joshdance

Very cool--good luck and I hope you have lots of success!

I began in forex a few years ago but then took a couple of years off after losing a little money, and now I'm trading futures, usually oil, though obviously this past week had my interested piqued in the indexes. I won't say I've "found my way" yet, but I'm certainly on the right track, based on my results. I have some bad days, and some good days, but overall my discipline is improving, which is my biggest problem. I went through the indicator circus when I first started, and for that reason am not interested in using free indicators which only obscure things for me, much less paying for them. Especially when in the words of the author (UB's company) "the screen captures/charts in this posting have been 'cherry picked' to show the various indicators at their best and may not reflect average performance." However, the concepts do make sense, and in that sense I am interested. But if the concepts require an indicator to see the "real picture" of what's going on, one that costs $100+ a month, then I'm not interested--if that makes sense. My trading primarily involves price, and wyckoffian-type volume analysis. It's simple, logical, and works quite well. When I have good days in the market, it's because I took smart trades and was patient. When I have down days, it's almost always because I forced trades, and made other errors. The success lies in my discipline. How about you--do you use any indicators in your trading that you have found helpful, or no? I am not an anti-indicator guy by the way I think they are great if they can help someone make good trading decisions.

5th year of studying UB's info? Congrats on your journey-- I sent the kids off to their first day of school today as well (a bit older than yours though), quite amazing to see them grow month by month..

Pat, will the information in the webinar be applicable primarily with the use of your indicators, which you lease at $1400/yr, or will the information be usable by those without your indicators?

And where should it be? And why should it be there?

Thanks for the article MMS. Always good to get back to the basics of what the market is telling us -- trends in price, and volume.

A question for you market profilers that I have been wondering lately--when you're into new territory like ES is right now, do you use volume at price from the continuous contract, or from a merged back-adjusted contract? If so, why do you choose that one? In other words, do you prefer the integrity of the volume information at the actual previously traded price, or do you prefer that it's accurate to see where volume traded at the same relative price level?

I do not normally trade ES but couldn't resist this on Friday. I opened up the charts around 2:30 and planned that if we broke 1198 I would look for a short. Simple demand line break (1st red line), retest/fake up, enough longs trapped to short, target earlier support around 1185. 10.50 handles in 7 minutes, gotta love that. Took another demand line break (2nd red line) plus VWAP rejection, shorted 1190.75 on the way down and closed 1187.75 for a quick 3 handles. I think I liked ES the last couple of days (took a couple of trades on Thursday as well) because it behaved like CL, which I normally trade

Rande, I enjoyed the article. I'm providing suggestions for YOU so your book will be more readable and correct. I don't have a horse in this race and don't own your book. If you can't take criticism, don't post your article here.

Good advice steve, thanks for the post.

A couple of editing notes. I would remove "A cacophony of strident thoughts" -- sounds overcooked. Also, "rapped". Finally, Jim is not "literally" caught in a catch-22. Unless a "catch-22" is a literal, physical trap of some kind, which I'm sure you did not intend. Jim is simply caught in a catch-22.

Which locals are you referring to? Last I checked, on the CME, open outcry volume was less than 10% of all trading, 90% coming through globex. And since you're looking at ES in these charts, there are no "locals" as far as I know. Perhaps I'm misunderstanding.

Like any trend-based methodology that has mechanical rules as you seem to have, it will work well on days like the day you posted this chart, and fail miserably on ranging, choppy days. It's my belief (and therefore only my reality, not necessarily yours) that you must learn how to actually trade. There's a reason why every single thread on every internet forum where someone posts rules like this either fail immediately in practice (backtesting has little merit in general, even less so with these kinds of things), or in the long run. Because people are not really learning how to trade the market, they want something black and white to do in every case, and hope that guarantees success. They want words on a paper to do the trading for them, instead of using their own brains in a real live situation. I'm not saying this applies to you, just the vast majority of threads where people post a "system." Others then jump on, hoping it will work for them, and of course it does not. It looks like you are on the right track since you came up with this yourself, which means you are willing to think for yourself instead of wanting someone to spoon-feed you the answers. Keep up the good work. My one piece of advice would be to ditch the momentum indicator. You already have several entry criteria, why mess up a good entry opportunity by giving it yet more more hurdle to jump? Watch your price bars forming, that should give you all the information on "momentum" that you need. How long have you been watching NQ? Learn how it moves, and then adjust whatever methodology you want to use accordingly. Use your experience with its movement to determine optimal stop loss and targets. Each market is different as people who trade them are different. Learn about the humans and computers who trade NQ. What are they like? When do they usually like to move? Is it really directional when it moves? All of these things you can learn just by sitting and watching.

You said this: Which is not correct. A stop is NOT also a limit order. A "stop" triggers when the market trades at a certain price or higher (buy stop), or a certain price and lower (sell stop). It is NOT a limit order.

Duh, but a stop market is not a limit order. A stop limit is a different type of order than a "stop order." It's a "stop limit order."

