david_uk

Db, I believed that 1484 represented a reasonable area to go short from, but clearly it did not turn out to be so. Hence the stop. As I said I shall try and read up more on Wyckoff whilst we are on holiday. Cheers, David

Db, I went short at 1484 a few minutes ago with a tight 1.5 point stop . We are about to have supper and then we are going out, so I shall let me trade run or get stopped out (the mkt decides) David

(a) I am afraid I don't know how one can select part of someones reply (as a quote) ... is this laid out somewhere on the website? (b) we appear to be edging ever closer to the globex highs (ellipse 9). How the mkt reacts (does it accept the higher prices, or will it reject these higher levels), the jury is still out. © apart from the 1484.25 highs already referred to, if we fail from around current levels, we would fall back within the yellow wedge pattern. http://www.sierrachart.com/userimages/upload_2/1358876455729.png I still believe we are seeing a 're-test' prior to a fall

Db, I shall whilst we are on holiday in February (sunny Florida in place of cold and wet London) look at the Wyckoff course (or at least your 'lite' version). I don't know what sort of intraday charting capability existed in Wyckoff's days ... was that why he needed to watch the 'tape' in order to get a 'feel' for the price action within the entire day? Point is today we are able to see that by means of the charting we all have access to. Conceptually I find it difficult to comprehend how the way price 'winds' its way through the day on a tick by tick basis gives a swing trader a better idea of where the actual support and resistance levels make themselves felt. But anyway let me revisit this forum after I have read more about Wyckoff and his methods. It is coming up to 11:45 EST as I am writing and my 25,000 vol chart shows that we are still stuck within a rather narrow range (quiet before the coming storm, perhaps?) and now infact the 'minute range' is bounded by the purple horizontals I have drawen in on the attached chart. http://www.sierrachart.com/userimages/upload_2/1358872977481.png Cheers, David

Db, Many thanks to you and all the others who have contributed to this thread. I only came across it yesterday and so far have managed to read upto page 43, but I thought I would put my two-pennies-worth into the mix. From what I have read so far it appears as though the advice (to better understand the market's price action) is to have open a tick chart or (at the most) say a one minute time chart. Speaking personally I have to say watching 'the tape' ie small timeframe charts not only tires me out but makes me dizzy. But more importantly I think concentrating on the market's tick by tick movement makes me lose sight of the 'bigger picture' which is the key question: is this market going up, or is it going down or is it range bound? I absolutely believe that markets (sadly) do not follow a clear mathematical pathway -- if only they did, a trader's life would be a lot easier. But rather they move from one 'extreme' to the next 'extreme' and since markets are 'fractal' in nature these 'extremes' look different when the market is viewed in charts of differing timeframes. On the ES, I tend to look at the 200,000 vol chart for the 'big picture' and the 100,000 and 25,000 vol charts for my trading. I find 'volume charts' brilliant for identifying market turns (or pivot points if you prefer) but something like the 15 minute or 30 minute chart to give a better perspective of 'speed' or 'market urgency' as it moves from the one extreme to the next. These 'market turns' I have highlighted on my charts with 'ellipses' and you will see that on the 25,000 vol chart there are more of these 'pivot points' than there are on the 100,000 or 200,000 vol charts. Any chart, on any timeframe will show areas of 'congestion' (where a lot of 'to and fro' trading has taken place, within a relatively narrow price band). And often markets 're-visit' or 'retest' those areas before 'breaking out' beyond the 'congestion area'. However until this 'breakout' takes place, those areas of congestion can and do act as 'regions' of potential support or resistance which means that they become price levels where you the trader has to make a call: be that an entry or an exit or a decision to remain on the side-lines. Am I to be consigned to the 'dust-heap' because: (a) I personally like a simple 10 period moving average on my charts? (b) Or because I only look at charts that are usually never shorter than a 15 minute or a 25,000 vol chart? © Or because I do look for 'patterns' (simple ones only) or trendlines (are they acting as support or resistance) or simple 1-2-3 reversals (in good old Dow Theory these were called 'swing failures') as denoting a possible change in the market's direction (or trend if you like)? http://www.sierrachart.com/userimages/upload_2/1358864167971.png http://www.sierrachart.com/userimages/upload_2/1358864305103.png http://www.sierrachart.com/userimages/upload_2/1358864491737.png Our current 'range' lies between ellipse 8 and 9. How we react at those levels will determine whether we break out of this narrow price band. We are presently drawing out on the 25,000 vol chart what appears to be a 'coil' (or triangle) how that pans out will determine what happens next I look forward to comments. Cheers, David

I am writing as we approach the close of rth trading on Thursday 8 March. The ESH2 contract is currently trading at 1366.50 So far today we managed to get up to 1368.50 but since then we have backed downwards again. I think the chances of a fall from around current levels are greater than a rise. If that were to happen then we would be well on the way for a potential '1-2-3 top reversal' pattern. If we break 1330 then I think the the way forward is 'clearly' to the downside. If however we get to 1380 say, then this bearish idea of mine is most probably wrong. In terms of how far could we drop, I think we could well drop a long way ... say some 100 / 150 ES points (ofcourse on the shoulders of the June contract as the March contract is close to expiring). David

