thalestrader

Did they open the cash market just for you? Best Wishes, Thales

Stops are based on S/R, and the size of the stop will depend both on the volatility of the market and how facile you are with your entries. A 5 point stop is $250 - can you afford to risk $250 on a trade? If yes, trade one contract, if no, do not take the trade. Over time, a larger, properly placed stop, assuming it is properly placed, will save you mcuh more than the accumulated losses will cost you. I will usually add a few ticks to the ES swing initially for a stop. I often enter at market based upon what the SPX is doing. Make sure you are using real time data for your SPX feed. I think IB's is delayed unless you "pay" a few extra dollars a month. The cash will, in my opinion, offer a more accurate view of the market. You are on your own with respect to trading platforms and software. You might want to set up an IB paperr trade account and play with the the settings there first, and then duplicate them in your trading account. I sometimes go months without logging into Ninjatrader, and then I'll go months at a time using nothing but Ninjatrader. Bottom line - you need to learn and be comfortable with whatever software you are using to connect you and your money to the market. Best Wishes, Thales

Trendline is broken, and price back above yesterday's low, so taking profits on the shorts would be in order. Best Wishes, Thales

As noted, price broke yesterday's low, and then approached the 1576 previous all-time high level, hovered just above it, and has since rallied back to test yesterday's low. You can also draw a downward sloping trendline from today's high. I would exit shorts if that trendline is broken, and I would look to hold my shorts if price remains under yesterday's low. Best Wishes, Thales

So far SPX opened with a rally right into your 1598 level and its been more or less straight down ever since. Just took out May's low and closing in on 1576, the 2007 high. Below there we should look at the March 1570 high, and below that, the 1536-40 area. Don't be in a hurry to buy support levels or close shorts early. If support breaks, you should immediately consider it potential resistance, and add to shorts on a test or initiate new shorts. Best Wishes, Thales

You set out to be a day trader. There is no easier way to do that than do trade off S/R. The hard part is forcing yourself to wait for price to get to an S/R level, and losing sight of the overall context, e.g. has there been a gap, is price trending from the open, or has it been tight and choppy, is th eintermediate trend up or down, etc. and so on. Keep it simple - trade smart today. Best Wishes, Thales

I suggest you watch the five minute chart, and switch to the one minute or even a tick chart only as price approaches one of your levels. What does Trader Vic say about gaps? A gap that doesn't fill in the first 15 minutes is unlikely to fill that day. It doesn't always work out that way, of course, but it does often enough that you should pay attention to it. This is about highs and lows. As you noted after the fact, the trade was short on the rest of the 6/13 low. You have everything you need to be profitable. You need to teach or habituate yourself to apply what you know consistently. Keep it simple: Price gapped down and quickly reach the 6/13 low. A 123 on the one minute could have had you get long. Depending how youmanaged that trade, you could have lost as many as many as -2 or gained a doubtful +4. However, given the downside gap, it would not be unreasonable if you had taken a breakeven stop or even grabbed a point or two profit. Once price dropped below 1608, you needed to wait until a 1598 print to think about possibly getting long or a rally to 1608 from which to get short. Again, given the gap, any long should be treated as a scalp at best. What you did was take two trades in the middle of nowhere, and then you did not take the trade where price trade right back to a level you had marked before you even went to bed last night. Keep it simple: Trade only when price is at a S/R level. Respect the day's trend, especially when that trend has been intact from the opening bell (and in this case, from the prior session). Don't be discouraged. But don't look for new things. Just go over this thread from start to finish over and over again. Best Wishes, Thales

You might find it beneficial to think in these terms: There are levels of potential S/R (specific swing highs and lows), and there are "zones" of potential S/R where two or more prior swing highs/lows are in close proximity to one another. If you go to the Reading Charts threa, you find a bunch of examples where I demonstrated what I refer to as zones through the use of colored rectangles. It may seem simplistic, and many may disagree with me, but the most important levels any day of the week for a day trader are the prior day's high, low, and midpoint. Then you need to know where the most recent swing high and low were, and the midpoint between them. These will be your "zoom in" and your "zoom out" view. Then, if the market is trading down, the areas to watch for are the prior daily lows. If the market is trading up, then the areas to watch for are the recent prior daily highs. You do not need to mark every prior high/low. You should mark the most recent in time and closest in proximity, as this will be the most likely to come into play. For example, today's low took out the prior two day's low, so you want to be aware if price trades back to test either as resistance or breaks back above and then pulls back to test either as support. You should also be watching for the next important prior low, the 1624 low from 6/14. Keep your charts as clean as you can but not so void of "reminders" that you miss opportunities. Best Wishes, Thales

