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

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 GaryD 
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CATCHING THE BIG WAVE


Surfing is often used as an analogy to trading, and most traders dream of catching the big waves. But, similar to trying to surf monster waves, if you haven't acquired the necessary skills to do so, you 'll probably wind up smashed on the reef. Even expert surfers are going to take an occasional beating, but through years of practice and patience, they have a much higher chance of success than most.


Over a series of posts to this thread, I'm going to list some things that can help you catch a big ride, and show you a specific trades as they occur. Some posts will be in advance, and you might be able to try to catch a wave with me. I know from experience that trading can be extremely lonely and difficult, and you may find it helpful to watch someone with thousands of hours of trading and studying share their views on setups. Other posts will be the results of what just happened, and this will most likely be more common, as I do not initially make analysis to share with anyone, I make it to trade myself.


As I write these posts, my goal is that it helps you, and and the same time helps me. Training the mind requires repetition, and writing it out for someone else to benefit from it is an important part of my own conditioning.


My wave of choice is crude oil, or CL, known for big powerful moves and high volatility. Crude is not for the beginning trader. Similar to the Banzai Pipeline, it can tear you to shreds if you don't know what you are doing. But, if learning to catch big waves is your thing, crude oil produces them with high frequency.

Crude runs at a 10-day ATR of 250 ticks +/-. But, the odds of you catching the top/bottom are stacked against you pretty hard, and trying to do so will be financially painful. But getting closer to the bottom gives a higher reward-to-risk. What I look for are places where to opportunity is greater and the risk is less. Tough orders, but that is my approach.




Before we even head for the coast, so to speak, please take some time to consider a few things;




1) TRADING CAN WIPE YOU OUT


That was unpleasant, wasn't it? We were just about to make a lot of money, no?


Maybe.


But you should be aware of the fact that I have “blown up” more than one account, totaling more money than you want to know, and enough to make some men cry. This is not the wave pool at Disney World. You can and will get hurt.


Am I successful now? Yes. But it took a lot of work and a lot of tenacity. Had I had more patience, more understanding of myself, better discipline, longer training, I would be far ahead of where I am today. There are surely better traders than me on this site, but I can at least provide a lot of hard-earned knowledge.

If you are not already profitable on a consistent basis, my advice is stay in simulation mode. There are opportunities every single moment of every trading day. You are not going to miss anything by practicing. On the contrary, you will ultimately make more money (or lose less) by having the patience to really learn your market before you put real dollars on the line. When you are ready, the market will be there.


If there is one thing I should stress to you, it is that you need to protect your capital. Do not trade with high leverage, do not average into losing trades, do not take a trade just because the market is open. You might get away with some of that for awhile, but long term it does not work. To succeed at trading takes a lot of practice, a lot of patience, a thorough understanding of risk, and a thorough understanding of the market you choose to trade, and most important, a thorough understanding of yourself.


Your job as a trader is not to make money. Making money happens when your job is to NOT LOSE MONEY. Does that mean ridiculously tight stops? No. In fact, that can be the fastest way to lose. It means taking only the best opportunities.



2) YOU MUST BE COMFORTABLE WITH BEING WRONG


In big move trading, you are not going for high win percentage, and so you have to get comfortable with the fact that you will most likely be wrong more often than you are right. That concept is tough for a lot of traders, as many of us believe that to be profitable we need to be right more than we are wrong. Yes, for scalping that is true, but for big swing trading, with the proper risk to reward ratio, you can be profitable even if you are wrong more often than you are right.


You must have the patience to wait for a trade to come, and also patience to wait for a trade to work.


Unlike surfing, you don't get the luxury of knowing which direction the wave you are on is headed, but trust me, it is going somewhere and is not going to sit around in any one place for very long. I may spend days watching for a sequence of events, enter a trade and get stopped out in minutes. But, if I want a big move, I have to just get back up and start watching again. That is tough to swallow for traders that enjoy the adrenaline of a fast-paced trading environment. I may have to sit out for hours, days, weeks, depending on what size move I am looking for. Wrong. Wait again...




3) YOU MUST LEARN TO IGNORE INHERENT VOLATILITY.


The extreme volatility of crude most likely whipsaws anyone who trades it. It typically has 20-30 tick swings that can feel frustrating when you are going for a longer move. It can be hard psychologically to be up 30 ticks per contract and then watch it disappear, and harder still to have your stop hit a few minutes later. But if you are going to ride the big wave, you have to learn to see that volatility as nothing more than the nature of the wave. Think of it as an exercise in endurance, and train your muscles (mind) to push past the pain as you maintain your balance. This could be a long ride, and you are going to have to find your second wind if you expect to be able to hold on.




The next posts will show a specific trade setups and discuss the tools and patterns that were used in making a trading decision. I plan to update this thread as new trades develop, and to continue to emphasize the factors that contributed to the trade being succesful. Until then, stay safe.

