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steve46

Steve's Basic System for Retail Traders

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So you're learning (the hard way) that when you don't have a lot of experience in this market, your choices become very limited....

 

Once you have a viable profitable system (and you know it works), DONT make changes unless you start to lose money...don't move your stops, be disciplined in taking profits, and keep good records so you know how your doing from week to week, from month to month...

 

I am going to stand aside for a day and get caught up with my sleep...

 

Good luck

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Here are the ES and DAX distributions for the open on Sunday, as well as Monday's RTH open

 

I will be looking to close my longs about at or near the London open (Midnight Sunday).

 

I have mentioned the subject of "pre-positioning" many times now, but this just one example of how it works...for the reader simply go to your own charting program and look at where price was last Wednesday (9/12-9/13) at the London Open (midnight PST)....if you have the time to really check it out, you may notice is that Europe opened and they probed down to find sellers....breaching a support level around 1430.....this is where "informed" buyers started to put a position on...(1428 -1430+)

 

Pre-positioning requires skill, patience and the ability to visualize where price is going (broad market direction)....what it provides the user is the ability to stay out of the volatility at the open, and when you are right...you win big...and you can do so with a very reasonable stoploss...so your risk reward is outstanding...it is often the case that I put on a core position in the overnight market and trade around it during the RTH....because it is capital intensive and there hasn't been any realistic interest I save the details for my classes...

5aa71141bc3af_MondaysDist.thumb.PNG.20d4cabf15d403fbb7d39488ef404da9.PNG

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Discovered that my ES distribution is lacking one (1) line at 1450....so here is the corrected version...

 

Thank you Steve,

 

Just to be clear, on the chart you just show, price is right at the line, 1456.50, but the red arrow is at about at 1461ish. So, this red arrow indicates short if price action failed to break this level.

 

What happens if price action gets to 1450 and holds? Can trader go long at this level or does the red logic arrow still indicates short?

 

I think this goes back to being patient and choosing the levels at extremes (1461 and 1432ish midpoint) to trade.

 

I hope I am making sense.

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Hello GOB

 

Have to put your questions on hold for the moment because of time constraints at my end

 

For this session the distribution did its job as usual....and I wanted to reference the DAX one more time....there is a reason I keep it on my screen and today is a good example....also the importance of "trading time" specifically looking at important time periods (like the London open) as a critical time based pivot....

 

Last night London opened and (as seen in the DAX chart on the right)...they tried to find buyers but could not as evidenced by the left most arrow on that chart showing the spike up.

The next arrow shows the RTH open and once again we see how DAX leads the action, probing up to find buyers and when they cannot, both the DAX and ES drop down into a range for the day...

5aa711424cb63_TradingTodaysDist.thumb.PNG.f91bfab8795e30f203d4bc0c0b96ae71.PNG

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and this last chart shows the afternoon rollover. On this chart it seem to start at 10:30am PST, actually this move down began about 10:10 which corresponds to the end of NY lunch hour

5aa7114255ae9_Afternoonrollover.thumb.PNG.a87a3604654245a5e5163674d0df5a97.PNG

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Hello GOB

 

Have to put your questions on hold for the moment because of time constraints at my end

 

Thanks Steve,

 

Take your time with respond to the question. You can even respond later in the week. No rush at all. Thanks,

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For this system, I will be stressing the importanc of "time & price" together....this is meant to provide a framework that retail traders can use to help them deal with the problems of directing their attention to the screen continously.....most folks simply cannot do it and end up missing opportunities...so we have a set number of critical times and the trader can manage time and take breaks periodically to insure that they don't miss a valid trade...

 

The attached chart shows one such opportunity...the vertical line is a "clearance line"...it tells the trader that he/she should be ready to trade if the opportunity presents itself....valid setups are possible within a half hour of this point in time (this line is positioned at 10am PST). Valid setups can originate from either the DAX or the ES chart, so both have clearance lines in place

 

In this case the trade "sets up" at approx 10:11am when price takes out the distribution line and then retraces to test it...the logic arrows on the distribution shows the preference for a short trade, and when price retests and fails that tells the trader that the odds favor a continuation short trade....

 

Depending on the skills and experience of the trader, they have the option to read the tape or to use any number of preferred data for confirmation...If I were trying to teach someone to do this I would want to show them how to evaluate the data quickly using the $TICK, $VOLD and/or $ADD.

 

As mentioned previously I am not going to go through all the stats, but once a trader starts to use it, keeping track of their own forward walking data should provide everything they need to maintain a decent level of performance...

5aa711425e791_TradeExample.thumb.PNG.86ec8dc7cb0df391685048daaa97c3be.PNG

Edited by steve46

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The attached chart shows a nice short entry off the DAX open this evening

 

The arrows show the setup originating on the DAX chart, as price "takes out" a distribution line and then hooks upward to retest that line.....on the retest, because our logic arrows direct us to "prefer" short entry, that is what we do....short on the retest and failure...and this one works out nicely...(there are two possible entries, the one on the right corresponds to the DAX entry arrow)....

