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DbPhoenix
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Everything posted by DbPhoenix
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RULE #11: Don't defend patience too strongly.... You can't make yourself go to sleep through sheer strength of will. It is not about the strength of commitment -- it is more of a gentler thing -- a letting go. We have to be aware and allow space for our ego's demands. Let the ransom demands be heard yet be objective in the moment, knowing we are still in the driver's seat -- we are not being kidnapped and the threats are baseless. Be compassionate and forgiving to the feeble ego -- that is how we give it space. Since the neurotic fixations are held by tensions, relax your arms and legs and be aware. As the Zen saying goes: "When you eat, eat. When you sleep, sleep." May I add: "When you wait, wait. When you trade, trade." (William)
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Hindsight horseshit is what this thread is all about, specifically, trades that one could have taken, should have taken, or would have taken if only, preferably trades that were foreseen and posted in the Foresight thread. What is not acceptable is the "here's a trade I took" nonsense. To cut to the chase, your short is right here, unless you want to end up a wider distance from your stop. IOW, your stop is above 70. Where you enter depends entirely on whatever reconciliation you've made between your confidence and your fear. Which, with the proper sellstop, gets you into the trade. If price instead rises, your entry goes unfilled. Never mind triangles, wedges, H&Ss, Pivot Points, Fib, or any of the rest of that. None of it is pertinent and it will only complicate the decision-making process. If nothing else, you won't have time for it if you're trading intraday. You have quite a few arrows, but if I'm looking at the correct one, that's not a breakout. In fact, there are no breakouts here. Or reversals, unless you're scalping. Climactic. This is nice analysis of traders' behavior and how it affects the price movement, but in terms of the trade, there are too many layers here. Put simply, (A) you have noted R (we will assume you have noted R); (B) you are in a downtrend. Therefore, when price hits R, you place your sellstop there, at whatever point you use for setting these stops (bar, candle, % below R, whatever). Then you sit back, relax, and wait. If your sellstop is hit, you place your coverstop just above 70. If it isn't, you either go get breakfast or wait for a retracement after the breakout, if any, if you've decided to trade countertrend. And that's it. Unless you want to trade continuously and scalp every turn. But that's something else entirely, and I wouldn't even think about getting into that except in a trading room environment. If you're not an expert trader, just forget about it. One other suggestion: get rid of the colors. Not only are they a distraction, they're misleading. If the candles really help you, fine. Otherwise, use bars instead. Good job. Thanks for reawakening this thread. Db
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Not to rain on your parade, but if you remember it, you should find something else for this exercise. It will be of most benefit if you have no idea what's going to happen next, whether it's the next day, week, or month. Db
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RULE #10: The long run is longer than you think.... Playing only the best hands can be frustrating.... Anger and irritability can arise. The emotions can be severely tested. This is where Zen comes in. The only way to turn the corner is to get rid of marginal trades. It is ALREADY a very fine balance. If one injects a few marginal trades into the picture, he quickly screws up the Profit/Loss equation. Making the matter worse, doing so will create chaos in both one’s equity curve and one’s head. Just get rid of marginal trades, don't stare the monitor the whole day, and learn to maximize profits WHEN appropriate. If we fail to take the responsibility for getting rid of marginal trades, we lose the privilege to trade. Provided one does have a good method, it’s meaningless to try to fix things any other way. Trade LESS, make more. (William)
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Off Topic and Moderation
DbPhoenix replied to MadMarketScientist's topic in Announcements and Support
I thought James put it well: Hi, Recent personal attacks on the forums have forced me to create this thread. Traders Laboratory has grown over the course of the past 2.5 years by maintaining one thing: respect for one another. While many boards continue to allow trash talk and attacks, I can not allow this to happen on TL. There is a reason why TL contains only: Threads: 3,935, Posts: 55,821 Most forum owners will only care about pageviews and post counts. At TL we prefer quality over quantity. For any concerns regarding a member or post, we urge you to pm anyone of the mods or myself. If there is a concern with a particular mod or myself, please feel free to pm me directly as well. I am very open to suggestions and recommendations from TL members. Afterall, it is the members that create TL. Any continued post that aims to attack another member will be deleted upon notice. If there is an issue please pm me or the mods and we will try to resolve the matter quietly without an open public debate. Please help us keep TL a quality forum. Thank you. Soultrader -
No, I was referring to the SPX and NDX, above (post 230).
