week 2

[Buk 10]

markets are traded via an assortment of differing agenda’s…..long, medium & short term players contribute to the daily flow & liquidity which ensures opportunities present themselves according to the structures & objectives of said participants………

 

it’s often daunting for newcomers to the markets to determine which style or timeframe best suits their execution mode…..however, the vast majority of non-commercial traders tend to veer towards a dominant technical bias…….

 

whether one is looking to clip regular 20-50 pip raids from the ball park, or gun for the larger 200-300 pip moves, a basic awareness of the generic landscape is often helpful to best plan a suitable course of action – or to put it simply: construct their trade plan!

 

I like to look at the trading map from a top-down approach…my main point of reference revolves around the use of Fibs, Pivots & perceived zones of longer range s&r levels…..I say perceived, because the market doesn’t really give a jot what I see…...these common area’s of reference are observed by a good majority of participants from each camp, therefore they’re the best I’ve got in order to lay down a base platform for the forthcoming session…

 

whatever you use (providing it offers you an edge), it’s important to remain faithful to the plan-rules…that way, as conditions change & the market evolves from trend to range etc, you’re better prepared to alter course without too much stress or financial loss……….

 

i’ve found thru experience, the larger range technical zones tend to react more favorably as price approaches..…Whether I’m observing a 5 or 30m frame for a particular entry or trigger, the journey & reaction of the larger monthly/weekly/daily bars have a greater affect on the impending direction than their smaller timeframe cousins…………

 

therefore, I like to see where & when these longer range lines are coming into focus……we know that the big round numbers (00’s & to a lesser degree the 50’s) & the accompanying levels slightly beyond them (stop & profit zones) carry heavy psychological significance, for a multitude of reasons……..we also know that once a confluence of events surround these levels (be they Fib clusters/pivot lines/wave axis/channel boundaries etc) the emotive attraction is intensified…….

 

these key levels form the backbone of my analysis & execution planning…….of course, nothing works all the time & I’m sure as hell not going to beat the market to the plate on every occasion – but my priority is to seek value & reduce risk as often as possible………

 

time has also taught me that whatever technical model you choose to adopt, the emphasis on simplicity & common sense will bear the ripest fruits……..complication leads to indecision…..or paralysis!!

 

once the larger levels are constructed & mapped, they offer a guide to the smaller trigger frames…..and my favored patterns & price bar formations can then be observed as price gravitates to these key lines……….

 

it’s by no means a guaranteed atm receipt, but it affords me a workable template from which to construct my core strategies, dependant upon the current price environment (trend/range/consolidation)…………….

 

to that end, Fridays closing level has earmarked a couple of lower & higher zones of interest which I’ll certainly be alert to observing as price decides where it’s intentions lie……….

 

apologies for the ‘war & peace’ commentary……..I promise, future posts will be infinitely more succinct!!

 

 

the 60m focuses Cable upside resistance zones, which show the relevant markers from the bigger frames.......I'll attach the intraday pivots to the 60m & sub hourlies to guage price bar formations as they come into view around the important s&r levels...........

 

[Soultrader 12]

Thank you Buk for your extremely informative post. I do share similar methods of developing a trading plan based on key price levels. I have a question regarding your methods on identifying trend from consolidation.

 

To determine if the current market is in trend or range, do you use a daily chart as your timeframe? What methods do you use to identify trend from range? I personally use Market Profile and higher/lower value placements. Thanks in advance.

 

Soultrader

[Buk 10]

I have a question regarding your methods on identifying trend from consolidation.

 

To determine if the current market is in trend or range, do you use a daily chart as your timeframe? What methods do you use to identify trend from range?

 

Soultrader

 

I'll try explaining by hauling up a few examples James.......

 

I use timeframe blending (4hr-1hr-15m) as my core method of determining the current state of play......the 4hr is my base template which houses the relevant & pertinent info from the larger timeframe charts (main pivots/fibs etc)........

 

the 60 & 15m frames are my zoomed in observation references for triggering & managing the initial entry & eventual exit..........