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 GaryD 
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When you are looking for a big wave, you first must know where to expect the move to start. When I am trying to expect ( a key element ) a larger move, I use several factors, preferably in combination;

1) Fibonnaci clusters on higher timeframes. If I can find an area of overlapping fibonnaci ratios, that is also potentially the end of an ABC correction, or the end of wave 4, or the end of a 5-wave move, or a consolidation area with double tops/bottoms. That is step one in getting prepared to catch a big move. When I have defined a zone that has the potential to be a major turning point, its time to paddle out and watch for something to happen.


I don't personally like the automatic fibonacci indicators, but they may work fine for you. What I use for my analysis are simple fibs pulled from 3-directions; an alternate projection of a previous wave, plus an extension of a recent wave, plus a retracement of the larger picture.

2) Volume exhaustion on a 1 minute chart. When the support/resistance areas establish, and then crude takes those out by just a few ticks (or 30), and during that move extreme volume come in but the price does not move much, or even reverses. You have to understand the difference between volume that is confirming continuation versus volume that is stop losses blowing versus volume that shows support/resistance. That takes time, practice, and some preparation to be aware of what could happen. But for me, this has been one of the most powerful observations I can have in successfully identifying support/resistance.

3) Trendlines. When price gets near a higher timeframe (60 minute / daily) trendline, this is where the larger traders are watching.

4) Divergence on a higher timeframe. I like a 21-28 period Momentum on a 30 minute chart, but there are others that work as well.


5) Overbought/oversold areas. This type of indicator can produce many wrong signals. When something is “oversold”, that does not mean anything by itself. But, when watching it within the context of the higher trend, wave structure, and volume analysis, it can provide a good place to consider being a turning point. For crude oil, I use a 2-period RSI on a 93 minute chart, (as taught by Jerry Simmons of ATW).

And to me, the most critical part of selecting an entry point is;

6) Some sign of trend reversal. This can be taking out the high/low of the previous x bars, or a moving average crossover, or a channel reversal, or a MACD crossover, or whatever looks right to you. I use more than one, and use range bars and wicked renko bars as my trigger, not time based bars. Currently I watch a 9 range with a Holt 89/144 and a 6-range with a T3 144. When price breaks out crossing both, (and assuming crude has possibly confirmed something in 1-5 above, the more the better) that is the direction I am looking to trade in.


But possibly the most important factor in catching a big move, assuming you have done everything else to stack the odds in you favor, is to BELIEVE IT WILL HAPPEN. Without that you will worry, you will want to limit your potential by locking in profits. Your win percentage can be 25% if you risk 30 ticks to get 150. But those moves take time, typically whipsaw back and forth, and if you are watching it happen will find every way possible to make you doubt yourself. We all have the potential to take those longer swings, but the question is, are we personally wired to be able to? Relax, believe.


Next post will be an actual trade.

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 GaryD 
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Yesterday, when the crude oil market opened at 8:30, this is the chart I was watching to determine what the plan might be. No decisions made yet, just getting familiar with the current structure of the market. The prior strong move up (highlighted with a yellow line), coupled with a series of higher highs (I'll show in another chart) had me looking to take a trade in the long direction. For a swing trade, there were two possible stong entry points. I've circled them in white and labeled "Zone 1" and "Zone 2". By this time in the morning, Zone 1 had already been slightly penetrated, but could still be valid area. But trying to get into this trade where it was would put me in a position too close to an area where stop loss orders were most likely concentrated (just below the pivot of Wave A) Therefore, for a long entry in this zone, price would need to breakout above the prior 15 minute high around 99.20. We wait and watch.








By 9:15am, the stop losses had been triggered, sending crude oil quickly down into Zone 2. Still no trade trigger, but another place to be watching for a reversal.





Here is another view of what I was watching on a 93-minute chart. The series of higher lows I mentioned are marked by blue arrows, which was the main reason we were initially looking for a long. The 2-period RSI entered into the oversold zone on the move down, which is never a trigger to enter a trade, but is often a place where crude oil finds exhaustion. A trigger to actually enter needs to occur first. But, look back across the chart at the areas where the RSI turned cyan. Note that the majority coincided with a major turning point. This is something I learned in a paid trading education, and it has proved to be incredibly accurate, IF I waited for a reversal confirmation to follow. Not waiting for confirmation typically lost me money. But, if you think of this as being a signal that A BIG WAVE IS COMING...






Now, we watch for volume. Volume analysis confuses a lot of traders, and a lot of conflicting volume signals can look the same. Notice the 2000+ contract bar around 9:01am. Even with the large wick at the bottom shoing some upward pressure, this is not a sign to enter. That volume was the result of the stop losses that were placed below Wave A. That type of volume can be a signal to enter a short trade. But, we were not looking for a short trade as the trend was up. We may scalp that move down, but this focus is on big wave trades. What we want to see is, will supporting volume come in and scoop up the low prices that the blowing of stops just gave us? The next major low pivot is a good distance down, so the fuel that stop losses provides for a down move has been somewhat removed. later I hope to show a setup where a domino effect of pivots can be the catalyst for a good move, but that is not what the structure gave this time. The green high volume bar around 9:10am actually shows selling pressure as price came back up and tested the breakout pivot where the stops blew. But the next high volume bar at around 9:15am gave us something we were looking for. Fellow surfers, get ready. We have possible support in a high confluence zone (Zone 2)





Now, for the final step; The Trigger.

