joshdance

Whatever method one uses to "map" the market to identify value and trade location, whether it's an EMA, fib area, POC, VWAP, pivot, prior support, round number, or anything else--the difficulty in trading is essentially this--will the market reverse at this area, trade through the area, or rotate around the area? Any of the above-mentioned ways to determine a potential trade location is only half the battle. Take your chart for example: in a 38 point ES range on the chart, there are 6 areas you've identified as potential tradeable areas, with the total range of those 6 areas being 11 points, or 28% of the total range on the chart. That information, by itself, is simply the map. Now, the skill in trading (one I figure I will always be striving to improve upon and become better at even when I can call myself "good" one day) really is: what do I do when price gets there? Again, in your chart, price is at the lower end of the third zone from the top. There are three zones above, and three below. Do I short now? Do I wait until we get higher and short at the highest zone? What if price reverses at the second zone from the top and doesn't make it all the way? Do I short there? If I do, where do I take my profit? If price goes down now, do I buy at the next zone, and if so, is my target the previously visited zone? So many questions, which simply cannot be easily answered. Simply buying or selling at the next zone reached is obviously not a formula for consistent success, and assumes a market that is always ranging, and ranging within a very small range for that matter. The market being observed must be read using some method to determine it's possible future direction. The ability to do this, IMO, is what makes a trader successful. I think having the "map" is essential and is part of a good plan, but knowing how to actually read the map, and then drive and navigate the roads, is where the skill lies. Put another way, even a young child can look at a "zone" or line on a chart or any other measure of value, and click a button to place an order. But this is not trading, is it?

Sam Seiden's information is very logical and generally quite easy to understand. It's basically attempting to identify high probability areas to buy and sell. Conceptually it's a little different than traditional support and resistance, but not that much. I like the fact that it quantifies with a numeric scale based on the 6 "odds enhancers" whether to pass on the trade, wait for confirmation, or trade with a resting limit order. The assumption is that there is a higher probability that buyers will buy when price returns to an area where there was previous demand, and sellers selling where there was previous supply. Of course, if it were so simple, everyone would make money (or rather no one would, as there would be no edge if everyone wanted to buy at the same place). Support/resistance, supply/demand, whatever you want to call it, is all relative. What is "wholesale" to one time frame trader (even a larger time frame) may be "retail" to another. In other words (particularly in currencies), there is no "low" and "high" that is absolute--it can always go higher or lower. What determines if price will rise or fall when price reaches that same previous level is not what happened before, but what the current market participants want to do. I would encourage anyone who appreciates the straightforward logic of this approach to try it, and notice how well it works sometimes, and how miserably it fails at others. In its basic form (that is, the information Sam presents in his free online seminars which I have watched almost all of them), the approach does not take into account current market sentiment, or any other factors relating to the "now" that is often so important in trading. Personally I like to use volume in my trading and like to get a picture of prior activity based on a volume profile--Sam does not use volume in his trading, partly because he seems to be very forex-based. Of course, this is also only a picture of prior activity, and does not in itself say anything about what will happen NOW. Whatever approach one uses to identify where to take a trade is only half the story; identifying opportunities based on current market activity is, IMO, just as important to put together with location to make a good trade possible. Either way, I think it's great that Sam gives away some good, free information, and would encourage anyone to check it out.

I have no problem with vendors, period. I do have a problem with people starting threads on forums posting charts of trades they supposedly took, with little arrows for buy and sell, unidentified lines that have some special meaning, and in code-speak giving half the piece of the puzzle. Then when others ask simply what the method is all about, they get accused of wanting handouts, and not thinking for themselves, and called lazy for not wanting to "do the work." It's classic guru-speak, and is only spoken by those who either have a god complex and who desire the masses to follow them blindly, or by those who are selling the answer to the question. What then usually happens is that those with half or more of a brain call their BS, they get "upset" and then the sheep who follow them, thinking they have "the answer," beg like little puppies for them to stay and be "generous" by continuing to give away a partial piece of a puzzle whose undisclosed portion is a moving average crossover, or a fib retracement, or some other useless information that is freely available elsewhere. Of course, you won't find that out until you fork over some dough. If the guru didn't want such "freeloaders" asking questions, then he or she shouldn't have posted in the first place with hazy information. My advice to wannabe gurus is: post 100% of the story, or don't post at all. If it's that secretive, why would you want to even give part of it away? Just keep it to yourself and enjoy living in your mansion where you live filthy rich. Please, just watch the freaking charts, watch how price moves, formulate some theories, or read some other good theories and figure out how they can work for you. This constant external search for a packaged, workable methodology almost guarantees failure, because it's evidence of a lack of critical thinking skills. You don't even have to be original, just borrow ideas freely available from helpful posters or internet forums. Some of the best ideas I've gotten for trading ideas have been from people just saying common sense things on forums, and also from watching my own charts, and from tuning out the advice of others who are already sold on their methodology. Trade what works for you, and find out what doesn't work and improve it. Simple as that. I'm more consistently profitable since I stopped looking for all the answers from everyone else. I do, however, ask questions of other traders who I think have good ideas and who don't pretend to have the grail. This is good learning, IMO, but you're wasting your time paying someone for a "system."

