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Hope you don't mind me diving in here while you're being so productive but with all the sideways action recently I'm looking more and more for clues that will help in sideways markets and consolidation periods and what you said there really got my interest. Mostly I'm dependent on the market going into a trend and leaving the level where I enter behind. Do you really find particular levels more important than others in sideways markets? I thought the key thing about trading a range day would be in the price action somewhere - that's not your experience though?
You can discover what your enemy fears most by observing the means he uses to frighten you.
@Adamus Thanks for your interest in the thread, and the subject.
Wouldn't that be nice! I believe in Today's market for a move like the one you describe, it (the market) needs an accelerant, usually IMO, this fuel for the move comes in the form of a news event. During the "waiting period" between these events the bigger players are adjusting positions and analyzing their next play. A lot can be seen by studying the COT data, Open Interest, Volume and Options positions. Even if a trader is trading the Cash Market, a look at this data may be very helpful. Also, during these times of waiting on the next Big Event intra-day speculators are doing their thing each and every day. This is the price action most of us "little guys" are accustom to trading, the rotations within the Larger Moves. As an example of this theory look at the price movements around the government shut down. On Oct 1, the government actually did shut down (now it's a fact) and the market Closed @ 1.3533 and on Oct 16 after 12 trading days the market Closed @ 1.3535, basically the market went nowhere but "we little guys" carried on business as usual (I know I did), until the "reopening" was actually a fact, at that time (10-17-2013) more volume hit the market on that day since the last high volume day (10-2-2013). The point I'm trying to make here is everyone is trading their own time frame, what qualifies as a trend to you may be "noise" or normal rotations for someone else, and I believe this theory plays itself out to infinity (well you get the picture). There are traders in the market that don't even raise an eyebrow if their 3000 lot position is 200 ticks in the red! As I type this, I see a 236 tick candle on my chart, not everyone is going to run for the door, they have to trade, I'll bet we will see Open Interest numbers for this day well above 200,000 contracts.
Ok, now that the playing field is defined and we may agree we're talking about little retail traders here that focus on and trade the intra-day price rotations I'll move on. Yes, I believe that there are particular levels that are more important than other levels in sideways markets. Here's a chart of three (3) levels I thought were "important" going into today's trading session.
My trading goal for today was to be out of the market prior to the comments of the ECB. My opportunity presented itself when price entered this area around the Pivot. Trading is about RISK and being comfortable with it, but when the opportunity shows itself its time to get out on the end of your seat and trade, not second guess your analysis. This is one example of an area that I believed held more importance than another.
It's worth a thousand words. Thanks. Do all pivot points work that well??? Haha. I have no doubt it hadn't so much to do with pivot points rather than some other factors. Plus your trading full points for ticks rather than the forex half-points! (Not that I've ever proved that this helps my trading)
You can discover what your enemy fears most by observing the means he uses to frighten you.
In keeping with the spirit of @Cashish's hard work, I've put this years data into a spreadsheet whilst mostly preserving the CME format.
Other than having to manually enter the data in columns M, N and O you can copy and paste the CME COT data into the spreadsheet.
At this point through a series of mouse left - right clicks you can paste and then format the data by mouse clicking (on the spreadsheet toolbar) "data" , "text to columns" and the numbers will go into the appropriate buckets.
I'll work on a set of instructions on how to do just that.
Nonetheless it's a start.
-Bill
FYI, something I did notice is the increase in the number of traders since the end of SEP but not much (relative) change in the open interest (O I)
I'm not sure I'm reading this post correctly. @Adamus asked me if I found "particular levels" in a sideways market "more important than others" and I find myself perplexed by these comments.
All, of course not, but in a sideways market as referenced in the original question I find they work very well a majority of the time. Here are two charts of last nights price movements. IMO today's market was poised for similar price movements (sideways) while biding time leading up to the NFP numbers. This first chart shows the "particular levels" I had on my chart prior to the open that I thought held "more importance than others"
Since this was NFP day my play was the same as yesterday, be flat before the numbers come out. For those familiar with Volume Profile this chart shows how the value area unfolded throughout the session, the red line is the point of control.
