steve46

As relates to trading, discipline is simply the ability to stick with a plan of action in the face of uncertainty...."internally" it is the ability to maintain a rational mindset, to maintain control of emotional response.... Its not that difficult...you learn to control your physical response first, by learning to breath and modulate your pulse....once you have that skill, you focus on managing the effect of damaging or unproductive thoughts and as you become more skilled, and you develop track record of managing your responses, you become "desensitized" to those unproductive responses....you see the same world around you but you "decide" what your response will be to those events....you are (finally) in control..... I realize you folks like to beat a subject to death....and then kick it to death once or twice just to make sure....lol But thats about it.. And frankly when I see people (I won't name names) having to write reams of paragraphs on how its done, I become suspicious (do they really know what they are talking about).... The direct route to this goal requires that you INTERNALIZE what is written above and then observe someone who knows how to do it.... Good luck folks...

This chart fits nicely with the previous post, especially the edit at the bottom.... The short entry isn't particularly unusual...the retest seals the deal for me...its a valid short although I think most folks would have found it difficult to pull the trigger.. What is important (again refer to the previous post "edit") is whether once you were in, you had the guts to hold, scale out properly (thus giving you "breathing room") and wait for the economic report to clear, and wait we see (I think we will see anyway) price travel down to the boundary of the blue rectangle...(test of previous range boundary)... On this one, if you took the short, you got 2 off the initial scale, 5 off the move down.....7-10 if you had three (3) contracts to trade...and the rest depends on your account size and your skill level..

I buy notebooks and write notes longhand....the advantage this gives me, is that I can take the time to think about what I have written and make changes as needed....I call this process "internalization"....I have noticed that over the years this type of data entry has changed how I organize my thoughts (for the better I believe)....

Well "Vince" respectfully I would suggest you are missing the point....professionals do not stay up nights worrying about when their systems are going to fail.....Instead of worrying constantly, they maintain good records, and they continue to do research KNOWING that at some point, they will need to adapt as the markets change around them... With respect to your comment "wondering if these market wizards have others doing research for them"....I know a few of these traders, and those that are known to me do their own research or at the very least, they collaborate with other traders...why? because when you do your own work, you know that you can trust the results...this becomes very important because these are folks who often put on size (when I last talked to Linda Raschke, she was trading mutiples of 20 contracts at a time). You can't really do that unless you have confidence that your system has a significant mathematical edge.

You're welcome.....and here is a follow up chart for that entry earlier tonight...as you can see this one came back to "press" our original entry.....when I say press what I mean is that most retail traders would have been "shaken out" by now....in fact the only way I stay with this one is because I trade multiple contracts....remember the scale out rule, 2 pts off the open....then 5 pts (if you are trading 2 contracts, you're done).....now for those who can add just one contract, I suggest you wait for either 7 or 10 NQ points...I am thinking you do this "incrementally" that is to say, you start by learning to hold until you get to seven (7) and as you become more comfortable holding your ground, you try to extend yourself out to ten (10) NQ pts. What you are doing here is learning to tolerate the tension (the uncertainty) of not knowing how an individual trade is going to work out....as as you progress and learn to trust your system....what you find is A.) if you have a good system, the longer you can hold, the more you profit over the longer time frame...psychologists call this is learning to tolerate "delayed gratification"..... I would argue that this is how a trader learns to translate theory into real success (one trade at a time)....and if it appeals to you, it is a lesson that you can "teach yourself" without paying a vendor to show you.....just add one contract at a time.....and keep good records....got it...? Edit.....ultimately the goal is to learn to hold one(1) contract from one side of the distribution boundary to the other extreme.....

Another chart for GOB This one shows a nice setup on the 10 & 3 min charts.....you can see price "take out" the blue rectangle....then come back to retest the boundary (our signal to enter long).... As you can see (GOB) you get a couple of chances to get in on this one...up to the individual whether you use the shorter or longer time frame, the longer time frame tends to cancel out some of the chop, but you will miss some entries.....the shorter shows more granularity so you have a bit more accurate picture, but you are also exposed to more "chop" it you use it.... Either way the "drill" is the same....the system was designed for traders with small accounts (trading two contracts min)....the rules call for taking two (2) NQ points on the first scale-out, then five (5) NQ points on the balance. Two (2) point S/L.... I call this a "training wheels" setup... Good luck tomorrow

Yeah OK then lets cut to the chase...in your classes, are you still trading a simulated account....?

