steve46

and the 5 min $ADD In both cases ($VOLD and $ADD) the 80 period and 200 period lines are not visible because we gapped down and the lines are above the display...

and here is a shot of the 5 min $VOLD

Here is the same trade about 30 minutes later. 5pts profit so far.

Yusuf this might be of some help to you Today was an example of a choppy open. We had a housing report at 10:00am EST so there was plenty of reason to stand aside and let things shake out. All the while I am watching the $VOLD and $ADD and they are red all the way We did see some minor program buying early in the AM BUT if you were patient and kept watching the 800V chart, you would have had a nice setup test of the 200 period EMA to trade short.

For those who may want to investigate using $VOLD and $ADD, I suggest trying the following (For Esignal users). Setup a standard or advanced chart displaying $VOLD for example. Put one or two EMAs on the chart. I suggest the same EMA's as for your trading charts if you are using the CV (Constant Volume) charts. That would be mean using an 80 period EMA and a 200 period EMA. Put 3 minute bars or candles on the chart and monitor for at least a month. What you will probably notice is that as long as the bars/candles stay above the EMA's, price is likely to be moving up. Watch the distribution of bars/candles. Trend is when all or most of the bars are one color. As you watch you may be able to see turning points or changes as bars progress. It is helpful to take notice of how price moves as these bars approach and test the 80 period EMA. If you decide to use the $ADD in addition to the $VOLD be aware that they show different data. For instance, you may see the $VOLD display move up showing all trending bars or candles, while at the same time the $ADD shows bars moving in the opposite direction. This can mean that the broader market is moving up, while some players are selling into that move. We might assume for instance that larger players are taking this opportunity to sell into that buying...and of course the reverse (of the above scenario) also occurs. Again this is all predicated on taking the time to get used to these indicators. Hope this helps Steve

The reason I posted an example spreadsheet is to encourage traders who are having trouble to take the time to analyze how price moves. One of the benefits of recording the data is that you have to look at the chart closely, and sometimes you can see that certain circumstances produce higher probability setups. The big problem for any trader is how to handle choppy conditions. If you look at this closely you see that price consolidates around a small range of prices, oscillating up and down a few points. Often the chop can be characterized by price testing the same price points back and forth The first clue is that the 200 and 80 period EMAs are flat (no slope to them). Then if you are looking at volume, you see it fall off significantly. Finally, look at the clock. Ask yourself, is this lunch hour in New York? Are traders waiting for an important economic report (CPI/PPI or something similar)? or for a speaker (a fed banker for instance)? If this is the case, I suggest standing aside until the event is over. In addition to the method I outlined, one has to find some kind of filter mechanism to help point you in the right direction. You could for example use the $VOLD (if you use Esignal). This will show the difference between the up volume and down volume on the NYSE. Also one could look at the $ADD (number of advancing minus number of declining issues on the NYSE). Another method is to simply place horizontal lines on the previous day's chart to show primary support and resistance. Done correctly this will indicate prices where traders have come in to protect their positions. In theory you would want to put on a trade when you see price touch or test a support area and bounce off it. Conversely you would want to put on a short trade when you see price approach a resistance area, test and fail to take it out. Pivots often helpful in this task. A lot of this is basic screen experience and unfortunately I don't know of any shortcuts. I used to spend many hours each evening looking for just such examples. I hope this helps. Steve

A couple of important ideas for struggling traders. The first is record keeping, the second research. As regards record keeping I think its important to keep a record of your trades and to analyze the results as soon after the session as possible. So I have a simple example of how a trader might keep and maintain records of intraday trading. As you can see it is a very basic record using an Excel spreadsheet. Constant Volume System Research Spreadsheet #1.xls