This comment cut me to the quick! As I had written in my previous post I believe there are many different players in the market with many opposing views. I thought I put together a pretty decent primer of my views and the theories behind my hypothesis. My original post was written with the intention of being informative and helpful, based solely on my own trading experiences. Here is a chart that shows a tail of a 5m bar trading on 1.3403 3 seconds before the NFP numbers were released. For some reason price stopped at 1.3403 2 seconds before trading on the bars high of 1.3449. In my post I offered my detailed opinion of these "particular levels" and how committed I am to them when given the opportunity to trade them. These levels weren't just pulled out my ass they are the product of countless hours of research and evaluation. I welcome everyone's opinion in this thread and invite you back to post the "some other factors" if you care to share them with us if you have, or when you have, identified them.
I have no idea what this means.
Here's how price of the 6E rotated from the Globex open to 8:00am. I have a NFP Day play in my "Play Book" it ends at eight o'clock am. These last few posts have been about rotations in a sideways market between predetermined price levels. Having an understanding of these levels may be beneficial to those traders who remain content "running on bunts" or "swinging at base hits" (they do add up). I believe these levels offer opportunity if used properly. Traders have to leave their bias at the door, this is a sideways market until proven otherwise.
Cashish, I am really sorry if i caused offence with my last post. I was torn between wanted to ask a ton of questions since you seem to be much further down the road than me, but wanting to be polite and not ask you to lay out the exact details of what you do or how successful you are. I was brought up to believe that such questioning is rude - although maybe on an internet forum it's expected.
When I said I'm sure it hadn't so much to do with pivot points as with some other factors, I wasn't trying to imply that the levels you use are just pulled out of your ass! I just meant, even if you had fantastically the best way of determining those levels ever, you would still have to decide how you are going to trade those levels using e.g. volume data or just plain experience. I mean, with those trades around 1.3510 from before the ECB interest rate news, it wasn't just a case of buying below the level and selling above, which you did on the first two dips below, since you then sold below as well on the third dip.
Your messages are informative although in my last reply I really wanted more but pussy-footed around instead of being direct about asking. Looks like I got a whole load more information but antagonised you at the same time by appearing to challenge you, which I wasn't.
I appreciate the time it takes to put informative posts together so I hope you accept my gratitude as well as my apologies.
You can discover what your enemy fears most by observing the means he uses to frighten you.
@Adamus Thanks for your reply. I believe we both understand where each of us were coming from at a much deeper level. Lets agree to cross-pollinate our apologies and move forward, as I too accept responsibility for my comments.
Doing Something Different
I can't count how many times I've read posts that say if I could just stick with my plan and do the same thing consistently I'd be much more profitable. On the surface this sounds like it ought to work, but let's dig deeper. Adamus, you want details, OK this one's for you! I started this thread in December of 2011, I can't believe it's still alive! About a year ago I remember writing a post stating that I struggled coming up with meaningful subject matter, then I realized how many little quirky things I do during trades without much conscience thought. Sure, I can post trades I've taken around significant price levels that look "near perfect" on a chart but as Adamus pointed out in so many words, The Devil is in the Details.
If you guys are anything like me, you've probably read dozens of trading books, many with charts showing those "near perfect" trades that look like any trader with a pulse could enter and reap what looks like guaranteed profits. Well, it doesn't work that way in the real world of trading, in trading books yes, but not in real time, in a real market, in the real world. Why, because the trades in the "book" are cherry picked, showing how the Theory of the trade is suppose to work. But in the real world of trading there are countless variables that must be considered, if they aren't, some of these variables have the potential to thwart any chance of the theory working at all. To put it simply, the trade will be destined for failure before it's entered. It's no different here on nexusfi.com (formerly BMT), I can post how the theory is suppose to play out and also post trades I took with the intention to provide some sort of validation of an outcome if the theory was traded by anyone actually reading these posts. I honestly don't like posting trades, and try not to do it very often, I believe the theory is more important than the outcome. But it's true, the devil, is, in the Details on every trade, and in my opinion every trade is different. No one can package 5, 10 or 40 years of experience into a trading book, but they can package the theory.
