idaxtrader

Thank you very much for the link to the first market wizards. I have been looking for that in e book form for years and could never locate it. Know I can put it on my droid and read insprational stories when I'm on the train or bus. Thanks again!!!!

If you have a legitimate edge trading Russell futures you would be a fool to surrender that edge and not switch. There is nothing wrong with all electronic markets. All the futures markets in Europe are fully electronic they eliminated the middlemen years ago. The bund and eurostoxx 50 which are fully electronic are some of the most liquid and best markets to trade. Its my opinion all markets should be electronic without a floor. Its already 2008 and the floor has no real purpose. The floor is a dinosaur thats is nearly extinct. It only exists because of strongly held traditions in the U.S.

I have come across an interesting trader media site. http://www.onn.tv/optionsnewsnetwork/HomePage They offer new videos every day. The videos are filmed at the old CBOT building now CME group. So they get some interesting people on the show. I personally like the street smarts series.

I'm really happy about this thread. I enjoy podcasts and webinars on trading. None of them really help in trading but they offer entertainment value. I enjoy the interviews with Larry Pesavento at http://www.tfnn.com Larry does three 15m interviews a week. Also at http://www.robindayne.com/archives.html there is an archive of 100 or so old podcasts with well known traders or educators. The only problem with this site is you must fast forward a lot. There is 45 minutes of garbage before the actual quality material.

Dear, Mr Krantz I have to politely disagree with you. It is possible to derive an edge and be successful in the foreign exchange marketplace while systematically ignoring data releases and long term economic fundamentals. It may not be the best idea but its possible. Many beginners think they need to deeply understand the macroeconomic outlook ,read the wall street journal every mourning, and surf the websites like bloomberg and reuters for news updates. This is simply not true. The following is in essence the concept that I'm trying to illustrate. This quote is from a professional that I personally respect greatly John Person. "You are not so much concerned with long-term macroeconomic situations as you are with riding a momentum wave. Granted, it helps to have a good understanding of fundamental conditions; but for the most part, you are looking to ride a move and profit from it. That is your job. In short-term trading, conditions change; and you need to capture opportunities as they become present."

I don't see why people have to respond with rude comments regarding a beginners inquiry. TL is not elite trader and people are supposed to help people over here. Any way the reason Eur fell hard on the rate hike is because some people had thought they would hike one more time. Mr. Trichet signaled that its very unlikely they will hike again so that caused the Eur to fall. If I can offer some advice don't concern yourself with why something is dropping only concern yourself that it is dropping. Fundamentals just get in the way of trading. I think the secret of this business is risk management and to ignore all news flow. Simply offset a few minutes before release time. Let the market digest the data and then wait for a trigger that will let you initiate a trade.

I have read that blog post by Dr. Brett and was kind of disappointed by it. I deeply respect Dr Brett and his work but I think he was kind of off target with this one. I agree with what he had said. That the root of all emotional problems is inadequate training or lack of a genuine edge. Heres my take. There are two types of traders. Either competent (possessing a genuine edge) or incompetent (not possessing an edge). Honestly I don't care about incompetent traders and all the reasons why they can't make it in the markets. I personally view myself as competent, I possess a genuine edge, and consistently make money in the markets. However, I have some emotional problems that don't allow me to make the kind of money I deserve to make. Its not the markets, my edge, or any thing else other than my own emotions getting in the way. I'm simply timid with unbooked profits and behave like an ass and can't stop myself no matter how much I try. I cut my winners short and have problems adding to a winning position that simple. If I could only get this matter resolved I would be extremely happy, fulfilled, and at peace with myself. I have tried just about every thing but nothing seems to work my brain is hardwired to cut winners short. It would be nice if Dr. Brett would address the concerns of semi successful traders such as my self instead of just pointing out the obvious that emotional interference stems from no edge. I guess my problem is common in the business among professionals and thats why he is employed at the firm he is at in Chicago. If one requires real help you need to fork out the cash and get a 1 on 1 meeting with a trading psychologist.

I think for his purposes the contract is liquid enough. At first glance it seems like this is a fundamental longer term play rather than a day trade scalp. If he's trading in 5 lots or less, I think any electronic contract on a major futures exchange will be o.k. There is almost always someone ready to take the other side of your trade. Trading on a major exchange, the price you see is pretty much what you get. Liquidity problems tend happen more with stocks especially low priced ones. Just my opinion by the way has any one ever traded the MDAX future on Eurex or the AEX future on Euronext. I have always had an interest in these but never got around to looking into them seriously. I really like some of the characteristics of the AEX and the MDAX can trend really well.

If you really want to trade the economic fundamentals of the u.k. this is a better instrument than the ftse 100 FTSE 250 INDEX FUTURE Mnemo Y MEP Euronext.liffe London Unit £ FTSE 250 Index Futures Unit of trading Contract valued at £10 per index point (eg value £65,000 at 6500.0) Delivery months March, June, September, December (nearest two available for trading) Quotation Index points (e.g. 6500.0) Minimum price movement (tick size and value) 0.5 (£5.00) Trading hours 08:00 - 17:30

Mark Knopfler: What it is [ame=http://www.youtube.com/watch?v=uSdQ3Ze2VOM]YouTube - Mark Knopfler - What It Is[/ame]

Really good idea for a thread. Here is a song by Springsteen I like a lot. (Devils and Dust) Really good song to listen to when the market doesn't agree with your system. Link: By the way how do I get a direct youtube link to show up on my post. I would be most grateful if someone can help

