DbPhoenix

Well, well, look who shows up after a year and a half I don't want to give the impression that I took this trade. I posted it only as an excellent example of a Wyckoff entry, and since at least one person has been following the ES, I'm surprised he didn't pick up on it. In any case, if using a 1m chart, you'll notice that price slid sideways briefly after testing support (about half an hour). This constituted a springboard and would have enabled a damned tight stop. Whether one uses bars or a line or whatever the software people dream up, it's easy to see what's happening with trader behavior if one is watching it in real time, which is what one ought to be doing if he's trading intraday. Hope you've been making piles of money. Db

My blog was transformed into a series of articles last week. Unfortunately, quite a few charts appear to have been lost, and since my blog no longer exists, what you see is what you get, and since I can't edit these articles (as they're no longer in my blog), I can't fix them. Fortunately, I saved all of this in pdf form due to a fundamental mistrust of the ether. The section on the TICKQ starts on page 20. Knock yourself out 24Trading Nakedr.pdf

Without context, it's impossible to say. You don't way why you went short, or how, or at what price, or where your stop was. When planning a trade, start with the macro and work your way down to the micro. By doing so, whatever questions you may have about the possibility of springboards and the direction of your trade after entry may be answered as a matter of course. Db

No, I don't. But there's a lot of good information in the P&F thread if you do. Db

I'm surprised that no one following SPY or ES hasn't posted this entry opportunity: The green square is the buy stop. Db

You say you are in this trade right now. When and where did you enter? Db

I was just about to say. Even though I've corrected this misunderstanding before, it still crops up, largely because of the way these posts are displayed by the TL software. Thanks for clarifying again. As to the earlier question from Strongtrader, click the Trading Log in my signature. At the end of it are links to a couple of articles by Steenbarger that you may find useful. Db

I suggest also that you look through the Hinge thread (where you'll find plenty of charts posted by people who actually trade) and the original course (be aware that W used a number of synonyms for “hinge” such as apex, wedge, pivot, dead center, etc.). You can also do a search of this forum using “hinge” if you're interested in relevant posts outside the Hinge thread. Db

Judging by the behavior of other traders (through their trades), it may look as though they're trading S/R, and they may well be, but that doesn't mean that you should be playing the exact same setups in the exact same way. The traders who are moving price are smart, more experienced, better financed, and better equipped. Trying to compete with them on an equal footing is likely not the road to success. But by studying price movement, you are studying their behavior, since that is what moves price. You may also be able to find a way to hitchhike on the movements that result from that behavior without exposing yourself to unreasonable risk. That's where the study and practice come in. Where and how do you get on and where and how do you get off? Those elements will be unique to you because you yourself are unique, including your risk tolerance, your patience, your perceptiveness, your intuitiveness, your confidence (or lack thereof), your objectives, and so on. Db

Well, no. Were that it were so simple. Yes, finding the support that is represented by the bottom of the trading range is important, as is finding the resistance that is represented by the top of the trading range. Finding that zone where the bulk of the trades have been/are taking place is also important. In this case, those numbers are 1.3060, 1.3220, and 1.3140 (all +/-). But price also finds support at every swing low and resistance at every swing high within each range. And the number of trades that are occurring during any particular timeframe (month, week, day, hour, etc) will change as you expand or contract that timeframe. The interval you choose (hour, minute, tick) will also influence how those trade numbers are displayed. So, unless you are going to focus on a timeframe of one month with a bar (or whatever) interval of 30m, then no. But even if you are going to do that, we advance only to maybe. What do you want out of the trade? Points? Ticks? How long do you plan on holding this position? Seconds? Minutes? Overnight? What are you going to do about stops? Are you going to scale in and out or will it be all in and out? And so on. Yes, it is important to know where S&R are since that is generally where the action is (not only tests and reversals but breakouts and retracements), and midpoints can also be fertile ground for planting trades. But there's a lot more to developing a strategy than this. If you're interested in doing this responsibly, I suggest you click my signature, which should take you to The Trading Journal. You may already be at step three. If all of that is old news, then I suggest you spend some time on the Trading in Foresight thread. Finding where support, resistance, and midpoints lie only alerts you to where the most profitable opportunities are likely to be. Determining what to do when those opportunities arise is a whole 'nother set of tasks. Db

