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Trading the 6E Old School, With a Twist


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Trading the 6E Old School, With a Twist

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  #101 (permalink)
 Cashish 
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There's no School like the Old School



josh View Post
One of the things that I have found to be consistently true for me, is the importance of good entry location. People will say that the exit is more important, or the management of the trade, and I do agree that those are important, but for me it is the entry location that allows me to minimize the risk. It doesn't mean that I have to get in at the bottom or top--but what it means is that if I establish a position "in the middle of nowhere" then I am almost certain that my stop will need to be quite large to give the market an opportunity to prove me wrong. So, by trading at the edges, it gives the opportunity for us to be wrong small. A good entry in line with our analysis is made possible by patience and not fearing "missing out." All things I have been working on, and continue to... would love to hear your and anyone else's thoughts on this.

-Josh

Thank you Josh for another great addition to the thread, and your post, who could add more?

The one thing I bring to the market each day that you don't is my past, all of it, from the time I was a child right up to my last trade. When I was 9 or 10 years old I lived in a small Midwestern town and and during the summer a few friends on my street and I use to look forward to going down to the school house in the evenings and watching the Little League ball games. One night I asked my Dad for 15 cents so I could buy a coke and a bag of popcorn at the game (those were the days ) he said, "If I give you 15 cents I'll have to give your brothers and sisters 15 cents," and he refused. He had six kids and I guess he thought that that 90 cents could be spent in a more useful way. Don't get me wrong, I never went without, but 90 cents a day or 5 dollars a week for coke and popcorn wasn't in his budget. My point here is he grew up during the great depression and that never left him, even to this day. It was inevitable that by some weird environmental osmosis his conservative beliefs would root themselves in me, for good or ill. He also instilled in me a vein of perfectionism that serves me well in most areas of my life like bookkeeping, lawn care and woodworking. These are only two examples of what I want to write about, try trading with that rattling around in your head!

I agree with your importance of the entry location. Combine that with the mindset generated by the experiences above and we will only begin to scratch the surface of the complexity of the psychology involved in managing risk. I believe most new traders don't dig deep enough into their own psychology to locate where the "real battle" is taking place when deciding to enter or exit the market, it's not on the screen, IMO it's buried deep in some electrified gray matter in our brain.

"..... I do agree that those are important, but for me it is the entry location that allows me to minimize the risk."
I think you nailed it with this statement, but let's go deeper. I don't know all there is to know about trading but I do know I have to enter a position before I can exit, whether it's my target getting triggered or my stop. I think of the process of trading in simple orderly steps; analysis, entry, continued analysis and exit. The market will always dictate the time frame of the process but who among us doesn't experience a psychological/emotional change when we simply click that mouse and enter a position that puts any amount of our trading capital at risk in an environment steeped in uncertainty. When I'm filled it's "game on" and my beliefs regarding my analysis is what's on the line. If I'm harboring a deep seeded subconscious desire "to be right" (perfectionism) the psychological/emotional change will probably become physical, increased heart rate, twitchy "trigger finger" and a change in my breathing are a few signs. I've entered trades that I thought were with the right direction of the market and after my entry the market died, and went nowhere. These are the trades that linger and linger and give me more and more time to second guess my analysis. I have a choice, I can close out the trade maybe with a tick or two of profit/loss or I can stay in the trade and let time decide my fate. These are the trades that have revealed to me, I'm impatient. Then the psychological battle begins, am I practicing patience by staying with the trade, or am I operating from a fear of "missing out" or a fear of losing what I have (my conservative beliefs).

The market is an enigma, it's made up of many moving parts, every order I place, after my best exhaustive analysis is nothing more than my "best guess" at the future direction of the market based on past price movements. My job first and foremost is to always protect my capital in an environment of total uncertainty, not an easy task. Entry position is absolutely a high priority but the randomness of winners and losers calls upon us all to look at all aspects of the market, the seen (support and resistance) and the unseen (breaking news and hardware issues) when assessing our individual risk tolerance. Until I identified my hidden nemesis buried inside myself and began to fully understand how my thoughts and beliefs from the "real world" played themselves out in my "trading world" I realized I was viewing my trading with only one eye open. I believe we all have reasons for what we do in the markets, whether it's cutting winners short or letting losers run. Looking inside ourselves might just reveal that hidden diamond, that one small piece that allows us to take our game to the next level.


IMO, Trading has nothing to do with your education outside the market, account size, methodology or the size of your cojones. To me it's about getting and staying comfortable managing the risk while trading the uncertainty of the market. If I control my risk so I can weather loser after loser after loser after loser, today, and protect my capital so I can still suit up and show up tomorrow I believe I'm successfully managing my risk.

I'm thinking of a tee shirt that says, Real Men Control Risk (muppets don't) maybe I'll send one to Russell Wasendorf and his kid.



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Cashish View Post
There's no School like the Old School

IMO, Trading has nothing to do with your education outside the market.... me it's about getting and staying comfortable managing the risk while trading the uncertainty of the market.



In essence, stress free.

I have a little card sitting under my screen...."No more stress"....It is a reminder that I don't need to be, the trade will work itself out.

Keeps me thinking 'good thoughts' and it really does work.

Trader

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 Cashish 
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There's no School like the Old School


I've been reading the posts in the, thread and have been thinking of some of the luck that has come my way over the years. Do I believe in luck in trading? Absolutely. Do I believe if I feel lucky one morning my trading will be more profitable that day? No. The focus of this post may be best understood by first offering a definition of the word luck.

LUCK
Noun:
Success or failure apparently brought by chance rather than through one's own actions.


This definition suggests luck can be good (success) or bad (failure). It also suggests luck is detached from, "one's own actions." The words, "apparently brought by chance," suggest to me I shouldn't count on my thought of feeling lucky to enhance the outcome of my actions.

This is a trading forum and I'm a trader so the following are my opinions that luck in trading is alive and well.

I had been trading sporadically for awhile and had some limited success but my efforts were nothing more than a hobby (that I paid to enjoy). During the early 90's my son was waiting tables at a country club and told me he had met a man who traded futures. My son spoke to this man often over several months and mentioned to him I was trading currency futures. The man suggested to my son that I should drop by his office and speak with him sometime.

One day out of the blue, unannounced, wearing work clothes and looking like a bum, I walked into his office and told the receptionist, "I'd like to speak with Bill Dunn." She got up from her chair, walked me through the building, tapped on an open door and motioned for me to walk in. There I was, a guy off the street with no appointment, shaking hands with Bill Dunn.

Obviously I had no idea who Bill Dunn was, I introduced myself and sat down. This was before the days of Google, online trading, real-time quotes and trading forums, my son described him as, "a regular guy that trades futures." I had no idea I was sitting and talking to one of the largest and most successful futures traders in the country, I didn't even notice it was his name on the outside of the building! I figured the receptionist was taking me through a maze of small offices and eventually I'd end up at some windowless office of "a regular guy that trades futures." This happened more than 20 years ago, I don't recall when I figured out how lucky I was to have this experience, but I do know, it wasn't that day.

I remember our conversation well because the truths he shared with me about trading occurred again and again over the years. As I recall he let me talk myself out, he never looked at his watch and said, "times up, I gotta go." My son was right, he was/is, "a regular guy that trades futures," we talked about kids and boats but mostly trading. Think about that, this is a guy that at the time ran a managed futures fund that required a $50,000 initial deposit (today it's $500,000) spending what seemed like all the time in the world with me, a newbie one lot D-Mark trader with a $5000 account. During our conversation he asked me what my trading goal was, I said fifty thousand dollars a year. He assured me I'd probably never make that amount trading a one lot, but he added, "You can gain a lot of experience, and have a lot of fun trading a one lot," I found that to be true. He encouraged me to continue trading the currencies and told me he considered them the markets of the future and he expected the daily volume to increase substantially providing greater liquidity. He also recommended that since I was an off floor trader I should focus my efforts on studying the movements of one currency, learn it well and strive to become an expert in a single pair. We talked about method. At the time I was using a 20 day trend following method, little did I know he was a major trend follower, with a capital M. He offered to back-test any method that I thought might hold promise, he said, "We have lots of data here, if you want to plug something into it, bring it by," I never did. Remember, we're talking Intel 386, 486 or maybe a Pentium, "having lots of data," actually meant something at the time. So how lucky was I to have this experience so early in my journey, I still wonder if it was just a dream.

I kept trading my one lot and had a whole lot of fun, just as Bill had foreseen. I never forgot those words, .....I'd probably never make that amount (50k) trading a one lot, so I kept adding to my collection of trading books, trying to find that particular fit of method and personality. I happened upon this Robert Pardo book Amazon.com: Design, Testing, and Optimization of Trading Systems (9780471554462): Robert Pardo: Books on a friends bookshelf, and began to understand the professionalism of guys like Bill Dunn and the amount of work they were putting into their systems in an attempt to extract money from the markets. After reading this book I knew Bill's words were true, I'd never make 50k a year trading a one lot.

Now I'm going to fast forward to the year 2008. In 2008 Robert Pardo wrote this book, Amazon.com: The Evaluation and Optimization of Trading Strategies (Wiley Trading) (9780470128015): Robert Pardo: Books a revised and updated edition of his classic text Design, Testing, and Optimization of Trading Systems. Since the first Pardo book influenced my view of trading so dramatically, I just had to own the updated edition. You probably cannot imagine the astonishment when I read these words in the first paragraph of the "Forward" of the updated edition.

My relationship with Bob Pardo goes back to 1996 when he approached my firm, DUNN Capital Management, in search of trading capital for his XT99 system. After some extensive system evaluations, we entered into an agreement to help research, develop, and trade Bob’s XT99 for Bob, DUNN, and our clients. I am pleased to report that this arrangement has proved beneficial to all parties and that it is still going great guns. When Bob recently asked if I would write the foreword for this second edition I assured him that I would be more than delighted to do so.

William A. Dunn, PhD
Chairman
DUNN Capital Management
Stuart, Florida
May 2007




Now, back to the topic of luck in trading. In the first Pardo book, Chapter 10, in Subsection, Performance Patterns and Quirks, on page 155 he elaborates on the topic of, A Windfall Profit. He defines a situation of a trading firm that reportedly made more than a billion dollars within a few days after the crash in 1987. In the book he writes, "The principals were reported to have done two things. They paid large bonuses and gave a paid vacation of one month to all employees. The operation was closed for one month while the principals decided what they were going to do with their incredible new wealth." He continues, "...... the huge profits that amass from such an event are more a windfall than the result of skill or foresight. A good trader knows the difference. Skill keeps a good trader trading in bad times and produces consistent profits during good times. A good trader knows when he or she has been the beneficiary of a windfall and does not expect to be able consistently to reproduce such levels of profit."


IMO, if luck can be good (success) or bad (failure) and if luck is detached from one's own actions (skill or foresight), Robert Prado's three paragraphs on windfall profits clearly illustrates an excellent example of Good Luck in Trading.

I sure was surprised when I pulled this out of my mail box.



William Dunn: Legendary CTA building legacy to last




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 Cashish 
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There's no School like the Old School

Here a Tick, There a Tick



Here's a trade that might just fall into the "Luck in Trading Category (or not)," decide for yourselves. I've been thinking about this trade since I took it 17 hours ago, the good and the bad, thought I'd take some time, write it out and share a few thoughts. I usually trade from 2am to 6am est but the hype of the Jackson Hole "Pow Wow" has had me a little pumped up this week. It seemed the Ben Bernanke speech was the hitch pin of most of the trading all week long. The 6E opened Sunday night (Monday trade) at 1.2512 and opened for Friday trade at 1.2509 not much movement there, but some nice moves none the less. All week I've been deciding on my game plan for today's trade, I decided to fade the extremes if I was given the opportunity. Last night during the Globex open and into the Asian session price slowly drifted up and appeared to me to be a continuation of a little up move. I began to believe that this slow grind could continue and price could retrace up to Thursday's VWAP at 1.2532. The Friday session VWAP had a little rise to it albeit price had only traded in a 19 point range, but most of the trading was above the VWAP and testing the Pivot from below. I entered 3 buy orders above the VWAP and 1 on the -1SD thinking Asian traders might give this market a jump start to the up side of the Pivot and tag Thursday's VWAP before the EU session began. I entered targets targeting the VWAP which was above a low volume area, I was anticipating a quick move and figured I'd be flat within the hour. My sell targets were 2 @30, 1 @31 and 1 @32. I entered the buy orders and got a quick fill on my first position, within a half an hour the market dropped quickly and filled all of them. This first chart shows the lower portion of a two day volume profile, the session low at 1.2503 and yesterdays low at 1.2488.




