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Yeah I learned about it in one of FT71's videos, I think it was this one about being a better trader.
He describes it as the normal breathing ebb & flow of the market for the particular product you're trading. I associate it with that sine-wave kind of behavior, for /ES it is usually around 8-12 ticks recently.
I jotted that note down as a thought came to me, not sure if its going to be useful, definitely take anything I'm writing with a grain of salt
Hi, what methodology do you use for trading? Straight up price action? Some kind of basic indicators? Any specific books/courses that you learned it from?
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We trade using Al Brooks Price Action and record our entries/exits in public for accountability.
I watch price-action and I try to build surrounding context based on where the market has been, and what it seems to be trying to do at that particular moment in time. I started by simply watching price-movement with little to no context. Then I started slowly adding context and that's where I'm at, just scratching the surface.
As I work on improving, I'm starting to read books, but they are more about market behavior rather than a particular system. "Mind over Markets" is the book I am currently reading.
I really don't use indicators, not because I dislike them but because I haven't found a good use-case for my style yet. Only volume really, and sometimes I turn that off too.
I would say that I did start from scratch by playing with the cme globex practice simulator, and finding my own way I liked to trade, I found what I gravitated towards. I like price-oscillation and its various form as you would see in the daily behavior of products like /ES, /NQ, /CL, and /NG (when volume is higher for /NG especially).
But I am always keeping a cautious open mind to those who have learned a lot and are willing to share. And I am open-minded to adding new products to my repertoire when I'm ready. Interest-rate products interest me for the future. In fact I wish there were more types of contracts on more asset-classes with high enough volume and liquidity, because the different behaviors fascinate me, that is the key to me, the curiosity to want to dig deeper and improve.
I originally stumbled upon sites like investopedia and seeking-alpha and found them sort of lacking the knowledge I was seeking. I felt there was so much nonsense on these sites, it read like trader fan-fiction, so it made sense to just stick to my own ideas. I struggled with the small amount of live trading i tried after I'd sim-traded for 4 months though, so I finally found this site to be valuable.
I owe user @TraderTS a lot of gratitude for being kind enough to point me to rich area of market-behavior that I wasn't paying any attention to, namely fibonacci-retracements and extensions, which I've taken and tried to run with and expand upon to make it fit with my style, this is a very deep subject that goes beyond the simple computation of those numbers, you can expand upon this and find all sorts of things in the market that are affecting price-action, its very exciting rabbit-hole.
Someone somewhere suggested Al Brooks for price-action theory, I forget who, I should look it up because I added it to my list of books I will check out. I always read these things with a grain of salt as no system or concept is perfect and you must adapt always.
I am naturally always picking up on stuff others are doing because I am researching this stuff as a second full-time job basically, so I am always integrating new ideas like expectancy or But I feel in the end I should leave plenty of room for my own ideas to generate and evolve.
I think its important to build your own strong beliefs but have error bars around those beliefs and even discard ideas if they cease to work, even temporarily, and be open to ideas that may seem difficult to accept because the market in the end is irrational at times.
Sorry to ramble, I just wanted to give you a complete picture instead of simple "yes/no" :-)
This sounds a little like what I'm experimenting with on the Ehlers sinewave indicators. Ehlers refers to harmonics with respect to cycles and noise. I'll have to look into the harmonic-rotation.
I have a few spare cycles today after being on-call for work all weekend so I am able to devote a little more time to trading today.
7:15AM CST - Gap filled over night, E-mini S&Ps hovering just above Friday's low.
7:53AM CST - Classic Monday morning situation. Trading is my favorite part of each day, and the Market is listless/directionless and appears to want to reminisce about Friday's close. This always makes me impatient, and I always want to go in and "make something happen" in the market while I have time to trade. I've fallen for this too many times so I'm staying put.
I also applied for a trader position with "the other timeframe buyer/seller" last week but have not heard back. I will be doing my best to position myself with them in the market.
I am trying to think about what information is available that I am missing. Volume has been picking up, and I guess its too early to consider IB (initial balance) since NYSE hasn't opened yet. I've been wanting to get into market-profile/volume-profile because I'm reading "Mind over Markets" but I don't really have any tools for it currently, so I guess I will have to make do without.
