Soultrader

Hi Torero, Read your post and something popped out in my mind. I was always curious to know the exact stop placements traders use when using pivots. How many ticks away do you usually place your stops above/below a pivot? The markets do have a tendency to test the highs or lows and even violate it by a few ticks.

lol.... we might as well have Dave Chapelle come on CNBC.

I definitely agree with her on this comment. I find the morning session the best time to trade as well as Tues, Wed, and Thurs. Mondays are not bad either... Fridays I find very unattractive. I make most of my money in the opening 60 minutes... lately I hardly trade the afternoon.

yea im definitely seeing liquidation by the longs now. Should start seeing some decent downtrends after the nasty consolidation we been having.

Heres mine: A. Keep It Simple Stupid B. Keep It Simple Stupid C. Keep It Simple Stupid D. All of the above

I dont think there is any single day easier than the others. I personally find it easier in the morning session so I choose to be aggressive and more conservative in the afternoons. Just stay away from the doldrums on Fridays though... its just not worth it.

Amazing posts guys. Indicators vs discretionary trading.... hard topic indeed. As I gain trading experience each day, I have personally found that the simpler the method the easier the trading. Im not sure if I mentioned this before but would like to post it again. A few years ago I was on the phone with my mentor discussing market outlook. In the middle of our conversation her 8 year old daughter interupts and says, "Mommy, why are you so good at reading other traders." This comment coming out of a 8 year old blew my mind. How true can she be! We are trading other traders. I can not move the markets... the group of big players move the markets. My job is to figure out what they are looking at and follow their footsteps. I try to ride the intraday waves that they move. I often ask myself, "What are they looking at? What are they trying to do?" Why? Because they are usually right. A trading signal off a EMA is somebody elses bread and butter. If they make money of it good for them. I cant make money of it because its not part of my sytem and methodology. Support and Resitance points, MP, and, pivots are what I am after. Linda Raschke mentioned how she knew a trader who made a decent living trading off one setup. Thats all we really need... one decent setup that gives us an edge. Big players like to watch for key price levels. Thats when they will step in to buy or sell the market. Which is why I focus on price levels. I always try to place myself in the mind of a big floor trader and what he wants to do. The difference in opinion and how traders process the same information differently is what makes the markets so fascinating. I learn something new everyday as I trade.... trading can be boring but my mind is always stimulated which makes this profession so much fun.

Hi Jay, Youre correct. Just make sure you use the correct high, low, and close. All instruments have different trading hours.

Very true ez. This is why the markets move from one key price level to the next. The markets will never reverse at a random location. They reverse at levels where the big boys are simply looking to buy or sell. When using pit noise, sometimes you will hear about a top tenner (one of the top ten biggest floor traders) fighting the entire market. I will often get on his side and fight with him. I have seen more right than wrong from these big players.

lol you guys are too funny

Hey JayRemy, You can pay just for the sofware fees. I believe Tradestation allows this. If you make 10 trades a month with TS they will waive the fees for you. So you end up paying only the exchange fees.

I have a friend visiting from the US so have been spending some time with her before she leaves. I will be back to trading from open to close starting Tuesday. Also, I dont trade much in the afternoon because of the time difference. I am usually asleep by 1pm eastern.

Hello Torero, I look at the time of sales. Ive stared at it and praticed it long enough to be able to read it fairly well. I just have a column for price and another column for size. I attached a picture of the time and sales I look at.

Short video on using gap fills as pivots and combining a market profile chart to identify the POC. CLICK HERE TO VIEW VIDEO Charts created by Tradestation Presented by Traders Laboratory

I agree ez. A 1000 lot on the YM... we are talking severe slippage. Around 20-30 lots are traded at each tick. Which would cause more than a 30 points slippage. The liquidity on the ES allows big players to trade this instrument. I also think market manipulation is hard in the futures market. In order to manipulate the ES, we are talking very deep pockets.

Hey wrines, Thank you for the compliments. A pure MP user would probably trade off a developing profile. I am sure traders like ant watches the developing profile carefully. However, I am more of a mix betweeen MP, pivots, tape, and market internals. I tend to trade off different methodologies instead of a developing profile. I think the VAL, VAH, and POC setups still work fairly well in the afernoon. But they are often used in the morning to trade off. I hardly trade the afternoon lately so I may need to get updated on market action in the afternoon. If I find any insights on this topic, I will definitely keep you posted.

Let's take a look at a daily chart again. Notice the high volume coming in on the sell-side again. We are now testing the trendline made from July and will be KEY to watch this level. We clearly are having long liquidation and without new market interest this can be a clear warning signal. Now lets take a look at the Market Profile chart. We are now seeing 4 days of lower value placement with decent volume. A clear warning signal? I think so.... we need to watch carefully on Friday and the following week. The markets have been moving in a consolidation to the downside for some time. Any break below the trendline and we can finally start seeing some decent trend days to the downside. I will be very flexible the next following trading sessions. I am looking at short setups but at the same time watching out for any bounce. Technically speaking the charts tell me of many warning signals. Should be interesting.

Phew! Finally I should be able to concentrate 100% on my trading. I'll be in the chat room all day tomorrow on Nov. 3rd, 2006. Feel free to join me. I'll be trading from 9:30am - 11:00am and 2:00pm to the close. Thanks!

Tradestation is great for charts. If you want to clear with IB just stick with it but paying that $99 plus exchange fees for TS is definitely not going to hurt you if you are really trying to learn tape reading.