"The two situations are identical. Whatever setup I choose to test, I keep seeing the same patterns but they work one time and fail the next. I'm never going to find something that works more than 50% of the time. Perhaps you more experienced traders are acting on something that's not in the chart, some 'intuitive feeling' or something..." ZEON This is a very accurate statement that you have asserted. D.B. shed a little light on the principle of context. This is one of the most important principles in all of trading. There is no easy way around context it can only be achieved by experience. I think wyckoff addressed this issue in his book on tape reading where he says that mechanical approaches are never the way to go. That it requires good judgment to trade well. Mechanical patterns are useless without judgment when to say no. In my opinion mechanical can be very good if you can build a super high frequency trading system. More than 100+ trades a day. The principle of just letting your edge play out over an adequate sample size. I tried hard to do this but could never really get this approach to work for me. I've yet to hear my theory on volume addressed on any of these threads. People want to believe volume is the holy grail. Price can move with or with out volume. Its can move massively without volume for example holidays. Your job is to be paid from price not volume. Its only my opinion and I'm not taking a shot on volume traders. If they get it to work for them thats all that matters. (1) Wyckoff's tactics for volume were great in the past but are no longer as robust as before. (2)I believe in his time the volume was a very straight forward thing. Nowadays you never know with volume, its not straight forward. (3)There is to much arbing and spreading and all sorts of complicated trades going on. (4) In your chart of the qqqs there may be no demand bars. But in a complex market there may be large demand in the NQ or the ND or the actual NDX cash. (5) Then add other complex factors such as just a quiet market in the Nasdaq 100 and all its derivatives indicated by your no demand bars but over in the S&P and all its derivatives there is large volume and its building cause to go up further. (6) To even complicate things further both the S&P and Nasdaq may be indicating no demand but there could be some really big players building a bullish position in EuroStoxx50 and its derivatives which could possible fuel a rally. In conclusion my opinion is that volume is a very tricky thing these days. If it were as easy as vendors make you think such as Market Delta and TraderGuider there would be a lot more wealthy traders in the world. My solution is to first master your one setup and then apply a volume filter to your setup. Don't get caught in the trap in taking non confirmed trades saying this or that was no demand or no supply.

The rules bring you to a no judgment type approach. You design your trade program and approach to trading by keeping the major choice of positions within your program while keeping the confirmation to the market. Your only job is to follow your trade program while obeying Rules 1 and 2. The rules take away the need to decide while the market is open what to do during the trade day. You will have a good idea what you expect of yourself at all times rather than guessing what is actually going to take place with your positions. You will either be proven correct with your positions or you simply get out of the positions. You don't stick around to get hurt with exposure if the market is not proving you correct. You must research your trade program well enough to be able to not enter at bad entry levels. Even if you make a simple mistake such as chasing markets, Rule 1 will still keep you from excessive drawdown during your trading career. If you keep a trade that never proves to be correct within your program of time element, you will never be able to correct a bad situation but only be able to remove that bad situation. Your mental well-being is worth a lot in trading. You can trade well when you are thinking well While it is true that being in control of your position in the market rather than the market being in control of what you are going to think about your position next simplifies your trading life, it also greatly enhances your ability to make good trades. The main reason is that you know what to expect and have those expectations up front from the entry of your trades. Still, at any time the prior work finished could create a problem. Let's say the foundation settles and cracks the sewer pipe. Would you continue on the house? Of course, you wouldn't. Well, no way will you continue with a trade that proved correct but now shows problems. You can never let your guard down in trading. You must always know what the next step is for you in any situation. You rehearse your criteria of a trade, and it becomes second nature -- just like driving a car becomes a subconscious effort for you when you are proficient at it. You are expecting a big reward and fail to see the big risk that faces you at first. Somewhere along the way you must face the situation for what it is. Trading is a loser's game. You must learn how to lose. You are expecting a big reward and fail to see the big risk that faces you at first. Somewhere along the way you must face the situation for what it is. Trading is a loser's game. You must learn how to lose. With Rule 1 you are freeing yourself from having to feel bad. You put the trade on based on the trade plan. The market either confirms and you now have a good position, or it doesn't confirm and you are not okay with the position and you get out. Simple! Only a big deal if you don't get out when it isn't confirmed as a good position. No need to ever feel bad. Most of your trades that don't confirm within a logical time frame are usually going to look bad sooner or later. Why not take the sooner?

