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Confessions of a Prop Trader


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Confessions of a Prop Trader

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  #21 (permalink)
Sydney, Australia
 
 
Posts: 78 since May 2012
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The market did what it's been doing of late, which was sell off after Wall Street dragged it higher overnight.

Again looking on the chart it looks OK - but the market wasn't great to trade. Not for me at least.

The volume felt quite thin and price was really skipping through the lows very easily.

When it did pull back it was fast and only on light volume making it really hard to get into a trade.

I was biased short but I missed a fill early on and only managed one trade at a decent pullback around 72. If you look on the chart you can see that a nice market profile level had formed at 72. That's one of the key things I look for. It also hung around for a little while at that level.

I don't really like stepping up and jumping into pull backs too early. However as a result I can miss them at times. Which is what happened today.

Toward lunch time the volume really slowed and there were times when I thought my DOM had actually frozen so I figured that was a good sign to call it a day.

Tricky action today. Wait for better spots.


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  #22 (permalink)
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trentcroad View Post

I don't really like stepping up and jumping into pull backs too early.

I highlighted this because to you its second nature, but I'm not sure all readers would have picked up on it's significance.
After a strong move, there is often "complex" (call it what you will) price action before any continuation. There is a period of buyers and sellers matching each other out before the dominant force resumes.

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  #23 (permalink)
Sydney, Australia
 
 
Posts: 78 since May 2012
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kickmic View Post
I highlighted this because to you its second nature, but I'm not sure all readers would have picked up on it's significance.
After a strong move, there is often "complex" (call it what you will) price action before any continuation. There is a period of buyers and sellers matching each other out before the dominant force resumes.

You're spot on Kickmic.

That's really what I'm waiting for.

Looking for that dominate force to show itself once again - hopefully in the direction of the trend.

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  #24 (permalink)
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trentcroad View Post
The market did what it's been doing of late, which was sell off after Wall Street dragged it higher overnight.

Again looking on the chart it looks OK - but the market wasn't great to trade. Not for me at least.

The volume felt quite thin and price was really skipping through the lows very easily.

When it did pull back it was fast and only on light volume making it really hard to get into a trade.

I was biased short but I missed a fill early on and only managed one trade at a decent pullback around 72. If you look on the chart you can see that a nice market profile level had formed at 72. That's one of the key things I look for. It also hung around for a little while at that level.

I don't really like stepping up and jumping into pull backs too early. However as a result I can miss them at times. Which is what happened today.

Toward lunch time the volume really slowed and there were times when I thought my DOM had actually frozen so I figured that was a good sign to call it a day.

Tricky action today. Wait for better spots.


The two things I notice about this chart on the continuations is that at 87 / 86 you see a drop off of volume on the profile which also coincides with at breaking of price downwards. I think this is a nice place to enter.

Also I notice pretty much the opposite at 85 / 84 as the profile ramps up coinciding with the same type of continuation I stated in my previous sentence but now it's getting sucked into a high volume node. This is also a good place to enter.

(maybe these are too obvious looking at them in hindsight after the profile has been created but I'm sure they showed some reference even in their creation)

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  #25 (permalink)
Sydney, Australia
 
 
Posts: 78 since May 2012
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Hey Itchy

Yes you're exactly right.

I like to enter when I see the pullback in the vicinity of a high volume area.

That 71-72 was a really good spot.

Specifically what I like to see is high volume around 71-72, but very low volume above it at 73-74 etc. I would have liked to have seen even less volume at 73-74 than what we had here.

It almost creates a ledge that shows there's selling in that area.

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  #26 (permalink)
Sydney, Australia
 
 
Posts: 78 since May 2012
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Just a short sharp session today. I wanted to trade the opening 2 hours and I also ran into a few internet issues.

I did have a bit of realisation today too.

When the volume is a little thin, if a price can't hold it's a reversal sign.

What I mean to say is that let's say we have 10 contracts on the offer at 5433 and it tries a few times to go bid - but can't - that's a sign of weakness and a chance to get short. Like I said before I don't like to be too aggressive with my entries but it's something I want to remember.

It wasn't a bad day of trading however. I got short twice initially on a pullback, for a quick winner and a stop out.

Price then really broke down and I took a pullback that I really liked. Price then traded down to the lows, which were the lows of the day, however I saw quite a few contracts traded there.