Depends on what one means by “midpoint” and of what and from where and in what time frame using what time interval and so on. Note here (I've posted the image you linked below) that sellers are unable to find buying interest at the last swing low and the swing low before that and have to go all the way to 1415 (more or less) to find enough buying interest to turn the tide. When buyers step up to the plate in enough force to reverse the movement, they send price back to 1455, a more than 50% retracement, indicating strength. But where does price stop? The midpoint of the trading range. Why? It's not magic. Most of the trades in that range took place between 1450 and 1460. You don't even need volume to see that. And it's only reasonable to expect a little business to take place if and when price returns there. Understanding this prevents you from sitting there stumped, wondering what traders and doing and why, and not knowing what you should do about it. You can't forecast that swing down to 1415 and you can't predict that it's going to run out of steam at 1455. But you can note that trading range and its midpoint, and when price stalls there on its upward trajectory, you can think Aha! and apply whatever strategy you had planned before the beginning of the trading day, because you know why it's stalled. Sellers try again to turn price back, but they are only able to accomplish a 50% retracement to 1435, again indicating strength on the part of buyers (an indication bolstered by the fact that price subsequently just hangs there at the top of the range rather than retreat. Why? How much money can you make by treading water? Sellers want price to fall. Buyers want price to rise. And each will do whatever he can to achieve that result. Granted you can make something trading the range, but a bigger payoff comes when traders sail off looking for a different value. That is, after all, what trends are all about.

Assuming you've read Wyckoff's course, do a search of it using "half" and "halfway". Db

This was written as a blog post, a simplistic introduction to a subject that was given a much more detailed examination in the Wyckoff Forum and written largely for those who might be interested in the subject but didn't want to plow through hundreds of posts to find out. I don't particularly care about the number of bars or even about the bars themselves, since bars are only one means among many to display what's going on with price movement. If you're genuinely interested in the subject, I suggest you look at several threads in the Wyckoff Forum: The Nature of Support and Resistance, Trading in Foresight, and Trend. If all of that whets your appetite further, study the Stickies. If you're particularly interested in swings, do an advanced search using my name and "swing*" as the keyword. Db

Josh, all of my blog entries and the comments and questions regarding them were given a date of 4/17 when the blog was converted into articles by the mgmt. Some of these comments/questions are at least a couple of years old. And I'd rather that all this business about my ebook not be here at all. It's hardly an article. Like this, it sounds like extreme self-promotion. But what the hey . . . Db

I wouldn't say I'm "back". I check the Wyckoff Forum every now and then to see if somebody has a question I haven't already answered (and since I haven't posted anything for two years . . . ;o]). But then today I noticed that one of my blog entries was posted on the home page as an article. Apparently my blog has been deleted and transmorgriphied into a series of articles, which is okay by me, I guess, if MMS thinks they're interesting enough to stand on their own. Does make me seem remarkably prolific, though, to post 19 articles in one day. And more than a bit egotistical. But what the hell. Those who've been around for a while will see that there's nothing new here. Have a happy. Db

You're welcome. And good luck to you.