Hey TinGull, If you notice the YM, the dead high was at the POC of yesterday. When the markets are far away from both the VAL and the previous days low, this offers a high risk/high reward situation. The markets are in complete imbalance. Because you can not rely on value points and the POC what you need to look is the value pivots and POC from the past trading days. I like to go back 10 days to view my mp charts. Or another method is to start looking for regular pivot point plays. Basically if price is accepted below VAL and the previous days low, there is a high probability that the markets will head lower. Therefore you can start shorting rallies. If the markets start consolidating, find the resistance points and play the upper range. Playing the open Couple steps I take when playing the open. Lets say the markets gap down below value the previous days range. I first check volume on the SSF's. I will then look for the next line of support. This will usually be S1 or S2. Then I look at the TICK's. Did the TICK's open up negative? Are they hooking at the zero line and falling? If so, I will short at the market looking to scale out or exit at the next line of pivot. Its just a simple method I use in playing the open.

You sure there is no auto-update? That is like watching Level 1 data. No good. Perhaps you should contact them and find out. If they dont provide it maybe consider switching to a more powerful platform.

Where are we headed? Are we still consolidating? Was today a warning signal for the bulls? Change in direction? We saw very interesting action today with the ES, YM , and ER2 all falling below value and never looking back. Does anyone else smell the shift in market sentiment? The past 8 trading sessions has been something new.... we havent seen anything like this in the past few months. Starting on Oct.23rd to Oct Oct.27, the YM had an overlapping value. Then from Oct.30 to Nov. 1st we are seeing lower value placement. What is especially interesting is the higher volume on the lower value placement days. From the trend formation in July, volume had been a good confirming tool for the steady uptrend we had. We saw higher volume on the rallies and lighter volume on the pullbacks. Over the past few days we have seen just the opposite with higher volume on the sell-side. A warning signal??? Are bulls now liquidating their long positions? This is something we need to keep in mind. The YM will now go on to test the 20 period EMA and the trendline cluster. This will be a crucial make or break point. Let's take a look at some indicators on the daily charts. See chart below: The MACD is a great tool for the daily charts. In the chart below, notice the cross in the MACD and the histograms below zero. The RSI is also coming down below the 70 line. A combination of warning signals exist from a technical point of view. YM Trading Plan As traders how can we monetize from these pieces of information? Let's try to build a trading plan. Let's take a look at yesterdays action. The YM saw price rejection above value in the opening 30min. This lead to a decline into value and then a final rejection to the downside. The POC and VAL should act as a key resistance point for tomorrow. Theres plenty of room for the markets to go down. Any further decline should take us to the 12000 mark offering plenty of opportunities. In my opinion, the short sellers are late coming in into this decline. The longs started liquidating early and now the shorts are jumping in. Why? This is because we did not have any key price levels to the upside on the dow. The YM took off to new highs with uncharted territory. Shorts need a little confirmation before they can start entering the markets. Therefore, I am not expecting a short covering yet. My bias is going to be on the short side. So my trading plan will be to look for short setups. The VAL or POC is number one. The previous days low offers another opportunity. 10/31 VAL is also in line with 10/30 single print tails. All of these areas are very close to one another and sellers will be looking at these levels. Be on the lookout for the upcoming trading days. Try to capture the clues the markets give us. Each infrormation is a small piece of the puzzle. The faster we figure out the big picture, the better off we are as traders. Good luck and best of trading. Soultrader

Trouble Holding On To A Position? All traders are guilty of exiting a winning position too quick. We fear the loss of paper profits or perhaps we trade our P&L instead of our charts. Whatever the reason, holding on to a position requires discpline and most of all a set target in mind. Many new traders tend to exit a winning position too quick just to re-enter and end up chasing the markets. How can one prevent this? Couple of interesting questions pop up in my mind. As intraday traders its good to have daily, weekly, and monthly goals. Are you capable of managing a position throughout the entire day? Do you prefer to set specific goals on a intraday basis? Some traders would rather take 2-3 ES pts then stick around until the close to manage a position. What does your personality tell you? Scaling Out Scaling out is a method I use to help me control my greed and fear. With defined exit targets for portions of my position, I am able to hold on to the last quarter position. For example, if a trader is trading 2 contracts, his first exit target should be 10-15 YM pts. Once this is hit he can then bring his stop to break even and try to ride with the remaining contract. Thus scaling out helps manage a trade psychologically. Understanding What "They" Are Doing Its the big traders that really move the markets. So what are they watching at? Big traders and floor traders who make up most of the volume watch for key price levels. Its fascinating to see the markets travel from one pivot to the next. This is how the markets behave. New traders need to hold a stronger belief in their methods. If price breaks a pivot and the previous days low is 20 YM points below it, expect "them" to bring it down to this level. The markets like to test key levels to see if there are buyers or sellers at these levels. If not, "they" will take it down to the next line of pivot. In the chart below, notice the break of price from the value low pivot. Where can you expect prices to travel next? Answer: the previous days low. This is typical market behavior. Always know where your next line of S&R and this will help you hold onto a winning position. The markets don't just reverse at random price levels. They will test key levels. Afterall, we are not trading the markets. We are trading other traders. At what levels are the big players looking at?

Hi Jay, Most platforms should have a time of sales. The column you see on the vidoes is basically a time of sales with just the price and size showing. I place two columns side by side. The first column shows all transactions while the second column shows 10 lots or more only. Im not familiar with IB, Sierra, or Braket but check to see for a time of sales. You can then customize it to fit your needs.

Hi Ramzes, Are you looking to trade from a longer time frame? If youre going to be actively trading, I do not recommend delayed quotes. Also what steps have you taken to educate yourself in trading? Soultrader