Soultrader

ah... one of my favorites too. Great book.

I have a very conservative method for catching a falling knife. Im not a great counter trend trader so I always wait for a shift in market sentiment. One method I use in a downtrend is to wait for a new TICK high. Then I will enter on the next pullback. This seems to work a fairly good amount of times. I may get lucky and catch a nice reversal but it is usually good for a nice bounce. Anyone else have a countertrend method? I experimented counter trend trading at pivot levels but got annihilated several times. Ever since then I just go with the trend.

Thank you Antonio. You mentioned that the index divergence is not as weak as the YM was indicating. Basically this would be adding more weight to the S&P 500 compared to the Dow? What I mean is it possible that the rest of the market is lagging and the Dow is leading indicating weakness? Of course technically at this moment I do not see market weakness but I am curious to know because in a market top, one index may lead the other. And this information can be crucial in timing your entries. Thank you. James

hehe... my favorite as well. I must of seen it over 20 times. I also liked Boiler Room although it was pretty unrealistic. I thought the Enron documentary, "The Smartest Guys In the Room" was pretty good also. Didnt quite like Rogue Trader though, it could of been alot better.

I enjoy trading discretionary but with a systematic approach. I have developed setups with rules but I still decide whether to take the setups depending on market internals and tape. I am not fully familiar with how system traders take their trades... do they take every signal regardless of market conditions?

Very powerful information Antonio. This is because I was waiting for the markets to bounce after it opened right below the value low pivot on Friday. I eventually went short at the break of the 9/21's low. However, going short right at the open would of offered a high probability trade. I will be studying this type of day carefully to see what kind of setups I can take the following day after a 3-I day. Thank you for this.

Antonio, I know I need to get in the habit of analyzing different indexes with the YM as well. For example, the YM and ES divergence was something I totally missed. Do you think the ES leads the YM all the time? What I mean is, that the divergence information tell you that the YM should follow the ES, instead of the ES following the YM? (I hope this makes sense)

Glad it helped. Its always a good idea to look for clues to why the markets gapped up as much as it did. I usually start by going over any economic number that came out. There are several extremely important ones and alot of mediocre ones. For example, if the CCI, Employment Situation, GDP, etc.. and the markets gap I will be careful. These numbers can often cause a contiunation gap. If the economic numbers are not as significant, I will then look at the SSF's to see if there is any action premarket. There is an excellent book called, The Secrets of Economic Indicators by Bernard Baumohl. I often use this book as referennce since I am from Japan and not familiar with all the different economic numbers.

Hello ezduzzit, Sorry about the confusion. What I meant was if it closes above 1.5 but below 1.6. This data is a little outdated now but from my observation, this is still a pretty good setup. From my experience, waiting until the evening to establish a position works better. It allows you to use a tighter stop. I have also heard Hubert mention going long at the close. A couple other professional traders use this setup and most of them will wait until the evening. They all agree that it works better establishing a position in the overnight session.

If you have a full-time job other than speculation, day trading will be hard to do. I think your 1-5 hold time is perfect for your situation. Look into studying technical analysis. Learn price levels of support and resistance. Identify high volume areas and trade the charts. Make sure you develop trading strategies for each pattern you decide to trade. If you are interested, I recommend reading How I Made $2,000,000 In The Stock Market by Nicolas Darvas. He has a very interesting theory called the Box Theory which he applied to the stock market. His timeframe was also similar to the timeframe you are looking at. The book taught me alot about understanding price levels.

Couple of things that I will be watching for. The market is pulling back to the 20 period moving average and the trendline. The markets did hold at the 9/19 low around 11555 - 11560. This could be an indication for another lift towards the upside. However, couple of warning signals lie ahead. We had higher volume on the sell-off. Also take a look at the market profile chart. The 9/20 gap up and higher value placement occurred on lighter volume. The following day, we saw a sell-off for approximately 100 points. Fridays action was fairly balanced and we had a rangebound market. However, we had a lower value placement. I will be holding an open mind for Monday. Although my bias is towards the long side, we will need to clear the overhead supply caused by profit takers. The 11555 support level will be a key level to watch. If the markets can hold above this, I will look for long setups.

A nice little handy book in case you have trouble interpretating financial statements. I am a fan of all Benjamin Graham's work. For the most part they are very informative and contains tremendous investment wisdom. This book is not a complete reference to fully understand how to read balance sheets. However, it has been incredibly useful as a simple reference when I need a little help with financial statements. The book is somewhat outdated as the accounting jargons have changed. A small book with tremendous value. Highly recommended.

A great fictional story of the rise and fall of TASR. A very entertaining story dealing with insider manipulation, accumulation, and distribution. You will learn about the boom and bust of Taser, the stock operation of the big boys including the founders, investment banks, and hedge funds. You will learn how stock operators feed to the public using momentum, fundamental news, and manipulation. This is not a book aimed in providing market or trading strategies. However, one can be well informed of the tactics used behind Wall Street to pump and dump a stock. You will pay dearly for being a naive investor. Learn how insiders profit from the less informed outsiders. Overall, a good and entertaining read.

