i trade

Good point....the condition or context of the market, not only on a short term basis but maybe more importantly on the background or longer term, is often overlooked when testing strategies or an "edge". My truth be told.....successful traders realize that setups for both winning and losing trades look identical when looked at only in the context of short term market activity.....its the longer term background that can distinguish between them.

Speaking from a purely discretionary stand point...I think an important aspect of trading "an edge" (or you can say it's part of your edge) that's hasn't been mentioned is varying the leverage used depending on the underlying context of the market in which your "edge" is setting up in. Most retail traders either {a} use max leverage all the time on their entries which requires you to be amazingly accurate with every entry or {b} they don't know when to up the leverage and increase their position size when underlying market conditions warrant it. Everyone loves the poker analogy : picking up pocket 10's or picking up pocket aces, both hands you would want to play but then again 2 hands that you would probably play differently pre-flop not only according to the quality of the starting hand itself but also according to the context of the situation - are you 1st to act or last to act, has any1 limped, has any1 raised, how many chips do you have...etc , etc.

Well it wasn't so much what I did but more so a matter of what my broker allowed me to do! Here I am...newby S&P trader, maybe trading a few months. Had to be in around 1996 or 97 before the time of the e-minis...only the big SPOOS....and it was $500 a point vs. the $50 a point in the present day ES. Back then there were no electronic orders...all orders had to be called in to my broker who in turn would call them into the floor. Then I would have to wait for the call back with my fill so I could place my stop. Lucky me...my broker, a sole proprietor IB working out of her home in Florida, takes a liking to me and gives me the number directly to the floor of the S&P's so I can call my own orders in and handle it all my self. Great...saved me some time and it was cool at the time to call directly into the floor. One problem...my account was only $3 or 4k and here I am calling directly into the floor with my orders. I could have called in with an order to buy 10, 20, or even 30 cars at the market and they would have placed the order, who knows? With a 10 lot order my $4000 account could have been wiped out with less then a point move against me. Pretty crazy when I think of the damage I could of done financially to both myself and my broker. :doh: (Needless to say that account didn't last very long!)

Thanks! Yes....context is king...everything is relative to both the macro and micro inventory conditions of the market and also to any correlated markets to the one that you are trading. The majority of exhaustion in a down move comes when long holders give it up and cover. Sometimes the level where capitulation occurs might seem illogical because it is based on held inventory levels rather then a specific price level.

Cunparis I just wanted to expand on the exhaustion by sellers that you mention. First I want to confirm that we are talking about intensity occurring in the midst of a sell off. If this is the case...the important part you didn't mention, and the part that causes the most intensity, is the capitulation caused by the selling of long held inventory. Then as short holders see longs capitulating they start to buy to cover then new longs start buying to initiate. These 3 steps are all part of the process of the market transitioning from a down auction to an up auction and help to point out whether intensity will lead to change in trend or continuation.

FT...any comment or experience with the accuracy of the DTN IQ data feed when it comes to bid/ask volume data? Also, if you wouldn't mind could you post an intraday chart from Thursday and/or Friday of this current week showing cumulative delta so I can compare it to my data? Appreciate it!

Great call Fulcrum! Looks like we got that event at 3:40pm today?

I don't use forex correlation as a reason to enter or exit a trade. I use it as a guide so I don't over leverage myself with positions that are similar. ie: if I'm loading up short aud/usd then I want to be careful going long usd/cad.

Best correlation tables I have seen. Forex Correlation - Mataf.net

Been trading for a long time and I've never stopped to actually think about this. Please correct me if I am wrong. So in comparing margin power of ES to that of spot currencies: Roughly speaking, ES - $500 in margin allows you to control ($50 x index value of 1100 =) $55,000 in trading power. Eur/Usd - $1600 in margin allows you to control $100,000 in trading power. So $1600 in ES margin gives you $176,000 of trading power vs FX giving you $141,000 basis the Euro/usd. So as margin levels stand presently ES actually offers more leverage the FX does. I don't get it, why are they picking on FX? I agree 100% with regulating the industry to get rid of the fraudsters but why do they think they have to treat traders like a bunch of kids and tell them what is the correct level to speculate (or gamble as some do) with?

Vittorio..what did you want to see...a merged profile?

Order flow is what moves the market...no question there. Support / resistance is the main thing I use MP for. Actually I can boil it down to 3 main things that I glean from MP: 1) Shows me the areas where I want to do business and my bias for trading within those areas. 2) Helps me define my risk by showing me where the market shouldn't go if my trade idea is correct. 3) Keeps me out of noise. Idea: why not use MP as your back gound to enter trades and order flow to manage?

In a nutshell yes Blowfish. Most of what I use for order flow is similar to out of the box market delta offerings like volume breakdown.... just the basics. The only unique study I use is something I came up with and had a programmer/trader friend code for me, It's just a little different way at looking at bid/ask trades but has served me well. For me MP is the base and order flow/ volume is secondary.

I don't know about you but personally I'm not equipped to compete on a nano second time frame like UB. But that doesn't mean I can't track the footprints of the commercials and use them to my advantage.

Commercials...other time frame....composite operator.....traders from the beginning of time have been tracking the commercials. Look at Wyckoff and his tracking of the CO. But what came first the chicken or the egg. Do commercials trade around value or does value follow the commercials. Willing to bet its a little of both. In either case value = structure. " It was Tom Alexander who said that more time applied to studying the market in an out of context way leads you to nothing and gets you no further ahead. " Context = background = value on higher time frame. ""Answers are easy to find, it's the right questions that are hard to come by. Once you've figured out the right question finding the answer is just a matter of time."" Question to ask yourself: will the vertical movement in the foreground get absorbed into the background or will it change the condition of the background. Consider this from Steidylmayer: Successful traders realize that the setup for both winning and losing trades look identical when looked at in the context of short term market activity. It's the longer term background condition that can distinguish between them. Using the background as the basis for your trade setups = upgraded opportunities.