steve46

To my eye, it looks as if you (some of you) have it all together....I say good for you... and please continue as you were.... Periodically one hears comments like MRC's.....as mentioned I have no problem with contrary opinion. I do suggest however that this thread, and particularly this subject (Event Trading) isn't about automated bots, or computerized analysis of news, or about automated order entry for that matter. What we are trying to do is to introduce new and struggling traders to concepts that they can learn about and then study further on their own... As regards the study of Events and how to profit, I have seen it done in a specific way for years. I can make it work, and I know other professionals and retail alike profit from it based on quite a few variations on that theme. I suggested one method that works quite well actually (putting on an option position prior to the event, and trading around it on the date). I offered a comment about it, and talked about its benefits in terms of reducing volatility. Interestingly no comments about THAT.... Soultrader as you certainly know, there are significant differences in order entry between retail and professionals. One is that retail orders are processed for compliance with margin and other rules before being sent to the exchange. The latency though small is significant and it is one reason why retail is slower. The process I suggest for trading events doesn't require that edge. Finally I am a little less patient with the comment that IR news is already priced in.... Price moves after the release of information because not everyone knows what the release will be....If news is "priced in" why then does price spike up or down AFTER an FOMC announcement. If MRC's comment were true price would not move this way...This movement AFTER THE FACT is the basis for "event trading" and apparently the concept is too difficult for MRC to grasp. Seems to me that this is pretty simple stuff, that (almost) anyone could learn about and profit from, it they worked at it just a little bit. All the best Steve

Lets talk a little bit more about the nature of "inside knowledge" As regards the financial markets, and events that take place, there are people who "know things" before everyone else. If they disseminate that knowledge to outsiders for the purpose of realizing monetary gain, they are acting illegally...they are breaking the law....and of course it is very unlikely that any of us will know these particular folks. After that there are professionals who make it their business to develop an opinion about economic events, including earnings report and other information that might be important. These people usually disseminate their opinions for a fee, or they provide their opinion to clients of their employers (like brokerages, economic advisors or consultants)...and their are people who offer their opinions free of charge..They are news commentators, and interested amateurs and professionals alike who often are trying to develop a business of their own. Finally there are professionals like myself who have their own opinion based on simple observation and the knowledge they can obtain from other associates (people like themselves). You can see that what you call "inside knowledge" is often the opinion of a variety of folks, some of whom are knowledgable, and some who are not...and this is why we have what I call a "noisy" market and a divergent opinion as to the outcome of most events. There are exceptions of course and this Fed Announcement is (in my opinion) one of them...Every professional I know, figured that today the fed would ease rates.....no exceptions in my world.....We did not know how much...but everyone of us would bet big that this would be the outcome...so in terms of "inside knowledge" there was not much to be had this time.... And this gets back to Brownsfan's recent comment. It may be that "Event Trading" isn't appropriate for newbies or struggling traders. It may depend on how much experience they have, and whether or not they are willing to take the time to learn how to do it. If one DID want to learn, I would suggest reading the literature, and developing a method of getting information. One resource that traders use to develop information about events is the blog, and another is the RSS news feed. Here are some examples of good news feeds that will allow the interested trader to integrate several sources of information. http://www.theinternationalforecaster.com/ http://www.marketnewsflow.com/MarketNewsFlow/market_news_flow.html I hope this adds some value to those who want to pursue the concept of event trading. Best Regards Steve

