steve46

Well I am sitting here watching the market go nowhere for the moment. I wonder now many of you know or have heard the term "stealing the trade"?...that expression refers to the way that institutions have of sneaking in and moving markets up through the levels in the overnight market. Anyway, to the subject at hand..... In response to the OP, I would agree with Blowfish, and I feel like adding a comment about this subject. You see in the professional sector, we are exposed to many of the same dubious vendors of all kinds. The difference if there is one, is that the cost of the services they offer is usually very high. In response, what we do is ask for referrals...and we usually ask that the vendor offer proof of concept. Since generally speaking cost is not the primary obstacle, we evaluate products and services primarily by assessing expected value over time and comparing that to what previous clients have reported (or are willing to disclose) to us. In this busines, it is expected that we are capable of evaulating and managing risk in a skillful manner so if periodically we get burned, there's not a lot of chest pounding and crying about it in public....in fact one might be tempted to suggest that the OP, having expressed his/her outrage, simply suck it up and move forward.... Thanks

Hello Folks I am done for the day, and thought I would mention a few things, hoping to help folks out From my point of view its clear that most "trading" chat sites consist of retail traders looking for help. That seems to be the primary motivation. Coming in a close second, are the vendors of all kinds, whose motivation clearly is to sell products and services to the first group, and of course you have the site owner and his advertisers doing their thing....its all part of the food chain, right...? Once you have reconciled yourself to these "facts", the question still remains, how does a person advance his/herself in this business? The obvious answer is the old standby...education and hardwork...its not glamorous or groundbreaking commentary, but I can assure you (those who might be serious about entering the profession)...that there is no other way IF you want to be consistently profitable. I realize I have made some assumptions here. One is that people are serious about participating in the financial markets on a professional basis. Clearly there are people who simply want to be told when to buy and sell (otherwise there would be no trading chatrooms), and clearly there are small groups who believe that they can automate and let a software program trade for them while they sun themselves on the beach....lol I would suggest that if a person is going to find success in this business, they will need to do two things. One is to protect capital by NOT TRADING until you have proven TO YOURSELF that your approach makes money, and number two is "invest" in your education. By "invest in your education" I mean take the time to learn the boring basics, learn about the markets, learn to use the basic tools of the trade including how to reseach, how to form a basic trading concept, how to test that concept using a spreadsheet, basic statistics, basic risk management, how to use execution software, order types, how to develop a busines plan. and while you are at it, how to control your emotions while trading....these are the minimum for success (I am sure that I have left out a few items as well)...These are subjects a person COULD learn on their own if they were motivated. As with all things, there is a price to pay, not in money, but in terms of time, effort, perseverance and discipline, and that is why so many fail....because they aren't willing to pay THAT price..... Good luck

"Just when I thought I was out, they pull me back in"....hahaha..the only line I remember from "The Godfather" with Al Pacino?....OK one last time Bojangles...lets understand each other....I think I can say this with a lot of confidence. Institutional traders have no interest, none whatsoever, in what retail traders are doing, where they are entering trades, or where retail stops are...none....In order for us to be interested in what retail traders are doing, there has to be something in it for us....and there just isn't enough return (under current conditions) to justify it....you see? So please understand, we don't look to run stops, we don't look to run over your "levels"...it just doesn't work that way.... So we can have a balanced comment, you should understand that some folks ARE interested in what you are doing....If for instance you were to talk to a floor local, you might see that periodically THEY like to run stops (everybody's stops). If you had the chance to talk to someone programming auto-execution bots, you might see that some of these automated programs do in fact search for resting orders (they try to activate resting orders to generate momentum). So there are things going on under the surface and THAT is why UNDER NORMAL CONDITIONS the concept of rotational days (and other market profile concepts) still works (although in my opinion, not as well as it used to). Can I go now? (don't make me come back here lol)

