joshdance

When you said "band tested" you mean the VAH? (i'm assuming that's the little green line on your friday profile)

Not very simplistic really ;-) Wyckoff/VSA is always quite easy in hindsight .. the difficult part of course is real-time, particularly with 1 minute bars. Often it's just quite counter-intuitive--see the attached chart, last part particularly.

Perhaps of note is that the 15m 20EMA is also in almost the same location, providing multiple time frame participants the motivation to sell there. Also, the globex vwap is around the second couple times. Finally, Friday's RTH VPOC is near the second couple of entries as well. So, confluence provides powerful signals.

A quick way to measure this (for anyone who's new to this idea) is to use the retracement tool found on all software packages (may be called the "fibonacci retracement tool"). Connect low to high, then high to retracement point, and the 100% mark is the target you describe. This is of course the challenge. You don't know it's a climax until it reverses and verifies that it's a climax. Some great tools are available for this, one of my main ones being volume analysis (a la Wyckoff), but when price is strongly moving, momentum trumps all notions of exhaustion and climax, as the resources in continuing a trend are virtually unlimited in today's world. Essentially, "exhaustion" is not really possible when the financial resources of large trading groups are virtually unlimited, particularly true with algo buying and selling, as they keep doing what they're told and often take a move far beyond what a human would do by themselves.

A moving average is simply a measure of value. Everything we do in trading centers around value, because when we buy we view that the price is undervalued relative to where it should be, and when we sell we are selling on the premise that the price is currently overvalued and will decline. Value can be measured many different ways: by the closing price of the day or the current bar, the VWAP, the daily pivot, the POC over a range, and so on. The EMA is simply another tool to do this. So, when price is above a particular moving average, this means that the current price is higher than its 20-bar closing price. Subsequently, if price returns to that average price, then buyers will see this as a "bargain" because the scenario is bullish, yet we have a bargain price because we are AT the 20-bar closing price value. Primitive though it may be, a 5 minute 20 bar EMA can be a good approximation of value in the very short term, and traders can use it successfully.

By your quote you seem to indicate that Dr. Brett also feels similarly. His quote, however, only says that it's rubbish to think that trading is "mostly" about psychology. Look at this video from him and you'll see he is quite attuned to the impact psychological traits can have on trading: [ame=http://www.youtube.com/watch?v=f1wcDBJpxE8]Trading Coach Shares Views on Three Common Problems for Tra - YouTube[/ame] I think that once a trader "knows how to trade," that the psychology then becomes important. A trader can get the basic concepts, which means little, because ANYone can get basic concepts after a while. The key then, IMO, is as Dr. Brett says, pattern recognition. Learning repeatable patterns and thinking in probabilities to realize that a certain percentage of those patterns will play out as they did previously leads to the possibility of exploiting that activity for profit. However, putting too much focus on psychology before a trader has the experience in front of the screen to recognize those patterns can be a case of not making the best use of his or her time. In other words, when you have no freaking clue, then the psychology can actually distract from the real problem (that you have no clue and need to learn how the markets move). Perhaps this is what Dr. Brett means; it seems this way from my understanding of the quote.

Kicking myself harder. I called for this move down (CL Redux thread on ET) north of .20, yet I actually lost money and turned a 1K day into a few hundred dollars less. I shorted and shorted, and kept covering for BE and small losses because it would not break, and by the time it broke, the hype was mostly over and we were done. I did not play this well. Anyway, back to topic at hand.... I digress.

Actually even better was that it was a 100 tick move in 9 minutes. Got to love it even more I use the 20 on 1m and 5m charts. That chart you showed actually was a 5m 20EMA near-touch. No 100MA necessary Of course I think context is the most important. To use an EMA as confirmation is the best use, IMO. In this case, we had support just above prior double bottom, lower highs at the top, and a false break out of the triangle-shaped formation, which trapped enough longs (see the volume for the bar and the delta) to get enough shorts interested in taking it down. The EMA provided nice confirmation and additional incentive to shorts.

Thanks for the profiles and such Negotiator, good stuff.

Yes, thought it was a typo at first when I read it.. I'm trading oil and we were at a perfect spot technically for a short anyway, but when it plunged that way I knew the numbers were bad, and sure enough, worst in 2.5 years.

Omar, the solution to this problem is simple--WAIT until the trend is established. If you don't know if the trend is strong, then it's not. Say you woke up to this chart, as I did this morning. Would you call this an established trend? Or to put it differently, would you looking to be shorting this, rather than longing this?

This is good advice, about not overtrading. However, many day traders cannot plan their trades in advance with that small of a range, particularly on volatile markets. We must trade what we see NOW. Others are able to do this, depending on their strategy and market and time frame.

Perhaps there's a terminology difference we have here. DTN's "continuous contract" for ES is @ES# ... there's no month associated with it. It's this contract that will show inaccurate high to low swings over a longer period of time. If you want to switch when volume shifts over, and so forth, then you need to manually roll over your own contracts. You do it either monthly or quarterly, and it should not take that long to do.