Well as regards the question of "how much" my interest is limited. I don't have reason to think in those terms. What does interest me however are comments suggesting that there are "no secrets" and by extension no big differences between professionals and retail traders. This is simply incorrect. Skilled professionals can and do, perform at a level that retail traders cannot, and they do it consistently. I am reminded of a statement by Arnold Palmer during an interview near the end of his career. Responding to a similar comment he said simply "well the truth is you (the amateur player) can't really buy the same equipment, and its very difficult to get the same level of training. At the end of the day, a pro is going to spend more hours practicing than is practical for an amateur player....and that is setting aside the idea of talent". I would never want to prevent a person from aspiring to excellence, but I think its important to have a realistic viewpoint, not only as to the challenges, but also as to what can be accomplished if you can manage to obtain the skills and you have talent. One thing that should encourage retail traders is the fact that unlike some activities, a person who has the skills (statistics, spreadsheet, programming, etc) and the discipline, can sometimes make a "breakthrough" just on the strength of their own work. In this respect, trading is a pursuit that rewards hard work just as much if not more, than "talent".

As regards "slope" of the EMA here is the way I look at it. If the slope of the 200 EMA is up, there are two (2) obvious possibilities. The first is to look for a continuation trade, the other to look for a reversal trade For a continuation trade, I look to see if price has touched and bounced off of the 200 period EMA earlier in the session. If this has happened once before I believe it can (and is likely to) happen again. If it has not, I look at the next level of constant volume chart (2401V) to see if price has "respected" the 200 period EMA, if not I look at the 800V. Each time, I am looking for the same thing. I want to see if price has touched and bounced off the moving average. For a reversal trade and I want to see the 80 period EMA change its position relative to the 200 period EMA. That means I want to see the it move below the 200 EMA before I take a position. As price moves below the 200 I look for a retrace to test that EMA. I want to get filled right at the point where price hits the 200 on a retest. In the current volatility I am giving it a 2 point stop. It is difficult to quantify the angle of slope because charts change perspective as each bar or candle is added. This is part of the "art" of trading. In my view, as the slope steepens, the move is likely to be what I call an "impulse" move. Evaluating the strength of the move becomes difficult because each candle fills quickly. If you are not using Constant Volume bars or candles, you can simply "read" the volume. If for example, you are looking at a standard chart with 5 minute bars or candles you can "cheat" by placing a horizontal line at the 25,000 level. In the current volatility, this is the minimum level needed to sustain a significant move. Also you can look at the relative distance between the open and close of each bar or candle. In a strong directional impulse move, the open and close are at the opposite ends of each bar/candle. Another alternative is to read the "time & sales" chart. One way to do this is to filter your display to show >50 or >100 lot size. As the larger players "lift the offer" (on a move up) you will see the acceleration on the display. Conversely on a move down you will see size "hit the bid" and it will cause the display to speed up as participants scramble to get favorable position. This is just a small part of the picture. Rather than get too long winded I will stop here I hope that helps you Steve

This is my final trade for the day Again we see price test an area where both the 200 EMA and S1 are close together. This is a good short entry, but if you missed it, be patient cause here comes the retest.....

and this last post to show how that trade ended as I was stopped out at 1268.50

Sure I understand. If the spread is more than a couple of points I look to the strength of the setup (whatever is closest to price). So if my 200 period EMA is closest to current price, and the nearest S/R is more than 2 points away, then I may trade it based on how it acts around the 200, but I don't expect much "help" from the S/R area. Also you should take a moment to watch whenever price is near to a pivot or established S/R. What I have found is this....if price is going to go through (take out that area) then it will often do so on a wide range bar. Since we are all watching the Olympics these days, the example I will call on is a high jumper running up to the bar. he has to generate momemtum before he can clear that height. Same with price as it goes through an area of S/R. This means that if you are wrong, be ready to bail as price can and will often move through an area of S/R with a sudden spike or impulse move. The opposite is also true. If price fails to take out an area of S/R it will often move right away in your favor. If it doesn't or just consolidates I will often scratch the trade. I don't mind missing a move because my system always provides another setup to trade. I hope this helps you Steve

and another shot as the trade continues I scaled out another unit at 1271.75 At this point I moved my stop to 1268.50

Then as the trade progressed I scaled out all but 2 runners at DVAH 1270.25 I did this because I have seen price reverse at the DVAH many times. In fact this area (DVAH) is often a good place enter trades. I chose to stay in my long position and watch.

