namstrader

No I am still developing my system as of these days. This trader's perspective was sent to me as a email because I bought the Watts system a year ago, which I do not follow. I have been loosing the indicators myself lately, as I have been studying VSA, MP, and Price action. Another interesting finding that I find useful is watching a closed line chart with its reactions at certain moving averages like the 8ema, 34ema, and the 200ema. I have learned to have more patience with trade management and having a longer holding period. I have no success to speak of except that I am building a solid trading system with simulation. Skill first, currency will follow. Being undercapitalized will not hold me back from learning from so many here at Traderslaboratory and developing confidence and trust in myself and my system.

I am in a time in my life where I am trying to give back so let me try and tell you some things that I have learned over the years so that you may become a better trader. I'll make you a deal, I only ask that you share what I write with your group so that they may have a chance to add to their learning as well. Let's start by talking about what indicators and trading 'systems' are designed to do and what they are not for. Indicators are just a way to choose and filter the best chances to win over other ones - particularly for spotting divergences which as I said is one particular strength in the way Ryan Watts uses the MACD. Ryan will tell you also that the indicators are a guide and not somethng that need be followed blindly - except in teaching yorself the value of discipline and following rules which is obviously very important as is risk management, which we don't need to get into here. The bottom line is that years ago when I developed and traded my own pure indicator models I still won 60% of the time, but now that I have been trading mostly price action WITH the addition to those, my monthly W/L is ALMOST ALWAYS over 80% and has been for many years now. Think of the indicator fallacy in another way, and I'm not trying to discourage you, but do you really believe that the 90% of traders we know are losing are failing because they really can't interpret and execute the thousands of perfectly good 'trading systems' available - including Ryan's that costs $50? Come on. Think about that. There are more smart traders than dumb ones. All decent trading systems have basically the same indicators and to qualify as a good system the combination just needs to be robust enough to take all 'angles' of past information into account so as to give you a most likely scenario for the future. There are basically only five things we can look at and we can twist up in 1000 different ways - the high, low, open, close and volume data of previous price events. These are all really important to know but what they don't do is tell you buyers can't push prices past 1377.50 - RIGHT F'ING NOW. Sorry for the drama but I am trying to impress on you that price action is what really matters. That information is right on the entry chart and as plain as the nose on your face. The bottom line sadly enough is that there wouldn't be much of a trading industry if everyone new the real secret of scalping is just looking at two numbers which constantly change throughout the day. Those dynamic numbers are called support and resistance and those coupled with the interperatation of how participants are acting at and on these levels is the real key to scalp trading. How could it be that easy? It is - and then again it isn't and that is why 90% fail. The best futures traders in the world are trading the pits on a handheld with X-trader. No indicators. No charts. All they have is a DOM and a sense of what and who is moving the market as represented by PRICES and the number and size of participants at those prices and whether there are more sellers or more buyers - that is it. It really is pretty basic and deceptively simple. They make note of intraday support and resistance levels as they change and the floor pivots for the day/month/week which don't change, etc - all centered around you guessed it, the PRICE RIGHT NOW...The spaces BETWEEN these levels are the trading opportunities. Their screen looks like this... Could you trade with just this and a pencil and pad to make notes? Maybe not yet, but you will be able to some day if you take to heart what I am telling you. My best friend is one of these guys. He trades the SP in open outcry and consistently makes $750,000 a year from his seat. So do I, in fact I made over $1,000,000 last year. I'm not bragging and I know that is an insane amount of money, but it is true and I am living proof that a guy with average intelligence can get filthy rich trading the S&P. There is more to life than money, but in this game it is how we keep score. There is no other way to evaluate the success of what we do. I grew up in the woods with no running water and used an outhouse until I was 13. Point made. Now I'm really going to get controversial. I think (let me correct that - I KNOW) I actually have an edge over pit traders. That's right I said it - I have an EDGE over pit traders - and so do you if you want to accept that. Why? I get to look at tons of charts - and you guessed it INDICATORS to filter - let me say that again FILTER out the bad trades. That is not practical in the pits. Indicators when used properly give you reasons NOT to trade as opposed to reasons to trade. Spotting divergences or inconsistencies in the cash market - or other times frames - or big sectors not following the move - or metals are selling off early, or, or ,or, etc...whatever you want to use - can help you insure that coupled with intelligent price action analysis, you will have the best possible chance to win. You have way more information than the guys in the pits, plus your moves go undetected even if you are a relatively big trader like me. How cool is that? The best traders all understand gambling theory. Filter down until you have the nuts. I am sick of hearing people say that 90% of traders lose because the market chews them up or the system doesn't work or whatever. That is just BS. The problem is those traders spend all their time playing with indicator values or analyzing timeframes or whatever and they miss the whole point of what they are doing here. This is a MARKET. All markets have buyers and sellers. I don't know why everyone can be experts on value when they look at items in a store or a piece of real estate or whatever but not in the market. If you wanted to sell your house for 500k and you had nobody even look at it in a booming market what would that tell you? The price was too high. Would you then raise the price of the house the next day? Of course not, you drop your offer if you wanted to sell it. You see what I mean? Markets make sense when we are talking about real estate or whatever, but people just blindly look at indicators and follow systems even in the face of obvious current pirce information. Example: in the last 5 minutes price has had a high failure at 1350 three times and is currently trading at 1348. Do you take a long setup here because a momentum indicator is above zero and the 9 day moving average just crossed over and above the 20 day? Why not, don't we always have to stick to our trading plan - blah, blah, blah? That is a great example of how traders follow systems to the letter and then scratch their head because they can't figure out why they are losing. Into the 90% pile they go. This isn't a ridiculous example either. This scenario repeats itself about once every 10 minutes on most days in any market. In closing I would like to give you an exercise. Turn on a simulator of some kind or use a pencil and paper. I want you to put up one chart of any market you like in a timeframe that moves but is not too fast or too slow - say 250 ticks in the ES or 75 in the YM. I want you to use nothing but the one chart and the DOM to trade. Turn off the news too. From 9-9:30 spend exactly 1/2 hour looking over previous and current price action. Find the S/R levels - there won't be two, there will be several on each side. Write them down. Don't forget, resistance becomes new support and vice versa. You should also use the floor pivots as well. How will you set your targets and stops? It is right there in front of you. See how obvious it is? Trade this from 9:30-10:30 EST EXACTLY like you would with Ryan's system, but without the indicators for the moment and tell me how you did. Wait for pullbacks within strong price pressure and don't take any trades against recent S or R zones within a few points. Give it an honest run and let me know how you do. If nothing else it will show you how weak, as once was, you are at really seeing the market for what it is - a mess of chaotic buyers and sellers that actually does have a very measurable pulse. It will just take you a while to find it. When you do, look out world, here you come! Then add Ryan's filters on top of that and you will be deadly accurate.