The red/green moving average in this chart is a Holt moving average set at an 89-period and a 144-trend. When price breaks out strongly above that, we are TRADE READY. Our goal is to enter in the zone of a pullback (I use the donchian channels shown, set at 21, 34 and 55). There is no specific place, and sometimes crude will spike up and not look back, but more often than not it will come back to at least one of these DCs. Entering a long position anywhere in the blue box in this chart is fine. Your stop loss will be the previous pivot. Why are we not concerened about blowing stops there right now? Because that pivot just formed and volume showed possible acceptance for buying at that price. A trade entered anywhere between 98.60 and 98.80, with a stop loss at 98.40, gave us a risk of between 20 and 40 ticks. Buy in, set your stop, and wait for the close (or the 2pm rush). At 1:59pm, price hit a high of 100.19, a potential of 139-159 ticks, in a few hours. Over a few days, who knows. Since it was Friday, that is never a time I feel good about holding after the close, but also because it was a Friday, I knew we had a good chance of shorts wanting to be out of the market before the end of the day after seeing such a stong ABC pattern combined with supporting volume.






Did I catch 159 ticks on this trade? No. I took 76. With more upside potential, why did I get out? It was Friday, and psychologically I want to finish up on Friday. But, following all of the steps I just outlined gave me a good chance of catching a turn. And I did. Riding big waves does not mean you can't get on and off at various points in the same move. There will be another opportunity Monday morning. And you can trust I'll be there, watching and waiting, measuring the flow, surfboard nearby...


This type of motion happens very frequently in crude oil. There is another example on a higher timeframe that set up recently and turned out to be a $10,000.00 move per contract. See a previous post.






I'm going to try to post a setup in the next week or so that gives an opportunity in advance.


Practice, learn, patience, stay safe!


Good Trading!!

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 Big Mike 
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 GaryD 
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The long term trend in crude oil continues to be up, and that direction has recently been given additional support by the forming of a major double bottom. Price just barely breached the left shoulder pivot area, but is not far enough yet to consider that area of resistance invaild.






Zooming in, but still on a daily chart, a near perfect ABC formation may be in place. Adding to the upside argument; price blew through resistance at the prior low breakout pivot, and is approaching an area of potential domino-effect stop losses from traders on the short side.





None of this necessarily means trade confirmation at this moment. But in my search for a big wave, the long side still has my attention.

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 GaryD 
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No trade yet...



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 GaryD 
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At roughly 9:30am EST, crude re-ested "Zone 2", found support, and rallied again roughly 140 ticks so far.


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 GaryD 
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Stay away from the long side until we see a breakout on the trend filters. Here is the current 9 range trend.







And the 6 range trend...






But, the long term trend, shown here on the daily, is still up.



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 GaryD 
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The 93 minute is in the oversold zone. watch volume and watch for a trend filter reversal.


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 GaryD 
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We have a second condition - potential stopping volume, we have a slight trend reversal already on the 9 range, but no confirmation on the 6 range yet.


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 GaryD 
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I am in, lightly, one contract so far...



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 GaryD 
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I have to go somewhere with my wife, closed this trade earlier than I typically would. Caught 80 ticks.

If you are in, move you stop to breakeven or +10.


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 GaryD 
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Left some on the table, but I have a wife to keep happy... There will be another good wave coming.

Hold on to this one, stop should be no lower than 98.40 at this point.



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 GaryD 
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Just made it back and see that we did in fact identify an excellent entry for a big wave. Hopefully some traders caught this with me. If you didn't, keep watching as I plan to post more as they setup. Keep in mind that no trade should be valued any more than any other, and you must keep your risk low. The next entry could be a loser, the next three could be losers. We must keep those small. But by catching the big waves we will come out ahead. Re-read the rules, practice, wait patiently for the next wave to come.

Good Trading, Stay Safe!



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 GaryD 
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Cude is trading right at the upper daily trend line...







... but has put in a lower low on the 93 minute.







This trendline is a great place to be watching for a long entry, but without a trend reversal of some sort (as the short term trend is absolutely down at the moment), for me there is no trade right now.





This high volume does not count yet, as the petroleum report was just released.


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 GaryD 
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I missed this trade, but wanted to post anyway. The 6 range broke out above the T3 and the Holt, pulled back to the Donchian channels, and off it went for at least a good $500 scalp. I was on the phone and then went to get coffee. I'm actually watching the downward pressure on the S&P and feeling like that may drag crude down with it, so not as likely to take a "big wave" trade today. I also did not like the lower low on the 93 minute. Sometimes I make money by not trading.