I do appreciate it whenever I hear a person admit to ignorance and request help...So here is what I know.... Event trading is for people who have or can develop the ability to think independently. People interested in "Event Trading" usually enjoy collecting the information and making a plan to take advantage of the outcome of an event. If you were that kind of person....a while ago you would have taken a look at the economic calender and said to yourself...Gee...it looks as though we have a Fed Announcement coming on Tuesday December 16th...I am pretty sure the economy isn't going to get much better between now and then...so I am willing to bet that the odds favor a rate decrease.....Now if I look back at what usually happens when the fed decreases short term interest rates, I can see that the S&P usually heads north...also this is the time of year when we have a bullish bias anyway.....So I will try to find a strategy that allows me to position myself long before the announcement and hope to sell into the move up..... Now this is an example of the way an adult professional would think about this before the fact....Then the question would be....what are my choices?...Do I put on an options position?.....Do I put on an outright long position before the move?.....Do I wait for the day of the move and try to trade it by getting long early, trying to get some breathing room and holding until the announcement?....Finally a person interested in doing this would ask, "what is the risk reward associated with each strategy, and how capable am I of managing the risks and making it happen?.... My own preference is to put on an options position a week or two before the event, and trade around it on the day of the event. In the example given, a good trader might look for places to get long in order to maximize his profits. If I were wrong, I might look for places to get short to hedge my options trade. The advantage is that by doing this a trader reduces the volatility of the event making it more manageable. The downside is you have to have more capital and knowledge of options to pull it off. I hope this helps, and I apologize for the late post. I didn't read your question until late in the day. Best Regards Steve

Minoo Thanks for your questions I think that constant volume bars or candles offer a couple of benefits. First, when you look at those, you are not focused on time, but on the movement of price. After all, they move when a certain number of events (trades) take place, not before. This can take seconds, minutes or hours. So what you really see it price independent of time (at least in my opinion). Then depending on the volume number that you choose, they seem to reduce the amount of "noise" that is present in index trading. Finally, when you look at the movement, you see a more "wavelike" action, that reflects the way price really moves. To me it is sort of like the ocean with tides moving in and out. This is why I like to use them and frame that wavelike action with a couple of moving averages. Using the 200 and 80 period EMAs, I think that I trader is better able to identify the origins of tradeable trends up and down. Traders should keep in mind that the main idea or concept is to learn to read price accurately. Whatever decision you make about your display, you should ask yourself, "does this help me to read the direction of price more accurately"? If it does not, then you are going in the wrong direction. Also I believe that if a trader is new, or if they are struggling, they should try to keep the screen very simple. As they learn and develop confidence, then they can add things. I hope this helps. Steve

You're quite welcome and now a couple of additional comments One, it might help others if you had some comment of your own as to the value of "creeks"....how for instance do YOU use this concept in your trading (just in general terms). and with regard to your comment. I think about it this way... In my opinion the approach that works best in life is be inclusive...to try to meet everyone halfway...and to look outside the boundaries of traditional approaches....in my experience if you take the other tack and exclude people who don't agree with you, what your doing tends to stagnate, because no one is ever looking outside the traditional boundaries. Correct me if I am wrong, but what we are trying to do here is find out "what works" to make us better traders? Good luck to you sir Steve

Here is a resource that shows how a "Creek" is drawn The authors are Pruden and Von Lichtenstein According to this article a "creek" is a "loosely drawn line spanning the rally peaks within a trading range". I know from my own reading that a creek also is said to have major and minor branches, and that these rally peaks are characterized by higher volume http://www.hankpruden.com/MTWyckoffSchematics.pdf and here is Craig Schoeder's (from the Wyckoff Stock Market Institute) comment on what constitutes a "creek" "A creek is the zone of resistance usually near the top of a trading range defined by a series of rally tops within a trading range. It represents an obstacle to up side progress that must be overcome if the price is going to work out the potential that has been built while the price has been in the trading range." and I would add the following.......(and its my opinion only) It seems to me that "Rally Tops" are identified by supply volume coming in to stop the move, rather than simply lack of buyers (low volume). if I am right you would identify the "creek" by looking for that series of rally tops within a trading range where supply volume has come in to stop the move up. My thought on the subject is perhaps we can get Mr. Schroeder to comment further. I'll see what I can do about that. I hope this helps Steve

