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Road to become a Trader

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Road to become a Trader

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  #1 (permalink)
Posts: 15 since Apr 2014
Thanks: 7 given, 1 received

Trading Journal May 6

I have attached the graph with today operations , a 5 minute Es graph , I have also attached the PnL statement, I will attach this daily , I hope I can still write an organized journal on losing days , when I can do this I am one step closer to be a real trader.

I use Auction Theory when trading, along with the daily structure I position myself on the "bigger" picture so I do not lose perspective , this last words are simple but actually super important.

Lets Begin

1. Short @75 9:27
Expecting choppy day as main hypo on the open , test to 72 on the open.
OAIR type of open.
Offset 72.25 at 9:32
+2 points

OVNL taken out so, some imbalance to the downside , GAP on the open remains as a great indicator of market sentiment ( GAP 78-74), this trading area will result in choppy trade.

2. Long @70 9:43
Looking for responsive buying on yesterdays LVN ( 66-73) I followed the auction closely on this levels, the Nasdaq was quick to bounce and my strategy was 72 as a first reference for value and a probable rotation to 74 , nevertheless I was a little unease about price action on this LVN. My entry was a second entry , after a first bounce from LOD 69.25.

Quick price action to 71.50 9:44

Offset 70.25 9:45
Here I can notice my inexperience as the Es commonly does this , it makes a retest that does not reach the recenlty established LOD to see if there is no more business on this levels and then it is ready to auction in the opposite way. I lost almost 3 points after my offset as this trade make a bounce to 73 the next minute I was out of this trade.

+0.25 points

3. Short @73 10:00

This short was a little irresponsible , because the GAP was just around the corner and a test to 76 (half gap) was a likely scenario , still the kind of trading on this levels ( down YVAL ) was establishing some direction to the downside. Still if no new lows were established or if value was not pushed down for certainty to 70 , this could prove a too early of a short.

Offset @ 71.00 at 10:02
+2 points

Here I decided to take some points and wait for a clearer auction , still my inexperience was pushing me to lean way to early on the short side , before a proper test of the Gap was made.

4. Short @74 10:24

Here comes a bad trade , this one could have been avoided. The location is poor as it is on one leg of the untested GAP , it gave me around 3 minutes or even more to offset with 1 or 2 ticks positive , it was really obvious that buyers were pushing to test the Gap , however I commit a mistake and stay with it.

This trade was bad and it only went 1.5 points against me with a GAP that reached 78, the quick rejection and the unfilled Gap made sellers confident and a future selling auction during the day would begin now that buyers were not confident enough.

Offset @73.50 10:30

I took the offset in part to just get out of a bad trade , because the level Ii entered was just in the middle of nowhere. Still after the rejection 72 was a target and new lows were on deck.

I now went on to look at the auction and try to figure out which player was in control , first I started to notice that YVA (yesterday value area) was out of reach after the 75.75 test , and how trade was being facilitated on the lows of the day . I also put special attention to the buying tail that took place on yesterday session. I started noticing some lower value area placement , so I waited for a short on 72-73 area. Why?
Because I wanted to trade away from YVA and this strategy also included 70 as a magnet and the notion for establishing new lows.

5. Short @72.25 11:49

Offset 71.75 12:05

Here I was still not confident enough of the question Who was in control? Still I was noticing that value was being accepted at 70 and that new lows attracted volume and responsive buying was disappearing. This trade went to 73 at 12:00 , so I looked for a chance to get out and hunt the 74 level , just as I got out a down auction began , it fell short of the LOD by 2 ticks.

6. Long @69.25 13:18
Offset @70.25 13:20
+1 point

Now this trade looks like it was made against all my previous analysis, but my strategy was the following:

As value was being accepted on 70, a test first to LOD and then a possible revaluation of value to 64 was a probable outcome. I wanted to look closely for price action on this levels to make myself sure of a bigger trade that was coming , a possible short to 64. So my strategy was as follow , chip in price action on this lows and short any level above 66 when the auction indicated a failure to hold 70 as a value zone.

7. Long @68.50 13:27
Offset 67.75 13:28
-3 ticks

Here I was pretty on the defense , I holded a level looking for price action to 70 , but I knew I had to be quick if new LOD 67.50 failed , this trade was pretty important because the absence of responsive buying at this prices was a signal for a revaluation of value , I placed my odds as follow:

40% Bounce Back to 70
60% Test to 65 at least

8. Long @68.00 Offset 67 and Reversed @67 13:39
Offset 1 : - 1 point
Offset 2: 64.50 13:46
+2.5 points

This trade is important for me, because I knew that if value moved from 74 (MCVPOC) to 64 , there will be heavy volume on 68-66 level and little time to act, so once price action was absent and strong movement appear , I took a short at 67 , looking for 65 at least.

