40draws

I think it would be a good idea for everyone to print out today's NQ chart and then hand write this post DbPhoenix's on the printout, and then tape to the wall next to your screen, or laminate it and paste it to the top of your desk.

Can't be stressed enough. I very quickly got to the point were even if I am not able to trade that day, I do this work or I have a strange feeling of anxiety that I won't be able to shake. It is THAT important to create this habit if you want to trade SLA/AMT, imo.

All this can be tested and has to be tested in order for you to be able to relax. How many? 50 or 100, however many it takes so that you have something in which you have confidence. It takes no time at all to do this. A couple of evenings maybe. Add: When you do the reviews, you'll find little "tells" that telegraph intent. For example, when price dropped out of the range, it futzed around for three minutes. This is not unusual since so many are surprised by the move. And then it resumed the downmove. However, it then stopped again and began to retrace its steps. This is not good and should not happen. If the move is genuine, all the thinking should have been finished. That it isn't suggests that traders aren't as committed to the downside as one might have thought. And for whatever reason, they decided to return to the "value area". That is from DbPhoenix, and I didn't want it to get lost in the body of timokrates post. FWIW - price needed two hinges to get back to the top of that range. When a hinge forms near a limit, and the breakout from the hinge does not carry through the limit, I look the other way. You can test that too.

Tracking higher out of that hinge. I suppose that the midpoint of the hinge, about 105.50 by eyeballing it, might be a place to keep in mind should price revisit that area in the future. Thanks for posting these charts, Niko!

I found an interesting journal over at the other forum, and you might find it useful to you: Forums - Making of a method

That is a great image! I had two trades today where the fish were clearly swimming, en masse one way and I was trying to convince them to go the other way. Guess who won?

I debated whether to post this or not, but as you did reach out to me via PM, I thought I would not be out of line to give you a few thoughts based on what I have read from you here. I mean everything I say in a friendly way, but I know you might feel offended. I hope you can accept that I don't mean any offense. So, here it goes. You said that: Interestingly, I posted my chart from today in DbPhoenix's thread over at ET today and I mentioned a "double top." He reminded me that it is not the pattern that is important, but the behavior of traders. It is their behavior that creates the pattern, and it is their behavior that provides the signal. You seem maybe too much to be hung up on the "feel" and the "sense" when what Thales is really talking about is a "skill." Again, in my discussion today with DbPhoenix, he pointed out that any of these patterns are dependent on a particular bar interval. What matters is simply to observe that sellers failed to push price below a certain level or that buyers failed to push price above a certain level. I watch a one minute chart during the day, and I do not consider myself a "micro-precision" trader. You make much of the "effort" you have put forth. I may be wrong, but it seems as though you do not want to expend any effort learning what you call tape reading. Instead, your efforts are primarily concentrated on trying to find a pattern that you can react to without having to know why, i.e. without having to "see behind the curtain." And for what its worth, I would bet that you severely overestimate how many people have become consistent. I would bet that the number who can "see behind the curtain" and the number who are consistently profitable are very nearly identical. Tape reading got in the way? This is like saying I could have been a successful doctor but I couldn't get into med school because organic chemistry got in the way. The subject matter is not in the way, what is in the way is your mastery, or lack of mastery over the subject matter. Here is one of the first posts by DbPhoenix I read here. He was not addressing me directly, but if you go back to this thread you'll see that one of my posts had been, indirectly, part of the impetus behind this post: Your resistance to "tape reading" is allowing you to keep your relationship to the market "somewhat mysterious." I would not want to remain on the wrong side of the curtain if I were selecting a job or business that I hoped was going to provide an income for myself. I can't remember if you mentioned your circumstances, so I don't know if you have a family or not, but I do have one, and I would not want them to be dependent upon my maintaining a mysterious relationship with something that could take my money if I let it. Good Luck, humbled, but you should try not to need it.

I see several places where a long would have been called for. Can you find them too? I know you didn't ask me, but if you were to ask me what I think of that chart I'd have to say that it looks more like something intended to induce a stroke rather than serve as a trading tool I do not trade the ES emini, but I took a look at it tonight and did a little exercise to see what I would be looking at tomorrow. I know you didn't ask, and I know I've not been at this as long as most people here, but I have to say that the last few days, the charts you've posted look like you're going backwards.