Ordinarilly I won't be posting during the trading day. This one worked out nice and I think its a good example for those who might want to see a trade in progress. I got long on what I call a reversal move at 1264.75 The chart is self explanatory based on previous posted data. Simply put I like to enter on the retest of an EMA

This is a little off the subject of my thread but I do want to offer a comment about pivots as follows; When I trade I keep track of daily, weekly and monthly pivots. I prefer however to take trades based on the confluence of weekly or monthly pivots and moving averages. I also take trades when pivots, moving averages and Market Profile numbers line up. If I can get those three planets to line up, I find that produces the best percentage success. I stay off (or fade) trades based on daily pivots. I do this because I believe that retail traders and weak hands are often using daily pivots as entry points. Generally speaking I want to be on the other side of those trades because that group is often wrong, they are easy to flush out of their positions and their stops (when they use them) are the fuel that moves a position in my favor. I don't say this to insult anyone. If you (any of you) use daily pivots, so be it. Divergent viewpoints make the market what it is. The area annotated on this chart shows the confluence of two pivots (daily and weekly) and the Value Area Low is also right there at 1295. Short entry in this area is essentially a bet that price will be rejected from previous value.

Another important concept that I have had success with is Market Profile This next chart shows the effect of Asia on our Globex market. As can be seen, the Asian market opens and auctions down to 1297 (near the daily pivot). Then the Globex market moves up to test the 200 and 80 period EMAs located at 1299...coincidentally the value area high is located at 1299.50 Price fails to take the value area high out on the initial test. Price retraces and then tests that point again....and fails again...auctioning all the way down to 1295 which is (coincidence again) the value area low. This is where the DAX opens.... Now I am limited in what I can say about this but I do believe that Market Profile offers a trader a lot of opportunity if they are willing to do some research...

Hello Kiwi No, I am not looking for advice. I have been doing this for many years (about 17). I simply wanted to suggest some ideas that struggling traders could adapt to their own use. The 200 and 80 period EMAs, constant volume charts, and the idea of watching how world markets react, are concepts that I have had success with. I thought I would discuss these concepts briefly, so that traders who may be struggling can see some examples and evaluate for themselves. I hope that clears up any misconception. Good luck to everyone Steve

and finally we have a chart using 800V candles On this chart, because the data is spread out a bit more, it is not possible to see much of the premarket. We assume one would review and monitor that movement using one of the other charts. The nice thing about this chart is that it shows tests of the 200 and 80 period EMAs very clearly. Again we see the relative position of the 80 above the 200. High probability entries (long) happen when the 80 period moves from below the 200 to above just prior to the test and vice versa. Once that happens we look for the test and take the trade. As one can see there is an advantage to using several of these charts concurrently. If for example the trader misses an entry on the 10,000V chart, often there is another chance to enter by switching to the next "level". One important comment at this point. Although it seems easy in hindsight, I think the primary challenge for a struggling trader is controlling the urge to act impulsively. One has to wait for the setup and not "improvise". This takes a lot of screen time and practice.

Here is an example chart of the same open using 2401V candles. Note the open of the Nikkei and the resulting move up..somewhat later the DAX opens and moves up. There is a retacement but ultimately the market forms a series of higher lows prior to the open at 9:30 EST (Market Open). Notice the test of the 200 period EMA (where it says "Higher Low" during premarket) and the relative position of the 80 period (blue) EMA. Notice that price then creates a higher low but never really tests the 200 again. This indicates strength. The market opens and tests the 80 period EMA and the long entry is obvious.

