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Price Action GC trading
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Price Action GC trading

  #11 (permalink)
Membership Temporarily Revoked
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isaacsu,

Take a look at the following threads:
https://futures.io/elite-trading-journals/23787-cl-crude-oil-futures-contract-trades.html
https://futures.io/trading-journals/26168-day-trading-using-basis-mack-s-pat-teachings.html

Al about price action. I think you have to use tick charts instead of min charts. The 5 min chart shows to much noise.

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  #12 (permalink)
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Price Action Trading

isaacsu,

I am a beginner futures trader also. I have chosen the ES to learn and practice my trading in SIM mode. I have found the teachings of PriceActionTradingSystems to be very helpful. They teach trading the ES using just one chart and no indicators except a 21 EMA and the support/resistance structure. It is best to trade with the trend and the setups all occur at key support for LONGs and key resistance for SHORTs. The PATs mentor does daily YouTube videos recapping the day. He is an expert trader and prepares the videos after he completes his trading day. This information should help you begin your learning process to day trade futures especially the ES.

Steve

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  #13 (permalink)
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Hi


Good job on the journal

I will be following you

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  #14 (permalink)
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Toronto, Canada
 
Futures Experience: Advanced
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Beljevina's Avatar
 
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One of the most invaluable things I have found for gold trading is usage of 1) today's fibs after price has had a chance to develop 2) today's moves against yest's fibs, esp. the 23%, 78% +/-127%/161/200/261 and 3) peak volume identified on a 1min or other low TF chart. Extremely valuable also on a 15M chart.

(For the indis above, use Fat Tail's anaCurrentDayOHLV [I like v38 - something changed in versions after that], use anaFibsFromPriorDay and for PVP it should be this one: Links and Downloads Manager - NinjaTrader Support Forum I also use some GOM tools that among other items show buy/sell imbalances, but that's a separate conversation)

Gold's liquidity is among the worst of instruments; I can't imagine trading it with a 3 tick SL; now sure what profit target you are after, but the risk to reward will clobber you IMHO eventually, due to the generally poor liquidity and extreme manipulation of this instrument. That aside, once you can learn it's personality, it can be a goldmine.

Oh, and if you want to see the (poor) liquidity and what moves GC, you might be interested in vvhg's excellent vvAggregatedTimeandSales indi - just a suggestion for temporary viewing, since it is bound to majorly confuse someone starting out in trading, esp. in GC.

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  #15 (permalink)
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A summary of advice received so far:

1. GC is a poor instrument for a beginner because:
- Poor liquidity x2
- High volatility
- Extreme manipulation

2. ES is a better learning instrument for beginners because:
- ES is more liquid
- There is a daily PATS video series that I can follow

3. Suggestions for trading GC:
- Tick charts > 5min charts because 5min charts shows too much noise
- Today's Fibs (after price has a chance to develop)
- Today's Move against yesterday's fibs
- Peak volume on <= 1min charts and 15min charts
- Learning GC's personality can be beneficial
- Running a 3 tick SL is crazy

Now some questions:

1. How does high volatility + poor liquidity (I assume they are two sides of the same coin) make an instrument a poor beginner's choice?

2. Would it be fair to say that high volatility is merely a character of the instrument that simply needs to be learned?

3. Are there any easier/harder times periods to trade GC or ES? I'm on the other side of the globe, so GC open outcry is ~2330 till 0430 for me.

4. I somewhat understand the mechanics behind time charts vs volume charts vs tick charts, but can someone please explain to me what is the thinking behind each of them? Do people have a preference for one over the other? Why?

5. With regards to trading with today's fibs after price has developed, when does the day start and end for GC? Also, what allowing the "price to develop" mean?

5. Can someone enlighten me with regards to trading with "peak volume identified"?

A final thought:

This may come across as extremely stupid, but when thinking about a beginner's instrument, I'm more concerned about looking for something that can provide the richest, broadest and most profitable learning experience.

Thanks everyone for your valuable thoughts so far. @Beljevina @jsengxx2 @Balanar

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  #16 (permalink)
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  #17 (permalink)
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isaacsu View Post
1. How does high volatility + poor liquidity (I assume they are two sides of the same coin) make an instrument a poor beginner's choice?