My average entry price was 1.2515, I had a good feeling about this entry when I entered the orders but now price was beginning to walk the -2SD line and the EU open was approaching. Normally I would have dumped this trade for a variety of reasons, price trading under the falling -2SD level is surely one of them, but if this is the extreme low of today's range I want to hold my positions. Now the EU session was open and I often take trades above/below the 2 SD levels and exit either at the VWAP or the other 2SD level. Other indicators were signaling exhaustion to this down move but price is very close to my Maximum dollar risk amount of $1000. I made the decision to hold the trade through the EU open. I held the trade and escaped being stopped out by 1 tick on three 1 minute bars 2:04, 05 and 06.




I dodged a bullet, price lifted and never returned to the LOD again. Once price entered the Value Area it rotated above and below the VWAP for an hour and a half, my quick move to the upside was now 3 hours old and this market is showing no true direction. Finally price jumped above the Pivot and began to find support there. As price reached above the upper Value Area and struggled to fill that low volume area I felt more sure of my decision to take profits and exit at my targets. Price jumped above the +2SD level and traded 30, 31 and 32 but my 32 didn't fill. Price traded 28, 29, then 32, 33 I was filled and the market took off like a rocket. I was so wrapped up watching the DOM and getting my fill that I didn't notice on my other charts, the bar that filled my sell order at 1.2532 was also giving me a buy signal, I was happy to be out of my 4 hour "quickie" with a nice profit, but I took the buy signal seriously and tried to get back in on the move by entering a two lot buy order, price traded within 1 tick of my order and never returned, I sat on my hands and watched the market run.










Edit: Some final thoughts, I can argue several different aspects of this trade from several differing points of view, Pro and Con, there's a lot of buckshot in there that could be picked out and analysed, believe me I have. I'll take the win, no doubt about that, but I believe this trade holds more value in "the experience" than in dollars and cents.

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 Cashish 
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There's no School like the Old School

Super Mario to the Rescue



I've been working on rebuilding, refinishing and reusing an antique headboard and tonight I began putting on the first coats of primer and paint. I have a head and foot board but my workshop is a little short on workspace so I decided to put a sheet of plywood on my tablesaw and use that as a painting table. The problem is, after one coat on one side dries, I move it off the table and replace it with the other piece, when that dries I move it and on and on and on. Then I flip it over (fresh paint side down) and support it on four nails driven through four wood blocks and continue the process on the other side, waiting for each coat to dry. So, as I wait between coats I thought I'd write about a trade I took tonight as I waited for my paint to dry.

This fist chart is a little cramped on the hard right edge but I wanted to show the location of the open (white vertical line is Friday's close) in reference to Friday's VWAP (yellow line), more often than not, the Sunday open is much further away. Friday's price movements were driven by several news events, mainly Ben Bernanke’s speech at Jackson Hole. After traders read through the speech, they sold dollars against the euro. The mighty euro couldn't hold onto its gains when news broke that Bankia, Spain’s fourth largest bank needed an immediate capital injection. About the same time, S&P downgraded Catalonia’s credit rating to junk, borrowing costs in Spain jumped 25bp to 6.8%. This was the climate of the market into the close on Friday, IMO, tonight's open was/is a continuation of sorting out this information.




Last week was the Ben Bernanke Show, all eyes were on Jackson Hole. I believe this week is Super Mario Draghi’s turn in the spotlight. ECB President Draghi decided not to go to Jackson Hole, so I think his "speech" is going to have the meat and veggies traders are hungry for, we'll see. This chart shows a volume profile of last week, with price sitting on the upper value area which is also today's Pivot I could see price fall to the POC 1.2549/50 prior to President Draghi's meeting with the EU Parliment later this morning.



This chart shows Friday's profile, I believe that "node" just below the lower Value Area is significant, it could stop price from falling to the larger "node" near the Buy Number at 1.2506. I also feel if ECB President Draghi doesn't deliver the "meat and veggies" that's where this market will go.




This chart is a combination of Friday and today. Of course price could go up into the safety of volume but I believe the expectations of what President Draghi has for this market will keep price below 1.2580/1.2600 .






I took this trade soon after the Sunday open, targeting Friday's lower value area. I'm short now, averaged in at 1.2582 but I'm sitting on my hands every time we cross that Pivot from South to North, I don't know how long I can subdue the urge to take profits down there.


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 Cashish 
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Super Mario to the Rescue

My idea for price to drop to the POC of the last week's volume profile came up a little short, price just couldn't drop out of Friday's value area. I covered my shorts when rumors that the ECB President had cancelled his meeting with the EU Parliament began to circulate. The best end-of-day report I found about what actually happened and caused all the scuttlebutt is here: European Parliament Risks ECB Spat Over Draghi Briefing Leaks - Businessweek

Here's a chart I captured after the surge, it's a two day profile, Friday and Sun/Mon.




Some times I believe "leaks" are just more political wrangling, who knows. So now I believe all eyes are fixed on Thursday Sept. 6, when the ECB Interest Rate Decision is announced at 11:45 GMT. Then at 12:30 GMT Mr. Draghi gives his comments in a press conference, the same time the U.S. jobs numbers come out. It will be interesting to see where the Euro is trading just prior to the rate decision. So far this week, although it's holiday trading, the Euro is trading in a 69 point range, threatening the highs of June and July, ought to make for an exciting week.

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 Cashish 
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There's no School like the Old School

Charts, Charts and More Charts

I believe this was one of those days where traders either did real well or struggled all day. Sometimes I don't like to post trades, I don't want to come off as grandiose or all puffed up on some ego trip, believe me I'm not. My only intention is help other traders find their way, and if any single piece of what I post is found helpful to others then my time with this thread is well spent. Today, I have so many charts I don't know where to start, I'll start with last Friday. Since the hype of the Ben Bernanke speech at Jackson Hole and the news shortly there after left the Euro in a state of indecision (IMO), I've been trying to figure out what traders were doing when price returned to the levels between 1.2575 and 1.2561. This first chart shows what I'm talking about. A couple posts up-thread I posted a chart with my opinion of price falling down to the POC of last weeks Value Area, but every time (Fri, Sun, Mon, Tue) price came to "60" it turned tail and ran to the North. Late in the day yesterday I concluded on a hypothesis and entered a short trade at 1.2564 as a "feeling out" of my theory, I closed out the trade just prior to 2pm est, and called it quits for the day. As in recent history, price rattled around the low, popped up above "75" and closed/settled for the day at "74."






My theory about this price action is simple, but complex. If I had millions or billions of dollars to trade in this market, for whatever reason, I'd probably do one of two things. 1.) Hire a couple of rocket scientists to write me a program, or 2.) Hire traders from around the world to trade for me during their individual trading sessions, the idea would be, I (through, my "hired" traders) could watch the market constantly from the Sunday evening open to the Friday evening close. With this idea in mind, I would conclude that the time frame I would be focusing on would be much greater/longer than the time frame of most under capitalized retail traders trading within the same market. The third piece of my theory is the U.S. Holiday. If I was a major player as described above, I wouldn't leave the "hen house" unguarded with the door standing open just because most of my U.S. competitors were off playing volleyball for the weekend. This chart is the Volume Profile of last week captured Sunday evening. The Pivot and Buy Number are calculated from Friday's price range and are for the Monday trading session. However, since Monday is a U.S. Holiday most traders anticipated a session with low volume. But as I mentioned above, I believe the "hen house" is well guarded during these times and if longer term price levels are breached, the longer term traders will be there. As the second chart shows with the volume traded when price traded in and above the 1.2600 level.





So after spending a few days with a Brother in Law I don't like and a Son in Law I can't stand, and painting a bed through the middle of the night on one of those days, today I slept in. When I got to my trading station and saw where price had been it all made sense to me. Now price had returned to the area between 1.2561 and 1.2575 but this time it's coming from below. My idea was, most of the trading in this area for the last few days was retail traders scalping ticks, and catching a few minor trends, then leaving the market with their accounts flat each day. This chart shows a VP of 3 days Sun/Mon, Tue and the current day. I entered orders to go long through this high volume area and thought if anyone did short this area and didn't take profits at the lows near even, their stops will most likely be 15/20 points above '75.








I most generally don't short up strong moves, but this was turning into a textbook trade and my intuition made me do it!





I must have looked at dozens of VP charts this morning and on some of them I saw, The Future. Here is my last trade this morning, I had sell orders resting on the Sell Number and the Upper Value Area (of some?) VP, and buy orders sitting on both sides of this -2SD level (1.2586), my buy orders at '88 filled but my '85s didn't, I gave the market a little time then covered on the VWAP.









A shout out to @eminitrdr Get Well Soon

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 Cashish 
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There's no School like the Old School

A Quickie

I don't have a lot of time but wanted to post a couple charts. For the record, yesterday I had sell orders resting just above that Sell Number at 1.2651 and totally missed the "Top Side," action. I wasn't going to do it again today. I took a trade today that is the best trade I've taken in a long long time, it tested me to the core of my being especially the last 10 or 20 minutes of the up move.










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There's no School like the Old School

Standing on My Soapbox



I don't post much on other threads, mainly because I find it difficult to quickly boil down my thoughts or opinions of subjects into a few sentences. More often than not, after a dozen or so posts by other members my views are generally somewhat expressed, and then after the "usual suspects" post their ambiguous one liners, the thread dies. I'll also confess when I do browse the forum, I browse mostly as a guest, reading the commentary of members whose opinions interest me without the distraction of charts and screen shots of markets or "programs" I have no interest in. I have used the "ignore" button but found it only works if I'm longed in, so I accept that as the price I pay to browse as a guest. I take trading seriously, my connection to market data and my connection to my broker is thru my lowly cable internet connection. When my trading computer is connected and I'm trading, I don't want any other computers within my control trying to muscle in on my connection and disrupt the precious flow of data. I have a separate computer for web "stuff" and connect, disconnect and reconnect throughout the day while I wait for my market to approach areas of interest. I have posted some 'live' trades on BM's and had no problems at all with connection issues, I just feel better giving the trading box top priority to the connection. I found the experience of posting trades exhilarating and fulfilling but I also found posting these trades during the trading session somewhat distracting. The biggest question I faced while posting 'live' trades was, why? I thought my efforts of posting 'live' trades on the EUR/USD thread might offer some credibility to the information I posted in this thread, for anyone that may have had an interest. Soon, I realized just how much information I view while making the decision to enter the market and found myself perplexed as to which chart would offer the "cleanest reason" for entering the trade or the "cleanest reason" for staying in the trade. I also ran headlong into the notion of intuitiveness and how much of my trading is "unexplainable," in the common tongue. But I will say, my method as outlined in this thread evolved from my efforts of building a mechanical trading system and on it's own it does pretty darn well, but when I add my experience and intuitiveness it does a might better. As an example consider the time change we all experience twice a year, or is it four times a year since Europe makes their changes a week or two before the U.S. makes theirs. It's not that uncommon to read a post or two of some trader asking were the volume is at the open of the market they're trading or getting caught off guard during a burst of volume during the European close that unaware to them, happened a hour earlier than they expected. I have no use at all for trading rooms or "packaged" systems, simply put there's to much gray area in trading. Your method, has to be your own, it has to "be you," just like the car in your garage, the pictures on your wall and the shirts hanging in your closet. I might give you my favorite "smart casual" shirt, and after you hack the sleeves off and rip out the collar it might be your favorite "painting shirt," same idea. No matter what concoction you put together and call your own, it still has to fit your psychology. It's the same with, "the car in your garage, the pictures on your wall and the shirts hanging in your closet," if they didn't fit your psychology, they wouldn't be there. The problem, IMO, is traders don't know what their psychology consists of when it pertains to their trading, they just want to MAKEALOTOFMONEYINAHURRY. Trader A, might never figure out the reason he takes $500 profit out of a $2000 move is because he's not going to, "let that bitch (the market) take my $500 away," like his exwife (the bitch) did, to whom he sends a $5,000 dollar check to each month. Trader B, might never figure out why he blew out 3 or 4 $25,000 accounts and continues to run from one trading guru to another until he realizes he was actually searching for "someone to do the work for him," and also realizes his search for, "someone to do the work...,) is a very common sub conscious desire of cesarean births (c-section). Go ahead and laugh, but I will guarantee you, you will know yourself on a much deeper psychological level before you make any real money trading the markets. If you're struggling with a certain aspect of trading and can state your issue(s) plainly and the problem just never seems to go away after all your best efforts, go see a psychologist. For the price of one losing trade, make an appointment and talk yourself out. This doesn't have to be some fancy "trading coach," that's usually a label of someone less qualified anyway, just pickup the phone book. When you pick up the phone book the process begins, will you choose a man or a woman, ask yourself why? For reasons I care not to disclose, I'm very close to several psychologists on a personal level. I'm not one myself but I'll assure you the people you see sitting in the waiting room during your visit, are not sick people trying to get well, they're well people trying to get "better" at living a more fulfilling life. You wouldn't take your car to a pizza maker for repair would you, or call a veterinarian to tailor your new suit. If you can be open and honest, I assure you your psychology as it pertains to your trading, will be enhanced within very few visits, what do you have to lose, if what you're doing now ain't working?


