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Gringo
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Everything posted by Gringo
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Futures in pre-market are showing some strength. Price is weak but has started to resist downward continuation around 63. This may be an early attempt by demand to halt the downward movement. 63.5, 64, 64.5, 65 are some levels where supply might show up in case price rises. Lets see if this is the start of an attempt to get out of the trend channel. Note the tighter supply lines to enhance the supply and demand dynamics. Gringo
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Despite so many days of weakness price is still unable to show upward strength of some note. It's the continuation of what started a few weeks ago and is a good lesson in realizing that once one is in a position all that is required at times is the patience to sit pat. The downward sloping trend channel is our guide and the guide continues to point down. The obsession with being right and catching the bottom would have given grief to those attempting such acts of valour. Catching a falling knife is exciting and the stories can be full of colour, but more likely than not that colour is red for the account and for the psyche. Gringo
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Price is still in the downward sloping trend channel. We have had a few days of price drop and conditions probably are quite oversold. Sooner or later a rise will come but we don't have much to do as long as price isn't able to show some strength and get out of the trend channel. On the daily chart today we glance at the volume for a change. Notice how volume expands on drops and contracts on rises. Each time the intensity of the trading has increased the supply has won out. How do we know that the supply has won out? Simply by observing that the price as a result dropped. Overall, heavy dumping of shares has been the overall theme. We don't need to know the volume to make our trading decisions though. Our trading decisions are based on price, however, having volume adds some extra information. Information that is not useless but is not essential either. Looking at the 2 hr chart, price has broken the dotted SL and has retraced a bit. Would this lead to a rise? Perhaps yes, but this is in a smaller interval and the larger trend - the daily trend - is still downwards. Until that dynamic changes we only observe the 2 hr chart. Now when the time comes after price has broken out of the downward trending channel we'll be more than happy to use the smaller interval chart for more precise entries or exits. This is a time for patience, a time for inaction. A time to just smile and let the future unfold. Gringo
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Certain members with less than noble intentions are significantly reducing the value that TL offers. There's a difference between a healthy disagreement and a massive copying and pasting campaign. I suggest a three pronged attack to rid of this menace: 1) Allow the ability to Ignore comments based on member ID. 2) Amazon like comment rating where a persistently negative rating hides a post only to be visible when specifically clicked. 3) Assign moderators who can simply monitor their respective areas and remove the garbage. The size of this site does make it tough for only a few to keep it clean. It's time work was delegated to those who have shown some sense of decency and common sense. The last point I believe is the most crucial as it can prevent TL from getting so bloated with the trivial that it crumbles on itself from that weight. The quality and ease make this site unique, and these attacks by spammers and ill wishers are an attempt to strike at at the very root of the success of this site. Gringo
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After such a drop yes the probability of jump is higher, however, to initiate a trade you would prefer an upward trend continuation. The market hasn't given a signal to go long as we're in the trend channel. Until we exit it it's not likely to show continued upward strength. First, the downward momentum has to slow down and come to a halt. Second, the demand has to show strength enough that it can push against the supply and push prices up. We haven't even gotten the first condition met so far. For day trading it might be fine but for someone holding say for a few days or a week this is the kind of thing that would get people to lose money if they prematurely attempt longs. The tape’s pointing down and until the price stabilizes and so far it hasn’t, we avoid longs and stay short. The price has dropped below the trend channel and I it might be an oversold condition. Wyckoff probably mentioned something like this somewhere but I am not certain. Whether it is oversold or not is irrelevant as we follow price and when a normal reaction to the upside comes we'll know with the rise in price. The drop itself has been retraced about 70% of its up move from 60 to 70 and that in itself is a sign of weakness. For short term or day trading going long may be fine but other than that it’s a big risk to anticipate. We're not anticipating but only reacting to what's the tape is telling us. Let the price dictate what needs to be done and wait for the first signs of strength to emerge before getting excited. Yes it is a late in the game to be initiating or thinking of more shorting. The danger of a violent reversal is there hence get ready to exit if you've been short all along, but only when price shows strength. Remember, we have our LSL, LSH, SL to alert us when it's time to take some off the table. On top of that we have teh tape reading skill to see price behaviour and recognize developing strength. We're not anticipating but only reacting to what's the tape is telling us. So far it's telling us to stay put and hang onto those shorts. Gringo p.s. I friend of mine was so excited yesterday and wanted to go long Q's. This alerted me to the possibility of other traders just seeing price drop and expecting the end of downward move as it has already dropped so much. Yes one may get lucky a few times but over the long term these kinds of things can get ugly and even mess with the psyche.