All these statements are My Opinion and should be viewed as such. This notion of every trade being different is, IMO, why doing the same thing over and over doesn't work. Anyone following this thread should know by now I chart Volume Profile, it is an ever changing historic graph of areas in the market where large and small volumes of trading took place. The same can be said for a 20 period simple moving average, it plots the level of the average of where trading trading took place during the last 20 periods. This is only an example. But let's say the market is at .000 and Trader X anticipates a move to .150 in the next few hours, why, because he studied this "set-up" and traded it a few times before quite successfully. This is my attempt to expose the idea of every trade being different. My question to Trader X is this, is the POC of the Volume Profile, the VA High and VA Low in the exact same location as it was when this trade worked successfully in the past? If not, this trade is different. How about the 20 period average, is it, in the exact same location? How about today's high and low? How about yesterday's high and low? How about the high and low for the week? Hell, for that matter is it the same Contract Month? This is why I operate under the assumption every trade is different. Am I splitting hairs here, yes of course, but in my opinion it is unequivocally impossibleto take the exact same trade twice, there are just to many moving parts. OK, let's step out of the Bizarro World and get back to reality.
Look at the Globex opening price of Thursday, where is yesterday's (Wednesday) high and low when the first tick hit the Time and Sales tape? Now look at the opening tick of the Globex on Friday, and compare that first tick to Thursday's high and low. For those reading this without a chart handy I'll fill in the blanks, Thursday's open (1.3516) was 33 ticks below Wednesday's high and 47 ticks above the low. Friday's open (1.3417) was 113 ticks below Thursday's high and 123 ticks above the low. This is an example of each trade being different, the entire trading landscape is much, much different. I hope readers are beginning to understand what I'm trying to put forth, every day is different, could that make every trade different, I believe so, but we all have our own opinions and belief systems.
Now I invite readers to take one more step. Look at the opening price of Thursday and compare that to Wednesday's 50% level or Mid Line, then do the same for Friday, compare Friday's opening price to Thursday's 50% level. Again, for those without a chart I'll fill in the blanks. Thursday's open was 7 ticks above Wednesday's Mid Line and Friday's open was 5 ticks above Thursday's Mid Line. Isn't that interesting, maybe the Mid Line of the prior day is a significant price level of "particular importance." The whole idea of any trading system is to identify non-random price movements and exploit them. I believe rotations around certain price levels such as the Mid Line are exactly that, non-random price movements, and thus offer me those opportunities for exploitation.
Did someone say details? This post could go on and on, so far I've only mentioned the High, Low, Open and the Mid Line of the prior day. For those who may be "a little slow on the take," ALL of these numbers are stagnant, fixed historic price levels revealed at the close of the trading day, they will never move!
But wait, there's more, how about the Closing price. Did I say all this is my opinion, just want to remain clear about that. The Globex 6E futures contract stops and cranks back up again an hour later every day. I'm shocked when I read threads of traders trying to find "some other" time to start a trading session. On most days the CME posts two levels of interest in regards to the Close, the last traded price (or the close of the last bar) and the settlement price. I've seen both of these prices charted as the Closing price. To make this subject even more complicated remember the 6E is the "tail" the Cash Market is the "dog," and the Cash Market closes when, and the trading day starts when? Good Grief !!
In a single sentence here's how I trade NFP days. I keep a running average of the tick range of price movements from the Globex Open until 8am of the last 12 NFP days, I then try to identify either the high or low of this portion (time) of the session and capture enough of the move to fulfill my daily monetary trading goal. Simple right? Yes it's a monetary goal, that's the only reason I'm here.
I posted this chart before, it shows the "particular levels" I had on my chart prior to the open that I thought held "more importance than others"
The rest of these charts are after the fact, so to make things a little easier to follow there are shaded areas which I'll call Asian (left) European (center) and one bar of the US session which I define as starting at 8:00am. First the bold yellow line is the prior day's 50% level or Mid Line. The upper green line is 16 ticks ABOVE the whole number 1.3400, there's another green line 16 ticks BELOW that whole number, I consider any rotation within this area "normal" rotation around a whole number. The chart shows price rotated around the Mid Line for several hours and dropped below the whole number but failed to trade down to 1.3384. This drop and failure to trade lower set up the entry for the trade. This is a 5m chart, it shows there was plenty of time to step up and enter a LONG trade,,, using the 1.3384 level as a stop 6 ticks below (the Risk of the trade).