Unofficial NinjaTrader 8 wish list thread (NT8)

Back on the soapbox. I have very few good things to say about NinjaTrader. I know most of the folks here on Big Mike's are NT users, but I'll bet I've been a NT user longer than 99.9% of them. I'm not looking for admiration, I'm just setting the stage for my NinjaTrader roast, or maybe a trip to the woodshed! I first started using NT in 2003/04, it was pure heaven, having a slice of software on my screen that allowed me to visually see price move up and down a stationary price ladder. I could enter trades with a click of my mouse and adjust targets and stops just as easily. For those who are unaware, when NT first came out, there were no charts, only the DOM. NT provided a stand alone state of the art order entry system that had never been seen before by most retail traders, pure heaven. I had set up my trading station to enter the world of electronic trading with Ensign Software for charting and IB as my broker. NT touted how it was developed to relieve traders of the hassles of the IB order entry system. Since I've never traded electronically on any platform other than IB's TWS I didn't notice it was a hassle at all, but the more I read about the NT software I thought I'd try it out, I was hooked, this little program was beyond cool. I don't recall which came first, the lawsuit with Trading Technologies (TT) or NT's charts. I had no interest in their charts, but I did use what was originally the only thing NT offered for lease, the DOM. The lawsuit with TT was due to infringement rights of the stationary (static) price ladder. As I recall the legal wrangling took a year or two and the result was, if you chose to continue using the static DOM and not the abortion of a work-a-round (dynamic DOM) NT continues to offer, traders were/are required to pay an additional fee of 10 cents per side per contract traded. I assume this is were my dislike for NT has it's origin. The NinjaTrader static SuperDOM is offered under license from Trading Technologies and that's probably why it hasn't changed much in the last (almost) ten years, TT probably has NT by the balls, I hope so, that would be a legitimate excuse for their total lack of R&D of a 10 year old piece of software. I want to puke when I see NT continue to call it the "super"DOM, what a joke. Oh, the new NT7, the NT7 is coming, get ready for the NT7, over 300 enhancements to the new NT7. Well, I got the new NT7 and the only change I found that effected me was within the Account Summary. I may be wrong but since I first started using NT the three choices to display analytics were, percent, currency and points. Now, with over 300 enhancements to the new NT7, the "points" selection doesn't work. I spent hours screwing around, downloading, uninstalling and reinstalling my "new and improved NT7" before posting a query on the NT forum in disgust, "oh yes, sorry, that doesn't work on NT7." Well, guess what, two years later it still doesn't work. I sat thru the, "One-on-One with the President of NinjaTrader" webinar here at BM's and almost fell out of my chair when the president of the company said, in effect, we've been considering changes to the "super (puke)" DOM but have concerns that traders might not like us increasing the width of the DOM by 25% and encroach upon their screen real estate. WTF, is this guy for real? I knew right then NT is going to allow the "super (puke)" DOM to die a slow death in the same suit it was born in. 25% give me a "F"-ing break, lets see that's what, one "F"-ing inch? What a dickhead, it's obvious after 10 years of almost no R&D, the NinjaTrader static SuperDOM offered under license from Trading Technologies is the last thing on his mind. 25% give me a "F"-ing break, I think I was using 4 -17" CRT monitors back in 2003, with what, 1000 x 700 resolution. I for one, believe I can spare an inch or two of screen space somewhere on my 8 - 23" HD, LED Samsungs to see a little volume strip on either side of the price ladder, get "F"-ing real Mister CEO. The other "tell" in the webinar that diminished my hope for any DOM improvements was his statement (if I remember correctly) that 50% of traders use the DOM and 50% trade off the chart. Well, I'll offer Mr. NT CEO a clue, keep neglecting the DOM and 100% of NT traders will trade from the chart. It's obvious, that in 2006 or whenever NT began offering charts, they dropped the DOM like a hot potato, turned their backs on the original product that started it all, that's a shame.

Should vendors be allowed to become Elite Members?

Back on the soapbox. Who cares? I know most of the folks here on Big Mike's are NT users, and many love to tinker with the NT open source charting program. I think the key words are open source, NT encourages tinkering, in fact they advertise they have over 300 people offering thousands of add-ons to their software. The scary part about that to me is NT excepts no responsibility what these add-ons might do to your computer or their software, they surely don't check each one line by line. I would assume a fella could find just about anything his heart desired, for free, somewhere. I came into BM's thru the backdoor so to speak, I did a google search about volume footprint and was led to Big Mike's, but the information was behind the "elite section." So my curiosity got the better of me, I paid the 50 bucks and clicked the link, surprise, it was some file to download an indicator for NinjaTrader someone had posted, no information or even an example of what a "footprint" looked like, I couldn't figure out how to exit the forum so I shut down my computed rebooted, checked to see if I was logged off, left, and had no intentions of returning. But I did return, several months later. I've read thru the "should vendors" thread and as I assumed most list NT as their trading platform, I think I counted five that listed something else. Most folks agree, you can't stop a thief from stepping up to the free buffet and filling his plate. My opinion is sure to go over like a turd in a punch bowl so I thought I'd post it here instead of the more public thread. Why is there an elite section in the first place, why not just charge 50 bucks, "to see what's inside." 30,000 members, on any given day most all the logged in list is yellow, I would think vendors would hold themselves to a bit of a higher standard than Joe Six Pack, but maybe I'm wrong. All the indicators are free for the taking, if you're an elite member, so in essence the only person actually making money on them is Big Mike, if you want one, you're going to have to pay him first, just to get to the buffet. I'm sure several of the indicator junkies on this forum have downloaded dozens (or more) of these free bees just to see them flash and blink on their charts. I just don't get it I guess, why involve yourself with a stripped down charting program that encourages you to beg, borrow or steal from God knows who, that coded God knows what into the indicators you feel you need to trade your market. I know the perfect trading program doesn't exist, but I do know there're several that don't require you to stand on the street corner with a tin cup, asking for a VWAP or a Volume Profile.


I snagged this post from Brett Steenbarger's TraderFeed a couple years ago and offer it as proof that every once in awhile we all need to air things out.


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 Cashish 
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There's no School like the Old School

It All Adds Up


This morning I was a little late to the party and rushed to do my pre market ritual. As I did price kept inching lower and lower but my analysis said higher and higher. I decided to enter some small shorts and watch my back closely and take profits quickly. The first trade worked fine, just as I planned. Then I started leaving a little money on the table and thought I should give up the idea, join the crowd and stay short. But I just didn't like the way price was trading between the -1 & -2 SD levels. After 3 short scalps price bounced hard off the low and I entered my long, price drifted lower and I added my last 2 contracts. Price drifted lower and had me believing I might have made a big mistake, price turned up and showed me some profit, then gave me the long signal I was looking for. I held my longs and targeted the +1 SD level of the 2 o'clock profile. The first run came up a few ticks shy so I lowered my target on 1 pair, the next run up, filled them all. I don't like scalping for 5,6, or 8 ticks but if I control the risk with very tight stops and take a predefined target every time, these small trades can add up. Catching the last move was more my style, that trade with the few early scalps, made my day.






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 Cashish 
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There's no School like the Old School

Just Try to Follow Along

This post is almost unbelievable, there's an old saying that goes something like, "You can't provide enough evidence for an unbeliever, but believers require no evidence."

I took a short trade that was banging on the door of the Buy Number and thought I'd post a chart of how I watch price rotation in a existing trend and decide on entry points. As I was marking up the chart the U.S. session was opening and I just kept mapping out my thoughts. There are several charts and I hope I can do them justice with my commentary.



This first chart shows the entire Globex Session form the open to the "taking out" of the Buy Number, a nice trend for sure. During the last few hours price "walked the line" of the -2 SD of the VWAP. Entering a move like that can often be intimidating if I feel I've missed the move and ought to just let it run, without me.



That was the initial purpose of this post, showing a method I use for entering the 6E when, the train has left the station, or maybe more important when not to enter. This chart shows a bunch of white lines and dotted lines (the angle of these lines means nothing). The idea is, that I believe normal price rotation of this market is +/- 14 points. So after a new low is put in and the next bar fails to make another new low, I look for an entry 14 ticks above that low, simple enough. As can be seen on this chart there were a few opportunities to enter this down trend using this method. Also, if I use this method to get in, I can also use it to bail out if I need to. If price pulls back to deep I'm out. What's to deep, +/- 20 ticks seems to work well for me. If I see a pull back against the trend of 20 ticks or more and the market doesn't continue in the original direction, the trend my be "fix'n to turn around."



Yea, but. Nothing works all the time. True, but I believe traders have to hitch their wagon to something, whether it's Gann, Fibonacci, candlestick charts or phases of the moon. This is just another piece of the puzzle, something I use to augment my other studies. Also remember the 6E is the tail, the cash market is the dog. This chart is a close up of 5m bars as the U.S. session opened while the market was trading on the Buy Number. After the low at '04 was put in the market traded above '18 (+14 ticks) and rotated above the Buy Number. Since this is the Buy Number I studied this movement and took a long trade, my risk is minimal, my stop is "anywhere" below the low. I wanted to see price reach up above +20 ticks off the low, and it did.



I wanted to see price reach up above +20 ticks off the low, and it did. This chart shows price poking it's head above the +20 ticks level, this (to Me) is an indication price my be reversing at this level and my long trade is with the correct direction of the market.



This chart shows price holding above the +20 ticks off the low. I also added the VWAP study to this chart. This movement above 1.3025 also coincides with the -1 SD level, this to me is another indication this trend may have found it's bottom.



There's always another piece to the puzzle. On this chart I removed the VWAP and added the Volume Histogram, this move UP has brought price back to the POC of the Globex session. I identify a target, the high volume area at 1.3043, however to get there price is going to have to make it's way thru the low volume area in the 1.3035 level.



Price moved up and entered the low volume area, the market is going to have to work it's way thru this level and I expect plenty of price rotation to reach my target at 1.3043 "ish."



As I did on the down move, I watch for those (-)14 tick pull backs in the up move. I trailed entry orders behind this market hoping to add two contracts on a deep pull back.



The reason I targeted 1.3043 "ish" is because that level also aligned with the VWAP, however the VWAP was still falling due to the big down move, so as the market went up the VWAP was inching it's way down toward price. To complicate things a little more, this is a Volume Profile and VWAP which began calculating at 2 am est, the upper value area is sitting near my target '42 and the VWAP of this session is '39.



I took profits at 1.3040, my trailing orders to add had one opportunity, and didn't fill.





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 eminitrdr 
Marietta, Oh USA
 
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@Cashish,

I'm now able to spend just a limited amount of time at the computer.

I wasn't here for the sell off. I did see this and took a shot on SIM just below the BUY number.

I'll see how the rest of the week goes.

emini

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 eminitrdr 
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@Cashish,

Thanks for posting all the charts and the thorough explanations.

I find it beneficial to see and try to understand your thought process as the market unfolds.

I appreciate all the time it takes for such a detailed commentary. I hope others do as well.

emini

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 Cashish 
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There's no School like the Old School

2 AM Reversion to Mean Trade


Throughout the night the Mighty Euro clawed it's way to the big number 1.3000. IMO, everyone and their Brother-in-law were looking for the possibility of a short squeeze, maybe a run to the Sell Number at 1.3058. I've written this many times, hopefully to drive the notion home in the minds of new struggling traders, the market is an enigma, it's made up of countless moving parts and participants. Big traders, small traders, short, and long term traders are only a few examples, add in the methods they use and the diversity of these participants is compounded greatly. There is no, "one way" to trade the market, but the chosen method must align with the psychology of the trader, that's all I have to say about that.