I can't tell you how to detect it. It is a sense of what is going on that you must develop. Here is the link to DbPhoenix's essay "How To Do It." I guess my advice would be to read that essay, and take seriously the task under the heading "Hire yourself to do a job." http://www.traderslaboratory.com/forums/wyckoff-forum/15896-how-do.html#179656 "The job is just to sit there and watch the bars form, to watch the buying and selling waves, the pokes and prods and feelers cast by buyers and sellers looking for a trade, not to create or test a strategy, not to make money, not to learn the "secrets" or the "tricks", just to develop a sensitivity to buying and selling pressure. No indicators, no MAs, no nothing but price bars/points and volume bars." I did essentially that by doing a lot of market replay. I have traded stocks exclusively since I started, and specifically trade stocks that gap open higher. By using market replay, I was able to watch many "days" each and every evening. I just started trading futures on Friday, taking my first trade on the NQ. I did a few days of replay leading up to that trade, in addition to going back through several weeks and doing a manual "bar by bar" left to right reading. I was lucky in that my first exposure to trading literature was Wyckoff's Studies in Tape Reading, which is also published as The Day Trader's Bible. I also stumbled upon TL.com and DbPhoenix's posts. I bought his eBook, and it was a great help. I say I was lucky because I started out thinking in terms of supply and demand and I understood the artificial nature of bar intervals. I read your post a few days ago where you said the one minute timeframe was too fast or too noisy for you. I think that is a big tell that you do not view the market as an auction market. I find that it is easier to gauge buying and selling pressure on a shorter bar interval than a longer. Here is a link to a copy of Studies in Tape Reading: http://cdn3.traderslaboratory.com/forums/attachments/131/6500d1211046697-introduction-dtb-1919.pdf The "layer" you ask about is supply and demand. It is not a set-up that I can spell out for you. The elements or forces are described and explained in Wyckoff and DbPhoenix. You need first to acquaint yourself with those elements, and then "hire yourself" to get to work learning to understand and recognize these forces in action with one another. Good Luck!

I'm a relative newcomer to this trading game, and I mean no offense to Thales, but it does seem to me that humbled is missing a piece. When I read his posts and look at his own explanations for his trades, I am reminded of the following passage from DbPhoenix's essay, "How To Do It": "If he focuses on setups and patterns as gimmicks rather than as manifestations of changes in the balance of buying and selling pressure, then he blocks the process through which he would otherwise understand it and profit from it." I do not see that humbled looks at the market as buyers and sellers looking for a trade. I do not see that he views the market with an awareness of the ever present functioning of the law of supply and demand. I do agree that other than that, he has everything he needs. I use a 2B set up, but I simply call it a double top or a double bottom. I use the 123 set up, but I simply call it a lower high or a higher low. I use supply and demand lines to clue me in to when the market may be in for a change of pace. I use support and resistance as price levels where I look for a trade. What I have that I think humbled is missing is a sense of what Thales referred to above in his post about candlesticks: A sense of the flow or continuous nature of the market as the constant shifting in the balance, or lack thereof, between supply and demand, those who wish to sell and those who wish to buy. As I said, I'm new, just coming up on a year since I decided I would try to learn to day trade, so take what I said with whatever size grain of whatever substance you might think it is worth. Whatever it is, the op is missing something. Whatever it is, I hope he finds it. Good luck!

This thread sure has developed since I was last here - I went searching for where I left off and I can't believe how many posts I had to go back through to find me! I've been working at working and working at trading. I am now a few weeks away from the big change. While I had originally planned to retire from my business completely and to rely upon trading as my sole means of support, it looks like the best I'll be able to do, at least for the first six months of 2013, is to "flip" the two activities in terms of time and priority. Right now, I work full-time and trade part-time as my my work schedule allows. Starting in January, my main prioirty will be trading, and I will gradually decrease the time committed to my current trade until I can phase it out more or less completely. This is due to my desire to preserve my good relationships with my past customers than financial considerations. I enjoy my trade, and if I can reduce it to a hobby status, albeit a paid hobby, that would suit me fine. Good to see you Db - your book has been a real eye-opener - Thank You!