@8:36AM CST I missed a good trading opportunity because I didn't feel safe with it being just after OB and all the volatility that goes with it. It always amazes me how these moves seem like slow-motion and by the time you realize what's going on, 14 points have gone by.
First half-hour of RTH/NYSE is wrapping up and the IB so far is about 21 points wide. Starting to think about a move here. Some range parameters are starting to form.
I have some extra free-time this morning so I can trade a while longer.
Almost entering short at 2790.00 but dodged that one, would have been stopped out. We're really still just rotating. I am taking a step back to re-settle.
Feels a bit awkward, choppy, indecisive. Market is moving, but where to enter?
I enter a stop-buy at 2814.00 thinking if we get range-extension beyond the IB it might run, but I cancel because I am catching myself speculating outside of my strategy.
I think this is me trying to weasel a trade in because this market is perplexing but I am seeing opportunities go by. This is exactly the time I need to sit back and just watch. I would have been stopped-out there if I hadn't grabbed the quick 4-5 tick gain.
So much inertia. How do we learn to pick out the trading opportunities when there is so much stoppage and indecisiveness?
The market is making nice moves but you need to step through shrapnel to get there. If you pan out it seems simple. Big, angular sweeping moves. But in real-time seems very choppy.
@11:08AM CST - Accept the fact that I will not trade today even though I had more of a time-opportunity, my trading-logic does not have answers for this price-action as it is presenting itself, but I can learn. This is a different market, even though it looks like you could pick it apart from a distance. what is the key to understanding this behavior?
These are live conditions, I can't just rush out to make silly trades. I need to make this count for something, since I traded well-enough in sim to make it here. If we sit and watch, then we'll sit and watch and try to learn something.
I feel like I want to use the term "Distortion" to describe the market-behavior, possibly combined with my own different psychology under live conditions. Everything is a little amplified and distorted and crunchy.
@11:30AM Other timeframe seller is pushing us out into a downward rotation of about 7 points. 2805.50 seems to be a point of control even though we are well away from it now.
@12:00PM CST I believe POC has moved down a bit towards 2804.00.
@1:09PM CST Possible buying opportunity on the single-print buying tail of the profile but we will only mentally trade this because it is a new concept and not part of the strategy being tested. Long wicks, quite a battle! Nice behavior, this is definitely tradeable in the future. This price-action needs confidence to trade into it, and right now I'm confident but not in this volatility. Be careful with structure/timing/trading-logic here.
But for the future, when there is confluence between tails and "interesting price-levels", magic may occur!
@2:50PM I almost want to go long @2802.00 because I feel like 2805.25 is the POC and will attract price upwards, but again, not my strategy for this 30-trade cycle, I observe and watch.
Final Results, just one canceled order from this morning. It was great to have a day to dedicate to trading, even if I didn't get into a comfortable trading opportunity. I will have to compare the market profile with how I felt about the day along with price-action homework:
Note: I sketch these market-profiles myself, these are not from CBOT, please don't think of them as "CBOT Gospel" ok? :-)
Completed (self-sketched) Market Profile for March 25, 2019: It looks most like a "Neutral Day" and was very difficult to find safe entries that weren't under constant attack. From "Mind over Markets": "The salient feature on a Neutral Day is the fact that both the other timeframe buyer and the other timeframe seller are active, as is evidenced by range extension on both sides of the initial balance. This indicates a market in balance, for all timeframes are involved." Very valuable info but you can feel the weakness of not having enough volume information to add to the profile, hence why I think it will make sense to learn about volume profile eventually after i finish this book. still very interesting.
What i liked:
- Time to focus on trading
- learned a lot about market profile by sketching it out on a day that I found difficult to trade.
- saw some opportunities unfold nicely, remember confluence of tails and interesting price-levels
What I did poorly:
- Missed some opportunities but that's ok
Goals for Tomorrow:
- Go over market-profile, compare against notes and do price-action homework against chart to try to combine all this into a coherent picture.