By Ken Wolff Recently, a couple of people I know packed up and quit trading after struggling for a long time to hold their heads above water. They didn't make it. This isn't unusual, of course. This profession has a high failure rate. But it frustrated me. It frustrated me because I could see potential in them. I don't believe you have to be particularly talented or intelligent to be a successful trader, but these people seemed to have a grasp on the market and the love of trading that's necessary. They had the tools, the knowledge, the time and the funds. It also frustrated me because I could see the pressure they were under that contributed to their failures. Most of all, though, it frustrated me because I could clearly see what they were doing wrong, but they couldn't stop repeating the same mistakes. This happens a lot. I see a lot of people making the same mistakes. So I thought I'd share my list of the seven most frustrating things that struggling traders do. 1. When people won't do their own homework. Too many people want to make money, but aren't willing to put the time in and do what it takes. I love answering questions, and I have a passion to help people learn, but when I notice someone asking the same questions over and over, and they are basic questions that anyone could Google, and gave it 30 seconds worth of effort, I know that person is lazy and probably won't make it. You want to know what makes successful traders? People who glue their butts to their chairs. Look at their computer desks and you're likely to see lots of coffee rings and crumbs. You get out of something only what you put into it. If you aren't willing to take notes, take some initiative, keep a journal and spend a lot of time watching stocks, I don't see much hope for you as a trader. 2. When people can't explain their reasoning for a trade. If your reason for entering a trade is something vague like, "I thought I saw buyers, and last week it had news, and I dunno, it just looked good," then you don't belong in that trade! People like this usually have no clearly conceived, written, organized trading strategy because they are lazy. They are doomed to failure. If you have no solid reason for a trade, you will have no confidence in it. You will wind up mistiming, misjudging, fumbling and losing. Here's a quote from my partner Phil Rosten, who is a brilliant technician: I think the most important thing to do is to develop a system that you have confidence in. You will get nowhere if you are second-guessing what you are doing. When the market is open, you need to know what you are doing, and why you are doing it, without thinking too much about it. If you start thinking too much about what you are doing or second-guessing yourself, you will quickly get taken out of the game. Believe it or not, it doesn't matter much what your reason is, as long as you are consistent with that reasoning. But you'd better have a reason. 3. When people make things more complicated than they need to be. Let me give you an example. One of the leaders in my chat room finally unveiled a new trading system he had developed after more than a year of extensive testing. The system works just as it is. It isn't perfect (no trading system will be 100%), but it is highly profitable. People's initial reactions were interesting. Instead of saying, "Wow, great. Let me give it a try," a common first response was, "I wonder if it would work even better if we changed this and that, and instead of a 15-day moving average we used a 10-day moving average," and on and on. Before they even tried or understood the system, before ever becoming profitable and successful with it, they immediately set about trying to improve it. Maybe it's human nature. We love trying to reinvent the wheel. Many of us see trading as a puzzle. If we could just find that solution or formula that no one else has thought of yet, we would be rich and happy. A lot of people think that the more indicators they pile on, the better their trading results will be. So they wind up with analysis paralysis, unprofitable and frustrated, convinced that trading is an unwinnable gamble. I can't say this enough: What matters is not the system itself, but what you do with the system -- your discipline to use it and keep stops. You won't find a system that always works, so you'd better limit those losses. Two percent of your trades can easily wipe out 98% of your gains if you can't keep stops. 4. When people enter a trade for a good reason, then lose their nerve and exit too soon. This is a lot like walking across a log over a river. If you keep focused on your goal, you will get to the other side. You know how to walk a straight line, and you would have no problems if the log was on the ground. But once you are out there, if you start second-guessing yourself and looking down at the rocks below, you will fall. Too often emotions set in and sabotage good trades. If you have a reason, stick with it. Stay in the trade until your target is reached, you have an exit signal, or the reason for your entry is no longer valid. 5. When people hesitate, or follow others, and enter a trade too late. I understand traders' lack of confidence and I can empathize because I've been there. If they don't get a grip on it, though, it will be their downfall. Calls are great and gurus are great, but if you follow, you will always be late. You need to learn to rely on your own reasoning. Otherwise you will be too slow and you'll become fish bait. Inexperience is often the reason for this, and that will take care of itself with time. That's why I recommend starting with small shares until you gain confidence in your system and your ability to keep stops. But this problem frequently has to do with deeper emotions, pressures and self-esteem problems that may not go away as easily. This is hard stuff because it's all about confidence. When you are under pressure from a spouse who disapproves of your trading, or under pressure to pay bills, etc., you are working under an enormous amount of fear and pressure. And that is automatically going to cause hesitation. I know that's a hard situation. But I tell you, if you don't get that under control and learn to trade like you don't need the money -- with control and a system, leaving out emotion -- you are not going to make it. You must find a way to ease that pressure. Get a part-time job if things are that rough and you still believe trading is the job for you. If you cut back and trade a couple of days a week without the pressure, you'll probably trade better for it and wind up making more money than you did trading five days a week under pressure. I've seen it happen many times. 6. When people will not contemplate the real reasons for their failures. I don't know how many times I have heard this: "The market was tough today. I had one good early trade and then gave it all back in the afternoon in a few bad trades." Let's be honest here. The market wasn't making you do those stupid later trades. It was you. Don't blame it on the market when in reality you were chasing longs all day when the market was tanking. Then people will say something like "I need help with risk management," "I need help learning to find good entries," "I need help learning executions" or some other topic not really related to their true mistake. What they need instead is a dose of self-restraint and some personal accountability. They need to stop making trades out of boredom, frustration, regret or any other reason other than "it met my trading criteria." They also need to be honest about these criteria and not stretch things into "well, it kind of meets my criteria -- if I look at it cross-eyed." I know this is hard. It's tough to sit there all day and stare at these numbers, especially when things are slow and there have been no good trading opportunities that day. It's like fishing. Fishing can be really boring. But if you aren't sitting there waiting with your hook in the water, you won't catch anything when the big fish come by. And it won't help if you jump in the water every time you see a ripple, trying to convince yourself you had a bite. 7. A defeatist attitude, especially in me. The potential in our lives far exceeds what we ordinarily imagine. Too often we put limitations on ourselves with Eeyore-like thinking. We say "I can't do this" or "I am just not smart enough" or "I'm just unlucky." In doing so, we fail to challenge ourselves and develop new potential because we've lost faith in ourselves. We are like circus elephants tied with small weak chains to a stake, believing we could never get free, unaware of our own strength. We possess tremendous potential, but if we develop the bad habit of convincing ourselves that our potential is limited, we will not actively challenge ourselves and grow. Like the elephant, we will be held captive by our own beliefs. If you have a defeatist attitude, you've already lost. So let's keep a positive mindset and try to see each mistake as a stepping stone to growth.

