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  TheNegotiator said:
What days like today do is make good money for those with a set plan and who know what they are looking at and it runs over those who don't really know and need time to decide what to do- or are just motivated into trading against their plan because those fruit machine lights are flashing.

 

I will jump on the "bash goodoboy" bandwagon (j/k goodoboy). I used to also get absolutely slaughtered on days like today. But here's what happened:

 

1) the market dropped before the open

2) the market moved up to a logical area of prior supply/resistance

3) the market sold off from there, and is near lows again

 

Structurally, days really don't get better than this. We have the 56-61 consolidation. Market broke up out of that. Showed its strength, pulled back to VWAP and top of 56-61 consolidation, and continued up. Consolidated, and fooled lots of people when it broke above yesterday's low. Double topped. Dropped, and is now channeling down.

 

So goodoboy, if today was tough--and I remember when it was hella, crazy, punch my monitor tough--it's because of something on your end, and it's not anything on your charts. You sold too early in the day because you didn't want to miss out when the market had already dropped 25 handles. Then you bought near the high (despite my warning about the 69 ;) ) but it was still a good buy as one more retest was a reasonable probability. Fortunately for you, it sounds like you actually may have made money.

 

Negotiator mentioned earlier, and I mentioned above, the structure. But all of this is stuff that is plain to see on the chart, and you can see the same things. I think what good traders do well though, is that they know the behavior of the market they are trading, and the general psychology of the traders participating. No one wants to miss out, so many will short the open, but the market didn't really confirm a short did it? And then they get pissed off, and they jump on the long bandwagon just at the top--just look at the 10:27 volume, it's plain to see. So, fear of missing out, "what ifs", "if onlys" are all over this chart today. All we have to do is recognize that, not be one of those people, and then take advantage and we can make some money. Negotiator helped me greatly with some of this stuff, so listen to him.

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  TheNegotiator said:
Yeah I did wonder. It's important as I'm sure you realise but perhaps others are less aware, that maximizing profit when you have a great trade on is pretty important.

 

"Press the winners" ... Something I am working on improving. With time it is getting better overall, though I still have moments like this. I find it much easier to hold a trade that is developing slowly and with good structure, rather than one that drops 28 ticks in 2 minutes. I am very careful of protecting profit and managing losses on days like today, and that leads to overly careful behavior sometimes.

 

By the way dB, you mentioned "clear the decks" -- I think I understand the meaning of the expression from its origin, but do you care to elaborate?

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  goodoboy said:
Thank you TheNegotiator for your advice and comments. I can use all the advice I can get, so I want get offended.

 

Trading before the open is something I struggle with a bit. A few weeks ago I decided to just wait from 8am central to begin. But if I see a setup I like, then its hard to not take it, even if its before the bell.

 

Can you explain a bit about this statment "The open provides a reaction of the underlying stocks to any change in price and allows you to identify the level and type of activity of bigger players early on. It provides some structure to play off for the rest of the day too"

 

Are you saying to let the big players make there move first? Like today at open bell, I was thinking much lower, but it was just the opposite. lol, well i guess now, it is just the opposite.

 

The e-minis are futures contracts of cash indices of a basket of stocks. ES is basically made up of the 500 stocks of the s&p 500 index. So when those stocks aren't trading, it's not a proper indication of what the market will do. Plus volume is much lower, although on a day like today people do their business early on. But then again, when it's moving wildly I'm not sure I'd advise a new trader to do anything other than watch, but watch with intent to understand (don't just stare blindly at the screen).

 

The bigger players (or OTF in MP terms) and the structure created early on is all about MP and auction theory. You really should read "Mind Over Markets" and then ask questions as otherwise you could be a little confused. If you do, just don't get too hung up on all the details. It's not all relevant anymore but it's a good grounding nonetheless.

 

Basically lots of big players trade early on and depending on what they do relative to where the market has moved, it can give you an idea of how the market may trade for the rest of the day. The way the market opens is pretty important and can give you, all things being equal, an excellent heads up on at the very least how not to trade ;).

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  joshdance said:
"Press the winners" ... Something I am working on improving. With time it is getting better overall, though I still have moments like this. I find it much easier to hold a trade that is developing slowly and with good structure, rather than one that drops 28 ticks in 2 minutes. I am very careful of protecting profit and managing losses on days like today, and that leads to overly careful behavior sometimes.

 

By the way dB, you mentioned "clear the decks" -- I think I understand the meaning of the expression from its origin, but do you care to elaborate?

 

I don't think you need to beat yourself up too much on a trade like that. It's the compounding of good solid trades (just like interest - well maybe not right now) that'll make you money in the long run and not one or two big trades. There were always rumours of million pound trades that people made but they were often lucky too. Like stupid orders luckily filled when markets spiked wildly. Or trades being stupidly offside that never should have been. You still did pretty well on the trade. Plus I've seen moves like that which end up reversing with double the strength and after making you 'believe' that they'll get you onside again, they hit you for six (or "out the park" if that's the US version).

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  joshdance said:
Will buy a solid bounce here. Otherwise, maybe some buyers at 47, but low 30s and 20s likely.

 

Yeah, I am looking at a test of 47.50/48.50 area possibly at some point. Want to see what happens here are 57.00 which was important a few days back. The point here is we gapped down, retested the upper development from the prior 4-day balance and rolled over extending down below friday's low. Often a rejection of one balance leads to a retest of 'fair value' of another. So the VPOC area is important to test imho...