S&P index (ES) 4 range


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 GaryD 
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Notice the difference in today's move versus yesterday's, that the upward swing lost steam so quickly... This goes along with my comment earlier this morning about a good scalp, but not as interested due to the lower low on the 93 minute and the pressure on the ES.






We still have higher timeframe bullish support, but for right now the 9 range shows consolidation and/or confusion. This is a time to keep your eyes open for a possible new trend, but no trade confirmation yet.



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 sharky 
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Good job using the different timeframes,remember consolidation is your friend for trend reversals,you are using vol well and watching for trends on all sides.i will keep reading...sharky

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 GaryD 
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The left shoulder pivot (yellow) of a possible head & shoulders combined with the local double top is fighting some with the daily near-term / long-term trendlines (shown in green). Traders are no doubt positioning for uncertainty, which can make for good range scalping, but can chop you up if you are trying to take a longer ride.





I did not take a trade today, but was happy with this morning's guess that the market would come back down along with the ES. Tomorrow and Friday I will be out of trading, but will be back on the lookout this weekend and ready for some great opportunities next week.



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TraderJoe0410
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I was in @ 96.70 with a stop @ 96.51 of the days low and held it on until midnight.

Thanks for the analysis GaryD,

 
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 GaryD 
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It's Sunday night, doing my "homework" so I'll be prepared tomorrow morning. The issue with the pending debt ceiling makes me a little aprehensive about choosing long or short for a trade direction right now. Not that I believe in trading on fundamentals, but this is an event to be aware of.

The charts offer mixed signals right now as well, and that is a stronger factor in my current "wait and see" approach.

The trend on the daily chart is still up, and price set a tripple bottom on a lower timeframe (posted further down) which was right in line with an offset of the major trendline (shown below as a bold green line).




However, the left shoulder pivot mentioned previously did provide resistance, and a right shoulder pivot has now clearly formed just above the $100 area. That does not mean crude is going down, but it does mean that most likely a number of traders are placing, or have placed, bets that it could. Meanwhile, crude's dominant uptrend and local double bottom have probably a similarly significant number of traders believeing it is going up. So, what I am going to watch closely are the areas traders on both sides have most likely placed their stop losses. And, of course trend filters.




The chart below is a 93 minute. The bold green line at the bottom is the same as the bold green on the daily chart. Until that line breaks, we will expect that line to hold. The next line up is blue, and represents the area of a previous pivot just above the major trendline. Crude seems to like to respect these areas, and if it were to get in that range I would be watching for that to hold before it gets to the major trendline. But, before either of those would come into play, my main area of careful observation are the two zones marked by red arrows below and a green arrow above. (There is a gray arrow between the two reds, because those stops most likely blew already, but that area has provided strong support so far).

Scenario #1 - If Crude gets near that local double bottom area again, I am going to be watching for it to blow the stops that have most likely concentrated there, then hold just above the secondary trendline. Watch volume and wait for a reversal. Or, if it gets near, then can't blow those stops, and then reverses, same thing.

Scenario #2 - If, instead, crude gets near the horizontal green line at the most recent high pivot, then I will be watching volume around that area as well. Most likely some of the traders who are short have tightened their stops to that area, and if that area blows and/or holds, watch volume and watch trend. A high-volume stop in that area followed by a reversal will cause me to enter short.


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 GaryD 
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TraderJoe0410 View Post
I was in @ 96.70 with a stop @ 96.51 of the days low and held it on until midnight.

Thanks for the analysis GaryD,


I have not gone back to see when and where that was. Did you make some money? I hope so!

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 GaryD 
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Approaching the upper zone. Huge volume spike.


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 GaryD 
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Stops are now out of the way, selling volume has appeared around 98.60.


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 GaryD 
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Currently in long only mode on both the 9-range (shown) and the 6-range, but I am watching closely for a possible reversal. Notice the divergence on the Momentum/MACD.


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 GaryD 
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We have possible reversal on both the 9-range and the 6-range. Watching volume and the donchian channels.




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 GaryD 
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 GaryD 
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 GaryD 
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I closed this trade at 54 ticks, heavy volume came in on the 1 minute. I almost took the trade higher up when the trend reversal first occured. It met the conditions; Passed the area of stop losses above the market, selling volume showed up on hte 1 minute around 98.60, the trend reversal on 9 and 6 range.

But I was waiting for the Construction Spending, and never got a better entry chance afterwards. Still a decent trade. Had it not been a "countertrend" trade, I might have thought differently.


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 GaryD 
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Stepped out way too early on this one. I was not comfortable with getting in so far from my preferred entry point and don't put as much weight in countertrend moves, but I left at least another 80 ticks on the table today.


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 GaryD 
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What a move - all the way down to the buy zone mentioned last night. Now, watching for a possible long...


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 GaryD 
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The market took out the previous double bottom;



Found volume support after blowing the stops;



And showed a trend reversal.


