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Catching Big Waves - a trader's journal of surfing the the markets
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Catching Big Waves - a trader's journal of surfing the the markets

  #421 (permalink)
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Gary, don't know if you were watching or trading the market today, but I found the volume quite difficult to read and deceptive. It's often tricky, however today especially so for me. After we broke down around noon, I kept looking for support, and I kept seeing buyers hold it, but never take it up. I would guess that based on your way of trading, you would need more confirmation before going long on a day like today. For example, I think volume signals you look for are there, however it was never confirmed by enough movement up. Am I correct, and what do you make of this?

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  #422 (permalink)
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r3algood View Post
The market could care less what you are trying to do...

GO WITH WHAT THE MARKET WANTS!

Let the market make your decisions, not what you think may happen.


Well, yes I do agree with that comment. But still believe in the analysis. The zone that was posted had the highest degree of confluence, and that is something I have found works for me. If you noticed, when I first posted the chart earlier that morning with the yellow-shaded zone of resistance, I said that "technically the resistance ran all the way up to 85.00". I knew that chance going in.

Below is an after-the-fact chart showing the previous yellow zone, and a blue line at the top end of restsiance (85.00). My experience so far supports that it is not pure coincidence that the market double topped in that area.


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It was my decision to take the lower half of a larger zone, based on the factors I had in front of me. In the future I may be more inclined to add a factor for the effect of momentum, and was probably a little too anxious to take a trade. (I travel a lot and only get to trade a full session a few days a week).



I am wrong a lot about my specific entry timing, probably 40% of the time. I may change that as I progress over the years.

I do always wait for confirmation, which to me occurs on a 9-range and a 6-range chart, and also for volume to tell me I am in the right area. What I did wrong that day, and should have known better, was that I stepped in front of a lot of momentum. Crude had run a great distance, and that made it tough to turn.

What I believe happened, obviously in hind sight, was that there were a lot of traders looking for a short entry (or a long exit) in that same area. The market ran to the yellow zone and sat for several hours, and heavy volume did try to reverse it. But before the pit close, when it was obvious they had the new shorts cornered, the market burst up in the last hour or so. Easy prey. I was among them earlier but had given in by then and scalped a few ticks long. But then, the fuel was spent, and notice what happened. I took a single contract short in QM (half-size) after 2:30pm EST and caught about $150.00 of the down move, which eased some of the sting of the day, but still ended down.

But, even though I lost money that day, the end result over the next few days only reinforced to me that the analysis was still useful, it was just my utilization of it that day that was wrong.

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  #423 (permalink)
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josh View Post
Gary, don't know if you were watching or trading the market today, but I found the volume quite difficult to read and deceptive. It's often tricky, however today especially so for me. After we broke down around noon, I kept looking for support, and I kept seeing buyers hold it, but never take it up. I would guess that based on your way of trading, you would need more confirmation before going long on a day like today. For example, I think volume signals you look for are there, however it was never confirmed by enough movement up. Am I correct, and what do you make of this?


What I attempt to do is analyze the larger waves to try to stay on the right side of the market. If you have been reading over the last few weeks, you've seen me follow a higher timeframe ABC correction, followed by a 5 wave move down (that failed to make it to the preferred wave 5 target), then a correction back to just below wave 1. Technically, that still made a 5th wave down the preferred direction for the market. I was not able to trade it as I have been in Houston for a few days, but I have kept up with it at night.

Many times it is easier for you to trade up than down, or down than up, depending on your experience, your beliefs, your fundamental views, etc.

What I find happens is that if the market can't seem to go anywhere but up for a few days of even weeks, when it changes direction with such intensity it is tough to believe it. That causes you to keep looking for a turn that does not want to happen. Similar to what I did earlier this week, but I did have a reason for why I was expecting it, other than "surely it has to turn sometime..."

That is actually why I started using the color coding of black and white instead of red/green or red/blue, because I needed to break a psychological pattern of feeling one was better than the other. I know that I am a better long-side trader than short-side, statistically. I believe that has to do with the overall bullish phase over the past couple years. And despite my best efforts, sometimes I find myself being affected by that subtle bias. (Even though my fundamental bias is slightly to the opposite side)

My trading amost always requires a reversal before I will take the trade. Occasionally I will take something right on a S/R line, like the target of a wave C, but other than a few very specific situations I need the market to reverse past my trend filters. But, that does not mean I don't sometimes also fade that, and actually take a long entry when the bars turn black for example, if it appears we are in the middle of a clearly defined and expected wave.