It was something like this (these are market profile numbers):

5415 100
5414 150
5413 80

To me this looked like there was definite buying picking up here so I exited right at the bottom. I don't like to pick tops and bottoms so I didn't get long, but it was enough to get me out of my short. Sure enough the buyers entered and we ran right back up. Pretty happy.

Finally we pulled right back to what was eventually VPOC and I took a short for a quick winner. If you look I had my target as the other side of that market profile range at 29 and we traded to it nicely. That's a good way of setting your risk/reward targets.

After the number at 11:30 I tried a short again, but in hindsight that was a mistake as the number was bullish and I got stopped.

Regardless I think it was a solid day.

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  #27 (permalink)
Sydney, Australia
 
 
Posts: 78 since May 2012
Thanks: 31 given, 101 received

Hey Guys

I've had a few requests to elaborate on exactly how I trade the big buyers and sellers with the DOM.

These things don't show up on the charts so if you are using the DOM you can sometimes spot some good opportunities.

A lot of the time large buyers and sellers show up toward the close of session and especially on Friday's or at the end of the month or quarter etc.

Now I wasn't trading this session (it was last Friday afternoon), and I wasn't even there for that matter. I just left the screen recorder on - probably wasn't even live either.

And as we know, trading is pretty easy with the value of hindsight.

However I just wanted to point out this type of action as you might be able to look for it in your own market.

I wouldn't expect this in the larger markets like the ES, but if you're trading something smaller, keep an eye out.

Hopefully it's of some value.

It's not always easy to understand if you're new to it, but give it a chance.

This is one way you can use the ladder to trade and you can apply these ideas to all your setups.


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  #28 (permalink)
Sydney, Australia
 
 
Posts: 78 since May 2012
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This was another day that I wanted to focus on the opening 2 hrs. Volume really fell away after lunch so I think that was a good move. The reason you need volume is that even though the setups are there, they just don't get any follow through and you just end up burning commissions.

On the open I took a couple of scalps when I saw decent buying on the DOM. I sometimes worry about taking these type of trades early on as I think you can get a bit fired up by the start of trading and take some silly trades. It kind of feels like being a kid at Christmas if you know what I mean. Maybe it's better to wait and be a bit more calculated.

After the run up there was clear selling at the top. I don't pick the tops and bottoms that much so I stayed out but sure enough we sold off.

Price then developed a really textbook MP ledge (as I call it) at 65. I took a trade nicely down to 59. It then came back a while later so I took it again. I got out at 59 a second time, then price really fell away.

After some data, we made another nice little range and I got short, but it didn't have any follow through unfortunately and I got stopped.

You can see price just drifting along not doing much so that's a good sign to call it a day.

I have been making fewer trades these days, but I think I'm finding good spots.

I've also been experimenting with a new DOM as a bit of an add on which has been a real help over the last few weeks so I'm happy with where things are at currently.


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  #29 (permalink)
Sydney, Australia
 
 
Posts: 78 since May 2012
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A reasonably quiet day of trade for me today.

We had the RBA rate announcement out at 2:30pm, and that usually keeps things pretty quiet.

In the morning there were some chances.

I got an early scalp in that I probably shouldn't have taken and lost a couple of ticks.

I then wanted to go with the trend, just to see if we would make an unlikely break. We didn't and I scratched.

You can see that there were a few good trades at the top today. An RBA day is a pretty good chance to take them IMO as the likely hood of a big breakout is slim. I know that's contrary to my earlier trend trade btw.

Finally I found a really great spot, smack bang on the MP ledge - and I didn't get filled.

I was right at the front of queue but no luck. I then proceeded to watch it go my way 12 ticks.

The joys of trading right?

Otherwise pretty quiet and I stayed mostly out of trouble. Let's see what tomorrow brings.


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  #30 (permalink)
Sydney, Australia
 
 
Posts: 78 since May 2012
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There's a saying in trading I heard somewhere which goes along the lines of, "If you can get it you don't want it, if you want it, you can't get it."

For me I just couldn't get it.

There were some really great spots yesterday, but I just couldn't get a fill.

One of the big issues with the SPI is that it trades to these levels then turns on a dime. Unlike say the bund that is very liquid and gives you a chance.

I missed 2-3 really great spots because there wasn't volume.

However I was lucky enough to spot some really great volume printing into the offer on a couple of occasions so finally cashed in.

This was one of those days that could have been massive - if only I could have got a fill.

Such is life.


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