Richard Wyckoff was a pioneer of technical analysis. While Dow contributed the theory that price moves in a series of trends and reactions, and Schabacker classified those movements into chart patterns, developed gap theory, and stressed the role of trader behavior in the development of patterns and support/resistance, Wyckoff contributed the study of the relationship between volume and price movement to detect imbalances between supply and demand, which in turn provided clues to direction and potential turning points. By also studying the dynamics of consolidations or horizontal movements, he was able to offer a complete market cycle of accumulation, mark-up, distribution, and mark-down, which was in large part the result of shifts in ownership between retail traders and professional money. Wyckoff sought to develop a comprehensive trading system which (a) focused on those markets and stocks that were “on the springboard” for significant moves, (b) initiated entries at those points which offered the highest probability of success, and © exited the positions at the most advantageous time, all with the least possible degree of risk. His favorite metaphor for the markets and market action was water: waves, currents, eddies, rapids, ebb and flow. He did not view the market as a battlefield nor traders as combatants. He counseled the trader to analyze the waves, determine the current, “go with the flow”, much like a sailor. He thus encouraged the trader to find his entry using smaller “waves”, then, as the current picked him up, ride the current through the larger waves to the natural culmination of the move, even to the extent of pressing one’s advantage, or “pyramiding”, as opposed to cutting profits short, or “scalping”. “Trading Wyckoff”, then, is more than just relating price and volume. It is a complete trading strategy, ranging from finding the most attractive opportunities through strategy development and trade management to the best moment to close the trade, all with the least possible degree of risk. Below are copies of Wyckoff's Studies in Tape Reading, which has been reformatted into The Day Trader's Bible and is as good a place to start as any, along with Reminiscences of a Stock Operator by Jesse Livermore, a contemporary of Wyckoff's. Chapters from Wyckoff's original trading and investing course follow. [ATTACH]28582[/ATTACH] [ATTACH]28583[/ATTACH] [ATTACH]28584[/ATTACH] W VOLUME STUDIES (14M).pdf