Press your winners correctly without exception. Without a correct method to press your correct positions, you will never recover much beyond your losses. You need rule two to ensure you have a larger position when you are correct. You always want a larger position when you get a great move or trending market than when your position isn't correct. "Correctly" in Rule 2 means you must have a qualified plan of adding to your position once a trend has established itself. Rule 2 is important for it keeps you in a good position as well as impresses upon your own thinking about having a correct position nitially. Most traders are conditioned to want to take a profit to prove to themselves that they are right. Being right does not, in itself, make the most amount of profit. Also a good reason for adding to a winner is because traders usually tend to doubt the position unless they reinforce the correctness of that position. Adding to the position correctly best does this. The other good reason is that you must be larger when correct on a position than when your position is wrong. Correctly adding to a proven position must be done so that a pyramid isn't established that will hurt the trader in a minor reversal. Each add onto an original position should be done in smaller and smaller steps. This is a 1:3:2:1 ratio in establishing three levels of positioning. Initial=1 unit Add1= 3 units Add2= 2 units Add 3: 1 unit At all times during the trade it is important that Rule 1 be in your plan. This includes when you are adding to your positions to protect your trade from any major reversals, which often happen. Without exception the rule indicates it is not an arbitrary decision on the trader's part whether to add. Reviewing Rule 2, it states only that you must add to correct (proven) positions and that it must be done correctly. The rule does not tell you how to add, as this is your requirement in the trade plan you develop. The rule makes no exception on adding to correct positions. The intent of Rule 2 is twofold: Reinforce your correct position both mentally in your thinking and your execution and increasing the size of your position. One correct way for a day-trader is to see that the position is proven correct and then add at a proper retracement. This will not be the case for a trend trader. A trend trader would most likely have at least one add at a breakout. Day-traders will have a problem with Rule 2 unless they position properly and understand that their adds must only be made correctly. Adding correctly regardless of your time period is useful in making bigger gains in the long run. I use to watch a very good trader put a big position on and take it off until it proved to be correct. He made good trades and ended up with bigger gains by doing it that way than by adding after being proven right. The drawback is that you are larger when you are wrong, too, but it's still a protected position if you use Rule 1 properly. It is acceptable but, again, I must remind you that Rule 1 is critical here. It looks like a modified Rule 2, but as I stated, your trade plan determines your method of adding. It is understood that you want to have a larger position when correct. This is a way to do a trade when you don't have an established trend and the probabilities are lower. You must start your trade plan with rules created to protect your equity. I am presenting those rules to incorporate into your plan. Experience has proven these rules a necessity in survival and reaching your objective of making the most return with the least amount of risk. Why is it that Rule 2 doesn't seem to work for most of the traders? One simple fact! That fact is they are putting their entire position on at their entry into a market. This is not Rule 2's intent. A total position is a series of positions until the complete expected position is established. They should only have their entire position established upon getting the move as expected. Rule 2 addresses this expectation. The nature of trading is that more often you see a negative effect from what you have just done. Seldom do you see or remember the good effects from the proper trading as often as the negative. This will leave a plan to add to winners on the back burner when it is time to add unless you fully understand the need for this rule. Any time you plan a trade program, you must consider what size position you are looking to establish. If your position, as mine often is, is that you will have a total of six units upon completion of your position entering, you can have a better idea of what you must fund. You need to be able to fund the position properly from the start. I believe most traders want to have a certain size position, and that is the position they place from the start. This is not a correct way to allow you to use Rule 1 and definitely Rule 2 properly. When you see an expected move from the start of trading, your thinking is counter to ever adding in the first place. I want the traders to ask themselves two questions: "Do you put only part of your expected position on from the initial entry? "Are you planning for adds prior to your initial trade?" If the answer to either of these questions is no, then you must go back and rethink your trading program. I have said it before. If you can think it, you can do it. Perhaps the traders aren't thinking it to begin with because it certainly is not expected thinking without the proper planning. The fact that reinforcing a correct position actually keeps you thinking correctly is one of the important reasons for Rule 2. Another aspect is that, of course, you will be with a larger position when you are correct. By incorporating Rule 2 in your game plan from the start, you will be eliminating the desire to be proud when the market moves your way and want to take profits to show that you are right. Traders love to be right. This is your enemy . . . to love to be right. Your motivation must be to love to do the right thing in trading by either reinforcing correctly your position or removing it should it not prove to be correct. You will become the best trader you can be by being wrong small, not right small! Get that in your mind now. You are going to have to press your winners if you really consider yourself to have the ability to make a living or extra income from trading. Otherwise, face the truth that you are only playing to break even. My point was that you must make bigger money on your good days and not just the same amount of money you lose on your bad days. You must understand that you are not the one who will determine your market position size. It is going to be the market and must always be the market. Rule 2 is going to tell you to put a complete plan into effect before taking the initial position. You must at all times be able to put only a portion of your expected position on at entry and be able to at least double your size somewhere along the route of an expected move. You have all heard that you should not add to a loser! Well, Rule 2 takes care of that from the start by keeping you with a smaller entry position in the first place. You never have your entire position until you are getting the move you had expected. I am giving you a rule that not only makes you larger when you are right but keeps you smaller when you are wrong from the start of a position. I am also giving you a way to not over-trade. It is up to you to make sure you are properly funded to make this step an important one in your favor. What I want them to understand about that point is that they will only get bigger when their criteria in their trading program tells them it is time to add. They will not add just because the initial position has been proven correct. When they have completed their adding of additional positions, then and only then should they have their entire expected position established. Most of the time a trader does not think about the reason for adding because they have their initial position on from the start. This is their maximum risk from the start. That is never what you want in trading. You must take some risk but never your maximum. That is exactly what they are doing if they cannot plan for added positions along the way. To want to have a correct position from the start is over-trading when you place an entire position. Traders don't add because they have their position. The big drawdown is that when that original initial position is wrong, their losses are as large as their gains seem to be if they were right. We don't want that.

I am going to express the importance of doing the right thing from the beginning of a trade and at the right time. Everything they did was based on their thoughts of how much they could take out of the market today. Their trades are designed to lose but not because of the good traders or the way the market works but by their own hand. Why does it happen? Mostly because a trader's plan doesn't consider, "What if I am wrong?" Their thoughts are always expecting to be right. Most traders plan only for the probability side and that, to them, is always what they consider the winning side. This is the biggest mistake you can make in trading. Instead, you must plan for the losing side. The big mistake made by traders is thinking and expecting trading to be a favorable game. The market spends much time in an unpredictable mode. The correct way to control positions is to only hold them once they prove to be correct. Let the market tell you your position is proven correct, but never let the market tell you that your position is wrong. You, as a good trader, must always be in command of knowing and telling yourself when your position is bad. The market will tell you when your position is a good one to hold. Most traders do the opposite of what is correct by removing positions only when proven wrong. Think about that. Your exposure and risk is much higher if you let the market prove you wrong instead of your actions removing positions systematically unless or until the market proves your position correct. If that position did not prove you correct, you must remove it to reduce your risk. You decide what is correct according to your plan. Your exit is a better exit when you exit right away when the market tells you the position is wrong instead of waiting to be confirmed that it was wrong. When you remove the position because the market proved you wrong, it is always a higher loss, and with stops it also is usually with higher slippage. By making the market prove you correct in order to hold a position is acknowledging that trading is a losers' game and not a winners' game. If you only remove your position because the market proves you wrong, you are acknowledging that trading is a winners' game. In a losing game such as trading, we shall start against the majority and assume we are wrong until proven correct! (We do not assume we are correct until proven that we are correct.) Positions established must be removed if the situation becomes foggy! (We allow the market to verify correct positions.) It is important to understand that we are saying the one criteria for removing a position is because it has not been proven correct. We at no time use as criteria for removing a position the fact that the market proved the position incorrect. (don't wait for a stop out také preemptive action) There is a big difference here as to how we treat all positions from what most traders use. If the market does not prove the position correct, it is still possible the market has not proven the position wrong. If you wait until the market proves the position wrong, you are wasting time, money and effort in continuing to hope it is correct when it isn't. What makes this strategy more comfortable is that you must take action without exception if the market does not prove the position correct. Most traders do it the opposite by doing nothing unless they get stopped out, and then it isn't their decision to get out at all -- it is the market's decision to get you out. Most traders keep their position until it proves to be wrong for them. I say don't keep any position unless it proves to be correct. My Rule Number 1 is to address the swiftness needed in keeping your losses as small and quick as possible. It won't always prove to be correct, but you will stay in the game this way. He who loses best will win in the end! I was staying in not because the price action "confirmed" my position but because the price action did not "confirm" my stop-loss chart signal. I was thinking this is what Phantom means. I have to tell you that with this strategy I was keeping my losses small, just by the nature of my plan. But I was unwittingly violating Phantom's Rule Number 1. I thought I had modified my behavior but, in reality, I was "behaving" incorrectly. It's a very subtle thing, I believe. Then I realized that is what Phantom means. My position was not confirmed in those first 15 minutes! It wasn't violated according to the nuances of my plan, but it also was NOT confirmed. Get out. The theorem now is to assume your position is wrong until the market proves what you positioned is correct. Keep your losses quick and small. Don't ever let the market tell you you're wrong. Always let the market tell you when your position is correct. It is your job to know you are wrong and not the market's job. The other side of the coin is that you will get positions that are correct. You must be bigger at that time. This will require a Rule Number 2, which is designed around adding to winners in an unfavorable game to come out ahead in the long run. When you are correct, you must continue to use Rule 1 to keep losses small. It's okay to be wrong small but never okay to be wrong big if you expect to trade in the long run.

