atto

But still, say you develop a confluence of several lines. How do you trade it? Are you trading the bounce, breakout, or both? How do you manage risk, since the S/R zone might be on the thick side? Do you enter after it already starts to move, or carry a position into it?

I prefer to think of it as a HUP.. it can do either. Since a lot of stops are placed outside of S/R, you can get a nice pop when broken. S/R projected into the future should be called "possible S/R", because it worked before, may not work now. This is why we pay very close attention to price action near there areas.

We could be setting up for a great short squeeze, but I expect a retrace if this bull run will have any length at all.. we've moved 50 ES for the first time in a while. Even a pop back to 1230 wouldn't be awful for the bulls. As a side note, after pretty bad news last night, the ES has nearly recovered over night. I'd actually like to see a retrace, or you'll see bulls bleed.

If using a setup like that seems to work for you (and make more sense), then do it. Specifically, I was referring to price/volume around that area. Since S/R is "projected" into the future, I was watching this very closely. I don't specifically use WRB's, but it's right there I'm interested in. I was watching on a 10 second chart for entry. As I said, you'd be very willing to scratch the trade if it doesn't work out. As for the more conservative entry, the max 2 ES referred to the distance back to the line... I wouldn't risk that much either.

I used to play a good bit of cards, and so did a few other guys here. There are definite parallels between trading and poker, so I encourage you to jump head first into this. Just like you've put a lot of work into poker, this will take more work than it may initially seem. What kind of trading do you want to do? If you have no clue, what kind of poker game do you play (tight/loose/aggressive/...)? Are you interested in trading for a firm, or for yourself? If you love traveling, you would probably do better for yourself. In that case, there's no competition (just open an account). I would suggest that you hold off paying for a mentor, just yet. The financial vendor market can be a tough place, and there's ample free material on sites like this one. There is no magic, and it will take work. How much do you know about markets already? Ever invested/traded before? And few will frown on your poker career. Traders are in the business of risk managment while exploiting an edge too.

Yes, that's the point. You're risk managment sounds very good. I will wash trades, even if they're slightly going my way, if they aren't moving like I expected. With S/R, you want to always be aware of the fractals (larger timeframes). Don't take trades straight into confluence of support or resistance, unless you have a good reason. Check out SnP500Trader's videos, he has a very firm grasp on S/R.

I apologize for the wait. Today was a great example of S/R trading. I am attaching a chart of mine (which I have prettied up, but pretty much what I'm looking at), an ES U8 1m chart. As a disclaimer, you're seeing hindsight analysis (and only my opinion). I am focusing on one trade that I did take, but please remember that it's "easy" to see this stuff after the fact. Dashed cyan lines are longer term S/R, thin blue were added today (premarket and later). I've labeled four main areas of interest. We peaked soon after open, and I put the thin blue line you see as a High. A range was held above a previous support, which entertained a couple bounces, before it broke (A). You could have traded these bounces, since there were plenty of buyers there. In this case, you would have most likely broken even (or gained a tick or two, depending on entry/exit). As mentioned before, you have to watch Price Action around these points. In this case, price did not bounce like we expected, so you want to get out until confirmed otherwise. After a break, price consolidated above new support (added during premarket). Volume climaxed, helping to confirm this support, before returning back above longer term support. At (B), price approached the previous swing high on slowing volume, indicating exhaustion. As you can see, price confirmed the resistance formed by the swing high. From here, we face rather unimpressive volume, as we slowly melt down. The resistance confirmation could have been tradable, but it was coming into lunch and volume didn't help. Towards the end of lunch, price returned to the longer term support. We see the first interest right around this line from the buyers. Buying here (just before C) would be an aggressive long, but comes with excellent risk/reward. If the support is broken, you can immediately get out. This isn't to say you can't re-enter later. At this point, you either enter, or look for a pullback to enter. Volume keeps confirming a bull move, so a good conservative entry would be at ©, risking a max of 2 ES (if the trade was a dud, you could probably get out sooner). However, we're paying very close attention to the thin blue line. If price doesn't slam through it, start to unload your position and wait. Sure enough, price never even hesitates at the previous resistance, so we stay in our position. The next area to watch the the previous High of the day. This time, we see climaxing volume as we approach, and then very quickly lose interest from buyers (lower volume, no real price movement). This is a great exit (if you're scaling out, first exit), as we wait and see what happens at the retrace. If you hang on for a second test, we experience a little hesitation, and then a break. Since we had less energy in the break, I expected less upward movement. Also, we have a longer term resistance right above, so r/r for a re-entry isn't wonderful. I added three trend lines to show you how I use them. You can see a steepening uptrend through B, C, and D, and then price starts to streach through these. The 1260 area would be a good final exit for any remaining longs. As a side note, we can see a failed breakout at 14:30. Notice the lower energy (price movement and volume) as price makes new highs. I was waiting for a bigger pop before I entered, which never came. If you did enter on the breakout, you'd very quickly notice the lack of interest, and exit for b/e. Compare this breakout to the one at © to get what I mean. Makes any more sense? If you need any clarification, or have any questions, feel free to ask. There's many ways to skin the cat, and this is what seems to work for me. As an example, the 1246 bounce area also happened to be a 76.4% retrace of the larger move.

