sdoma

The CBOT released a market profile handbook which is free and has all the technical information. The market profile is a chart, auction market theory is what it's supposed to display. http://www.cbot.com/cbot/pub/page/0,3181,1168,00.html

Check out this Spoo chart. This is un-freaking-believable, we've almost done in 1 year what it took 3 to do the last time, and that time we had 9/11! I look at this chart and I know I'm a trader because it actually induces an emotional response now.

I agree with you for the most part. It's easy to look at a past chart and see the monster moves, but in the end you have to make sure you're booking P. Plus, 3 points isn't exactly a small trade considering normal ES conditions which is what, a 10 point range in the average day or so? Hell, there are plenty of times if I open up the day with a 3 pt trade on full size I will evaluate the action and consider going home. I say the most part because there are some conditions that can lead to bigger moves such as NR4 and NR7 days, breakouts of major congestion areas, and failures from major reference points. But those don't normally happen every day, far from it. But catching one of those a month can make a huge difference in your P/L over time.

Er, sorry. I was trying to be funny about it and I guess I failed.

What I mean is, what is it about that yellow line that makes it repel price?

Why does that yellow line act as support?

Questions: By "buy it at the yellow of the fan" do you mean you buy when price dips to the yellow line from above, or do you buy when it breaks the yellow of the fan from below?

You have a fear of pulling the trigger because you don't really have a battle tested certainty that you have an edge. As you say, your entries are partly intuitive, and this has injected enough fuzziness into the situation to make you lose that sense of certainty. Some people have sufficient (some might say irrational) faith in themselves to simply "go with their gut," but you sound like you need more proof. This is how I got through a similar problem (I had no problem entering, but would fudge my stops and lose too much money). I created strict setups with hard stops and backtested them 2 years back, chart by chart, bar by bar, and compiled all of the stats in spreadsheets. After that, I knew with a reasonable degree of certainty that I had statistical edge. After that, following the plan was much easier. Coincidentally, Steenbarger said that you have to know you have an edge before any psychological work is relevant. You need to know your edge, and then trust your edge.

Oh, you're a passive aggressive one, aren't you? I didn't check the date before I responded, shoot me.

I know, I was just elaborating for anyone who didn't know.

Stoxx are on Eurex, where everybody gets "member" pricing. ES is CME, which means that you pay much higher for retail trades and if you want the cheap rates you have to lease or buy a seat.

Neither is technically more important than the other, but people tend to have more trouble with their exits than they do with entries. When I was a new trader I found it easy to pull the trigger to get in, but once I was in I was fearful of profits evaporating and got out early. Over time this really impacts your results. Practice helped me to overcome that, but practice can be expensive.

Sorry, it was just pent-up aggression from years reading these messageboards and seeing those kinds of posts. It always struck me as incredibly lazy and also selfish to expect people to conduct trades real time to prove to some random guy on the internet that their method works. Unless they're selling it, of course. After I posted I realized it was old but at that point I figured what the hell.

How about you take the ideas and try to apply them yourself? Seriously, the way you're acting you should be forced to wear a diaper and drink formula. Not trying to be mean, just trying to shed light on your passivity in a humorous way. Be proactive, man! This is a learning experience and one of self-discovery. If you want to see if it works, try it! You will only learn by doing. Nobody will ever be able to prove anything to you, you must prove or disprove it for yourself.

Wyckoff has jargon, come on. There are alternate definitions of jargon, I am using the term to mean technical terminology used within a group. For example, a Wyckoff spring, or the Composite Man. I often call the market a hive mind or collective intelligence, it's all the same thing, but you need a term for it.

I think that perceptions of value are so unstable that value is difficult to trade right now. Where is it, really?

I know this isn't addressed to me, but my name IS Steve, so... Anyway, one thing that hurt me when the volatility really opened up was that I like to buy dips in an uptrend and sell rallies in a downtrend. Normally a very profitable strategy, but when the markets get crazy like this the moves are too vicious to trade like that. You should always be getting in with the direction of the market at the moment you put on the trade, and use your stops. As soon as the trade moves for you, put the stop to breakeven plus one tick, then if it runs further start to slide along behind it and lock in profits. Your attention if you are scalping this kind of market is always on your stop, because this controls your maximum loss (and minimum profit). Too many people make the mistake of getting greedy or scared in this kind of environment, and good trade management will really help you with that.

