steve46

Discovered that my ES distribution is lacking one (1) line at 1450....so here is the corrected version...

Here are the ES and DAX distributions for the open on Sunday, as well as Monday's RTH open I will be looking to close my longs about at or near the London open (Midnight Sunday). I have mentioned the subject of "pre-positioning" many times now, but this just one example of how it works...for the reader simply go to your own charting program and look at where price was last Wednesday (9/12-9/13) at the London Open (midnight PST)....if you have the time to really check it out, you may notice is that Europe opened and they probed down to find sellers....breaching a support level around 1430.....this is where "informed" buyers started to put a position on...(1428 -1430+) Pre-positioning requires skill, patience and the ability to visualize where price is going (broad market direction)....what it provides the user is the ability to stay out of the volatility at the open, and when you are right...you win big...and you can do so with a very reasonable stoploss...so your risk reward is outstanding...it is often the case that I put on a core position in the overnight market and trade around it during the RTH....because it is capital intensive and there hasn't been any realistic interest I save the details for my classes...

So you're learning (the hard way) that when you don't have a lot of experience in this market, your choices become very limited.... Once you have a viable profitable system (and you know it works), DONT make changes unless you start to lose money...don't move your stops, be disciplined in taking profits, and keep good records so you know how your doing from week to week, from month to month... I am going to stand aside for a day and get caught up with my sleep... Good luck

Here is today's chart Clearly the distribution worked well (once again)... If you waited for price to take out a line, entering on the next open or on a retest of the line, you had a nice profitable day...you can see the advantage of working with the 10 min chart (it minimizes a lot of the noise).... The main lessons to learn are as follows 1. You need to have enough experience and skill to know when to enter...the distribution lines could be a big help to retail traders...if you simply go back and read the posts at Negotiator's thread, you can see that absent that kind of help, you folks are all over the place, taking losses and wondering which way price is going to go from there....one gets the impression that when you get a winner on the line, it is mostly random chance....rather than planning.. 2. You have to have a reasonable stop in place and you have to be willing to honor it....take a loss when your wrong and move on...that stoploss has to be (in my opinion) big enough to give your mathematical edge time to kick in...I estimate my stoploss based on local volatility...and it seems to work pretty well...some folks like to simply look for the most recent high and low....and thats fine if you can afford it...

Hello GOB, sorry to be late in replying, but I trade FOMC events much differently than retail participants....my "trading day" began last night prior to midnight.....so I am very sleep deprived.. With respect to your comment, realize that not matter what you choose, depending on your skill (and your luck) it will work some of the time, but certainly not all the time.....I suggest testing over a recent data set....(prefer at least 100 previous data points), then looking to trade it (keeping a record of how your method works over the next 100 opportunities).... It takes time and committment to do this, but the advantages are that you can see immediately how your system works...and if it stops working, you can see that too... I keep all kinds of data, and although it is a tedious job, when I trade I know what to expect and whether my system is working....that level of confidence means that I don't hesitate when I see an entry....and I am no longer late to the party..(one of the big problems for retail traders). Don't know if this is understandable or if it helps...I hope it does...

Tomorrow's Distributions for the ES & DAX markets

Sorry GOB missed this earlier So your question is about finding "the best way" to make a decision to enter the market on a test of the distribution line....One way is to test each of your theories, and as long as you have the time and patience, that is fine...I think what you will find is that each variation has its good and not so good points. For experienced participants I have always favored letting price open and close outside the line, entering as price retests the line.....

Spidey Sense Thank you sir, judging by your handle, the subject of perception is significant to you...without our perceptions it seems to me that we exist (if we do in fact exist at all) in a vacuum. Clearly our experience and our interpretation of that experience, are what makes each of us unique. The truth of that seen when Onesmith for example "decides" that I am a criminal (literally) while another member (say Goodoboy) may in contrast thank me for my help...I assume we have the capacity for both behaviors, and somewhere along the line, we choose on path or another... Goodoboy, "long term" means (to me) people and/or institutions who hold a position over a period of weeks (at a minimum) to (more commonly) months at a time...and for the institutional client this is more oriented to the "taxable year".

