Enigmatics

I have not taken a single trade since August 13th and I've only conducted 5 trades the entire month. My total profit output is twice that of what I need for my monthly bills and is the largest month I've ever had. In the past it would've taken me 25+ trades to hit my monthly numbers. The results are not surprising to me though. I finally stopped trading options full-time. I have focused my efforts on trading the actual stock and I've backed out of the smaller/noisier intervals (2min/5min) in favor of the longer ones. That being said, it's kind of strange. There have been 4 prime opportunities (each fit all my criteria) that I passed on since August 13th, simply because I'm happy with the month I've had and do not want to do anything to jeopardize it. Clearly that is not a T/A-related decision, moreso a "relationship to money" one. I'm just trying to get to the point where I'm not second guessing myself for not taking those extra trades. It's inevitable that I'm going to have to get back on the horse again at some point. But I know from my experience with my method, there will be enough opportunity in the following month.

I can only speak for myself personally, but it would appear when I don't have bills in the back of my mind, I trade better ..... I'm more willing to sit back and let my trade attempt to fulfill my analysis. I know that sounds ironic given that I'm trading for income. The issue with getting out and getting back in, again has to do with my analysis of the position at the time as it is doing it's thing. My perception of the "I need to pay bills" often does get in the middle of things and start casting doubt over the viability of hitting the target by the end of the month. It then grabs the trading wheel and takes the profit, eliminating that uncomfortable moment when you acknowledge uncertainty.

You can .... but are you "guaranteed"? Obviously never. My point was if you don't have a lot of cushion in the account and you have to trade for income, sometimes it gets tougher to sit there and let the position do its thing as the clock is ticking for you to book profit to make ends meet. For someone who's up considerably in their account (let's say 6months reserves, etc) they can just sit back patiently letting the trade attempt to fulfill the determined targets.

I was just sitting here ruminating over a non-decision I made today with a certain stock that pulled back slightly on me as I tend to get very OCD sometimes about decisions I "should've" made. I'm up pretty nicely for the month on 4 other trades though. It's the largest month I've had ever. I could've been up about 5 times what I've made though ...... but I chose to take profits on two stocks that hadn't hit my targets yet. The mental relationship to being up the most I've ever been in a month was just too strong and overtook my ability to stick with my analysis/convictions. Alas, the stock today was reacting stubbornly from a mix of OPEX shenanigans, shorts trying to hold the last line of defense, and profit taking from last week's big move. I had multiple opportunities to exit the stock at or slightly above break-even ...... but as the ego would have it, I couldn't get myself to pull the plug. Clearly there was some fear-based decision factoring "Well what if it starts to move". The irony is, what is the worst that can happen? I can always re-enter. Not quite sure why that was such a tough conclusion to come to and execute. At any rate. For those of you who trade for income ..... how do you juggle expectancy in terms of targets with the necessity of needing to also book profit every month? Some of you are well beyond that stage because you've padded the account so much that you have now afforded yourselves the "patience" required to sit back and let the trade attempt to fulfill your analysis. I might even be answering my own question with that last part in a sense that I am not at that level where my account is padded in such a way. I'm constantly waffling over whether it's better to stack compound gains or stick to my longer targets though. I feel like part of the reason I held that stock today was because of the profits I missed by selling two previous stocks prematurely. So I've gone from "Damn, I sold those too early" to "I should've taken profit". I feel it's in my best interest to get this mentally flip-flopping under control.

Mine happened this year and was the classic noob mistake. It happened back in March when AAPL hit that 486 level. It did not fit any of my criteria whatsoever. It was just me getting suckered into the appearance of a potential "breakout" opportunity amidst all that David Einhorn-led "iPreferred" shares hoopla. I bought about $11,000 worth of calls and suffice to say got reversed on big time. So again, buying something that did not fit my method's criteria was mistake No.1 ..... then came mistake No.2 ..... I averaged down on a big loser. I rode the entire thing down to about $1,500 and finally gave up. Lost just over $20,000. Set me back tremendously.

Ya, clearly the guys paying money come first .... I'm a little confused though about how the rest of us "see" what a skilled trader teaches having already stated you won't be answering about your method? Really all there is to gather by looking at your charts is that based on your arrows you were successful. I know in the past you told me that your classrooms aren't really a business you're looking to grow. Are you using these threads just in case someone comes along and contacts you and so happens to be someone you feel you could teach?