I have observed that the best entry is usually between 9:35 & 10:00 AM. This first move usually stalls between 10:30 AM and 12 noon. Then the stock often drifts lower until sometime between 12:30 PM and 2PM. If price then moves up on high volume compared to the volume during the pullback, then a new entry often works.

Thanks for that ... I agree, and toward that end I sent a check to Interactivebrokers today and I'll replace that money with the check from the old broker. It looks like Interactivebrokers will still put a seven day hold on the funds, so I'll be in paper trade mode until then. Funny thing today - with nearly every stock I follow gapping higher at the open, I found myself unable to decide which I would trade. Usually I may have ten or so candidates at the open, and several of those quickly fade away. It is easier to decide which to trade when faced with 3-5 choices rather than 38!

Thank you. My first and only attempt to trade today was a long entry on TDC. As was the case yesterday, the trade was rejected by my broker ("You have $0.00 buying power.") Again a phone call pointing out that given the price of the stock (about $78.14 offer when I was submitting my market order) and the size of the trade (500 shares) the cost of this trade would be $39,070, which represented less than 65% of my available cash ... never mind margin at 2X's or day trading margin at 4X's cash! I spent the rest of the day requesting that cash be returned to me in the form of a check, and opening an account with Interactive Brokers LLC. By the time I receive the check, and the funds clear, and I send a check to Interactive Brokers and then those funds clear for trading, it will likely be two weeks or more before my next trade. I will use the next two weeks to continue to follow the stock market as time allows. I will continue to add stocks to my list of trading candidates.

Today was my first day of trading since taking an early leave for the long holiday weekend. I tried to execute two trades, both longs, one on RAX and the other on TSCO. In each case, my broker's website rejected the orders, saying that I did not have sufficient day trade margin. I checked my share count and everything, and clearly the broker was in error, as neither trade on its own would have required any margin at all. I called the broker, and the representative agreed. He assured me that it would be fixed quickly. I tried another trade later in the day using a limit order far enough from the market that it would not be executed. The same thing happened - order rejected for insufficient margin. Another call, another rep, and again, the rep agreed with me. They put me on the phone with the margin department. The margin clerk could see nothing wrong. Again, I received the customary assurances of the customer service rep that all would be well soon enough. I'm used to this broker, the website is easy to navigate, the mobile app is a breeze, and the commissions are reasonable, my withdrawl requests are processed quickly and accurately. I am not in a hurry to take my trade elsewhere, but if this continues for more than a day or two more, I will seek another broker. Any suggestions? I trade stocks only.

There are no reasons not to write a trading plan and to keep a trading journal, only excuses. I can't tell you how many times in the last two months I have read "you have to treat trading like a business" and yet clearly 99% of the people trying to make it in the trading business have no clue as to it means to compose, budget, and execute a business plan. The first post of DbPhoenix's Trading Journal/Trading Log thread is a great staring point for someone who truly wants to try to treat his trading as a business and not a video game or a trip to Vegas. There is also a good article or two at Linda Raschke's website on business planning. I use TC2000 for my charting, and in the older archived Worden Reports that come out nightly, you can find scattered throughout examples of trading/business plans submitted by other stock traders. There is no reason not to compose a trading plan, a business plan, and to keep a daily or weekly log of your progress and problems in executing your plan, only excuses. I hate to sound like some sort of self-help guru, but success is not an accident, except in very rare cases. Success is the result of planning and the discipline and desire to execute your plan, and the ability to recognize mistakes and to revise and alter your course when necessary. Hard work does not lead to success. Focused and planned work yields success.

