Soultrader

The article is from the December issue of Technical Analysis of Stock and Commodities called "Spread Analysis And A Look At Uknown Fundamentals".

I was reading an article on spread analysis today and there are some points I have yet to comprehend completely. The article focused on using the spread as a leading indicator to sense bullishness or bearishness in the futures market. The futures market is classified into 3 groups of market participants: noncommercial, commercial, and nonreportable. As an intraday trader, we need to follow the footsteps of these noncommercial traders as they reported to make up approx 80% of the total volume. Noncommercial traders are referred to as the big boys or the large speculators in the markets. The question I have is regarding the activity by these noncommercial traders to push the nearby contract in relation to the deferred contract. The article mentions when the spread is narrow, noncommercial traders hold a neutral to bearish outlook while a wider spread would indicate a bearish outlook. Can anyone explain this concept to me? Why would traders trade the future contract and not the current? How can one apply spread analysis to their trading? Thanks

Here's my list of favorite movies and documentaries. I am an official movie junkie so my list is a little long. Movies: 1. Heat (classic) 2. Rounders (poker flick) 3. Wall Street 4. Boiler Room 5. Casino 6. Good Fellas 7. Fresh 8. Paid In Full 9. Office Space 10. Boomerang 11. Crash 12. Requiem For A Dream 13. Glengarry Glen Ross (real estate flick) 14. The Descent (twisted horror) 15. Invincible (football flick) 16. Godfather (all of them) I probably have around 30-50 more but its all I can think of for now. Documentaries: 1. Death in Gaza 2. Trillion Dollar Bet 3. Enron: The Smartest Guys In The Room 4. Conspiracy of the Moon 5. Fog Of War 6. Google Behind The Screen Havent got a chance to see that many documentaries yet but I do enjoy them.

Video from Dec. 14, 2006 on some tips to identify a trend day within the first 30 minutes. Also explains what to expect in the afternoon session on a strong trending morning session. CLICK HERE TO VIEW VIDEO Charts created by Tradestation Presented by Traders Laboratory

Excellent post Kiwi, covering perhaps one of the most important aspects in trading! The gratification I receive on a planned out trade far exceeds a winning impulsive trade. Designing a trading plan and following is a must. A trader with a trading plan can get into the sniper mode of waiting for that killer trade. A trader without a plan will end up overtrading following absolutely no setups. A plan keeps emotions in check. It is a clear roadmap and I could never trade without one. The times I lose are times when I didnt spend enough times designing my trading plan. I am fortunate enough to have learned strict discpline through my long years as a poker player. Similar to trading, there are so many possibilities in poker. You need to be prepared for all the possibilities and play your hands accordingly. Play tight but aggressive. Sometimes you have to lay down or fold a good looking hand. Even the best looking setups might have to pass in trading if internals are acting weak. Intuition in trading allows one to filter out the good setups from the bad. This creates further discipline in my opinion.

A day trader finds opportunities in a trending market or a rangebound market. You can buy the dips in an uptrend and short the rallies in a downtrend. You can fade the upper and lower extremes in a range or play the breakouts of key S&R levels. Day traders are also aware of key economic numbers that are released everyday. I like to watch how the markets react to the news. I also like to watch the overnight session and the market reaction to any significant overseas news. My question is are day traders 100% technical? From my own experience, I am 100% technical. I have never paid any attention to fundamental news, and economic numbers do not really bother me. All I do is watch the market reaction to the news. As a day trader, there are only a few options available each day. Buy pullbacks, short rallies, fade ranges, play breakouts, or stay flat. What are your thoughts on this?

Interesting, I always use the continuous charts all year long. Looks like a little premarket resistance at 12425 level. Should be key to watch here.. also Fridays high.

Raul's been missing lately. Hopefully he will come back with us and answer some of your questions regarding this strategy. I would hate to lose him.

The only reason why I still use attachments is for guests... it forces them to register to view charts Im using the @YM charts... could you check that up for me. I may be wrong.

I agree Torero, I also have the problem of locking in profits too soon. Futures can be pretty volatile which is why I tend to ring the register because I constantly assume a reversal.

Quick YM analysis for Dec.11, 2006. I have my trading plan set at this particular levels. (chart is attached) Will be looking at Fridays range: low and high 12335 - 12340: 12/01 POC and Fridays low cluster 12425 - 12430: 11/29, 11/30 POC and 12/07, 12/08 VAH and Fridays high cluster 12470 - 12475: 12/04 POC & 12/07 high 12500: 11/24 POC, 12/04 VAH, 12/05 VAL, 12/06 VAL and psych level I will be looking to place trades at or near these levels using tape and market internals to judge whether price will meet S&R or break.

Welcome to the Lab Traderbong I trade the YM exclusively as well. Glad to have you here. A couple traders here have taken the Cisco course and have mentioned great things about it. A further insight on market profile on Mind Over Markets.

From my understanding Ninja Trader allows automated exit strategies? Does anyone have any experience with them and what are your thoughts on it? Thanks

With 2006 almost coming to an end, what was the biggest trading lesson you learned this year? For me, it was understanding that the market will do whatever it wants to do. It doesn't care about what I think it should do. Instead of having a bias, I learned to approach everyday with a flexible mind and plan out every scenario. It has helped me fight the overall direction of the market.

How many roundtrip trades do you all make a day on average?

From my understanding Mondays have the lowest probability of a gap fill. Also the first day of every month has a low probability as well.

Its imppossible to explain market profile in a few words or even a paragraph. The best way is to pick up Mind Over Markets and read it thoroughly. MP traders here are all familiar with the book so we have alot we can dicuss. By the way, POC refers to the price level where most of volume occurred. Market profile is an auction theory based on market balance vs imbalance. When a market trades in value, the market is balanced or rangebound. A trend occurs when the market leaves value and searches for a price area where it can establish value.

I often use self hypnosis and try to clear my mind from any thought right before the trading session begins. It takes practice at first but once you are able to completely eliminate any thoughts and make your mind blank, it allows me to focus when thoughts re-enter my mind.

Traders often use reference points to plan their trades from the short side or long side. I use S&R levels that I derive from looking at the daily charts to plan my trade from the short or long. If price can not break above a specific price level, my bias would be short setups for the day. What other reference points do you guys use and how do you play them?

Yep, Im staying away until Monday as well. I have absolutely no reference points to base my trading on. No trading plan... so Im pretty lost.

Do you guys trade on roll over day? I always get confused about my price levels.

Not sure testaclese. I dont use the ER2 TICK's. Try searching it in the platform with "Russell".

Yes testaclese. Market Profile can be used in most financial instruments.

I use @ER2 for Tradestation. Or are you referring to TICK's?

Yep. Itll be just a discussion in the chat room. Stop by if you get a chance.