There are two distinct schools of thought regarding trading. Scaling in or to Scale out. There are professionals that I respect that are successful from both schools of thought. I have decided I want to give a full fledged effort into making a scaling in method work for me. I have decided to post my notes from a non conventional book but a great piece of work. Phantom of The Pits. POP advocates strongly a scaling in method rather than a scaling out method. Neither way is right or wrong. Some people find averaging into a winning position to be more profitable in the long run. A averaging up method is also less ego involved and more business like compared to a scaling out. Which is much more competitive and ego involved The ability to change behavior is the most important part of successful trading. Correct knowledge without behavior modification projects improper execution of an otherwise perfect trading plan. Trading is not as we all thought. It has taken years to understand that being wrong is what trading is all about. Behavior modification, without doubt, is the key to trading success -- not only in how we think but also how we act in certain situations. We must adapt to changing situations over which we have no control. We must change the situations over which we do have control. Losing never stopped her from staying with her plan as she knew how to lose small and go with her program. I also learned to not stake it all on one price. I actually was doing them a favor in telling them to take their losses. To this day, I call this out to myself when the market isn't working my position correctly -- the big start of my behavior modification, I suppose. A trained trader understands success as "You lose good and you're wrong small." Trading is called coming out on the small losers' side and being rewarded with knowing how good you have been wrong. The message of importance is to be in control of your positions and not delegate it to the markets. It is important to acknowledge the reason for trading, regardless of your situation or reason. Thirty years ago I would have thought it very strange to take these steps. You need to acknowledge your reason for trading each day. On bad days, instead of coulda-woulda-shoulda, you must expel your feelings of defeat as soon as possible because, if you don't, it will affect your next day's trading. Read that book if just for 10 minutes. Make it a routine.

After reading Mark Fishers book it created an interest in me to fiddle around with modified pivots and similar concepts. I will post some of the easier to find formulas right here. PIVOT POINT: 1. (H+L+C) /3 2. (H+L+O) /3 3. (H+L+C+O) /4 PIVOT RANGE: Daily Pivot Number: H+L+C/3 Second Number: H+L/2 Daily Pivot Differential: Difference between daily pivot number and second number Daily Pivot Range: Daily Pivot number plus or minus the daily pivot differential. R1: 1. 2 X PP-L R2: 1. PP+ range R3: 1. H + 2x (PP-L) 2. PP+ range x 2 R4: 1. PP+ range x 3 S1: 1. 2 X PP-H S2: 1. PP - range S3: 1. L-2 x (H-PP) 2. PP - range x 2 S4: 1. PP - range x 3

The first combo strategy is a Point A through the Piovt. (called A through the pivot) At first glance, you know that sets up a bearish tone for the next day since the settlement was below the pivot range. Assume that the market does trade higher,easily penetrating the lower end of the pivot range and trades all the way to the other side of the pivot range which is where it also make an A up. At this point the market has made an A up and has traded through the pivot. The stop for a simple A up is point B, which is just below the bottom of the opening range. However, going long with an A up through the pivot, your stop would be just below the bottom of the pivot range. Going long at a Point A up after the market trades through the entire pivot range increases your confidence to make a trade. Putting your stop just below the bottom of the pivot range minimizes risk. In other words, if the pivot is sitting above an A up or below an A down you might as well wait for the market to take out the pivot and confirm the A is really valid. Going short after the market makes an A down through the pivot increases your confidence in the trade. Minimize the risk by putting your stop just above the top of the pivot range. A failed A occurs when the market touches or approaches an A up or A down, but doesn't spend enough time there to validate the point. Or, it approaches an A up or an A down , but snaps back, which we called a rubber band trade. No if the situations occur with a failed A in the pivot range- meaning the market just barely makes it into the pivot range but snaps back before the point A your conviction to trade the signal increases. The failed A coupled with a failure within the pivot range increase the likelihood of the market reversing to the downside. You'd have a stop one tick above the pivot range. Good A up through the pivot range: Buy the A up through the pivot. Put stop just below bottom of pivot range or use a time stop. Good A down through the pivot range: Sell the A down through the pivot. Put stop just above top of pivot range or use a time stop. Failed A down against the pivot: Buy the failed A down through or against the pivot, as the market snaps back. Put stop just below the bottom of pivot range. Failed A up against the pivot: Sell the failed A up through or against the pivot, as the market snaps back. Put stop just above the top of pivot range. If the market, makes an A down early in the day, then rallies through the opening range and through the pivot range to make a point C on the upside. Place stop just below the bottom of the pivot range. (Point C through the pivot) If the market, makes an A up early in the day, then sells through the opening range and through the pivot range to make a point C on the downside. Place stop just above the top of the pivot range. (Point C through the pivot)