Here are a few steps you should take, in handy list format, before you trade live: 1. Educate yourself: Think about it this way, would you take Muay Thai classes for two weeks and compete in the Ultimate Fighting Championship? No, of course not, you'd get murdered. You need a complete, well rounded skill set to compete with trained professionals who've spent years honing their skills. I recommend you read books that will help you to think about markets, understand how they move and operate, rather than just a system or a book about one small feature of the market. The last thing you should do is take a simple system or methodology and just start trading. You must UNDERSTAND what you are doing and why. You need a good cognitive framework to understand the market. I, personally, recommend you read Mind Over Markets and Markets In Profile, and then come here and discuss them with us. Also, go to http://www.traderfeed.com. Brett Steenbarger has a free e-book on teaching yourself to trade that is awesome. 2. SIM, SIM, and then SIIIIIIM: Before you go live, you need to know you have a set methodology that works and that you can execute it in real time. Be strict with your risk/reward parameters and stops. Make it as realistic as you can. KEEP RECORDS. I can give you spreadsheets if you don't know where to start. Keep track of your performance. 3. Start with twice as much money as you think you need and half the size: Seriously, this stuff ain't as easy as it seems. SoulTrader and the crew just make it look that way because they'z pimps and stuff. Chances are you'll have your bumps and tuition payments along the way and you don't want to be taken out of the game before you get rolling. 4. Don't discount costs. Understand your costs going in. That means your computers, monitors, data costs, charting, exchange fees, commissions, rent, drinking money if you're into that kinda thing, whatever. You never ever want to feel like you HAVE to make money today or you can't pay your rent/child support payments/Mongo the Loan Shark.

How horribly ironic.

I think that you need a disciplined and proven exit methodology so you can assess a trade's risk/reward ratio before you take it. I base mine on the nearest attracting structural features. So, for example, if we've exited value and we're heading towards the high or low of the day and I'm in the market, I am looking to take off my trade at that point at the very least. This allows me to assess R/R and not get myself into what my risk manager calls 2 star trades.

I've actually been thinking about something along these lines, and I think it is possible to free "VSA" from time based analysis to an extent. This sounds weird but bear with me. One thing I like to watch for that you could attribute to VSA or Wyckoff or even MP to an extent is the idea of volume increase and range compression. Now, is this really dependent on chart time frame, or is it something you can watch for as long as your chart is granular enough? for example, I can see this in a one minute chart even if the candle or bar that shows it succinctly is the five or ten minute. I keep an internal tally of sorts on the volume at all time and I am relating it to the amount of movement. If you see the volume on one minute bars increasing and the market has started congesting, it's a tell that people are fading and/or taking profits and this move might have run out of steam for the time being. Just thinking out loud, but the point is that time frame can be irrelevant if you look at it the right way.

That's fine, but hindsight analysis is used to demonstrate and teach pretty much every trading method you'll encounter. After you use hindsight to learn the method, you then move to real time application. Just saying "all the examples are hindsight!" doesn't mean that it doesn't work. I know nothing about the VSA club or any of that stuff. If he wants to sell his method he has that right. I, personally, would never buy tradeguider either, I use CQG. But claiming that TG or Mansby's service is a ripoff is totally different than saying "VSA doesn't work, all I see is hindsight!" Actually, generally if you make a statement to someone else, the burden of proof falls on you and not them. Think about it, if you're accused of a crime, do most governments just haul you up before a court and say "prove you didn't do it?" No, because the burden of proof falls on the accuser. It's just logical and fair. Seriously, if you don't believe something then don't believe it, but how intellectually lazy can you be to require proof that your position is wrong while not offering up any real analysis backing up your claim? Anyway, if you don't believe in the concepts, then say WHY you think they don't work, i.e. why the phenomena they describe have no significance. You don't even have to PROVE it per se, just give me something to go on so we can have a real discussion about trading.

What market is that in your screen shot?

How do you define high and low volume areas? If all this were true, why do you see such a buy the dips mentality, especially in swing and longer term trading? Maybe it's just not a part of your psychology, but many traders are generally afraid of paying too much or selling for too little when they initiate a position in the direction of the current market move, whatever their time frame.

I guarantee if you are still oriented on trading as prediction, it will hold you back as a trader. Nobody has a crystal ball - nobody. And, in this volatile and chaotic trading environment, anybody who tells you they can predict a move is a huckster, including VSA practitioners. I've met quite a few "big traders." By big traders I mean multi-million dollars a year in income. Any of them will tell you that the best intraday and swing traders are only right 50-60% of the time in real time over time. You might have days when you kill it and you can't lose, and others where you can't buy a trade, but over time your edge tends to be 5% or so. The key is identifying high reward/risk ratio situations and combining that with your edge. This has NOTHING to do with prediction. All you can do is do your research and identify entries with statistical edge over time. If you try to predict, it ties your pride in being right to the trade and will end up causing you all manner of psychological problems. I am not a VSA trader per se but I do find some of the concepts to be useful because they are commonsense. I don't believe in "smart money" but I do think the market tips its hand to you at times. I mostly use VSA concepts as supporting evidence when I observe prices at a reference point. For example, if the market tests the high of the day, exceeds it slightly, and falls back on heavy volume with a short range for that 5M bar (or whatever), that tells me that there were eager sellers at this reference point that overpowered buyers, and no new buyers came in. If the price declines further I consider this bearish and look to sell because I know that often these moves will offer a lot of profit since the market often reverts to the mean after such a failure. I know where I am wrong (price makes a new high) and what I can reasonably expect if I'm right. Thus, I have the ability to evaluate my risk/reward ratio and act accordingly. I think that your path must have form, but be formless if you are to succeed. Everything is context.