I was just watching the ESU trade down into the high teens, and I logged in to remind you not to get greedy. If I count correctly you are 24 ES points to the good for the first three sessions. Nice trading so far this week. This is where things tend to fall apart for many folks, so you need to be diligent and watch yourself. Keep to your routine, and remember that if you are going to come out a net winner, there is work to be done, always. 1) You need to continue identifying S/R before the session. 2) Do not trade unless you get one of your price action set ups at one of those levels. 3) Do not get discouraged when you give a few back - you gotta be in it to win it, as Trader Vic says. 4) You must place your stop, and it must be beyond an S/R level - Trader Vic says you gotta be in it to win it, but he also reminds us that we can't bet if we lose all our chips. 5) Most importanly, stay humble with repsect to the market and your performance. Best Wishes, Thales

Trade One: Had you entered on the break of Friday's high, or, looked for a pullback to Friday's high after the breakout, you might still have posted a loss, but probably a smaller one. Otherwise, it was not a bad place to look, and since the gap had not filled, the odds favored the long side; however, as you noted, the resistence near 1650 would have been a concern for a long, and it would have been a spot to be looking for a possible short. Trade two: I don't see a 2B anywhere near where it looks like you bought. You should post a chart annotating what you are seeing. Trade Three: No reason to hold anything over night that is not closing at or near the day's highs. Follow through is most likely when a close is at or near an extreme. That doesn't mean the market can't or won't gap higher today. Best Wishes, Thales

Good ... look at this chart. It is the same pattern (smaller swings, but same pattern) as I showed a few hours ago, but this time it occurred right at the midpoint of this morning's high and yesterday's low - evidence that it is usually best to let trades go by that are not setting up at S/R. So far today, your S/R levels as identified by you prior to the market opne have proven to be relevant to today's trade. Even if this rally doesn't stick (and I'm not saying it won't) but even if it does not, you could have traded for a solid profit based upon your identification of potential S/R areas. Making Progress: Best Wishes, Thales

Watch this pattern - a double bottom/2B, this one on the 5 minute SPX ... a money maker over the long run. The only thing certain is that is no sure thing, and it sometimes happens that the market will make a third push down, especially when the second bottom failed to reach either a prior high/low or midpoint of the most recent swing. But it gives you a defined risk point, and the profit objective is a retest of the swing high from which the initial decline started. In this case, basis the ESU, the buy stop could be either 23.75 or 24.25, and the stop loss 21.25, and a limit order would be placed one tick below today's high, at 34.75. Best Wishes, Thales

Are you trading 2b's at all, or just 123's? One minute 123 on the 2B with an ESU 1633.25 sell stop. Which would have given the same short entry as selling the break of the 10:05 - 10:10 range low, with a stop 1-3 ticks above the high of the day. Best Wishes, Thales

Price opening in a tight range and staying there for 5 - 60 minutes and then breaking out of that range is a clear indication that price might be ready to favor the direction of the breakout. For example, 1630-27.25 for fifteen minutes, and now I'm Long ES 30.25, stop below today's session low. I'll be watching for reversal at yesterday's 1633.50 high, or a break and hold above yesterday's high. Above yesterday's high, my target becomes the 6/10 high (42.50 basis ESU). Best Wishes, Thales

Sounds good. Be patient and wait for clear indications of price's intention. Beware of choppy price action with overlap. When price is at or near one of your levels, then it is ok to drill down on a one minute or even a tick chart to see what is going on and to see if you can find an ealry entry. Once in a trade, switch back to the 5 and 15 minute charts. Trail you stop beneath pullback lows after price makes a new high. Best Wishes, Thales