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Support was bypassed quite easily with the gap down in market. Trend is clearly down so we stick with the line of least resistance. No more swimming against the tide and we await the break of break of downward trend channel before thinking of initiating a long. LSL, R, and LSH are our guideposts to determine changes is demand and supply dynamic. The supports ahead could show up at any place as price has entered the tricky area with many potential S/R levels and it's by observing price behaviour can we hope to determine where and when price starts to halt or reverse. Potential support that's move obvious is at 63.5. 64.5 didn't offer much in making the price halt as it sliced through it nullifying that potential support as turning into a real support level. There is no telling it might start acting like a resistance level on the way up but we shall know only when price gets there how things stand. Wherever price starts to stall we'll attempt to look to the left to determine if a previous congestion area lies there. On the weekly chart the demand line has been convincingly violated as compared to the earlier behaviour where price went below it but didn't really crash out but was in the resting phase. Now this gives added credence to the possibility of 70 being an actual top for this bull phase of the market. We shall have to wait for price to trend up to determine with more clarity whether this hypothesis has validity. To declare we are in a bear market or 70 being an ultimate top is a bit premature. There is no rule that states just because DL was decisively broken that price can't make it back above 70. The bottom of the TR is around 62. As tape readers we follow the price and make decisions based on what is in front of us and not succumb to our biases. My recent approval for those with quick fingers to attempt long was a case of perhaps my bias taking over instead of sticking with the trend, or a desire to be the first to pick the bottom of this trend. Another lesson from that episode is the value of stop losses. Even with a wrong long call exit after violation of support at 65 was automatic because of the stop, restricting the losses to minimal. Re-shorting was a valid choice at the onset of the signs for continued weakness. Those who stayed short through this ordeal need to be commended for their patience and persistence. Allowing price time to move in the direction requires a zen like patience but is an essential ingredient of those who do make it in this business. Live and learn. Gringo
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Db, pointed out a bit of a flaw in my analysis. The trend channel is pointing downwards and this makes it a bit unwise to initiate longs within the channel. Doing so would be akin to swimming against the tide. Seems like an obvious thing but somehow it had slipped my mind. Gringo
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Gringo replied to leenora46's topic in Beginners Forum
Forex trading from what I understand is a losing proposition for over 90% of retail traders. Now giving up to 40% in extra funding is akin to broker going long on these net retail losers. This reduces the net profits of the broker with some increase in revenue due to a lot of new traders having some extra money to lose. Earlier only the new accounts were getting decimated, but now the broker loses up to 36% of their own money with each blown account. The net result is an increase in probability of the non-survivability of the broker. In other words if I open an account with 10 billion dollars the broker is expected to add 4 billion to my account? In this cut throat world does this not sound a bit weird? I have no clue about the broker or its operational and financial capacity. It's the logic of the argument that is perplexing. Gringo -
I was beginning to get distracted from all the comments on the charts. An attempt has been made to clear up the mess and to ensure the focus remains on price. The trend is still down and hopefully is a bit clearer to see now. Observe both charts and see if your perception of how price is behaving alters with a cleaner look. Price is above support and the trend channel is downward. The support level is becoming more defined as price spends more time unable to go below it. It's the inability of supply to push prices below support that give us the clue that it in fact is behaving as one. Before this behaviour it was only a potential support. There still could be another push by the supply to check the conviction of demand. As things stand we are in a mini trading range from 65-66.25 that is within the downward sloping trend channel. Same attempt has been made with the 2hr chart. Here those who went long haven't been forced to exit as price is holding above the support. Elections are over and those who are long can continue to hold their positions and if price is unable to move up or shows weakness choose to exit. Notice the SL/DL within the trend channel. Those still holding on to their shorts can wait the until the violation of 66.25 or the supply line that forms the trend channel. Follow your plan regarding the conditions under which an exit, entry, and stops are executed. If you don't have a plan then attempt to make one with some basic rules and continue to add to it as you learn more. Some of you might have noticed that for the same price behaviour one can have a long, short or neutral position. It all depends on risk tolerance and comfort level with the decision making process. Those with more time and eagerness are able to enter and exit more often as compared to those who have less time and prefer to avoid jumping in and out. There is no holy grail, but only the control of the self. The price isn't in our control, only the option to enter or exit is. Gringo