Since I'm on the topic of Opening Range tactics I thought I would post my notes from The Logical Trader. In trading, as in life you need a plan. This plan includes not only the micro- a strategy for each trade you make- but also the macro- meaning why you trade, how you intend to reach that goal, and what you'll do as an alternative if that doesn't work out. I've observed that very few people operate according to a plan. In a micro sense, to many traders are undisciplined in their trading. They try to pick tops only to have the market keep rallying, or they buy what they think is a dip, only to have the market fall some more. Rather what matters most is a plan- your plan- to get where you want to go, with a back-up in case that doesn't work out. If the ACD is the one missing indicator, then there is no trade. ACD starts with the concept of the opening range. If you a short term trader you may decide that the opening range you'll use is five minutes. The key is to define the time period for the opening range and then be consistent when you trade using that time period. Based on the opening range, the A point to enter a long or short position is plotted above or below the opening range,based on set variables.If the market were to immediately trade above or below the opening range and reach the price level and trade there for a period of time equivalent to half the opening range time frame.The market has established an A up or A down There is only one A per day. That means, once an A up is established, there can be no A down for that trading day. Or, id an A down is established, there can be no A up for that trading day. Once you have established a A- up or down- your stop for getting out of an unprofitable trade is B. The B level, where you would be bias neutral, is delineated by the opening range. In a A up your stop to exit the trade would be at the lowest end of the opening range. Point C is the crossover point at which your bias shifts from bullish to bearish, or vice versa. If you have a C down, the stop- known as point D- would be 1 tick above the top of the opening range. (If you have a C up, the point D stop would be 1 tick below the bottom of the opening range.) I'm here to state that time is the most important factor in trading. If the scenario you've envisioned doesn't materialize within a certain time frame (20-30 minutes) then just move on and look for the next trade. As a minimum the market must trade at a certain level for a time period equivalent to half the opening range.As a maximum if the market has not acted the way you expected within a time get out. If your day trading and have an opening range of 5 minutes, then the market must spend at least 2 ½ minutes at your A level. At this point, with a failed A down. Your risk of establishing a long position after the snap back is small, as long as you know where you'd get out if you're wrong- the A down target. Establishing a short position on a failed A up or long position on a failed A down provides the potential to make a profit that far outweighs the risk. An A up was established and now the market is back below the A up point. You should be waiting for a point of reference to initiate a long position. A rubber band trade is made when the market approaches or just touches a target and snaps back. In that instance, you would go short just below the A up or go long just above the A down. Your stop on the trade would be the A up/down price point. Or, you'd exit the trade if the market didn't move in the direction you anticipated within your time frame. Whats important to note is that this system is comprised of price reference points. Points of reference in ACD give you something to lean against as you make traded. At all times, you know where your getting out if your wrong. The result is confidence ti trade. Using the rationale that you always know where to get out if your wrong, you can use the ACD systém to do other types of trades such as buying dips and selling rallies, with ACD points as references. According to the ACD systém, once an A is established, your bias has to reflect the markets relation to the opening range- long above it and short below it. Lets say the market makes an A up. You exit at a profit. Now the market trades lower and goes below the point A. But its still above the bottom of the opening range. You still bias the upside and decide to buy the dip. Your stop point- where your bias turns from bullish to neutral -would be the bottom of the opening range. Once the A up or the A down is established you retain a bullish bias above the opening range and a bearish one below. Using the reference points of the systém you'll be able to draft your strategy- always knowing where you'll get out if your wrong. 1.Plot point A's and C's as points of reference. 2.Lean against these reference points as you execute your trades 3.At all times minimize your risk 4.Know where you are getting out if your wrong 5.If you can answer 4 you will trade with confidence Now lets say it makes an A up and trades higher, then starts to sell off. It approaches your C down price level. But instead of trading at that price and then going lower it behaves like a rubber band traded higher. That is a classic failed C down. After the bounce off C you get long. Your stop would be point C at which you'd have to abandon your upward bias. Now what was the rule he forgot? He didn't know where he was getting out when he was obviously wrong. The pivot range is where the market is likely to find support or meet resistance. If it manages to break through the pivot range, the market would likely make a significant move in that direction. Daily Pivot Number: H+L+C/3 Second Number: H+L/2 Daily Pivot Differential: Difference between daily pivot price and second number Daily Pivot Range: Daily Pivot number plus or minus the daily pivot differential. Where the market closes in relation to the pivot range gives an indication of sentiment If the market breaks through the pivot range you could expect a significant move in that direction. In this example with a long position bias initiated above the pivot range, your stop would be the other side of the pivot range, at which your bias would shift to neutral. At this point you are watching to see if the stock does indeed trade below the pivot range. If does you have a bear bias. Your stop would be the top of the pivot range.

A trade taken at a predetermined amount above or below the open of a given day is called an opening range breakout. The hypothesis is that the NR 4 tends to precede trend day activity and consequently successful opening range breakouts. The comparison of NR4 with any day shows a general increase in reliability for ORB after the NR4. Percentages definitely suggest trending is taking place after a Doji that is also a NR4 day. The hypothesis is that an Inside day (ID) that is also a NR4 tends to precede Trend Day activity. The assumption was made that the two patterns combined, which were both successful individually, would tend to produce even clearer indication. All percentages were higher for the ORB after an NR7 than an ORB taken on any day. Specifically, 2 Bar NR is defined as the narrowest two day range relative to any two day range within the previous twenty market days. Three bar NR is defined as the narrowest three day range relative to any two day range within the previous twenty market days. That there is a marked tendency for the market to trend intraday the day after the pattern has formed. The bigger the gap, the more likely the market is to go in the direction of the gap. An ORB in the opposite direction of the gap becomes less profitable and eventually unprofitable the bigger the gap. If the gap is not filled or if the market on the day of a gap cannot return to previous days range by mid session, the chance for continuation are high. Obviously, the larger the gap the more likely for this to occur. On a large gap ignore ORB against the gap unless it is occurring within the first 5-7 minutes. As a rule, trades taken in the direction of gaps should be done cautiously and in coordination with other information. Evidence clearly suggests that Opening Range Breakout trades are not something that should be taken every day. Bear hook is defined as a day in which the open is below the previous days low and the close is above the previous days close with a narrow range relative to the previous day. As implied by the name there is a tendency for the price action following a bear hook to move to the downside. Bear hook days have provided clearer indications than bull hook days in general. Bull hook is defined as a day in which the open is above the previous days high and the close is below the previous days close with a narrow range relative to the previous day. As implied by the name there is a tendency for the price action following a bull hook to move to the upside.