Feeling good. I had a tough month in August IMO and the spikes and tight ranges did my head in alot and tested me alot, ironically in the complete opposite way of the intended journals purpose. Anyhow, today... 7am - we drifted up and both the MA cross and SAR said short at 7 on the dot and it dropped down 15 beautifully to kick it off... now its gone staight back up, and up, and up all the way to the top of the candle... here we go again, spike/fake drop No.1... 9:30am - Since dropped off slowly and S/R has worked well on the way down... Its now 9:35 and all is quiet... at the low of the day and bouncing. The lack of US participation may keep this tight today but seeing as they were open all last month and still little happened I shall carry on regardless... 9:40 - Just had a retest of the S/R and it moved over a few pips and dropped back but still not piercing the low. As per the plan I have moved the SL to above the last S/R and now to see if we break this low... (not just spike through)... 9:45 - The plan is the plan... why am I even thinking.... MA's are still short, we are at the low of the day but not past as yet and we've not pierced the higher S/R so just sit, wait and read my book.... 9:54 - broken at last.... next S/R coming up at 40... a clean break below would be good and I can get the stop down lower and lock in a good profit and let it run (maybe)... Searching for something to remove emotion from my trading... Break or no break, up, down, sideways whatever, great, good, bad ****, shouldn't be in the above dialouge but it is still, it should just be fact this and fact that equals do X yada yada... From here on in I will be attempting to relate all my trading to that of a mundane job I have had... barman... each trade is just pulling a pint thats it. I know I didn't care all that much for the pint at the end of the shift but I got paid and thats the important bit. Granted, as its my money I could then look at it as the landlord and I would care too much but for now, the bartender idea seems good. 10am - dropped through 40... next top 16, hopefully I shall just sit, wait and if it doesn't get there for a while, I'll keep waiting... or till a new signal... 10:08am - doh! its going up through S/R but only just...not looking like it will nold as resistance... tempted to give it more leeway... no stopped out as per plan.... only just hit SL, not 1 pip higher, and keeps dropping back off... time for it drop like a bomb! T1: +23 Wait now for a long signal.... the next candle would signal a SAR long but I shall await the MA's for now... 10:15: Long SAR signal taken in demo...Ok, having doubts about my exit now, my SL got touched but not pierced and now its dropping back down and near at the low of the day again... argh! Sod it... now at the low again and it'll probably be the best move in weeks and my fear and greed wants back in but no, I can't I must wait... ******* and down it goes! S/R and trailing stops > too much room for error and sods law... too close and this happens. Too far back and reversals end up +1...! Its hard to find a good middle ground... just one pip higher and I'd still be short but that one pip would equal -£30 in the opposie circumstances.... Ho hum, just hope it doesn't go much further south... As a side note - the SAR didn't work out well neither!!! My panic and reluctance to rejoin the short worked out... just a bit of faith thats all you need! I SHALL wait for a long now.... As per usual, panic ensued and then it comes back up and my original exit was fine. No cross of lower S/R meant that the same SL would now be being hit and all is good again.... 10:46: SAR Signal No. 2... exactly same place...still awaiting MA long signal... more coffee required... Funny, I never realised I thought so much! 3 times we've tried to drop now but still keeps returning to the 40-45 area so 'price action' says its not going lower (I think)... now it'll drop! Ahh, tried again but now pushing North again... looking for a long soon... Lining up nicely and I'm getting bored... No solid long signal as yet, could be a while seeing as its now 11am and the mornings action has finished, all the big boys in the banks have probably done most of their work and are off and gone by now and of course no America this afternoon. The plan, as tested, incorporates every hour of each day to the fullest regardless of current affairs and news etc but, its sunny, I have a list of things to do and a rather tempting offer of something else to do so it has half hour till I knock it on the head and do something else! 11:11: Hmmm, SAR 2 would have been sweet, MAs mean waiting for 11:15 and its now 8/10 higher and hitting upper S/R... I have a feeling when the long signal comes It'll drop back but we'll see... right dropping back a little now and looking for a better price for me now, unless it means no higher and we have a few hours of little movement... 11:15: long now and wish I'd taken the SAR long as 10 pips better but the first SAR meant a loss so it worked out about equal. Obviously this is all dependant on whether cable gets some life inside it and goes, somewhere! Superb, and its off....S/R at 63/79/85 to trail behind (for now!)... Hmmm, dropped back... now back up a bit... moved stop to +1... still no clear break of 63.... T2: +1 Right, dropping right off now and out for +1... thank god for that, dropped straight through.... Now I need to wait for a new candle before the short and its proving harder than hoped as it drops through... 1:15: at last, short.... and it drops nice, no, damn it coming back up... here I'd normally (pre August) hope for a great run down but its labour day so we shall see.... Hmmmm, one of them candle thingys, a 'hanging man' I believe... ahh, dropping a bit, slowly mind... Hmmm, bouncing about now but trying to push down... nopeback up... ok, a 5 pip range, not sure where it wants to go... no long signal yet... and back down it drops, thankfully it is in such a small range there is lttle fear as the stop is still nowehere near! Okay reversing now and taken a small 5 pip loss and wait a minute for the new signal. T3: -5 2:30: finally switched to a long and stright up from the entry into profit. Not sure whether this afternoonss market can sustain a push higher but stick to the plan and see. A rise above 60 will allow a move of the stoplossbehind to lock in a small profit for now... Now I'm not expecting much all is well... Ok, slowly slowly moving but not passing my 62 S/R level to trail SL... all things considered I have moved stop to +1 and see how it goes from here. this is the last of the day regardless now. pushing up to the recent high again but not through... yet!... Excellent, up it goes, no maybe not... over 62 so SL now trailed behind for a few pips depending on what happens............... As the day draws on my emotions start to become a nonchalent disinterst as I have +2 regardless and I have now resigned myself that that is how it will end up. For a bank holiday in US, I'm happy with the results regardless.. Taken the +2 and finished... T4: +2 DAYS TOTAL > +23 / +1 / -5 / + 2 = +20 Thoughts on the day: I never realised how much I thought during trading session for a start. The actual day vs the plan vs the actual movement was pretty good really. the small drop mid morning got me but it worked out ok and plan vs reality = pretty much the same... I caught a good proportion of the day so pleased... Now to progress to trading = pulling pints and happy days.... (wasp)

Sure. But if it's something intelligent, or you think it is, would appreciate attribution. If a fight breaks out, though, you're on your own.

