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This is amazing, one or 2 days after the Bernanke said they won't change rates, Cramer ranted, and the Fed injected money. If it's true that Cramer's rant got the Fed to react, then the most powerful man is no longer Bernanke, but Cramer? Go figure!

I was trading badly for almost this entire week, I had thought about taking the day off this Friday. My confidence was starting to shake, especially about my system. Stress level was ok, I didn't lose big per trade, so no major stress was taking hold of me. Instead of taking the day off, I decided to get back to basics and focus on execution and not let the losses drive my next trade. I actually meditated for about 10 minutes before market open, going through the motions in my mind how to get the executions perfectly and running the list of rules I had to obey. Friday I managed to pull it off to almost breakeven. It was actually a relief to pull it off. I think I managed to stay stressless was the fact that keeping my losses per trade by the use of stop loss rules kept my nerves steady because it was one thing I did right so I was still confident in my discipline, despite other errors (ie. entries and overtrading). It was the first best lesson learned from my mentor, honor your stops and everything will care of itself (discipline, stress managed, and mental composure).

Excellent post! I thoroughly enjoyed it despite it being short. I recently started to view the Level 2 and T&S together and it made a better understanding of the order flow. I do concur there are lots of mind games, pulling contracts in and out. I usually keep an eye on those that remain, say, if a level is at 50 contracts, then flicker to 100, then pulled back to 50, and so forth. I would take 50 as a real resistance, unless the T&S start showing more contracts traded at that level than 50, then I have to view this a possibly stronger resistance level. If I see momentum going down but there are at least 3-4 levels of large open orders, it doesn't bother me, unless the tape start slowing down or go fast with contracts flying by but not moving down. One piece I look for is watching for the T&S turning red to green (or green to red for upward momentum, it's a TS and personal thing of mine), showing orders being pulled off the flow. I usually take a more careful look at natural support/resistance areas, such as opening price, day's high and low. Interesting combo of info to get an idea if prices will pierce or reverse. It's probably the most difficult thing to decipher. My question is how does one incorporate volume at price or Market Profile fit into this order flow/tape reading skills? I know that MP is used alot and makes sense since volume is very important. The biggest contribution is the use of initial balance where locals set the pace, and after IB, it's the papers. Any input on this?

Wow, didn't know there are so many metal heads here! "For those about to rock, we salute you!"

I never take this rants seriously but when his rants are confirmed by the Fed, have to look into his comments seriously. That's when I pay more attention. Even if he didn't rant about it, the Fed action would be a confirmation of a major problem.

The first was 95Bil euros, 2nd days, 59bil. so it around 150bil so far. All other Central Banks are doing the same. A bit nervous aren't they? This is almost screaming panic here. Not sure if the investors and institutions will show their panic in the markets. We'll see. It's just a bit surprising that most indexes are still in their highs, it hasn't really shown deterioration just yet. It's mostly been news driven move. If this news break the support, then technicals will do their thing and confirm the news.

Well, Cramer may have something there since European Central Bank decided to inject a few billion euros of cash into the economy, unprecedented. Not sure if they're over-concerned unlike the Fed, but something to think about. http://www.ft.com/cms/s/3d97cc30-472c-11dc-9096-0000779fd2ac.html

I agree that this book is for beginners to daytrading and a few other unfamiliar markets (forex, ags, etc). I think the setups and strategies are for those who haven't found a system and looking for ideas to form one. But the intangibale which other books have not really go in depth is the trading plan. It's a good template to start. I admit I added more content into my already existent trading plan from this book. In the end, it's worth the money on content other than strategies and setups.

Yes, still in it but looks like things have cooled off a bit. So I'm more cautious for now. It was a fine run from the 1992 high eh? 3 cents in a few days is quite amazing for my short life as an FX runner. Let's see how things look when everyone gets back from vacation in the Bahamas, Southern Spain & France & Italy, etc ha ha ha.

Hi Tex, I thought I recognize your nickname but wasn't sure. Great to have you back. We've missed you (you can tell from the deadness in the forex forum area). I agree the best way to trade is to follow closely the S/R in monthly and weekly charts to find point of entries and exits. This works in all markets, forex, commodities, index futures, etc.

I usually prefer to do mechanical first, then if it looks good then I do manual testing to make sure what I'm seeing in mechanical is real. Double-check the work to make sure you don't lose money for some careless mistake.