Not being an American, I cannot offer any thoughts on US Tax laws but I can offer some thoughts on 'trading' as such. First of all may I ask have you considered trading index futures (such as the ES, the YM or the NQ)? Trading index futures is not difficult. I believe it is far simpler than trying to work out which stock or stocks to trade. But more importantly you can close out your trade whenever you want to -- something that appears not to be the case (from what has been written on this thread) when trading US stocks. You have said your daily target is approx $200 per day and you have something like $100,000 of your own capital available. My short answer is that one most certainly can make $200 per day, day trading US index futures, and especially so if you have $100,000 by way of trading capital available. Just bear in mind that one ES futures contract is equivalent to say an investment basket worth $65,000. Do NOT get 'seduced' by the minimal margins ($500 per ES contract) that are being offered by US futures brokers these days. Never lose sight of the fact that each ES contract means you are playing with $65,000 per contract. You mentioned that you have been swing trading stocks for several years. Providing you get to understand the way in which the ES futures contract behaves (and you get this understanding by watching that market, in real time, on a daily basis for several months if not even years) you may well find that your swing trading technique can be used trading the ES. You may wish to look at several aspects to do with trading, many of which are available for free on the trading-naked.com website (here is a link: Trade Setups and here is another part of the same website: NQoos -TradingNaked " master your setup, master your self" Profitable Trading Techniques for emini futures ). To summarise: (a) $200 per day is certainly achievable with a $100,000 futures margin account. It represents just 4 ES points per day and the ES tends (on an average day) to have a range that is of the order of 20 ES points, if not more. (b) Before you jump in with real money, spend months or more 'paper trading' with a broker-demo-account. See if you can consistently make 'paper money' trading just one ES contract -- see what your results turn out to be on a weekly basis. And keep an accurate record of all your trades each day of the week. © How you play your stop-losses will be an interesting lesson you can play around with, with the demo account. I agree trading paper money is completely different to trading with real money (when you either stand to make or lose real money) but the more time you spend at 'paper trading' will pay dividends in the end. You are 34 years of age and you have plenty of time available for you to learn how to trade index futures. Use that time well (be that reading up articles and or trading as realistically as you can with a demo-account). (d) Entering a position is easy. When to get out of the trade is where the problem arises. If you exit too soon, you may leave too much 'on the table'. If you dont exit when the position turns into a loss (and remember markets tend to zig-zag their way through the day) you stand to lose money BUT do experiment with varying stop-losses. See what happens each week when you use say a fixed dollar stop eg $100 (2 ES points) then try and see what happens when you increase that stop loss, another week, to say $300 (6 ES points). Where you place your stop losses, indeed should you place any stop losses at all, is what can effect your weekly outcome far more than the point at which you enter your trade. Many people say you should never operate without any stop losses -- I actually am not one of those people. I agree stop-losses help you manage / control your 'risk' and you should never ever bet the whole farm on any single trade. But I also say you can control your risk by being cautious in your trading lot size. Especially in the beginning when you start off trading with real money. So experiment with the idea of trading small size but having no stop-losses in place. I think you will be quite pleasantly amazed at the outcome! (e) Apart from the very important question of what your trading lot size should be AND whether and where to place your stop-loss orders, you need to decide where your profit targets should be AND dare I say at what price level you should consider adding to your losing position ie averaging your price. These are all aspects that you can and should play around with whilst using a demo account. And note down the weekly outcome using these differing risk control strategies and evaluate the weekly outcomes. (f) Many people reading this may say I am mad even raising these points. Well I would ask those people, if they were trading stocks (as against futures) do they successfully trade using the equivalent of 2 ES point stops? Do they exit their trades each and every day? And if they dont do that with stocks, why just because you are trading index futures should they exit their trades? Too many index futures traders use their margin account to the full -- that is where they have no choice but to operate using these 'tight' stops because otherwise they would simply get wiped out tomorrow if not already today. If however you trade your futures, as though each contract represents an investment risk of $65,000 per contract, then you will not fall into that honey-trap or 'seductive' $500 margin requirement per contract when day-trading. Trading in 'small size' relative to your margin account means you are controlling your risk differently to most people. And if you only have a profit stop in the market (and not a stop-loss order in the market) there is only 'one leg' of the trade that can get filled -- and that is your profit target. Try this kind of a strategy (which by the way no book or so called expert will suggest to you) on your demo account, and monitor the weekly outcome of using such a strategy and then decide for yourself whether it is actually a workable (or a stupid) strategy. (g) I wish you all the best in your endeavour to becoming an effective index futures trader. If you are willing to put in the time AND if you are willing to challenge the so called accepted norms (and do not forget that most futures traders actually lose when daytrading -- so why follow those so called 'accepted' norms if the final outcome is that you join the 85% losers out there) I think after several years of screentime and real life trading, you may well get very pleased with consistent winning from this amazing life style. (h) Someone once wrote that 'Trading is a hard way to make an easy living' and he was dead right. It is an extremely hard way to make and 'easy living' BUT it can be done and is being done by, apparently some 10 or 15% of all traders who are out there. There is no reason why with patience, study and dedication you cannot also get in amongst the chosen few successful traders who are out there. (i) If you wish to come into a free trading room (I and other traders are there most days) come along to #patterns on the Mirc channel). Some days we have interesting discussions which you may find of interest. But whatever you do, do not think that successful trading comes to anyone in an instant -- quite the reverse it takes years of trying and and can take lots of money in the act of trying. david_uk