Enigmatics

I'll tell you one thing. I placed upon myself the paradigm that I need to be consistently profitable "X" amount each day to cover what I need every month. I think it's worked against me. There is almost a symphony of ebb and flow to doing this. There are moments when a quick trade for easy profits is necessary and those times when it's best to sit back and let the position breath, even if it means you don't have a big week.

It is my belief that as rates rise, the banks will begin lending again. All the fence sitters will now rush in so as not to get caught on the high-end of that increase and credit restrictions will open up so all the rest of the sidelined people can finally get a loan. Nifty game played. Sucks for the public, but in a strange way it's purely business.

I do realize that it might sound like an oversimpification to tell him not to overtrade. I'm willing to guess that you have a far better understanding of market/trading mechanics than he does though. Humbled experienced no success in his 4-5 years prior to this. He's basically rebuilding a new "foundation". For him, I consider it important to observe the market in the ways Thales is instructing. Yet he needs to focus more on reward/risk than frequency. Work smarter not harder. Yes, none of us have a crystal ball, but we still have to look at a chart and assess viable targets. He should become really good at a couple setups before trying to learn/trade everything all at once. Some of the little scalps, he should avoid. Not denying you of what you say you've been able to do, but I've never seen any trader (let alone a beginner) show me how they consistenty trade 30-50 times a day and be profitable. You bring up an interesting dichotomy though. You mention it's alright to not overtrade if they hit their daily goal. The problem is, that violates the very principle you established of "trading when the setup is there". I myself have spent the better part of my last 3 years focusing on daily monetary goals. In the end, I think I've held myself back. It has become sort've a crutch. At times it has forced me into impatient trades (trying to hit the goal) and other times it has caused me to prematurely exit winning positions (already made my money). The latter can be worked around via scaling techniques ..... which Humbled will also have to learn the proper mechanisms of. A guy I know who keeps all of his trading stats (btw he benefits from a very high reward/risk ratio that makes me sickeningly envious) has always preached to me to not make it about the money. Make it about successfully conducting a trade.

They whipsawed me so badly there into the EOD. Not pretty. P.S. be extremely congnicent of "overtrading". Some of these little trades you attempt to make IMO are not even worth the hassle.

I'm long again .... I personally think we make new highs. We've spent over an hour inside of yesterday's value area (where 70% of the volume occured). Typically that leads to us re-testing the high end of that range (161.80). Other indices acting very bullish. $TRAN is up. GOOG up. AAPL is even up. I'm shooting for SPY 161.80 ..... However, there is a really large inverse head and shoulders pattern playing out on the 5min if you look at the past 2 days. Could yield an even larger move up to the 162's. Either way I will at the very least scale out at 161.80 it gets hit.

My dumbass forgot to wait for the Michigan Sentiment and Consumer Confidence numbers early in the session and had to take a loss on my first entry ..... but I was patient for a new opportunity to form .... Blue line is yesterday's volume POC (Point of Control) Red line is today's volume POC Once the early morning dip was bought up, I waited for the break above today's POC and to see if it would maintain support. The 5min candle on that break was very strong. The next couple of candles remained "inside" with support of today's POC. Sell volume waned, giving cue to the bulls to fill the gap up to yesterday's volume POC. I typically try to take advantage of the gap between two POC's (today's and yesterday's) whenever the opportunity presents itself.

I trade both long and short using these options. The more people I talk to, the more I get the impression that trading futures would be more reliable than options (particularly if I'm trading small pockets). Those "vaguaries" in the theoretical pricing models definitely makes things so much more complicated. Now normally I trade right at the money and the delta is around .50 .... so I know that all I need to do count how many ticks on the underlying I'm targeting. Then I divide that in half and add that to the entry price on my options. If the move is quick, generally speaking the limit sell order will get hit. The longer it takes, the more complicated it gets because of time decay ..... which then makes life miserable for trying to set the appropriate stops. I think I'm answering my own question.

Congrats on your profits! I took a very similar trade in the SPY. Blue line is yesterday's volume POC (Point of Control) Red line is today's volume POC Once the early morning dip was bought up, I waited for the break above today's POC and to see if it would maintain support. The 5min candle on that break was very strong. The next couple of candles remained "inside" with support of today's POC. Sell volume waned, giving cue to the bulls to fill the gap up to yesterday's volume POC.

I day trade SPY options quite a bit, always next week's chain at the money. My preferred trade is more or less reversion to VWAP or the intraday volume POC once an "extreme" has been reached (I recently created a thread about it on here). I find that it gets extremely difficult trying to day trade in tight windows ..... i.e. most trades on lower intervals (especially on narrow range days).... or basically less than 40 ticks on the underlying. The spreads can often times complicate my exit when my limit sell is not hit. Then I have to scramble to market order which again is most likely going to be 2-3 cents under the ask. I often wonder if scalping the /ES would be more beneficial as I wouldn't be dealing with time decay and spread issues.

