GCB

While I'm in a trade hopefully I think about as little as possible. I have my stop, I have my first target. These are hard targets so there is really nothing to do but sit back and watch. Sometimes there is the potential for the market to shoot past my first target and giving me a few more ticks (or even points) so I will not enter a hard exit order. Then my thinking becomes a matter of watching how price moves up and past my target and watching closely for a pause in price movement at which time I will exit half. Then it becomes a matter of doing the same thing for the next target, at which time I will exit a quarter. The last quarter I hold with a loose trailing stop until it exit or EOD, or alternatively managing it with total discretion. During this process my thoughts are often occupied with watching price and internals intensely, looking for signs of continuation or reversal. This is where I have to resist fretting and other detrimental emotions.

Yes, this is precisely what my program does. I got the methodology from the thread you cite, and it works. But again, I don't see how you can know "the price at which the greatest volume occured" with a thirty-minute chart, or for that matter, a one-minute chart. Only a one-tick chart will tell you precisely where the volume occured. With any other period chart you are taking averages, which leads to fuzzy results. I asked ant about it and he said he doesn't use volume, he uses TPOs, which is why I asked the question "what's a TPO." I asked him and he never responded.

"Whatever it is you are feeling is the perfect reflection of what is in the process of becoming." -- The Secret "What you think and what you feel and what manifests is always a match." -- The Secret

I sort of get it. But value area is supposed to be the area where the most amount (70%) of trading took place, so it seems like you would need to know volume as well, and if you don't know the exact volume at each specific price, I don't see how you can figure this. I don't understand how this information can be derived from a 30 minute chart. I know ant's program does it, I just don't understand how, which is another way of saying I still don't know, from a technical programming standpoint, what a TPO is. In contrast, I wrote a program which can derive value area and POC from a price and volume chart, and it does so accurately, but only if the chart is a one-tick chart, because only then do you know how to precisely assign each bit of volume with the price it actually traded at. Anything more than one tick and you don't actually know at what price the volume traded, so how can you accurately know where 70% of the volume actually traded? Say, for example, you have a completely symmetrical downtrending 30-minute chart. It looks like a staircase going down, each stair the same size and having taken the same time to form. Imagine that, however, the afternoon session actually traded twice as much volume as the morning session. Where would the value area be, and how would you calculate it, given that you don't know exactly at what price all the volume traded? The reason I was to know this is because I actually want to write my own MP indicator, because ant's is a little buggy for me. I asked ant this same question, but he didn't answer. Anyway, there's something I'm still not getting about TPO. But thanks for the replies, guys.

"To be a successful trader you need to trade without fear. When you use fear as a resource to limit yourself, you will create the very conditions you are trying to avoid. Or to say this another way, you will experience your fears." Mark Douglass -- The Disciplined Trader

I know it means "Time Price Opportunity," but that doesn't really mean a lot to me. Perhaps I am dense. Anyway, I'd like to know how one might determine "a TPO" from a price/volume chart.

Neal, Thanks. I actually took the 2-week trial at TTM. But Carter was never there, at least not for long. I actually did send him a message. I have thought about doing the mentoring program with him since we live in the same city, but I have a mentor now who is very good and reasonably priced. (Another thing Carter doesn't tell us is how he decides which signals to take. Although he is very rigid in his rules, he doesn't give us his rules for why he might, say, favor pivot plays over squeeze plays. But I'm sure that's just discretion on his part. But he doesn't tell us how he decides.) Basically, this thread has verified what I figured: that the indicators are just ways of getting signals that you can get in other ways. The real meat of trading is being able to read the market pulse and go with it, and be able to jump back in after being stopped out, even in the opposite direction. Good trading to you, too!

Jankovsky does say in his book that 80-90% of price movement in the markets is just losers liquidating their positions. This is a startling statement, but worth considering.

It does indeed help to know that emotions are driving the buying and selling, because that's the only way to make any sense of it. I'm just never sure which emotions are at work in what combination and why they continue for the time periods they do. What for example, happens on those days when the market sells off and just keeps selling off all day? How come hardly anyone steps in and buys? And what about reversals days, just why do buyers step in? And what about reversal days that reverse twice? Why the heck is going on? Well, in a sense it really doesn't matter. It's really just people freaking out back and forth. He's right about that. I'm not trying to be the devil's advocate. The market does what it does. It's really like a flock of demented birds, everyone just follows everyone else. It keeps going in one direction until it doesn't go that way anymore. The trick is to get in the move early. Takes nerve and a bit of insight, and the discipline to manage whatever happens.

Looking at the chapter names of his book, its mostly pretty standard stuff. Solid, but nothing spectacular. Soul, see my points about zero-sum below and tell me what you think if you are of a mind.