 

attachment.php?attachmentid=30290&stc=1&d=1343923731

2012-08-02_2.thumb.jpg.d066b8d5f5d1e1a54cbbbeb355fd3d0c.jpg

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  DbPhoenix said:
Actually it was pretty easy, but you have to relearn how to tell up from down. You won't be able to do that until you clear the decks.

 

Db

 

Thanks, yes I do! What do you mean "You won't be able to do that until you clear the decks."

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  joshdance said:
By the way dB, you mentioned "clear the decks" -- I think I understand the meaning of the expression from its origin, but do you care to elaborate?

 

IOW, get rid of all the filters: the MAs, the slosto, the VWAP, the channels, the bands, the MACD, the RSI and whatever the hell else is between the trader and the transactions. Even candles and volume. If all these "helps" were resulting in successful trades, I'd say great. But they aren't. Quite the opposite, in fact. So what's to lose by getting rid of all that and watching traders trade? Granted this may feel as though one is being stripped and tossed out into the snow, but at least he'll be dealing directly with the cold rather than focusing exclusively on the thermometer.

 

Db

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I'm not trading today. I recognized the market was higher risk and made a decision not to trade. One reason was I couldn't find a definite timeline for the events. I believe this move was perhaps better a setup for options then futures, especially before the market became volatile. I'm curious if somehow the premium was still on those options because the events.. as I don't trade options.

 

However, I've been surprised at just how predictably even if volatile the market is trading. I was concerned it would be more erratic. Predictably of a certain sense. There are always games to be played and a certain type of game being played now is doing well.

 

Overall, market has held up way better then I would have expected. That means either #1 we're only 1/2 way through the decline today or #2 everyone knew Draghi wouldn't do anything or #3 the market did not rally because of his remarks but because of something else.

Edited by Predictor

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  joshdance said:
Too late, and too early. Consider the behavior of the market since the open, and the initial quick test and jump off the lows. Has it been telling you to sell? One of the hardest things I have had to learn is to avoid the euphoria. The other hardest thing learned from much pain has been to avoid jumping on the train after the train lost momentum. Big news events like this make 9 out of 10 new traders want to sell, and for good reason. So, everyone wants to short, and where do you think the newbies load up on shorts? 60. So what happens? They get punished. Consider the long since the open. Great opportunity that I took a few minutes ago. Attached is chart that I posted real time elsewhere but posting it here for a location reference. Volume supported at 10am, and a shakeout to VWAP supported as well. I was a little off in my entry but still not bad.

 

And now that 69 has been touched, and everyone is convinced it's going to be long all day long, be careful about buying. Maybe it's still a good buy, but pissed off shorts are wishing they had bought, and will start jumping on. Dangerous area to buy, better area to sell--but that's just based on the location.

 

Thanks, makes sense. Thats funny, I was one of the 9 out of 10 guys. Market was saying sell me all week. Steve pointed that out earlier. i just caught the tail end of that short and still not catching it.

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Good thread - I agree that to some extent today was textbook.

 

8-2-201212-22-47PM.png

 

1 - overnight inventory short, so we took a peek down to the overnight low & then reversed and took out the poor buggers that got in last.

2 - big push up, I went long just above the open price, 1360.25 and apart from a few trades 2 ticks below the open, the open held.

3 - push up through yesterdays low, failed to close the gap, then took another attempt at that high before turning down

4 - some nice measured moves on the way down

 

Basically, fairly typical day where (in my opinion), the market is primarily being driven by day players.

 

What wasn't typical was the way the thing was jerking around. That bounce off 1356 was fast & brutal, hence I missed it. I have to use a larger than usual stop on the trade I did take because of this extra volatility.

 

So - textbook day, sure. Easy to trade - not that easy in my opinion. It was moving a bit fast early on.

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Locals are just short term traders who tend to trade same market all the time. They can trade large size but they can't hold so they can't move the market far/much. These are really the LQ providers today.. few/no real locals. Traditionally locals got payed for volume.. so they can try to make activity.. make it look like they are doing something when market goes nowhere.

 

The new locals are day traders trading from home... imo

--

 

FX, I might say there is a natural buyer at 1350.. this just means a buyer who will actually hold inventory for a while vs a bot who will immediately clear... like the seller at 52.50-53 cleared very quickly..

 

  goodoboy said:
Who are the locals? People that trade one contract?
Edited by Predictor

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How do you plan to see if 55 holds and get long at 53.50? If 55 holds wouldn't that mean 53.50 won't fill...

 

53.50 is no mans land... first buy opportunity is 52.50.. the better one is 50. or you could buy as you suggested with a run over 55... I'm not sure the wisdom of buying new highs in a down trending market though unless you are sure you've got the reversal.

 

  goodoboy said:
Long 1353.50, stop at 1351. target is 1358

 

But I want to see 1355 hold first.

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What we have now is something interesting.. equities bots are starting to sell and we have a possible natural buyer in futures at 50ish.... get ready for dump back to 50, imo. I can be wrong though.

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  DbPhoenix said:
Do you know what a reward:risk ratio is?

 

Db

 

Yes, I know what I mean. The risk was 2pts and the reward was potential 5pts. If my definition is wrong please correct me.

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  Predictor said:

 

53.50 is no mans land... first buy opportunity is 52.50.. the better one is 50. or you could buy as you suggested with a run over 55... I'm not sure the wisdom of buying new highs in a down trending market though unless you are sure you've got the reversal.

 

Yep, man o man. 53.50 was a bit high and should have waited a bit for retest of 51. that miss does not feel too good, came right to 1358 too.

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