ant

Huh? In another thread, you mentioned that you use the Taylor Technique for your daily bias, but you don't use a daily chart? I think a daily chart and Taylor go hand-in-hand. Personally, I rely on the daily chart for "bigger picture" stuff - to identify balance areas and other key levels that higher timeframe traders/investors may be looking at (especially confluence areas where levels from the daily and intraday charts line up). It's when multiple timeframes come together that you get really dynamic moves. I also examine the weekly and monthly charts, but they aren't as granular as the daily chart.

Dogpile, using the buy day/sell day rhythm from the Taylor Technique and these statistics is a good idea. Personally, I don't use the Taylor Technique anymore, instead I use my analysis based on Market Profile for that bias. If I used Taylor, I know I will get conflicting information with my other analysis, which I would defer to anyway. I think I captured the data you were asking for, but I also included the first 30 mins stats as well. ES (Past 3 Years) Highs in first 30 mins (9:30-10:00 EST): 149 out of 756 days or 19.71% Lows in first 30 mins (9:30-10:00 EST): 205 out of 756 days or 27.12% Highs from 10-12 EST: 151 out of 756 days or 19.97% Lows from 10-12 EST: 146 out of 756 days or 19.31% ======= High/Low in first 30 mins: 354 out of 756 days or 46.83% High/Low from 10-12 EST: 297 out of 756 days or 39.29% YM (Past 3 Years) Highs in first 30 mins (9:30-10:00 EST): 138 out of 755 days or 18.28% Lows in first 30 mins (9:30-10:00 EST): 200 out of 755 days or 26.49% Highs from 10-12 EST: 151 out of 755 days or 20.00% Lows from 10-12 EST: 152 out of 755 days or 20.13% ======= High/Low in first 30 mins: 338 out of 755 days or 44.77% High/Low from 10-12 EST: 303 out of 755 days or 40.13% ER2 (Past 3 Years) Highs in first 30 mins (9:30-10:00 EST): 165 out of 756 days or 21.83% Lows in first 30 mins (9:30-10:00 EST): 182 out of 756 days or 24.07% Highs from 10-12 EST: 154 out of 756 days or 20.37% Lows from 10-12 EST: 172 out of 756 days or 22.75% ======= High/Low in first 30 mins: 347 out of 756 days or 45.90% High/Low from 10-12 EST: 326 out of 756 days or 43.12%

ES Target Hit at 1462. A few comments about the trade (see first chart)... Blindly fading the POC would have probably resulted in a losing trade. Volume would have kept you in the trade. As long as retracements/pauses occurr on lower volume, one should stay with the long trade. Price pauses around high volume areas (e.g., POC) and gives a trader time to make a trade decision (stay in, add to position, exit trade, etc). I also noticed that today's trading was following a mirror image of yesterday's trading. Check out the second chart.

Here's my take for the afternoon action in the ES... The ES gapped up this morning and never challenged yesterday's low (or yesterday's spike low). The ES has traded from yesterday's POC to yesterday's VAL on low volume. So I think the market will trade up this afternoon and we should see 1462 (yesterday's VAH and HOD). Unless something changes, such as higher volume on a down move, I will look to get long around 1447. I'm just bored so I figured I'll put my analysis on the line here. We'll see what happens...

Attached is the SoultraderPivots indicator with labels, excluding the midpoints. If you want labels for the midpoints, review the code and just follow suit. This enhancement has been requested by several people and the changes are fairly straightforward so I thought I'd make it available. James, you may want to replace the original indicator with this one. SOULTRADERPIVOTS.ELD

Dogpile, I haven't gathered statistics for "open-drive." It would probably be easier to test for "one-timeframing." I think what you proposed, which is not a bad idea, would be a subset of an "open-test-drive." If time permits, I may pursue this. But I would definitely look for high-confidence openings after testing the previous high/low, testing bracket or balance area extremes, or an opening gap after the market has been balancing. By the way, providing IB stats is something I could do easily so I usually appease people that have contributed to this forum in a constructive manner. You qualify Dogpile