 

I was reared on simple bar & pressure observation.....the ROUND NUMBERS are key (for me) in highlighting potential exhaustion-reversal behaviour in confluence with the BAR information they display at these levels........

 

rather archaic I know, given all the new age bells & whistles available nowadays - but I'm a firm believer in the old adage: "if it aint broke, don't meddle with it".......I might have to spend an hour or two more than other folks at the workstation, but there ya go....life's a bitch

 

this methodology combined with my stake-sizing & trade management structure (scaling out-compounding back), fits well with the psychology & behaviour traits of the instruments I trade.........

 

I suffer a bit when price flips from trend to consol/range behaviour (on these timeframes), mainly attempting to climb aboard the b/o etc.....but once it makes a run for it & I can get aboard at a fair value entry, it generally plays out ok...........

 

i'll stick up the 4hr examples first (taken from back in Sept/Oct) to give you an idea.......& the 60m observations on the next post..........

 

hope they help shine some light on my train of thought

 

 

 

 

[Buk 10]

and the 60m frames at same levels............

 

 

 

[Soultrader 12]

Thank you for the clear explanation and charts Buk. I am also amazed at the power of the 00 psychological levels even with the futures market. The Dow especially respects these levels almost always. One pattern I like to trade around these 00 levels is a violation by a few ticks. For example, when the Dow violates the 00 by 5-7 ticks and then pushes back above the 00 level I like to establish longs for intraday trades.

 

Regarding your exit points, do you usually scale out of your positions? You mentioned the use of pivots and fibs in your methodology. Do you also use fibs and pivots for exit targets? Do you think if a trader enters a trade based on a certain indicator (whether it is pivots, fibs, indicator signals, etc...) that his exit should also be based on the same indicator?

[Buk 10]

I think any trade candidate hauling decent liquidity behind it will react to, & offer good opportunities at the major round numbers James.....the consistant bar prints mirroring the activity which occurs around these levels render them worthy of special note.......I'm not at all surprised you index guy's find them attractive too!

 

yes, I like to scale out wherever possible.....the prime objective for most of my initial (intraday) entries is to test the intent of price activity away from a key level....especially if that level offers the prospect of re-engaging a dominant trend after a possible? pullback shunt........

 

I like to reduce risk on a potential swing entry as quickly as possible to either give my stops breathing room (if I've had reason to tuck them farther away than normal), or cover costs.......it means I can then leave my stops where they are to properly test the genuine intent without being lulled into trailing too close on the first shunt away from a level..........

 

once/if price tells me it's looking to trot, I'll begin trailing to an appropriate hourly or 240m line.

 

I certainly use the Fibs/pivots as guides for profit pares & compounding opportunities for sure........obviously, as with entries, they're merely guides.....it's the candle prints & where they form which carry the prime importance........I love doji's which form around hourly+ pivot-fib lines!!.....particularly if they print at a new high/low.....fantastic 'fade' opp's, if only for a quick 20-50 pips

 

should price then further retreat to our favored 78.6 & show the slightest signs of weakness, we're all over it like a rash LOL.........

 

regards your final question: hmmmm.......I can only speak for what I do, and I'm a big fan of STRUCTURE....especially if that structure is proven to work - for me, Fibs/pivots in conjunction with common bar formations work!....so yeah, I'm happy enough to enter/pare out/exit based on my entry criteria.........

[pipMonster 10]

Traders, give this a good read and take it to heart. Buk and Texxas know exactly what they're talking about. I know these two from a couple of other boards and through their tutelage my trading has improved greatly.

 

What Buk says about keeping it simple using tried and true methods, though not whiz bang exciting, is the way to go. Torero, from what I've seen in his postings, uses much the same tried and true TA.

 

Add to all of what Buk has said, a huge heap of patience to wait for setups that beg to be taken.

[Soultrader 12]

Traders, give this a good read and take it to heart. Buk and Texxas know exactly what they're talking about. I know these two from a couple of other boards and through their tutelage my trading has improved greatly.

 

What Buk says about keeping it simple using tried and true methods, though not whiz bang exciting, is the way to go. Torero, from what I've seen in his postings, uses much the same tried and true TA.