Some days the market is going to win, guaranteed. Some days you are in synch, others you are not. If it gets you too many times, drop the mouse, change your chart to a higher timeframe, look for possible major support and resistance areas, scoot your chair back a few feet and just watch for the rest of the day.

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  #424 (permalink)
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greenr View Post
Love your work Gary...will be following this closley :-D

I have been trading about 1 1/2 - 2 years now and still learning as all ways, were do you think you got most of your education from?

i have spent a fair amount on education and the market now.....any pointers

happy trading


I got most of my education from sitting out with a blown up account. Wondering why I ever wanted to trade in the first place. Wondering if there was such a thing as a profitable trader. Working out at the gym, or rollerblading, or driving in my car.

Very serious, but maybe not the best answer.

I have read a lot of books, taken a lot of online classes, signed up with nearly every free trial available. I have not found any that worked as an exact instructional manual for me, probably based on my personality more than whether or not the method worked, but overall probably got something from all of it.

My personal favorites;

High Probability Trading Strategies by Robert Miner. I found it incredibly difficult to read, not because it is poorly written, but because there was a lot to try to absorb. I'd make it through half a chapter at a time. But it took the elliot wave theory and condensed it.

Super Trader by Van Tharp. Funny how easy he can make trading sound, and how easy it should be based on the information there. That is when I stopped trying to be a high percentage win trader and instead decided to go for larger swings. At first I set my sights on minimum 100 ticks, but later got frustrated and did a study on the most common move size (posted somewhere here previously)

Advanced Trading Workshop. That is an online instructional group. Jerry Simmons is an incredible source of knowledge and I watched him pinpont major turns day after day after day. He was somewhat cryptic to me at first, and it was only after time that I appreciated the wisdom he has.


And, probably more than anything, you would probably not believe how many hours I spend in a week just reviewing charts, drawing on them, tweaking them, analyzing my trades, reading books, watching videos, questioning my mindset.

I travel a lot, and when I am out of town I fall asleep practically every night with my laptop on the nitestand beside me, data still running, and wake up occasionally to see what is going on. I have chart on my blackberry, called "Blue" that I review when nothing else is available. When my wife is watching television at night, I sit with her but also have my laptop in front of me on the coffee table. Not trading, just glancing. While I am working on other things, if the market is open and I am at a computer charts are always on my desktop.

I always have two or more trading books nearby, currently "Swing Trading" (in my suitcase) and "Trend Following" on my coffee table at home. I sometimes spend entire weekend days doing analysis. I once backtested on a Sunday for about 12 hours straight a couple years ago. Right now it is Friday night and I was just reviewing the week's movement, for entertainment.

I guess, for me, there is no one source for education. Everything is an education. I got taught a lesson just this week, and it sent me to a chart to create a rule about long term momentum.

But, if I had to put emphasis on anything, it would be that after whatever your choose to study, find what seems to work based on your personal experience, then;

Test that method in simulation with $5,000.00 until you can double the account trading a single contract. Balance down to $1500.00? Too bad, figure it out. Either blow it up, or double it. Then do it again. Get to $10k three times in a row. Then, try it with $5k real. Feel the difference. This time though, get to $1,500.00 and you're out. Back to simulation.

You may read this and think I'm crazy, or that it's not possible, or that you don't need that type of training, or that it takes too long. But, I'll bet anyone would believe they could blow up a $5k account in a very short time. There is no difference. You make or lose by market movement. If you are blowing up, you are taking the wrong side.

There is no better trainer than the market.


Last edited by GaryD; October 1st, 2011 at 12:38 AM. Reason: typos
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  #425 (permalink)
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Awesome post and many thanks Gary.

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  #426 (permalink)
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GaryD View Post
I got most of my education from sitting out with a blown up account. Wondering why I ever wanted to trade in the first place. Wondering if there was such a thing as a profitable trader. Working out at the gym, or rollerblading, or driving in my car.

Very serious, but maybe not the best answer.

I have read a lot of books, taken a lot of online classes, signed up with nearly every free trial available. I have not found any that worked as an exact instructional manual for me, probably based on my personality more than whether or not the method worked, but overall probably got something from all of it.

My personal favorites;

High Probability Trading Strategies by Robert Miner. I found it incredibly difficult to read, not because it is poorly written, but because there was a lot to try to absorb. I'd make it through half a chapter at a time. But it took the elliot wave theory and condensed it.