Setting stop losses and profit targets are arguably the most diffcult aspects of trading. Here are some ideas that I use in my trading (in no particular order)... Setting Stop Losses If you want to use the same stop loss for every trade, you can use an Average True Range (ATR) function in the timeframe you are trading. For example, if you trade off of a 5 minute chart, you can calculate 2.5 times of a 10 period ATR and use that as your initial stop loss. You can choose a multiplier of 2 to 3. Once you're in a trade you should manage your stops, but don't be too aggressive in moving your stop too close or to breakeven too quickly or you will be stopped out most of the time trading the ES just to then see it move in your favor. Give your trade space to move. Most traders seldom catch the high/low tick of a swing before the market starts moving in their favor. Personally, I use a 3 point stop most of the time (see bullet below of more details). Another approach I use is to review all of my recent trades for the year and determine what the optimal stop for my trading should be. For example, thus far, I have placed 225 trades and my maximum 3 pt stop has been hit 5 times. When my maximum stop has been hit, those were times that my trade decision was just wrong, and the trade never went "in the green" for me. In other words, I am suggesting you consider the Maximum Adverse Excursion (MAE) of your previous trades. This is my rationale for mostly using an initial 3 point stop. Note that I've been stopped out for 3 pts only 5 times because I "work" my stops once I'm in the trade. I use an initial stop because I want to give the trade room to move since I seldom catch the last tick before the trade goes in my direction. You can set a protective stop loss based on market structure. That is, place your stop where the market would prove you wrong should it go there. If that requires a stop too far away with respect to your risk parameters, than wait until the market trades closer to that location or "pass" on the trade. Without details of your trading methodology, I can't really say more about this. Some traders use a fixed stop based on a percentage of their account balance. Some traders think that they can trade, let's say, 2 ES contracts with a 4 point stop or 4 ES contracts with a 2 point stop because $400 is 2% of their account balance. Bad idea! I would highly discourage anyone from using this method. Setting Profit Targets I like to scale out of my trades using 3 units, where a unit is X contracts. Again, I studied my previous trades and evaluated the trade potential of each trade even if I did not capture the bulk of the move. What I am suggesting here is that you evaluate the Maximum Favorable Excursion (MFE) of your previous trades to identify the profit targets of your first two units. For the last unit, I would let the profits run, but I usually set a profit target based on market structure (or tighten my stop as price moves toward my profit target). Letting your profits run on your last unit is critical to long-term success if you plan to scale out. Otherwise, it would be difficult to do better than breakeven over the long-term. Scaling out will definitely raise your win/loss ratio and confidence significantly, but do not overemaphasize this because what really is important to survival is your profit factor. For example, based on research of my trading, I try to scale out my first 2 units at 2 points and let my third unit run based on a profit target that is usually much greater than 3 points (my intial stop). But what if I don't let my third unit run and instead close out my whole position at 2 points, that's $300, not bad. But what if I get stopped out at my maximum stop loss, that's $450, not to mention that I can have multiple, consecutive losing trades stop me out at 3 pts. There are a lot of variations, but I think you get the idea for my rationale of letting the third unit run. The bulk of your profits will usually come from a few really good trades. By the way, I tend to move my initial stop loss up modestly as the position moves in my favor. I move my stop to breakeven + 1 tick when the trade moves 3 to 4 points in my favor. Ultimately, here is where I am trying to go... I want to scale out of my trades based on support/resistance levels in the market. For example, if my S/R level is 5 points away, then that's where I want to start scaling out and hold until we reach the next S/R level. But right now, I feel that scaling out as described above is appropriate for me as a fairly new trader. As my trading and confidence improves, I will continue to refine my profit target method. There is a lot of emotions and mental stuff that makes it difficult to hold on to a full trade for so long, but this is where I strive to be soon. For me, experiencing an adverse move against my position after I have been up many points is difficult for me to handle. Regarding reviewing your previous trades, combined order execution and charting software platforms, like TradeStation and NinjaTrader, will log all of your trades on the chart so you can review them later. For me, logging trader performance statistics and executed trades in my trading platform is a very important feature. I spend a lot of time in this area because the insight I gain from it usually affects my bottom line. Anyway, I hope this helps.

