steve46

From my point of view, this is a world of many possibilities, some folks are willing to deceive me, some are not, and it is my job to distinguish one group from the other and to learn how to protect myself. Over simplified, naive? Maybe, but it has served me well for quite a few decades now to strip away the melodrama and just look at whats in front of me. By the way, this is my world. I have made a living in the financial markets for many years and am retired. I have probably talked with and ridden in taxi's and limos with every type of personality from true philanthropists to social psychopaths and yet here I am in good health, my wallet still in my back pocket....Keep the faith folks, the sky isn't falling just yet. Steve

In my opinion, the primary problem for folks trying to learn this business is as follows; First, anyone with a few dollars can decide that they "want to learn to trade". They assume that because they want to trade, that in time they can learn. Further, they assume that they have the apptitude and the background necessary to obtain success. Finally they assume that they can find a successful method relatively quickly and go on to make a lot of money. This, in a nutshell is what most if not all of you "believe" as you begin the process. If as you read this, you find yourself angry or impatient...this might be a clue that you are proceeding without benefit of the kind of soul searching that most of us are forced to do at some point. The real questions are..."What do I need to succeed in this business?".....What is the most direct way to proceed?"...."How can I find a mentor who, instead of just taking my money, will advise me honestly, even though I might not want to hear what he/she has to say?"....... Think about it for a bit..most "beginners" don't need a chatroom, or what passes for a mentor today. What you really need is a way to evaluate where you stand. Someone who would help you in a dispassionate way, to see your strengths and weaknesses, and provide effective direction. Ultimately you need someone willing to take a personal interest in you, and that is very hard to find. Frankly, none of the alternatives in the original post qualify. Sorry to have to put it this way, but that is what I believe at this point in time. Steve

I leave opinions on the logistics and features to others. If you are going to put money at risk you should however make sure to learn about the "account risk" issues. What insurance does your broker offer for your account size? What additional insurance does your broker offer for futures accounts (if you trade futures). I suggest you call your broker and ask these questions. If you decide on a publicly traded broker, it is a good idea to request that they send you their standard disclosures for your files. Good luck

In my opinion, learning to control one's emotional state is perhaps the most difficult challenge a trader faces. I find it to be a continual problem, one that is more or less manageable as time goes by. I only know of one technique that works for me, and that is a form of meditation that I call "simply sitting". The idea is to sit quietly and observe one's inner dialogue. Specifically, you wait without expectation and you simply notice whatever comes to mind, without being "engaged" by the content. It is like laying on your back on your front lawn and looking at clouds floating by. Certainly thoughts come to mind as to what shapes the clouds are, what color, and how the wind is moving them along. You simply look on as they float by without getting "into it". Sounds easy, but in practice it is not so simple to do. During the trading day, whenever I get filled, I try to put myself into that state of mind by remembering that feeling of detachment. If I start to feel apprehensive for instance, I try to monitor my body, making note of my breathing, my pulse, feelings of muscular tension etc. Although it may sound nutty, I talk to myself, telling "myself" that I am simply going to watch and execute according to my rule set. This is what I have come up with, however I am always interested in the opinion of other skilled participants. Steve

This morning's session (Sept 5th, 2007) provided a nice example of how to trade a gap down. As can be seen from the attached chart, the ES contract opened below the daily pivot. Therefore we look for short continuation entries. One thing that should be mentioned. It is always mandatory that the trader be aware of pending news. Economic reports for instance often hit the market at 7:00am PST. Today the pending report was new home sales which came in down 12%. We observe two (2) things about this. First, the report always leaks to institutional players first. They tend to hedge positions in the options market first due to size constraints and to put on outright positions just prior to the release. This causes what I characterize as an "impulse" move (a quick move of several points duration). Even if a retail trader has a correct limit order in place, often they will fail to get filled unless they act pre-emptively (market order or get filled prior to the release). As you can see from the chart, early entry at 6:55am PST (1479.25) would have been best. Trying to enter on the open of the 7:00am PST bar (1478.25) would have also worked, but you risked being left behind as the market traded through limit orders. My primary profit target was S1 at 1472.25.