Just prior to the market trading at 2am price was trading above the rising +2 SD level of the VWAP and made a high of 1.3012. The 2am bar opened at even (1.3000) and went straight up and traded at '15, since this level is above the +2SD level and within the range of what I call normal rotation around a whole number I entered sell orders at '05(+2SD Level), '14 and 16. The '05s and '14 were filled but the '16 was left behind. The target on this trade is normally the VWAP but today the Pivot was also sitting within a few ticks. As price fell and traded just above the VWAP and the pivot I began to consider the possibility of traders entering into this market long with the intention to stage a short squeeze. I took profit on one contract at the Pivot. I believe the market is driven by a force greater than the sum of its participants, bullish traders may want to move the market higher but when certain levels are breached sellers "from out of nowhere" can decide to initiate positions and thwart even the most powerful bull run, IMO, this theory plays out continuously throughout the day. To stage a significant short squeeze the market needs buyers to lift prices into the area where the shorts are forced to cover their positions, this short covering (buying) is the fuel that will propel prices higher, offering profits for the longs who need to sell their positions, to "someone." The reverse is true if an attempt is made to squeeze the holders of long positions. Where am I going with all this "basic" market crap, the point I want to make is, this bull bear fight exists on many different levels. I believe, this morning's price movement was indeed an attempt to force a short covering rally into the area of 1.3050, but as it was forming the tide was silently turned on many of the traders who positioned themselves long, with hopes of a run to '50. As price traded back up above the +2SD level, still within "normal" price rotation around the whole number, I added to my short trade on the +2 SD level. My target was just below the POC (1.2988) in the range of the -14 and -16 ticks below the whole number 1.3000. When price returned to the Pivot the long traders who were looking for a short squeeze, were now looking for the door. As price tested the session's low, the stops of the short time frame long traders who were hunting for the stops of longer time frame short traders offered the fuel to move prices to my targets. As I write this post the market did reverse again and put the squeeze on those traders at 1.3050, however, I'm not satisfied with the pressure of that move, I believe we may return during the U.S. session. There's an old saying, "If you want to take the market up, you have to take it down,,, If you want to take the market down, you have to take it up." I think this morning's early move was a good example of this.








Edit


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 eminitrdr 
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@Cashish,

When time permits, could you please explain how you traded (would trade) this morning's price action.

This price action appears much like the above post in "Just Try To Follow Along." Once price traded 20+ points above the low and ABOVE the -1 SD, it would be a "plan" to buy near -2 SD...target the VWAP...stop below the LOD.

Thanks,
emini

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 Cashish 
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eminitrdr View Post
@Cashish,

When time permits, could you please explain how you traded (would trade) this morning's price action.

This price action appears much like the above post in "Just Try To Follow Along." Once price traded 20+ points above the low and ABOVE the -1 SD, it would be a "plan" to buy near -2 SD...target the VWAP...stop below the LOD.

Thanks,
emini

Time to pull out another tool, Bollinger Bands, I haven't been giving them much credit on the charts I've posted lately. Yes, the move prior to 2am was similar but the one difference that might shake traders out was the fact the move was prior to 2am. Last night's move was not generated by the same traders as the "Just Try To Follow Along," example. I believe the different sessions need to be traded based "on their own" price action. At 2am the move down became "context" for the price action of the session that was about to unfold.

This chart shows the move down was still in progress at the 2am open, heading straight for 1.2900, the Buy Number, yesterday's low and the bottom of yesterday's Value Area. These areas aren't going to move they'll be fixed throughout the day at these levels, no matter which session we're trading. Also, the Bollinger Band study, its average and the SD bands will remain "true" throughout the entire Globex session. True, in the sense that it is a calculation of a simple 20 period moving average, not a volume weighted average like the VWAP. This volume weighting is why I start a new calculation of the VWAP for each session, IMO, it allows me to "get a read" on those particular traders trading that particular session. The second chart shows this, EU traders traded thru "their" VWAP from both directions many times between 2 and 6am. Also. it usually doesn't take long for the POC from a previous session to "come to the session that's in play," why, because it's volume. Usually the EU session volume soon becomes greater than the total of the Globex since it's open and the POC will "run home to mama." This happened at 2:50 am this morning, (just prior to the London Open). I believe the same idea holds true for the US session but the fact that the EU traders are still there (or maybe most of them) makes the shifts of the POC a little harder to read. But the US session VWAP with all the volume it consumes is a force to be reckoned with, if the Globex POC runs home to mama, think of the US session VWAP and POC as PaPa grabbing all traders by the scruff of the neck and dragging them along.







I chart all these different calculations of session VWAPs and keep an eye on the POC shifts throughout the day. The bridge between them all is Bollinger Bands. At the 2am open the upper B Band turned down (red) just below the Globex -2SD level and 14/16 ticks above the whole number 1.2900. When I see the upper band turn down in a down move I look for an attempt to test the most recent low. This was a pure play of the 14/16 tick rotation, I had orders sitting on the -2SD line that never filled, I moved them to 15 and got filled. Since the 6E never traded on even yesterday that was my target, I got it, and sat out the rest of the session, actually I slept. After the low was put in and the EU session was underway the market went range bound for several hours.


Keeping an eye on the B Bands during opens will often give a good indication whether follow thru is real or just a head fake. I took this trade at the U.S. open, using the "new" VWAP the market went one way, up. But if you look closely at the B Bands they show volatility was not a given (red areas signify contraction) compared to the earlier B Band chart (all green). I shorted this "weak/struggling" up move first at 69 (a few ticks above +14/16) then again near yesterday's EU session high (I sold 1.2978 yesterday). I'm looking for a pullback to the B Band Average, or 50, or the Pivot at '47 I took profits near the lower value area of the U.S. session Volume profile.






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 eminitrdr 
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@Cashish,

Just tryin to learn and understand all I can.

SIM only for now and just 1 car.

I moved my target after first probe went to 1.2946...covered at round number 1.2950.

I'm in the early stages of learning this OLD SCHOOL methodology. I'm not totally sure this trade even meets cashish's trade criteria. Just trying to get as much screen time as is possible.

emini

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 Cashish 
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eminitrdr View Post
@Cashish,

Just tryin to learn and understand all I can.

SIM only for now and just 1 car.

I moved my target after first probe went to 1.2946...covered at round number 1.2950.

I'm in the early stages of learning this OLD SCHOOL methodology. I'm not totally sure this trade even meets cashish's trade criteria. Just trying to get as much screen time as is possible.

emini

That ain't workin' that's the way you do it
Money for nothin' and chicks for free



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 Cashish 
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I can't post fast enough

Filled




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 Cashish 
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@eminitrdr

Are you FLAT ??

Maybe a little more (maybe a lot) ???? down to '50 ?? I'm not going to touch it, long or short. Pigs get slaughtered !!







I'm adding charts to this post

The test of the recent low occurred (B Band signal) sometimes they come sometimes they don't. It's a hard trade to take in either direction and a hard trade to stay in if you're already short and are looking for continuation of a move. Buying the "new" low works too, the hope is a deep pull back or reversal, but often I've just been mired down in rotation for hours.




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 eminitrdr 
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@Cashish,

Yep, flat here, only the one trade.

Just observing as much as I can to understand the studies.

emini

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 Cashish 
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Cashish View Post
Buying the "new" low works too, the hope is a deep pull back or reversal, but often I've just been mired down in rotation for hours.

But not this day, nice move.


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 eminitrdr 
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I believe I missed a couple of opportunities. Much to learn.

I must run. Drs appt later this am.

emini

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 eminitrdr 
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My objective for now is to get a lot of screen time. Still on SIM and will be for some time.

emini

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 eminitrdr 
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Still comparing my entry charts to determine what best suits me.

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 Cashish 
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eminitrdr View Post
Still comparing my entry charts to determine what best suits me.

That's time well spent IMO, your method has to fit your personality.

I believe today's movements are basically savvy traders positioning themselves for the IMS number coming out at 10am. I also believe "these guys" can throw volume at the market and get the sweet spot they most desire. I always try to "guess" the level price may be sitting on prior to a major economic report, but today (right now) I'm still unsure. My "best guess" is 1.2960 at 9:45am. This position would offer a "spike target" of that Virgin POC sitting at 1.3001 for the ALGOs when liquitity disappears during the release. We'll see what the 8:20 open brings to the fight.

Ensign updated their program and my VP studies were all WHACKED OUT yesterday, overnight they offered another update and although it's 99% better than yesterday it still doesn't draw the VPs as it did with the older version. This quirk had me a little gun shy this morning but I'm adjusting. I took a short when price came back to the POC shift. I cut the trade off at it's knees and took profits just South of the Pivot. I moved one order down to get filled on the entry, and moved two up the get filled on the exit. When price finally traded on my two original exits I knew I made a big mistake! I hate leaving that kind of money on the table but the changes in the charting program still has me a little "to cautious."




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 Cashish 
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I took the goodies out of that move, I'm done. I used the US session low -1 as a stop and it held, wanted to buy anything below the value area, I was early, as always. When the US session kept traded up to 1.2915ish (Globex VWAP) I felt like it was a powder keg of stops, it was.







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 Cashish 
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There's no School like the Old School

Hoping and Wishing


I have a few rules I abide by when trading, one of them is, no hoping and no wishing when it comes to managing positions. I learned long ago if I find myself hoping the market will do this or wishing the market will do that, what I'm really doing is failing to admit to myself that I'm wrong. When trading, trying to avoid being wrong is like running through a parking lot during a rain storm with the expectation of not getting wet. When I finally put two and two together and realized this correlation my trading improved. If I found myself sitting on a winner 5 or 10 ticks from my predefined target and began to notice I was hoping or wishing for a pop or a little push, I took that as a signal to close out the trade. More times than not it was the best action to take. The same held true for losing trades. If I was behind on a trade and caught myself hoping or wishing I knew I was wrong and I knew I was refusing to take the inevitable loss, I've never had a loss I didn't wish I took sooner. My trading improved because I took action when I had the thoughts of hoping or wishing the market would do something, but the action was the opposite of what I was hoping or wishing for. My Dad used to say, "shit in one hand and wish in the other, and see which one fills up first!" There's some truth in that colorful saying because one hand holds certainty and the other holds uncertainty. If I hope or wish when managing a trade, what I'm doing is shifting the responsibility of the action that needs to be taken from me to the market. I had to remember, my actions are basically the only thing I have total control of while trading and no one can control the market.

As my trading improved and my method evolved over a number of years I once again began to have feelings of wishing and hoping, but this time it was during different circumstances. I began to say to myself, "I ought to short this market," even though my indicators or method wasn't in agreement with my thoughts. Since all I have control of in the market are my actions I would refrain from acting on these feelings and stay out of the market. But time and time again the market would sell off or rally several points in the direction of the "inner feeling" I had moments ago. Slowly I began to realize I was developing an intuition regarding price movements. This intuition felt like wishing and hoping if I gave it even a moment of conscious thought, so much so I rarely acted on the impulse, but time and again these gut feeling trades proved themselves profitable. I began to trust these intuitive trades and over time I learned to trade them. Even though most of these trades came to me while my indicators were neutral I learned to take them quickly and manage them with respect. All this just kind of happened over time and on occasion out of the blue I get this funny feeling to buy or sell the market, today I rarely hesitate, I enter the trade as if it was any other valid signal, limit my risk an define my target(s).

I had such a trade Friday, it was probably the hardest of this 'class' of trade I've acted on in many years. I was up and stalking the market throughout the EU session and watched it trade in a 23 point rage for 6 hours. Just prior to the US open I had an intuitive thought to enter a long position. For the record, this is Friday October 5th less than an hour before the release of the NFP report. If I have a trade on and that trade is showing be a decent profit and a decent trend I'll hold the position into an economic report, but I can't recall entering a trade prior to a NFP report for a long long time. I entered my positions, set my stops within normal risk levels and entered targets as if it was any other trade on any ordinary day. Within a half an hour after my final entry my targets were hit and I was flat, the total adverse move was 50% of my predefined stop. Price traded on all of my targets on the 8:30am bar but 2 contracts didn't fill on the high tick and the market took 2 minutes longer to retest that high tick and fill them. It was probably more than an hour later when I thought to myself, what the hell did you just do, trade straight into the NFP report! I felt calm and collected during the whole process and was actually caught a little off guard when the numbers came out, I wasn't glued to the screen waiting for the clock to tick.

I'm posting this as an example of what I call an intuitive trade, I would have never entered any trades prior to a NFP report, ever. I still find it hard to believe I did but something compelled me to take this trade, something I really can't explain. I hope it doesn't happen again very soon.





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 eminitrdr 
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Why it's important to track the different sessions...Globex, EU, and US.

Price kept making HHs and HLs. Important to note price couldn't pull back to +1SD in EU session and also rising POC and B Band average.