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 GaryD 
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 GaryD 
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I closed this trade for another 60 ticks even. Two trades today, one short after blowing stops above the market, and one long after blowing stops below the market. Total 114 ticks for the day.

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 GaryD 
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Stops overhead blew, then we see selling volume. I am watching for a reversal. No trigger yet.


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 GaryD 
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Remember not to consider a trade without a trend reversal. As of this moment, the trend on the 9 range is definately up.


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 GaryD 
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This is the areas where sellers will come in, if they are going to reverse. The large sellers rely on the heavy volume of stops blowing, which just occured above the green line of the most recent pivot. The RSP is still intact.


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 sharky 
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i would start trying to call it a day the markets are about to get funny here in another hr or so.bad news comming...sharky

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 GaryD 
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We have a sell ready signal, now watching volume and the donchian channels.


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 GaryD 
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The setup was flawless. My entry, however, was not. I missed this trade by 2 ticks... Happens sometimes. The good news is I will get another chance. Had I entered right on the 21 DC the trade has roughly 70 ticks so far.


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 GaryD 
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Even with the missed trade, it's worth looking at the wave structure that caused me to be interested in this area as a possible turning point for a short trade.

In addition to being just outside the stops that blew, and the higher timeframe Head & Shoulders RSP still intact, there was a very good 100% APP of wave A after a major prior move down.


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i would start trying to call it a day the markets are about to get funny here in another hr or so.bad news comming...sharky


Yeah, that was my trade for the day, and I missed it. It still has the potential to run if we are in fact going to complete the H&S, but when I don't stick to my rules I typically get nailed

Today's record 1 missed trade, no dollars either way. If crude is going to find support, it should be in the 93.70 - 94.00 area, for a short covering race for the exit doors. But I may pass.

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 Deucalion 
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CATCHING THE BIG WAVE

.....Your job as a trader is not to make money. Making money happens when your job is to NOT LOSE MONEY. Does that mean ridiculously tight stops? No. In fact, that can be the fastest way to lose. It means taking only the best opportunities.


Kudos, that was/is/will be the single most potent concept in trading of controlling risk (of not losing money). It was eye opening for me too, the lesser I traded the more profitable I got (just as you have resonated). It's a lost concept (but only because of 80/20 rule). Human nature being what it is - it is only right that only 20% ever get that and probaly only 20% of that 20 survive long enough and are lucky enough to put it all together to make it.

And once you think you make it, you are in danger of losing it all becuase the market never sits still and wants you to re-learn the lesson over and over again. It is the dance of death, and what a beautiful dance it is. For the rewards are truly equal to the danger.

GaryD - thanks for sharing.

 
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If it will hold, here is the support we were looking for. Around 93.70. Wait for a reversal...


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 GaryD 
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WAIT....



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 GaryD 
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My stop has already been moved up. Either this is going to go or not. It is the rush for the 2pm exit.

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 GaryD 
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Stop was moved up again, 93.59. This one was not looking right, and I almost closed it for a 10 tick +/- profit, but I tightened my stop instead. It turned out to be a losing trade, but only for 18 ticks. It can be frustrating to have a target of 70+, have your trade reach 40+, then turn on you. But, I'll take that over being afraid to leave my profit a reasonable distance away for the trade and the risk. My target was just below the prior high pivots, which will often be run when the market was bearish all day and then headed for the afternoon close, as shorts are trying to lock in and/or exit. But, tomorrow will be another opportunity, and 50, 60, 70 tick moves happen every day

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Kudos, that was/is/will be the single most potent concept in trading of controlling risk (of not losing money). It was eye opening for me too, the lesser I traded the more profitable I got (just as you have resonated). It's a lost concept (but only because of 80/20 rule). Human nature being what it is - it is only right that only 20% ever get that and probaly only 20% of that 20 survive long enough and are lucky enough to put it all together to make it.

And once you think you make it, you are in danger of losing it all becuase the market never sits still and wants you to re-learn the lesson over and over again. It is the dance of death, and what a beautiful dance it is. For the rewards are truly equal to the danger.

GaryD - thanks for sharing.



You only risk losing it all if you bet it all.


There's a story, a little off topic, but it applies. I am a vegetarian, have been for over 20 years. I also studied eastern religions in the past, and in that pursuit came across a tale of a student who wanted to study with a certain "master".

The master refused the student, saying that he only accepted students who were vegetarians. "But I AM a vegetarian" proclaimed the student. The master still said, "No, you are not."

The student begged and persisted, and finally the master told him, "Go away, and eat nothing but meat for the next thirty days. If you can do that, I will accept you as my student."

The would-be student was confused, and asked, "but master, I can't do that..." But the master's terms were not negotiable, and so the student set off to start his 30 day diet of NOTHING BUT meat.

Several weeks later the student returned to the master, and broke down in tears at the master's feet.