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We're in a TR and price so far is stuck between the 65-66 range so far. There was a lower high on the 2 hr chart indicating some momentum shifting to the demand side and a successful test. Those who have tolerance for information risk could have taken this opportunity to enter with tight stops on the long side. This would have reduced the price risk. Interestingly the election in the US is upon us and this is where information risk is high but price risk low. The price risk is low because a stop can be safely placed below the test area around 65 thereby reducing the chance of price going unexpectedly against the long position. This is where one can take a chance while the world awaits the news and more information before making a decision. In case the direction doesn't hold exit is close at hand. Keep in mind the price can meander and stay within a TR as there is no obligation for price to cater to our desires. We cater to its desires. As Wyckoff stated: The Tape Reader is not the captain - he's the engineer who controls the machinery. The Tape is the pilot and the engineer must obey orders with promptness and precision. Gringo
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Nick, From what I understand from the quote, Db is pointing out a minor discrepancy between behavior of futures and stocks due to one having float and the other not. There doesn't seem to be any mention of futures not being good instruments to follow. It is you who must decide what you want to and are able to trade. The principles remain the same irrespective of the instrument used. Gringo
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Trader Nick, Well done in going through the Wyckoff Lite thread. I hope you are able to maintain your focus and eagerness to learn. It is normal to feel overwhelmed as it is a unique way of thinking about, observing and diagnosing the market. In my opinion NQ Futures may be the easiest for learning purposes, simply because quite a few of us post about them our pre and post trading thoughts. This makes it easier to follow along and compare your thoughts with those of others. I use Ninja Trader (NT) at home for free replays. You can replay data upto one year old with a minimum 1 minute bar interval. If you have the ability to access NT during trading hours there are free data feeds that can be used to view tick data or say 5 sec bar interval on a chart. For hassle free web access that is only a few seconds delayed ForexPro is sufficient. I use it while I am at work to follow along the NQ price at 1 min interval. You won't get tick data with it though, but I've been able to follow along quite well. Try to read the trading journal and the trading in 90 min threads if you can. I would credit these for bringing it all together for me. PM DbPhoenix and ask for a link to live chat where we discuss NQ in real time. I believe this is a good way to accelerate learning even if not much makes sense at the start. Welcome and I wish you all the best. Gringo P.s. I post in the Daily thread which is more stocks, indexes, and ETFs if you prefer that.
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Demand propelled price up for a day and then fizzled quickly around the swing high of 66.25. It is a sign of weakness to fizzle this rapidly, however, we stay alert to the possibility of demand showing up again which could turn out to be 'test' of support. If there is lack of demand or supply takes over then prices can tumble lower. In case the demand does show up and halts the downward price move and starts to push prices up we may take that sign to exit shorts and in fact make a play for the long side. So lets see how things evolve from here. The test if it occurs would be from here to around 64.5 area ideally. It's not the exact point that is important but rather the way price behaves and whether it is able to muster some strength to the upside. In the absence of that strength we stay with the downwards bias. Notice the dotted SL which was broken to the upside showing a change in supply/demand dynamic at least for a bit in favour of the demand side. Now we have to see if demand was just a one time play or has some conviction to change the course of price upwards. The trend is so far down but we have our eyes glued to the price for any signs of change. Gringo
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Price rose and with conviction. At this time we don't know whether the demand is short term or serious in taking the price up for good. Those on shorter bar intervals probably would have exited after the price broke out decisively out of the mini consolidation (downward channel) on the 2 hr chart. Those who have stops at swing high or LSL are still short or may have reduced some position. And then there are those who are holding all their position to see this first price rise through to ensure it is not just a gimmick to shake shorts out of their positions. Whatever the case, keep in mind price is rising although the trend is down as can be seen by the SL still being intact. Those watching intra-day would have noticed price trending up and barely breaching the DL. It would be prudent to wait and see how price behaves from here onward. So far it hasn't retraced down much and is showing demand in control. Futures are trading in the consolidation range without dropping much which is alluding to possibility of more strength ahead. As Db, mentioned yesterday price rise from around 60 to 70 had a 50% RET back to 65 area before demand re-asserted. The decision making in advance is a tricky business and price is at a place where both bull and bears could be right. It's one's plan and the risk tolerance that determines how much price is allowed to go up before shorts are exited. There are those who would have initiated long positions after the price break out from the consolidation channel. Lets see what price does. Because the SL is intact I am not the kind to initiate long positions just yet. Demand has to show me that it means business and for a sustainable period before I switch from the short bias. This doesn't mean I am not aware of where price is and ready to protect or reduce or exit short positions just because I believe the trend is still pointing down. Those are money management decisions and must be made according to the plan. Weekly chart is showing a normal 50% RET and now some rise. Note though that after the last breakout above 68 price only advanced to 70 and then returned back. This weakness (lack of strength) combined with 70 being an old S/R are negative developments for the market. Nonetheless, price for now has started to rise and we'll have see how much is demand willing to do to deal with swing high, LSL, LSH, and SL for starters. Gringo