Gotcha! That has been my gut feeling about this from the beginning. I have read a few articles about day trading the news, and it hasn't struck me as a plannable way to trade. It was the same stock, over and over and over and on the fourth over I was rewarded. The fourth entry was the best of the four, and not because it was the profitable entry. Rather, it was the profitable entry because it was the best. If I were to be completely honest, and I see no reason not to be honest, I have to say that I was a bit miffed at having screwed up on that early opportunty due to having clicked the wrong symbol when bringing up a chart, that I was a bit too eager to make up for it. My three losing entries were not so much bad, as they were early, and thus a departure from my usual entry style. As such, I should have entered once, with a more liberal stop, and waited. If I had used a 25 cent stop on my first purchase, I would have not been stopped out prior to the advance, and the trade would have put me ahead by $540 rather than finishing down -$39. In other words, my three entries ate up $494 in losses, equal to a 50 cent stop on my initial purchase! I need to come up with an adjusted loss cut method before I try adjusting my entry method.

Today was the first day that my account balance is less than my base equity at the close. I had my worst intraday drawdown dues to three losses in a row for a total of -$494 even with commissions and fees. My fourth trade brought reduced the drawdown to $-39 even after commissions and fees. I finished the day -39.00. The good: I maintained my stop loss commitment, and in fact my three losses of $494 total means that my average loss remains at the $164/losing trade level that I managed during my first two weeks of trading. Also, I had no problem taking the fourth set up even after having lost on the first three. The bad: The three losses can largely be attributed to the market in general having fallen into a strange choppy funk preceding the release of the Fed's Beige book. Why is that bad? Well, I do not follow news, and I did not know there was this "Beige book" announcement that would paralyze price action for the early afternoon. Had I known that the market behaves this way preceding Fed announcements, I would probably have refrained from trading until after the news was out. That may or may not be a good idea going forward. I will say that my profitable trade occurred after the news, and my three losses occurred prior to the news. Each time, I would enter long, and a few minutes later price would drift down and catch my stop. The Ugly: Soon after the open, I identified a possible set up that I intened to trade if the price of this stock would move up out of this hinge shown in the chart below: I then had to take a call from a customer on my cell phone. If you have been reading my posts, then you know that I chart and trade from my cell phone. After I ended the call, I flipped back to the chart of the stock I intended to trade, and I saw this: "Wow," I thought, that thing really came apart quickly. I can't even see what I thought was a set up any longer." Well, sometime later (as in hours) I went back to my list. That is when I realize that those two charts were of two different stocks with similar symbols. Sort of like my "Techniques in Tape Reading" and "Studies in Tape Reading" confusion from last night. Here is what the first stock, the one I had intended to trade, did during the remainder of the session: I noticed there was a thread called wouldashouldacoulda or something like that. This is definitely mine. And not the only one from today (I should have known what news was expected and investigated how the market might act before, I should have checked to make sure I had loaded the correct symbol on my chart). I count myself very fortunate that I am only down $39 given my carelesness today on multiple fronts. I need to amend my to do list tonight.

If there is something I want to do, I do it. I have devoted all time not committed to my business or my family to building a trading business. Its what I want to do, so I am doing it. I am just about done with trading books. I have what I need. I am re-reading Wyckoff's Studies in Tape Reading this week in conjunction with Db's eBook, which I just got on Sunday. I liked Graifer's enough to keep it for another look down the road. I find myself thumbing back through Neill often. I am only on section 9 of Db's book, but I will say that it has been full of "A Ha" moments. It is like reading Wyckoff, but between the lines. There is probably a level of experience at which someone would get a lot more from Wyckoff than I am able to get starting from where I am (hence my reading and re-reading and re-reading him again). Db's book is a kind of learning curve accelerator for me in that it makes more clear and concrete some of the more difficult to discern elements of Wyckoff (Wyckoff often implies much more than he makes explicit, which is why I find myself reading and re-reading him).. I will get through a first read of it this week, but I am making it a slow first read, and it will really be a study guide going forward. If you want to read more, all you have to do is pick up a book, open the cover, and turn the page. Speaking of learning curve, today was a doozy for me. I'll cover it in another post.