"Master, I tried so hard to do what you told me. I have had nothing but meat for over 3 weeks. Not a piece of bread, not a single vegetable, just meat, meat, and more meat. But, I am so sick of it I now that even the mention of it makes me sick. I am so sorry master to have failed you, but I cannot eat one more bite ever in my life."

The master smiled and said, "Ah, now you are a vegetarian!"



For me, I was a "trader" long before I should have been. I was going to make millions, and have had incredibly profitable days... But even though I convinced myself that I had studied hard, knew the rules of trading, researched probable strategies, backtested my butt off... I was not a trader. I was a fool, I was cocky, I was impatient, I was naive.

Blow up a few accounts. Risk everything and loose it. Do it again. And again and again. Until you can't stand the thought of ever having it happen. That was my path. And then I became a trader.

We all already know the odds are against us. When you play with leverage, make sure you do it on your terms. Trading should not be looked at that much differently from being an insurance underwriter; Know your market, know your odds, take only the risks that make sense.

Stay Safe! And make some money!

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TraderJoe0410
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I have not gone back to see when and where that was. Did you make some money? I hope so!

Yeah, thanks for asking. I was able to get at least 35 ticks on that trade. I was constantly checking your journal for updates, glad to know your back posting. As for me I'm still looking for my trading style, I'm currently trying price action placing long positions on LowerLows of the day and going short of Higher Highs. Whats your take on it? I was thinking of asking BigMike if he has any opinions about my strategy and hopefully will be posting a journal as well.

 
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 GaryD 
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A lot of chop right now. Price has been swinging back and forth across both the Holt and the T3. Some traders are good at scalping the top and bottom of this channel. I am not and am going to stand aside until crude chooses a direction.


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 GaryD 
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Crude is at a very interesting point, approaching the daily trendline, which could provide an excellent reward to risk ratio long trade, and that same area is now the neckline of a very well defined head & shoulders pattern, which if broken could mean continuation to the downside. The energy report is today at 10:30am EST. We will most likely see some heavy volume ahead of that, closer to the open probably, as traders try to get positioned or out for the report, then likely some more chop approaching 10:30am. At the news release many times the first spike is a fake move. Be cautious and let crude prove where it wants to go.

[URL=https://cdn.bmcharts.com/view.php?filename=3nms9j.jpg][/URL

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 GaryD 
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On a closer view of the daily H&S and the double bottom, two major players fighting for control of this market.


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 GaryD 
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There are two defined zones that are going to be on my watchlist for this to be confirmation of a long, shown below on the 93 minute. I will NOT take a trade just because it gets there, assuming I can catch the bottom, but I will watch for volume that is powerful enough to stop it for me. What would be a classic crude move is to come down to Zone 2, which would mean taking out all the stops at the prior double bottom, and then reverse. Not meaning to be a prediction, but just something to watch. But, also keep in mind the short positions have likely been building, which can set the stage for an explosion to the upside if they are wrong. Any direction is probable today


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 GaryD 
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Here is a closer view. There is actually a 3rd area, the daily trendline, that would be a great place to watch for a long, if it is going to happen.


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 GaryD 
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We have broken zone 1, as well as the 30 min consolidation area. I am short ready, but wish it was not ahead of the EIA. Still may pass until after 10:30...

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 GaryD 
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 GaryD 
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I closed the short trade for +11. Do not like the heavy buyers at this area. They may break, but that was an impressive 1-minute bar.



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 GaryD 
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I'm out until after 10:30am. Picked up yesterday's loss with a quick scalp on 3 contracts. When the charts give such strong formations on both sides, trading can be like being caught in a washing machine. You nor I are big enough to move this market, and there are some heavy hitters on both sides right now. When this breaks it should be a good move.

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 GaryD 
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Approaching area of interest for possible long entry


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 GaryD 
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I am looking for a long swing entry near the daily trendline. We had volume around 12:18 showing buyers are i the 91.20 area, which is very close to trendlinge support o the daily.




We have just had the first sign of reversal, both on the 9 range (shown) and the 6 range.


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 GaryD 
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 GaryD 
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Took one contract off the table at 30 ticks, moved stop up on 2nd contract.


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 GaryD 
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tighten stops


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 GaryD 
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GREAT volume bar - hold this trade


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 GaryD 
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stop moved. 30 ticks in the bank, 12 tick risk


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 GaryD 
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I don't hold into the 2:30 close. stepping out of contract #2 at 16 ticks. Sorry guys, was not watching the clock that close when I took this. Net result was a win, but should be an interesting place for tomorrow.

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 Big Mike 
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Nice job today @GaryD.

Mike

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 GaryD 
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Getting back to how this thread started, obviously I don't find the time to post every trade as saving the image file, logging onto the chart post website and posting, copying, writing a commentry, and posting in this thread takes time and attention away from what I really want to do, which is watch the trade more closely.

