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hunter1

The Way to Trade the Emini.

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In the interest of helping young traders and all traders I shall divulge all you need to know to make money trading the eminis. This is of course a simplification but use this as the basis for your trading methods and you will make all the money you want.

 

Watch the tape. Learn to tell which direction the little guys ie. suckers are going. Watch the 1 ,2 and 3 lots. If the are buying heavy you are looking to sell if they are selling heavy you are looking to buy. That is all you need.

 

If your indicator of choice method etc gives you those trades take them. If its giving you a trade in the direction of the little guys DO NOT TAKE THE TRADE.

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Can you read price? Can you read the tape? Do you make money each and everyday? If not then don't roll your eyes. Indicators lag. Most newbies trade methods like mA crosses stoch nonsense etc. You must be able to read the market in real time and understand what it is telling you. The easiest way to do this is watch the tape and watch the little guys. If you do you will see that time after time after time they come in and then get punished by the smart money. It is a given. So you don't want to trade with them you want to trade with the smart money which is usually against them.

 

A form of tape reading is 1/3 of my trading method. 1/3 is my method for trend. 1/3 is my method for trade zones. Plot the zones then watch the tape. Take the trade. Do that 4 to 6 times and go work out. I scalp for 1 point a trade and run a few trailing contracts with b/e stop. Initial stop is never more than 2 pts and often less. I use 2 charts and that's it. Nice and simple.

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Trader 333 yes 1 pt = 4 ticks. that is what i mean. 4 ticks per trade for base unit then let something trail.

 

I use trade station time and sales. Just watched another little guy wipe out before I posted this.

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I always find it funny when people go back and forth of indicators vs no indicators. There are a million ways to make money in the market, and to think there is one way is a joke.

 

MODERATOR:

Please change the title of this thread to something like, "One way to scalp the Emini's"

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In the interest of helping young traders and all traders I shall divulge all you need to know to make money trading the eminis. This is of course a simplification but use this as the basis for your trading methods and you will make all the money you want.

 

Watch the tape. Learn to tell which direction the little guys ie. suckers are going. Watch the 1 ,2 and 3 lots. If the are buying heavy you are looking to sell if they are selling heavy you are looking to buy. That is all you need.

 

If your indicator of choice method etc gives you those trades take them. If its giving you a trade in the direction of the little guys DO NOT TAKE THE TRADE.

 

What about my EOD trading where I don't read price nor the tape? Are you saying that I am doing it wrong, since I am not doing it like you?

 

To be frank, your advise is a useful as saying all you need to know to make money is to buy low/sell high and short high/cover low.

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Generally speaking, the success of retail daytraders is going to be distributed randomly. That is to say, for any single event trade, there are likely to be both skilled retail traders as well as unskilled newbies taking trades. I don't pay much attention to them one way or the other....

 

There are "fades" but nothing that a screen trader could make use of without having some experience and a squawk to listen to. For instance in the pits it used to be said that specific brokers (Refco for instance) were good fades. So if you saw them coming in to buy you might want to lean on them for a short, thinking the top was in...(lol) and vice versa. Frankly for me, it works best to rely on the positive expectancy of my system and to just take the signals and manage the trades in a disciplined way. Otherwise you are always going to be second guessing yourself.

 

Good luck Folks

Steve

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What about my EOD trading where I don't read price nor the tape? Are you saying that I am doing it wrong, since I am not doing it like you?

 

To be frank, your advise is a useful as saying all you need to know to make money is to buy low/sell high and short high/cover low.

 

You might as well as pack it up then. Obviously there is only one way, and this guy has come across it. How wonderful for him to share with us.

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Please some one anyone point out where I said don't use indicators or you can't use indicators.

 

Indicators are fine. It is a fact they lag. I have one indicator that does not lag at all. It correctly calls tops and bottoms at the top and bottom of moves. Problem is it also gives early entries as well which can cost you and is the thing that rips the heart out of new traders. The other thing that rips up traders is late entries. The indicator gives and entry but by the time they are filled the move has ended. These trades can be avoided if one learns to read price action. The simple way is learn to read the tape and watch the way the little guys trade. When they reach a peak over ,400 contracts usually, you will see the smart money come in and gut them.

 

I never said anywhere this is the only way to make money. Yes there are many ways to trade. However if it so easy why are there so few consistent profitable traders. I mean day in and day out year after year in any kind of market. Whoever bragged that you made 10 points on a 500 point dow drop day is way out of line. Having a good day on a huge trend day in meaningless.

 

Anyone with a little guts can pull huge profits out on a day like today. It doesn't mean they won't be bust 6 months from now.

 

Iif you learn to read price you will never go bust. If you learn to read the tape then you will greatly reduce you losing trades.

 

Everyone that ever walked onto the floor on the Merc or CBOT was told the same thing. Learn to buy the breaks and sell the rallies and you will make a great living. Don't and you will be back driving a cab in a year.

 

The point of the thread is to help new traders before they get caught up in looking for the next great indicator or the Holy Grail of trading etc and pay some outfit thousands for something that won't give them the financial security they seek.