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RULE #9: Don't fall into the "Now Trap." Players want to win now, today. Results must happen now, in this hand, the one right in front of us.... We assign a little more importance to where we are. We make it bigger, more important.... But we do this timewise , too -- we assign things more importance because they are happening in the present moment.... Yet giving greater importance to the present in the game of poker allows us to imagine marginal hands into good hands and good hands into great hands.
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I'm surprised that no one has mentioned the short from yesterday. If you didn't see it, then you've got more reading and studying and thinking and practicing to do. If you saw it but didn't take it because you took the long and it didn't work out and you think you're useless and stupid and you'll never get this, then you need to go sit in a corner somewhere, preferably with the Zen posts, and contemplate your universe, preferably with chocolate in some form. Db
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I believe you'll find the answers to your questions (and more!) in the Breakouts, Retracements, Reversals thread and the Volume thread. If not, I suggest you ask your unanswered questions there, in whichever thread is the most appropriate, for the benefit of others. Db
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This won't come as news to anybody but the indices appear to have found R at their last swing highs. All three of these are back inside their regression channels. Db
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RULE #8: Keep plugging away. Expect nothing.... There will be times when you play tight, keep playing tight, and keep on playing tight, and it still does no good...the bad cards just keep coming.... You may have to just keep doing it until the end, with no reward at all. When there is no expectation, there is no fear of the outcome. (William)
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Sorry, I meant to address this. It's partly volume and partly price action. If that sounds like a duh!, what I mean is that one must consider both, not one or the other in isolation. And one must avoid using volume as an indicator. Volume is just number of transactions, nothing more. If the volume on the rally is "light" but price is rising (which in a rally it would do), then one can assume there is little selling pressure. This may be because short-sellers are covering (which, by doing so, means they're buying, not selling, and probably won't short again, at least until price is higher, perhaps at a resistance level). It may also be because holders would like to sell but want to do so at higher prices, so they're giving buyers a pass. Or they may not want to sell at all, in which case price will continue to rise with little to stand in its way. Prices can in fact rise farther than the "big volume" crowd would have one believe. Sometimes the volume is practically non-existent. It all depends on what the sellers have in mind. In other words, forget about the "rallies need big volume" stuff. All that is necessary for price to rise is that sellers sit on their hands (and of course that someone is willing to pay the asking price). Db
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When trying to disentangle traders' motives for doing what they do, or what they appear to be doing, it is often helpful to look at intraday charts. Yes and no. Prices come to rest for a variety of reasons, one of which is the attempt of those who are holding a lot of whatever it is to support price. After all, they're holding it, so they don't want it to fall much further. They don't want to be forced to sell at a lower price. If they're forced to sell at all, they want the best possible price, not the worst. The action here suggests a softer landing than one might perceive from using an EOD chart (I'm using CL here as a proxy for WTIC since I don't have intraday charts for WTIC; it should be close enough). Notice here that sellers test 86 twice on the 31st, perhaps gauging demand. When the response is disappointing, price falls again the next day, and sellers again test, this time at 82.5. Price comes back and closes at 83. Not a rush of longs, but not a plunge, either. On Monday, price follows the same angle of decline. Perhaps those who had been supporting price are putting shares (or contracts, whatever) back onto the market to test demand again. Maybe new sellers are putting shares on the market because they don't want to assume the risk of further downside. Maybe new short-sellers are being brave. Whatever. This doesn't last long, and price rallies back to where it closed the previous session. Good news. And it hangs there for quite a while. Then another rally, to 84, above the previous session's congestion zone. Then still another rally to 85, all good news. On the 5th, price retreats, but it's not a rout, and it finds hypothetical (possibly coincidental) support at 83.5. Another bit of good news. Price then morphs into a hinge and ascends from there. All of which suggests to me that this is business as usual, a series of tests and retests, gauging the levels and forces of demand and supply. I don't see any panic or any other sort of drama here, though there clearly are trading ops, depending on one's own style. And remember, please, that this is only my take on the action. It's not like I'm channeling Wyckoff or anything. I post this only to show that there may be more going on backstage than one might guess if he were to use only EOD charts. Trading off intraday charts is not necessary. But they can provide "inside" information. Db