I really enjoyed "Mind Over Markets". Inspired me to write Dalton a note. Unfortunately I did not receive the courtesy of a reply Anyway, although I do monitor MP charts periodically, I find that monitoring intraday volume also works well. Specifically, I use a method I read about in Brett Steenbarger's blog "Traderfeed". What he (Brett) suggested was to lookback 20 days, averaging intraday volume on a 15 minute basis. What you would do is to compare what you see to this 20 day average to determine whether institutions are playing that day or standing on the sidelines. Here is a link for those interested http://traderfeed.blogspot.com/2007/04/volume-and-opportunity-in-stock-market.html For what its worth, I lookback 20 days and break out the average volume in five (5) minute increments. I have found a couple of interesting things using this method. One thing that becomes apparent is that the market "breathes" volume. That is to say, volume seems to drop significantly just prior to what I charaterize as an "impulse" move. It drops somewhat, then picks up as price develops momentum. As a move loses momentum, you can see volume expand and then fall off. Typically, these changes correspond to increases or decreases in the size of the bar or candle. As regards today's move, I believe it took place on slightly low volume (daily basis) so I am suspect that institutions are selling it, and/or using the opportunity to modify positions. For instance, I took profits on several existing positions for tax reasons. Good luck in the markets Steve

Yes, thanks for pointing that out. The error is mine. The line should read look for "long entries as long as price is above the daily pivot".

Unfortunately the site wouldn't permit me to attach another chart to my first post, so I will do so here As you can see the first and second long entries are annotated The second long entry resulted in a nice gain of more than 10 ES points. At least in my experience, this pretty common (waiting for a second entry and holding for a test of R2)

Hello folks Gap days are pretty straightforward if you have the right context in which to operate. Here is one method that works fairly well. 1.) Wait for the open and calculate the spread between the previous session close and the high of the current session's opening bar (use 5 minute bars or candles). 2.) Determine the midpoint of that spread and place a horizontal line at that price 3.) Place a horizontal line through the opening bar (5 minute bar or candle). 4.) Put in your standard pivots (daily, weekly, monthly). If the open is above the daily pivot, look for long entries above the midline of the opening bar or candle. If the open is below the daily pivot, look for short entries below the midline of the opening bar or candle. Just speaking for myself, I find that trading is all about "tests". Price will test the midline of the opening bar, or it might run as it did today (Tues Sept 4, 2007). The task is to determine whether price will "take out" a price point or "fail", and then act to trade that move. Attached you will see a recent example As you can see, price opened above both the daily and weekly pivots. So I would be looking for a long entry. The first opportunity to enter long comes right after the open. As you can see, price oscillates between the midpoint of the opening candle and the midpoint of the gap "spread". In my view there are two (2) nice long entries available. The first at 7:20am PST, and the second at 8:10am PST.

Seems to me that attitudes about money (and so many things in life) are formed from the observations we make as children. My earliest observations led me to believe that we "had" whatever we needed. Along the way, I learned (as we all do eventually) that sometimes we have to wait for what we want. I have no idea how I learned it, but somehow I internalized a feeling of having what I needed, and expecting to have what I needed. I attribute this to good parenting. I learned to expect the world to "be there" for me, and for whatever reason, everything has always worked out. I have always "had" enough internal resource to make my way in the world. I am sure I always will. Money is what I recieve for doing a good job. To me this work (trading) is a challenge first, to figure it out, and to win the game. Then if I do a very good job, I get money. I think life is simple if you make it so. Steve

Thanks Jerry, your generous work here makes it possible for me to improve. So what I would like to do is give a little bit back..One technique I use profitably is to look at a 60 min chart of the previous day's action, noting where the wide range bars exist. Wherever I see a "wide range bar" I calculate the midpoint and put a horizontal line through it. These lines serve as "test points". That is to say, I look for today's price to test these lines and also they serve as profit targets helping me to stay in a trade longer. The attached chart shows one example of a trade using the midpoints of the previous day's wide range bars. There were several such trades possible today. This seems to work well for both futures and equities. The general concept is that the midpoint of wide range bars serves as both support and resistance.