Below are the statistics for the 30 Yr Bonds (US) going back three years. Note that the Initial Balance (IB) period used was 8:20am to 9:20am EST. Similar results as the other markets with the high/low being placed almost 80% of the time in the first hour of trading! (US) 8/30/06 - 8/24/07 Highs in first 30 mins: 92 out of 251 days or 36.65% Lows in first 30 mins: 90 out of 251 days or 35.86% Highs in first 60 mins: 110 out of 251 days or 43.82% Lows in first 60 mins: 100 out of 251 days or 39.84% ======= High/Low in first 30 mins: 182 out of 251 days or 72.51% High/Low In first 60 mins: 210 out of 251 days or 83.67% Normal Day: 15 out of 251 days or 5.98% (US) 8/30/05 - 8/25/06 Highs in first 30 mins: 87 out of 250 days or 34.80% Lows in first 30 mins: 74 out of 250 days or 29.60% Highs in first 60 mins: 102 out of 250 days or 40.80% Lows in first 60 mins: 94 out of 250 days or 37.60% ======= High/Low in first 30 mins: 161 out of 250 days or 64.40% High/Low In first 60 mins: 196 out of 250 days or 78.40% Normal Day: 7 out of 250 days or 2.80% (US) 8/27/04 - 8/26/05 Highs in first 30 mins: 72 out of 252 days or 28.57% Lows in first 30 mins: 79 out of 252 days or 31.35% Highs in first 60 mins: 87 out of 252 days or 34.52% Lows in first 60 mins: 105 out of 252 days or 41.67% ======= High/Low in first 30 mins: 151 out of 252 days or 59.92% High/Low In first 60 mins: 192 out of 252 days or 76.19% Normal Day: 18 out of 252 days or 7.14% (US) Last 3 Years: 8/26/04 - 8/24/07 Highs in first 30 mins: 251 out of 752 days or 33.38% Lows in first 30 mins: 243 out of 752 days or 32.31% Highs in first 60 mins: 299 out of 752 days or 39.76% Lows in first 60 mins: 299 out of 752 days or 39.76% ======= High/Low in first 30 mins: 494 out of 752 days or 65.69% High/Low In first 60 mins: 598 out of 752 days or 79.52% Normal Day: 40 out of 752 days or 5.32%

Alleyb, I'm on my way out and won't be around a computer this weekend, but I'll try to get you the stats on the 30 Yr Bonds by Sunday evening or so. Perhaps you could share your thoughts on using these IB stats in your trading.

James, a lot of great information. If one were to research the ideas in your post, one can create a robust trading plan, IMO. Volume is one of the few pieces of market-generated information available. It provides important clues regarding the conviction of traders/investors. In my opinion, learning to interpret Volume is what will make a trader a viable opponent in the markets. There is no doubt in my mind that most professionals use Volume in their trading. Reaver, well said! You made the point better than me regarding the human brain vs computers. And yes, I agree that traders can be successful with mechnical systems; however, it is becoming increasingly difficult. Those traders who take time to develop market understanding will most likely be successful with any trading approach, discretionary or rule-based. The problem I see is with traders who don't take the time to learn to read price action and turn to indicators and mechanical systems because they want to start trading right away. They are looking for shortcuts in a business where there are no shortcuts. Unless of course we get lucky like with the internet bubble of the late 90s.

I basically try to exploit these statistics http://www.traderslaboratory.com/forums/f6/interesting-initial-balance-statistic-978.html