Hi Blowfish First of all, I appreciate your participation (as I do everyone's) and I have no problem with diverse opinion or even contrary opinion. I do not expect to be correct in my opinions all the time. I encourage people to read and think critically about everything that is proposed. If it doesn't work for you then... certainly you have my apologies. I have not read the book by Harris, but I have spoken with him a couple of times and I found him to be a good guy, smart to say the least, and a good observer. I hope others will try his book. One last item...my comments are meant for anyone and everyone who are trying to improve their skills. I hope people will take what they can and if they feel inclined leave additional comments that will might help others. Thanks

Yes Brownsfan, I agree The idea from the start, is that persons having difficulty trading might read about a subject, learn some basic principles, then try to develop the concept in a way that suites their style. There is by the way, another resource for traders who want to further investigate how to identify where and when the various types of professionals enter futures markets. That is the CBOT Liquidity DataBase. This is a way to visualize the activities of several classes of participants. The database is marketed by several vendors including AlphaTechnologies and Cisco Futures (there may be others). I attach an internet link for some background on the Liquidity Data base from an interview with Pete Steidlmayer http://www.traderslog.com/steidlmayer-interview.htm Scroll down to read the information associated with CBOT Liquidity Database. Thanks Steve

Excuse me Hakuna You weren't simply told to "read another book" 1.) I apologized for my lack of teaching skills.. 2.) I asked for your patience 3.) I referred you to another source of information (a book certainly) that has been valuable to others. 4.) and I am still considering your question This isn't the window of a fast food establishment, its one human being trying to help you as best he can... I am sorry I haven't met your expectations. and NO this is not just about professionals, in this thread we are presenting "Ideas for Struggling Traders"

Yes it takes a lot of study, and experience. In addition, anyone who wants to excel at this needs to look for every possible resource to give them an edge. For instance, I used to develop relationships with analysts who demonstrated the ability to anticipate earning reports accurately. This is a competitive world and those of us who take it seriously make every possible effort to get an advantage. Thanks for your questions Steve

I know from experience that the market likes to retrace about 10:30am EST So I am testing various ways to estimate how far that retrace will go. I put in that horizontal blue line to estimate that point at the open. I'll be glad to give more info when my forward testing is completed. Today I came pretty close. To more fully answer your question, I was also reading the tape at that point. When you see a configuraton like that (a spike down with very low volume on the tail) it is almost always a reversal point.

I think you are way off base, and certainly off topic. I suggest you think for a moment before posting We aren't having a problem here. YOU are having a problem in your head with something that happened on another thread..... No one is restricting you from learning about Wyckoff. If you want to learn about that approach, I have a post dedicated to that approach on this thread. It provides resources that you can pursue at your convenience. If you have a comment about that, we can talk about that. As regards DB's Wyckoff thread you probably should post over there and express your opinion to DB. If his thread is closed, perhaps you should sent him a personal message. Alternatively you could start a thread of your own. Thanks Steve

Hakuna I think my teaching skills are insufficient to explain to you in a way that you might understand For that I apologize. Perhaps I am not the person to help you. I can suggest a book by Ben Warwick titled "Event Trading". and there may be other members who can put things in proper perspective for you. I am so sorry that I don't seem to be able to make myself understood. I will continue to think about your question and if I can come up with a comment that helps I will bring it to your attention. Good luck Steve

Markets consist of many participants worldwide. Those who have been involved on the professional side know how it works. They "work the market" on several levels. One level is longer term multi-day strategies based on the known scheduled "events". Other players are interested in tax strategies based on the tax law of their jurisdiction (their country), and finally there are "small time players" who try to make money on the small opportunties that play out each day (intraday). Today has been an up day for the most part. Having said that, there have been plenty of opportunities to short the market and pickup some money. Here is my intraday chart. Be advised that I only use the 1 min chart because it is easier to annotate. To execute I am looking at (constant volume charts) as well as 15 minute candles.

