders have been doing for 50 yrs,it depends on how much you trust your tl's and that is determined by the fundamental overcast of the market ,the time of day and the momentum, dividends,fed days, expirations, end of month window dressing,currencies,bonds,foreclosures,unemployment,holidays,this list could go on for awhile...

 

[saliva]

Quote from Spxdes:

Is TRAP and PMT limited to trading the ES or can you apply these strategies to other markets (equities, forex, etc.)?

Thanks!

One of my eye-popping mantras is "Have charts, we'll trade!" As long as you can graph the price of the instrument you trade, be it stock, futures or forex, I would think you could apply TRAP and PMT. But then again, I only trade ES so I can't give you a definitive answer.

But look at the two charts below. They are 5-minute charts of USD/JPY and GOOG. Notice that they only reflect today's price movement and does not show any prices from previous days. The point I want to make is that it's still possible, although not ideal, to make informed decisions by just looking at the current prices.

 

[saliva]

Quote from ammo:

it sounds like a fancy way of saying i trade off supp and res,now if i throw in a bunch of abbreviated definitions, trap,pmt ,i can call it a system,but it's really more of an art than a system

First, I'm pleased to see a fellow piker from the ES thread.

At any rate, I have no intention of shoving my system (or call it whatever you like) down anyone's throat. As I already stated at the beginning, this thread was created solely to address those who sent inquiries regarding my trading strategies. So, the bottom line is I giveth and you can taketh or not. The choice is up to you.

Quote from ammo:

...is determined by the fundamental overcast of the market ,the time of day and the momentum, dividends,fed days, expirations, end of month window dressing,currencies,bonds,foreclosures,unemployment,holidays,this list could go on for awhile...

Are you sure about this? Even if you're right, that doesn't mean the market will move either up or down all day long from open to close. Plus, if fundamentals are so damn correct as a forecasting model, why does the market at times disregard those absolutely horrifying economic numbers and close up anyway? Fundamentals, in my mind, are useless when it comes to trading.

 

[ammo]

fundamentally on a fed day ,u wait for the #, regardless of the charts, so yes, i'm sure that fundamentals always trump ta,even tho i trade solely on ta,i must respect the big dog in the yard when he's not chained

 

[saliva]

TRAP - Price Swing

Price swing is perhaps the most unconventional part of TRAP, but it is nevertheless important because it ties directly with momentum and time that are two core components of PMT. In many aspects, price swing might look similar to the minor movements described in the literature of the Dow Theory or the waves as outlined in the Elliott Wave circle. However, that's about where their resemblance ends. Here's the diagram illustrating the intricacies of the Elliott Wave.

Now, consider this chart of ES with the price swings circled. As you can see, it does bear some resemblance to the Elliott wave. But here, unlike Elliott wave principle that uses individual wavelets to gauge the trend, we're using the entire price swing to detect momentum, which will in turn help us to forecast the trend.

However, it doesn't end here. Each price swing will be condensed into a candlestick formation and interpreted using the PMT method.

 

[gotta_trade]

Enjoying your posts. Great thread.

Thanks,

gotta_trade

 

[saliva]

TRAP: Top-Down or Bottom-Up?

Here's food for thought. Any trader wearing the badge of honor stamped with the seal of approval from the TA camp would subscribe to one method or the other. Most traders that I know use the top-down approach whereby they start out with the "BIG frigging picture" and from there narrow down to the microcosm of 1-minute chart (or the tick chart).

But, wait! Hold ure pants for a moment! If you think about it, the daily bars can't be formed before the hourly bars, and the hourly before the 15-minute chart, all the way down to the tick increment. So if you know where the price is heading on the 5-minute chart, you could predict how the 15-minute chart will play out and that, in turn, will allow you to see where the hourly chart will pan out. Dig it?

These two methods are not diametrically opposite as you might think. Actually, they work quite well together.

Stay tuned, more to come!










[edit]
Important note: Allow me to be blunt. I don't like to bitch anymore than I have to but there's a good reason why this thread was written in a chronological order. If you're new to this thread, start from page 1 and don't skimp on details!