When judging the market action after entry compare it to the ideal, early entry with immediate profit and persistent follow through thereafter. Action that varies from the ideal is suspect. The ORB can be utilized as a general indicator of bias everyday. Whichever side of the stretch is traded first will indicate bias in that direction for the next two to three hours of the session. If nothing else this information alone will keep you out of trouble. Multiple contracts can be used when entering on an ORB or ORBP. This allows for some profit-taking as the move continues guaranteeing at least some profit in the case of a pullback to break-even stop. In summary, the open is a market primary. Without an understanding of its importance and the market action around it, its difficult to come to correct conclusions about market direction. On any day that such a breakout occurs within the first ten minutes of trade, the information is overwhelmingly in favor of a continuation of that move. Early Entry (EE) is defined as a large price movement in one direction within the first five minutes after the open of the daily session. This is ideal price action when using an ORB for entry. The open should act as one extreme. The characteristics of a Type 1 EE are as follows. The first five minute unit has a larger range than normal (norm is roughly defined as the average of the preceding ten days (first five-minute ranges). Open of the day is on one extreme of the five minute bar and the close of the five minute bar is on the opposite extreme. The second five minutes shows an equal thrust in the direction of the first five minute period. A Type 2 EE is extremely powerful and is characterized by an excessively large range in the first five minutes, quite possibly bigger than the previous twenty day's first five minute periods. An equal thrust in the next period is difficult to manage but a general drift in the direction of the first five minutes is likely with an acceleration after further accumulation has occurred. An open outside the previous day's high or low sets up an intraday Upthrust or Spring in most cases. The most important types of price action have been described already and occur in the first 5-10 minutes of trade, but there are times when even with a defined thrust the market will not follow through, and in fact, will sometimes reverse completely.This is defined as EE Failure and is associated with a momentum increase in 'the opposite direction of EE. An increased range relative to the previous unit and units shows an increase in momentum. Ideally, this should not happen, and when it does it usually indicates an EE failure is occurring. As a rule, no counter move five minute unit (bar) should have a range larger than the first five minute bar. In fact, any 5-minute bar against EE that is relatively large compared to previous bars that confirmed EE, will imply a shift in momentum and possibly EE failure. Neutral or confirming price action is crucial just after the EE indication. When Entry is taken on a pullback, narrow range bars should be present on the retracement. A counter move with a momentum increase is a warning that failure is occurring. Profits should be taken after an ORB entry when recognizable shifts in momentum occur like that at. Price action should not fall back into the first 5-minute bar as quickly as it did here. The type of price action that takes place on EE shows that participants are urgent about entering the market. A clear EE and an ORB should not be faded and suggests that a one directional move is coming up. Absence of EE without clear getaway on an ORB calls for trading range action with a market generally unable to trend. When trading is defined one can anticipate reversals throughout the session. I have found that these measured moves off the open set the tone for the rest of the day. These are very high percentages and suggest that after a bull move of this magnitude (off the open) you should look to buy a break. The tests support an important conclusion about the market's nature. That is, the market's tendency to carry in the direction of a defined move off the open. The market shows a tendency to trend in the direction of a move off the open. Sell a low momentum rally after the initial decline. Supports the conclusion that the market has a tendency to trend after some definition of direction. Buy low momentum breaks after the initial rally off the open. The move off the open by the predetermined amount usually was profitable if followed in that direction. In other words, buys were profitable when taken after a move above the open and sales were profitable when taken after a move below the open. NR4: The narrowest daily range relative to the previous three days daily ranges compared individually. NR7: The narrowest daily range relative to the previous six days daily ranges compared individually. The suggestion from these results is that one should be looking to go with a forceful move off the open after a contraction and not willing to do so after an expansion. In fact fading price action off the open, with trend, after an expansion is a consideration. If nothing else, one should be aware of the dangers of ORB trades the day after a big directional day. Caution is necessary after expansions. WS4: Is a day with a daily range that is larger than any of the previous three days ranges. WS7: Is a day with a daily range that is larger than any of the previous six days ranges. Computer studies suggest that Inside Days (ID) provide very reliable entries in the S+P market. Inside day is defined as a narrow range day that has its daily range completely within the previous days range. A doji line is then defined as a day that shows the difference between the open and closing prices to be very small. The strategy is to look closely at the movements that follow the doji line and be ready to enter the market aggressively once subsequent price action gives a clear indication of the markets direction. Logically, the opening range breakout technique would seem a valid means of determining the direction of price after a doji. Results were impressive and confirmed the conclusion that a doji line precedes reversal action or trend type action.

"Well, he said, the customers are bound to lose their money anyhow, no matter what they buy, or how or where or when. When they lose their money I lose the customers. Well, I might as well get as much of their money as I can and then look for a new crop." (38) This is a total joke. Why are most traders such asses? VSA is not a crock. VSA is one way of forming a framework to understand price action. Its really just one mans interpretation and modification of Wyckoff's work. Is VSA any better than Wyckoff? Of course its not. Is VSA any better than Candlestick analysis or simple bar chart pattern recognition? Of course its not. Is technical analysis any better than fundamental analysis? Of course its not. Each is simply a framework that may allow you build an edge. Its seems most people are totally lost. They are still in search for the grail. Get on the right path and become a expert in just one method. If you want to read book that deals almost exclusively with that concept read Brett Steenbargers Enhancing Trader Performance and maybe you will finally get it.

I thought I would re-read the work of Tony Crabel and post my notes here. In the past his ideas worked well. It stopped working so well on the index futures in the environment of low volatility. Now that we have entered a new era in the market where volatility will most likely remain high due to the permanent changes the credit market turmoil caused on the thought processes of the big institutions. As a trader, my purpose is to develop a framework for understanding the market. The three concepts, ORB, price patterns, and contraction/expansion, provide the basic framework for viewing the market. However, their power as tools for trading can be multiplied by integrating them into one system. The combination of these three can capture the essential action of the marketplace. An Opening Range Breakout (hereafter called ORB) is a trade taken at a predetermined amount above or below the opening range. When the predetermined amount (the stretch) is computed, a buy stop is placed that amount above the high of the opening range and a sell stop is placed the same amount below the low of the opening range. The Stretch is determined by looking at the previous ten days and averaging the sum 6f the differences between the open for each day and the closest extreme to the open on each day. The ORB is effective after inside days that have a smaller daily range than the previous four or five days and for that matter after any day that has a daily range less than the previous six days (NR7) whether an inside day or not. Hook days also tend to precede big moves in one direction. A Hook day is any day that opens above or below the previous day's high or low then proceeds to reverse the previous day's close but does so with a narrowing daily range relative to the previous day. Notice the proximity of the next day's open to one of the extremes for that day and the general tendency of the close of the same day to be at the opposite extreme Inside days act as springboards for an immediate continuation in the direction of the run. In general the earlier in the session the entry is taken the better the chances for success. In fact , the ideal is an entry within the first ten minutes of the session.