 

Add to all of what Buk has said, a huge heap of patience to wait for setups that beg to be taken.

 

I definitely agree pipMonster. It's been a real pleasure to have Buk and Texxas on board. A ton of market wisdom and experience is reflected in all their posts.

 

I also believe in the K.I.S.S. method. I also used to be apply fibs into my analysis but I have taken them off completely. I started using what makes sense to me and fibs are a little bit vodoo to me. I still do keep the 50% and 61.8% retracement areas in mind since price trends to bounce of these areas. Trading is simple but it sure aint easy.

[Buk 10]

I also used to be apply fibs into my analysis but I have taken them off completely. I started using what makes sense to me and fibs are a little bit vodoo to me.

 

careful James!!......I'll wave me "doji stick" atcha & render your next few trades impotent

 

 

 

seriously though, folks will tend to develop & progress if they're fortunate enough to find one or two templates which fit not only their personal 'comfort zone' but also harmonize with the markets they intend trading.........

 

there are many ways to skin the market cat, the hardest part is finding the implement in which to attempt to skin it........

 

the most important factor when getting to work on that implement (strategy combo), is to devise it around the safety net of RISK management........too often folks focus on "how much can they make or win" from their strategies or systems, instead of concentrating their priorities on protecting the capital/trade executions thru sound risk & money management.......

 

you can engineer a fantastic win/loss ratio strategy & test it to the hilt etc........but if the basic risk structure is weak & the sizing/management is suspect, you're pissing against the wind..........

[Soultrader 12]

you can engineer a fantastic win/loss ratio strategy & test it to the hilt etc........but if the basic risk structure is weak & the sizing/management is suspect, you're pissing against the wind..........

 

Amen to that. Risk before profits. I trading mentality is very similar to my poker mentality. When you're not sure if you can win the hand, let go. As long Im still holding chips, I can comeback:

 

1. Preservation of capital is number one

2. Looks are deceiving. Pocket queen's may actually be beat preflop. Even the best looking trading setups will have to pass at times.

3. The worst thing that can happen is to catch something on the flop with a mediocre hand. In other words, making profits with lucky mediocre setups will get me in a bad habit and hurt me in the long run.

4. Who cares if my opponent bluffs and wins a pot. Im not trying to prove him anything. In trading... divorce my ego. Trade to make money and not to be right.

5. "If you can't spot the sucker in the first 30 minutes.... you are the sucker". Have a professional mindset. Dont be the sheep. What would I do if I was a big shot floor trader? What price levels will I look at? etc...

 

Just some rules and guidelines I live by.

[Anna-Maria 10]

I don't play the game myself, but as with trading, the psychological strengths obviously assist with game plays.

 

Not sure if you've come across this book James (available thru Amazon), but a couple of our friends/fellow traders have waxed lyrical about it's content.

 

Again, very similar rules & approaches in both persuits.

 

[Dr Who 10]

Well it has been a pleasure reading this thread Buk. If you don't mind I may ask you some questions in the future.

The Doctor.

[Soultrader 12]

Ive heard good things about that book. Might have to check it out. As for poker books... I have never read a single poker book. But been playing ever since I was in middle school.

 

Thanks for the recommendation Texxas.

[Buk 10]

watched events earlier as London kicked in, but nothing setting up so got on with other tasks.....came back 30mins ago to find price had bounced off one of our favored triggers.........

 

the early Tokyo activity ambled down to sniff Fridays low zone before kicking up & spent the best part of today bobbing around the main pivot.......to be honest, I expected price to merely shuffle around aimlessly today digesting (consolidating) the NFP data.......ah well, never mind....plent of juice left in the week ahead..........

 

hope everyone else's week has gotten off to a successful start!

 

ps: Dr Who......any question or comments, please feel free to post away - if I or Anna (Texxas) can answer, we will.............

 

15m highlighting the pertinent markers..............

 

 

5m focusing the usual entry/stop zone on these types of entry...........

 

[Anna-Maria 10]

.....came back 30mins ago to find price had bounced off one of our favored triggers.........