I'd love you guys to give your ideas/feedback on my thread over in Market Analysis.. the more opinions / analysis, the better . http://www.traderslaboratory.com/forums/f2/a-case-for-a-mid-term-4173.html

I don't actually think we're disagreeing, though you're right in that there's different ways to do it. I use trend lines to identify trends, but if you can just eyeball it and see a trend, then that's pretty much the same. A use a 200 SMA as a long term "trend line" as well. Personally, I think trend lines "work" as S/R often because it's keeping you on the right size of the trend. This is just how 21, 33, 50, 100, 150, 200 etc SMA/EMA's "work". As for retests, price often retraces as it starts a new trend. I do not use momentum, but do use volume. The "games" you refer to can largely be mitigated by studying volume in the context of price action. Shakeouts/fakeouts do occur, but can usually be identified. The good thing about trading based on S/R is that your risk/reward can be minimized by watching price around these levels. Think of these points as HUPs. The more confirmation of a rejection or breakout, the later you are in the move. Markets just opened, so I'll try to get you a graphical example later today.

The idea is that there is nothing magical about any lines. S/R "works" because it identifies prices that have illicited action before by the bulls, bears, or both. S/R lines are usually projected into the future as "possible support/resistance", because we don't know if they will cause the same response. Horizontal S/R do not show a trend (which can be used for entries/exits), which is why people use trend lines. These lines aren't the exact same as S/R. Their primary purpose is to show the direction and magnitude of the trend. If they stay valid, the trend stays valid. Conversely, if they are broken, the trend could be weakening or reversing. Trend lines do not have the same characteristics as horizontal S/R lines because they are moving, so prices they identify as "bounds" may or may not have any reaction. A moving average performs much of the same job. Trend lines are great for staying on the right side of the trend.

Another opinion from a successful trader. SnP500Trader, who posts daily Youtube ES analysis, trades mostly off support and resistance. He is still bearish, but sees a divergence in Oil/Equities, and the MACD. He also has plenty of open air between his upper resistance lines, so is looking for a possible short-term rally.