Super Trader by Van Tharp. Funny how easy he can make trading sound, and how easy it should be based on the information there. That is when I stopped trying to be a high percentage win trader and instead decided to go for larger swings. At first I set my sights on minimum 100 ticks, but later got frustrated and did a study on the most common move size (posted somewhere here previously)

Advanced Trading Workshop. That is an online instructional group. Jerry Simmons is an incredible source of knowledge and I watched him pinpont major turns day after day after day. He was somewhat cryptic to me at first, and it was only after time that I appreciated the wisdom he has.


And, probably more than anything, you would probably not believe how many hours I spend in a week just reviewing charts, drawing on them, tweaking them, analyzing my trades, reading books, watching videos, questioning my mindset.

I travel a lot, and when I am out of town I fall asleep practically every night with my laptop on the nitestand beside me, data still running, and wake up occasionally to see what is going on. I have chart on my blackberry, called "Blue" that I review when nothing else is available. When my wife is watching television at night, I sit with her but also have my laptop in front of me on the coffee table. Not trading, just glancing. While I am working on other things, if the market is open and I am at a computer charts are always on my desktop.

I always have two or more trading books nearby, currently "Swing Trading" (in my suitcase) and "Trend Following" on my coffee table at home. I sometimes spend entire weekend days doing analysis. I once backtested on a Sunday for about 12 hours straight a couple years ago. Right now it is Friday night and I was just reviewing the week's movement, for entertainment.

I guess, for me, there is no one source for education. Everything is an education. I got taught a lesson just this week, and it sent me to a chart to create a rule about long term momentum.

But, if I had to put emphasis on anything, it would be that after whatever your choose to study, find what seems to work based on your personal experience, then;

Test that method in simulation with $5,000.00 until you can double the account trading a single contract. Balance down to $1500.00? Too bad, figure it out. Either blow it up, or double it. Then do it again. Get to $10k three times in a row. Then, try it with $5k real. Feel the difference. This time though, get to $1,500.00 and you're out. Back to simulation.

You may read this and think I'm crazy, or that it's not possible, or that you don't need that type of training, or that it takes too long. But, I'll bet anyone would believe they could blow up a $5k account in a very short time. There is no difference. You make or lose by market movement. If you are blowing up, you are taking the wrong side.

There is no better trainer than the market.


You have given the holy grail away. Few that read your post will really get it. Like everything else in life - it's life altering, painful, mind bending effort and perseverance. The other bits like luck and timing and ability come after that effort.

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Most instruments are down, there is a lot of fear in the markets right now. I am watching to see if crude can find support in this area of previous major support. (76.00 - 78.00). If it can, there are most likely a lot of short positions that will get nervous. The trend is obviously down, so buying is countertrend.

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I decided this weekend that I am going to start watching multiple markets again to test a theory I have. There are certain patterns that seem to have the best risk to reward for me, but they occur so infrequently in a single market. My goal is to ultimately trade for the large waves ($5 to $10 in crude).

I have set up a 2nd computer to watch 6 markets at a time on a daily chart, and may change them until I get a feel for them. A few are markets I am familiar with; S&P, Euro, Gold, Russell, Nasdaq, Dow, but I am am also looking into Corn, Soybeans, Yen, Nikkei, Copper, British Pound, Natural Gas.

The idea is to take the strongest swing opportunities and hold for the duration, including overnight. I'll probably trade the mini-sized instruments, but will be posting analysis as I take a trade. Currently I seem to like Gold and Corn.

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  #429 (permalink)
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A surprise to me, what seems to have my attention the most this evening is the Nikkei. Notice the bullish wedge forming at a potential major double bottom.

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  #430 (permalink)
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GaryD View Post
I decided this weekend that I am going to start watching multiple markets again to test a theory I have. There are certain patterns that seem to have the best risk to reward for me, but they occur so infrequently in a single market. My goal is to ultimately trade for the large waves ($5 to $10 in crude).

I have set up a 2nd computer to watch 6 markets at a time on a daily chart, and may change them until I get a feel for them. A few are markets I am familiar with; S&P, Euro, Gold, Russell, Nasdaq, Dow, but I am am also looking into Corn, Soybeans, Yen, Nikkei, Copper, British Pound, Natural Gas.

The idea is to take the strongest swing opportunities and hold for the duration, including overnight. I'll probably trade the mini-sized instruments, but will be posting analysis as I take a trade. Currently I seem to like Gold and Corn.

now we're talking.


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