- continue reading
expectancy for current cycle
avg win = 0
avg loss = 0
% win = 0
% loss = 0
current cycle expectancy = () - ()
progress towards challenge goal
$3000.00 profit goal.
$0.00 achieved.
$0.00 current drawdown
0 trades of 30 entered.
current expectancy for cycle is 0 ticks
The more experienced you become, the more time will slow down for you. You will be in control of the moment and not lose the time that now just seems to slip away. I'm sure you've heard of as 'the zone' that athletes get into, or 'the flow (external link to Wikipedia)'.
7:30AM CST Jot down some price-levels and notes, not much preparation today.
7:33AM CST I enter, then cancel a limit-order to buy at 2819.00 which would have been profitable, but I wasn't ready. This is an error on my part.
7:49AM CST I am filled for a long position at 2819.00, like a replay of the trade I just missed. I feel there is enough support at YH of 2818.50 to have my back. @8:06AM I am closed out for a small 8-tick gain. I feel good about this small trade. I am ready for more if the right opportunity presents itself.
At 8:09AM E-mini S&Ps up 13.00, there seems to be strong support at YH as the last trade proved. VIX at 15.66.
It looks like the initial balance will be much narrower than yesterday, about half as wide, so I will be looking for range-extension coinciding with price-levels that are of interest and favorable price-action. This last piece is the first I learned to trade and still the most ambiguous!
Staying cautious as it looks like there is little directional conviction for now.
At 9:55AM CST I open then quickly cancel a buy order @2834.50, same reasons I've been cancelling the rest of them today and yesterday, lack of directional conviction. I may miss an opportunity but I also don't want a silly stop-out due to wonky market conditions.
Smart move in hindsight, very subtle behavior today. I guess to summarize this morning, there was a lot of conviction around support & resistance levels but little directional energy. This looks like it will turn out to be a "Non-Trend Day". The narrow IB has yet to be meaningfully toppled by any serious range-extension. We are up 24 Points, I don't see it going much higher, maybe there is even some edge to the downside.
Finally, in hind-sight, I noticed Volume would increase during the (selling) downward-rotations throughout the morning. I need to study that. Maybe there is a clue here.
Final results:
Note: I sketch these market-profiles myself for my own practice, they are not official and may have errors, etc.
Completed Market Profile for March 26, 2019. Characteristics, very few "breakouts" in the morning, a lot of rotation around points of interest. I saw a lot of "potential" transform into "ambiguity" and back again. I think these "Non-Trend Days" will open up trading opportunities in the future when you have enough capital and experience to safely trade a couple contracts a pop and take the periodic 4-8 ticks that are readily available steadily throughout the day while looking for bigger opportunities. I am not currently testing this strategy so I will not engage it today. I think there is something more I can identify here with more experience. I think a fitting name for this kind of day might be "Compact Day". End-Of-Day Note: A bit more range-extension mid-day, not as compact as the profile that was being assembled in the morning hours. Neat to see it unfold. Days can transform and the transformation today presented itself as tradeable range-extension. Very wide closing range, wider than IB!
What i liked:
- Good first trade for the cycle.
- Was able to see potential transform into ambiguity, cancelled out of entries that turned ambiguous.
What I did poorly:
- Though I was able to see potential turn to ambiguity quickly enough to cancel, I failed to see ambiguity turn to potential except in hind-sight, things will probably still move a little fast for me for some time.
- Some over-cautiousness I think, but this is where I'm at right now, building confidence slowly.
- Couldn't get through all my self-inflicted "trader homework" last night due to exhaustion, just watched tv.
Goals for Tomorrow:
- continue reading
- compute value area of market profile
- compare closing range with overnight changes
- put together bigger picture
- probability theory
progress towards challenge goal
$3000.00 profit goal.
$100.00 achieved.
$0.00 current drawdown
1 trade of 30 entered.
current expectancy for cycle is 8.0000 ticks
Decent for the tight markets we've seen to start this cycle, but I need to continue looking for good trades that raise expectancy significantly.
p.s. saw some very nice opportunities, even on a compact day in the morning, and as range-extension ensued later.