Beginners are usually undercapitalized. High volatility means quick moves that take out stops. Stops are wider. 3 ticks, or 30 ticks for that matter mean nothing to an instrument like GC, when it makes a moderate move. Undercapitalization means potential blow-up sooner than with a more fluid or non volatile instrument. Even if one has gobs of money to start with, the demoralization caused by the huge losses that GC can bring, can have psychological impact on one's trading.

There is no harm in watching, studying GC, but doing so in conjunction with say ES and 6E is something I might recommend. If nothing else, viewing their price action, and almost as important - interaction - is part of that time investment of viewing and studying price action that many many traders say is necessary, and, that there are no shortcuts.


isaacsu View Post
2. Would it be fair to say that high volatility is merely a character of the instrument that simply needs to be learned?

Hm. Yes, I guess. Volatility can come to all instruments. The key is to recognize when it is happening, and, ideally, IMO, understand what is driving it. GC has a rather schizophrenic personality: it can be a fear play, it can be an inflation play, it can be a safety play, it can be a correlation play. But, like most instruments, there isn't any guarantee of uniformity or consistency. I would not say it can be completely 'learned'; likely expectations can be 'learned', but, sometimes not trading it - either for lack of any movement or too much "she's gonna kill me movement and I should not risk it and thus stay out" are other behviours or actions that can be important to 'learn.'


isaacsu View Post
3. Are there any easier/harder times periods to trade GC or ES? I'm on the other side of the globe, so GC open outcry is ~2330 till 0430 for me.

I would not be able to define any easier or harder times to trade GC. It really depends on what the session (Asia, Europe, NY) sentiment and influencing factors are like, and, what influenced/moved it in the previous session(s), not to mention what S/R levels are in play. The current asia session that is underway, I see it just moved from a ~1350 low to ~1360, in <30min. That is on the higher side, for an Asia range, at least higher than what it has been. That's a $1000 range, a heavy number for a beginner, pretty much regardless of capitalization amount. There's an indi (another wonderful Fat Tails creation I believe) that will box for you each of the sessions (based on time ranges you define), so you can see how much it tends to move in those sessions.

The GC pit session ain't what it used to be. I personally don't ascribe much weight to it; yes, it happens to coincide with the NY timeframe, but there's no guarantee when or how much moves will be during that time IMO.


isaacsu View Post
4. I somewhat understand the mechanics behind time charts vs volume charts vs tick charts, but can someone please explain to me what is the thinking behind each of them? Do people have a preference for one over the other? Why?

I almost exclusively use time-based charts; I have a few tick charts in my workspace (for CL) but almost never check them. It's a personal preference. Others swear by range, tick charts, or other bar-style charts. I personally cant't stand them, but that's me. You're now getting into the nuances of how we each perceive what we see, and what we feel we can draw from those visuals. For chart differences, you should delve into some personal research.



isaacsu View Post
5. With regards to trading with today's fibs after price has developed, when does the day start and end for GC? Also, what allowing the "price to develop" mean?

The GC ETH (full day trading session) opens 6pm EST, and goes until 5:15 EST. You've already identified the RTH/pit hours. Thus, the day 'starts' at 6pm EST.

My reference to today's developing fibs is a reference to the 6pm EST start, and, say some hours into the session. It's now past 11pm EST, and I'd say price has 'developed'. Sometimes you get a healthy range with half that time. The variance can be huge. Interestingly, with the 1350-1360 range, the 50% or D-Mid point is at 1355, and, that's where price has now been for about 30 minutes. I'm a little surprised by the $10 range in this session. Often it's half that. Sure, sometimes more.



isaacsu View Post
5. Can someone enlighten me with regards to trading with "peak volume identified"?

Bear in mind, this is something that I personally ascribe a lot of value to. I don't mean to force it upon you or anyone, but, IMHO, it is quite valuable, for many instruments.