Thus, for instance, if you conditioned your state of focusand concentration to repetitive music, you would play the music while you are trading. If your entry into the flow state was associated with sitting very still and reducing sensory exposure, you would remain perfectly motionless as you follow the market, wearing noise-canceling headphones. Because of the repetition of your efforts to enter the Yoda state, you have learned to associate particular cues with that state. Evoking those cues allows you to summon the state in real time and access the coping associated with focused concentration, just as traumatic cues elicit distress and result in regressive coping. This is an example of creating a “positive trauma”: a powerful experience that evokes a desired set of responses. 231 To repeat: It is important to master the entry into the focused mode prior to conducting the actual exposure in trading. I am convinced that several highly extended sessions to enter and sustain the focused mode are much more effective in helping you master the Yoda state than a greater number of brief sessions. 232 When I first trained myself, it was with 31⁄2-hour sessions conducted to Glass’s Music in Twelve Parts in the dead of night, with no distractions. It was the smartest thing I could have done. Over the course of more than 200 minutes straight, you encounter one internal distraction after another and learn what you need to do to tune it out and sustain your focus. That same tuning out and focusing is what you bring to the graded exposure of trading. 232 Our source of deepest confidence is the overcoming of worthy challenges and obstacles. 239 He returned to the S&P market when it reopened and, in Scott’s words, “One day it clicked.” He began to make money, and his confidence grew. Indeed, his confidence had grown so much by January that he bet firm owner Chuck that he would finish the year as Kingstree’s number one trader. He eventually won that bet. 241 The majority of emotional disruptions of trading are preventable. They stem from three sources: (1) inadequate training and resulting frustration, (2) mismatches between trader strengths and the demands of their trading niches, and (3) deficiencies in risk management leading to overtrading. 250 Properly structured training will generate sustained experiences of learning, mastery, and confidence. They will contribute to a sense of efficacy. These positive emotional experiences are precisely what you need to be able to handle the inevitable stresses of risk and reward as you increase your size. Properly configured training will also serve as training to enter and sustain the flow state in which we activate our brain’s executive functions and will make our best decisions. If your learning experience is understructured, you will be at greater risk of emotional frustrations and conditioning effects that disrupt coping. 252 Military officers refer to the “fog of war”: the uncertainties surrounding all decisions and actions. A great deal of military training is designed to help soldiers perform high-level tasks automatically even amid the fog. Trading, too, is conducted in fog. 255