Again today Friday, using the value area yesterday thurs. of 12661 to 12577, I find a likely, haha, low or high price in the morning session and then if I project this price with adding the yesterday value range total, I then can sense a possible target to keep in mind. So with a value range of 84pts. and added to the low of 12524, I get a projected target completion of 12608. Hit. Take a contract off or go kiss something cause it magically happened.

Looking at the ZN (interest rates chart) I can also use as a inverse relationship confirmation to the YM. Very Often both take off, in opposite directions and keeping eye on the ZN can give me a heads up before I get my head taken off.

Here is a chart where fading the volume distribution completion corner that happened this morning friday.

Here is prior day value areas.

Here is a example of using the volume histrogram intra-day. Lots of time I see these larger volume areas that will act like the center point of a equal distribution to each side of this point, like a POC. All I do is project to the other side a possible target that completes the bell shape curve look. At the completion I can then fade too.

This is my first attempt to show a picture attachment and not sure if it will work. What I am trying to show is something interesting observed yesterday on the ym. Taking Thursday Value range of 72pts and applying this to the early morning low of 12538 you then get 12600. If you double this Value range from thurs. x 2, you then project a target of 12672 on the ym. Like a double value range projection, liken to a IB expansion of x 2 that occurs often. So this is just an observation that taking yesterdays Value range and applying to todays early high or low can show possible targets projected. I am amazed when I see this often after analysis, trusting in real time is pretty difficult now for me. When seeing things so often this will breed confidence to have patience to just let it unfold and hold until completion. From being a scalper and failing miserably, I am reprogramming mindset to ride trends and pullbacks to completions of projections and targets. It becomes more of a faith based trading system that evolves from observations and analysis. Work has been done and now must trust, rather than earlier fear based or emotion based trading that grabbed when there in profit.

Db, I also find tremendous value with your posts and await anxiously each day for your posts. Because of you I have gone down the path of studying VSA more and more and some day I intend to buy your ebook.

Soul, What brought you to the 10min chart? is background weakness or strength better recognized using this longer time frame?

Awesome Video Soul. When you said that Discipline is the name of game for you now, that really hit home for me. Patience and waiting for the higher probability setup is so paramount to winning at this game. You mentioned that earlier you would take like 8 to 15 trades a day and now that is not so. Man, if I could show some of your discipline, that corner would be nearer for me. Also it is cool seeing you use the cci. I play as a setup a 123 trendline long or short and sometimes when the cci gets over 200 with a spike, this means an exhaustion in a move to watch for.