It is an incredibly basic indicator that draws a level where volume has peaked. Usually, this volume represents seller's or buyer's exhaustion, and, hence defines the top or bottom of a move, which can often then be followed by a retrace. It is often a key area where buyers and sellers battle it out, with one (temporarily?) giving up, and one (temporarily?) winning. As the line remains on the chart, it is amazing (IMO) to see how often it becomes a key level for price, later that session (on lower timeframe charts), but also in future sessions. PVP has similarities/overlap with POCs. The indicator I've listed here is incredibly simplistic and has flaws (ie., inability to catch some important volume peaks.)

I've included a chart of GC. Shown is a 1min chart, with an invisible 3min in the background. The blue/red arrowed line is VWAP, with the alternating grey areas being the indicator's standard deviation levels. (note how nicely it often poses the limit of a move). The yellow dashed line is the 1min PVP, the white is the resulting 3min chart's PVP; they frequently overlap, which is a good thing. The red/yellow lines are GOM VPOCs. The column that has 127.2 as the top value are fibs from the prior day's price range. Note how 50% caught the down move at about 3:45am EST; peak volume was found ~$2 higher, which is unusual. Note the white/yellow PVP lines that follow and where they appear and where price goes after that. Note 9:30 EST 38.2% of yest-range 'catches' price, as does the pivot point. The move up then is 'caught' by the yesterday high; buying ensues, and 127.2% stops buying about 1361; note R1. The move down to 1351 happens to be the 23.6% of the prev-day - it is a key level, that sees multiple holds. Note the 1354 overlapped PVP and how price respects it. And, I've not included any trendlines or channel play on this chart. (mostly, because this is actually one of my CL charts, and I just changed the instrument; I use a different type of GC chart with these indicators on them, in conjunction with a variety of GOM indicators.)

(I've also included a 15m GC chart. Just threw it in because I thought the black-dashed PVP levels were pretty useful not only today, but on previous days too. Admittedly, it is a learned behaviour combined with price action interpretation, on reading it and putting it to use, properly.)

Again, I don't mean to say that this is the way to do it. It is (a portion) of what works well for me. It is not a KISS approach, but, what can work for me, will see open repulsion by others. So be it. That's pretty much why there are those very true stories of a uber-successful trader giving his system to 10 people, which is misinterpreted along with instructions not being followed, and you'll have 8 of the traders still lose money.


isaacsu View Post
A final thought:

This may come across as extremely stupid, but when thinking about a beginner's instrument, I'm more concerned about looking for something that can provide the richest, broadest and most profitable learning experience.

Thanks everyone for your valuable thoughts so far.

You'll get different answers from different people. Many will steadfastly recommend ES; there are those that don't feel that way. But, since liquidity is decent (during the cash session), it is not a bad start. In fact, for a beginner, I'd say following 5 of the top major instruments, and seeing how they relate to each other, are key learnings to attain; I guess I am referencing intermarket analysis, specific to price action. The asia session is least useful to learn from IMO, becasuse there just isn't any volume almost anywhere. London session is better, but instrument dependent. But again, this is my approach, and, regardless of success or lack of for one person, it can be completely opposite and completely wrong for someone else. As a beginning trader, you will have to discover what works for you.

Attached Thumbnails
Price Action GC trading-gold-1min-3-min.png   Price Action GC trading-15min-gc.png  
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  #18 (permalink)
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So I've watched the webinar as suggested by @, and wrote this up mostly before reading@'s priceless post. Thank you.

Here are some of my takeaways.

1. As a beginner, it is important to start trading live as soon as possible. Sim/Demo, while useful, is severely limited in the lessons and experiences that it offers.

2. Because learning by trading live is so crucial, a clearer set of requirements for what makes an ideal beginner's instrument emerges. Mostly it revolves around allowing the learner to experience the action while keeping the cost of learning low.

Some important requirements for a beginner's instrument:
- It should allow the learner to put on minimal trade sizes (micro lot Forex are the suggested ideal)
- It should have a reasonably safe daily trading range (dollar value of range per unit position)

These characteristics allow the learner to put on minimal sizes with realistic stops (yes, 3 points is crazy) in order to learn to ride good key level price movements (50+ ticks) instead of bobbing about in the noise (5-7 ticks).