When I first started in the markets I was completely uncomfortable buying stocks that already moved up significantly. The thought of chasing price was too much for me. I wanted to buy at a discount like the big boys. Retail is the last to know and once again, they provide liquidity for the pro's. That mindset is what eventually lead me down the path on how to better (not "perfectly") achieve a discounted price. You know the age old expression .... "Buy into weakness, sell into strength". That's what I set out to do and my trading methodology now matches that mindset. Then as I stated before, I started learning about "the extremes", not only to the downside .... but for shorting the upside as well, as I do not want to be relegated to a one-way trader. I guess we should ask Humbled what his belief is about how the markets operate. Without that foundation, I am not sure how one can build a trading plan. Does he know about market/stock cycles? Wyckoff did a very good job explaining the different stages from accumulation to distribution. The we get back to the question of can he learn how to spot supply/demand? Drawing parallel, vertical, and horizontal lines doesn't help much if one cannot translate what is trying to be achieved out in the market place. I constantly ask myself, where is it going and how good of a job is it doing getting there?

I agree with this 100%. I know Humbled doesn't know how to trade like me, nor does he understand the concepts I've explained to him on here or via private messages ...... but the fact remains, what I've shown him is how I "frame" every single trading day and how I frame potential longer term setups. If that framework is not there, I am not trading. That's all it is. I also wanted to say that I understand how some of the things Wyckoff taught can be "subjective". I noticed it, so I sought ways to fix that. Things started to become clearer based on "confluence" of other methods used in conjuction with it. So that's why I started using Volume Profile, Auction Theory, and Divergence. Example .... 1. Sellers are exhausted after a big selling climax and the candle shows professionals buying into the weakness (Volume Spread Analysis) 2. Sell Climax happens at a Value Area Low (VAL) on the volume profile and I know that there is potential for mean reversion 3. I watch for signs of secondary testing ... i.e. lower lows on lower volume. (Wyckoff) 4. My MACD is making higher lows while price is making lower lows (Divergence) 5. I wait for a key trend line to break and confirmation of demand overcoming supply (Volume Histogram) 6. Targets are then based upon VWAP and volume POC's. I know that many insitutions guarantee price execution at VWAP and I know that POC's are from "previous auctions" where the most buyers/sellers agreed on price on that timeframe. (Auction Theory) Again, an amalgam of different methods to help with the "quality control" of the trade. It enables me to properly mark my stops/targets. I am typically entering trades from the extreme instead of getting caught in "the middle" where risk/reward is often so freakin' poor its disgusting. All of this came from careful observation and a desire to understand orderflow better. Eventually I noticed a consistent behavior. Enough to provide plenty of trading opportunities. I'm not here to master every trading pattern known to man and be in the markets at all times. 90% of the public out there trading price patterns don't even know what the patterns mean in the context of the orderflow. That's why they're forced to trade it every time they see it and most of the time their risk/reward is skewed against them. They just don't realize it. They become "liquidity" for the professionals to unload their positions into.

I have Tradestation and I only use The Matrix (volume by price bars).

An example of my long trade today Humbled. I waited for the market to open up. Saw it reject the early session highs. My mindset was that since we're been in an uptrend, I'm looking for a buy the dip opportunity. I simply wait the dip out, draw the trend line and wait to watch the reaction of supply/demand at that trendline. Clearly Demand came back in a large way when you look at the volume bar leading up the trend line break. Whala, I got long. Targets as usual were VWAP and the intraday volume POC. Again, that is my frame of reference for every trade (as well as trend lines when applicable). I operate from the trading belief that once an extreme is reached (also known as value area low or value area high) and supply/demand have run out, we will revert back to known volume congestion points .... i.e. VWAP (volume weight average price) and the volume POC (volume where price most often occurs). Also notice the 2nd 60min candle. It had a long lower wick on high volume aka "stop volume". This often is a sign professionals are absorbing the dip. The idea here is sort've like card counting in blackjack. If they absorbed almost 23 million shares on that dip, that means those have to get distributed to the upside for the professionals to make their money.

Excellent synopsis. It's more than just drawing supply/demand zones and trendlines. It's about being able to mentally "frame" the marketplace's behavior and then only trade when that framework shows itself because you'll have confidence in the expected reaction. Plus you'll know how to manage the loss in case it moves against you. I myself have spent quite a bit of time over the last month re-dedicating myself to trading only when my framework is there and get over some of the moves I'll miss in the process ....... it's irrelevant anyways because if I don't "understand" the move, I can't mentally manage it anyways.