I would suggest the following (and I hope people will believe me when I say there is no ego involvement in this at all). The S&P futures market is dominated by professional interests. Retail participants (investors, traders) took a beating a while back (as many did) and they haven't come back into this market. Also the math is simple. The small lot participant is ussually late to the party and simply doesn't have the horsepower to move this market. The Market Profile concept of rotation is still valid, because on specific days, institutions simply stop moving inventory. On those days (marked by low volume) the smaller funds and the aggregate influence of small lot participants can be felt, but in my opinion, they don't have the ability to project a sustained move. On those days if you are observant, you see the effect of programmed execution, as the futures move in very specific ranges (that market profile characterizes as "horizontal development"). So what to do? Well if you have the skills, one way to trade those days is to read the tape (and here we get to the limit of "where I can go" with my commentary) by "tape" I mean the "time & sales" strip, "market breadth" and the "NYSE tick". Thats how I was taught. and of course at this point we get into the philosophical issue of who knows how to do this, can you get training, what does it cost (I can assure you I am not involved in any type of training). etc. Its difficult. Absent a skilled pro willing to teach it, I would say your best option is observation and screen time. Its a good day. My back is healed well enough to walk finally and no more pain meds (miss them already lol) so although I bear no resemblance to Elvis, I am going to "leave the the building" so to speak. Theres not a lot more I can say really (without getting fired). It was nice to have the opportunity to share some ideas. I hope everyone has a nice holiday season. Good Luck

Sorry my time limit ran out before I could finish my post. I would guess that 1186 is the "line in the sand" for my upside scenario to play out. If this is going to happen, I am guessing that the market will reach down to test that price, maybe "shake the tree" by taking it out by a point or two (no lower than 1183.25), before retracing back up (leaving some folks trapped short), and continuing into the New Year. So now we will see

One thing I would suggest (and I do so humbly)....is that referring to charts and leaning on methodolgies are part of the trader's natural preference for psychological comfort. and while these methodologies may indeed provide a good "way to go", the" big players", couldn't give a damn less about Market Profile, Channels, Boxes, Moving Averages, Fib Retracements and so on. What they DO give a damn about are the answers to questions like "How will a big move up (at this time of year) affect our tax reporting? "How much inventory do we have at risk (and where is it located in reference to current price)?" and the big question for institutional participants.."How close are we to our P&L targets for the year, quarter, month"? Given that orientation, I expect the big players (AKA "the market") will try to find support early in the month (next week) and from that point, launch an extended up move into the New Year. This scenario allows the big firms to defend existing profit and inventory, and insures that they receive those nice end of year performance bonuses. For those who might have an interest We opened the year at 1113.75, the high to date 1224.75, and the low 1002.75 We opened the quarter at 1135.75, high to date of 1224.75, and the low 1127.00 We opened the month at 1186.25, high to date of 1224.75, and a low of 1173.75 Good Luck

In answer to your question Snowbird, "Overhead Supply" refers to an area above the current price where inventory is parked. The term "Offset" refers to a second area of supply adjacent to the "overhead" supply.