A goal that is not tied to immediate plans and feedback leaves a trader with no clearly perceived path toward goal attainment. Burton and colleagues make the excellent point that performers with lower levels of confidence and efficacy will especially benefit from goals that create experiences of success and control. 189 Because imagery is functionally equivalent to actual experience, performers can benefit from skill building via imagery as a supplement to deliberative practice. 190 1. Mental practice improves performance. 2. Mental practice added to physical practice improves performance 3. Mental practice improves cognitive skills more than motor ones. 4. Mental practice benefits expert performers more than novices. 5. The benefits of mental practice decrease quickly with time. An additional, interesting finding is that imagery-based practice is most effective when it is vivid and when it is positive. People differ in their abilities to produce vivid imagery, and it appears that highly vivid images best serve as rehearsals for live performance. 190 Employed properly, imagery enhances goal setting by making goals real. 190 It is not enough to read books and articles, attend workshops, and review charts. Performance development is planful, systematic work on oneself. 191 An objective observer of the human race would conclude that people lack self-control. 193 Why would a trader who has written one rule after another in a journal lurch into a large position—and then hold it as it goes against him? It almost seems like self-sabotage, but in fact it is much worse than that.It is the result of an absence of a unified self. 193 Quite simply, the “me” in us—our sense of who we are—is stronger than our “I”—our ability to intentionally guide our actions. 194 you cannot achieve unity of self unless you work on it while you are fragmented. This is the essence of realtime self-therapy. 194 What I’m doing is—metaphorically—shaking traders by the shoulders, holding up a mirror, and saying, “Look at yourself! You’re worked up! Do you really want to be putting on trades now?” The goal is to help people stand outside themselves as observers, even as they are experiencing moment-to-moment state shifts. That observing capacity is the glue holding the self together, allowing us to act with intention. “You’re frustrated; don’t go there” is the message from the therapist in us to our trader self. 195 The first step of progress in cognitive work is seeing that we have more control over our reactions than we thought we had: It’s our way of looking at things—and not things themselves—that maintain our problem patterns. 201 Cognitive therapy is most powerful when it provides us with direct experiences that undermine our most negative beliefs. 202 My own experience is that cognitive work is especially effective in situations like James’s, in which loss of confidence, worry, and negative thinking are major elements. By framing these as part of our self-talk—our conversations with ourselves—traders can make rapid progress in distancing themselves from old patterns and beginning new ones. The value of this is that, without the negative self-talk, traders no longer experience the high levels of distress that trigger old coping patterns and generate further problems. 203 Research tells us that involvement in the therapy—practicing techniques on a daily basis, engaging in them emotionally, and applying them to actual life situations—accelerates change and improves the likelihood of success. 204 The goal of cognitive therapy is to help you become expert at thinking about your thinking: to become aware of your automatic thought patterns so that you can critically evaluate and change them. In a sense, cognitive therapy is an unlearning process. 204 The idea of the cognitive journal is to interrupt ourselves when we’re experiencing one of our characteristic problems—negative thinking or impulsive behavior—and identify the thoughts and beliefs that are associated with these problems. The journal forces us to become observers of ourselves rather than getting wrapped up in the problems of the moment. 204 Albert Ellis suggested a useful format for journals that he described as an A-B-C sequence: • Activating event. The situation that is occurring at the time we are experiencing our problem pattern. • Beliefs. The thoughts and perceptions that are triggered by the event. • Consequences. What we are feeling and how we are behaving as a result of the triggered beliefs. Time and again I have seen people make remarkable changes, including ending long-term addictions, when they start viewing their problem patterns as personal enemies. The cognitive journal keeps the trader focused on the message “I am not a loser; it’s my negative way of thinking that’s making me feel like a loser.” By reinforcing this message again and again, the journal helps traders sustain the momentum of their change efforts. 205 First, the journaling should be conducted every day until traders can clearly identify the one or two core beliefs or distortions that are most interfering with their performance. It is important for traders to recognize their own patterns and appreciate the degree to which their thinking is patterned. Second, the journal is just a learning tool. The ultimate goal is to recognize our cognitive patterns as they are occurring.Once traders can catch themselves in the act of distorting events and falling into old, automatic thoughts, it is time to move to the next phase of cognitive work. In general, I have found that at least two weeks of daily work with the journal are necessary before patterns become clear and people are able to catch those patterns in real time. 205 When people catch themselves falling into an automatic thought pattern, they purposely interrupt the negative thinking process by saying (out loud or to themselves): Stop! The purpose of this technique is to become more mindful: to not only recognize negative thoughts as they occur, but to actively interrupt them and decide to not run with them. 206 The idea of the fourth column is to question the negative assumptions and beliefs, rather than automatically identify with them. By playing devil’s advocate with your automatic thoughts, you reinforce the mindful part of you that does not want to fall into the old traps. The interesting part is that, as you repeat this devil’s advocacy day after day through the journal, the disputation process itself starts to become automatic: You are much more likely to catch negative thought patterns as they occur and reject them. 206 By translating self-talk into a conversation and vividly imaging the talk coming from another person, we become an observer of the distorted thoughts—much more able to view them critically and reject them. 208 Speaking our thoughts aloud gives them objectivity, allowing us to adopt the role of listener as well as speaker. It is not at all unusual for traders to reject their negative thoughts before they’ve even finished verbalizing them—that’s how silly they sound when they are given voice. 208 The common element in all of these approaches is that you are telling yourself, “The situation is not what’s making me feel this way; it’s how I’m processing the situation.” Once you realize this, it gives you room to stand apart from your processing and try to look at things from different perspectives. 210 The most important step to winning is learning that losses are part of the game. Every successful person has failed many times before succeeding.” Cognitive techniques reframe our perceptions of winning and losing, focusing us on learning and improving. 210 Should you find that you are not benefiting from the cognitive work, one of several factors may be the problem: • Lack of focus. Sometimes people try to change too much all at once and bog down. It is usually not effective to work on multiple patterns at once. More promising is prioritizing patterns and tackling one at a time. • Lack of repetition. Many times, you will be trying to unlearn patterns that have been present—and reinforced—over a period of years. This does not occur overnight. A daily focus over a sustained period provides an opportunity to internalize learning. • Lack of emotional intensity. This is perhaps the most common mistake people make in cognitive therapy. Keeping a journal can become a routine, unemotional affair that never challenges old thinking patterns with passion and immediacy. Active methods such as talking about patterns aloud and utilizing imagery can yield greater emotional involvement. • Incorrect diagnosis. Perhaps the problem is not what you think. Ifyour negative thinking is grounded in a biologically based depression, cognitive work might help, but it should be guided by a professional. It may also need to be supplemented with pharmacotherapy. Alternatively, emotional patterns of frustration may result from trading problems, such as changing markets that have greatly reduced the edge of a particular strategy. Behavior therapy works by reversing this process. It consists of a variety of techniques that allow us to process undigested events consciously, in essence reprogramming memory. It unconditions certain responses and helps us condition others. 217 What we typically call behavior therapy is really a collection of techniques for unlearning harmful conditioned responses and instilling new, positive ones. In becoming your own behavior therapist, it will be necessary for you to learn and implement the more basic techniques before progressing to more advanced ones. 222 Let’s start with the very most basic behavioral intervention: relaxation training. This is a method that is quite effective in dampening anxiety and frustration. The first step in relaxation training is learning how to breathe diaphragmatically. Deep, slow, controlled breathing is one of the simplest but also most effective ways of checking your physical and cognitive arousal. To breathe diaphragmatically, you begin by seating yourself in a comfortable position and closing your eyes to remove distractions. You then take deep, slow breaths from your abdomen. In the beginning, it is helpful to place your hand on your stomach as you breathe, making sure that your belly expands as you inhale and contracts as you exhale. Breaths should be deep, smooth, and slow; you want to avoid hyperventilating. As you breathe in, count your number of breaths aloud. As you breathe out, say the word “Relax.” As much as possible, just focus your mind on the counting of breaths and the word “Relax.” In the beginning, you may be distracted and find the breathing from the abdomen difficult. With practice, it becomes quite easy and natural. After 10 to 15 minutes, one can typically achieve a highly relaxed state. 223 Note that this, in itself, is not a treatment for trauma; it does not prevent cues from being triggered in the first place, nor does it reprogram those cues. It does, however, allow us to undo the effects of conditioning quite quickly, providing rapid relief. This is very helpful to traders who find themselves getting worked up while a position is on 223 The second step in your behavior therapy is to conduct a cataloging. We want to find out everything that is happening leading up to a disruption of trading. This means cataloging emotional reactions, events surrounding these reactions, and all thoughts and sensations occurring at those times. The more complete your catalog is, the more likely it will be that you will discover your specific triggers. 224 A Catalog of Cues for Trading Disruptions Common Triggers • Euphoria. Highly excited, positive feelings trigger overconfidence and overtrading. • Anxiety. Intense fear triggers impulsive actions to relieve the state. • Boredom. Lack of activity and feelings of emptiness trigger stimulation seeking activity to relieve the state. • Sudden market movements. These become associated with particular emotional states and trigger fear, greed, overconfidence, or frustration. • Large and/or sudden losses. These trigger feelings of loss/depression, frustration/anger, or fear, which, in turn, trigger coping responses to dampen these. • Strings of wins or losses. These also trigger overconfidence and frustration and result in overtrading and distorted trade management The idea is that you use the power of imagery to create a mild form of the traumatic trigger, keep yourself under control with the abdominal breathing, and then rehearse the coping behaviors you would like to utilize in the situation. Ideally, this is repeated with a variety of imagined scenarios, each reinforcing desired coping responses. For instance, if you wanted to ensure that you honor your stop-loss points during adverse market movement, you could vividly imagine markets moving against you while you sustain your slow, deep breathing. You would then envision yourself exiting your position at your chosen point, even as you focus on the adverse market movement 225 This basic exercise accomplishes the two ends of behavior therapy. First, it allows you to face a threatening situation while you are rehearsing self-control. With repetition, you loosen the associative link between the trigger event (adverse market movement) and your conditioned response. A major reason for this is that you are requiring yourself to process the trigger event consciously, with full awareness. As you might imagine, repetition is crucial to the success of such reprocessing. Vivid imagery, emotional involvement in the scenario, and frequent repetition increase the likelihood of altering existing conditioned responses and creating new ones. 226 A cornerstone of systematic desensitization is that you do not move to higher levels of the hierarchy until you have completely eliminated distress at the lower levels. some traders I’ve worked with have used noise-canceling headphones while closing their eyes and focusing on a repeated phrase to fix their attention— and heightened focus facilitates enhanced conscious processing. The key to the success of this method is sticking with it long enough to adapt to the altered sensory conditions. If you find yourself bored with the exercise, you haven’t stuck with it long enough for the adaptation to take hold. Over time, given sufficient practice, the enhanced state can be reached rapidly—usually within seconds 229