Become consistent on a daily basis, and the long run returns will necessarily follow. You do not need to trade everyday. Wait for price to set itself up at a predetermined S/R level, and then await your trigger. Ask your spouse to refrain from asking you how the day went - it will put pressure on you to perform on a daily basis. Your ability to refrain from trading in unfavorable conditions must not be undermined by external pressure to "make your day's wage." You do not need to trade many times each day. If you manage to take a position early in the session which is near the session low/high, trail a stop - trend days do not happen everyday, or even every week. When you are fortunate enough to have caught a wave early, ride it until it runs into real resistence. Remember that a 123 is indistinguishable from a simple ABC or two-legged correction at the moment it triggers. Therefore, you want to enter only on those 123's that are launching from a predetermined S/R level. Trade only when you have an edge. Price action from moment to moment is largely random. If price is moving from a test of support to a test of resistance, it matters not how it gets there. That big space in the middle is literally the middle of no where. Price spends most of its time there. In general, you have no edge there, so do not trade there. Price action's randomness decreases immensely when price trades to a prior high or low, and it diminishes even more if price has been in a discernible long-term trend. You should trade at those times when price is most likely to make a non-random move. You must give your spouse a monthly PnL from your broker. She should be able to log in and download this herself. Many folks post to trading forums about the need to be accountable. If you are married, you have a built in auditor - use her, and make sure she can perform her function independently of you, i.e. she should not rely upon you to provide performance data, she can get it herself. Best Wishes, Thales

Closed during the test of yesterday's high with 25 ES points ... not a bad day trade. Didn't buy the low or sell the high, but came close enough to give some credibility to this S/R thing, right? Best Wishes, Thales

Good to hear from you Andre! I can't seem to find that chart now, and I have no idea what happened to the link. It was an ES chart posted in the Reading Charts thread. I'll post it again if I find it. Best Wishes, Thales

SPX is now back to Tueday's low (which, as you recall, was a level on our watch for yesterday). If price can break and hold above Tueday's low, and should cash close above Tuesday's low, then as I mentioned this morning, I will hold overnight for potential follow through testing yesterday's high. Overall, so long as price holds above last Thursday's 1598 low on a closing basis, the odds favor a re-test of the 5/22 1687 high. Best Wishes, Thales PS ES is up 10+ points from the entry level indicated by the cash index.

1) Your entry was fine. I also bought some there. 2) Targets for a long would be Tueday's low and then yesterday's high. 3) You would have been right to raise your stop after price made a new high subsequent to that pullback. 4) You say you had a "technical reason" to close your long, which was the breaka of an upward sloping trendline, or demand line. Using such lines intraday is fine - DbPhoenix has demonstrated time and again that they can be used to great effect. However, you must be consistent in your use of them, e.g. clearly today is now a day for long trades. Why, having used a demand line breaak to close your initial long did you not track price and use the break of the ensuing supply line to re-establsih a long position? You need a plan which you apply consistently - otherwise you are just making up as you go along and your results will be as inconsistent as your approach. Best Wishes, Thales

I'm long. If this morning's low holds, and the cash close back above 1623, I'll hold for overnight to see if there is follow through. A close above 1623 would, I think, open the door for a retest of 1687, and possibly a shot at 1700 +/-. Conversely, a close below 1597 could, as you noted, open the door to lower prices in the near term. The test of the up trending demand line, and the quick trade back above yesterday's low should have put you on watch for long opportunities, right? That doesn't mean that price cannot reverse sharply lower at anytime and take me out ('tis what a stop loss if for) but you have to play the odds. Odds can only be in your favor when price is responding to an S/R level. I'll see you back here tonight. Best Wishes, Thales

Also, there is a up trending demand line from the November 2012 low which has just survived, for now, its fifth test. Price traded below yesterday's low, but never gave a sell sign before traded back above it. Best Wishes, Thales

Good. Now make sure you keep those marked through today's close so that you will be able to look back and see how price acted if it trades to those levels. Best Wishes, Thales