Agree generally with Oldtimer's comment however...I would amend it by adding a word or two as follows; Just following trend will tell you MOST of what you need to know.... http://www.traderslaboratory.com/forums/futures-trading-laboratory/13779-how-get-started-futures-2.html (post #12) One of the natural problems that occurs in this environment is that folks become dogmatic about what does and doesn't work....I think you need to look at a lot of possibilities and do sufficient research so that you have the option of seeing what works for YOU... The post link above is just my opinion, and it works for ME.... Good luck

I've said this before, but it bears repeating To operate in THIS (contemporary) market, one needs to understand at least some of the mechanisms underlying the way that it moves....the "how" and "why"...specifically; How; Currenty, markets (all futures markets) are have a component that is automated...for that reason these markets tend to move from one level to the next, suddenly...then they settle into a range... Why Because the primary participants (institutions, banks, funds) have found that this type of movement allows them to maximize their profits, while minimizing risks. So a couple of things to consider.... 1.)Price action tells you much more than is currently talked about in TL threads.. 2.)Price action adherents suggest that all you need is price....not true, opportunities to make money are time constrained....if you know how to anticipate time-constrained opportunties, THAT KNOWLEDGE allows you to position yourself in a way that minimizes risk while maximizing profits. 3.)Price action commentary while valuable, only goes so far....what is missing in my opinion is how to prepare....currently...skilled professionals use a method that provides a "heads up" as to early market direction. Why is this important? because most of the significant opportunities occur early in the first hour and late in the session when volatility is high...again having an understanding of this simple element of market structure can be the difference between making money and sitting on the sidelines watching "price move" without you.... Good luck

The impression Schwager's book gives is characterized by the original post....that there are many different ways to make money in the markets....this may be true, however thats only part of the story......if the reader looks a bit closer......each of these traders had to engage in extensive research........but you don't read about that in Schwager's book.......and what "really" happened was....some of them found an edge (something that provided a mathematical advantage) that enabled them to make a lot of money.....from my point of view the important question is, "did that edge last, or did it eventually disappear and did they adapt"? Now....some years removed from the original publication of Jack Schwager's books, we know some of the answers to those questions.......some of those traders are known either adapted to a changing environment, or they found themselves back where they started....(refer to Linda Raschke, and Tom Baldwin for example) Yes, there are many ways to make money in the market, but regardless of the method you choose, you still have to do the research....to make sure that the method you choose, (indicators, price action, or magical incantations) provides a real mathematical edge.... Interestingly, these vendors never seem to be able to provide that kind of very real education to their students....and on the other hand I have to say...students are easy marks, because invariably they don't WANT to do that research......one gets the impression that both parties "deserve each other".....lol

I will sign off for today, with this chart....it is my 2-3 day prep chart with today's dist lines in place As you can see there is alot to learn from that chart...and it provides a nice overview of how particpants are positioning themselves as we move to the end of the week... Personally, I think tools like this are indispensible...using this approach I am able to accomplish three very important objectives...first, I can see where the big moves are likely to originate....and second I can determine where we are likely to go and establish more accurate profit targets...the last benefit (for me) is as regards trade selection...using this approach, I can make concious choices about how to manage risk/reward....I can take potentially small scalp trades if I want (I simply scale down my size) or I can wait for potentially bigger fish to swim by and set my position accordingly... Best of luck to everyone Steve

This might interest folks, especially you GOB....take a look at the previous chart using 10 min candles Then look at this one, using 3 min candles This illustrates differences that a traders has to resolve in terms of time frame....on the one hand the 10 min minimizes the chop....on the other, you sometimes (today for instance) miss valid entries, or as in this instance you might get shaken out because you're not getting the full detail showing where price is building support or resistance... I guess you could simply put both side by side, but in the end, you do have to choose and accept that there are going to be good and not so good sides to this decision....in this case I missed a valid re-entry long after price came back down looking for sellers. Oh and btw onesmith, I have changed my mind....I am thinking Tom Cruise would be a better choice to play me, in your movie script....what do you think?

Here's a follow-up to the previous trade entry As it happens I was able to get 2 NQ points initially....then 5 on my next scale out...however at that point the markets simply stalled out...and eventually came back to retest the blue rectangle which represents the previous range....at that point (for me) the risk doesn't justify staying in the trade, and although ultimately I think we will continue down, I don't see a valid short....so I am standing aside for the moment..... BTW, I posted the chart without realizing that the green arrow showing my entry has been obscured the a big (relatively big) green candle....oh well...I will leave it. You can see the edges of the arrow around the candle body....

We all face the same problem in terms of reversals...it could go both ways...so you have to have a valid context in which to operate...mine is to use another correlated market to trigger trades... In this instance we see the ES leading (in my opinion) the NQ up through a distiribution line for a nice entry....whether it will work out is not my concern...its a valid entry so I take it... and the chips fall where they may..as of this post, I am up two (2) NQ points on this one, and simply monitoring it...if it comes back I am out at B/E and my decide to go the other way.... This example really illustrates the utility of having a frame of reference like the distribution lines.....you could operate without them no question, but they provide the psychological comfort that new traders often need in order to pull the trigger.... The final question is "when do you pull the trigger to get in" and that is a matter of training and judgement....I will be talking about that later....now I have to babysit this position. Hey onesmith, nice to see you....again. If you are writing a book or a movie script I would like George Clooney to play me.....