What do you mean about DTN which doesn't roll over properly? DTN doesn't "roll over" single month contracts. It like other data vendors, constructs a continuous contract (the "#" one) which is independent of time. DTN has a contract for each month (or say quarterly if you mean the index futures). It doesn't do rollover. Your software must do that, and IRT does have a rollover function (I know, I used to use it). It does this only to remove the gaps (this is the "adjusting"), and thus shows correct high-low swings. DTN is not responsible for this, they have no concept of a "rollover".

Merged back-adjusted contracts accurately reflect high-to-low swings, so are an accurate representation of how far price actually moved in relation to a high or low. However, any data except that in the front-month contract will not show the actual price traded. Merged non-back-adjusted contracts accurately reflect the actual prices traded, but are useless for high-to-low swing movement, so S/R levels will not be accurate, fibs will not be accurate, and so on. Continuous contracts also reflect actual prices traded, but again, the high-to-low swing ratios are off, the further back in time you go. Each data vendor will construct a continuous contract in a different way so they are not identical. The question is, what are you trying to achieve? Based on the above, determine the answer and go with that. Stuff like S/R only works because enough traders use it that it works, so use whatever others who trade what you're trying to accomplish will be using. Just curious--what software and data provider do you use?

Steve, when taking these trades where is your stop typically, on the other side of the node? And are you looking for another node for your target? I know in this example you're talking about using BBs, but I'm talking about what you typically do.

I think you are going about things in exactly the opposite direction as you should be. Try to cultivate your intuition. This may fly in the face of the vendors who want to sell you a "system" that can be traded by anyone, but ask any long-term successful trader to write a series of steps that a new trader can follow (like, specifics, not generalities like "cut your losses short") to achieve repeatable success, and it's obvious that it can't be done. Ask Paul Tudor Jones or some other successful trader how they do what they do, and I guarantee you they will not have a series of specific steps you can follow, otherwise they would just duplicate themselves and retire. Or, if they did write steps, following them to the letter would NOT produce the same results. Intuition based on experience in any field is what separates the really successful from the mediocre.

Most vendors hide behind this legality issue, but I'm not even asking anyone to make a "call." Just to say, "based on my indicators, we are at a local or session extreme and I would expect a move around X ticks from here" or something. No calls. Not saying "I'm taking this trade" or "you should take this trade," just a demonstration that in real-time, a $100+ per month indicator can be used as something other than a chart decoration. I have read many of Pat's posts and have found useful information there in theory. And I am not doubting the validity or fundamental logic of anything he says. But, he seems to imply by his comment to brownie that his methods are quite superior to simple price analysis, and so far I've seen only charts which show a low or high of a session with the indicator confirming it. Even I and other traders make real-time trade reports in the ET "CL Redux" thread, and while I make some bonehead calls, I make some darn good ones too. If I can do it with such primitive, cave-man tools like candlestick charts, surely others with such advanced technology, who are selling something, who have a reason to prove (unlike me) that what they are selling actually works, can at least give it a shot too. The truth is, I really don't care if it works or not, and from what I've seen, it looks quite accurate and probably works just fine. I just don't think it's cool to talk the talk without walking a little walk too. I hope for everyone's sake that they do work as well as claimed, sincerely. I remain skeptical of anyone selling a product which claims such great accuracy, yet who refuses to provide any proof whatsoever. Theories are all well and good, but someone who can't put his theory which he is also selling to a real test is IMO what we call "full of it." I appreciate your thoughts cl, and look forward to discussing more trading ideas with you.

Since you're so confident in the precision of your analysis, why don't you post on this thread when your indicator has pinpointed a local or session low, to see if your analysis works as well in real time as it does on an already-formed chart? Even if it's a minute or two late, it's ok, doesn't have to be at the exact time.

haha! You just know how to keep the woman happy--all of us men have to learn that skill at some point or our lives will be much less pleasant!

That is part of my equation, yes. But I don't trade solely based on this. I trade them when the market context indicates to me that they are reliable. For example, at 3:07, after the breakout of the flag and retest, it was almost a given that 35.25 would be retested at least, and given the time of day and lack of further selling pressure, it's a good long IMO. The volume supported the trade as well. Please feel free to call me just Josh if you like, that is my name.

I am not trading this as I had a very positive CL day and do not normally trade ES (IOW, don't want to screw up my profits ), but if I were, the first confirmed long for me would have been at 3:07 ET. Break out of bull flag, nice picture.

At the moment, perhaps it is--after a 75 handle range and nearly 200 handle drop since last Monday, I would expect some kind of relief... but calling it "positive" is "positive thinking" I think ;-) Longing this is swimming against the stream, that's for sure. Put another way, the easy money has been to the short side to a degree not seen in a long time.

No reason to long this market. Trend followers are tenacious and will keep shorting, especially when El Presidente speaks. Either way, I was shorting the nice $2 drop in oil over the last 15 minutes. It can always go lower.

Likewise cl--I look forward to reading more of your posts. Have fun with ES today -- Obama to speak in 10 minutes, get ready to short