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Actually, oil was pretty decent. Better than the indices, anyway. Traditionally, one looks to the indices for "permission" to give the green light to initiating or increasing positions in stocks, if one can find stocks that are mimicking the actions in the indices. Commodities, though, are a different animal, and can move quite nicely regardless of what the indices are doing. Nonetheless, it's important to keep an open mind with regard to all these tests and bounces and rallies and so forth and in particular avoid the pundits. I believe you noted, for example, that oil found support at the midpoint of that August-November range. This occurred at the same time that the SPX and NDX found support at previous swing highs and TR midpoints. They also happened to be flirting with their respective demand lines. Is all of this coincidental? Is all of this little more than tests of trendlines and value areas? Whether so or not, it's certainly worth keeping in mind, particularly if one plans to ride this for any distance. Db
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Actually, this has quite a lot to do with support and resistance. In fact, it provides very nearly the basis of support and resistance. One of the defining characeristics of a selling climax is panic. One of the defining characteristics of a technical rally (as opposed to a "quality" rally or seecondary reaction) is short-covering. A downmove may be ending, but the ending and turn need not be drenched with drama, i.e., "climactic". And these turns, or reversals, are just as tradeable as a selling climax. In fact, they are often easier since the see-sawing is not so extreme. One may therefore be better off looking for exhaustion on the part of sellers and renewed interest/strength on the part of buyers rather than be tangled in buzzwords and catchphrases. As with the importance of price action itself and not how one chooses to display it, the important consideration here is the behavior of traders and not how one chooses to describe it. If someone is resorting to jargon rather than plain speaking, one should make sure that the terms are defined. Otherwise, the fog descends once again and the trader finds himself feeling his way through the muck, as usual. Db
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Unfortunately, these kinds of discussions (whether or not something is occurring at the moment), when they take place on message boards, are doomed from the start because they depend so much on prompt responses. What one sees in the morning may change dramatically by the afternoon, and if none of it is addressed until that night, or the next day or the day after that, it becomes next to impossible to ignore subsequent events and see whatever phenomenon it was clearly. If what appeared to be a good trade turns out to be a good trade and one took the trade, he can think Boy, am I glad I took that trade. Or, if he didn't, think Boy, I wish I had. If what appeared to be a good trade turns out to be a bad one, one can think Boy, am I glad I didn't take that. In any case, it becomes impossible for one to formulate an assessment of conditions leading up to the event that are not colored by hindsight. Thus the trader is as confused and helpless the next time as he was this time. Whether one took a trade here or not is beside the point. What is far more important is what one looks for, the criteria one applies, when making the decision to take a trade or not. If he doesn't have very clear criteria that tell him what to look for and follows them, then he's just taking his chances and hoping for the best, which is what so many perpetually beginning traders do, year after year after year. For me, high volume in and of itself is not climactic, and whatever rally may ensue is not necessarily technical. This does not mean that there is no trade off whatever reversal -- temporary or otherwise -- may present itself after a highish volume downbar. But that doesn't make it a selling climax. I needn't go into details about selling climaxes and technical rallies (and preliminary support) here because we have W's course available, particularly Section 7, and anyone who cares to do so can "hear" it from W himself. Db
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I hope you got as much out of this as you appear to have done. This must be a regular part of your trading regimen. Db
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I'll need to see it. Can you post it? Db