Yes, I "mispoke." I read Graifer's book last week, and I mistakenly cited his similarly titled book. Thank you for the correction. After having read Graifer, I was happy I had read Wyckoff first. The second half of Graifer was worth the read. I could have done without the first half autobiography. You are right about missing opportunties. I do intend to broaden the hinges I will trade beyond those arising after gaps. I also am studying other springboards, and adding a more complete view of supply and demand to my understanding of how the market operates. I try to wait for price to begin a movement outside the hinge before buying. I have also been very strict about maintaining my stop loss since about day three or four. I am not in a hurry to add set ups to my repertoire, as my results thus far indicate that I do have a definable edge in the trades I am taking. So far this week I have only added three trades to my total. Two were closed for a profit and one for a loss. The two profitable trades are within range of my average profit so far (approx. $345) and my loss was within the range of my acceptable loss level ($250 or less). I do have one other set up I have been trading which is basically a variation on your WTF entry, but I apply it specifically to the ETF's that track the Russell 2000. I have observed that after the Russell 2000 makes a big quick move, it often will trade in a very narrow range for 15 - 60 minutes or so, and then it will start moving again in the direction of the first big move. As with the hinges, I wait for price to start moving out of the tight little range before entering a trade, because sometimes instead of continuing the move, the Russell 2000 will just keep going nowhere or even move in the opposite direction of the big move. You are right about scanning. I can scan my list for stocks with opening gaps, but once you have your candidates, it becomes a game of "watching and waiting."

This one did not gap open higher, so I didn't trade it ... but as it was forming, I was tempted. If you have read Wyckoff's Techniques in Tape Reading, this little hinge looks a lot like Wyckoff's "pendulum" drawing describing this price action.

I'll use this thread itself for now, if that's ok with you. While I was able to arrange my schedule for the last two weeks to allow for a good amount of market watching and trading, the next two weeks will be a bit more sketchy at best. I may start a separate journal/log thread here in the Wyckoff forum when I am ready and able to commit more fully to day trading. If you prefer that I set it on its own now, just say the word, and I'll start a thread of its own. As for my first two weeks of trading, here are my results: Total Trades: 26, or 2.6/day - Based upon my first investigations when I started to formulate how I was going to trade, I wrote that the set up I am looking for combined with my current capitalization would result in two or three trades/day. So I am right on there. Total Profitable: 18 Total Losses: 8 That gives me close to a 70% profitable trade percentage. I am very pleased with that level. My goal was to come up with a plan that allowed for at least 55% profitable. I want very much to work at maintaining my current ratio of wins to losses. Profits: $6224.88 = $345.82/trade, including commissions and fees Losses: $2285.02 = 281.76/trade, including commissions and fees This yields a ratio that can describe my profitable closed trades as being equal to 1.22 times my losing closed trades. This is not where I want to be. My goal is to achieve a ratio of 2.00 profit:loss. One interesting note on this matter is this: My worst two losses = $1300.26 or approx. 57% of total losses. These losses occurred during the first three days of my trading. In each case, I failed to trade my system. In each case, rather than wait for my planned entry signal or trigger, I entered early. Also, in each case, rather than exiting once price traded down to my planned loss cut level, I held the positions. I was sure that given how each of these stocks had responded to pre-opening news that each was poised to continue the move higher. In each case, I had to close each at a substantial loss. I went back and re-read the third part of Neill's book, as I knew after each trade exactly what I had done wrong, and that he and Wyckoff had each address these behaviors and beliefs. I was surprised at how easily I had succumbed to trying to "game the market" and hold onto a losing position in order to do what amounts to nothing more than an attempt to defend my opinion. The first of these was my very first trade on Monday August 13, 2012, and the second occurred two days later on Wednesday August 15, 2012. That was enough for me. I have since then stuck to my defined entry signal, which is either to wait for price to form and leave a hinge or wait for price to make a higher high than the high of the first five minutes after the open. If price is trading below the high of its opening range, I want not to be long. If price is forming a hinge, and is still contained by the hinge, I want not to be long. Additionally, I also have strictly kept to my loss cut points. If I am able to watch the market, I am prepared to exit at the market of my cut loss is reached, and if I am unable to watch continuously, I enter a stop loss order. If I were to back out those two trades, I then have an average loss of $164.12, which gives me a much more acceptable profit to loss ratio of 2.10. Again, these numbers are net of commissions and fees, and not gross trade figures, so it is what appears to be, nothing more, nothing less. So for the first two weeks, I closed $6224.88 net profits and $2285.02 net losses for a total net profit of $3939.86. In keeping with my plan that this account is to generate an income, I withdrew $2254.09 which is equal to 1.29 of my planned draws of $1750 each. The balance of the profits from this first two weeks will stay in the account. The reason for this is that I want to trade a base capital of $60,000, and I actually started with slightly less than that. From this point forward, all profits will be drawn from the account. When the account balance is less than the base equity level, it will not be eligible for withdrawals. Going forward, I have identified three areas for me to focus my attention and efforst on: 1) I must maintain strict adherence to my entry criteria 2) I must maintain strict adherence to my loss cut levels 3) I must work on using demand lines to better time my exits from profitable positions. I have allowed several trades to have significant profits erode as I mistook outright reversals for pullbacks, expecting the day's trend to continue in my favor. I need to balance my desire to let my profitable trades run with the need to protect those profits from significant erosion. Overall, I am very happy with my results so far, and I am looking forward to improving my use of supply/demand lines in timing my exits. I want to thank you again, DbPhoenix. You have really helped me to tighten up and clarify what I am looking for when it comes to defining price action as a hinge, and also for your suggestion that I use supply/demand lines to help time exits. I'll be back throughout the week with questions and chart examples to make sure I am on the right track.