In this next post we show the balance of the 10,000V chart for that day (8-15-2008) What happens is that price continues to consolidate and test the 200 period EMA. When this happens we take notice of the relative position of the 80 period EMA. Notice that both are approximately horizontal. We expect consolidation to continue and we look for long entries (because the 80 period is above the 200). Entries upon retest of the 200 EMA proved profitable in this chart. The first entry at 1294.75 resulted in a profit of at least three points if you scaled out as I recommend. The second entry was at 1295 and took heat down to 1294. This trade would have resulted in a five point profit, scaling out at three and five points (if exiting at 1300).

Since we are talking about "seeing" the markets I will begin by suggesting that struggling traders try using constant volume bars (or candles). For the ES market I favor three charts, 10,000V, 2401V and 800V....each chart offers a different "resolution" to market action. Here I show a recent chart using 10,000V candles First notice that I annotate the Nikkei open. What I want to know is "What does Asia want to do, mark it up, down or consolidate?" Then I annotate the approximate open of the DAX, and again I want to make note of how it acts (what its effect is on the Globex market). Of course one could also simply get the charts for these markets, but this way one sees the "effect" of other markets on the Globex. In this chart we see the effect of both markets conjointly. Clearly they are going to take the market up and as the evening wears on, we see higher lows formed (HL symbol). As the US Market opens, I always wait for 4 candles to complete before making a decision. I believe this gives me some idea of the direction of the market's "first move". In this instance a quickly drawn trendline helps to make the decision. Where I show the word "entries" what I notice is that price tests the trendline and respects it (once). In my opinion entry on the test is aggressive (not high percentage) but entry on the open of the next bar with a tight stoploss is a higher percentage move. That entry at 1299 would have offered a 3 point profit before violating the trendline. What follows is a retest of the trendline which forms a lower high and offers several favorable short entries. Frankly the short entries are a reflection of the trader's ability to recognize changes in momentum. Obviously the "failure" candle is hardest to recognize, but the short tail of the next candle should tell you that the odds are in your favor, and the next candle really confirms it. Short entry in this area (1299.25) provides favorable position and results in a nice potential profit. Although the subject of position sizing is complex, I suggest that a trader not trade small accounts. Instead I would wait until I could trade at least 4 units (with a minimum 20,000 USD) acccount. I would suggest scaling out one (1) unit each at 3, 5, and 10 points, leaving one unit to run. For this market and current volatility I would use a 2 point stop. I would not trade this market with one unit.

High volume often signifies "acceptance" of a price or range of prices by market participants. By acceptance we mean that the majority of market participants find value there. Low volume signifies rejection of a price or range of prices. By rejection we mean that participants believe that price or range of prices does not represent fair value. The concept of "time at price" is an important part of the concept of value. In Market Profile terms, if a lot of time is spent at or around a particular price, that means that participants accept that price (or prices) as representing fair value. Conversely if very little time is spent at a price, it signifies rejection of that price (or prices). I think the best advice I can give is to suggest that readers buy James Dalton's book "Mind Over Markets" and check out the complete concept. A lot of good professionals use this approach. Best of luck Steve

This chart with daily candles, shows more recent action with the addition of the monthly pivots. In my opinion, an important concept in trading is that of "tests". Price is always testing some landmark or "line in the sand" and one of the challenges is to find out which of these "lines in the sand" is significant. What we can observe here is that recently (8-11-08) price tested an area where two (2) "landmarks" exist close together (the monthly pivot and the 80 period EMA). In my experience, trades taken off tests of areas where two or more such elements exist together offer improved odds of success. A swing trade taken off the test of the 80 period EMA at 1313.50 or off of the test of the monthly pivot at 1307.50 would have had good success with a low to date of 1274. A short term or daytrade taken from the test point at 1313 and held to EOD would have reached a low of 1288 and a profit of 25 ES points.

I'd like to offer a few ideas for trader who may be struggling or simply not seeing the market as well as they could First one needs to see the market in a context. For this I use daily charts and to frame the action, I use a 200 period EMA (White line) and a shorter 80 period EMA (Blue line). If I can see an area where the market has shown major support in past I locate it using a horizontal line as shown at the bottom of that chart While I do use this primarily to frame price movement, I would have taken a short trade off the test of the 200 period EMA.