As part of your journal, a trading log should be more than just bought here, sold there, made this, lost that. It should contribute to the record of your journey (“journey” -- ”journal”). If done correctly, a log will reveal patterns. Patterns of what you're doing right and what you're doing wrong and when and how often and under what circumstances. Patterns of the behaviors of those who are trading your stock (bond, fund, option, whatever). Patterns of the market you're trading, of its cycles, of its stages, of what works at some stages and in some cycles and not in others. It will reveal much regarding your trading. It will also reveal much regarding your self. Addressing the questions asked in The Trading Journal and defining and testing the setup are only the preliminaries. Eventually, one starts trading, if only on paper, and that is where the log and journal can make the difference between success and failure. A log is not just a record. It is also a plan. Before the first trade is ever made, even if only on paper, prepare for the day. Note any events that you should be aware of (reports, press releases, meetings, speeches, testimony, nuclear explosions, approaching meteors, etc). Write down reminders of any elements of the trading plan that you're having trouble with and what you intend to do about them, e.g., “don’t take any trades anywhere but at support or resistance” or “be wary of wide-range bars” (this may be necessary as early as the afternoon of the first day). Above all, record your justification for each and every trade. Record your thoughts before, during, and after the trade, written in real time (your perception of what looks to you like a potential setup will change substantially after the “setup” resolves itself, and when you ask, later, “what the hell was I thinking?”, your record of your thoughts -- your "self-talk" -- will tell you, so that the next time, in real time, you’ll have a deeper and more rational perspective). This is more than just the reason for the trade (“It looked like it was going to go up”). It is more than the rationalization (“It was time for it to go up”). It is more than the mystic prompt ("I felt it was going to go up"). It’s the justification for it, the explanation that one would provide to one’s boss or client if he were trading for someone else. If everyone wrote down the reasons behind and justifications for every trade, their learning curves would be accelerated dramatically. And if writing all this down proves to be too much of a distraction from the screen, pick up an Olympus Digital Voice Recorder from eBay for a few bucks. At the end of the day, review your decisions, if necessary by "replaying" the day, a feature available in several charting programs. Did you make good trading decisions, i.e., did you follow your rules or not? If you followed your rules but made one or more losing trades anyway, do any of your rules need to be re-examined? If you didn’t follow one or more rules, which do you most often fail to follow? What’s the problem? What did you say to yourself at the time? What do you need to work on the following day? Always, what could you have done differently to improve the outcome? Can it be tested to find out if it's only an occasional anomaly or worth incorporating into the system? And then you write down your detailed plan for the next day . . . See also: Making Trading Journals Work For You When Trading Journals Don't Work Improving Your Trading Performance

I'm ready to start backtesting my revised plan, here in the form of a comparative study. The setup used for this exercise is basically the same as the one described previously in this journal, but with the following adjustments: General Rules -- Positions may be only opened between 2:00 a.m. and 12:00 noon. Any open positions must be closed at 1:00 p.m. -- All valid entries must be taken. -- S/R levels may be adjusted any time before a trade (no fair adjusting levels to invalidate a running trade or to call a trade after the fact, and stops once entered may not be moved back). -- During backtesting, if the sequence of price movements in a bar is unclear, I'll assume the least advantageous outcome. Entry and direction -- Trades are entered after a BO, defined here as any price penetration through a S/R level, followed by a SL/SH above/below that S/R level (entry details specified previously in this journal). -- After BO, price must return to the S/R level (within a pip) prior to any entry. There will be occasional exceptions to this rule (RET's taken beyond the S/R level), but only at levels specified in advance. (Edit: this is to allow more leeway when price BO through more important levels, and price may not retrace all the way to the S/R level, at least as shown with the time resolution of the chart I'm using. Trade management rules are modified slightly for these trades.) -- Trade direction is determined by trend direction. If price is in a range, the last trade direction remains in force. Trade management For this exercise, three contracts are traded: - One contract is closed when price has reached the same distance from the entry point as the distance from the stop level to the entry point, or when SO. - At that point, the stop is moved to the S/R level for the remaining contracts. - The second contract is closed once price touches the next S/R level, or when SO. If there is no S/R level available during backtesting, I'll use the same distance as between the last two S/R levels. (Edit: at levels specified in advance as major BO levels, the rules for this contract are the same as for the 3rd contract, below.) - The remaining contract runs until a signal is received in the opposite direction, or when SO. - If one or both of the first two contracts has been closed, I may open a new trade (on a valid signal, same trade management rules) even if the third is still running. If past is prologue, other issues will inevitably arise. But this should get me started. (FX_Cowboy)

I should point out that this was written not by me but by "jasont" (note the name at the end of the passage). I've quoted it here so that those who are interested may be aware of at least one other trader's process.