UAW reps to speak on TV just as we fill the gap....Watch what happens on your charts folks (9:58 EST)....reports to hit right at this time as well

I am all prepared for the open so let me continue to say a few words on event trading First, take a look at briefing.com and note that all the important reports are released BEFORE the open. Be assured that the pros know this and position themselves before the reports. Next know that the Bailout for US automakers is in trouble....also know that this is predictable (I can talk about it more later)....Then take a look at how the professionals position themselves in the market by looking at the 81 minute chart. See how volume ramps as money flows in during the prior week and they mark the market up.....put two & two together folks.... I (humbly) suggest that you can be an observer or you can learn the game and make some money from it. Now, there are so many vendors who offer to teach people the game (trading), when in my opinion, they don't even know what the real game is......Well I will stop right here.....there is an old saying "a word to the wise should be sufficient....."

Standard Pivots based on RTH (regular trading hours US open to close) This is a news driven emotional market that is potentially volatile. Reports like PPI, CPI and others move markets because they are likely to offer bad news. Professionals know this, and from experience they know which reports are likely to discussed on US financial TV shows. So they position themselves prior to the reports and then take the position off after the report is released. You could see that happen in the last hour of yesterday's market. and in the overnight Where the Asian and European players took it down further (they have their own news to "work" as well). It is quite a game. You can get started learning about the reports by going to http://www.briefing.com. Read the background material on each report and learn it as quickly as you can. As I have said in previous posts "Event Trading" is a very lucrative part of this profession, and if you learn the rules of that game, you can make good money. Good luck to you Steve

Thanks for your questions Shamal I have been doing this a long time, so frankly I could use a variety of charts, it wouldn't matter much to me. Remember that charts are a visualization aid. When I was starting out, I learned from a man who never used charts, he simply "read the tape". If you are unfamiliar with the term, it means that you simply read price as it runs across a display (used to be that traders actually read from a tape that came out of a machine showing only price). What I prefer to do is to look first (the previous evening) at long term charts (570 minute down to 15 minute). I scan these to get an idea of where we have been, and we we might be going. Then I do my numbers (I figure my Market Profile numbers for the next day, I look at the pivots, and I put in horizontal lines to show the previous day's high and low. The next morning before the market opens I look at the overnight charts, that is to say, I look at a chart with 5 minute candles that shows the overnight market (Globex) and I take notice of the way the market moved. Did it move up aggresively or just consolidate....are we near any important price points, pivots or MP prices? Are we above or below the previous day's Value Area High or Low. I take notice of news, and scheduled economic reports, earnings, and other items that may move the markets. From all this I make a plan. On the open I watch two charts, a chart showing 5 minute candles and a chart showing 729V (constant volume) candles, and I execute my plan. When I am filled I continue to watch the same charts but I add a special volume EFS from Esignal called "BidAskAnalysis.EFS" which shows me how many execution happen at the bid vs the ask. I use this on my constant volume 729V chart. I change the time on my standard chart from 5 minutes to 2 minutes and I look at standard volume. I look at volume levels (absolute volume) and I evaluate the way buying and selling change as price wiggles around. Becauses I have been doing it awhile, I can see whether there is enough volume to sustain a move, or whether the move is losing energy and is going to reverse. Its just another way of "reading the tape". I also look at the $TICKI which tells me when programs are executing. Finally I have the $VOLD and $ADD on my screen (you can see them in prior posts) and I watch to see whether they support my trade or not. Now, having said that, I suggest you (any trader for that matter) do not put all that on your charts.....it is too much (in my opinion) for a newbie to monitor and you will just get confused. Simplify and choose just one or two elements to start. I recommend $VOLD and $ADD (if you have Esignal).....I suggest using $VOLD on a 13 minute chart and $ADD on a 3 minute chart. $VOLD is the difference between up and down volume on the NYSE (shows you general strength or weakness) and $ADD tells you whether players are selling or buying into that strength or weakness. I hope this helps. Steve

and this chart shows the test of the previous day's VAH As you can see, we test and head back down (at least temporarily) For thos interested in MP the previous day's VAH was 903 and price tested up to 903.25 so that would have been a nice short entry. I happened to be busy posting so I missed (apparently I haven't learned my lesson about his). Oh well, I am sure I would have spent the money badly....Alright then I am done for the day. It is a nice day here in California...no fires...floods....or earthquakes....so I am going to find something else to do...Good luck to everyone. Steve