One can identify key reference levels, i.e, POC, VWAP, +1SD, +2SD, -1SD, etc for each session. Always keep in mind the 14/16 rotations that Cashish has mentioned numerous times.

emini

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 Cashish 
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I'll call this the passing of the torch, from EU session to US session. I'm long here '43 (in the nose bleed section) looking for HIGHER HIGHS. IF the spot traders go stop hunting ABOVE '50 I want be with them. Give 'em time.

I can also give you 100 reasons why this trade won't work that's the risk.



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 kronie 
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Cashish View Post
There's no School like the Old School

Hoping and Wishing


I have a few rules I abide by when trading, one of them is, no hoping and no wishing when it comes to managing positions. I learned long ago if I find myself hoping the market will do this or wishing the market will do that,



I want to say you deserved those gains,
those trades that caught the spike higher, irrespective of the bar interval / time frame, were excellent.

I had a few of those, except it was news event driven, with full target and stop pre-set and got hit all within the top tail, not the body, of the candle. those were some of the most memorable, profitable trades.

that chart is amazing, thanks for sharing it, because that is an example of how we (should) trade!

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 Cashish 
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There's no School like the Old School

Trading in The Zone



No, not the book but the mindset. I'm not sure where I originally read MY definition of "the zone," but according to ME, I would imagine most of us (if not all) have been in it, whether we were aware of it or not. I'm going to assume most of the readers of this thread are adults, just to keep things simple and drive home my point. For me, being in the zone is best identified when I abruptly realize I was just in it. I'm not trying to speak in riddles, but I find it is much easier to realize when I was just in the zone, and now I'm not, than it is to realize when I'm about to enter "into" the zone. For myself I find entering into the zone subtle and uneventful, a slow lingering process that somewhat magically de-energizes all thoughts and concerns unrelated to the task at hand. My definition of being in the zone is when I'm so deeply immersed in a particular interest that I loose all connection to the physical reality surrounding me. How many times have we, as individuals, looked at a clock and said, where did the time go! IMO, this is an example of abruptly realizing we were, in the zone. In my definition I said, "ALL connection," and all does mean all, the temperature of the room, the time of day, responsibilities we failed to fulfill in our past, the responsibilities that may be pending in our future and even those individuals around us, this may seem like a nice state of mind to be in, IMO,it is.

Let's talk about sex, or more definitely the act of having sex, remember what I said about adults. IMO, the brief moment we (many of us) experience during sexual orgasm is one of the best examples of being "in the zone." All chuckles aside, ask yourself what you were thinking about during the climatic moment, were you thinking of your mortgage payment, your golf game, your daughters birthday party, your 401K or even your sexual partner (I doubt it) or were you totally disconnected from ALL your physical surroundings. In several forms of literature sexual orgasm is defined as, "La petite mort," (the little death). Simply it suggests that all things cease (reality around us), and we travel "outside" our "selves." This traveling outside ourselves is what I believe being in the zone IS. Another example might be trying to get the attention of a teenager playing a video game (who's in the zone or "zoned out"), but I didn't think that was as colorful as sex.

No, I not suggesting we break out the "boner pills" before we boot up our trading computers, I'm just trying to portray in words my opinion of the zone. I'll share another personal example unrelated to trading. A few years ago I was rebuilding a Mother-in Law cottage on my property and spent countless hours hammering and sawing. The cottage sits on the extreme edge of my property about one hundred feet from a neighbor's home. One morning I noticed I had a phone message I had not heard the night before over the noise of the array of power tools I was using. The message was my neighbor letting me know how much she admired the work I'd done to the outside of the cottage and how much she enjoyed the "new view" from her home. But she also went on and asked if I would consider stopping the heavy construction at 9pm since that was the time her ailing mother went to bed. At first I thought her request was weird (I usually stop by 9pm), but as I recalled the events of the previous night I realized I was in the zone and my goal for the previous day was to finish the interior walls of the last two rooms. It wasn't until that moment (about 9 am the next day) I realized that while I was working the day before, day slowly turned to night and I had absolutely no conscious thought of the noise of my saws, drills, hammering or CD player let alone the time of day. I finished the last two rooms of my project that night and as I stood there I realized it was well past 1am when I turned out the lights. Before I started work the next day I spoke with my neighbor and apologized for the inconvenience, assuring her I didn't notice her phone message the night before. As it worked out this was the last day of the noisy work and many times during the trimming out and painting I found myself back in the zone oblivious to the trappings of the "outside" world.

IMO, trading in the zone is similar to the above examples, if I'm thinking, I'm not in the zone. When I'm in the zone I'm doing,, not thinking, about what I'm doing, just doing, like being on auto pilot. I know I'll never get into the zone if I'm surfing the web, checking emails or talking on the phone. I've found there are some negative risks to trading in the zone, being completely disconnected from the outside world can be a problem. I'm sure many brows lifted with that statement since most all the written material suggests we try to enter the zone and go with the flow, trading effortlessly without thought, like a leaf floating down a stream. The one negative consequence I've struggled with when trading in the zone is the vacuum of time, anyone who has entered into the zone while trading can surely relate.

My problem became apparent when I found myself "zoned out," oblivious to time and in turn scheduled economic reports. If I was in a trade my common course of action was to exit the trade prior to the release and stand aside until the next opportunity. However, many of the trades I exited proved to be in the right direction with the market and my premature exit often cut my profits short and on occasion were closed with a loss. My problem was this, I had set audible alerts in my charting program that would "warn" me of the upcoming releases, these audible alerts would often "shake" me and snap me out of the zone. After realizing how well I was reading the market and how many times my analysis of direction was correct while I was in the zone I began to question my "set in stone" rule to exit all trades prior to economic reports. I began to study price movements around and during reports. Many online economic report calendars rate the market's expected volatility around releases with "stars, bars or colors" but I suggest traders do a little self study and derive their own conclusions if these levels of volatility are within acceptable limits of risk for their trading style on an individual basis and truly warrant exiting trades prior to or standing aside for a predetermined amount of time. After a period of study I made two changes. The first was simply qualifying the average volatility during several reports and redefining the criteria based on my risk tolerance. This redefining allowed me to totally omit many reports from my alert list, and gave me a greater understanding of what the true current volatility is on the others. The second change was to the alerts themselves, I removed the audible alerts on many lower tier reports and replaced them with visual alerts, I found these visual alerts not as "shocking" to my concentration and over time I was able to "stay in the zone" and trade as "normal" maintaining my focus entirely on the current price movement.

These changes took some time for me to get comfortable with and require an ongoing calculation of the average volatility during several reports but I believe personalizing this information in accordance with my risk tolerance makes the rewards well worth the time, effort and aggravation. Since I believe (for me) it is nearly impossible to "intentionally" enter into the zone, I took the notion that maybe it was possible to create an environment to "keep me" in the zone instead.

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 eminitrdr 
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Still on SIM...making slow and steady progress.

emini

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 Cashish 
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Still on SIM...making slow and steady progress.

emini


Nice trade @eminitrdr that's about as good as it gets. Well done, this was a morning with plenty of two way trading, which can make it very difficult to commit to direction. You picked the primo spot for an entry, took no heat on the trade and read the target area ,,, I'd say perfectly.

Well done, a textbook trade.

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 eminitrdr 
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@Cashish,

Thanks for all your help. Still making steady progress. Still trying to put all the pieces together.

There will be setbacks, but with a good attitude and a willingness to work hard, it can be done.

Always embrace the risk and try to keep it as simple as possible. As Cashish told me, "traders make it harder than it needs to be. All we can do is buy or sell and control our RISK!"

emini

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 Cashish 
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There's no School like the Old School

The Times


This week was filled with pain and sorrow for many Americans, my heart goes out to them. I know what devastation a hurricane can do to families, property and small businesses. I also know recovery takes time, years, not weeks or months. IMO, unless you experience the wrath of a natural disaster first hand, you'll never fully comprehend how deeply individuals and communities are affected. The thought of "life as usual" is seldom contemplated while searching for fresh drinking water or cleaning out a refrigerator full of spoiled food that's leaking out on your kitchen floor. Many small business owners will never return, their losses will be just to great and several of their customers will simply, disappear. We had a small park in the area where I live which included a campground, my wife and I took our grand children there on many occasions. After the hurricanes of '04 it was converted into a FEMA worker housing area and remained closed to the public for almost two years. People who were unable to live in their homes due to damage were unable to find housing because all the livable hotels, motels and apartments were filled with claims adjusters, linemen and the masses of other workers that came in from out of state. Many businesses also needed to relocate as well as replace damaged equipment while they repaired their storefronts, available usable commercial space filled up fast. People who planned to put the contents of their homes or business in storage during the needed renovations soon found the availability of a storage unit was zero, moving companies secured most available units shortly after the storm. These are only a few of the obstacles those effected face, in the aftermath of the storm in the Northeast. Did I mention they might go through this with no power. The street behind me had power one week after the storm, it took another week for power to return to our street.

But life goes on, and those not affected barely suffer a blip in their routine, I guess it's one of the hard facts of life.


Trading Times

On Oct 31 @eminitrdr posted this chart (first chart below) on the thread and I wanted to comment on the time of day this chart begins calculating the VWAP and VP for the European session. eminitrdr has been a loyal follower of this thread and is, IMO, grasping the concepts and forming a method of trading which appears to be working very well for him. A Volume Weighted Average Price (VWAP) or Volume Profile (VP) can be calculated during any period of time, 1m, 15m, 30m, 60m, daily or weekly, ect. all that's required is the period of time, a time to start and a time to end. I start a VP and VWAP at 2am est because I want to see how the traders in Paris and Frankfurt view the value of the market before the London open at 3am est.. I've taken many trades during this 1 hour period and consider it an important time period for anyone seriously trading the Euro. So let's take pause here and realize it is not 2 thru 3am est that is important it is the hour between the Paris/Frankfurt open and the London open that I believe is important. Since I believe the time period between these opens holds significant importance, I have to adjust my indicator (VP and VWAP) settings when these countries set their clocks from British Summer Time to Standard Time and vise versa, albeit I have to change the settings again when the U.S. adjusts their clocks in and out of Daylight Saving Time (this weekend). I posted a second chart to show the difference in the two settings on this particular day, a subtle difference, but significant to the method nonetheless. Furthermore, if traders expect movement at or during the close of a particular European market, I believe these time changes should be considered, IMO.






A final note, the intention of this post was to show how much the study formations were affected by adjusting the indicator times to correlate with the European time change on Oct 28.

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 AttitudeTrader 
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Cashish,

I'm very late to this party, but I just wanted to tell you how much I'm enjoying this thread. The way you are explaining things (from technical analysis to psychology) is ridiculously refreshing and far easier to understand/comprehend than most.

So thank you for the amount of time and effort you put into this. Posting on my blog has shown me how time consuming it can be to put posts like this together and yours are great (I've actually added links on my blog to some of your posts here so I can refer back to them easily)!

Also, I've recently begun using Ensign and I just created a thread on the Platforms and Indicators section here on futures.io (formerly BMT) asking Big Mike if he would create a Sub-Forum for Ensign.

I wanted to let you and @eminitrdr know in case you'd be interested in it too. If you are, feel free to add to the thread to let Big Mike know.

Alternatively, if there already is one that I don't know about, please let me know!

Thanks again for the wonderful content you're providing here.

-AT

"Is it hard? Not if you have the right attitude. It's having the right attitude that's hard." - Robert Pirsig
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 AttitudeTrader 
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I know you guys are mostly trading the euro, but I thought I'd share an ES chart with you using some of what you're talking about here.

Recently I've been getting closer to my own “style,” and with the addition of some of your ideas, I found a little more reason for confidence in the setup I was looking to take today.

All of my regular stuff is on the chart, but where I entered was also a bounce off of -1SD of VWAP, and prior to my entry, the turning down of the upper Bollinger Band signaled a possible retest of the most recent low and potential turn around (which occurred).

My normal target happened to be just under the VWAP which made it even more reasonable (in my mind) as an objective.

As you say, it's a complex mix of things that make for a potentially good trade, and any one of these things alone is not enough to make that decision.

If I'm off about anything I've just said regarding what you've been sharing, please let me know.

Thanks again.