To original poster Over a period of years, what I have found to be true is that most traders want to find a principle or an organizing concept that; 1. Allows them to make consistently accurate judgements about market direction and 2. Shows them where to obtain favorable entry In truth, what they really want is relief from the psychological tension caused by uncertainty. In other words, the retail trader (newbie) is generally ignorant about the markets, hasn't learned the basics about the financial system he/she is going to become involved with, and hasn't done enough research to find a systematic approach that provides a tradeable edge. Personally I would be uncomfortable too and looking for answers. The price discovery process is simple, Traders offer and traders bid for, stock or futures contracts and in the process they "discover" whether the price they want to transact is too high, or too low. Human nature being what it is, sellers believe that what they own is valuable and want more for it, than buyers want to pay. On the other side, if the stock or the futures contract weren't of interest to buyers, then they wouldn't be offering ANY price, would they? So the question is at what price is a product (stock or futures contract) fairly valued. Generally speaking, fair value is what a knowledgeable person is willing to pay at any point in time for the product. Here the question of time comes into play...According to Auction Market Theory, time effects the way people think about value. If for example the markets have just opened, most folks would agree that they have plenty of time to figure out what a fair price is for a share of stock, or a futures contract. However, if you have a systematic approach that requires you to buy or sell at the opening price, the idea of price discovery goes out the door. Same for traders who, near the end of a market session find themselves holding position that they need to "cash out". For those people, no matter whether they have a potential profit, or loss, the limitation imposed by "time" is going to motivate them to pay up or accept the current offer, whether they think it is "fair" or not. Its an interesting subject, and one that people generally neglect to learn about. In terms of a profesional approach, what I have observed is that learning about and taking full advantage of human nature (and that includes the price discovery process) CAN provide a valuable edge that you can use to make money in the markets. I use that edge in my business every day. Clearly I am biased in this, but I have to say, this principle works better than technical or fundamental analysis and since human nature isn't going to change anytime soon, once you understand, you simply continue to use it (no periodic software updates required)... In addition to the subject of price discovery, the principle of supply and demand are vital to leaning how to make money in the markets. Once you learn to understand and integrate these ideas, you have the opportunity to exploit markets. Attached is the chart I worked from last night. I use two (2) simple concepts to make a buck...time and price and the discovery proces is embedded in each one. Good luck

If you don't mind I think I will wait for the movie Good luck

and here's a follow-up to that original chart Here you can see that price came back down to re-test the value area low at 1207.50 In fact price stayed there long enough that a trader had lots of time to decide whether to get on board or to "pass" on that entry. If you notice, I put in horizontal lines that essentially define my boundary during that time period. What that does is tell me that during that time, I am looking to get a favorable entry (as close to the value area low as possible) so that I can control my risk. Generally speaking a professional will want to buy at a "wholesale" price (like the value area low or below) and sell to the public at "retail" (value area high at 1216 or better) and vice versa. As you can see, if you can recognize opportunity, you really don't need a lot of math.

I thought I would post this. I think its an interesting question and its an area where I can help out without compromising my job I agree with those who suggest that you don't need heavy math skills. Not saying that you don't benefit from knowing math. I am an engineer with a degree in math. It helps. BUT you can make money if you simply learn to observe, to put the puzzle pieces together, and learn to act intelligently (manage risk, etc).... In the chart I attached you have what I and my colleagues call a ping-pong trade. At the end of regular trading hours, price moved to test down to an area where inventory was parked. Then it bounced up to test the other extreme. IF you learn to observe intelligently, you can see what other participants are doing. The testing of previous swing highs and lows is called "shaking the tree"...its an old game. Market tests the extremes and if they find resting orders, they "go with" the momentum that generates. If not, price often retraces and/or resumes its primary trend. No math involved, just common sense and observation. In my opinion, there is always a way for the intelligent focused observer to make money in the markets. Good luck

Hello On my back in a hospital bed today (back injury) and nothing to do so I thought I would check this thread out. I am done for the year (hit my targets early), so I am free to post as long as I don't say the magic words (lol)....anyway, with regard to the poster's charts, let me offer the following simple comments First, it seems that (generally speaking) retail traders don't have a way to read the market bias. You really need to start there, then move to your immediate time frame. Second, if you want to obtain a consistent result you need to know the basics....by basics, I mean; Before putting money at risk, a trader should be able to easily read the difference between horizontal development and vertical development (trend). Its not complicated. Horizontal development is price bouncing back and forth within a range. Vertical development up is a series of higher lows, while vertical development down is a series of lower highs. Once you are able to see that simple difference in types of price development, you need to learn to characterize your market. In the market you show (and in many others), you see what I characterize as noisy movement between areas of supply and demand. As the big players move price up and down, they create "islands" of supply and demand (characterized as horizontal development). They can't help but do this because they have size (inventory) that they have to put to work. Smart money sees these "parking places" and tests them. Those tests are places where price moves out of a previous range just a few ticks (looking for resting orders). If they find resting orders they "go with" the momentum that creates. If not, price often retraces significantly because smart money sees that the odds favor the opposite side (at least temporarily). It looks to me like many of you are getting faked out, because 1.) you haven't learned the basic concepts and 2.) You don't understand how institutions and smart money participants operate. I think thats about all I can say without getting myself in trouble. Based on what I am reading here, I would suggest taking some time to rethink my approach. Good luck