5aa71142678aa_TonightsDAXOpenTrade.thumb.PNG.ec80b4f54b120c21caab9d97cd72678d.PNG

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The attached chart shows a nice short entry off the DAX open this evening

 

The arrows show the setup originating on the DAX chart, as price "takes out" a distribution line and then hooks upward to retest that line.....on the retest, because our logic arrows direct us to "prefer" short entry, that is what we do....short on the retest and failure...and this one works out nicely...(there are two possible entries, the one on the right corresponds to the DAX entry arrow)....

 

Thanks for sharing Steve. Very nice setup and trade.

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Here is a nice one as well....one that I have pointed out before as price tests below to find sellers, then reverses and retests for a long entry signal. Not easy to be patient and disciplined during the entry process...not easy to hold it long enough to take a profit, but thats the job you signed up for...and when you do it correctly, the result is early profit..

 

Some may remember that I added this distribution line to my original pre-market post...1450 is an significant line in the sand...

5aa711429b3c8_TodaysOpeningLongTrade.thumb.PNG.55cb4f0a9d26600f6fc7b7cedb186dd1.PNG

Edited by steve46

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Here is my last chart for the day..

 

The distribution is working beautifully.....trading touches of the 50 line produced several nice trades on a day when most folks are scratching their heads wondering what to do..

 

The answer is as follows A) you work from "Macro" concept that you know is viable...B) you adapt to the local volatility....C) you take small (and not so small) bites out of the market and finally D) you manage risk...(and the way you do that is to enter with precision and respect your stoploss...

 

To the extent that a trader learns these lessons, he/she is going to be consistently profitable

 

Best to all

5aa71142b7b64_tradingthe50.thumb.PNG.a59476198242e9592e6c150ba87cb39c.PNG

Edited by steve46

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The attached chart shows a nice short entry off the DAX open this evening

 

The arrows show the setup originating on the DAX chart, as price "takes out" a distribution line and then hooks upward to retest that line.....on the retest, because our logic arrows direct us to "prefer" short entry, that is what we do....short on the retest and failure...and this one works out nicely...(there are two possible entries, the one on the right corresponds to the DAX entry arrow)....

 

Hello Steve,

 

Thanks for sharing. A few questions regarding the short entry:

 

1. On the ES chart, price never got to the distributions line of 1456.50, yet short was still taken on the first red arrow. Any reason for that?

 

2. The second short, is nice, but I would have taken short at 1454.50 on retest of failure hold this line. Why take short at 1455.50?

 

3. Good job on DAX trade, played out well.

 

Thanks for the help.

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Hello Steve,

 

Thanks for sharing. A few questions regarding the short entry:

 

1. On the ES chart, price never got to the distributions line of 1456.50, yet short was still taken on the first red arrow. Any reason for that?

 

2. The second short, is nice, but I would have taken short at 1454.50 on retest of failure hold this line. Why take short at 1455.50?

 

3. Good job on DAX trade, played out well.

 

Thanks for the help.

 

The first trade is taken because I see all the spikes indicating that sellers are stepping in here (so for me that is "close enough")

 

the second is taken because of the gap and the retest of that gap border...take a look at it again and file it away in your memory....it is a high probability pattern.

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This should look familiar to those who have been following along...

 

Setup occurred this evening and as you can imagine I have seen it many times

 

What it tells me, is that the distribution lines work very well....that there are other professionals out there using a similar framework.....and that those other professionals exist worldwide...

5aa71142ca0e8_TonightsGlobexLong.thumb.PNG.83f98984b3f449a5c0dc6169acced925.PNG

Edited by steve46

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This should look familiar to those who have been following along...

 

Setup occurred this evening and as you can imagine I have seen it many times

 

What it tells me, is that the distribution lines work very well....that there are other professionals out there using a similar framework.....and that those other professionals exist worldwide...

 

Thanks Steve,

 

This 1456 level has provided good resistance and support today. I watched it today. Its actually holding right now.:cool:

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Actually GOB, last night I had family obligations to attend to, and did not have the time to publish my ES & DAX distributions...I am glad if that old line worked for you and others..

 

For today's RTH session, the distributions are attached below

 

And the final trade for those interested happened a little after 12 PST (3pm EST)

 

Notice if you will that now there are two (2) elements to my distribution lines...one is the lines themselves, the other is a wider "barrier line"....these wider barrier lines (colored blue) are where longer time frame players have come in to buy or sell in the past....and when price tests these areas, we now see short time frame players (or those who have decided to trade intraday) acting....

 

The second chart shows three time frames 10,3 and 1 min, but the view is the same as price tests the longer time frame line, and fails just after 12 (3 EST)....as mentioned in response to GOB's inquiry a few posts ago, I look for what I call a "spike failure"....and I enter what I hope will be a reversal trade to the south...in this case it worked out very nicely (about a 5 point move down)....