-AT


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 Cashish 
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@AttitudeTrader

Thanks for stopping by and Thank You for the thoughtful comments, I'm glad you've found the thread enjoyable and "ridiculously refreshing." It humbles me that you've been able to incorporate some of the ideas from this thread into the development of your own personal "style" of trading the ES. To be forthright I must say I've never charted or traded the ES, you're "on your own" there. IMO, the more "confidence in the setup" we can attain (by any means) is always a good thing. Earlier today, eminitrdr told me his B Band study was instrumental in keeping him in his 6E trade as price moved to his predefined targets as well. I'll make one suggestion, and raise one flag of caution. I suggest you chart a Volume Profile if you aren't already, a VWAP without a VP is like bacon without the eggs! The reason I say this is because the VP will aid you in identifying areas in the market where you don't want to trade. This is the flag of caution, IF the POC of the VP is between the -1 and +1 SD bands of the VWAP, which would put it pretty close to the VWAP (ave),,, price often moves "effortlessly" thru this range (-1 to +1 SD) very quickly. This is often the case during a prolonged consolidation period leading up to a news release/event. I call this area the "forbidden zone" in the 6E, a place where anything can happen, in the blink of an eye. As an example, I once entered eight consecutive trades bouncing off the -1 and +1 SD levels in the 6E in a four hour period during overnight trading, the market went nowhere, it just rotated between these levels for hours. I'm sure you've forgotten more about the ES than I'll ever know but keeping notes of "what happens where" has been very helpful to me. Life is good.

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 AttitudeTrader 
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Cashish View Post

... a VWAP without a VP is like bacon without the eggs! The reason I say this is because the VP will aid you in identifying areas in the market where you don't want to trade.

Ok, I'll keep that in mind...but now I'm hungry!


Cashish View Post
... keeping notes of "what happens where" has been very helpful to me.

That sounds like the kind of thing I hear from a couple of (successful) cyber-trader-friends of mine who continually attempt to beat the real trading "wisdom" into my head.

Thank you for your input and "wisdom" as well.

And yes, life is good!

-AT

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 AttitudeTrader 
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Just wanted to share this chart showing a fairly dramatic example of the Bollinger Bands and their reflection of volatility in the ES this morning.

I have the BBands plotted at the bottom of my chart.

After the first 45 minutes of the session, volatility dropped significantly (according to the BBands) and remained low for a protracted period of time (about an hour and 15 minutes).

The distance between BBands continued to shrink until they were very close together, and then price exploded up.


Cashish View Post
The self-evident truth about volatility is, low volatility leads to high volatility and high volatility leads to low volatility.

Very cool.


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 eminitrdr 
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@Cashish,

I'm still hard at it...

emini

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 eminitrdr 
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I entered on a stop sell @84 (2 below swing low) and selling pressure (BBand expansion). I had my target of 74 (2x BUY before I entered.

emini

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 eminitrdr 
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@Cashish,

I do believe the pieces are coming together. Thanks again for all your help.

emini

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eminitrdr View Post
@Cashish,

I do believe the pieces are coming together. Thanks again for all your help.

emini


@eminitrdr Yes, I believe you're putting together some very nice trades, well done. I sent you a PM, not sure if the charts went through, let me know if they're missing.

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 eminitrdr 
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@Cashish,

Another nice morning. I just wonder where price is headed...hmmm.

The charts you mentioned above were missing.

Have a great weekend. I'm sure you will .

emini

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 Cashish 
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I'll post the charts here, I marked the targets, I'll PM you the trades. The third chart is this mornings chart. I'm targeting the POC @ 1.2716 (for now).







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 Cashish 
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Mister Boombastic
all for fun





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 eminitrdr 
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If ya wanna learn the Old School, read the entire thread as many times as necessary to understand the basic concept/idea. Mr Cashish explains his method in great detail.

Is it easy, NO. Does it take a lot of time, effort, hard work, dedication, screentime, etc...YES, at least for me.

Here is just some of the prep work I do before each trading day.

emini

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 Cashish 
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Spent a few days in Islamorada


Sunset, almost missed it.





Sunrise, was a little cloudy that morning but the day was beautiful.


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 josh 
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Beautiful -- hope you have a good thanksgiving Cashish!

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 Cashish 
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josh View Post
Beautiful -- hope you have a good thanksgiving Cashish!

Beautiful...... @josh ... If you only knew. The trip was bitter sweet, within a week of getting my tickets for the US Grand Prix in Austin my best friend told me his only daughter was getting married. I never mentioned the GP to him and assured him we would be honored to attend. For three days we ate and partied on the beach surrounded by the Bride and Groom's beautiful young guests, this wedding was definitely 'over the top' in everyone's opinion.





I think it's good to get away from the market and focus on friends and family once in awhile. The problem I have is, I wake up at 1am for a few days when I take time away! Gearing up here for an invasion of Grand Kids who start arriving on Wednesday, should be a great time. Thanks to all who follow this thread and I wish you all a Happy Thanksgiving.


BTW, I sold my GP tickets within an hour of putting them on Ebay.

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 Cashish 
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It's always nice to come home, and get back in the groove. Now, I'll take my Holiday.





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 eminitrdr 
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Just wanted to post a chart with some of my thoughts for a particular trading session...in this case, the EU, my favorite.

I base my trading decisions on price action and price location. Most of my key price levels are placed on my chart during my PREP work, the night before the EU session begins.

I also keep a very close eye on my CASH chart which is right beside my order platform.

IMO, it pays to do your homework I hope it helps.

emini

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 eminitrdr 
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Sorry, forgot to include in above post.

I'm done...all have a good one.

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 WilleeMac 
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Good morning/ afternoon

Just found this thread and I find it quite interesting

Please let me know what you are showing for the vpoc for /6E on a 15m chart

TOS has 2789 at this time of writing

Thanks

Bill

EDIT

I see that you are showing spot w/ a poc of 2785 - so close enough

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 eminitrdr 
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Just a word of caution. You may want to read the entire thread. We use specific studies (vwap, volume histo) that start at specific session times...Globex, EU, and US.

It may be close enough for you but not for me. Just sayin, be careful. However, not my thread and probably shouldn't say anything.

emini

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 WilleeMac 
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Thank you

There will be a difference between spot and fute

I trade primarily on price and try to find why price is doing what it's doing at a certain level, 50% retrace etc

Think or Swim can sometimes be in its "own world" thus the reason for my question

Again thanks

Bill

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 josh 
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eminitrdr View Post
Just wanted to post a chart with some of my thoughts for a particular trading session...in this case, the EU, my favorite.

I base my trading decisions on price action and price location. Most of my key price levels are placed on my chart during my PREP work, the night before the EU session begins.

I also keep a very close eye on my CASH chart which is right beside my order platform.

IMO, it pays to do your homework I hope it helps.

emini

Why do you start your vwap at the 2am european futures open instead of the 3am European cash open?

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 eminitrdr 
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@josh,

I have replicated my charts to match Cashish's, with his help.

I do believe we start the EU session at 2am EST because that's when Frankfurt, Germany begins. I believe it's important to capture that price activity. Cashish can correct me if I'm wrong.

emini

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 WilleeMac 
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yes on the 2am est

also another thing to look for if LON (3am est) continues GER or reverses

goes along the lines with most don't want to buy at highs so they (whom ever) will offer it down then bid it up

today is a fairly good example GER offered it down then they (GER & LON) bid it up

another thing to keep in mind is the 4am reversal


Cash, not trying to steal your thread just trying to throw in my two cents with hopes/ glimmer of help

Bill

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 josh 
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All significant European markets open at 3am ET and close at 11:30am ET.

Frankfurt exchange (Dax) opens at 9am CET which is UTC+1 and thus 3am EST.
Stoxx 50 index trades same hours.
London stock exchange opens 8am GMT, thus 3am EST.

Futures on DAX, stoxx and other eurex products opens at 2am, but the cash markets open at 3am EST.

Note that this applies when both Europe and the US are on daylight saving time. The week or two when they are not aligned is different but this is the only time.

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 josh 
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Cashish, I would like to share a nice scene from yesterday where I am vacationing with family and friends this week, since you were kind enough to share your beautiful picture. I hope everyone is having a great thankful holiday filled with gratitude and joy and not thinking too much about markets. I checked in today a couple of times to keep up with things, but by far my focus was on more important things. Happy Thanksgiving everyone.

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 Cashish 
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josh View Post
Why do you start your vwap at the 2am european futures open instead of the 3am European cash open?

Thanks for stopping by and keeping this thread on the straight and narrow.

I've never been to Frankfurt, I don't know when they open the doors and allow traders to enter. I do know time is becoming less and less important. To answer your question I'm going to 'take the long way around the barn.'



List of market opening times - Wikipedia, the free encyclopedia




Market Clocks


As trading floors become a thing of the past I've focused more and more on volume. There's plenty of market moving economic data released between 2 and 3am that draws volume. I blew up these charts showing a simple moving average of volume, the first chart is an hourly chart with a ten period average, I've marked the 2am bar for the period of one week.



This chart is a 5 minute chart, it also has the same 10 hour average charted. It is a little harder to see but volume usually begins to exceed the 10 hour average right at 2am.



I've used the 2am time for the beginning of my charts (Euro-6E) for many years, based mostly on the steady ascent of volume which is apparent in the previous two charts. To further clarify, near the beginning of this thread I defined my trading time as a "synthetic trading session," one that is not based on opening bells but based on volume. You being a "stickler for perfection," (IMO ) may appreciate that. So where does that 2am volume come from, I don't know, I don't care, I just know it's there.



Also, to comment on @WilleeMac 's last post. I keep a running average of the price movement during the hour between 2 and 3am. Since my last calculation prior to the holiday, I've found that 75% of the time (15 of 20) either the high or the low of the 2am 1 hour bar will remain the high or the low at 6am (end of my synthetic session)and often the entire Globex session, I'll leave it to you to find that average .

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 Cashish 
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The New Trading Pit ---- Walmart

Sometimes I'm embarrassed to be an American




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 kman 
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Cashish View Post
The New Trading Pit ---- Walmart

Sometimes I'm embarrassed to be an American




That is unreal. What has society come to??

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 eminitrdr 
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Remember what Cashish stressed/emphasized about flat-faced volume profiles/histograms. Price can travel thru the entire value area with ease.

I positioned my self outside the VA and did ok

emini

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 Cashish 
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eminitrdr View Post
Remember what Cashish stressed/emphasized about flat-faced volume profiles/histograms. Price can travel thru the entire value area with ease.

I positioned my self outside the VA and did ok

emini

I'm assuming you went SHORT at the red arrows and covered at the circle, NICE. You took the meat out of that sandwich and didn't leave much crust. That is a good setup and it works going North and South,, regardless the longer term trend. Because, you are trading the normal rotation of a consolidating market. If you keep your eye on the VP as it's building while you're IN THE TRADE you may begin to identify when it WON"T work. Nonetheless, you did a fine job identifying the set up and placing your orders.

How about this one.

Buying '86 and '84 and targeting even. BUT, with the Buy Number under even and price UNDER the -2SD level AND the time of day ,,,, I took profits at '96,,, two ticks under the SN. Taking a long in this trend will get your blood pressure up, it did mine when price hit my target (and didn't fill me) and came back in my face.






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 Cashish 
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There's no School like the Old School

Thanksgiving

FWIW, I wanted to throw this out there, late I know but I was busy over the Holiday. The Euro has a history of making nice moves the day AFTER Thanksgiving. Over the last 10 years the Friday range is on average 207% of Thursday's range. The five year average is 213%. Whether you're up to the challenge of trading Black Friday or not there is opportunity, and armed with statistics that say the smallest range expansion was 100% and the largest was 350% some of the uncertainty of being caught in a range bound market are alleviated. Another concern that deters traders from trading short sessions around holidays is volume, but if traders put in the time to find the actual statistics they may be surprised. As I recently posted I base a lot of my studies on volume, I also use the 10 day average as a basis for many calculations. As an example, Friday's volume was more than 75% of the 10 day average, not bad considering the market was only open 87% of the normal session. This years range came in as the second largest in the last five years, "just a bit outside" (under) the 10 year average. Sometimes I trade 'em, sometimes I don't, but I always keep my BOOK.


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 WilleeMac 
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Cashish,

What is a good node value (row height, pip etc) for the composite on a 20 day 15m?

10 pips, 6 pips, 3pips etc

On the daily profile I'm using a 1 pip row height (node)

Thanks

Bill

EDIT

If someone else wants to chime in,,,,,,,

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 Cashish 
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WilleeMac View Post
Cashish,

What is a good node value (row height, pip etc) for the composite on a 20 day 15m?

10 pips, 6 pips, 3pips etc

On the daily profile I'm using a 1 pip row height (node)

Thanks

Bill

EDIT

If someone else wants to chime in,,,,,,,

@WilleeMac I always squirm in my seat when someone speaks in "pips" .... I'm a tick man. I use 1 tick "row height" for all my profiles, I've played around with other settings but kept coming back to 1. Of course you could use a bigger row size if you're having issues with the size of your profile on your screen while looking at longer term charts. But I'd be sure I understood how the software was calculating the values before I "trusted" the results.