 

......to be honest, I expected price to merely shuffle around aimlessly today digesting (consolidating) the NFP data.......ah well, never mind....plent of juice left in the week ahead..........

 

 

 

 

When you're done staring at that wall for the next 5hrs, write on the blackboard: "I shall not watch the ATP Tour Events when I should be sat at my workstation" 150 times!

[Anna-Maria 10]

The move up off that intraday 78.6 trigger has not only stalled out at your 618 Fib extension target Buk, but also lost it's wind at the hourly lower high swing, which by chance is the 78.6 on this trend move.

 

Need to watch this axis into the London activity tomorrow. 9430-60 is near term upside. We got a long range 38.2 Fib + the Weekly Pivot lurking at c9435-60. No doubt they'll be a clutch of $ long stops mixed in there abouts.

 

No T.V Tennis for you tomorrow!

 

[Buk 10]

I hear ya............

 

couple charts highlighting Anna's above comments..........we're at a bit of a fulcrum around this current level..........

 

$ Bulls looking to reinforce this lower top above the aforementioned fib-pivot resistance zone, which is bound to house trailing stops from the recent leg up on the buck.......Bears seeking some lift above the 61.8% support line & double daily bar rejection...........

 

Tokyo is back in full flow tonite after their holiday nap, & we have to wait until Wednesday for the main Data focus of the week, starting with the Stateside Trade Balance numbers...........

 

think I'll play this from the intraday slant until we get a confirmation of who holds the aces at this level.....see what Tokyo can do with it into the London Open

 

 

intraday chart...........

 

 

daily frame................

 

[torero 10]

 

 

When you're done staring at that wall for the next 5hrs, write on the blackboard: "I shall not watch the ATP Tour Events when I should be sat at my workstation" 150 times!

 

I still sense a feeling of sibling rivalry? :0) A very nice team you both build! I took a long tonight with a small tight stop. I'm looking for 9440 as target (38.2% retracement).

 

[Anna-Maria 10]

I still sense a feeling of sibling rivalry? :0) A very nice team you both build!

 

 

It's merely our quirky sense of humor torero.

 

We work/trade for the common cause! You oughta witness some of the banter he receives from the rest of our brood - being the lone male amongst a gaggle of fillies, he holds up pretty good LOL.

 

Nice entry there by the way. Very clean shunt off late NY settlement price, which is also the 23.6% of this recent leg down off 9750.

 

We're now approaching the 'decision line' back towards the recent range penetration, which houses the 38.2 @ 9445.

[Buk 10]

ditto........that's a cool trade there torero!!.........think I might just switch trade camps & haul my ass across to the sunny shores of Spain!!!!

 

couple of upside confluences to aim for should the flows be kind to the Cable Bulls today.....

 

 

 

[torero 10]

Thanks but to be honest, I didn't take this trade based on my discretionary rule, it was from a trading system I had just launch to trade in realtime. It hasn't signalled to exit just yet. But I see some resistance in this area. I'll stay with the trade since it generated it.

 

[cowpip 10]

Good morning, all!

 

I decided to take a dip on the short side at 9440, given the proximity of price to the fibs and the still dominant downtrend, as well as what appears to be some fairly stiff $ demand near this fib - which became particularly evident after the 15-minute inverted hammer that tagged the 38% fib.

 

BTW, beautiful analysis, as always, Buk and Texxas!

[Anna-Maria 10]

Ya, pretty much a nailed on fade up there cowpip. Your 15min bar confirmed via the 5min doji with 1min confirm thru that 440 - decent low stress quickie.

 

Looks like they're absorbing the interest up here at the dual confluence. Yesterdays high being a fairly decent marker, back towards the overnight consolidation which triggered torero's entry.

[Anna-Maria 10]

I guess your short was just a fader cowpip?

 

Not wishing to influence anyone's trade(s) at all, as we all 'play em as we see em' - Buk's a buyer (of Cable) in small pockets on moves back to this short support line (410-15) this morning.

 

Looking to test the resistance from below at this level.

[Buk 10]

I'd be a happier bunny if it would pop it's head thru this irksome 9435 lid.........