One thing that may help you is to develop an understanding of the context in which stocks display choppy price action....part of it is due to a stock hitting a specific price or range of prices, and some is due to the attention that stock is getting from professional interests..sometimes that choppy action is a sign that institutions (of all kinds) are adjusting inventory or trying to develop a position, and sometimes one group of participants are trying to take profit while others (usually late to the party) are trying to get in... Whether you pursue that or not is up to you of course, but it could help you....for example those who see specific issues hitting prices that generate that kind of action, often try to pre-position themselves so that they aren't exposed to that problem Another way to manage issues that display that action is to operate within a longer time frame chart....I work in futures markets and one of the ways I limit chop is to prepare using daily through 30 min charts and to enter on the 10 min or 3 min....of those two the 10 is less choppy and often it allows me to obtain more favorable (earlier) entry. Hope this helps

Here is an update on this trade...as can be seen I hit my initial profit target (2 ES pts)....however I am not optimistic, in fact I think this one is going to stall out here and run sideways...at this point, it is a low risk trade, so I will keep it for the time being but I think the odds favor price coming back down to retest the lows and perhaps even take them out....if so I will simply close out with enough profit to cover costs...stops are in place so I will simply continue to monitor....

Discipline as regards trading is very important to me....it is one of the subjects that I cover in depth when I teach students....Because I screen carefully, rather than simply take anyone with a checkbook, I know that those who are in my classes are adults with a history of success that they can call on when (not if) they start to find the road ahead stressful and challenging... I tell my students up front that each person has the right to define their own success....its not my job to do that.....however with regard to HELPING, each person to reach their goals and find that success I tell them clearly, that what is required is that they get on board knowing that this is a group effort...and that each person has an important role to play... In order to do this....they list their goals (they must write their goals out) for everyone to see....and then I ask them to put a time line in place....so that they can see if they are progressing satisfactorilly...at each point along the path, they ask themselves the same question...."am I moving toward my goals each day....am I making satisfactory progress....are there areas in which I need to improve, and if so, what can I do to make improvements so that I stay on track to become a consistently profitable trader".... By the way, nobody wants to do this at first...they say they will, but my experience is that they ALL hold back saying that they don't need to do this part of the work, until I threaten to toss them out of the class....and even then they resist.... Ironically those who do comply with this exercise, eventually come to see it as a very important tool for their continuing success...to put it bluntly, you may be able to decieve yourself, but generally speaking you cannot "pull the wool over the eyes" of everyone else in the class...we try to become a community of traders helping each other... Discipline of itself isn't enough but, within a well thought out program, it can serve as a pivotal element for folks who normally wouldn't be able to succeed on their own... Hope this helps some of you..

This is unusual, in that it is an entry pattern repeats through three (3) markets....usually at least one market "disagrees" or lags....I took this entry (with small size) because the time 2:38am PST is not what I would prefer....normally I look for entry based on the quarter hour, half hour or "on" the hour....I am willing to take this risk however, and we will see how it turns out... Tonight incidentally I am trading the ES market, whereas usually I am trading the NQ...

Summary of Charts Daily Time Frame...............Trend & Primary Bias 130 Min Time Frame..........Distribution Lines 30 Min Time Frame............Basic Entries, Reversal & Continuation Patterns 10 & 3 Min Time Frame.....Basic Entries, Reversal & Continuation Patterns Daily, 130, and 30 min charts are used for prep only.....10 & 3 min charts for entry/exit

and these are my 10 and 3 min entry screens....we can make money using either, however there are also compromises to be made with both...for example Using the 10 min, we see fewer examples of traders getting "chopped" as price moves above, then below our distribution lines (part of our entry system)...however it is possible, even likely that using a 10 min chart a trader will miss some trades Using the 3 minute chart, as was mentioned previously, we get to see more detail and with that detail, traders have the ability to wait for price to display exactly the behavior that they are looking for (tests of the distribution lines for example). Unfortunately traders also see price test back & forth more often creating congestions and "choppy" conditions that can cause the newbie to be shaken out of what would otherwise be a profitable trade.... The blue areas represent the previous day's range.. Hey onesmith, here you are as usual....I tried not to make reference to any "catchy phrases"...HOWEVER...the three (3) minute chart does show an "algo pattern" (shown in the ellipse) that I have referred to many times in Negotiator's day trading chart.....sorry...just couldn't resist....lol Both charts attached below

Moving to the 30 minute chart, we get a closer look at price action, and in the process we can identify the features that allow us to find possible entries (red arrows) off the prior range bound action (the numbers indicate the creation of an upper & lower range or congestion)