Thanks for your crude chart negotiator. That's pretty much the picture I have when I consider ranges on the daily time frame. Do you trade based off of the type of chart you are posting here? I assume not and that these are just "maps", but just curious. And do you consider globex hours when profiling? I notice you have RTH on the left side of your screen.

Thanks Negotiator. I do this sometimes when drawing the profile. What I like about drawing a weekly profile, for example, is that it's a clear delineation and shows areas of value from one trading period to the next. Same as with daily profiles, how yesterday's value area or POC has a significance to traders as the daily period is a clear delineation of trading. In fact, you allude to the importance of this when you mention that price must close outside of an area of value to indicate acceptance of a new direction away from that value. The concept of a close is only relevant when discussing time, as without time price cannot "close". However, I think there is a large benefit of ignoring time for the purpose of drawing profiles to get another perspective and see the larger scope of things. If you are able to post the chart you're referring to, could you do so for crude oil so I can get an example of something I'm actively trading? The area that I have a little bit of internal conflict with is this: if I draw the profile around the range of prices, then the significance of the volume profile becomes dependent on the range of prices. As an example, perhaps the volume concentration is heavily skewed to the lower part of a range of prices, and below that range is another range whose skew is to the top part of the range. By drawing separate profiles based on the price distribution, I diminish the significance of the volume distribution and limit the scope and perhaps overall significance of the volume profile. This is why I believe it may be useful to profile a very large range of prices, and then narrow down the volume distributions from there into smaller, more manageable ones. By the way, while the POC is statistically "jumpy" as a measure of value (it is not continuous in a multi-modal distribution), I find using the profile in conjunction with VWAP to be very helpful. I use both the current day's RTH VWAP, as well as the globex VWAP (particularly early in the RTH session), and find that the continuous nature of the vwap as a measure of value can be quite useful as another way to add meaning to the profile. For example, today on oil I longed the globex VWAP for the session (also at the round number which helped), and felt more confident knowing that besides being in a very bullish scenario, this area was near the low of the established volume distribution for the day, and was a "bargain," being the area near the VWAP. Several reasons to buy yields a higher probability trade. Would love to hear your thoughts on the above.

I don't know Negotiator--can you demonstrate somewhat of a process for identifying the overlapping areas of balance? Do you take a long term profile, and then split the profile further? I'm very interested in what you have to say on this.

Here is a weekly profile on oil. Very clearly, two weeks ago we had a double distribution, and last week we filled that space in. Yesterday and today, buyers asserted the value quite quickly above last week's value. I am actually short at the moment but only looking for a move to retest last week's high or value area, in the low to mid 86's... The volume on the day has been quite low, so it's hard to say if we will sustain this value above last week's.

Negotiator, keep the charts coming. I look at them all, and have similar charts for crude oil. I would post some of that here but this is about the eminis .. perhaps I'll start another thread.

I'll take the high road and simply say that it's my opinion that the reason for the fall in the markets cannot so simply be stated, and other reasons so simply ruled out, with a simple sentence which has no reasoning behind it.

xkr, I'm not asserting that you are not taking these trades in real time. However, a video does not prove anything. You can record two separate charts, one with you shorting, and one with you longing, add the audio later, and voila, you can never lose. The ONLY way to prove that what you are doing is real is to call the trade REAL TIME. So, next time you start your video recorder, why not post your trade as you're taking it? To whoever mentioned it, a brokerage statement proves nothing either. Hedge your position with two live accounts--long in one, short in the other, and again, you can't lose. I'll re-iterate. The ONLY way to prove a trade was taken is to announce the trade AS it's taken. Again, I'm not calling you a liar. I'm simply saying that your video means nothing, if the intent of the video is to prove that you took the trade. It may have value to someone learning to trade a particular method, however.

Based on what empirical evidence?

