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Fundamentals for New Traders


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Fundamentals for New Traders

  #1 (permalink)
Market Wizard
Point Roberts, WA, USA
 
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Fundamentals for New Traders

In this journal I'll post ideas on basic concepts for new traders as the come to mind in my trading and review of charts.

The idea is to have a starting point for new traders within the sea of information much of which is so overly complex that it is of liitle use to someone starting out.

Anyone is welcome to post here and all questions are welcome.

Don't worry if you are using the wrong word - I'm sure I'll get the idea.
Including a chart or a video clip is a good idea.

For example you might make a trade on your simulator (aka "sim" or paper-trade account) and wonder why it went wrong. I'm sure someone will have an answer.

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  #3 (permalink)
Market Wizard
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Experience: Advanced
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Retracements and extensions


One of the things new traders wonder about is how other traders come up with targets.

One commonly used way is retracements and extensions. You might see someone say "the fib is 55" short for the fibbonaci retracement level (if they don't specify they probably mean the 0.618 level) is 1555 for the ES.
(I'm going to call the support and extension levels "fibs" for short)

Here is a little video showing retracements applied to an ES chart for Friday 19 April 2013.

Notice that in this video I use 5/8 or 0.625 versus the default level of 0.618. Don't worry about that, just experiment with using them.

Tip: look for places where the support/resistance levels (S/R) match the fibs.

More on retracements with trendlines 2013-04-19_1705 - aquarian_ian's library

Wear a mask, mandate others to wear masks, & remember that @WHO is criminally incompetent. To repeat:@WHO is criminally incompetent. Nassim Nicholas Taleb (@nntaleb) March 31, 2020
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  #4 (permalink)
Market Wizard
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How to place your end points for retracements and extensions

In the next two videos I show how to find the start and end points for your anchoring of the "fib levels", that is how do I know which top and bottom to anchor the lines on.

Of course, this depends on your trading time frame.
However, even if it is a daytrade you still need to be aware of the larger time frame context so see if the larger time frame levels are in play for the day ahead.

In this example, made in advance for the ES for Monday 22 April, we see that the larger move of 1593 to 1530.75 does hit tomorrow. The hourly bar 04/21/13 (20:00:00-21:00:00) CST ES JUN'13 Futures@Globex Trades has a High:1557.50 our R2 daily RTH pivot is 1559.25 and 7/16 of the larger move is 1558.
Part1
Part1 retracements and timeframes


Will the 1559.25-1558 be important? A lot will depend of the balance of the overnight (GLOBEX) session. If it drops from here then the top may have been put in place with tomorrow's RTH high lower than that.

I'll try to make a video tomorrow live in the trading day (8:30 to 15:15CT) to see if we can use the levels to help in our trading. Naturally we wouldn't trade on just the levels we would need more information to complete a trade setup.


Part2
Part2 retracements and trendlines and pivot points 2013-04-22_0016

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Last edited by aquarian1; April 22nd, 2013 at 01:45 AM.
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  #5 (permalink)
Market Wizard
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Monday's results and looking to Tuesday

1:04 AM 4/23/2013

Here' s a review of how the fibs and pivots played out. the 1558 level worked very well and then 1544 for the low end and 1562 (the 1/2) for the HOD.

How fibs and pivot worked for Monday 22 april 2013




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  #6 (permalink)
Market Wizard
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Review of the Preview for Tuesday

At the left is the o/n session. You can see that the yellow circles (potential targets were hit in the o/n session for Tuesday 23 Apr. H1564.25 matched the top circle and the L1548.75 matches the lower circle (1 qtr 1546.50). These are very close for "eye-balling" the chart!


Wear a mask, mandate others to wear masks, & remember that @WHO is criminally incompetent. To repeat:@WHO is criminally incompetent. Nassim Nicholas Taleb (@nntaleb) March 31, 2020
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  #7 (permalink)
Market Wizard
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Tuesday in the morning

In the morning you would be looking for a higher set of targets as the preview targets were hit in the o/n session before Tuesday RTH. See the nice match on the chart. So if you were long at/near opening you could close at the 72 area and have locked in your profit before the "flash crash" today.


Wear a mask, mandate others to wear masks, & remember that @WHO is criminally incompetent. To repeat:@WHO is criminally incompetent. Nassim Nicholas Taleb (@nntaleb) March 31, 2020
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  #8 (permalink)
Market Wizard
Point Roberts, WA, USA
 
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Preview for Wednesday 24 April

Here's some ideas for Wednesday.
As always the o/n action dictates.

Preview for Wednesday 24 April

When you look at these posts try to look beyond the actual numbers I put forward and focus on the process.
Don't get locked in to a certain idea of the next day, just give yourself some targets for possible scenarios such as:

"It topped out in the 77.50 to 80 area and is heading down so let's aim for the 60 area and the slower uptrend line."


Wear a mask, mandate others to wear masks, & remember that @WHO is criminally incompetent. To repeat:@WHO is criminally incompetent. Nassim Nicholas Taleb (@nntaleb) March 31, 2020
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  #9 (permalink)
Market Wizard
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Experience: Advanced
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Broker: IB
Trading: ES
 
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Thanks: 1,472 given, 2,480 received

Support and resistance levels and Stop-running

Support and resistance levels and Stop-running

Where the price turned in the past, a peak or valley, become POTENTIAL support/resistance levels.

"Where price changed direction before it might again."

These are equilibrium points where buying pressure and selling pressure were in balance.

-------------

In the video I show the o/n 1579 high (right where we estimated it might be in the previous video).
This high or price peak becomes a POTENTIAL resistance level where if the price rises to it it might turn back down,
Having done this before.

A resistance level is like a ceiling. Price can come up to it and turn back down
OR
push on through it.

One thing that complicates things is stop-running.

As explained in the two part video stops are placed above an old high. The distance above will depend on the trader (their experience, their confidence in the trade and their account size - though this shouldn't be how you decide where to place your stop-loss order it often is).

An area of stops are like a magnet for the market makers and others. All those resting orders are a wonderful tempation.
If the price rises up to the resistance level it is often pushed through it to get to these resting orders.

However, the market makers are tricky. They don't need to take them now, or occasionally not at all, perhaps later.

I know this complicates things - but that is the market.




Part 1 S_R levels and Stop-running


Part 2 on S_R and Stop running

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  #10 (permalink)
Market Wizard
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aquarian1 View Post
Here's some ideas for Wednesday.

"It topped out in the 77.50 to 80 area and is heading down so let's aim for the 60 area and the slower uptrend line."

nice! exactly what happened - o/n high 1579.

Wear a mask, mandate others to wear masks, & remember that @WHO is criminally incompetent. To repeat:@WHO is criminally incompetent. Nassim Nicholas Taleb (@nntaleb) March 31, 2020
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