I fully understand greg--but you said that a stop order is a type of limit order, and by general definition it is not, as it is not guaranteed to be executed at a specific price or better, as is a limit order.

Not by the definition of 95% of traders out there, and not according to the SEC: Limit Orders A stop order is executed at the market, and this does not fit the definition of a limit order ("at a specific price or better").

If by "current price" you mean "last traded price," you're almost correct but not quite. Buy limit orders must be below the lowest offer, and sell limit orders must be above the highest bid. In normal market conditions, it will be the case that the highest bid will be below the last traded price, but not always. See the screen shot two posts above yours of my DOM. The bid at .27 is above the last traded price.

Greg, good point--I was thinking in the context of typical market scenarios, where it's very uncommon except in illiquid situations (like globex oil trading for example) for offers and bids to shift such that the last price traded is above the best offer or below the best bid. I took a screen shot of this last night on my DOM because I thought I might use it in this thread, and I've attached it. At any rate, I'm done trying to help you. Instead of thanking people for trying to help you understand basic things, like the difference between a sell stop and a sell limit, you use an off-the-wall scenario to show that I was wrong on one point--good catch though, I'm glad you pointed it out. Good luck in your trading, whenever you decide to begin.

If anybody else comprising "the market" actually drew that trendline, and kept it there, and traded off of it, they'd be out of their minds. In other words, there's not a snowball's chance in hell that sellers sold there because of that line, IMHO. Trendlines are quite subjective anyway, but that's about as random a point to pick as you could find. I do find the value in using lines and channels, in fact much of my trading is based off of that, but you can draw a random line anywhere, and find where price touches it. Best to stick to the lines IMO that are obvious to a blind person from 10 feet across the room.

You're confusing stop orders and limit orders. A simplistic but generally accurate explanation of orders: - a sell stop at X says "when the last price trades to X or lower, sell at the market". This means most sell stops are placed below the current market price (which is why your protective stop loss is below your price when you are long, and why you place a sell stop below the market price to enter on a breakout to the downside). - a buy stop at X says "when the last price trades to X or higher, buy at the market". This means most buy stops are placed above the current market price (which is why your protective stop loss is above your price when you are short, and why you place a buy stop above the market price to enter on a breakout to the upside). - a sell limit at X says "sell at X or higher". This means most sell limits are placed above the current market price (which is why your take profit order when you are long is above the current price, and why you place a sell limit above the market price to sell when price reaches that level) - a buy limit at X says "buy at X or lower". This means most buy limits are placed below the current market price (which is why your take profit order when you are short is below the current price, and why you place a buy limit below the market price to buy when price reaches that level) A stop loss at 300 is likely not even known to the exchange. It's likely on your broker's order servers, or in some cases even just a simulated order on your software. A sell stop order placed at 300 in your scenario says, "when the last price trades at or below 300, sell at the market." So, your sell stop at 300 will sit there at your broker, and if executed, will be matched to the best bid (which was placed as a "buy limit" order). A stop market order is a MARKET ORDER, not a LIMIT. Reread this section I wrote: A sell stop market will be matched to the best (highest) bid. The order book contains bids and offers, and your stop loss is matched to one of these. So, in your scenario, a market buy will be matched to the best OFFER (your 300 sell stop is not an offer), which is 1100.

No, "best price" for a buy market is the lowest offer. Why would "best price" mean anything other than the "lowest price"? I can not follow your examples. Perhaps something a little more realistic and clear would help. If I understand what you're trying to say, if the best offer is $1, and you bought market, then yes you'd get filled at $1. If the best bid is $1 and you sold market, you'd get filled at $1.

Okay, so last traded price was 1000, resting offers are 10 at 900, 10 at 800. You do a buy market of 20, you get filled 10 at 800 first, then 10 at 900, so you're long 20 contracts at an average price of 850. Last price will now be 900.

Several people seem to be making this more complicated than it needs to be. Bids are orders to buy at or lower than a specific price. Offers are orders to sell at or lower than a specific price. A market buy is an order to buy at the best available (lowest price) offer. Thus, a market buy (created when you click "Buy market" or when you use a "stop market" order) is matched to the lowest offer in the order book, specifically the first order in the queue at that price. If there are more offers at that price, then they are each filled as market buy orders are placed. If enough market buy orders are executed so that the offers at that price are filled, OR if the offers are that price are removed, such that there are no more offers at that level, then the best offer will be at some higher price level, usually one tick higher. As soon as someone places a buy market now, then price will "tick" higher. This is the "last" traded price, and is usually the price you see as "the price" on your chart. This is how prices move. Reverse the process for how prices move down. So, only market orders, or marketable limit orders (buy limits at or above the best offer, and vice versa), can "move" price or create a transaction. Bids and offers in and of themselves do nothing but wait to be filled by market orders. Open a time and sales window and a DOM on a slow moving instrument during off hours, like ES, and just watch how it works.

I'm not sure you're clear on how orders work. A buy market can not cause price to move down. A bid is a resting limit order to buy. A seller places a market sell order, and this is matched to a resting bid. Either you're very confused, or your terminology is incorrect.