I switched to Tradestation in November. Everything I had come to know about it was so appealing and I just assumed since it was a highly respected brokerage that their Volume Profile would be what I needed. Was less than pleased after I found out it's not the greatest of platforms for VP. I can't go back and look at 1 week POC, 1 month POC, etc. etc. Blowfish's indicator does allow me to see today's and yesterday's. I have been lazy about checking out other alternatives (hence the using both Tradestation and Stockcharts right now).

I have my Tradesation that I pair up with it. Alas, Tradestation doesn't allow you to set up volume profile like I can on Stockcharts. They have a seperate window called "The Matrix" and it is only used intraday. I wouldn't call "Stockcharts" as way inaccurate. What I have noticed is at times it's slower to adjust, particularly the volume Point of Control. Stockcharts ended up the day with POC right where my Tradestation's Matrix was and the plotted red line on my chart (nifty indicator I got from Blowfish on this site). My Tradesation starting from the top has my MACD (5,13,1), then the candles, then the Better Volume indicator (displays volume based on bid/ask), followed by the standard volume histogram. The Matrix is on the left. It does not show "options" positions up there at the top of it. I used next week's 163 chain for the trade. When I post the Stockcharts charts on here, it's typically because they're easier on the eyes IMO.

Look at this chart again ..... "Conceptually" speaking, since we had a break and push below VWAP (after a brief period of consolidation w/lower highs), my first focus is to be patient as sellers have taken over the day's action. I begin looking for a series of points to connect as a trend line (drawn as 1-2-3 on the chart). I'm not quite sure of the "earlier" area to have drawn them as you have stated. I forgot to mention that there was also a lot of chart confluence at today's bottom given that the early LOD of the session was 163.66 and the R1 (not featured here) was at 163.63.

My reversion trade for the day ...... I actually bought in on the original trend line break, along with the fact that supply had come to a halt (as you can see on the volume histogram). All the classic signs were there though for a reversion to VWAP. Stop volume candles. Positive Divergence. Low volume secondary testing of the low. Right at 1:20pm when 163.59 was hit, it put in a classic "no supply" candle. I still didn't average down though. Trying not to get aggressive late in the day. If I'm profitable from earlier in the session, I typically cut down my position sizing to half of what I used as a mechanism for protecting profits. This trade though (reversions) is there almost every day. All it takes is for someone to be patient. Let the range play out and then understand what the volume is telling them.

A 1 second chart? Man that would be too intense for me personally. I agree though that this shouldn't be about candles and price. It should be about understanding the flow of supply/demand.

Obviously to only want to take a trade where there is less "congestion" between your previously drawn "levels" as well as supply/demand lines. Then obviously understanding if the market is ranging or trending .... can't forget proper candlestick analysis.

Again, I think you need to concentrate on "doing business" in the areas of better risk/reward. Stay away from the small stuff. Use what Thales is teaching you to identify those places.

Not in my opinion. I had a similar trade going and sold basically where you did (based on intraday POC).

Paired up the bonds with my analysis of the SPX today. Worked nicely.

Wait .............. 2B?

Evidence? That's a foreign word on this site. Definitely a lot of bloviating and sword fighting though. :rofl:

Ain't that the truth. Reminds me of this past January when an uncle of mine was so stubbornly insistent AAPL "would never break 500, it has too much cash". He bought that level too.:shocked:

Oh yeah no doubt. I never assumed the big boys are sitting there looking at volume profile and divergent+ volume patterns. All that stuff is just a reflection of what those guys are doing. Aside from knowing big money is who really move markets, I've always looked at this as a game of supply/demand. Naturally if I see something strike a similar low on reduced volume, that violates the "Which direction is it going and how good of a job is it doing getting there?" Hence, if it's not going to go down, it's likely to go up (especially if we're unable to break the low of the previous day's low in RTH). I then wait to see if demand returns in the form of buy volume to confirm upside and the divergence. The higher the time frame this occurs on, the stronger the reaction. I have to admit I've been fairly lazy at looking at the bond. It's something I need to work on because of all of the reasons you previously stated.

For a trade in today's session? No. Although, I still try to remain pure in my volume analysis regardless of "time of year".