Hello Folks I have been away from the site for a while and to my surprise people keep referring to this thread. I would have thought otherwise, but I will try to answer some questions and then unfortunately I have to step away. I retired from the business some months ago, but found that I got restless. I suppose it gets into you blood so to speak, anyway I took a job maintaining a presence in the Euro and Bond markets, and I it seems to suit me. My day starts at 2:00am on the west coast USA. I monitor a "book" of inventory through the US session and then handoff to my colleagues overseas at the close of the US markets. This is partial answer to a previous question asking if I am able to hold overnight and still "sleep well". The answer is that in this business we view volatility "shocks" primarily as opportunities to get long or short. Broadly speaking we use options to protect existing positions (sorry I can't say more about that), and so yes I do sleep just fine. In answer to the question about using the $TICK I have to take a step back and explain, that these days, I use CQG for charts and while I do use a version of Esignal's $TICK, it isn't really the same as you see on your screen. And finally the more recent comments about "tape reading"...I am a tape reader, and for me that means that I use price (the raw numbers) to visualize the markets. By "raw numbers" I include volume, options open interest, and market breadth. I no longer use "indicators" like moving avereages, MACD, RSI and such....I also look at seasonal influences and by that I mean that I take into consideration the impact of economic reports and earnings season reports. In terms of details sorry but I am very limited in what I can say.... I look at the markets based on what I call "key reference times". During these times (which correspond roughly to the open of various markets) I monitor how each market acts and I try to put the puzzle pieces together. That means that I try to determine what the market "wants to do" and If I feel I have it solved I put on a position. During my short tenure here I notice that many if not most of my colleagues are tape readers, and do not use TA. Many of them monitor only the opening hour or so of the markets they trade, then using that data, they establish or modify positions. Since these are institutional traders, they usually wait for price to get to extremes before acting, and it takes a while for them to build or liquidate a position. After that the emphasis is on risk management and achieving profit objectives (the bottom line). Clearly this is very different from the experience of a small retail trader, so it may not offer much help. To make sure I offer a balanced comment I want to say that I do know traders who use indicators and technical analysis effectively. I think its a matter of finding a method that fits your personality and offers a mathematical edge. Clearly it takes time and expertise and the profession isn't for everyone. Since I can't comment on the markets I trade, it probably doesn't make sense for me to continue to post. I will stop here and wish everyone the best of luck in the markets.

I'd like to offer a comment here if I may I like to incorporate additional data into my decision making when using MP whether it be TPO based or Volume based. For example, I find that refering to $DVOL and $ADD (Esignal indicators) adds value. These indicators show me where which way volume is trending, and in the case of $ADD I can see whether participants are "selling into a market" anticipating a reversal. Other data elements that help me include Market Delta's footprint chart. That perspective is helpful to break any deadlock because I can see the "turning points" as the market cycles from bid to offer and back. In my opinion it can't be used in and of itself, but when I am near an entry or exit, it lets me pinpoint my execution. I realize these are not directly related to MP, but frankly as was mentioned in previous posts, there an art to trading this way, and in my opinion, one has to be able to integrate additional data elements if they want to improve their decision making abilities. If we switch back for a minute to MP, I would suggest looking carefully at "singles" (confirmed singles). Traders tend to overlook this. Singles are either potential reversal points, or if they fill in the both the pit and the ES market, can inform the trader that a run to extremes is possible. This in concert with range extension tells the trader that "other" participants are active and looking for a specific kind of move. Also look at the size and range of the Initial balance. Small IBs tend to be easily "overturned" creating the conditions for a directional move. Wider IBs in contrast tend to accomodate rotational days, and inside those days we can see further nuance when for instance specific brackets range and test other brackets. Let me just say that this is all market specific as I specialize in trading the S&P contract, and while I certainly respect Dalton and others who authored this concept, most of what I am talking about is based on observation. In other words you can learn it yourself by simply keeping your eyes open and spending time on the screen. I think these comments relate to both TPO and Volume based MP. I hope they provide you with some workable ideas for your research. Best Regards Steve