Thank you for the kind words Today is a very easy day. Lots of nice safe places to enter. The chart shows price testing the previous day's VAL, taking it out and then coming back to retest. I LOVE entering on the re-test (as many of you know). Notice that the first move was down (surprise) and then boom up we go......testing all the way...oh what fun it is to ride in a one horse open sleigh....(You are lucky that you can't hear me sing this mutant version of "Jingle Bells")....Merry Christmas everyone... Here are the charts (up to the current time).

Hello Kiwi I hope I can get this in before the time limit closes me out. While the markets do follow one another to some extent, one has to understand that the folks in NY generally control the action here in the US. That is to say, that the funds generally have someone who is executing in the overnight markets. The purpose of executing in the overnight market is (generally) to establish a position that is held into the next RTH day (or longer). If the trader needs to move size, they generally do not execute in the US (globex) market but will switch to the DAX and to the Nikkei (for reasons of liquidity). For this reason, you may observe that significant moves occur at specific times (for instance at about 3am EST). Generally speaking for big money to enter, markets have to be fungible and have sufficient liquidity to move a minimum size. That is why the SPI (and others) don't see big swings in the overnight. As to why the 81 minute chart...well I like to have at least one bar that opens at or near 9:30am EST. With the 81 minute chart I get pretty close and I have a chart that shows me a longer term view that I can use to my advantage. Generally speaking I like to look where others are not looking. Sometimes it is a waste of my time, other times I find valuable information. For instance, I like to scroll through longer term charts starting with 570 minute candles. I usually go from 570 to 285, to 142, to 81 and to 30. I like to see how the view of the data changes in relation to the 200 and 80 period moving averages. By "view of data" I mean I look for places where I can see wide range bars (candles) forming. If you know how to read volume, it helps to show only RTHs with volume. Because the volume is condensed, you can more easily see how up and down volume confirms trend or (by lack of volume) indicates that a trend is nearing its climax. In my recent post I show one example of that kind of chart. In regular (24 hour charts, you see a jungle of data and it becomes difficult to note patterns in volume) I attached a couple of charts with volume. Note the instances where price continued to climb even in the absence of significant up volume. Then, boom price collapsed and the down volume came in big. Sorry to ramble on here. Hope some of it helps Good luck Steve

Hello Folks I am done for the day, so I will post a note about today's action and go get a life for myself. First of all, we anticipated a move up early today, not because of the economic report, but because of the news that the government has decided to bail the Big Three Automobile manufacturers out temporarily. In my opinion, smart money knew this long ago and they were positioning themselves for this "news". As you can see in the chart the first move from the open was down (this often happens on days when an obvious positive news event is scheduled). Experienced intraday participants waited to find favorable entry. You could have seen this by monitoring volume using $ADD, $VOLD, $TICKI and other sources. Then at 10:00am EST the players reacted to the news and the market trended up in a two stage move. The first high was 904.75. the second high tested the weekly R1 at 909. At 12:15 EST the market started to roll over as the speculators took profits. Price then tested the previous day's low. Charts attached By the way, for MP traders, the previous day's value area low was 892...Surely its just a coincidence that price tested there before reversing at 10:00 EST.....:>