Steve ..... What is your opinion of when it comes to trading futures or equities/options? Which instrument do you find more reliable and why?

Love, love, love that you've brought up "the middle" a few times now. That is the utmost worst place to trade from. Not to mention the risk/reward factor becomes skewed. Lots of traders do not even pay any attention to that kind of thing. They insist on taking trades where AT BEST it's 1:1 and often times even worse than that because they're late to enter. You can't be a profitable trader over a prolonged period of time doing that. In fact is one is late to the trade, just let it go. There were always be other opportunities.

Cool cool. I used to pay a lot of attention to EMA's .... my two of choice were the 30 and 150 (influenced by Stan Weistein). I wouldn't even use an indicator like MACD if it weren't for Divergence purposes. Quite often with divergence/reversion trades, the pattern happens to be a Rising/Falling Wedge. Like yourself, I try to stay as simple as I can ..... just the essentials. I don't have time to look at 10 different "lagging" indicators.

What do you trade with?

It's Stockcharts.com My actual trading platform is Tradestation ..... but I'm so attached to Stockcharts (have had it for nearly 3.5 years) that I use a combination of the two. It's just so easy on the eyes. The other reason I use it is Tradesation only offers Volume Profile (aka "Volume by Price") for the intraday via what they call their "Matrix" .... so I'm out of luck if I want to back out of a chart and look at Volume Profile via longer time frames. I found an indicator created by BlowFish that plots the current and previous day's volume POC on Tradestation though, which is kind handy.

I'll certainly do what I can. I'm not quite on DB's level though I created a thread recently for divergence & reversion trading, which I linked Humbled to in a private message. It's a combination of all my studies in Wyckoff, VSA, Volume Profile, Market Auction Theory, VWAP, and Divergences.

Totally understood. In fact one should never trade real money on something they don't fullyunderstand and are comfortable with. Thales has done a great job so far and I can understand your comfort zone. Too many traders don't fully invest in one method long enough to actually become consistent at it. However, there's nothing wrong with "observing" in case it starts to make sense with you and becomes an added piece of the puzzle to your trading style. I mean mine is made up of various things I've pieced together over the last 3 years.

In my opinion, price-only trading can be extremely tough business for beginners. I know what it's like when you're first starting out though. There's only so much you have the ability to focus on and analyze while you're attempting to "frame" your trades. Just looking at candles seems much easier. The guys who are consistently profitable doing it have a better feel for the flow of the market, it's breadth, and trend identification. Many of the beginners who start out doing it end up in trades like the first two longs you took today. The trades start out winners, but end up losers because you were on the wrong side of the market. You end up in false breakouts or breakdowns, etc. etc. etc ... I'm sure you're familiar. For me personally, that's why I started investigating various forms of volume studies. I got sick and tired of candles "lying" to me.

I'll say one thing .... if you're attempting to short near lows of the day, you better be sure you're analyzing the supply/demand factor in the volume. If you don't get volume expansion to break through that level, you just going to get whipsawed .... particularly on a bullish day like we were in. I actually took the opposite trade as you did and went long, but in the SPY. You see the first touch of the bottom at 11am EST. At which point some demand came in, with buy volume exeeding the previous sell off. The bounce hits the upper trend line then retraces back near the low of of the day. The key here is that it happened on much lighter sell volume then when it first touched down there at 11am. This is your classic "secondary test for remaining supply". It did not return and up the market went. Major sell volume really didn't return until late in the day after we already achieved new highs. I included the chart down below. As for your long trades, can't say I understand why you took them. I personally didn't see anything viable there.

Damnit .... there it goes, almost back to HOD. :crap:

My trade on the SPY today .... 1. Waited out the dip from the opening session highs. 2. Demand came in around 11am EST 3. I waited out that first bounce (the automatic reversal) to see what kind of reaction it would get on the dip from sellers 4. Sellers clearly lightened up ("no supply") as we re-tested the 159.30's where lots of lower wicks were and positive divergence formed 5. I then entered on the break above the TL, albeit I really wanted to enter at the "no supply". I'm trying to be prudent with these instead of greedy trying to capture every cent. 6. Target initially was VWAP, but I held thru as no real sellers turned up there. 2nd target then became the opening price of 159.87. The intraday POC ended up shifting up to that level where I exited. DAX has held strong on the day which also added some confidence to my long. Max target would've been the HOD today but I just didn't have the balls to hold to that.

