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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

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  #871 (permalink)
 GaryD 
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STEP 3 - CONFIRMED


This was a perfect example of where, even as a small range trader, being aware of the larger wave structure can provide an advantage. Short was the direction to trade, until proven otherwise, starting with nothing but a simple chart pattern this morning.

Entering this move now could take a lot more skill and luck, as all three layers of fuel (stops) have been removed in a single day. I would prefer to see a pullback before trying this again.

Had I not had a meeting this morning, my target of 96 something would have been fairly easy, roughly doubling my take for the day, or more. Actually, based on my thoughts this morning as I wrote my plan for the day, I might have gone for the whole thing had I been able to watch the volume and momentum, but that really is speculation.

I used to have the tendency to feel worse than if I had been stopped out on a day like today. I had a plan, but due to other obligations I missed another huge move! But today, nothing. Not an ounce of regret. I see it as a sign that I am becoming more comfortable with myself as a trader. Big moves are always coming. The fact that my analysis was right scored a psychological win, but really, it did not surprise me to open the charts after I returned today and see that the market did as expected. What I gain from analysis and followup without trading, is memory without emotion attached to it. No disappointment if I am wrong, no adrenaline rush if I am right.

Today I stepped into a great trade by following my rules, got out of it to honor my rules about monitoring. I missed a big move, and am very happy with my trading today.

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  #872 (permalink)
 GaryD 
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Now that the fuel has been somewhat removed from the downward path, it would not surprise me to see traders start to build long positions again in this area. There are several things suggesting an ABC correction could here;

1) 94.56 is a potential Wave C target (as a Wave A alternate).
2) 94.60 is the 618 of the most recent wave up (low around 89.20).
3) 94.66 was a prior high pivot.
4) Price moved low enough to grab stops below the recent low pivot at around 94.90, but not far enough to discount this zone as defined support.

The somewhat ironic part; if they do, and the correct direction is still down, they will only add more fuel to the downmove as they bail / stop out...





Whether the move continues down from here towards the initial profit target, or whether crude will form a solid base in this area remains to be seen. While I did believe that target was reasonable as of the roadmap presented this morning, the motion stopped for the day where it stopped.

Now there is more information that is conflicting with the pieces available earlier. That is trading. Opportunites come and go. The best short entry was this morning at the triangle breakout. The next opportunity is coming, but for me, it is not there yet. I would not entertain entering a short in this area because, whether I am right or wrong, the odds favor too many traders reading this area as a good place to get long. And, it may be. But, even if it isn't, it could be a great place for a short covering burst that I would not want to hold on through.

In this particular area, I would actually prefer a long entry over a short, expecting the burst. Not for a big swing, but for a nice trade anyway. But what I would want to see has not occured. A washout, a local double bottom with an upside reversal, consolidation with an upside breakout, a bulish wedge, etc. I'm not that picky... But I'm not just going to cross my fingers.

Patience. Stay Safe.

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 GaryD 
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I just realized, it was just this morning I had the word "confirmation" echoing in my head, commented on 3 steps for confirmation, thought about how frustrating waiting for confirmation can be sometimes, RECEIVED the confirmation in a single day's price action... And then, thought, well, now maybe I'll go long... lol! I am a constant source of my own entertainment.

But, what I posted above about the ABC, other traders seeing this as possible support, "the market stopped where it stopped", all of that is true and well within my trading beliefs.

Is it any wonder trading can seem so random and illogical? The same confirmation for down being the direction ended up being an argument for support when the dust settled. I still stand behind both perspectives, and believe that is correct. My job is to assess risk, be aware, watch for good opportunities.

I could have chosen to go short this morning, stay in the trade while I was out for the day, and have returned home up 300 ticks to move my stop to wherever I wanted. That trade would be very solid. But, for a short entry now, where would a trader place a stop that does not have a target on it's back? I would not be giving back gains, I would be coming out of the gate. Big difference.

Maybe by tomrrow, if, I'll pretend, price moves up to 97.00, spike tops, then has a strong reversal. Or, moves up the the minor LSP around 99.95, gives significant divergence on a 9 range...Then, there's my stop location, there is the risk assesment. But right here, right now? Not in my plan. Not as a short anyway.

This area is a tough read. Trendline reversal and double top overhead, possible ABC support dead below. At least the ABC, plus the 618, plus the prior top, give me structure to back me up for a long entry. At least I know new shorts often get nailed. I'd actually be surprised if we don't see some version of short covering rally, even if it is nothing but a failed one.

I did just contradict my own 3 step confirmation and the day is not even over. But at least I have a good reason, and the market did not look like this then. At least I am aware of what I am thinking and why. That in itself is harder for a trader to pull off than it should be.

Tomorrow.

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 GaryD 
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 Silver Dragon 
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Gary,

What constitutes a weak cross-over? For that matter, what constitutes a strong cross-over?

SD

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  #876 (permalink)
 GaryD 
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Back to gold, the LSP resistence held for a minor double top, and formed a triangle similar to crude oil, , except that triangle gave way a couple days earlier. I notice that it also shared the similar break of the upward trend, then retest of the back side of that line (green upper trendline) as it's last attempt at moving higher.

The potential long in gold haunted me for about a week, since I spend the overwhelming majority of my time analyzing markets in timeframes that I never actually trade but often wonder what would happen if I did. But I recently came back to center on that whole thought, and the ride of emotions and questions that accompanied that swing of the pendulum actually solidified my understanding of why I trade net positive, and why I prefer shorter sections of larger waves.

I have found that when I experience the most inner conflict is typically when I stand the best chance of learning something.

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 GaryD 
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Silver Dragon View Post
Gary,

What constitutes a weak cross-over? For that matter, what constitutes a strong cross-over?

SD



I am just starting to study Ichimoku out of curiosity after the Chris capre webinar, and posting charts now for my own historical record. I have used it for additional confirmation, but only psychologically so far.

Here is what I have in my notes;

Strong Crossover = When the TK crosses above the Kumo for Bullish/Favorable, or, below the Kumo for Bearish/Reversal

Medium Crossover = A TK x inside the Kumo

Weak Crossover = When the TK crosses below the Kumo for Bullish/Favorable, or, above the Kumo for Bearish/Reversal


Below is Gold on a daily Ichimoku. This would be a Medium crossover. Also, unlike crude, the Chikou Span (purple trailing line) has clearly crossed below price action.




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 GaryD 
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Gold 5WM failure on the 120 minute. The confluence of the major trendline, the backside of the minor trendline, the LSP and the 100APP of the 2nd wave that formed the major double top, marked the best reversal resistence. If that would have been the "sell ready" signal, and the entry trigger would have been the breakout of the symmetrical triangle, it would have been clear sailing with zero heat.

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 GaryD 
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WoooHooo! For some reason, I just got a little medal of some sort! Must be a purple heart for all the times I have been wounded in battle.

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 josh 
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GaryD View Post
I used to have the tendency to feel worse than if I had been stopped out on a day like today.

Ditto -- I'd see monster days and think "the chance of a lifetime missed!" ... then I sat through some of those monster days, able to trade it, and realized that being present during a monster move does not mean one will make money from it And even if one would have, so great, you catch a monster move... and then what? You don't trade for two months and happen to fortunately catch the next monster move? ...consistency is the key and when I am on a roll, I trade well. When I'm hit or miss, I do some of the dumbest things ever. Trading smart and consistently every day, monster moves or range bound boredom, is the key to long term success, at least I think based on my very limited experience.

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