Other answers from the webinar to some of my questions:

1. What's a good time to trade?
There's always something moving somewhere around the world. So, just pick a time and pick a market that is giving reasonable movement.

2. Time/Range/Tick charts?
For a beginner, it's better to stay away from the super short term charts (noisy), and learn to trade 15/30/60min+ for proper S/R price movements. Time charts seem to be favoured because range/tick charts tend to smooth out things out and obscure vital price action information (candlestick formations).

So it is safe to say, my very first beginner's learning plan to SIM trade GC on short timeframes with price action is a dud.

I will formulate a new plan and start again in a new thread.

Some questions to wrap this leg of my journey up:

1. For now I'm leaning towards micro lot sized forex. I know the BigMike suggests EURUSD as a personal favourite. Because I'm based in Australia, does it give me an advantage to trade something like AUDUSD because I'm closer to the fundamental action?

2. I noticed that with forex, I don't get to see the depth of market. Should I be concerned with learning to read the DOM at this stage, or is it something I can afford to pick up later?

Thank you, again, for all the help and wisdom!

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  #19 (permalink)
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I've started afresh trading micro-lots of EURUSD Spot FX live here:

https://futures.io/trading-journals/29259-trading-price-action-eurusd-spot-fx.html

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  #20 (permalink)
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isaacsu View Post
So I've watched the webinar as suggested by @, and wrote this up mostly before reading@'s priceless post. Thank you.

Here are some of my takeaways.

1. As a beginner, it is important to start trading live as soon as possible. Sim/Demo, while useful, is severely limited in the lessons and experiences that it offers.

2. Because learning by trading live is so crucial, a clearer set of requirements for what makes an ideal beginner's instrument emerges. Mostly it revolves around allowing the learner to experience the action while keeping the cost of learning low.

Some important requirements for a beginner's instrument:
- It should allow the learner to put on minimal trade sizes (micro lot Forex are the suggested ideal)
- It should have a reasonably safe daily trading range (dollar value of range per unit position)

These characteristics allow the learner to put on minimal sizes with realistic stops (yes, 3 points is crazy) in order to learn to ride good key level price movements (50+ ticks) instead of bobbing about in the noise (5-7 ticks).

Other answers from the webinar to some of my questions:

1. What's a good time to trade?
There's always something moving somewhere around the world. So, just pick a time and pick a market that is giving reasonable movement.

2. Time/Range/Tick charts?
For a beginner, it's better to stay away from the super short term charts (noisy), and learn to trade 15/30/60min+ for proper S/R price movements. Time charts seem to be favoured because range/tick charts tend to smooth out things out and obscure vital price action information (candlestick formations).

So it is safe to say, my very first beginner's learning plan to SIM trade GC on short timeframes with price action is a dud.

I will formulate a new plan and start again in a new thread.

Some questions to wrap this leg of my journey up:

1. For now I'm leaning towards micro lot sized forex. I know the BigMike suggests EURUSD as a personal favourite. Because I'm based in Australia, does it give me an advantage to trade something like AUDUSD because I'm closer to the fundamental action?

2. I noticed that with forex, I don't get to see the depth of market. Should I be concerned with learning to read the DOM at this stage, or is it something I can afford to pick up later?

Thank you, again, for all the help and wisdom!


The Aussie dollar is perfect for you. I consider it the China Dollar and trade the futures and not forex pairs. 6A

Gold is better in your time and I think it trades like a currency in the Asia and London sessions. The volatility shows up in the NY session. That's when millions of options are traded on gold in the GDX and GLD etf's. Yesterday I saw over 15 million shares of GDX traded. Hows that for liquidity. The options market does affect the GC futures and vice versa.
Someone who went short long term yesterday on GDX options used the overnight futures market to hedge their position.
The options market closes overnight , so the futures provide the hedge positions.

The Ma6 is micro aussie future and is perfect for learning on. I test many of my automated strategies on the MA6 to get live results when testing and developing strategies. The aussie is the only currency I trade. I do consider Gold to be a currency and it trends beautifully. But I condider a 50 tick stop loss to be a tight stop with gold. 100 ticks gives it room to move.

This is just my opinion.

I split my time between GC and crude oil.

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