Since this thread started, the turning point for several very large waves have been shown in real time, some I caught, some I missed, some I just passed and regretted it later, some I caught and let go of too early... Keep in mind that I do this as a part of my own conditioning. But I have tried to expose all those flaws and successes, so some of you can see that trading is never perfect. You just say, so what, and wait for your next opportunity...

I have been a scalper, and had weeks of 80%-90% wins. I have traded profitably for 30 trading days in a row. I have backtested systems with 80%+ win rates. But with all of those experiences, I could always find some way to give back my gains. And that is why I finally started trying to ignore the "noise" and look for larger swings, roughly 50 ticks+. I previously posted an excel file that showed why I selected the 50 tick range (highest probability for my risk to reward comfort).

Today I'm going to show you what the performance report looks like from 7/23 through today, 8/3. I have attached a PDF. It's certainly not the best performance I have had in 6 trading days, But if it is higher than where I started more often that it is lower, that's all I need to keep moving forward.

I was out of town last Thursday and Friday, so even though we have had 8 trading days, this is only a 6-day record. I trade part time right now as I also run a business, and so I have to only take the trades in the times that I am able to monitor them.

As I said at the start, the win % does not have to be that impressive to make money trading. The way I have learned to make money consistently is by taking the better setups. Since the start of this thread on July 23, I have taken a total of 44 RTs, or roughly 7 trades per day. (Sometimes I will get in and then change my mind and wait for something better, which I don't consider a "trade", but NT does. I think it also count multi-contract as multiple trades? If I guessed my average "trade" per day is 2 or 3) Some were multiple contract trades, but the overwhelming majority are single contract trades. My win % on those is only 59%. Not that impressive as a stand alone number, but my average win is roughly 2x my average loss. For me, that is the only way that I have learned to consistently stay ahead.

I wish I could show a $1000+ trade, but did not catch one since I started this. But I will.


Some of the key points that I hope to emphasize by showing the reasons I am taking trades;

1) Always be aware of timeframes from 1 minute through daily or even weekly.

2) Always watch and interpret volume.

3) Always wait for confirmation of a trend reversal, instead of trying to pick the bottom.

4) Always know where the major pivots are and where the stop losses might be.

5) Always know what the overall market direction is.

6) Always review what the average motion for your market is.

7) Learn to interpret market strcture.

8) Learn how to use fibonacci ratios (my favorite book for studying the application of fibonacci "High Probability Trading Strategies" buy Robert Miner. He cuts it down to a select few).

9) Write on your charts. Show trendlines, give yourself written clues for what to watch for.

10 ) Practice, practice, practice. Get to where you can pretty much expect what the market will do next.


This has been an interesting experience for me. I'm not sure how much longer I will continue to post, as it definately makes it harder for me to trade succesfully. Just the effort of moving back and forth between screens takes away from the focus I would typically have on a trade. That is a very large factor in why I am doing almost exclusively single contracts. (I would typically trade up to 3) But, trading is hard, extremely hard, and we all need some sort of support occasionally. I hope these posts are helping some of you. And, if you see where I could improve, please don't hold back


Stay safe!

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Catching Big Waves - a trader's journal of surfing the the markets-ninjatrader-performance-report.pdf  
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 kronie 
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Approaching area of interest for possible long entry


please post or name that indicator in panel 2,

clean, nice, effective, and useful

thanks in advance

 
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 GaryD 
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please post or name that indicator in panel 2,

clean, nice, effective, and useful

thanks in advance

I obtained it through group that I paid to study with, and am not sure I have permission to share the actual indicator. But, it is a standard RSI that should come with most platforms. The only difference is that it was modified to show a color change at an OB/OS condition, which on that chart is set to 90/10. The period is 2, and "calculate on bar close" is set to false.

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 GaryD 
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Now that the 2:30 rush is off, notice that the last trade target would have hit... Today I was knocked out twice by timing...A short I took before the 10:30am EIA, and a long before the 2:30pm close. Both moved in my direction after I got out, but the timing of both was not right.


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 GaryD 
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It seemed so far away this morning, but crude made it down to the daily trendline. This is an area to watch for a long trade with a good risk/reward.

HOWEVER, the last time crude got to this channel we had a beautiful ABC pattern and decidedly bullish structure. This time we have that somewhat ominous H&S pattern casting a shadow over everything, and stock indexes tumbling down. And, the last time crude touched it's daily trendline it was a near direct hit for a double bottom, but this will be the third attempt to bottom here, and third attempts often break through (stops). That is why I showed "Zone 2" on the study this morning.

Unfortunately I have to make an unscheduled trip to Dallas in the morning and will be gone before the market opens.

p.s. Or, this is a gigantic bearish flag? lol


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 GaryD 
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Notice the big volume up bar at the jobs report, and then the big volume down bar around 9:55am EST. I'm flat, and not directionally biased right now, but the market is trying to tell us something in the area.


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 GaryD 
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I did not have time to explain this when I posted. Things were happening fast and I got a little worse entry price on the long because I was messing wiht trying to show images here. The fib lines above just show simple 100% measurements of 1) the most recent wave down, and 2) a previous wave of similar length.