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 WilleeMac 
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thank you

.0001 on daily, toying w/ .0003 - 6 on composite

- bill

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 eminitrdr 
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I took what the market offered. I believe you don't always have to hit homeruns...singles are ok. Works for me.

All have a great weekend.

Adios

emini

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 Cashish 
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I took what the market offered. I believe you don't always have to hit homeruns...singles are ok. Works for me.



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 Cashish 
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@eminitrdr Sorry to hear about the complications with your Bride, I hope all turns out fine. Trading can be difficult with emotionally charged issues effecting our focus, believe me I know. Trades like the one you posted is going to 'mark' you as a scalper if you're not careful.

I wanted to give you a cyber pat on the back for initiating this trade, the one you posted in the #4 Chat Box. For some reason, we think alike! I went balls out on that trade too and thought IF price did break '09 it would travel to the Upper VA and MAYBE the +2SD level. Price came up a little short of '24, I had some exit orders there and gave the market a few minutes to reach for them but bailed when the vision of the 'Dick for a Tick' poster entered my mind. I found this session tough to stay committed to the trade with all the news, but this 1.3000 level has been a playground all week. I also think it's a slippery slope, easy for price to fall into yesterday's VA and test some new lows for the day, only time will tell.






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 Cashish 
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"Fairy World"

I like this guy, he sure has a way with words!!






Price did slide down the slippery slope






Friday Fun


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 Cashish 
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There's no School like the Old School

The Market Rewards Bad Trading

I've been trying to write this post all weekend, I've started and stopped a dozen times because I feel the topic has so many rabbit holes I'm finding it near impossible to stay on task. This is my best shot. I'll apologize now for wandering more than I usually do!

futures.io (formerly BMT) is like the opinion shows on T.V. that are loosely disguised as news broadcasts, most everything is there and people tune into Blitzer, O'reily or Maddow cafeteria style because the show fits their individual belief system, but often with a little effort they find, "All that glitters is not gold." The point is most people believe what they want to believe (until it doesn't work for them anymore), it's more comfortable that way. I have the same opinion about traders, everybody trades what they're most comfortable with whether it's order flow, Fibonacci, Wyckoff, Gartley, moving averages, market profile, lunar cycles or candle stick patterns they believe in them. This allows traders to trade their belief systems. Of course we all have the option to mix and match studies and indicators and our choices are endless, but basically IMO, we all trade our belief systems.

futures.io (formerly BMT) is like one of those buffets where you walk in and pay a fixed price then grab a plate off a warm stack 4 feet high and graze among table after table of anything your heart desires. Rarely do I try anything new, I eat what I'm comfortable with and usually end my experience by searching the half mile long desert table for a piece of chocolate cake with chocolate frosting. When I look through the journals and posts on futures.io (formerly BMT) I find myself doing the same thing, I look at different charts with lines and arrows and often wonder how "this guy/gal" ended up using this system/method. What combination of gurus influenced this person to arrive at this destination, then I move on to the next table in the buffet. The point I'm driving at is there are countless ways to trade and futures.io (formerly BMT) has detailed examples of hundreds if not thousands of them. But every trader and every method suffers losses and in my opinion the ability to manage those losses is what separates winning traders from losing traders. I believe the notion that the market rewards bad trading decisions is the ugly step-child of proper money management and skews the true statistics of the profitability of many trader's methods. Trying to come up with an example of bad trading is difficult since everyone has their own belief of what is right/good and what is wrong/bad when it comes to their own individual method. To circumvent this issue I'll use the movement of a protective stop to exit a losing trade. I'm going to assume most traders will eventually exit a losing trade at some point.

At some point is exactly what this post is about. Simply, if my best statistical analysis of my system's back/forward testing tells me I should exit my position when the adverse movement of price is fifty ticks against me, anytime I allow price to move against me more than fifty ticks would qualify as bad trading. So one day I enter a long, price goes up a shows me a profit of ten ticks then it begins to slide South. I hold the trade as the market rotates thirty points against me, then it slides to my predefined exit/stop. But today is different my stop is sitting on a squiggly line that I believe in and I give the trade a little more room, ten ticks. Then price falls within a few ticks of that level and I give it another five ticks of breathing room. Now the market is inching lower and I move my stop one more time, fifty ticks lower than my original level. At this point my stop is one hundred ticks from my entry and price is sixty five ticks against me. It's a good thing I moved my stop lower and gave the market plenty of breathing room because price shot up and took out the congestion area thirty ticks under my entry and trended the rest of the morning to a new high where I took profits one zillion ticks above my entry. We all know this trade, if you don't, this post ain't for you. This is what I'm talking about when I say the market rewards bad trading, an extreme example, but we all know there are many many more subtle ways the market rewards poor trading and poor trading decisions. The market rewards good trading and bad trading the same, the problem is if I don't enforce discipline on my bad trading no-one will and after being rewarded for bad trading two, three or four times the right thing to do becomes blurred and the system/method's rules can no longer be compared to results accurately.

Managing Multiple Contracts

Scale in, scale out, all in, all out, all in, scale out, scale in, all out or just stay out! I think the jury is still out on this one. I believe it's another one of those individual belief system issues, what works for me may not work for you. This debate continued with me until I decided what worked for me for a host of reasons, and I stuck with it. A one lot trader is obviously limited when it comes to managing trades and limiting risk but it is IMO the most important skill a trader needs to master. Once I enter a trade the only thing I have total control of is when to exit. Only I can decide how much money I will lose in any trade. Learning bad habits while trading one and two lots will become sudden death for most traders when given the opportunity to trade larger size. Trading size and managing the risk of multiple contracts is a skill of it's own. Like increasing the horsepower of a racing car from a Mini to a Corvette to a LMP to F1, it's still a racing car, but it is totally different. Could the Mini driver drive the F1 car, of course, could he get every ounce of performance out of it, I doubt it. So far every journal (I've seen) on futures.io (formerly BMT) relaying the progress of a Top Step Trader Combine abruptly ended when the daily maximum loss limit was triggered. It may not seem strange to you but it's amazing to me, the only aspect of trading that I have absolute total control over is the downfall of so many.


What's the answer? This is why I've struggled with this post, there is no answer. There's no one answer, there's an answer for you and another for me, one for her and another for him. Although the answer is based on an individual level of acceptance which is based on our individual trading system/methods which is based on our individual belief systems, the question remains the same, how do I manage my risk? Just as our systems differ our risk management parameters differ. I hope readers of this post take away this one fact which I hope has been made perfectly clear, we all need risk management criteria that works. A "cookie cutter" risk management system may be 'good enough' for a one or two lot breakeven trader but when traders start sizing up I suggest they exhaust all available resources before settling on the parameters of the most important aspect of their trading.

TST Combine

Why is the daily loss limit in the TST Combine claiming so many casualties, in my opinion it's because the loss limit is based on someone else's belief system, not the traders. IMO if someone was planning on pursuing an attempt at the combine they would be well served to start with the strictly enforced loss limit parameters and reverse engineer a method or "retro fit" their method to incorporate the limits. This is no small task, especially when most of the traders (I've seen) are unfamiliar with the perils of trading size. Simply said, the loss limit has to become part of their individualized trading system, not just a "fiscal cliff" aspiring traders run to when they feel suicide is the only "honorable" way out. Another notable observation (I've seen) is the laissez-faire attitude traders are bringing to the combines. When someone opens their combine thread on futures.io (formerly BMT) with a statement like, "I'm going to trade small at first" that tells me,

(1.) They're not taking this (generate a 10% return ($5,000) on a $50,000 account or a 10.6% return ($16,000) on a $150,000 account) serious enough to bring their A Game.

(2.) They don't have an A Game.



IMO, to generate a 10% return on any futures account in 20 days you better come out of the gate with everything you have.




How about this guy, did he bring his A Game to the NFL Combine?


I'll bet anything, before he laid on that bench he knew absolutely without a doubt he was leaving with that all time record.




A final note:
I hope this post is received with the same respect I have for every trader attempting the TST Combine, I honor them all, their commitment, their honesty and their humility. My purpose was to highlight the importance risk management plays for all traders, we do (manage risk), or we die. I also wanted to inform others to the extent of the challenge traders are taking when they sign on for a TST Combine, it is competing at a level only a few attain. Each individual who's posted their experience with TST on futures.io (formerly BMT) has certainly earned my respect and the respect of many others.

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 Cashish 
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There's no School like the Old School

The Bear Trap








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 WilleeMac 
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Thanks for your help cashish

Just found out that Volume Profile module is screwed up in ThinOrSwim


-Bill

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 MilesT 
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Hello Cashish,

I really enjoy following your "old school" thread and I just finished reading through the chat log of you and eminitrdr conversing on 12/7...good stuff!!!!

I was wondering if I could be so bold as to ask for the videos you PM'd emini. I imagine it would be good stuff...like everything else you guys post.

Thanks in advance,

Miles

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 Cashish 
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Hello Cashish,

I was wondering if I could be so bold as to ask for the videos you PM'd emini.
Miles

Thanks for following the thread and the positive feedback.

"Bold?," I'm sorry I didn't post them here, I guess I thought I had.

If you don't A-S-K you don't G-E-T

These guys are the masters of Market Profile but they sure are hard to listen to, IMO.

This is very Basic stuff from James Dalton.
James Dalton Webinars | SFO Magazine Webinar: Trade Using Market Profile and Market-generated Information

This is J. Peter Steidlmayer thinking wayyyyyyyyyy out of the box.
Volume: The Key to Understanding Today's Market

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 Cashish 
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I like this guy,,,,,,,,,




I guess I'm not the only one.



ECB chief Mario Draghi was awarded Person Of The Year for 2012 by the Financial Times today.


Mario Draghi's FT Person Of The Year - Business Insider

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 WilleeMac 
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draghi and bernake are cut from the same mold

do whatever it takes to protect the banksters

and keep the grease on the gears of the printing press

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 Cashish 
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There's no School like the Old School

Going To or Going Thru

It's Christmas again, another year coming to a close. I was thinking back and realized I started this thread in December of last year. I wanted to thank everyone who has stopped by and especially those who either posted a comment or sent me a PM. I never expected to be posting on this thread a year later, again thank you all for more than 17,000 views in 365 days.

Merry Christmas to all of you.



Going To or Going Thru

If you've read a few posts in this thread you may have noticed I put importance on whole numbers (50s and evens (00s)) while trading the 6E. I've also mentioned a few times I like to take profits, " going to whole numbers not going thru whole numbers." In this post my intention is to offer evidence of why I've held this belief when price approaches a whole number.

This 1 minute chart shows price breaking out and rallying to the upside with nice (very nice) volume. Once price "took off" towards 1.3150 with this kind of volume it is My belief, most traders were feeling pretty confident the "Trading Gods" were going to push price to "50, whole numbers often seem like a logical target. The big volume up bar @ 11:06 cleared 1.3140 and "50 was certainly dead in the sights.




This chart is a close-up of the previous chart. There are two things I wanted to point out to make my case, price and time. Both charts (of course) show price did not trade on "50 during this first run. IF a trader was expecting price to trade on '50 and had an order sitting on '50 or a few ticks above to exit a long position he didn't get filled and was immediately forced to make a decision, (assuming a long position) sell or hold. The high of the 11:07 bar was '49 the close of the bar was '42. The next bar @ 11:08 opened at '42 and dropped another 4 ticks to '38 ,,,,, 11 ticks off the high of '49.





"Time waits for no man"

These are snips I took from the Time and Sales data posted on the CME website. The first one shows price trading @'40-'41 within the first 2 seconds after the 11:07 (a.m. est) bar opened. The second snip shows price trading on '49 (top row) during the 4th second after the 11:07 bar opened. My point is, seconds count in the market and making decisions on the fly can cost you (me) money. The opportunity to exit this trade at '47,8 or 9 lasted about 3 seconds, after that nearly one third of the move was retraced. To capture "snips" of the entire Time and Sales report of this one minute bar would have taken many, many attachments. Instead, I'm posting a 5 second chart in an attempt to show that taking profits "going to a whole number" is often more profitable than anticipating price "going thru a whole number."






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 Cashish 
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There's no School like the Old School

I Might be Wrong About That



Have you met Oliver Leopold?






Oliver's website
The Investment Times



An Interview from Tastytrade




The Article from the WSJ
Building an Investment Portfolio - WSJ.com


All my best to Oliver and his family in 2013 and many years to come.

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 Cashish 
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I'm going thru Trading Withdraw, these four day weekends are taking their toll on me.






I'm just hanging out with the "little ones" in our tribe,
playing Yahtzee jr. and Candy Land





My trading box is sitting here waiting for me to turn it on.