Normally these ideas occur to me as I am getting some exercise after the close...but today, perhaps because of the kind of day it was, I have been thinking of what I want to do from this point forward... I have learned a lot about human behavior during my time posting here at TL. I learned for example that people have the capacity to learn and change and find success, but in order to do that, they have to give up the kind of behavior that in the past they may have needed in order to defend themselves in what they percieved to be a hostile world... During the develpment process for this system, I worked with several of my neighbors...these were friends of mine who expressed an interest and wanted to learn how to do this..some of them had a past record of success, some had a record of failure, and what I learned was that regardless of that past record and their expectations, IF I could communicate to them a formula for success, to a man (or woman) once then saw how little stood between them and their goals, it became a purely a matter of choice...a matter of DECIDING to take responsibility...and a willingness to work at something and to invest in themselves in a way that they hadn't done (in some instances) in years.... I will be thinking about this over the next few days and weeks and decide how to proceed from here...

and here is the same trade, if held to the end of day This is the reason we suggest that traders take partial profits and "stay with" a profitable trade as long as possible As can be seen, participants came in to move price up, probably in anticipation of a positive overnight and next day action This opportunity by itself would have made for a nice day. Best Regards Steve Edit This note for GOB....as you can see if you just entered at the distribution boundary (1433.25) you would have had to sit through a drawdown of almost a point....you might think this is a lot but really what matters is the expected profit....for this sytem, when we enter at the distribution boundary, the "expectation" is that a certain percentage of the time we are going to see a favorable move to the next line....still obtaining data, but at this point it looks as though we see a "round trip" (from one line to the next) about 26.9% of the time....

This split screen example shows the final test this afternoon at the end of session What you can see on the far right (the one min chart view) is how price "respects" the lines created by the distribution... We think this indicates that a significant group of traders are visualizing price action in a similar fashion and making decisions to act based on tests of these price points. If that is correct if means our development process is on target...our primary goal was to get on the "same page" as the longer term participants. As side benefit was that the distrubution creates bands that work when the longer time frame participants are standing aside, and the short time frame participants (and automated execution programs) are trading in and out, creating horizontal ranges...

Another very gratifying day using the distribution We learn something new every day trading this system...for example, the longer we use the distribution, the more we see that it self selects our entries (if you let it)....and what we mean by that is...that the high probability entries are by definition at the outer extremes of the bands that the distribution creates...the logic arrows tells us what orientation to have and to date they haven't failed us...alternatively if you wanted you could read the tape when price touched a line. If you simply wait for price to touch one of the distribution lines and then act according to the logic, the result has been positive every day and our drawdowns have been significantly reduced....We have been using a 1 point stoploss but intend to modify (increase and decrease according to changes in volatility). On the attached chart we show the open (left most green arrow) and then the other arrows show the "touch/tests" of the extremes on each side of the band....

As usual you have good instincts...I realize you are using a trend line to keep you in, but be careful....folks who use this (or any) method to keep them in a trade tend to get complacent...generally speaking if you get acquainted with how to read the broader market, in time you will be able to recognize when it is "rolling over" (when the move is exhausted). Interesting that there's only you and one other person posting...clearly this is a difficult market for retail traders.....one thing you might want to consider is the issue of seasonality....this is the butt end of the slow season...most of the senior traders schedule vacation during Sept, leaving the desk to the "second team"....and the instructions they leave are simply "go with the flow and don't initiate any action on your own"...basically they are told to fill orders and stay out of trouble...as a result most of the volume is automated. The result is that when you enter a trade, unless you have a wide stop, you may get shaken out a lot....If you find that happening, you may want to try just trading the open until about 8:30...then come back at 10:30am when the New Yorkers are back from lunch... For the close, if you look at my charts you will see that when price gets near to a distribution line, price tends to chop...this is purely seasonal and what it tells you is to stay out (don't take positions there)...instead I look to indentify the trend in the middle (between the lines) and take a position as price retraces toward the origin of a previous trending move....the attached chart shows one example...the logic is simple and should be comfortable for you...you see the previous high and then a trend move down....as price retraces you want to wait for price to "stick its head up" and then fail...risk is generally modest (little more than a point) and the reward is relative to local volatility (for this season, about 3 points on average).

