If you have time for this.

[Yigal 10]

Hi everyone,

 

In this thread I would like to ask more experienced traders to point out to my mistakes, I've started trading futures recently and your help will be truly appreciated.

 

 

These are my "bad" trades for today; the reasoning is that both times pivots were broken on a low volume so I tried to fade it. Was there anything that would indicate to you that this was a beginning of a downtrend?

 

[weiwei 10]

Yigal, can you post a pic and be more specific before one can give out his opinions.

 

weiwei

[TinGull 10]

Hi,

 

One thing you could have watched for was the daily charts starting to churn. Yesterdays volume was increasing and the range was VERY narrow. This is indicative of people selling into strength. That, coupled with the the higher prices on lower volume was a warning signal.

 

With the strength of the downthrust...definitely wasn't looking for long trades.

[notouch 10]

Yigal, you usually get a better response if you use the title to describe your post instead of just "If you have time for this" which could be anything. As for today's trading, your problem may be that you're seeing pivots as a Holy Grail but to be useful they have to be part of holistic approach to trading. Yesterday we had a very narrow trading range so the pivots were very close together - too close together to provide meaningful support. Breakouts often follow narrow ranges and this was especially likely today because of the FOMC minutes.

[brownsfan019 17]

W/o seeing any charts or anything, here's my suggestion - don't try to catch falling knives grasshopper.

[Guest cooter]

Well said!

[Yigal 10]

Yigal, can you post a pic and be more specific before one can give out his opinions.

 

weiwei

 

Do you not see the attached chart?

[brownsfan019 17]

Do you not see the attached chart?

 

There's nothing attached to this message.

 

To be sure, check your post after it's on the forum and see if your attachment is there. As of now, nothing is there.

[Yigal 10]

Weird, I do see my attachmet.Here it is:

 

 

Anyway:

[TinGull 10]

Also, one other quick observation on the first one...why would you try to go long if you've got a blue TTM with a red divergence signal on it? That's a short signal.

[brownsfan019 17]

My humble observation - that was a nice strong downtrend. Why anyone wants to stand in the path of an oncoming train is beyond me. That's the issue with pivots and other static lines like that - during a trending move, you are going to get killed. Now of course the argument is that the market does not 'trend' much and in the general discussion that is true; however, in daytrading where you are going for intraday moves, the market can 'trend' much more than what the talking heads on CNBC discuss or much more than your account can withstand.

[wrbtrader 10]

Hi everyone,

 

In this thread I would like to ask more experienced traders to point out to my mistakes, I've started trading futures recently and your help will be truly appreciated.

 

http://www.traderslaboratory.com/forums/attachments/32/1258d1176375927-if-you-have-time-11.04.jpg

 

These are my "bad" trades for today; the reasoning is that both times pivots were broken on a low volume so I tried to fade it. Was there anything that would indicate to you that this was a beginning of a downtrend?

 

First question and a very important question you should answer...

 

The method you used that involves fading low volume s/r levels (pivot point analysis), have you backtested this methodology and does it have a positive expectancy???

 

Secondly, if your going to trade the Emini Futures...keep a close eye on regular schedule market events via a good economic calendar.

 

You should also study your historical intraday charts to know some of the market tendencies associated with your trading instrument.

 

For example, there's a tendency involving the first few trading days after Easter Holidays concerning a strong trend day and/or a volatility expansion day after contracting volatility.

 

I myself expected a strong trend day the first two trading days after the Easter Holiday but when I saw the contracting volatility the first two trading days after this Easter Holiday...

 

I knew it would happen either Wednesday or Thursday especially with three very important economic events:

 

Wednesday -EIA Petroleum Status Report, Fed Chairman Bernanke Speaking and FOMC Meetings

 

Thursday - ECB Announcement, EIA Natural Gas Status Report and Import/Export Price Report

 

Looking at the above two days of volatility producers...the best bet was Wednesday because Fed Chairman speeches and FOMC events are market movers.

 

The above info now tells you when the strong trend day or volatility expansion day is going to occur.

 

Next, what about the direction to answer your question about the beginning of a downtrend?

 

Lets talk about the technicals.