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Niko, You're right the last one may be held going against the direction of the market but it might not actually have been entered at the start of the move. Just like scaling out, the entries themselves could also have been scaled in, leading to the last contact having an entry closer to the middle or end somewhere. It all boils down to what you are comfortable with and your plan based on that comfort level. Some may enter all contracts at once and for exits use deliberate scaling out, while others may choose to deliberately scale in and deliberately scale out. Find out what you prefer. I am suspecting those who use tick charts or 1 minute or less bar intervals may actually prefer to re-enter rather than let the last contract float in the opposite direction. A person's comfort with how much he wants to be active in managing the trade will determine what the right course of action is. Gringo
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Is that me? Being mentioned in the same breath as Db in itself is a dream come true! I gotta pay more attention to what I say from now onwards as it might actually turn out to be important. I like the sound of it though, the big G. Gringo
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We're still in the downward sloping channel. On the 2 hr chart price has made a higher low. This could imply a bit more strength but also keep in mind the price had fallen again back from previous trading day's highs quite easily. I may be looking too deeply into the wiggles within the channel which may nor may not be that essential. The channel is intact and we really don't have a decisive decision yet and that's where we stand. Usually if there is conviction in demand for a long fight it does show up but there is quite a bit of weakness so far that even an up move of a day is nullified the next. Notice how price tested the support around 65 and went below it. There was a sharp reaction and price went above it for a day. Now it has fallen back below the support. It may be that the support at 65 isn't that solid but it is something to keep an eye on. We can only make decisions in advance as in hindsight everyone's perfect. There are no certainties, only probabilities and for now the channel holds and instead of getting all worried lets just observe price and base decisions when things do unfold. The LSL, LSH and the TR channel lines are there to give us warning when demand or supply dynamics changes. Gringo
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Demand showed some conviction on Friday. Lets see if this continues or was just a one time effort. 64.5 was where the bounce did come and price is above the support at 65. This was probably the first sign that demand is not taking in lying down. In any case also notice in 2 hr chart that price tested the lows and then the highs of the downward trending range and got rejected both ways. It did end up closing above the mid of the day's range showing some strength. Nasdaq is closed today because of Hurricane Sandy. Futures are moving around though so it would be fun to watch how futures behave with lesser participants. Keep in mind the trend is still down and we're just getting some signs of demand showing some strength but nothing decisive so far. Gringo
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This is Light Crude Oil inspired by Niko. I have attempted to reduce the S/R lines to make it visually easier to see what's going on. Notice on daily chart how price quite frequently jumps into another level later to reverse. In trading terms I would consider it quite tricky to trade this or perhaps even smaller intervals would be required to make decisions so as to control multiple stops or reversals. It appears that longer term trading using weekly charts is a somewhat easier than shorter term with daily charts. Simply because once a direction is picked light crude oil appears to behave more predictably than at the daily bar interval levels. It is my personal opinion and as I don't watch the behaviour much and only have the prices to judged it and even that in hindsight. On weekly notice this time around the price seems to be having trouble going all the way to the top or the larger range to 110 area and has turned south from mid point. This shows a kind of weakness in here. To tie it with the QQQ analysis (longer term) done a few days back which showed earlier signs of weakness in the longer intervals and here again even oil showing weakness I would stay alert to weakness developing in the global economic outlook in the coming weeks and months. Again after the next rise we'll have a better idea how strong the demand really is. The nice thing in using the Wykcoff method is that even without knowing much about the trading vehicle I am at least able for form a preliminary hypothesis which later could be tested for accuracy. As an example my hypothesis regarding daily trading being tougher than the weekly could now be tested to verify whether it in fact is the case or just an incorrect observation. This makes making practical decisions a bit simpler as I am not dependent on some guru for my decision making. Yes there is work involved but there also is self reliance and a peace that comes with such self reliance. Daily SL/DL chart later added: Gringo Edit: I tried to see whether SL/DL were reasonably predicting changes in trend and it appears they do their job quite well. I have attached another Daily with SL and DL to show it is quite possible to take advantage of the supply/demand dynamics. We could superimpose the two daily charts and the S/R levels coupled with SL/DL could provide a reasonably advantageous insights into how to trade light crude oil. I deleted my first daily chart by mistake so had to create a new one to show SL/DL. If what I am talking about isn't making much sense then perhaps reading the Wyckoff Light can provide a fantastic start.