Yes and I think we can take this a little further than just the open. It seems that one can use the shorter term chart to trade those "in between" times when the skew is does not show direction (skew = 0). Or when a sudden shift of the skew occurs, looking at the shorter term chart (for me it is either a 1 minute chart or 200ticks) lets you re-orient yourself and prepare for a possible reversal. We had a good example just now on the ES contract where the skew shifted, I changed over to the 1 minute chart and took the long entry around 1448 looking for a scalp profit at the 1 SD (about 1449). In fact the move continued on up to 1452 (a previous "HUP"). Previous "HUP" areas seem to act like magnets or pivots and in this case price has stopped there at least momentarilly.

I took a stab at fixing the program bugs that stopped my tick chart from displaying correctly, and during the evening I replayed intraday charts using both tick charts and chart with 5 min candles. What I observe is that one can use the tick charts to trade the pre-open and open (first 30 to 45 minutes), watching the market develop and taking a few quick scalps. You can then "switch over" to the longer term chart (2-5 minute candles in my case) and not feel as though you "missed" the open..Just a thought.

1.) Why not look to a longer time frame when trying to determine how long a distribution will remain symetric. I am thinking that following the skew on a daily and/or weekly basis might add value to the process. 2.) I have started to look for, and catalog "HUP's". Based on Jerry's characterization of them as places where price is held up while the market decides direction, I am keeping a list not only of the price but of the time (time and duration) to see if there is some utility to be had from that.

For any Esignal users who might be interested, this custom study by Chris Kryza incorporates some of the elements that Jerry is using. This is today's chart at approx 12:20pm Pacific Standard Time using 5 min candles

For anyone interested, I emailed Howard (Ensign Software) and asked that he program the SD (as Jerry pointed out, the VWAP is available as a DYO study). Unfortunately he declines citing other committments. I am not a programmer so I will look in Esignals code library and if I cannot find it there, I will find a programmer to do the work using that platform (efs). I will try to make it available to all TL members. Steve

I think one has to hope, and to aspire, to rise above one's own conceptual limitations. Believing this, I look inward regularly thinking to uncover that which lies dormant. In order to do this, I think we have to learn to forgive ourselves first our shortcomings. I believe we have to recover those parts of our lives that embarrass us, that shame us, that we try to isolate ourselves from, that we try to bury.. To the extent that a person can come to terms with this, I think they eventually learn how to value themselves and along the way to mobilize enough self-respect to take responsibility for what they know... In my opinion this is part of becoming more aware. I notice that as I progress along this path, I've been able to become more competent, more willing to be disciplined, and a better observer. In practical terms, I notice improved impulse control, improved ability to put the markets in a useful context, improved ability to tolerate frustration. Unlike the past, I can now stay in a trade long enough for my edge to kick in. I see the market and I accept that I am going to win and lose. The idea of "drowning" seems to imply trying to hold feelings at arms length, being unable to do so, and finally being overcome. Having spent a considerable amount of time avoiding that feeling, I can say with some authority that there is a part of us that can't "drown". You just have to find it. I admit that I haven't read any of the Doctor's articles. This is just my take on how denial limits us.

As can be seen by this next chart, there is good reason (in my opinion) to use the "Shapiro Effect" rule for exits as well as entries. Staying in this trade, either by scaling out, or simply holding would have resulted in a significant additional profit. Given that volatility has expanded so much this last month I will have to remember to scale out rather than exit in one piece.

I thought this might be of interest. I have modified the setup a bit because I don't have all the indicators in place just yet. I use another chart showing time at price to tell me where the PVP is, and I have a volume weighted MA on my chart to estimate the VWAP. As can be seen this trade worked well, betting against the breakout. I should have stay in longer.