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Technically, yes, equilibrium being a state in which demand and supply are in balance. More or less. But that doesn't mean that price is unchanging. It means only that it's not going anywhere with intent. Like a see-saw. It need not be perfectly level in order to be in equilibrium. It can teeter totter in perpetual motion, never going anywhere, and also be in equilibrium. That's why W considers trading ranges to illustrate a state of equilibrium. Price isn't flat-lining, but it isn't going anywhere, either. As for the "cajas" (not "casas"; casas are houses ), yes, those are periods of sideways activity. However, that doesn't mean that one can't profit from them. Depends on what one wants and whether or not one understands that trading in a trading range is literally that: trading. It's not investing. Keep in mind that equilibrium can last from seconds to months. One can trade it for itty bitty gains (or itty bitty losses), or one can wait for a state of disequilibrium to arrive, which is largely what Market Profile is all about. For more, search the course for "equilibrium" using Ctrl+F. Db BTW, this equilibrium/disequilibrium thing is largely what makes springboards so useful. Price reaches a state of very temporary equilibrium for one reason or another but it's nowhere near ready to lean back and contemplate the sunset over pina coladas. It wants action. And it gets it. If one understands how illusory this temporary state of equilibrium is, he can profit handsomely. Db
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Actually, I don't think about it at all Seriously, though, if you've read this thread, what you think means more than what I think. Do you have a chart? Db
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The gurus will surface like flea beetles to weigh in on this. Most will waffle enough so that they can come back later and claim that they "called it", unless it turns out to be nothing more than a feeble bounce, in which case they can call that as well. Others will go for it and make the call, which offers a 50/50 chance of being right. And if they post it on an obscure website somewhere, they can always hope that no one will notice in case the call is wrong. But none of that matters. Whether or not the volume was "climactic" or whether or not the rally is "technical" is beside the point. What is more to the point to the trader is whether or not any of this is tradeable, i.e., that whatever entry is made will put the trade immediately or close to into profit and keep him there until he is safely away from his stop. So begin with your terms. How do you define "climax"? How do you define "technical rally"? If you don't have actionable definitions, you won't recognize these things when you see them, if they are in fact what they appear to be. Db
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RULE #7: Regard patience as a central pillar of your game and strategy.... Don't assign it a secondary or lesser role. "Although the cheetah is the fastest animal in the world and can catch any animal on the plains, it will wait until it is absolutely sure it can catch its prey. It may hide in the bush for a week waiting for just the right moment. It will wait for a baby antelope, and not just any baby antelope, but preferably one that is also sick or lame. Only then, when there is no chance it can lose its prey, does it attack. That, to me, is the epitome of professional trading." (Mark Weinstein)
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Regarding the above exercise, these may be the best learning opportunities I can think of, if for no other reason than that they are active, as opposed to sitting in some trading room or webinar listening to some guru drone on. Anyone who enjoys this sort of thing is welcome to try this one (the oil "bottom" reached last August). Looking at it first glance, the entry seems like an "Oh, well, of course, just buy the retest" example, the kind one finds on those expensive DVDs. But if one has acquired the habit of reading charts left to right instead of right to left, the entry is not quite so obvious. In fact, there are at least six places where one might justifiably enter a long trade here, and all of them would fail. Where are the entries? Why would each fail? (Technically, this belongs in Trading the Wyckoff Way, but that thread's long enough as it is). Keep it Wyckoff. Db
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This illustrates what I meant by my comment regarding "oversold" and "trend channel" above. I'm using a regression channel here, but same difference, and it really doesn't matter where you take your starting point: you're either "oversold" against the channel itself or oversold by being outside the channel. Db
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I don't know that I would characterize this as a technical rally. If short-sellers don't start covering and buyers don't step up, it is more likely nothing more than a pause. Only the most aggressive traders (gamblers?) would enter here. Db