Another important element of this system is the use of "confluence" meaning the alignment of two or more valid signals Using today's chart we see price move to take out a distribution line and then retest....on that retest it also tests the previous day and weekly low of 1433.50 (green up arrows)...the confluence of these two elements (test of the distribution line and previous low at or near the same price) tells us that a bigger audience of potential traders could be waiting to act (to enter long at that point)... and as can be seen that is what happened...the follow through is limited because long time frame participants have already left the building....but the principle still applies. Time based pivots (mentioned originally in the thread "An Institutional Look at S&P Futures") are used by primarilly by professionals and consist of yearly, quarterly, monthly, weekly and previous day's open, high and low (we do not use the close). My trading worksheet lists them, along with Market Profile Value numbers, and distributions for both the ES and DAX. It all fits on one sheet and is simple to use...

Today's open was like so many before...Price tested down and found no sellers...so up we go Market sentiment is optimistic of a positive vote by the German Supreme Court regarding the Euro Bond Purchase Program We haven't touched on the use of the DAX as a leading indicator yet...we have used it for years....and for most of that time period it has performed very nicely (with one exception) With the attached chart we see how the DAX can be used...we have created a distribution for the DAX (chart on the right) and as price moves up, we see that the DAX encounters a limit line before the S&P does....and fails (three times) to take it out...when that happens, in our opinion, the odds favor a reversal....and you can see the S&P react in tandem on the other side of the screen. So that everyone understands what is meant by "leading"...on the DAX 3 min chart the "failure" candles (where price tests the distribution line and fails to take it out) occur at 8:18, 8:27 and 8:33 .....on the right side the ES shows three "test candles" all topping out at 1437 and they occur at 8:33, 8:36 and 8:39 consecutively before price fails and heads south...hence the term "leading", and we can see that the ES is not near to the upper distribution line at the time of the reversal...again its clear that the DAX leads...

Finally, I think it was "TradeRunner" who suggested that even if a person had all the info necessary to create the distribution they probably still couldn't trade like me... One thing I have learned to respect is that kind of insight...I think you are correct...the fact is that trading as a profession requires that the individual have all their ducks in a row. The system has to work The trader has to be able to anticipate, recognize opportunity and then act without hesitation when they see a valid signal... and they have to be willing and able to manage risk...meaning they have to be willing to put a stop in place and respect it....to take profits in a disciplined way and when wrong to "take the loss" and move on without having it affect the next trade.... and when each time period ends, you have to be willing to keep good records so that you can monitor and more importantly maintain your system's performance... As far as I can tell their is no "middle ground"...you either do it or you blow out your account.

Here is how the last trade of the day worked out....as mentioned previously, the system frames price action in a specific way...we look for price to move from extreme to midpoint, then to "reset" A previous post contained a request for clarification....the best I can do is to say that I use a very complex analysis concentrating on two states....balance and imbalance...and I am able to characterize how the market transisitions from one "state" to the other...as mentioned in my initial post, it is a time consuming process, but it enables me to in essence forecast where price is likely to test and fail or test and reverse...as with all things it doens't work 100%, nothing does...but it seems to provide a nice heads up that a possible trade is shaping up. That may indeed be less than the read wants to know but that is the best I can do...it is after all still a work in progress. Best Regards Steve

Interesting.....I am starting to see "guests" and others coming in to read the thread, but not to post....and when I check them out (by clicking on their names) often what I get are messages from other TL members asking if they are still "on" a trading website....and if they are still using a "system" a "method" etc....this and the fact that the page views are growing exponentially tells me that A.)whatever these folks are doing may not be working as well as they might like and B.) they are checking this thread out to see if there is something they can learn about how my system works... No problem... glad to help, just be advised that at some point I will have to stop and concentrate on my own trading... Good luck in the markets Steve