1) The gap open was still well within the range of the prior day. A Gap fill trade is more likely to work when the market gaps entirely above or below the prior day's range - look to buy a test of the prior high as support or sell the test of the prior low now as resistance. 2) You bought before price tested the prior day's low. You need to be patient and only trade when you have an edge. There is no edge in buying or selling the middle of nowhere. 3) You correctly pointed out a possible long when price did test the prior day's low, and you correctly saw there was no trigger, as price broke that low without having devleoped any trending attempt after the test of support. 4) The final short was fine. I merely pointed out where it could have been made earlier at a much lower risk point. You are correct - your stop was too tight: It needs to be a few ticks above resistance or below support. 5) I don't know anyone who trades profitably who does not have losses, and that certainly includes me. Don't let a loss get you down. Some will be the result of a mistake, but most will be the result of the fact that this is an odds-game. Rules are for us, not the market. We must play by the rules to put the odds in our favor. The market cares nothing for our well-being. This mean that even perfectly executed trades that comply with all we know about price action's tendencies can still end with a stop out. Best Wishes, Thales

What seems to be missing in your approach is a second-nature knowledge of certain fundamental aspects of price action. By "second-nature," I simply mean that there are things which you must know so well that you react/respond almost instinctively to the presence of one of these things. The good news is that they are relatively easy to point out to you; the flip side is that you need to watch a lot of price action in real time or in replay so that you can learn to identify them as they develop. Some of these are easy: Let's talk about gaps: 1) A market that gaps open and starts trending from its opening 5-10 minute range has increased odds of being a trend day, i.e. a day that opens at one end of its range and closes at the other. Unless a clear reversal of that initial trend takes place at a clear S/R level, assume the trend will continue into the close and look for opportunities to enter on pullbacks aginst the trend. 2) A market that gaps open and the gap does not begin to fill relatively quickly has increased odds of the gap not being filled during that session. Trade in the direction of the gap until a clear indication that the gap trend move is fading occurs. As with anything related to the collective action of a significant number of human creatures, there are exceptions to everything, including whjat I just said about gaps. However, gaps are important, and what price does immediately following a gap is often very actionable information. So resolve to start paying attention to gaps. Let's talk about S/R: There is nothing more important to trading profitably than the ability to identify support and resistance, the ability to interpret price action at those levels, and to act upon that information. You can throw every 123 and 2b and divergence and volume spread analysis and whatever trigger method you can think of out the window so long as you can identify S/R and you can tell a succesful test from a failure, and you know what is most likely to come next as a result. Know what is most likely is not the same as knowing for certain - but all you need is a "most likely" and over the long run, you'll make money (or at least not lose all of it). 1) The most important immediate S/R levels for a daytrader will be the prior day's high/low, with the midpoint being of secondary importance. There are of course nuances involved, e.g. what do you do when the prior day was an inside day? For now, focus your efforts on watching price as it approached the prior day's high/low. 2) When price pulls back to or rallies into a significant S/R level such as a former swing high or swing low, as it did last week when the SPX pulled back to 1598, take your cue from price's reaction to that level until price gives a contrary indication. For example, once price rallied off that 1598 level, then I would want to trade primarily from the long side so long as price did not break and hold below a prior dailyu low. Once price breaks and holds below a prior session's low, then it is again a two-sided market (trade both long and short). If it then proceeds to break that low, you now have a market where day trades from the short side likely have an edge. Long trades should be held to a tight leash if at all until one of two things happen a) price again pulls back and finds support at a significant support level (a prior swing low, a former high now being tested as support, etc. or b) price takes out a prior day's high. 3) I do not always practice what I preach, but when I trade contrary to the above considerations, I cut my losses agressively and I can decide in an instant whether to go flat or stop and reverse. It took a lot of hours to get to that point. For now, you might find it helpful to really keeping it simple: Trade primarily from prior highs/lows. If price is above a prior high and tests it, look to long. If price breaks above a prior high and then breaks below, consider a short with a target at the prior day's low. If price pulls back the prior day's low and holds it, look to go long. If it breaks it, look to go short. Etc. and so on. The 123 is a great tool, but it only should be used when and where appropriate, which is when price is trading off of a visible S/R level. Here is a relevant post from a time gone by that you might wish to ponder: As to your chart from today, I have circled two areas just benath yesterday's low where I would have looked to short. Under most circumstances, you would be right to be looking for a reason to get long as price tested yesterday's low, although the gap open higher that immediately met with selling would have given me pause. Once price broke below yesterday's low, it was really time to look for short entries. Whenever shorting near an assumed resistance level (which you did and which was good) you must be sure your stop is above that level. Here is a link to a chart I posted sometime ago: Just note my notes, especially the reference to "the prior day's low." Best Wishes, Thales