Overtrading is one of the biggest causes why traders never make it in the financial markets. With a click of a button, a trader can place a trade anytime he wants. It takes tremendous discipline to hold yourself back from overtrading. There are many reasons why one may choose to overtrade. 1. Traders without a plan Traders without a plan are my favorite type of traders because they will always lose. Without a plan, how would one know when to take a trade and when not to? Having a trading plan is a necessity. I can not trade if I do not have a plan for the day. I feel lost without one. 2. Revenge trading Many new traders become tilted after a loss or a string of losses. This causes them to revenge trade just to break even. This often leads to reckless trading forcing a trade when opportunity is low. 3. Chasing the markets Alot of new traders feel more pain when they have missed a move than an actual loss. This is why new traders love to chase the markets. If price has moved away from your projected entry point, let it go. There are plenty of more opportunities. Chasing is one of the worst habits a trader can have. Not only does it offer you low rewards, it also gives you a horrible entry and alters your stop loss placement. Always think about the risk before the profits. When you have a plan to follow, it is easy to filter out bad trades from good one. This keeps you discipline and selective in your trades. I personally do not like trading more than 5 roundtrips a day. Patience is a virtue. There are always good high probability trading opportunities everyday. Just sit tight and don't jump the gun. One way to control a loss is by reducing your size. The problem with gamblers is that they will often double up their stake so they can get even quicker. This usually leads to a greater loss and devastation. Having the strength to grind your way back from a loss is important in trading. Whenever I am having a losing streak, I will trade small and gradually recover. This also gives me the confidence I need after a string of losses.

There are a variety of methods in trading. I recommend you start reading about the methods of other traders and find what may fit you. For example, some people use price levels based on fibs or pivots, Others use volume analysis, market profile, tape, etc.. It all depends on your style of trading, Do you want to be in and out in a matter of a few minutes? Are you looking to capture the bigger intraday swing? Would you want to make 20-30 trades a day? Self-understanding in trading is vital for success. There is no simple solution in trading.... those who seek for a simple method to follow or their neighbors advice is destined to fail.

Okay, this is not a trading book but an excellent book to get you started in strategical trading. Sun Tzu is a true master of strategy. There is something one can learn from every page in this book. "The battle is won before it is fought." How true can this be when applied to trading. Trading without a plan is a sure way to lose. Trading is not all about being on the offense either. Be defensive (remaining flat or trading small) is also another form of offense. I have personally read this over 10 times and have found it a great help in my trading. I does not have to be applied to trading only either. The wisdom given by Sun Tzu can be applied in all areas of life. A must read!

Hey Jacobnbar1, You got the audio version? Which means you will be unable to view the charts and setups Alan Farley has in the book. I also have the audio version and the book version. I did this so I can listen to some concepts in his book while working out. Either way, you will still find the audio version useful. I posted a chart... this is the reason why I do not play breakouts.

Here is the results of the squeeze indicator from today. Keep in mind that today was a pretty rangebound day consolidating between the weekly pivot and the S1 pivot zone. I think it will work better on a trend day. Perhaps it can give an early signal for a trend in play.

Hey Antonio, Timing was off by 1 Day but it looks like we got that pullback

Im going to test it out today. This is good for a trending market or a wide range day, so I will need to devise some setups that I can use with this indicator. Perhaps it is best used to confirm a setup instead of using the squeeze indicator as a first choice.

I admit, I pushed it too far by saying indicators are useless. I know they can be used to trade successfully but Linda Raschke said it best, "I've known hundreds of professional traders throughout my career. I don't want to disappoint you, but I know of only two who were able to make a steady living for themselves with a mechanical system.†I completely agree with this. There are no secrets to trading. A simple trading plan is enough to generate a steady income. The key to success is understanding your methodology 100%, believing in it, following your trading plan, and having discipline. But I think the tricky part is that although you will see professionals trading as if trading was easy... to get to that level of comfort took alot of hard work. Trading should be easy, but that is after you graduate from the hard part.

Backtesting is accurate but you need to understand that market conditions change all the time. If you are testing a system, you need to make tweaks or changes to it with the changing market environment. Also once you have real money on the line, all the backtesting in the world is not going to help you if you can not follow your trading plan/system. Give a reckless trader a good system and I have my money that he will not profit from it.

Nice chart That is precisely a 3-I day. It is a great example because price usually trade within or above value for the first 90 minutes of trading. I am trying to work on a strategy to trade this type of day since it offers a high probability trading opportunity to the long side. Note: How do I spot out a single print tail on the MP indicator you designed?

Very nice Antonio. I am actually going to test this out. Do you know if this indicator was written in the same way as the TTM Squeeze Indicator?

I have actually only read the first and second edition of Encyclopedia of Chart Patterns. But from my experience with his books, I would be interested in reading Trading Classic Chart Patterns as well. If you end up reading it, I would love to hear your review on it.