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PM Db, and say Gringo referred you Gringo
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The grinding down continues. So far supply has continued to bully demand in this tug of war. Although the speed of the downward waves has slowed down the pressure is still downwards. How will we know when the pressure changes to upwards and demand start to assert itself? by observing price which will start moving up as a result. There are quite a few charts today to show price behaviour at micro and macro levels. I have also included a monthly (gasp!) chart to show where the price high around 70 might have its origins. Pre-market the NQ futures plunged and recovered but the price is still below yesterday's close. This could entice the traders to attempt to check selling pressure by trying to test the lower end. In case there isn't much supply we could head back up. After a sudden spike down if price starts firming up and resists the downward pressure the end of the downward price wave could be at hand. For now we know price is still weak and daily continuing lower. We stay bearish until some contrary behaviour indicates that it's time to change the stance. Pay attention to the downward drifting mini-trend channel. It's visible more clearly on the 2 hr chart as compared to daily. A lot of information for today. I hope it's not too much to digest. If it's getting overwhelming just focus on the daily chart and that should be sufficient to keep things in perspective. The other charts are just additional information that's nice to have but our trading decisions are mainly based on the daily. As the saying goes: The trend is your friend. Stay with the trend. Gringo
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For some reason shorting at the onset of weakness slipped my mind. I guess I had assumed full position in the short which subconsciously prevented me from seeing someone could add to the short position as well. Gringo
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Early morning levels: 70 65 Other levels: 96 86 82 80 79 70 65 59 57 48 46 Gringo
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Although the supply has the upper hand, the demand seems to have slowed the downward progress. This is reason enough to tighten stops on the short positions. The trend is still down even if price goes as far up as the last swing low at 66.5. The SL is there but could be breached today. Keep in mind though that the weakness is still present and demand is only halting the price drop but hasn't mustered enough strength to push supply back and move price upwards. Demand is beginning to show itself and starting to confirm that the line on the chart may be a support level. How strong? we don't know yet. The stop levels are still the same. SL break, LSL, LSH, BE, or whatever tickles your fancy. Trading the Wyckoff way requires one to let the supply and demand fight it out and pick the winner. We await the result. If price goes up some may exit outright and some may choose to reduce their short positions. The aggressive ones could take a long position based on whatever plans they have. Some with longer horizons could continue to hold until more strength is shown by demand before liquidating their positions. It's all relative, and only the preferences and plans are different for different people. This is the reason we don't all trade the same way despite using the same theoretical foundation and looking at the same price. Gringo
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Eminiman414, I would suggest you stick with the 1 min to learn and after a few months you can start looking at smaller intervals. You'll know when you are ready for smaller intervals when you start craving what's happening within those 1 min bars to make even better decisions. I only use 1 min and generally speaking can figure out the main theme of the day. Since you're getting used to how price moves the entry and exits are not that much of your focus as to get the direction straight in your head. Smaller intervals simply give you a faster and earlier signal regarding possible entries and exits but even 1 min is sufficient for learning purposes. I would even go as far and say a person can probably trade with a 1 min chart if he's aware of the limitations and is ok with some missed opportunities. If you can, leave the 5 second window open without paying much attention to it. You might slowly get accustomed to using it only at important junctures. You'll know what those junctures are once you get used to price behaviour itself. Gringo