Decided to create this thread for the simple reason that as traders we're like scientists ..... it is our responsibility to attempt to poke holes in our own "theories" (aka trading styles) so as to prevent confirmed bias that will inevitably lead us astray and our accounts dry. I'm open to all kinds of opinions and since I don't have trading peers in real life, so I come to place like this. That comes with one caveat though. There seems to be a lot of time spent by certain posters showing up in threads just to proclaim their market saavy, not really intending to offer up any tangible advice. Please refrain from any of that. I get it, you've worked hard and do not feel compelled to "share" so to speak. My style has been an evolution. It inherently is born from my desire to NOT chase price. I have been relentless in my pursuit to "understand" (over 7000 hours trading/studying) and that has led me further down the rabbit hole covering studies involving VWAP, Volume Profile, Market Auction Theory, Divergence, Wyckoff, Mean Reversion, and Volume Spread Analysis. Obviously a lot of "volume" related concepts right? That is primarily because I've never been any good at price-only trading. Volume helps me identify supply/demand and "validity" of movements. Another reason this style has evolved the way it has for me is I still struggle trading near the open. I have not been able to do it consistently for quite some time. I certainly would like to, but I digress. I use divergence to spot potential reversions to VWAP or volume POC's (Points of control) from the "extremes". It is my opinion that these two areas act as magnets once supply/demand run out. The divergence must be confirmed via the volume and there typically must be a trend line break. Probabilities for success on these trades are obviously going to be higher on bracketing days than trending days, but from observation the days where we don't retrace to one of those two levels is few and far between. That being said there still must be enough "juice" to make it worth the squeeze, so if there isn't enough potential I just avoid it. The following is an example of a trade I took on June 6th. There was actually quite a bit more upside to this trade as there was confluence in the high time frames, but I just want to focus on my trade. 1. Selling Climax occurs giving an indication of possible seller exhaustion 2. Stop volume forms with a long lower wick (sign of potential absorption of supply by pro's) 3. Price bounces off the SV (called an automatic reversal) 4. The action pulls back and then retests the bottom on lighter volume (called "secondary test of supply") 5. The test is successful as no new major sellers show up, giving a signal to the intraday bulls to take over 6. The top trend line is broken (this is absolutely crucial so as to not enter a false rally) 7. Target at this time was VWAP/POC as they were both the same. If POC was before the VWAP, then you scale out at POC first.

****WARNING: DO NOT TAKE WHAT I SAY PERSONALLY**** Now then ..... you said posting a screenshot doesn't matter to you. I definitely get that impression. Understand that it matters to people like me who read what you post. That's the difference, especially if you're on here trying to recruit new students. Can you blame me though? It's my hard earned money we're talking about here. I'm not going to hand it over and invest my own personal time because someone's chart looks really good. I've been in the market about 3 years now and there's never a shortage of people who are able to post charts after the action has happened. Posting the snapshot of the entry/exit Time and Sales after you closed out your trade takes less time than working up a chart and is bonafied proof of the results. I'd actually put more stock in that then the chart. It's not like you'd be giving away your secret recipe ..... as clearly that is reserved for your students. Imagine if you went to a hedge fund and said, "Hey guys, I've been day trading for a few years. I have this super duper system that makes lots of money!" .... naturally what is their reaction going to be? They're going to want to see your trading history and tax returns to back it up. Again Steve, you should not take what I say as a potshot at you. It is just the nature of these online stock trading forums. Everyone's a complete stranger with their own motivations and I don't know you from the next guy. On the subject of volume ...... I love volume studies. I'm amazed by people who are able to trade price-only. I use both VSA, volume profile, VWAP, and peaks/troughs of the regular volume histogram in order to construct my trades. I'm better able to do it at "extremes" when the market supply/demand has run out during the day ..... and then taking a trade back to a volume congestion area (i.e. VWAP or POC). I've also been working on swing positions in the same fashion. The beginning of the day with all those on-open market orders has always been the toughest for me though. So still working on that aspect because I want to be able to take advantage of liquidity. Lately I've gotten a little better at it by letting the market breath for about 15-25mins, watching for a range, and then a reaction to the extremes of said range .... usually looking for volume expansion at them to signal to me which direction we're headed in. Still have a long way to go.

No doubt about that. Hard to post charts and trade at the same time when you're day trading. Having said that, quieting skepticism is relatively easy to accomplish simply by posting screenshots of the executed trades later on along with the charts detailing the trade one took.

I was shown a site (Avafin.com) that keeps track of Trade Flows and Block Trades. Now what I don't get is on a day like today there were the following: SPY Total Trade flow 1.19 buy/sell ratio $2.58 billion in positive cash flow SPY Total Block Trades 2.21 buy/sell ratio $1.06 billion in positive cash flow Yet the market got slaughtered, in particular the SPY. How could there be such a negative impact when the inflows and block trading were green all day long? I'm trying to figure out how to apply information from that site correctly. I've long heard to follow the block trading, but obviously it can't be viewed in a telephone booth.

Awesome. Wasn't sure before. Thanks for clearing it up in case something opens up in the future.