For me, discretionary trading is more about adjusting trade strategy to market condition and market behavior, not necessarily "overriding" trade signals that can be programmed and automated. I believe that one can program many, if not all, of LBR's trade setups if taken in isolation, but that won't lead to profitable trading - she admits that. Her trade setups basically identify market tendencies that can provide an edge under the right market conditions. So what are the "right" market conditions? That's one area where I prefer to use discretion. Sure, I can use stuff like indicators to describe patterns and market conditions to a computer so that it can determine what type of trades to take, but that description is usually too rigid, IMO. Our brain processes so much information and goes through so many steps to accomplish simple things that we usually take it for granted until we have to teach someone something or describe it to a computer in the form of an algorithm. Our right-brain abilities, such as pattern recognition and synthesizing information, is very awkward for a computer to accomplish accurately and efficiently, yet we can often perform those tasks quite proficiently if we know what we are looking for. I believe that pattern recognition is a key skill that expert traders possess. So generally speaking, that leads me to believe that discretionary trading is the "better" path to achieve expert trader status, if one is to get there (just my opinion). I also believe that it would be impossible right now to get computers to "think" the way human beings think and draw conclusions. Although I believe in keeping it simple, I do acknowledge that the market is a complex entity that cannot be mastered without market understanding or by getting "green light/red light trade signals" from a computer. As Einstein said, "Make everything as simple as possible, but not simpler." I think that many trade strategies being used are "too simple" for a changing, fluid market. Wow, a lot of opinions, views and ramblings here, but I've written this much so I think I'll continue. Understanding price action and market behavior - how auction markets work - through Market Profile is one component of my trading methodology. This is the component that makes my trading discretionary. In short, my trading has been heavily influenced primarily by LBR, Wyckoff, and the books Mind over Markets and Markets in Profile. Below are some examples of factors that I consider during my routine nightly preparation and during the trading day. For me, these factors lead to market understanding (which is whatever I can glean from the markets given my limited trading experience) which helps me determine trade strategy, trade location, risk, stops, targets, etc. It also helps me determine how aggressive I should be in the markets. There is a lot of subjective stuff here, but I think I structure it in a systematic fashion. Anyway, here are examples of stuff I look at for my trading. context, such as what is currently driving the market and what are the long-term, intermediate-term and short-term market conditions long-term, intermediate-term and short-term support/resistance levels was a market rally driven by short covering or long liquidation and is new buying/selling coming into the market bracket and balance area extremes areas where price is rejected and accepted where do traders have resting stop orders how are traders feeling about their open positions where are traders' setups likely to trigger market correlation (especially between the ES and YM) pattern recognition in price action and Market Profile shape market volatility volume analysis market internals By trading using a discretionary style, I hope I can pick up on market nuances that will provide an edge in my trading. I believe that learning to pick up on these nuances, which comes through extensive experience, will lead to becoming an expert trader, which is my aspiration. Folks, I know many of you will disagree with my views, but please note that no offense was intended nor was this post directed towards anyone. I am simply presenting my perspective as a developing trader. P.S. Blowfish, and you thought you went off on a tangent.

Reaver, the best place to learn about LBR's trade setups using the 3/10 oscillator is her website. My suggestion would be to subscribe to her "Basic Online" service for one month ($85) and make copies of her class transcripts (she encourages this). There are a lot of setups using the oscillator (i.e., Anti, First Cross, Intermediate Buy/Sell, divergences, Momentum High/Low, etc). There is a good article on momentum highs/lows using the oscillator here https://www.lbrgroup.com/index.asp?page=ArticlesFastBreak_Apr_04. Also, on her home page, take a look at the MarketVu Presentations, I believe she reviews many of her setups there. I know she also did a couple of webinars for the CBOT and the link to one of them is one her home page as well. I think she provides an excellent overview to technical analysis. I learned a lot about price action and discretionary trading from her. Another good thing about her work is that she doesn't use a lot of technical indicators, she mostly uses the Keltner Channel, 3/10 Oscillator, and the ADX, and she emphasizes learning to read price action before using indicators. Once I learned her methodolgy, I actually stopped looked at other indicators. You'll be surprised how much time one can spend looking for the perfect indicator instead of learning to read the market. Even though I don't trade her setups anymore, I still use the principles that she teaches in my trading.

Thanks Reaver. I also read both of Chick Goslin's books and thought they were quite good. I still use the 3/10/16 oscillator to gauge momentum, but more in the way that Linda Raschke uses it.

Humble1, My intention for the trade was to try to catch the low of the day. I tend to be aggressive in the mornings trying to get the best trade location in the day timeframe. The trade was to fade yesterday's value area high (VAH) as price approached the VAH and volume decreased. At point 1, which is where I re-entered, you can see a volume divergence. I scale out of my trades and try to let my last position run, but when there was not follow through I started closing out my remaining position. It is absolutely critical to let your position run if you scale out of positions, otherwise you'll probably be a break-even trader over the long-term even if you're a decent trader. Now, what I should have done after that trade, which I didn't was to go short in that area. There were several possible entries: At point 2, when the ES retraced to the previous day's high on lower volume, I should have reversed my position (according to my trade plan). I didn't because I was still getting over my first two trades. At point 3, there was a thrust bar on higher volume. I could have gone short as price traded through the VAH. At point 4, I could have entered on the small retracement. Although, re-entering the trade worked out for me, my intention was to catch the major move of the day, which I didn't. If you'd like to discuss this further, you should probably start another thread since this question is off-topic.