This relates to the previous post My distribution is built to frame price action in a specific way.... The midpoint is the target for price action moving from either extreme OR failing to take out a long "logic arrow"... The old saying is that the "proof is in the pudding"... and today is no exception...as we near the end of the day, we have a nice short as price moves through a distribution line, closing below it...(our signal to look for a short entry) To repeat... our system is composed of distribution lines and "logic arrows"...as price tests those lines, we wait for a close above or below, then we act according to our pre-programmed logic...taking a long or short on the next open...with a 1 point stoploss and a profit target at or near the next line...or in this case at the midpoint... As can be seen the system is working very well indeed...summer is difficult to trade because volume dries up....you only have a couple of opportunities to get paid....one is at the open, and in our opinion, the other is near the close...the system shows you the opportunities, and the rest is up to the trader...this last short entry is worth about $250 per contract.... And once again thanks to Predictor and Onesmith for their "profound" comments. Best of luck folks

Sorry can't "clarify"...as mentioned in the first post of this thread I am not going into detail on the math used to create the distribution...I expect that it will be somewhat different than anyone else's..I also expect that it will "work" better...it should, because it took a lot of time to develop....

You have to read from the beginning...it says go back to the distribution published for Monday's session (post 143)....that distribution shows a green arrow ABOVE 1438 When the Globex session opened BELOW, it means we want to look for short entries.. I hope that makes it clear..

Globex consists of several markets opening one after another.... For my purposes the primary opportunity is London...at Midnight The attached 10 min chart shows the pre-position setup...(according to my "logic" system) On the chart you see price has moved in a tight range...too small to trade.... so we wait for the pre-position time, which for this market is 11:40pm (2340 hours) local time The "logic" is dictated by the arrows and the position of price in relation to the distribution lines....looking at the 11:40 candle (2340 hours) we see that it closes below the line....if we had an open below the line it would indicate a short entry....instead price moves back above the distribution line and the next open is also above (higher green arrow)...that open indicates a valid long...if you didn't like that one, the next retest (right most green arrow) also indicates a valid long entry... As of this point in time, that long entry was only good for a couple of points however it was nice to see the distribution lines and our logic system confirmed once again...this is the kind of process that gives the trader confidence to pull the trigger.

Thanks for the kind words GOB Now a chart showing how the distribution can be use to trade the Globex open.... First go back and review the distribution I published for Monday's open (it is used for the Globex as well) Direct your attention to the "logic arrows"...in some ways they are the most important element of the display...for this distribution, you can see the green logic arrow pointing up and it is located ABOVE 1438.75.....the "logic arrow" is there to suggest that the trader prefer a long or a short entry depending on whether price opens and closes above or below that line.... In this instance price opened (and closed) below that line...immediately we are looking for an opportunity to get short....the logic does NOT mean simply "get short"....it means look for an opportunity (your preferred short setup) THEN get short...in this instance our preferred method is to wait for price to confirm support or resistance... Looking at our attached chart you can see the open and then price establishing (tentatively) a smal range...characterized by a "local" high and then a "local" low...once we see that, we want to wait for price to confirm either side (by retesting and failing)...and as you can see on our chart.....the local high (resistance) is "confirmed" ....and at that point we can enter On the chart you can see the next two red arrows showing a couple of possible short entries This is very typical of the Globex session, especially after a nice RTH move up...

The importance of Pre-Trade Preparation If you look at the threads on this (or any trading website for that matter) one thing you may notice is that you never see comments about the importance of proper preparation The opportunity to make money in markets is time based...that is why we use time based pivots and why we prepare the same way each week...our pre-trade process begins with a review of the schedule of economic reports....Resources for this include Briefing.com ForexPros.com Forexfactory.com Every Sunday evening, we begin the process by reviewing the listing of scheduled economic report releases...we screen this list making note of those reports or events that are likely to have "significant" or "high impact"...(each of the websites listed have their own way of marking high impact reports for the user). Once we have a list of high impact reports (including the timing), we go back to our chart software and and look at the way that the markets responded to the previous report....this is easy to do by simply 1. Using the same economic calendar, simply go back to the previous month and verify the date of the report you are looking for. 2. Using your charting software, scroll back to the proper date and time and look at how the market responded to the report release. 3. We make note of the report, whether it was "in line with expectations" or a "surprise to the upside or downside" 4. We note the range of response in terms of the "initial move" and the "counter move" 5. We observe the resulting price action for the balance of the morning, and afternoon. Using this data, we decide (prior to the report) whether to "pre-position" in front of the report or to wait and trade the "counter move" looking for a continuation or trending move that might last throughout the session.

Here are my ES & DAX distributions to start the week