Ok guys I'm not sure if anyone is actually reading this thing but I thought I'd try to help people discover what to trade. I'm going to disclose a few things about how I found my trading niche and offer some ideas to help people find out their niche. This may be a long post so if you want some help picking a niche, grab a coffee or beer before starting to read. List what you find so you can help keep track. When I first started trading I was foolish enough to jump in without doing my homework. I jumped into trading a time frame that wasn’t suited to me and trading an instrument (options) that didn’t utilize my personal talents and advantages. So over time I managed to find the right instrument and time frame to trade but how did I go about it? I actually found the time frame and instrument a bit blindly to be honest. I actually stumbled across them and then did the following stuff afterwards to clarify that it was the right thing for me. Hopefully if you’re reading this you can do it before backtesting or simulation trading a method so you don’t waste your time. After reading a great book by Brett Steenbarger entitled “The Psychology of Trading” I realised the importance of finding a trading method that suited my personality. It is very important that you are trading a time frame that suits your personality, this doesn’t mean one that suits your other out of market commitments, that is very different. Just because you work a day job doesn’t mean you should be trading according to daily time frames because the only time you can get to the screen is for fifteen minutes to see the close. First find what time frame suits you and then figure out a way to do it around your work or outside commitments. Being that we are in the thick of global economies you can trade any market around the world from you own home pretty much. So how did I the right time frame and market instrument and how can you find it? Look at Past Activities and Sports I started by looking at past activities and sports I enjoyed. By doing so I managed to find an interesting pattern. I always seemed to play sports that were reasonably fast paced. They included football (Australian Rules as I am from Australia, Ice Hockey, Basketball and Tennis). The one I liked the most out of those was Ice Hockey because there wasn’t really a dull moment for any player whilst on the Ice. Another pattern was particular video games I used to enjoy. They were always ones that were action packed but still required strategy. Shooting games that needed you to be quick but at the same time take everything in that was on screen and work out how you’re going to get to the next area. I didn’t mind the thinking type games such as Command & Conquer and Sim City but I always found they took too long to get things done. Another fast activity I enjoy is riding my motorbike. I like riding around the mountains going as fast as I can but still leaving something in reserve should I need to avoid a road hazard or get out of a bad situation. Here was another clue, I didn’t like putting myself totally on the line, something to keep in mind for risk management. So looking at my history of things I enjoyed, I realized they were all pretty fast moving activities. Previously I had been trading longer term instruments where trades would last for weeks. Obviously not fitting my past activities I enjoyed. So first thing you need to do is look at the activities you have enjoyed in the past and the nature of them. You may enjoy Baseball, Golf or playing Poker which are activities that give you more time to think about your next move. So I had found that I needed something which had a bit more action and was quick. I then needed to find out my personality traits and talents. To do this I looked at how I interacted with people on a social level and what my subjects I gravitated towards in School. You can do the same for College or University or even look at your job. Finding Personality Traits and Talents First starting with school. I was always someone who picked things up very quickly, I’m a fast learner. Another clue to what I should be doing. I never enjoyed nor was I good at History, Math and Science. I enjoyed English, Graphics, Theatre/Drama and Sport. Right there if you read between the lines it tells you that I don’t like the subjects with heavy calculations and rules. I liked subjects with creativity but didn’t like the rules accompanied with Math and Sciences. History required intense study of the past and remembering of facts and information. So I realised I had a liking for and a talent of the creative subjects but without using hard statistics. If you think about your School or College/University days and your current workplace, you can find out what areas you were good at and just as importantly what areas you enjoyed. You need to find areas that you enjoy and that you are good at. Both are important. I then thought about my social life and what I tended to do in conversations and groups. I noticed that I was a quick thinker when it came to talking with people. When I am in a conversation I think about what the person I am talking to will say in response to what I am going to say, before I say it. So like a Chess player who thinks moves in advance, I think conversations in advance. I then try to lead the conversation to the direction I would like it. That was another clue, I seemed to put possibilities together before they happened. I also noticed that I would constantly look for signs in people to tell me that they are enjoying the conversation or looking for something different to talk about. This is when I realized that I liked looking for things people were saying without saying it verbally. Another clue for trading that I tended to look for things that were being told but without being obvious. The last thing I realized was that I was