 

Most traders I know and talk to in realtime (different chat rooms) were discussing a key GAP day in the past...

 

April 3rd Tuesday 2007.

 

Why is that particular GAP key in comparison to other recent GAP trading days?

 

Its a GAP that the price action moved strongly and didn't retrace to close the GAP that same trading day, falling Oil prices due to easing tensions between Iran and Britain over the hostages, rallies in the Asia markets and a small surprise in the Pending Home Sales report to give some reassurance about stabilization.

 

The above made it a day to keep in our memories as a Key S/R Zone.

 

That's another hint...if your going to do intraday pivot point analysis...don't get tunnel vision and only see a few yards of the field.

 

Thus, you need to expand your vision to see all of the field and that would have given you the April 3rd S/R Zone along with the contracting volatility soon after that key trading day (Easter Holiday tendency helped set this up nicely).

 

Getting back into the technicals.

 

Pivot Point trading (s/r levels) also implies you have an understanding of supply/demand.

 

To merit a trade you need to define what you consider to be a shift in supply/demand to give your trade a chance to be profitable.

 

Supply/Demand is one of those scary topics most traders don't have the time and energy to invest in...

 

Much easier to stay tunnel vision via more simple technical trading (indicators, chart patterns et cetera).

 

Thus, I won't get into the supply/demand stuff because there's so much discussion about it at many different discussion forums...I'll let you do your own research into that.

 

Lets talk about Market Breadth.

 

Almost all the market breadth indices were not supporting a bullish price action at the time of your Long positions.

 

Thus, the probabilities were in favor of the Shorts (bearish price action).

 

If your not trying to scalp a few ticks...you should be following Market Breadth Indices and hopefully your using a data vendor that gives you access to such intraday info.

 

However, I'm not going to tell you what's a suitable market breadth considering I don't know anything about your trading style.

 

I'll just mention a few popular ones as in Volatility Index (VIX, VXN and RVX), Put/Call Ratios, Advance/Declines (Lines, Volume and Ratios) et cetera.

 

Via any of the above to correlate with your trades...I didn't see any support for any Long positions unless you were trying to scalp for a few ticks.

 

Also, on your chart you have something called a Tick Delta histogram.

 

I don't know what that is nor how to use it but via a quick glance...those bad trades you call it seem to be occuring when the histogram look weighted to the red (heavy on the down ticks).

 

Therefore, how is that Tick Delta integrated into your Pivot Point Analysis?

 

If it has value...use it and you should mention in your above question its use to give us a better picture of what your doing.

 

If your not using it or it has no value, get rid of it because it could be giving you sublimnal messages that causes trading problems.

 

For example, I see some price action only traders with volume on their charts but there's actually no specific use of volume in their trade methodology.

 

Simply, its not needed if there's no specific written trading plan for such.

 

The above also gets into the color coded Blue and Red intervals on the price action itself...

 

I don't know how your using it but if they indicated you should have been short instead of long...

 

You need to ask yourself why did you ignore the price action info it was giving you???

 

Conclusion:

 

* Know your market tendencies

 

* Have a bigger view of the playing field when using Pivot Point Analysis in reference to April 3rd S/R Zone.

 

* Look for confirmation for your trades via market breadth indices in reference to that when they aren't protecting your back...its a low probability trade.

 

* Pivot Point Analysis (s/r levels) also involves knowing supply/demand in reference to Contracting Volatility that leads into Volatility Expansion.

 

* Use the info on your charts or get rid of it in reference to the Tick Delta and the color coded price candlestick intervals.

 

Mark

(a.k.a. NihabaAshi Japanese Candlestick term

 

"Volatility Analysis is a doorway to consistent profits."

[ant 10]

Here's another view with Volume...

 

[james_gsx 16]

The first pivot of the day you should have just watched to see which way the market would take it. From there when the next pivot was approached you should have looked at the market internals, where had the tick spent most of it's time? Where was the trin trending? If you notice they are all confirming a down trend, then go short and don't try to fade. But when you see price rise back up to the pivot after the down trend, then that's your signal to fade the pivot.

 

Cliff notes: At 17:14 when you get the blue TTM and the red dot, that was your signal to take the pivot trade and go short.