torero

I think it's harder to learn to exit properly than entries, because are a few ways to enter (price or indicator signals) but tons of ways to exit (normal stops, percent or dollar trailing stops, SAR, stop loss, etc). I'm still learning to how to stop properly. Psychologically speaking, exits are harder to take than entries. Learning to use a simple stop loss is a major step for any trader. And learning to stay with a trend is even harder for any experienced trader. Even most traders from Market Wizards admit they tend to exit too early.

I'll not be there. Got a meeting to go to. But Tuesday definitely.

Some traders use them. I don't use them myself but it wouldn't be bad to see the market breadth to confirm the breakout, etc. Just starting to read John Carter's book and he mentions that he uses ER2 as a leading indicator to trade ES, YM, and NQ. I didn't know that myself but worth verifying if it's BS or not. I know many ER2 traders keep an eye on ES to confirm ER2 movements. I don't do that either. I just use ER2 prices and volume. I may start to incorporate the TRIN, but have to observe it first to see if reinforces my method or muck it up.

While I agree that Jesse Livermore book imparted more general maket wisdom than any other book, finding a particular trader in learning tactics and strategy is difficult. Had to do that on my own. Bruce Kovner is my other favorite trader.

The previous chart shows the force index on the bottom. I use it for the first hour, then ignore it the rest of the time. By then I already have an idea what the market looks like after many bars have appeared since opening. I usually get an idea of the last hour of the market the previous day but volume (or lack of) is very important in the morning to confirm the previous day's action. In some ways, the last hour is used and extended into the opening to get direction (higher high/higher low and lower high/lower low). You can see from the chart, the previous day action was already making lower high/lower low. So it continued down on opening, but volume sided with the bulls (shown on force index) and reversed. I waited for the next higher high, then on the higher low to make the entry. Yep, my mentor taught me that before anything else. Everything else made sense later on after understanding this concept. Now you know my secret.

Check out enthios.com with ES and ER2 blog. He uses VPOC as S/R. His method is mainly counter-trend trading, which I think is ok but not my style. Heck I bought his book based on Fibo title but this blog is all about MP, nothing about fibs. I'm confused as to which method he really uses or the book is just for selling.

I totally agree. Shouldn't listen to anyone without doing your own homework to verify it or not. It's my opinion, and it's only ONE opinion, so shouldn't take mine as is. I only emphasized that learning to read charts is important. I am not dissing indicators at all. I myself use a few indicators. They work better if a trader understand how price action works before applying them. At least understand how the formula of the indicator work before trading it if he's doesn't want to learn to read charts. Say, if a trader knows that oscillators work well only in range-bound markets, then he's already got a foundation of understanding in chart reading for that particular indicators.

S/R levels on this timeframe is decent, but the most reliable are daily, weekly, and monthly. In this case, it worked in this time frame for fed news. But opens and closes as well as trendlines and patterns on these higher frames are more reliable.

Used to trade NQ, ES, and a bit of YM. I settled on the ER2 and left the rest behind. ER2 just seem to flow better than the others. I can stay in a trend better with my method than the others. One other advantage is that the emini Russ doesn't obey the Russ index like ES and NQ to their respective indices since these are so major reference points for the financial markets. So if you see the $COMPX near resistance and NQ has some ways to go, gotta keep an eye on $COMPX to cues. Russ index doesn't weigh that much on the emini Russ, it seems to have its own mind so I don't need to eye on other charts. Just my opinion and personality though. If you find YM and ER2 similar and you're doing well with YM, why not go with a higher payoff.

The shaded boxes are where the news came out (between 2:00pm and 2:15pm). I drew this arbitrarily because the time is not important to me. My only concern is how the prices treat the S/R levels. The red arrows are where my short entries would be. So in both charts, the news came out, the first chart didn't go down hard, although it was already bearish before the news (left side of shaded box), it was already below the rectangle support. When it came up to meet it was resistance, right when the fed news came out. Since prices didn't bring it back above the resistance, it was still bearish so I waited for a lower high to make my entry. The 2nd one where the fed news came out, it tanked hard, hitting past below the rising trendline, that was bearish. It recovered and stop at that line again, this time it's used as resistance, that's a confirmation that the market was bearish. Then it preceeded to chop forming a small HnS. Once it broke the neckline, I measured the target. Hope that explains it better.

It;s up to each person to properly size their position. So if the stop is wide, I'd reduce number of shares held to maintain a balance portfolio. Sometimes a stop is wide because it's the only way to give it market room and to let the pattern play itself out without being interrupted. I'd hold it until target is reached or something in the market indicates that the target may not be possible. I either exit or reverse.

nasdaq was in the chatroom on the 26 and mentioned about the IB tactic. I didn't catch everything, can anyone repeat what it was again? Wanted to see how he used the first hour to set up the trade. Thanks.