I did trade that Hinge, and it turned out to be my best trade to date. My entry could have been better. I waited for price to start moving out of the hinge rather than near the midpoint of the hinge after the last higher low. My exit could have been better. I drew the demand line I used to exit. I clearly missed the acceleration of the move that would have allowed me to draw a steeper demand line, which would have had me exit at a point about one dollar higher than I did. In the end, not a bad couple of weeks for me. I am going to work on my stats for these two weeks this evening. I am considering putting together something like a journal/log here at TL. I do not know if I should put it in the journal section or here in the Wyckoff forum. For the sake of keeping the Wyckoff forum clean, I would guess I should put it in the Traders Log section. Here is how I viewed the REGN chart on Thursday. I made just over 3 dollars/share before commissions and fees on this trade. Not much to say about Friday's trades. I had a 9 cent/share loss on one trade and an 18 cent profit on the second trade for a 9 cent/share profit before commissions and fees. I will tally my winners and losers and profits and losses later and report back here.

Thank you for the suggestion and thank you for the chart - that makes your suggestion much more clear to me. I will be working on learning to identify those opportunities. I appreciate you taking your time to help me along.

As I said, my interest in day trading was sparked by a chance viewing of an early morning infomercial for a day trading school. I actually contacted the school, and my conversation with the admissions counselor left me with two take aways. First, he was trying hard to sell me, and I do not respond well to the hard sell. Second, from his pitch, it became apparent that learning to "read the tape" was, according to his pitch, the critical skill component of learning to trade. A google search of "tape reading" and "reading the tape," and a little discernment applied to what I was reading as I investigated the results quickly acquainted me with Wyckoff and Neill. You would I agree, I suppose, that one cannot immerse oneself in the study of a field and not quickly come to terms with the vocabulary of its participants. Less than two months ago, I was vaguely aware of "ticker tape," mostly as it related to parades. I have a much more comprehensive view of "the tape" now than I did then. Much of that has to do with the fact that I in addition to Wyckoff and Neill and Raschke, I also read a few basic textbooks on the financial markets. I knew nothing when I started. More importantly, I knew that I knew nothing and that I needed to learn what these financial markets were about before I started to engage them on an active basis. As far as having "sifted through thousands of market strategies," I have really explored only one - the one that was my first introduction to this business: "Learning how to read the tape." I have encountered other systems in my reading. I have been fortunate in that I read everything with a eye toward how does it relate to what I have learned about price movement and volume. I have indeed been invested in the markets for quite some time. I have Keogh accounts as well as non-retirement savings that have been invested in mutual funds for some years. As a matter of fact, my recently funded trading account began as a $60,000 investment with a Merrill Lynch broker in a group of diversified mutual funds over 13 years ago. In 13 years, that $60,000 had "grown" to $58,155.29. So I am not new to being a market participant. I am new to be an active and informed participant.