5aa711431a59f_TodaysESDAXDistributions.thumb.PNG.420bdd33decf78ce97b3433a93e644b3.PNG

5aa7114323342_Lasthourtrade.thumb.PNG.cdb772306250ed0694870287835b0a92.PNG

Edited by steve46

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Where to go from here

 

Gotta say that my experience of trading has really changed because of this system...what I was trained to do was pretty complex and although it worked well, the volatility was significant. This way the vol is reduced and so are my stress levels.....

 

One of the things that I am enjoying is the time based approach to watching the screen...I know that my priority times are at the front end of the session so I am there for the pre-open position trade (when it occurs) and during the open for those high probability time periods.

 

Then if I want to I can simply go do other things until the afternoon...then I can come back and still catch the last trade of the day...sure I expect to occaisionally miss trades, but this is proving to be the way to go for me (it seems to fit my personality pretty well)...

 

I suspect that what I will do is to stop and consider my course from here....I still haven't found a way to approximate the distribution creation process although I think I will have that available in the near future....and with the holidays coming on fast I will probably just trade it..and answer the periodic questions that may come up..

 

Good luck folks

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Thought I would post a full screen view of today's last trade and some additional commentary about the differences between long and short time frame participants

 

As can be see in the chart there are two kinds of lines...the thin lines represent areas where I believe short time frame particpants are likely to come in to A. take short entries and B) start the "end of day" profit taking process...

 

The thicker blue lines represent areas where long time frame participants are likely (if they are around) to take long positions and try to move price higher

 

I notice that there are discussions about value on other threads (ROFL)...value is subject to interpretation by participants "based largely on time frame"....with the longer time frame participants viewing higher prices as "fairly valued"....why? because it is the longer time frame participants who view price in terms of the forward value of projected earnings of the asset....while short time frame participants see value predominatey in the present value of assets.....As always I enjoy the comedy routine these deep thinkers are posting.....

 

by the way....for those who think it might be appropriate to use this thread as their battleground for more silly comments about "value"....I invite you to copy my statement from the above and paste it into your own thread....thanks...

5aa7114331e90_FullScreenView.thumb.PNG.d8d5a07620ef2c095cd84d922af0c6d8.PNG

Edited by steve46

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Actually GOB, last night I had family obligations to attend to, and did not have the time to publish my ES & DAX distributions...I am glad if that old line worked for you and others..

 

For today's RTH session, the distributions are attached below

 

And the final trade for those interested happened a little after 12 PST (3pm EST)

 

Notice if you will that now there are two (2) elements to my distribution lines...one is the lines themselves, the other is a wider "barrier line"....these wider barrier lines (colored blue) are where longer time frame players have come in to buy or sell in the past....and when price tests these areas, we now see short time frame players (or those who have decided to trade intraday) acting....

 

The second chart shows three time frames 10,3 and 1 min, but the view is the same as price tests the longer time frame line, and fails just after 12 (3 EST)....as mentioned in response to GOB's inquiry a few posts ago, I look for what I call a "spike failure"....and I enter what I hope will be a reversal trade to the south...in this case it worked out very nicely (about a 5 point move down)....

 

Thanks Steve,

 

I haven't time tonight to review your last three posts but I will in the morning. I have a silly cold and had some other stuff to do. But appreciate the sharing and updates on the system.

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Here's another nice example of a trade that sets up during the Globex session.

 

As can be seen in the attached chart, price takes out the line (1450) then closes below...

 

and THEN retests (and fails)....if you took a short entry at the retest (right at 1450) and held briefly, you had a nice 2 point winner (so far)....

5aa711433a70e_GlobexSetup.thumb.PNG.af371aaca45dc040e4582d090149cb3f.PNG

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Here's another nice example of a trade that sets up during the Globex session.

 

As can be seen in the attached chart, price takes out the line (1450) then closes below...

 

and THEN retests (and fails)....if you took a short entry at the retest (right at 1450) and held briefly, you had a nice 2 point winner (so far)....

 

Thank you Steve,

 

Just to be clear, the retest failure occurs when the green candle (on the second arrow), fails to closed above 1450? Or does the retest failure occurs when the next red candle open and close below the 1450? Sorry, if the question is to micro!

 

This is good example as short could be taken 9 minutes later when there is an open and closed above 1450 as well.

 

Thanks,

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Thank you Steve,

 

Just to be clear, the retest failure occurs when the green candle (on the second arrow), fails to closed above 1450? Or does the retest failure occurs when the next red candle open and close below the 1450? Sorry, if the question is to micro!

 

This is good example as short could be taken 9 minutes later when there is an open and closed above 1450 as well.

 

Thanks,

 

I thought I was clear

 

Retest means a price (1450 for example) was "taken out" to the up or down side, then price comes back to touch it again....and fails (reverses)....I hope that is clear.

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I thought I was clear

 

Retest means a price (1450 for example) was "taken out" to the up or down side, then price comes back to touch it again....and fails (reverses)....I hope that is clear.

 

:) Thanks Steve, make sense now. Happy Trading Today!

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