Happy New Year




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 josh 
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Cashish View Post
My trading box is sitting here waiting for me to turn it on.

What a great song; I like Norah Jones but had never heard this song. What a sexy and soothing voice this woman has... thanks for posting this, it's in my music library now!

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 Cashish 
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What a great song; I like Norah Jones but had never heard this song. What a sexy and soothing voice this woman has... thanks for posting this, it's in my music library now!

@josh

IMO, Norha Jones is the whole package. A Jass R&B artist from Texas,, you know Willie wasn't going to let her get away. Anyone can identify that voice after hearing her sing only a few lyrics. My favorite music always consists of two things, "a sexy and soothing voice" (preferably a female) and a piano. As I said, IMO Norah is the whole package, not only her voice, but she can play an awesome keyboard.

Since this is My Thread and my wife is keeping me busy being a grandfather I'll post another song. When it comes to lists of sexy female voices, Anita Baker is probably near the top on most of them. And if anyone enjoys the sound of a piano as much as I, it's hard to get any better than Greg Phillinganes. He plays a solo in this song that I've enjoyed year after year.




A George Duke and Greg Phillinganes treat, enjoy.




Okay, one more from Norah


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 Cashish 
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There's no School like the Old School

A New Year's resolution


A New Year's resolution is a commitment to a personal goal. I'm a firm believer in trading goals and wanted to throw out some ideas and methods I use to achieve my goals.

Balance
Trading can be very exciting and extremely rewarding on many levels but maintaining a healthy balance between family, friends, hobbies and other personal interests is IMO a must. I look at trading as a journey not a destination, trading is a part of my life, not my life. I may have financial goals I set for myself throughout the year but these are only goals, not an all encompassing single vision of my total life. I think it is important for me to step away from trading throughout the year and re-create, re-create and stay focused on the meaning of my total life. By setting achievable financial trading goals throughout the day, month or year, I can allow myself to feel a sense of completion on a journey that has no end. My long term goal in this journey that never ends is to get better at what I do, not continuously search for the finish line. In this endless journey of trading you may find, as I did, that you will never be better, or more of a trader, than you are a husband, father, son or daughter (human being).

Focus on the Process
Whether my goal is to increase my trading size, limit my risk or stop overtrading there are well defined actions I must follow to bring these goals into reality. Each goal I set consists of a plan of action, simply a list of do's and don'ts, this is the process. If my goal is to implement a daily loss limit the action necessary to achieve this goal is simple, stop trading before my daily loss limit is hit. The process to achieve this goal starts with a longer term personal belief of the importance of this goal, from there the process turns to action steps only I can execute. I am the only person responsible for the outcome of my trading. The pros and cons of a daily loss limit can be argued from both sides, but it is my individual belief of it's importance to my trading that concerns me, no one else's. By committing to a New Year's resolution to focus on the processes of my trading allows me to keep my finger on the pulse of my trading at a daily or even a trade by trade basis. These small goals based on the processes necessary to achieve much larger goals can pay big dividends over the long term and at the same time offer intelligent achievable positive feedback on a much smaller time frame. The challenge is mine, and mine alone, trading IMO is a lonely journey. Knowing I am capable of stopping my trading for the day before my daily loss limit is met can alleviate many more serious pitfalls of trading but the feeling of closing up shop when I'm down on the day isn't always a joyful experience in the short term. But if I remain committed to the longer term goal, knowing I achieved and honored my commitment to my smaller term process goal the positive feelings often out weigh the negative feelings in a very short period of time.

Inch by inch it's a cinch, yard by yard it's hard.

It doesn't sound as good when you say, Centimeter by centimeter it's easy, meter by meter it's hard.

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 eminitrdr 
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Cashish has taught me many elements of the Old School trading method. Two mainstays that I follow religiously are:

ONE and DONE...TWO and THROUGH and
PRICE likes to gravitate to volume areas or previous POCs.

It can be seen in the attached screenshot.

Best wishes to all in the new year.
emini

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 Cashish 
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There's no School like the Old School



Charles Darwin



It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.
Charles Darwin



eminitrdr View Post
Cashish has taught me many elements of the Old School trading method.

For readers of this thread, don't be fooled. IMO, @eminitrader is the real deal, he has done the work of finding his personal "style." He took the middle out of the method described in this thread and made it his own. As Darwin said, "It is the one that is the most adaptable to change," (that survives). He (eminitrader) is a unique individual and harbors a drive to succeed at trading that is relentless, I believe he's going to go far in this business.

My trading style like most "market survivors" has definitely evolved over time and I always keep an eye out for ways to improve my results. Subtle changes over time can mean thousands of dollars in profits. If by some twist of fate readers find my ramblings useful to their own trading don't overlook the value of "making it your own." What I mean by this is don't look for a cookie cutter trading system, put your fingerprints on it and make it yours. I believe there are many ways to successfully trade the markets, but the method has to fit your individual belief system (personality).

I hope we hear more of eminitrader in the future, he might not know it, but he has a lot to offer us.

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 kronie 
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Cashish View Post
[center]There's no School like the Old School


For readers of this thread, don't be fooled. IMO, @eminitrader is the real deal, he has done the work of finding his personal "style." He took the middle out of the method described in this thread and made it his own. As Darwin said, "It is the one that is the most adaptable to change," (that survives). He (eminitrader) is a unique individual and harbors a drive to succeed at trading that is relentless, I believe he's going to go far in this business.

My trading style like most "market survivors" has definitely evolved over time and I always keep an eye out for ways to improve my results. Subtle changes over time can mean thousands of dollars in profits. If by some twist of fate readers find my ramblings useful to their own trading don't overlook the value of "making it your own." What I mean by this is don't look for a cookie cutter trading system, put your fingerprints on it and make it yours. I believe there are many ways to successfully trade the markets, but the method has to fit your individual belief system (personality).

I hope we hear more of eminitrader in the future, he might not know it, but he has a lot to offer us.


those are some kind words, and its good to see someone give credit to someone else, on these threads..

too often sarcasm, quick assessments and fast conclusions of the negative kind pepper conversations, as if someone were selling something and pestering others....

because of the kind words, I'm going to give attention to this thread, and see if I too can't get something beneficial from this useful thread.

on behalf of myself (and presumptuously others too), thanks!

good trading to you (too!)

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 eminitrdr 
Marietta, Oh USA
 
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Just the beginning of my PREP work for my early Monday EU session trading.

Try to visualize where price wants to go and what YOU need to see to get onboard.

Where are the high volume areas and do they align with any trend reaction numbers?

Embrace the uncertainty and CONTROL your RISK.

emini

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 Cashish 
Miami FL USA
 
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There's no School like the Old School

A Self-Fulfilling Prophecy?

A common occurrence in trading that is often linked to Market Voodoo is the notion of a self-fulfilling prophecy. In trading, I believe a self-fulfilling prophecy is basically a prediction that comes true due to traders aligning their actions (behaviors) with a common belief. Since the market is made up of masses of traders with completely different beliefs, it is no wonder such phenomena are often labeled Voodoo. But if there are one thousand traders that believe this equals that, the result will be much different than ten traders believing this equals that. I believe self-fulfilling prophecies are real in today's market, I also believe some of them offer trade-able opportunities.





Following the Herd

Thread after thread and post after post describe the ongoing search many traders trudge looking for that one sacred indicator originally chipped into a stone tablet then transported through space and time by aliens from another planet and ultimately left on the doorstep of Goldman Sachs. You know of what I speak, the holy of holies, the one indicator that enlightens traders to the forthcoming market conditions . It identifies before the day's trading begins, trending markets and range bound markets. It lets traders know before the next tick, whether they should prepare to trade in chop or in a choppy market, or chop suey, or pork chops, or in a chopped topped automobile, I believe (but I'm not sure) it even answers the question, "How much wood a woodchuck could chop if a woodchuck could actually chop wood?." I'm sure it exists (I read it on the internet), so keep looking and good luck with that.








Following the (other) Herd

I've never actually seen that indicator, but I have found an indicator that many people use in many different markets. It's not a red light green light indicator but when used with a little common sense it does very well identifying market conditions, it is a simple 20 period moving average. I want to back peddle here and resurrect the theory of a self-fulfilling prophecy. I have a few trading buddies, one trades oil, another the Mini Dow, they both swear by the 20ma and they both use 5m bars on their charts. Some like the EMA and some the SMA, some use the close some the OHLC/4, my point is the 20 period ma is used by a lot of traders (herd). Another spooky Voodoo-ish thing about the 20ma is it works pretty good on a daily chart as well. I think "that Bar by Bar guy" uses the 20ma too. I trade the 6E and noticed price respects the 20ma line quite often, often enough to keep my "third eye" on it throughout the trading day.

In this thread I outlined the way I use the Bollinger Band study, the settings on the study are, you guessed it a 20 period simple moving average. Since this average is already on my chart, albeit buried in the B Band study it's easy to keep an eye on the location of price in reference to the average. I'm not going to make any wild statements like sell when below the average or buy when above the average, I'll leave that to you. I will say this simple moving average line running across my 5m chart has been a mainstay for many years. I believe we as traders, trade our belief systems, I also believe there is a mass of people trading the 6E with 5m charts, looking at the 20ma. I believe in normal price rotation, in the 6E I believe that rotation is +/- 14/16 ticks, you might disagree, the point is I believe it, and I trade it. I take the notion of rotation and compare the location of price to the location of the 20ma. If price is trading thru the 20sma again and again and again I'm trading in range mode. If price is above or below the 20sma I'm trading in trend mode. I'm not a good prolonged trend trader, I'm impatient, but that asks the question what is a trend, is it 6 ticks or 60 ticks, the answer is yes. I've found the 20sma on 5m bars fits me right down to the ground, it allows me to identify and trade in a tight range bound market and at the same time provides me with "warnings" or signs that the "ranging time" is over or might be ending.

A simple 20 period moving average on a 5m chart is IMO a great tool. I've only scratched the surface here but if you spend a little time looking at a stripped down 5m chart of the time of day you usually trade, I'll bet your efforts will be worthy of further study. If you feel compelled to venture deeper into the rabbit hole slowly add your "normal" indicators and study their relationships. I'm posting a few stripped down charts to make things easier to see, but, if you don't look, you can't see. I also use the VWAP study and when traders become familiar with the relationship between these two averages they can devise signals and methods of their own. Often in a range bound market the 20sma will be the "first line of defense" (or the last) of the beginning of a trend, or the converse, the end of a trend (3rd chart).



I've said before sometimes I don't like posting my trades. The purpose of the following chart is to show what is possible in a tight range bound market. This is no time for me to be surfing the web or typing in the chat box, I need to be completely and intensely focused on the price action. Any interruption of my focus (T.V., ringing phone, children or pets) can make the difference between a good day and a day I question my analysis and skill. Targets are tight and small, I find days like this very stressful but I've always believed I had to learn to trade what the market offers during the time I've set aside for trading. My suggestions to anyone attempting this is, get focused, tighten up your jock strap, get out on the end of your seat and hang on tight to your saddle horn.

And control your risk.






As many who read this thread know, I use volume profile in my trading. When I "boot-up" for the trading day I look at the 20sma (within the B Band study) and compare it to the volume profile of yesterday, is it near the POC or LVA or UVA ,,,, where's price right now in reference to the 20sma. Ask questions, might price use the 20sma for support or resistance or has price been slicing through it like butter for the last three hours. If for example you want to get long off the LVA and the 20sma is sitting 6 ticks below, splitting the difference with a one or two lot might save you from taking 6 ticks of heat on the trade, or if you're a 6 lot trader buying one on each level all the way down might prove to be a very low risk entry. I'd swap my horse and dog for a 20sma.


Oh, and don't forget to have fun



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 Cashish 
Miami FL USA
 
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kronie View Post
.........because of the kind words, I'm going to give attention to this thread, and see if I too can't get something beneficial from this useful thread.

on behalf of myself (and presumptuously others too), thanks!

good trading to you (too!)

@kronie what can I say? I usually spend way to much time thinking about and pecking out my posts but I felt your post required a response from me, clicking the Thanks button just didn't feel like enough. Thank you, I'm speechless.

Topics for posts have been hard for me to come up with since I blasted through my initial outline last December, but the thread lived on. Conversations and PMs with @eminitrader and a few others have stimulated many of the topics lately and I've been realizing how much stuff I do day after day subconsciously, not really realizing I could share this little belief or that little tidbit. If someone started stringing together these little nuances the next thing you know a trading system might be born.

Even if the only thing you find beneficial during your visit is a you tube music video, welcome aboard.

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