So;

1) Fib support on higher timeframe
2) The high volume area I mentioned on the 1 minute chart above
3) The fact that we had such a burst up on the jobs report
4) The fact that the huge down move yesterday meant we had a lot of shorts in the market (many frsh today probably)

caused me to look for a reversal. When I then got the reversal on the 9 range and 6 range, I was ready to look for an entry.

Trades like this are countertrend in my mind, and as a rule I prefer to only trade with the trend, but when everything lines up I like these trades. I posted something previously about "In through the out door" where I was referencing this type of trade. Not sure if I explained it sufficiently then, but I may go back and read later.

As I write this (this is an edit post made a while after I first showed this chart, and after I closed the 71 tick long below) the market has come right back into another area where I am looking for a long reversal. It is Friday, and shorts don't seem to like the Friday closes...

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 GaryD 
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I am in




Edit comment after the trade was closed; I should have tried to enter closer to 86.20, but was feeling rushed by trying to trade and comment and decided to go market. Not a good move on my part, as patience is a key ingredient to succesful trades. I will reflect on that more and try to do better in the future.

Sometimes I allow myself to break my rules. Still working on that within myself. breaking a rule like not getting in at the perfect spot is a lot more excusable than breaking a rule about moving a stop, or averaging down, and no where near the sin of using dangerous levels of leverage or trying to catch the bottom...

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 GaryD 
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 GaryD 
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I closed for 71 ticks. Personal policy to take a good win on Friday. This one could still run, and I may get back in later, but we hit the 618 retracement of the previous move down, and we are in bear mode on a higher timeframe.


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 Big Mike 
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Nice.



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 GaryD 
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That was a good call to step out early. I wish I could tell you how I knew, but some things are just from experience. The 618, to me, is a strong area if you know when to expect it to be effective.



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 GaryD 
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This post may be controversial, but just for fun watch this zone for a reversal. This is a 30 minute chart. We just took out the stops of the long day traders from earlier this morning, which suggests the short traders are celebrating a big victory. They may not want to let go of their profits...


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 GaryD 
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It's hard to know where the market will go initially. It is much easier to tell how it may react after it has already made a move.

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 GaryD 
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Regarding the "zone" earlier (I know, it is a wide area), we are at a "maybe" regarding volume. Wait for confirmation of a reversal. Do not even think about freight-training this market.


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 GaryD 
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I am now stepping my take up a notch from a "maybe" to a reversal watch.


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 GaryD 
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 GaryD 
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not yet


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 GaryD 
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 GaryD 
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Long READY


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 GaryD 
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 GaryD 
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Closed at 86.36 That was a fast one to try to comment on.


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 GaryD 
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2nd trade closed for a 69 tick profit. Trade record for the day; two LONG trades (call me crazy), one for 71 ticks, the other for 69 ticks. 140 ticks up, no losses, calling it a fantastic day. I know myself, and this is when I could get dangerous

Monday will give some great opportunities.

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 GaryD 
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And back down it goes... When crude gets this volatile it will eat you alive. But, this is when the "surf" really kicks up and the big waves start rolling.



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 GaryD 
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We had a near direct hit on the lower line of the "zone" on the 30 minute



Plus, a near direct hit of a 618 extension of w 1-4 on the daily



Plus heavy volume support



Plus a reversal on the 9 range and the 6 range (shown earlier on the 9 and the trade entry image shows the 6)


You have to be on alert on all fronts. PRACTICE PRACTICE.

Stay safe! Enjoy the weekend!

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 GaryD 
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FYI - here's how the profit target was chosen.


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 GaryD 
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If you are interested in a MONSTER wave, crude is at an interesting point.

There are a lot of factors suggesting support in this general range. (This is a $4000.00 per contract range by the way, out of my league as my average stop is closer to $400.00. )

And, on the short side, look at the ABC formation if this zone breaks.

Over the next few days/weeks it could set up to be something that fits my comfort zone. The way I am going to be playing this is watching for signals on lower timeframes to ride in and out of a possible major trend. Always remember, any market can and will go wherever it wants to.






Unless you are a fundamentalist...

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 GaryD 
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This area around 82.20-82.50 has a long history (shown below on the daily) of being a support/rsistance area.




And based on the volume in this area, crude oil traders are still interested.


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 GaryD 
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I don't typically watch the S&P, but I do if there is major movement. I have not traded it for over a year, don't like the motion, but right now there are 4 zones below the market that are strong candidates for at least short term support. Crude has a tendency to follow the S&P in times of high volatility in the S&P.


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 GaryD 
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The S&P is at the first one now, and has shown support multiple times on the 10 minute


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 GaryD 
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I am wanting to short crude, but the divergence on the 93 minute is holding me off. Today may be a no trade day. Crude as local resistance around 84.80, but also has a stop loss powder keg around 85.


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