IMO, it trends longer than others, also the payoff is higher. An average day is 12-15 points, so a few points here and there can add up. I go for 2-3 pts, it's not alot from the average range, but it's $100 per point. Not sure if YM has the same payoff for the same trend. I notice on days the markets shows itself flat end of day, say open to close is 1-2 pts, yet the Russell has had a full day with 10-15 points range. Volatility is the answer I reckon.

Excellent article! Thanks, MrPaul. Mentions forex as good candidates for Fisher system but problem is the dang market is 24hrs, where do you start and end the 15min open range?

Most of us sit in front of the computer watching the market trying to keep our mind and body in check with the trading plan. We are all alone trying to keep a straight path. This profession is one where we each deal with our own demons alone. This book opened up the channel of communication between our demons and the trader we want to be. Positive self-talk is what I learned to stay focus, calm and unemotional. Most people can't even hear their self-defeating talk or hear their head talk themselves out of doing the right thing at the right time. Happens all the time everyday. They can't even hear their own cry for help. This books helped me pay attention to what my mind is saying (negative or positive). If I hear negative things, I turned it around to reflect a focus thought. This book gives you excercise to take steps to practice and eventually use it in the heat of battle. I'd recommend it to anyone who's still trying to overcome their psychological weaknesses.

Excluding the context of him selling other products, I found the book enlightening. First time I was exposed to money management, with 2% principle, got me started on the right track to become a better trader. Not his idea maybe but still a valuable read.

So how is the A/D set up or be found? I'm studying to trade forex right now and still looking for profitable system and pairs to trade.

i'm not sure if anyone has been to enthios.com where Jardine talks about VPOC (Virgin POC) where this POC has been touched by price in the days after the POC was formed. Anyone know if this worthwhile technique?

tingull, what timeframe as you using for MP charting? I see you have 2 mins shown but is it what you use or something else? thanks.

Does anyone have a chart so I can get an idea what you mean? I don't have the book so I have no idea in my head what it looks like. Thanks.

After long search for the Holy Grail, going from one indicator to another, I was recommended this book. Along with it was a mentor who guided me by answering all the doubts, vagues ideas, hidden messages, and real life action of these ideas in real trading real time. But this book is the foundation of my method today. Nothing new really, everyone uses it or at least talk about it. But one secret is reading it over and over to get to truly understand the authors' detailed descriptions that were missed in the last reading. I still use it as a reference when I'm confused as to what the market is doing. This book emphasized price action as king, everything is secondary. It covers price, volume, trendlines, patterns, stops, and targets. It's one of the few books that cover profit targets. Then there are secondary topics like position and portfolio management, situation with hyperactive stocks, crashes, account management, etc. These price action form patterns over and over no matter timeframe, instrument or time of day, month, or year. It took me a year of reading and rereading and to put into practice with success. I recommend this book for anyone who wants to understand market structure and behavior. Take nothing in the book for granted. Every line is important. Every line is a nugget of wisdom.

Now, I'm curious to buy the book too. Nas, now you've really opened up a Pandora's box!!! Ok, once I have the book, I hope you'll be around the chat room to answer questions and walk us through it LOL!

You probably know I'm a S/R, trendlines, and patterns trader. I normally don't stick around for the afternoon to trade, so on Fed news I'm there once in a while. But in these 2 examples, I would have traded like this. As you can see, the moment leading up to the Fed news, the chart has already said alot: moving up to resistance and drop below the support that became resistance. On the next rally, I'd sell and my stop would have been above the resistance lines. The top chart, the short was 45 minutes after the announcement. The 2nd short was 1 hour later. By that time the volume would have settled to find real direction by then. Of course 20/20 hindsight it's great but trading it is a different picture. I always look for higher high/higher low for longs and lower high/lower low for shorts.

Yep. Most trend following system make their money on big trends and lose their money on ranges. The ratio of winners to loser is usually around 1:3 but the average win is 3x or greater than the losers. Daytraders have higher winners to losers but the avg win to avg loss is similar, big trend or not.

only a very small minority, usually market makers and specialists and floor traders. So very very small minority. The best way I know is wait for the news to come out, then let the volume settle down a bit, then watch for higher high and higher low (to go long) or lower high and lower low (going short) from there on. You pretty much have an idea where it'll go next. Of course you have to keep support and resistance in mind. Fed news is one example I trade it. I trade emini Russell so not talking about stocks here. Stocks might require a different style.