I wrote something on a similar topic on another forum not too long ago and will repost it here in case it's helpful:

You're posting nothing but after-the-fact charts, with no concrete reasons why you're doing what you're doing. This is classic spam. If you want friends, do something other than "give hints" about your trading methodology... post real time trades, or give something other than a chart with an arrow as to WHY you're doing what you're doing. Friends don't dangle charts in front of potential friends and hold back what they're really up to. Here are two charts I posted REAL TIME on the ET CL redux thread, trades I was ACTUALLY IN, and the chart makes it much more clear WHY I entered the trades and why my targets were what they were, not some mysterious arrow with no explanation. Go check the thread if you want proof. This is what a friend would show to a potential friend. This thread was mentioned in the TL newsletter? Only reason I can see is to attract people like me, angry at this type of garbage we have to sift through.

More likely, he uses it because many people do--it's the 8th number in the fibonacci series: 1,2,3,5,8,13,21,34,55. It's why you see 89 tick charts, or 233 tick charts, and so on.

Just to clarify the large profile is a backadjusted continuous contract?

See above posts MMS. It was a joke..

Making fun, but in a nice way

I was making a reference to Tams' regular dose of poor spelling and grammar ("peddle" would be to sell something, "paddle" would be to spank, or an object used in rowing).

Did the ebook misbehave to warrant such a punishment?

No, if you are asking because I wrote the indicator that posted trades to twitter, it was more for fun to see if it could be done easily, and it did work quite well.

This would of course be impossible, as they don't trade for a living. I wrote a little NT indicator that uses twitter mail to have a tweet go out to the world less than 5 seconds from the order gets filled. I am a washed up ex-programmer and even I could do it. For a commercial vendor it should be a snap on any platform to write something similar. (1) They don't have to give away ANY reasons for why they entered the trade, so no intellectual property issues. (2) They don't have to recommend the trade, in fact, they could even say "would not long XYZ here"; so no NFA or legal ramifications. Since the software alerts WHEN the trade happens and the trader has to take no action, (3) the excuse that the trade is momentum based and not "planned" can't be used. A video provides no proof. Showing account numbers, which are easily faked, provides no proof. Showing an account statement provides NO proof (this is easy--just have two accounts and take opposing positions all the time, hedging and guaranteeing they will offset, then show only the winning one). The ONLY way for a vendor to provide any evidence that what they do is genuine is to call the trade entry, stop, exit, and management of the trade LIVE. When it happens. Period. Yet, they will not do it. It's like a pitcher in baseball claiming he can throw strikes with 90% accuracy, and asking a fee to show you how to do it. Yet, he won't show you that he can. He only tells you that he does it, and does it every day. He refers you to a video of a pitcher doing this, with his back to the camera so you can't see his face. But he just won't do it live, in person. He says you might catch his technique by watching, or that he has nothing to prove, or that MLB won't let him demo without their permission, and so on. Would you pay this person? IF a vendor could actually consistently do what they say they do, they would only benefit by proving it. Yet, the fear of being wrong and being exposed as traders who can't make a living trading, despite the fact that they are teaching others how to do this, will prevent them.

Another non-paying vendor is Logic.

Along with this same theme, around 10:10 AM, when we hit the EMA again, it was not a high probability short IMO and I did not look to re-short. At 10:00AM we retested 84.00, and found good demand. The area of the low at 83.40 provided simply too much reason to buy in what has been a multi-day uptrend, as I posted last night. There was a 60m trendline, the weekly pivot (value), the daily pivot (value), yesterday's VWAP (value), yesterday's VPOC (value), all squished together into a relatively small range. Given the strength we have in context, shorting the EMA was not a great choice here even though it was also next to yesterday's high, another good reason for shorts to give it a try. My point is that context is very important. Simply looking at a chart and seeing an EMA and buying may work at times, but if there's a context to give it strength, then it becomes really useful and powerful.

Just as important as knowing when to use a tool is knowing when not to use it. When I woke up this morning, my view was that of the left of the vertical red line. While EMA traders did provide some support around the EMA, it was hardly reliable and at best probably a few scratch trades. The globex VWAP was a more true value support. Later, the circled area shows both the VWAP and the EMA at the same value, and this confluence provided yet another point for eager shorts, smelling a breakdown, to place their orders.

I'm a nerd and do watch the market at all times it seems--my girlfriend just loves it, I assure you, haha... That's a tough trade to take IMO. Friday and today were quite convincingly dominated by the bulls, and after market close today (Monday) and since globex opened, it only retraced less than 50 ticks down, and has since easily broken Monday's high and has stayed above it. In other words, there's a heck of a lot of demand being shown here (when the longs get to lock in 75% safely of the big move of the day and can leave their stop just below a 25% retracement of the large move of the day, you know it's a strong market at the moment). I'm sure a shakeout is inevitable, but anything short at this time is quite risky IMO, until the shorts prove something first. The target for that trade would be about 20 ticks, risk about the same.