There are two methods you can do this: mechanically or manually. Mechanically means you write a small program with criteria (indicators, price action, etc) where if met, the signals will generate an entry and/or exit. Tradestation, Esignal, and several others offer this. Manually, when a system want to test out cannot be done via mechanical method (overly complex system or indicators that cannot be based on math etc), then you manually have to walk through historical data and mark entries/exits and calculate the results yourself.

Is anyone using this system or a modified version of this system? Any success?

I think physical conditioning is quite important. I try to play tennis and swim regularly when I can. It's a great way to take your mind off the market and come up with new ideas or just recharge or reduce the tension and stress from trading, especially on bad days. Just the act itself gives you better perspective and focus.

I think Ensign Software has replay as well and I know for a fact they have MP included in the software but not sure if they have it in the replay. I used this alot in the past, it's pretty cool because you can set all kinds of indicators and timeframes you want. I just never used MP until recently.

You picked the right spot to set your stop, below support (assuming you were long above it). But you should put the stop as soon as you make your entry. You can always cancel and move it if you think it's justified. As MrPaul mentioned, some freaky incident like internet connectivity or power outage in one minute can be a hazard to your account. It's a lesson easy to solve but hard to execute until a big loss forces you to change your habit. As for where to place stops, that depends on your trading strategy and research. It's difficult to do but once you found a consistent spot, taking stops if a lifesaver. I usually place stop the low of 2 bars ago or the last pivot low for long. There are tons of books on explaining on how to place stops. But it must match your strategy and trading style.

PP, quick question. What tick charts do you use for viewing the trend and what tick chart for entering trades? Thanks.

Excellent recommendation. I think I'll order this one just to get a better understanding on how to use it. Thanks, blowfish.

You might want to get this book. There is a great section on P&F charting, also in entries and exits. It's the most anyone's done on explaining these types of charting on books. Technical Analysis of the Futures Markets: A Comprehensive Guide to Trading Methods and Applications

Ok folks, here's the first example of what I've found. The video has no audio, so you'll have to read this along with the video so you get an idea. I don't have a mic just yet. I'll get one next week. But here's the gist of it. From my observation, I've found that the bid and ask matrix provide lots of info particularly if the price will go lower or higher from it's current level, especially in determining breakouts. If you see the video, 649 6/8 (this is Wheat commodity in case you're wondering) is at VWAP. From there, the prices move down, so we're watching the market going down and see how it does it before it happens. When the current stays red (the right panel with price and volume columns), there is still buyers support that price. When that same price turns to green, support is about to give, buyers have either abandoned that order or the sellers have stepped down to absorb that price level. Usually expect the price to move down. 648 6/8 was day's low (support), when it turned green, it was ready to go down. Keep watching as I annotate the price levels on matrix and T&S on the way down. The second part is watching that same level being taken out with the vol on T&S matching the orders shown at that price level on the matrix. This is to verify that the orders were NOT being canceled but were taken out by a sell order (this is to determine if the buyer is fooling by showing large orders only to pull them, T&S helps filter that). This is the first example and first segment of my observation. Any comments/opinions welcome (including bad video taping... pls be gentle... I'm a virgin... with presenting with the vid cam). http://www.traderslaboratory.com/forums/attachment.php?attachmentid=2109&stc=1&d=1185822576 bid-ask-matrix-tape-reading-market-falling.swf

Yeah, I went through that period of ears hanging on every word of the reporters and anchor people (hint: non-traders) telling us their opinions. I learned that what they say and what the market actually don't correlate. If they do, it's already happened.

Ok, thanks for the clarification, cooter. That was what I thought, maybe I wasn't clear in mentioning it was mini-EMD, and wasn't aware there was a large size EMD.

Wow! Really? I have to take a look again CME specs. Thanks for pointing that out. I thought the margin was the same, you're talking about 16k per contract right?

Welcome to the forum, cog. I saw you have some experience as a prop trader right? Or were you just about to get it?

Hi Cog, I checked out the S&P 600 but it's too new and it may need some time for decent volume to get in gear, at least 6 months to get an idea about volume, slippage, etc. If it's the same as you say, I'll be watching. EMD in the mean is not so bad. Do you have any insight comparison between EMD and ER2? I've done some strategy testing on both and they produce very similar results. For now, I think I may stick with EMD.