Let me start this by saying that I want this to turn into a productive and informative discussion regarding the dynamics of market tops and bottoms. Specifically, I outline a case below for a current mid-term market bottom. I'd like to stay away from "market calls", and would absolutely love anyone who differs (or agrees using similar or differing analysis) to respond. This is definitely a work in progress, and as usual, I may be completely wrong. We're obviously still in a bear market, so any near term bottom will most likely not be "the" bottom. With that said, a few of us in the TL chatroom discussed this today, and I wanted to bring this to the greater TL community. Market Internals / Support & Resistance Here is a current $COMPQ chart spanning 6 months, with two popular market internals: $VNX (Nasdaq VIX) and $NAUD (Nasdaq Advance-Decline Issues Volume). This chart has been annotated for support/resistance, with divergant lines for $NAUD and (possible) tops and bottoms in $VNX. As you can see, we are very near a possible support. So far, this line has been confirmed, as we have seen buying pressure overcome selling pressure. This area coincides with a new high on the $VNX, which measures market uncertainty and volatility. Previously on the March low's, the peak in $VNX near this area signaled a break from the downtrend. $VNX broke off its high's on today's bullish price action. $NAUD is also showing a big divergence. Typically, divergences like this indicate a shift in pressure, at least for the moment. Past divergences have also been highlighted. Other indicators based on market internals are also shifting pressure, such as the McClellan Oscillator, which is well off its lows. Volume Over the past couple of days, we have seen higher than normal volume. This could very well be "stopping" volume by the bulls. Several downward advances have been met with climactic volume. No strong advance has been made in this past wave down that hasn't been met very soon with the bears taking back all lost ground, so we will see if today's gains hold. Volume-at-Price also shows significant volume in higher prices which can support a retrace. Fundamentals Today was a big news day. Most news recently has been fairly bad, which has been met with more selling. The CPI number this morning (1.1%, the worst in a while) was met with minimal selling, while the decent news that was released today encouraged more buying. This could be signaling bearish weakness, and a chance for bulls to take over for a bit. Most of the "bad news" seems to be priced in, and market sentiment is extremely low. Additionally, this bear market has been led by the financials. Financials made a strong recovery today on some good news and more bull buying. If financials can recover, if even for a short time, the indexes in general could see a break. Transports have also recently been affected, primarily from the bullish Oil market. Oil has subsided dramatically, which may release some of that pressure. International threats to low oil seem to be at bay right now (things could change overnight, however). Target If I had to pick a technical target, I would shoot for a 50% retrace of the May/June high's. This level is near a previous S/R line (drawn on the chart, above). Sufficient volume exists at these levels to support a rally. __________________________________________________ What do you think? If you differ, could you elaborate with your views? I know a few Market Profile guys are looking for the same break in selling, but I'll let them share their views (I don't use MP). Does anyone have further insight into top/bottom picking? Is top/bottom picking a loser's game, and why?

After you understand market basics, you can probably get most bang for your buck trading a lower-leveraged forex account with small lot size. You can last longer on less money than trading futures, imho.

The YM is the E-mini Dow futures. Basically, it's futures on the Dow index (INDU). The tick size (the smallest it can move) is 1 point, and is worth $5. You've probably also seen these: ES - E-mini S&P 500 Futures ($50/pt, tick size is 1/4 point) NQ - E-mini Nasdaq 100 Futures ($20/pt, tick size is 1/4 point) ER2 - E-mini Russell 2000 Futures ($100/point, tick size is 1/10 point) Hope that helps.

Yep, heard of him. I was thinking about doing the exact same using a Ninja data feed.

Yeah, I was more interested in live data. If I feel I really need it, I could write a C++ wrapper that takes a live feed and puts it into mysql, tick by tick. EOD I can handle just fine.

Is there a reason you're favoring spot forex as compared to currency futures? I used to have an article (I can try to find it if you want) going over advantages and disadvantages of both. The futures beat forex in almost every area, from comissions, to spread, to brokers, etc (forex has lower entry costs and can trade exotics).

Not a forex regular, but you are most likely looking a the bid/ask difference. Most forex platforms don't do a good job showing this. The "no comission" thing is a joke, as you are paying for it in the spread (which varies according to the broker).

I'm thinking about making a mysql database with live data for this type of analysis. I'd like to get a few years of 1m in a table, and then a week or so of tick data. Does anyone know of a good, reliable way to get data into a mysql database real time?

I've never found a good indicator that helps with Elliot Wave analysis. That said, are you talking about the EW indicator that is just the difference between two EMA's? I've seen that one around, but don't really know how it would help with EW, specifically.

Yeah, your issue is probably due to your geographical location. There isn't an easy fix, unless you can find a data provider that has minimal latency. The ping idea is good, because it'll give you an idea of what your lag should be. If you're significantly more, then you may have more problems.

I've been doing a little analysis in Mathematica, but after asking some people who know their stuff, I'm going to try out Matlab. It seems easier to get moving, and Matlab seems to deal with data better. Wish me luck.

Interesting, right down my alley. Thanks.

Would you mind posting it, for the edification of myself and others?

Can we all try to keep this civil? I don't think he's here to sell anything, and his ideas aren't presented here often. Let's try to make this productive, or keep quiet. :thumbs up: Assuming you want to talk about this further... so, how effective are your projections? By the figure you gave, I'd assume you're scalping. What kind of risk/reward do you use, and what's your win %? Would you be willing to discuss some of the inner workings here? For instance, I'm intrigued by your different way to measure up/down volume. Could you elaborate?