It happened to me today and it really burns me up (see chart). I try to forget about it, but it's hard. I immediately try to re-enter or reverse my position. I guess it becomes a bit of a revenge trade. It becomes easier to forget if my "revenge" trade works out.

gighrich, take a look at "Brkout of X Bar High" and "Brkout of X Bar Low" under the Showme studies in TradeStation.

Not good! That's worse than TradeStation showing cumulative daily P&L in their Matrix.

Brownsfan, do you know what the CFTC and NFA requirement is and what happens when a firm falls below the requirement? I thought the requirement was $1M in net capital and Open ECry has $1.029M according to the link. Anyway, I'll wait to see what you find out.

Hey brownsfan, Thanks for the info you've been providing on OEC. I've actually been taking a look at them as well based on your recommendation. One concern I have about them is that they barely have $1M in net capital. I would expect a company in a strong financial position to have more like many others at the link you provided. I don't know if I could get past this. Does this concern you?

I tend to agree with this post. Perhaps you can post charts of the actual instrument you're trading, such as ER207, ESU07, and YMU07. Since you're trading through TradeStation, your entries and exits will be automatically displayed on the chart. Although not foolproof, it should add a little more credibility, IMO. Either way, I will follow your journal with interest. Good Luck!

James, that's the same book I was recommending - an excellent read.

Hi David, I'm assuming you are refering to developing TradeStation indicators... As a programmer, I think you'll be able to pick up EasyLanguage fairly easily so I would suggest taking TradeStation indicators that already exist and review how they are written. Learn how to use arrays, draw trendlines, print text, create functions, read and write to a file, how to process data on every tick, etc. Take a look at the online TradeStation User Guide. There are a lot of TS indicators around so just take one that you think would add value to your trading and modify it for the learning experience. I would also learn about the TradeStation API (EasyLanguage Extension Software Development Kit - a reference guide) so that you can write DLLs for TS. It's pretty straightforward I think. Other stuff you can learn are how to use global variables and the ADE. Global Variables allow you to pass data between windows in TS. Do a search at the TS Forum for more information. This is how I started out with EasyLanguage. Hope this helps.

Hey James, I recommend reading the book "A Whole New Mind" by Daniel Pink. It is a quick and pleasant read that will answer many of your questions, I think. In the book, Pink discusses three forces - Abundance, Asia, and Automation - which should cause people in many professions to re-evaluate their ability to remain competitive as we transition from the "Information Age" to the "Conceptual Age." Pink suggests integrating the left and right hemispheres of the brain and developing six right-brained (R-directed) abilities or senses which he calls Design, Symphony, Story, Empathy, Joy and Meaning. The author also suggests activities to help develop the right brain. I believe that this book should be required reading for all traders, including discretionary and rules-based traders. There is an excellent thread which you started that touches on this topic and where I added my thoughts (http://www.traderslaboratory.com/forums/34/death-of-discretionary-traders-1907-2.html#post12627). To address your question... A mechanical trading system which can be described in a finite set of steps and programmed into a computer utilizes mostly the left brain. In this case, the trader is processing data in a sequential and analytical fashion. A trader who considers market correlation, multiple timeframes, combines economic factors with technical analysis, understands how longs/shorts should be feeling in a market, analyzes the type of trader that is in control of a market, considers where stops are resting, or adjusts his/her trading strategy based on market condition are all examples of right-brained abilities. This requires interpreting and synthesizing different pieces of information, i.e. requires the trader to truly understand market behavior - something computers cannot do better than a human being with the proper skills. James, I would send you my copy, but shipping would cost more than the book itself.

Joe Ross signed up as a "Registered Trader" and provided an appropriate biography in his profile stating that he is an educator, etc. Isn't that an appropriate introduction? I believe he did the right thing by providing the disclaimer. He should be held to the same rules as everyone else. If he starts pushing his products and services without having the appropriate vendor status on TL, then the moderators should handle his posts accordingly. My suggestion is to ask people if they are a vendor during the registration process, and if so, require them to include an appropriate biography/disclaimer like Joe Ross did. "Registered Traders" who are also vendors can then have their handle set a different color, or something like that, to make others aware of them. If a vendor lies during registration and (s)he is busted, then (s)he should be called out and put to shame.