This move lower fulfilled two theories I hold about the rotations around whole numbers (in the 6E). 1.) The move rotated down from 1.3415 to even, I believe the area 14-16 ticks above and below is the area to "take action." 2.) The Failure to trade lower into the 1.3386-84 (14-16 ticks below) validated the area in the first chart (1.3403-1.3417) or the Mid line (1.3412) as "The" significant level, and provided the expectation price would return and continue to test these levels during the European Session. The chart above shows after a tight rotation around 1.3400 price returned to the Mid line and did in fact test lower to 1.3405 (not quite "03) and when retesting the high (of that session) made a new high for the day at 1.3421 during the 1 hour period between 2 and 3am.
Details,,,, I've found there's almost no end to the details, once I began accumulating "tells" of movements in price and areas or price levels that over the years caught my attention. In the chart below I reveal another area in the market (6E) that I believe holds a "hidden power," any reader of this post can form their own conclusions of the validity of this one but the price movements on this particular day endorsed My theory about this level. It is the price range from 2 to 3am. There are two vertical shaded areas on this chart for the European session, the first shaded area is 2 to 3am. The horizontal shaded area is the range of that hour, notice the highs and lows after 3am. First the low, exactly on the low of the range 1.3405,,, and look close at the "flat tops," NO, they're NOT on the high of the range, they're testing the upper boundary of the original significant level that may hold more importance than another area. As i said, the details of a trade can seem unlimited, but just for the record, those "flat tops" on 1.3417 are actually banging against the Pivot line which is in fact 1.3417.
Moving right along, I have to rewind back to the entry. I said this was a NFP trade, I believe I posted some details of this particular trade up-thread somewhere, but I'll spell out the basics once again. The average range of the Globex session on NFP days over the last 12 months from the open until 8am is/was 55 ticks. The idea is to identify either the high or low for this time period and the direction then project this average onto the chart. I've done this on the chart below. I hope I've provided enough details as to why I believed this could be the low of this time period. I'm sure the first question would be, did I buy the low, the answer is no. Buying the absolute low tick is irrelevant, I'm looking for a piece of a theoretical range, I think, based on my studies a movement higher is possible, nothing more. Do I plan on holding this trade with a death grip, hoping and praying to be proven right and watch price trade on the projected price level, no. So where's the target on this trade, let's move on.
This is a side bar to more details of the theory behind this trade. I'm looking for upward movement in this market based on what has already been presented and know the average movement for this time period on NFP days is 55 ticks. I've define the area where my stop is on this trade, now I need a target. The snip below shows a simple, free on-line standard deviation calculator (link below) with the last 12 ranges entered. The lowest graph shows where each of the 12 individual ranges are in reference to the 55 tick 'mean' average I mentioned earlier. Of the 12 averages, 4 are above the mean average and 8 are below, this may suggest achieving the original 55 tick move may NOT be a pipe dream after all.
Details of the target.
I mentioned earlier these charts are after the fact but this chart has a few "old" levels removed and a few new ones defined. One thing that 23 hour markets usually provide is, the Close of the prior day is usually pretty close to the Open of the current day. Some charting programs use the close of the last bar of the prior day as the close and omit the Settlement Price altogether, I believe this is important, why, if half the traders are looking at one level and half are looking at another maybe BOTH levels are important. Remember that "high" of the 2 to 3am range, it was the close of the last bar on Thursday 1.3421, on this chart that level is defined by the green dot dot dash line. Remember another thing, while all this is going on in the 6E the Cash market is also trading around unchanged, whatever level that may be on what ever bucket shop's data you might be looking at. But the CME also posts a settlement price, THAT is the level quotes begin to read +, unchanged or - ,,, NOT the close of the last bar of the day. Maybe it's just a random tick,,,, just like the trade on 1.3421 but look at the high of the bar in the shaded circle, 1.3428 the settlement price. That was my target on this trade. Sure all this blah blah blah about the last close of the last bar and the settle is next to meaningless when price is testing the high or the low, BUT price is trading right here, right now, and I believe it's VERY important to have both of these levels on my chart. This is another example of why I started this post, every trade is different, what if, the Last was above the settle, would we see the same rotations, it's in the details. Again, just for the record, price traded between these two levels six (6) times, before 8am,,,,, probably just random movements, after all it's only a 7 tick range.
Have you guys had enough? I feel like a Chatty Cathy Doll, pulling my own string.