I wish he would have shared something more specific on how to exploit what he was talking about. He basically said losers move the market (a variation on JC's "the market's move because they have to"), but he didn't say anything on how to know when this is happening. I sensed this frustration in the interviewer as well. Is the answer in his book? I'm not sure I buy his point about zero-sum markets either. The cash market is not zero-sum, the futures market is. But the index futures market is based on the cash market. If trade SPY or I trade ES I'm trading essentially the same price movement. So if I'm trading SPY is it not zero-sum and if I trade ES it is zero-sum? If I buy an index mutual fund or a future contract and keep rolling it over I'm basically doing the same thing. Is one zero-sum and the other not? That makes no sense. Technically an index future contract is "zero-sum." But it's based on something which is not. The whole zero-sum thing is a carnard. Everyone gets something out of the markets. The winners get money and the losers get lessons. It's win-win if you want it to be. The problem is losers don't gain anything from losing, that's why it seems like an ultimate loss.

Assumption 1: We have not learned everything there is to know. Assumption 2: What we have learned, unwittingly or by choice, may not be very useful with respect to fulfilling ourselves in some satisfying manner. Assumption 3: What we have learned that is useful and works to our satisfaction is still subject to change because of changing environmental conditions. "If you operate out of the foregoing assumptions, you will begin to recognize how every moment becomes a perfect indication of your state of development and what you need to do to improve yourself. "When we refuse to acknowledge or accept the perfection of each moment in our lives, we deny ourselves access to the infomation that we need to expand ourselves. Any skill that we need to learn to express ourselves more effectively has a true starting point. To find that true starting point requires our acceptance of each outcome as a reflection of the sum total of who we are so that we can first indentify what skill needs to be learned and how we might go about the task of learning it. Without this true starting point, we will operate from a base of illusion. " Mark Douglas -- The Disciplined Trader

While the market was making its nice breakdown and rebound during lunch today, I was at a long businessman's lunch with a friend of mine. What were we discussing? Nothing less than my life and its direction. I have been looking into alternative possibilities to trading from home. He suggested this firm: Kershner Trading Group Which has its main trading floor in the city in which I live. This is a prop shop. Does anyone have any experience with these things? I realize they are basically going to supply me with capital, support and proprietary software with which to trade. And I realize they focus on stocks, though they say they do futures. Any thoughts, ideas, dismissals or outright scoffs will be welcome.

I think you can sometimes have enough time before the breakout happens to buy/sell the bottom/top of the pre-breakout range on up/down breakouts. This requires nerve and premonition, but is actually safe if you feel strongly about the breakout. It gets you some more ticks of profit and eliminates the noise factor in getting stopped out.

Do you use it? Do you prefer it to other means of entering orders on TS? Was it hard to get used to? Are you glad you stuck with it, or do you prefer other methods of entering orders? If so, which ones?

This is basically the Keirsey temperament model (which is similar the Myers-Briggs model). I'm an iNTj, or what Keirsey calls a "Rational Mastermind." (He has very flattering names for these types.) NT - Rationals - iNTj (Mastermind), iNTp (Architect), eNTj (FieldMarshal), eNTp (Inventor) SJ - Guardians - iStJ (Inspector), iSfJ (Protector), eStJ (Supervisor), eSfJ (Provider) SP - Artisans - iStP (Crafter), iSfP (Composer), eStP (Promoter), eSfP (Performer) NF - Idealists - iNFj (Counselor), iNFp (Healer), eNFj (Teacher), eNFp (Champion) Go the Keirsey Temperament Website to read all about your temperament type. There is also a more in depth test to take, but you have to pay for the detailed results. It used to be free, but not anymore. But the info is free. These temperament types pretty much match up with the classic temperament types. It does seem there are four basic types, and then variations of each of those four. Sanguine - Artisan - SP - (Likable, creative) Choleric - Idealist - NF - (Visionary, driven) Phlegmatic - Rational - NT - (Intellectual, independent) Melancholic - Guardian - SJ - (Compassionate, serving)

Either that or get in before the breakout if you see it forming. That's what I like to do sometimes, if I seen the reversal forming clearly and I feel strongly it's going to take place. That's what I did today and it worked.

Might do that wsam. This "study" of mine is based upon the recommendation of John Carter regarding the pc ratio. His rule is to not get short when the pc ratio is over 1.0 and not get long when it is under .6. Although I found over 100 days in the last two years where the pc ratio spent significant time over 1.0 during the trading day. I found only 6 days in the last two years when it spent significant time under .6. So there are simply not enough samplings to draw any conclusions about this level and it's effect on market behavior. My general view is that given a market that is turning up from a decline, the higher the pc ratio, and the VIX for that matter, the more likely the reversal is to take hold. And given a market that is turning down from an advance, the lower the pc ratio and the VIX, the more likely it is to take hold. As for Carter's recomended levels, they are a bit arbitrary. I do agree with this however, when the pc ratio (or VIX) is moving in the same direction as the market, i.e. folks are buying puts when the market is going up or calls when the market is going down, that is a great confirmation that the trend is likely to continue.