Soul, Why do you trade the ES now rather than the YM?

thanks for this rare opportunity, I will attend if I get an invitation.

http://www.mypivots.com/forum/topic.asp?TOPIC_ID=2531 Here I get the MP's VAH POC VAL for the: ES,NQ,YM, ER2

great video James. I have the Nikkei up now because of your suggestions.

great videos! Hope you can continue Soul. I want to share that watching the volume profile indicator, that for me replicates MP charting software (I can not afford it now), which shows volume horizontally upon the price charts, has been very predictive for projecting price targets. Some times it is uncanny how an price area accumulates more volume than earlier price levels, so that you have a low or high tail area, with a POC at this more volume price area. Then I just do a double distribution from the tail and the POC to the other side for a projected target price. As the day develops, this intra day MP value range using the volume profile indicator, can then form another intra day MP value range that is equivalent to the earlier MP intra day value range, (I just double the volume distribution area, to the other side, for 2 intra day value ranges now). So what occurs sometimes is 2 equal distribution volume ranges and each has a separate intra day POC, or a area of more price volume exhibited. As the day continues, it can then morph into one bigger combined MP profile area, 2 into 1. (volume profile area that resembles a MP area). I watch the volume profile indicator on the other future indexes ES,NQ,ER,DAX as confirmation, or as a leading signal for what the hell the YM may do subsequently. It is like I am seeing many Bell shaped curves on all the indexes and seeking symmetry and structure. From this view of the volume profile indicator, there seems to be more clarity or that it offers a "PLAYING FIELD" of vision, and sitting up in the coaches box, I call the play in when at the 50 yard line POC, or when in the red zone, taking to the goal line, i.e. or extreme tail or the other VAL or VAH of the other intra day value range. Great analogy! haha I am the coach of the Miami Dolphins. It is more an ART FORM that has given me better understanding of the auction process. Man, in the past, long ago, where prices should end I had no clue. Now I feel sometimes visionary with this added dimension of Market Profile.

I always respect and enjoy all your comments. ¡¡¡ is sure where I want to be. Forex is the next frontier for me I am sure someday. Sounds like you have found the Path and Way of Wu Wei and I enjoy hearing from you and all your mispelled words haha! the chimp is more advanced than this mere man for sure. Looking wildly and ready to climb the tree with ya if you allow.

Yep, sorry for the wrong reply. Bar charts vs tick charts, I am more a tick chart kind of guy and impetuous with my responses, quick on the trigger with trades also and learning to hold rather than grasp.

I believe that it is just the difference of issues that are up vs. the issues down at that moment. So a 610 tick reading means more issues up ticking than at a level of 210 and a more upward bias in the market sentiment or market internals.

404, Good choice. I put the DAX up and watch with the ES,NZ,ER, and trade the YM. The DAX leads the pack on occasions. Who knows for me perhaps other foreign future contracts do also, however, I have been watching the DAX for many months and I can say that it will always be on my screens going forward as a confirmation for trade setups.

nycdweller, I use the TICK and by observation you will find that the extreme readings are useful and also watch for channels that form with bar chart TICK readings. By drawing trendlines on the TICK bar charts you can discern some recurring patterns that you might feel like you have an edge when confirmed with price action and volume etc.

I enjoy listening to Bloomberg that is free online, by launching their video player. The guests give some very detailed and informative views that are less interrupted and more lengthy explanations, than you will ever hear or see on CNBC. Years and years of watching CNBC has made me sick. Same old, same old. Bloomberg has more to offer and it is new and refreshing, but probably boring to many that want the less in depth understanding and just entertainment. As far as trading chat rooms, not for me, too distracting. I need to be alone and be trusting of my own judgements, not others. No hand holding here, I did that for some time and became dependent and unsure rather than self reliant. It is a lonely road that I find necessary for my success. Hey I am a lone Wolf and it has become more evident as I have gotten older, so I like to interact with the group, but stay clear of the dynamics that create tension. And when this lone wolf has found some success, I want to pass it on to others, but I ain't there yet.

Hey Soultrader, A great book to read about these predictions of the future is "The Black Swan" The Impact of the Highly Improbable by Nassim Nicholas Taleb. Reading it has opened my eyes to all the experts out there that predict with such certainty. You have probably heard of the "Minsky moment" that refers to the economist that is getting lots of attention now for explaining the whole credit crunch situation we are in now. It is the lowered awareness of the possibility of problems. The narrative fallacy is to be avoided and to favor experimentation over storytelling. Nobody knows when those long fat tails will occur. Also, for some other great reading go to a website called STRATFOR. There is an article called Iraq:Positive Signs by George Friedman dated November 13, 2007, that will inform you of all the forces interacting in Iraq right now. http://www.stratfor.com/

Way to go Idaho!! You have so much to offer James. I am on the waiting list for your book. I wish the God's had kept you trading the YM, I followed in your shadow and learned so much. Your light shines on, I am always cheering for ya! You open up the aperture for so many to see the bigger picture.

Kiev's Trading to Win is a excellent book and has made things more understandable to me. That is fact to me.