creative in my humor. I would not tell a joke straight, I would make a comment that would get people to think about the joke. Instead of telling a punch line I would give people a reference to come up with the punch line themselves. This was another clue into my personality trait of thinking ahead and my creativity. At School I always was a bit different to everyone else. I wouldn’t do things to fit in, in fact I deliberately would go out of my way to do the opposite of what most people did. Yet some how I managed to still be well liked by the majority of people in school. This was another clue that I didn’t like to follow crowds, I also didn’t like to follow the rules of the School. If there was a rule I thought logically didn’t make sense, I wouldn’t follow it. Things such as wearing a tie with the uniform or being cleanly shaven. Just take some time to think about your own social experiences. You need to be honest with yourself. If you were someone who was comfortable fitting in with everyone else, write that down. It will help determine whether you should be following the trend or going against the grain. There is no point going against the grain if every time you do, you feel unsafe and sick in the stomach because it doesn’t fit with your personality. You also want to think about how you interact with people and whether you are quick in your responses or whether you like to take your time to think about what you say. That can tell you if you suit a fast paced market or a slower moving one. How You Drive Your Car The last thing I thought about was how I ride my motor bike and drive my car. I look for people in their cars turning their heads to see if they are going to change lanes. I look at the front tires of a car to see if they are going to come into my lane. I watch the car and how they move within a lane to see if they are a reasonable driver or a terrible one that is moving from one side of their lane to another. I drive a touch faster than everyone else on the road because I rather keep my eyes on the people in front of me instead of having to watch people next to me and coming up from behind me. These are clues to what I tend to gravitate towards. I am observant of things that aren’t so obvious and I am very individual. There are many things you can find out about yourself in regards to how you drive your car and if you follow the rules strictly or believe it is safer for you to do something else. Think about anything else you can to tell you what your personality is like. I wear clothes in the same style I have worn for ten years. I don’t care if the fashions change, I know my style and I stick with it. I am “street smart” more than academic smart. I like to learn on my own more than being taught by someone else because I think I can learn it myself. List Your Findings Whatever you think of, slice it up and look at the hidden meaning behind it. Then once you have a list of things you do, you then need to see how that relates to trading. I wrote my list that looks something like the following. Don’t like to follow rules unless I agree with them Good at seeing between the lines Like being creative Like things fast paced with action Don’t like to overexpose myself and feel unsafe Don’t like following the crowds Look For Markets That Suit Your Findings So how did I know to trade futures in an intraday time frame? Well I learnt from a past mentor that certain markets should be traded at certain timeframes. Here is the following: Equities should be traded using daily charts Options should be traded using weekly charts Futures should be traded intra day Forex should be traded intra day Now this is not set in stone and only my opinion. I am sure there are people out there trading these instruments in different timeframes to what I have mentioned. The reason these are like I have listed them above is because of the volume traded. Equities are traded a lot but there isn’t the liquidity to get in and out of positions as easily as forex and futures. Don’t forget I am from Australia and our market is not as Liquid as the US or London markets. Considering I wanted to trade quickly, not be exposed to things out of my control and have a bit more discretion in my trading, I realised the Futures were my most suited trading vehicle. I trade them looking at a 5 minute basis and e-minis in particular have high liquidity. I trade against the grain but follow the overall flow of the market. I use the NYSE Tick to tell me that the equities are doing something different to the index futures, looking between the lines. My other indicators are guides and not strict rules where I must do X if Y occurs. I have the freedom to interpret markets. If you get your list of what you are after, you can find a rough time frame to trade such as intra day charts, daily charts, monthly charts, or maybe no charts at all. You may find you are good at reading business statements and use fundamentals. You can then work out your style of trading whether you like to trade with the grain or against the grain. There is no inbetween. Your either trading as the market is moving or your trading as the market is stalling looking for the opposite direction. You can find out if you need strict rules to tell you what you should be doing or whether you trust your own judgment to make the strict rules simply guides. This should hopefully get you headed in the right direction and give you some guidance. Once this stuff is figured out, look for a mentor who trades in a similar way to what you’re looking for or ask around forums for what people recommend according to what you’re looking for. At least you will start in the right direction and can focus on the plan instead of asking whether you are in the right niche. (jasont)

http://www.traderslaboratory.com/forums/blogs/dbphoenix/37-making-high-probability-trades.html