Minoo (and everyone else) If you are still hanging around check this out. I see this "condition" often enough that I am in process of testing it (I test setups on a spreadsheet before using them). What you have is a pre-existing down trend punctuated by a double bottom, marked on the chart. I notice that the 80 curls up toward the 200 and then price tests (in this instance it doesn't actually touch) the 80 period EMA before it runs up and takes out the 200. I am testing this as a long setup with entry on the first open above the 200 with a tight stop right below the 200 period EMA. Of course individual instances mean nothing, but in this example it was a nice winner, and it didn't look back. As you can see this is on a 16807v chart. I have seen this repeatedly on the 2401v and on the 729v charts. I will report my findings when I have enough data to make a comment. By the way, this is an important part of the game. Finding new sources of revenue. So basically what I do is I monitor and document instances where this setup occurs. When I have 100 instances I look to see what the success rate is but also I look at the losers, to try to determine if those losers have a characteristic that I can identify. A setup that has a nice success rate after 100 instances gets backtested (I have a third party do that for me so that I get an unbiased opinion). That test goes back several years and covers several market conditions. I look at this much the same way the drug companies look at developing a medication. They know that most of the investigative work will end up in the trash, but if they can find one good candidate, it can mean significant profit. I follow a similar plan to find profitable setups. Hope this helps Attachement below

Another person who "gets it". Its nice to see. THATS what makes it worthwhile for me....

Hello Minoo I believe the chart you posted is from 1/05/09. For me the important details are as follows. First, you can see that the 80 period EMA has dropped below the 200 EMA. It did this prior to the first and second test of the price point that you identify as a "double top". Second, on my screen I see that the $DVOL shows me increasing down volume (see attached chart) Third, you can see that $ADD is also dropping. This shows me that participants are selling into this market. Both indicators are telling me that people are selling the broader market. In addition I keep a small quote screen that shows me what the Naz, the bond, and other market bellweathers are doing. Unfortunately I can't show you that screen (because the data for that day is no longer available to me). I assume that they would have confirmed my decision. Basically you are taking a poll of the various data elements on your screen and making a decision based on what you see.

Hey Brownsfan Had a nice conversation with Swingfade who as we all know is actually trader28 from ET. He thinks it is very important for traders to prove themselves by posting blotters and is going to post here on your thread....Sorry to say its not my style, but I am glad to see that a big trader like Swingfade is willing to post and show us how it is done.. I'm sure this will inspire others, and bring some "momentum" to your thread. Best Regards Steve

Sorry, you are incorrect....again My advice to you sir, if you feel I have nothing to say of value, is that you point and click somewhere else. Best of luck to you and goodnight

I have never seen a single blotter of yours. I think its wonderful that you have stepped up to post on Brownsfans thread I am sure your record is very impressive. I think its very generous of you. I am not that generous. So what I willing to do is post in my thread and try to help traders that way.. Since you view it as worthwhile, I am sure we are all looking forward to seeing your posts. Best Regards Steve

Well then Swingfade. If you agree with Brownsfan, I am sure you will be posting your blotter on his thread. Congrats Brownsfan, you have another poster coming your way... Good Deal

I appreciate your kind words. Naturally its up to the individual trader to decide whether to reveal their personal financial info on the Internet. I notice that neither James nor DB have decided to post theirs. I am guessing that like many traders, they value their privacy. Clearly it is natural curiosity that prompts people to want to view this information. Whats interesting to me, is that you talk about how it helps others.....in light of the fact that I wouldn't be willing to show time of execution, how exactly does it help other traders?

