Hey everyone, so recently I've been trading with only the DOM and supply and demand zones, and let me tell you my trading has improved ten fold. maybe it just me but whenever I would run an RSI or any moving averages I feel that it clouds my judgement and often times the information is lagging/wrong. Watching the order flow and seeing where big buying levels and selling levels are in REAL TIME improves my entries. when I first started trading I used every indicator known to man, the one that truly influenced big drawdowns was the fan favorite FIBINOCCI, maybe its just me but I don't see how someone can use this and succeed long term. Now this isn't to talk down on anyone using them because at the end of the day there's many ways to skin a cat and if you're achieving consistency then it works for you. let know what you guys think.

4 Ticks for ES,

Interestingly enough I am always shocked when traders talk about risk management and they never mention diversification. It's as if fundamental risk Management principles don't apply to trading.

90% never mention diversification because 90% don't win long enough to even begin to trade their system across different symbols mkts etc. The law of large numbers may work always so long as you have edge but that edge might only need 3 to 10 markets with 5 lots instead of 15 to 50 lots in 1 market.

What if instead of stopping out you use profits from another trade in another market to help offset your losses! That would be risk management.

Do you trade or buy just 1 stock..nope. risk management is diversification and this is where machines outcompete humans. Black box trading is to trade multiple markets at same time. Thus mitigating isolated single market risks! Especially once size is put on and again computers can trade 100s of mkts at once!

The law of large numbers is reality but how large is large? It's enormous!

Diversification is the key to making long term consistent money in my opinion. Can be done by humans but you must be quick about it. Few ever backrest buying a 1 lot at the open in crude the sp500 and the 30 year bond then closing them all out at the close and sharing those results. It's always just 1 market!

Thank you for sharing msadiq109,

How are you getting 4 ticks risk per trade on ES pleaes?

What timeframe or bar type are using?

Thank you,

I use bollinger because it helps me visualize the volatility. To me looking at the long term is for determining the direction (trend) and position size (volatility). If you look into the turtle traders that is where a lot of my knowledge originates. I don't trade exactly like them they bought highs and sold lows pyramiding in with many losses and a few big wins but I do like the "complete system". I prefer small wins while preventing big losses because it is easier for me to handle psychologically.

As for time frames I change them up occasionally but it is more about the length of the chart vs the candle size for example I want to look at several hours, several days and several months. It doesn't matter that much if the several hours are in 1min or 5min or if the several days are 15min, 30min, 1hr, etc. It is about what can fit on the screen to see the picture for each range. If I used huge monitors they could all be in 1minute candles. I tune the moving average/bollinger to that and what I am trading (es futures). Here is what I use all are simple moving average not exponential and the numbers don't have to be that precise (89 vs 90 or 88 etc):
1min: 89sma 2.2 stdev bollinger
1hr: 55sma 2.1 stdev bollinger
1day: 20sma 2.0 stdev bollinger

For the previous high/lows I look at different ones for different time frames and I look at high, low, ohlc/4, and halfway between high and ohlc4 and between ohlc4 and low:
1min: it is the previous day
1hr: previous week
1day: previous month

The color coding is to help me not counter trend trade or at least keep it in mind what I am doing if I do it. Hope that helps. Here is my anchor / longer term chart:


You can see the uptrend start on 2/3 and downtrend start on 3/13 with the dollar index, but on es it is later (inverse obviously) 2/17 and 3/21. I'm not actually predicting anything just trying to determine what is currently happening and then eventually react to it changing. For example I am recognizing the current uptrend and keeping and eye open for the next downtrend without anticipating it. After that it is just a matter of surfing that current trend and keeping the position size right. A very simple way to know if your position size is too big is if you can't sleep with an open position or step away without worrying. Generally I keep my size small enough that even though my trades only last a few hours I could withstand whatever the market does for a few days even if it went against me the whole time.

It's not just indicators...it's about understanding different TFs...then your charts will begin to tell you a story. That is the holy grail of trading.

In This post now we will analyze the micro picture of market context and confluence of different technical indicators and how they help to locate potential high probability trades.

On the micro charts which are actually my trade execution charts, the order flow Indicators I Use are now luckily available for free . They are built in Ninjatrader 8 new versions 8.0.0.27 and above .

On my trading charts for any possible strategy , I have same Price action swing Indicator as We saw on big picture macro charts and 3 order flow indicators now built in NINJATARDER.
They are
1-Order flow volume profile
2-Order flow Cummulative delta.
3-Order flow VWAP

Also I Will tell you what indicator can you use as an alternative to my Price action swing indicator.Because it has so many different parameters you may not find all those in free alternatives but still something as an alternative.

I will be loading the above Indicators one by one so that you have a clear picture.

CL Big


Picture 1 is a CL macro context Chart already explained in previous posts.For Macro trend 500 tick swing is CL macro trend direction as per my style of trading and according to recent past volatility.It used to be 300 but since last two years it is 500 now.


CL 1
CL 1

This picture 2 above is renko chart 4 tick brick size and this is my trading chart .I trade all macro levels of this chart when the micro technicals confluence or align with macro trend entry points.

This chart has only my price action swing indicator which measures price action swings tick by tick.On this chart I use 64 ticks swing to determine micro trend direction for CL . Red line on Top is line to be used as entry or stop for potential counter trend scalp traded and green and cyan line is used for Log trend trades.Both red and green lines are entry and stop lines as well.

Within this micro trend market context of small swing levels is easily discernible.