Hakuna; Your inquiry seems genuine so I will try to say a few more words on this subject although frankly I don't what more one could say that would help you. First, if you looked at the site Briefing.com, they offered a comment about the potential of today's report to move markets (low potential). Nevertheless, it is often the case that markets move at 10:00 on released news OTHER than what is scheduled. What news would that be? Well, today was the day that the announcement was made that the federal government was going to bail out the big three auto makers. This market has been moving up on that rumor. and today was the climax move (in my opinion). The general rule of thumb for this kind of action is "buy the rumor, sell the fact". Market has been moving up on the rumor, and smart money was already in position and ready to take profit on the report that it was "fact"... That move happened in two stages and culminated in the high today at 908.75. Then as the players took profits, predictably the market rolled over....Of course its not over till the fat lady sings, so we could still see a late day rally. I think the important things to take away from my comment are that 1.) Smart money usually positions itself on the longer time frame. Look at a chart using 60 minute or 81 minute candles. You can see the move up as the speculators tried to obtain and hold onto their positions, waiting for the government to confirm what they already believed would happen. And 2.) At the open, the short term speculators (and locals) will often try to drive the market down, then wait for the news to mark it up, trying to entice those on the sidelines to enter the market. At the top of that move, they like others, want to get off the train with their profits. I attached a chart with abbreviated volume so that you can see how price moved up on increasing volume at the beginning of the month. Long term specs got in position. The first move happened and then volume dried up as some of them took profits prematurely. Then it picked up again on the news that the government would probably bail the automakers out. Match volume to the move. When it increases as the move trends up you see agreement, when it decreases, even though price continues up, it is a sign that the move might be comming to an end. I hope some of my comment helps your understanding Steve

Market just opened and we are going to see a "buy the rumor, sell the fact" situation setup for us (classic human behavior at work). In this case the rumor is that the government will give the Big Three Auto makers a provisional bailout to keep them in business until President Obama gets into office. Then they dump the problem in his lap. So the way this works is participants have been positioning for the announcement all along the way. When the announcement hits they will want to find a place to bail (where will that be) Look at the longer term chart 81 minute candles and see that price has moved up on declining "up" volume twice. Clearly, the first time it rolled over, and we are awaiting today's "verdict" and the next move. I believe it will be a test of a new high (related to MP value area high) followed by another roll over. The only "fly in theh ointment" is that again, selected institutional players are marking the market up a specific points (using federal money). So at any time, then can enter to artificially create an updraft. Here is the chart...lets see what happens.

Okay then folks, I think what we will do now is take a look at the work of Richard Wyckoff. So lets begin with a bit of autobiography. http://en.wikipedia.org/wiki/Richard_Wyckoff I have to admit that I learned quite a bit from the Wiki article on Wyckoff. In some respects the guy was quite a player, for example he was married several (three) times and published a series of expose's including "Bucket Shops & How To Avoid Them"..... What particularly interested me was this snip from the Wiki article "The Wyckoff technique may provide some insight as to how and why professional interests buy and sell securities, while evolving and scaling their market campaigns with concepts such as the "Composite Operator"." Clearly Wyckoff had an interest in and studied the way that professionals operated in markets. and for those who find this interesting, here is a link to the Wyckoff Stock Market Institute. What I have learned is that the gentleman who runs this institute is named Craig Schroeder. According to the Institute website, Mr. Schroeder is a "40 year student of Richard Wyckoff technical trading method and a veteran stock trader". http://www.wyckoffstockmarketinstitute.com/ I learned quite a bit scanning the site, and there are multiple free resources available to those who want to know more about the way Wyckoff traded. Finally here is a link to an article by Craig Schroeder http://www.articlealley.com/article_612354_19.html One thing I have noticed is that there are a lot of rigid personalities involved with Wyckoff and his methods. Clearly these folks have an interest in perpetuating their own version of Wyckoff's methods. I think Mr. Schroeder qualifies as an authority on Wyckoff and perhaps we can all learn something from his writings and the historic resources he has preserved at the institute. Good luck to all in tomorrow's markets Steve