 

The way I trade now is very simple. So simple that today my 9 year old home sick from school was calling my trades for me. Yes trading can be so simple a 9 year old can do it with a 5 minute explanation of what I am looking for.

 

I have been trading and supporting my family for a long time and have traded several different methods from candle sticks to MP etc etc. Life didn't get good until I learned to read price action via time and sales.I hope to put some young traders on the easy path early. I am not here to argue or prove my method is better or teach anyone. In fact I would never teach anyone exactly what I do other than the two people I have been trading daily with for years.

 

One last thing I have 5 different traders for hedge fund that I have traded ideas with for years now. The interesting thing about them is that those that trade emini's only try to get 4 to 12 ticks a day and then they stop trading. The one that doesn't trade eminis uses MP and they all read the tape before taking a trade no matter what method or indicator/ indicators they rely on.

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Nice post hunter, it does clear some stuff up. I have one suggestion as a 'vet' on the forum circuit - post pictures. I've found many learn much more quickly seeing vs. reading. Just a suggestion. Depends how far you'd like to take the thread.

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hunter may be a better trader than a writer,his point of tape reading is well documented everywhere,the point he left out is,you need thousands of hours of screen time and the use of indicators before it sinks in,that the indicator you are watching is about to crossover,or the volume bar will be small,or the mp chart is about to fill this gap,or will fill and run past,or the market will open higher or lower tommorrow,that all comes by osmossis no matter what your using,but it still takes a lot of time for most,before they see it,and the indicators must be used as a means to an end ,not a crutch for life. I am presently,for as long as it works,using the usd/jpy,transports and mp,along with trendlines in the previous 2 and the es,for support and res lines and see how it reacts when 1 of the 3 reaches,and the ratio of up'down vol for a trend day or a range day,with all those , i still read the tape ,even when i have a feel for the market,its nice to know where to expect the turns

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Whoever bragged that you made 10 points on a 500 point dow drop day is way out of line. Having a good day on a huge trend day in meaningless.

 

Anyone with a little guts can pull huge profits out on a day like today. It doesn't mean they won't be bust 6 months from now.

 

I didn't make those 10 points in one big, lucky, with-the-trend trade. I used my indicators like I always do, and played the reversals for 2 points per trade. Some days I only get one or two setups, some days I get eight or nine. And I even have a losing trade now and then.

 

I will certainly agree with you when it comes to understanding price action. I factor that in while watching my indicators for the setups I want. And like you, I also have an indicator that signals exactly at tops/bottoms, but will give falsies. So I use it on multiple time frames to help me see the bigger picture.

 

It took me about a year of screen-watching to figure out what worked best, and was most profitable for myself. I've gone from trying to ride trends for double-digit points, to scalping a few ticks, to finding the "sweet spot" of 2 points per. I'm very happy with the results, but it took a lot of work to get there. We all must find our zen!

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I've often heard and read about 'reading the tape' but have never seen it practiced profitably. I'd love to see someone that could trade off of something so raw.

 

At one point tape reading was a big thing on TL and that died a slow death. I'm guessing this is very difficult in application and maybe hunter can shed some light for everyone.

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BF,

 

It can be learned by anyone... but it is a 'skill position' - not everyone can be good at it and few can excel... as I posted elsewhere

 

tapereading requires

1 a certain aptitude / talent . It doesn’t require extreme ‘autism’ but it does require a natural degree of ‘savant’

2 a natural fascination / attraction to it

3 then a lot of screen time and development of execution skills

(4 and most likely, to be an adept at it, it requires an early start at it in one’s career – a la Tiger Woods )

 

These days, with programmable graphing capabilities, ‘visual tape reading’ is becoming more feasible. ie one does not have to be a digits freak to ‘tape read’

 

http://www.traderslaboratory.com/forums/f34/tape-reading-watching-for-price-rejection-85.html

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as you use your indicators to get in and out,you use stops to protect your entry's,if you are watching the leading economic vehicles{at present it's currencies)as they run up and down ,you get a feel for who has the momentum,like a fotball game,so even if your indicators say buy this breakout,your tape reading skills say fakeout,there is no way to meticulously explain this,it's more of an overall gist,and at first you will see or feel it occassionally and slowly more often

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Thanks Ammo , writing on Forums is not something that comes natually for me. After iI post there are always things I should have said and didn't or said that didn't come out the way they were intended.

 

The way I learned was first I had a method supported by indicators that work although not without some pain. The better I got with my indicators the better I could anticipate when they were about to give a signa. Then to learn the tape I put up the time and sales on another screen and then played with the filter I then watched it only when it looked like my indicator was about to give a signal. That's when I really began to notice what I had been told for years.

 

Then for fun I suggest 2 time and sales set 1 to filter out all trades above 3 lot the other to filter anything less than 40. You will see something very interesting.

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I've often heard and read about 'reading the tape' but have never seen it practiced profitably. I'd love to see someone that could trade off of something so raw.