Recently in the chat room I've called attention to the put/call ratio being high. (High defined as 1.0 or greater.) My theory has been that the a high pc ratio puts a "floor" under the market and keeps it from going down much, as it represents too much beariness. For the last three days the pc ratio has been over 1.0 for most of the sessions and, though the market tried to go down and had some early success doing so, all three time it reversed strongly to the upside. I decided to study some historical data and so went back two years and observed the effect of a high pc ratio on the ER2 (Russell 2000). The results were as follows: Of the 105 days which the pc ratio spent a large amount of time above 1.0, 10 of those days were up days, 24 were down days, and 71 were mixed/reversal days. By up or down day I mean a day when there was really nothing that could be termed as a genuine reversal, rather they were days when most of the action was in clearly one direction or another. This data is a bit surprising since there were 2.4 times as many down days as up days. So playing a high pc ratio day short is not unreasonable. There is almost always some down on high pc ratio days. This makes sense. The pc ratio is up for a reason. Of the mixed/reversal days there were some choppy days, but there were many days when the prices reversed strongly, a few times from an up open to a down close. But there were many days when the price started down in the morning, then reversed strongly back up. The lesson I think is to not be afraid to play a high pc ratio day short, particularly early, but be ready for a mid-morning, mid-day reversal on such days, as that is the norm. However, keep in mind there were several pure bear-ugly selloff days when the pc ratio was over 1.0, so they can and do happen. The bottom line is that pc ratio is at best a secondary indicator. I'll post a related study on low pc ratio days soon.

If you look at the charts, NQ, ES and YM broke out of the their lunchtime ranges to the downside, but the ER2 simply went to the bottom of its range. It didn't break lower. That indicated its greater relative strength as compared to the others. So when the others were exposed as fakeouts that was a strong indication that ER2 was NOT going to go down, which meant an upside breakout was likely. As far as the ER2 range goes, I saw it a about 824.5 or so, but that doesn't mean I would trade a break of that, I would probably need a new low or break of the previous days's lo. As to the high of the range, it was to me about 827.

James, To me this kind of trade is a chart pattern and price action recognition thing, coupled with the background of the market behavior and internals. Today the market really tried to go down. There were some serious sellers today. But for whatever reason (pc ratio, liquidity) it just didn't go down like it seemed it want to. The ER has been so bouyant lately. It seems to end the day near its highs a lot. Like I said, I should have known and I did. I just missed it. I had a chance to get in. Next time I will. The great thing about these reversals is that you can see them building up, so you have time to enter, and if you're bold and anticipatory you can get into them near the bottom of the preamble range and maybe even get your initial target before the breakout and then ride the breakout itself stress free. Either way, the great thing about them is that you can hit your initial target before you even know it. Reversals are becoming one of my favorite patterns to trade. I don't know how long ER will continue to act this way, but these afternoon run ups are becoming semi-regular events.

Where are you guys seeing these bid sizes on TS? Level II? The "Matrix?" Thanks.

wsam, I can relate to the difficulty you are having and the ambivalence you are feeling. I think what it boils down to is that at a very fundamental level you are really unsure whether the probabilities of your method are favorable. You sound a lot like me in many ways. I think the way to be successful as a trader is that you have to have a rock solid belief that you have an edge and the edge has to be quantifiable. You have to continue to study and refine (not curve fit) your method until you are sure the odds are favorable. But you also have to realize that there will still be times when the method will not work well. The trick is to know what is wrong--the method or the timing of using it. I think the basic stuff is time tested and in our case it's just a matter of consistent execution. It's the Gann/Elliot/moon phase stuff that to me is way out in the weeds. Someone might find using that stuff "works," but I think that is more coincidence than correlation. It's all just some strange way of looking at price or people. Some traders do better when they look at price through three different fun house mirrors at once. If that works for them, more power to them, but to me it's like a baseball player who thinks wearing his high school socks helps his batting average. There's nothing wrong with filtering your "afraid-they-aren't-better-than-50/50" setups if your filtering method is quantifiable and repeatable. For example, taking pullbacks only if they are up against a helpful support and resistance and so forth. The problem with filtering is that you can overdo it ("I've figured out how to eliminate risk! Don't take any trades!! The holy grail is mine!! Uh...wait a minute."

Thanks very much!

Ah-ha. Is volume delta a TS indicator found somewhere on this forum? I've written a few volume indicators using TS histograms so I might already have something like it myself.