The importance of preparation From our point of view, this is one of the most important elements of trading...in fact properly done, preparation is what separates professionals from amateurs.. We start by reviewing daily charts...and what we are looking for are the following data points 1. Indications of trend 2. Identification of possible reversal points 3. Identification of possible reversal or continuation patterns In the attached chart we see three highly correllated markets....ES, NQ and DAX Each chart displays range bound price action On each chart we mark potential reversal prices (and price ranges) Based on our observations it is often possible to generate a "primary" bias for the next day

It is taking a bit longer than expected to wrap things up here....but we want to accomplish something significantly different than most....what you ask...well, for one...we want to provide the reader with a more comprehensive view of what it takes to win this game....and by that we mean (at least in part) the following; First....having spent a few years here posting, one notices that many if not most, come looking for "setups"..."indicators"....magic incantations and mentors who can lead them to the promised land...and in just about every case, if one looks behind the veil, what you begin to see is that everyone wants (with a few variations) the same thing....a way to make money in the markets without having to think, without having to obtain skills, and most importantly, without having to take the risk (or the responsibility) of losing money....in most cases what people come looking for is a method that if followed blindly from A to Z will produce winning trades...and for the majority, thats all that matters....name your price, prove it works, and we're in business.... For those few folks interested in American History, I am reminded of the California "Gold Rush" era when so many came from around the world to Northern California, looking to make a fortune. As we know from the history books, very few of those original miners found fortunes, however those who sold them shovels, sieves, and pick axes, made out pretty well....human nature it seems changes slowly (if at all....). At the end of this process, my hope is that folks will understand that success in this arena, is all about learning something that is in front of us every day....it is the last "true" secret that they will ever need....because it is about learning how our fellow human beings react to the world around them....and to figure that "secret" out, they will need to be willing to do what others won't.....to go that "one step further" than the next guy...

Purusing threads I saw reference to a move charactertized as "WTF"......because of its sudden nature....apparently (for these folks) the move down appears "out of nowhere" surprising them (one assumes that most folks miss this kind of opportunity).....the gentleman's strategy is to wait for the first pullback and get on there hoping for a continuation down.....nothing wrong with that... For me the preferable method is to "see it developing" (because actually these kinds of move DON"T come "out of nowhere") and get on board at the beginning...so here is my chart and explanation of what traders need to be watching in order to participate in these moves...(its trading folks, this is what you're here for) First the context...we've been in a range since Sept....this is the backdrop against which we plan our general approach....and that means we look to get short at or near the highs of that range, conversely we look to get long at or near the top of that range...this is the "big picture" On a given day we review the previous 2-3 days action and try to develop a sense of "where we stand" and by that we mean....are participants worldwide, coming to a consensus that motivates them to act (to generate a trend move up or down).....if so we should be able to see and identify it by reviewing price action over previous couple of days...and so the principle question to ask ourselves is...over the last several days, have we started a new trend or are we still moving sideways... Focusing more closely on the previous Globex session we see Asia AND Europe moving in synch to generate a trend move up, buyers coming into the market.....thats one data point, and if we look at a 30 minute chart, one sees that markets have simply oversold and are now correcting back up to the previous range...a positive sign, but still characteristic of range bound action.... So when the US market opens, what happens...in the critical half hour prior to the open buyers try to pre-position themselves on the long side hoping to generate a trend move up...based primarily on the positive employment news...unfortunately this news is only mildly positive and is offset by continuing negative news about Spain and the Euro situation....with pending earnings from banks coming tomorrow, how likely is it that participants especially the banks themselves, will come in to buy until they see the results....not very...... and so we see the market drift up, then roll over and on our 3 minute chart this is characterized by the three (3) weak spikes up into positive territory (green arrows) followed by what we know to be an "algo pattern" (sorry about that "catchy phrase" onesmith)....and then if you knew what to do...here is the time to do it....those who have the training and the experience, go through the following checklist... Based on our analysis, we 1.) ANTICIPATE price probing up unsuccessfully to find buyers followed by a failure setup (characterized by an "algo pattern") that we 2.)RECOGNIZE as an opportunity to get short....either right at the top or on the retest of the distribution line...so we 3.) ACT and get short, then we 4.) MANAGE OUR RISK....and hold on to this profitable position looking for a minimum move (at least 10, and hopefully 20 NQ points). We have posted this before.... 1.)Anticipate the opportunity 2.)Recognize the setup 3.)Act Promptly 4.)Manage Risk So in summary, there's nothing mysterious about this kind of "WTF" move....in fact its telegraphed to us long before it happens...but you have to be paying attention... Best of luck folks

What is this world coming to, that a person has to worry about offending someone by simply "lol'ing".....don't worry man......"lol" as much as you want....knock yourself out...."lol" yourself into a coma.....