[CL 4-2


I added Order flow volume profile ninja trader native order flow technical indicator.It has following features in it.
Gives you Commulative session volume traded and Total daily market high to low price action range in ticks.
All point of interest are labeled on the chart. Also you will see all those Levels of Macro price action chart are projected on the micro chart s well. Which means Bigger context chart is readable and tradable through micro 4 Ticks bar chart.


CL 4


Most of the trade set ups are labeled on this chart.I am looking for confluence of max factors.
Is there any macro chart retracement level touched? is price below or near value area low? Is price in or out of 3 standard deviation VWAP Lower band? is price near or touching my mechanical entry level? for long setups and vice versa for short set ups in micro down trend. what is cumulative session delta indicating?

Also I have an Order flow tool which gives order flow indication in the form of sound which is different for short or long order flow types
it never lets you miss any high probability trade entry.

There are so many things that have become my second habit including risk management. I don't chase the market rather wait for my setups. As I have Extra ordinary resources at my disposal.Because I am following lot of instruments simultaneously someone of them comes to my set ups. I trade 2 to three instruments at a time which are most trending.

Having said that you have seen my charts are not cluttered, in volume profile I do not shade volume area but Only I use value area low and value area high and range low or range high Lines. Of order flow VWAP I only care about 3rd standard deviation band.

When it comes to last two lines of my Macro trend retracement areas I become mechanical trader as risk to reward is very high.

For now I conclude my conversation about this topic. Nothing in this universe is un purpose, do not become judge-mental because none is an absolute entity. We are just relatively little ahead or behind someone .We can overcome any hurdles and achieve our dreams but we need to be persistent.

it is not that any indicator is crap or one is better than other or to use them is waste of time, the issue lies with our skill, attitude and persistency level and the way we use these indicators.Price action and order flow indicators both can be used for scalping as well as trend trading. its only up to us how we use them.

We are living in boxes and if some information is not available in our box we jump to the conclussion it does not exist at all. This is not the case, if we will get out of the box the whole new world will be revealed to us.

So indicators are not useless or waste of time but depends, how we use them and what resources are available to us.Keep things simple,
have a winning attitude, be persistent, Life belongs to you.

Successful people don't do different things, they do things differently.

I will write another post later about psychological aspects of trading.

Sorry I messed up the loading order the last pic is at number 3.

Standard indicators can be a waste of time. Feature-engineered indicators can be beneficial.

Part of the reason why standard indicators can be a waste of time, is that people treat them as mechanical tools. They simply aren't.

Hi… I have traded for 26 years, 10 years daytrading stocks and 16 years daytrading futures. I have read all of your posts in this thread and want to thank you for your candid posts. I found them to be very interesting and several of your comments match my thinking. For example, you said:

Following are the factors that are vital in risk management.
1-Risk v Reward (covers loss and profit management)
2-Probability (Likelihood of event happening in your favor or against)
3-Position sizing (orders management , Orders lots involved)
4-Expectancy (Per trade profit/loss irrespective of number of winners or losers )

We all use different indicators/lines/etc. but the elements of risk management should contain the above categories. I use what you have plus a few more that are more tuned for the way that I trade. I daytrade and most of my trades are less than 10 minutes and the rest could take up to a couple of hours.

Risk of ruin is one of mine and I think you covered it in one of your posts. Too many times I have seen newer traders risk it all on one or two trades and blow up their account. I have losses like other traders, but I always live to trade another day.

Diversification does play a role in my trading risk. I trade metals, crude, and natty. That gives me enough diversity to get 10-12 good risk/reward trades in the 3 hours that I trade. My goal is to trade more than 50% of these potential good trades.

Spread and liquidity is a risk specific to me using market orders for entry/exit. I don’t trade futures that have spreads greater than 3 ticks because it eats into my profits. I didn’t trade natural gas for most of this year because the spreads were always greater than 3 ticks and the price ladder had many holes in it. Natty is good again, so I’m trading it again. I don’t trade futures that have less than 10 contracts at each level, given that I can trade up to 9 contracts per future and prefer to enter/exit each trade with minimal slippage.

Events and news. Market opens/closes, economic news and important finance people talking are important factors to consider for risk and reward. There is the risk of large volatile moves due to surprises, but often, there is the reward of great price action moves after these events. My personal opinion is that opens/closes, economic news, ets. all bring in more traders and the potential is greater that price will move in some direction for some period in time.

Given that I daytrade alone, I don’t get to discuss trading with others very often. Over the years, I have talked with others and some of those discussions led me to new ideas on how to improve my trading processes. So, if you don’t mind, I would like to ask a few questions about the attached chart. If you don’t want to answer, its ok and I understand. Some of what you have on the chart I can relate to: you use volume profile VAH/VAL and high/low of today. I use high/low of yesterday and high/low of today. My questions are:

1. What is the timeframe of this chart. It looks like during regular trading hours. minute chart? is the open or close on the chart?
   
2. Are you a daytrader or a swing trader.
   
3. What is the basis for those red/yellow rectangular lines above/below the candles. It looks like they are the same distance away from each other and change when price hits the upper red line. How/when/why do they change and how are they used in your trading. Is that distance based on standard deviation or something else. I assume that sometime in the future, those lines will cross and reverse direction down.
   
4. What is the basis for the cyan line below the yellow line. It looks similar to the red/yellow lines, but it seems to change more often. is that used for possible entry area or automated entry?
   
   What do you mean mechanical entry… is some part of your trading automated. I am partially automated on entry and fully automated for trade management and exit.

thank you in advance
toucan