 

At one point tape reading was a big thing on TL and that died a slow death. I'm guessing this is very difficult in application and maybe hunter can shed some light for everyone.

 

I'd second that. There are a couple of old (very old) threads over at ET where the odd person has tried to describe exactly some of the things they look for on the tape but if I am completely honest I have never really 'got it'.

 

I get the impression that it is as much art as science but it is certainly something I am open minded too.

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Then for fun I suggest 2 time and sales set 1 to filter out all trades above 3 lot the other to filter anything less than 40. You will see something very interesting.

 

That is an exercise I have done many times over the years (except using 50 as a filter on the ES). As I said above nothing really 'clicked', sure you see patterns but there always seems to be two possible outcomes.

 

As an example, sometimes you see a 'wall of support' at a level. This will sometimes hold sometimes break. Just to confound things sometimes it breaks for a few ticks to have the break firmly rejected and then the price subsequently hold!!! Sometimes I do get into the 'flow' but other times it confounds me. I have never managed to quantify things in a meaningful way.

 

Maybe I am just daft or my brain is 'wired wrong' for this.:)

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More than one of the 'talented' tape readers I had requested some teaching from over the years replied with "it can't be taught", or "I don't know how I could explain it to you". At first I thought they were just ducking out or being all proprietary, but over time I got to know one of them at other levels and now I believe them. Their savant brains see patterns in the flow of digits for which they can provide no verbal representation of to 'normals'... you probably haven't met one because there aren't many of them on the planet...

Like most other trading niche skills, knowing the conditions in which to read / play is just as important as the skill itself.

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Every skill can be modeled and learned if one has the basic aptitude and the desire to learn. In my opinion the comment "it can't be taught" really means "I don't know how to teach it" or "I am too busy" or perhaps "Whats in it for me?". I think any good professional could teach this skill. The question is how do you motivate a skilled pro to take the time to teach you?.....

 

The DOM and/or Time&Sales show dynamic processes in real time. Depending on the speed with which the displays change, learning to recognize threshold levels can be confusing. One needs to know what they are looking for. For instance, on a Buttontrader display (Dom) one can see up to 5 levels. As you see the ratio of bids to offers hit 1.2 to 1.4 to 1 it usually signals a move toward the higher level (its counterintuitive as one would think it would go the other way). As one watches that display over time, DOM on one side of the screen and chart on the other, you eventually learn to correlate the movement with the levels you see on the DOM. You can speed up your learning process by using the sim and by taking notes that include time of day and other data relating to the price movement (for instance, when the ratio of bids to offers hits 1.4, how many levels does price move, and how much inventory get taken out as the offers are lifted).

 

Although I don't mind answering some questions increasingly I find myself in the "Whats in it for me?" camp. Although it may seem mercenary, I have been in the position of answering endless questions from folks who aren't willing to put in the screen time. Basically they want a formula to follow.

 

I think one should remember that there are many alternative options to just reading the tape. MarketDelta can be read like a DOM if you take the time to learn it. Time/Price displays can be used the same way if you know how to use them. As I pointed out previously one can get plenty of information simply by using a 1 minute chart with standard volume.

 

I know quite a few professionals who use combinations of data, like MarketDelta and reading the Squawk, or Time & Sales and Squawk, or Time/Price and Squawk. Reading the Squawk is a skill as much as tape reading is....one has to learn how to visualize the floor and to decode the "color" provided by Ben and his colleagues. It helps if you know the local scene and can place the players (knowing for instance who the "top 10" are on the floor helps tremendously). Knowing how the size players "work" the pit is part of the art of trading, one that unfortunately will soon I fear be gone. But for now, it is (for me at least) an easy way to read the market and make a buck...

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One of the first ones you learn in the pit is whether it's trading on the bid or the offer,how long a new lower bid lasts when we are goimg down,this will give you the speed of the move or a tip as to how many sellers are around,this momentum and movement will give you a sense of the two teams,bears and bulls,and who's dominating. On the dom,the market trades to size so if its 150x450 size and the market is 950.25-950.50,you know that the 450 offer is fake and trying to hold the market here so he can accumulate or fill his buy order,and we will go up,or towards the size. When the dom all of the sudden goes 100o or 2000 up , a larger bid and offer than you've been accustomed to, you know that the recent move has met a price where there will be a battle,possibloy a continuation,or a reversal. Steve whats the squawk you mentioned?

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A couple of threads that might be of interest (its ET so don't stay long or your mind might turn to jelly).

 

http://www.elitetrader.com/vb/showthread.php?s=&threadid=42947

 

Even though it talks about market depth a couple of good posts on the tape.

 

http://www.elitetrader.com/vb/showthread.php?s=&threadid=55217

 

short an sweet.

 

http://www.elitetrader.com/vb/showthread.php?s=&threadid=26299&perpage=40&pagenumber=1

 

A kind of rambly thread but some stuff of interest.

 

Worth paying attention to stuff that FuturesTrader71 says. There are a couple of other guys worth watching out for too.

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