First, thanks for the kind words from folks who I hope have benefitted from the posts. Now I would like to move forward with some words about "trading plans" Especially for traders who find they are at or near breakeven status, but are having trouble getting past that point, I suggest writing a detailed trading plan. There are many examples in the public domain and I will at some point publish an example outline that could be used. The purpose of the trading plan is to focus the trader's attention on his business. This last sentence is perhaps the most important one you will read. FOCUS on those elements of your BUSINESS that make MONEY. Inherent in the plan is discipline. Simply put the plan provides artificial discipline by creating a set of rules that you are obligated to follow. This obligation is self imposed, and when a trader committs to a plan, it is because he or she realizes that they need to impose that kind of discipline on their actions. We will come back to this in a bit. Now as regards my own work, I trade intraday....If you do the same, these comments may help you. I have a plan that works for me. In that plan I outline the various setups that I use. Lets say for the sake of argument that I trade a dozen different setups. On a given day not all will occur. I trade only what I see. I don't "freelance", no matter what I see on the screen, no matter what I hear from other traders, no matter what I hear on the news, or see on TV. Also I do not modify my plan (my setups) during the week. You will understand why later... Now I have those setups. I trade them each day faithfully. At the end of the trading day I take my brokerage record and I enter the data into a spreadsheet. On that sheet I have specific information about each trade. I have a name for each setup. I have specific data regarding the setup, the entry conditions, specific price data, time of entry, time in the trade, time of exit and other data that I find important. I regard each setup as a "profit center" (a business that stands on it own merit). At the end of each quarter year, I analyze how that setup is performing. I do this for each setup that I trade intraday. Some may feel that this is unecessary or that it is just too much work. I believe however, that success in any business requires similar effort. Now there is much more to say about this and related subjects, but I will stop here and see if there are questions or comments from readers. Remember if you will that these are simply "Ideas for Struggling Traders". If there is interest we can develop some of the ideas further. Best Regards Steve

As can be seen in the attached CV chart, we stayed in a range most of the previous trading session. Last evening, Asia took it on the chin with Korea and Japan dropping significantly (mostly on regional news and conjecture about US policies). We bounced off of 711.25....

Hello folks I think the case for a bottom of any kind is rather slim at this point. Simply put I think this market is news driven Rather then using Daily or Weekly charts I prefer using 570 minute bars or candles. I notice price tends to respect the two EMAs fairly consistently. Looking at the chart attached one can observe the most recent wide range bar representing activity from midnight to the open on Friday 27 Feb I like to calculate the midpoint of "wide range bars" and use that point as a line in the sand for a possible retracement. The horizontal lines to the left of the WRB represent an area where I might be interested in a long term swing trade. Alternatively I would see a test and failure of this area as a possible signal to short the market. I like the 2b setup. Intuitively it seems right, but in the current market I notice that price tends to consolidate for extended periods of time, before showing any conviction. It is this tendency to wiggle around in a range that causes problems for some traders. I hope to avoid this by looking for confluence of several possible signals before acting. For tomorrow's intraday trading the previous value area high happens to be 748. The previous value area low is located at 739.50. As I write this we are wiggling around just about 720....Depending on the overnight, news and other considerations I would be looking for a test of previous VAL to tell me what the world is thinking about the economic situation we are in. After that it is all about reacting to what I see. The "other considerations" include the status of the 10yr & 30yr bonds and the Libor. For what its worth, a failure test at 739 would probably mean a move down to 716.50. Failure at that point would mean a move down to 693 even. Best of luck to everyone tomorrow Steve