The offset came at 64.50, the new LOD was established at 64.25, now with this new scenario my next trade was a short on a rotation up , near the new LVN 66.

9. [email protected] 66.50 13:55
Offset 64.50 14:00
+2 points

Once the LVN got defended , a full rotation down to 64 and possibly 62 and 60 was on the radar, if 64 was the new value ( volume confirmed this) , but still for the Es it is not strange to bounce quickly just after a LVN and take it out. So as a trader I got trades with more probabilities of success in this scenario.

10. Long @63.50 14:02
Offset 65 14:12
+1.5 points

64 will act as a magnet for the time being and the structure will develop around it, at the time I placed the trade I noticed that the low part was incomplete and 62 or 61 was an expected level , even a test to 59 was on deck, but judging by the nature of the fall (slow but pretty ordered) OTF were not that active. So I traded around 64 for the rest of the session.

The Es kept making new lows up until 61.75 late in the session (15:00)

I hope this Journal is useful to beginners and any trader that find it useful , I think there are mistakes that are avoided by master traders on a daily basis , there will always be mistakes and I know the first big deal is id them and attack them, anyway I am on a life quest to trade futures on a good level and this is my first post. Hope it is not that long. Forgive grammar mistakes.

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  #3 (permalink)
Posts: 15 since Apr 2014
Thanks: 7 given, 1 received

Ok so I posted on May 6 and stop short of posting for nearly two weeks , so long for the discipline side, which is fundamental , nevertheless I got all my records on pen , I will give a quick summary of the days of May 7 to may 9.

May 7

This day was one of those days one loves to be a trader , this day was what Dalton refers to as a neutral day, except for the IB down side, which did not got broken as the IB low was quite aggressive and was met with heavy responsive buying.

So on the open I was short looking for 64 to hold, we should remember that on May 6 a late down push closed and leaved a POC at 64 after spending almost all day on 71. This moved , should hold and go for the previous session low of 61.75 , I was short on the open.

Important: When trading a counter trade ( trade that goes against main trend) one must be extra careful and very quick.

Now , it is important to play the odds, I was expecting 64 and a test of 60 which came pretty early and aggressive at 10:00 AM , expanding to 54.50 , this was a symmetrical move

PDay High 75.25

Late POC PDay 65-64

Target 55-54

Strong buying tail to 58 , for the rest of the session the construction was quite strong , establishing POC AT 64 and going for the upper POC of previous session at 70 at the close.

The close at 74 and its construction on all the session made a case for a push up for may 8.

May 8

So on Y session the market closed with an upside imbalance , Y profile suggested a target of 84.

Y High and close 74

Y POC 64

Target 84

This symmetry does not come from only adding points , it has a powerful base on the natural distribution curve, obviously the great payoff of understanding it is not as easy at it may seem, and it is not difficult either , it is natural.

The open was just on Y session VAH , 72. The open had a quick test to 69 and initiative buying on this area , Dalton states that any activity on previous value areas is considered initiative as in this case buyers precipitate to it expecting or considering it to be a good spot , responsive activity would wait for it to go out of value in this case longs would have jump in on 60-59 levels.

A quick on the open to 81 , which is another fundamental level , now we should consider previous day activity , OTF selling was present, so smart money could jump in on high levels above 81 , always consider acceptance of new levels, volume is fundamental. We know construction on 64 is strong , so a seller could make 65 or 64 its target, an now that buyers made their move it is all about volume (acceptance).

84.75 level reached at F period , 8:30 period is my A period, I use 30 minutes TPO (time price opportunities). After that volume was really not facilitating trade to the upside , we could consider 84 as a target from previous day move , so odds are a little sided for sellers on this higher levels , as smart buying money will wait for 64 or lower levels.

As the day develops period I made an important move to 80, this was a fundamental sign as , after an strong open IB high was 81, if OTF selling came in on 84 , this value could be challenged which sets on the alarm for any long , there is a LVN created by B period that went from 77 to 72 , this is an area that is pure bread for sellers.

In one hour sellers pushed the POC to 77-76, the LVN is being filled , as a trader if one has a long bias , the logical spot comes at previos day POC 64 , smart money waits for a test even to 60.

Period L and M go in fast , the move begins at 75 and ends on 65 , just on previous day POC, longs jump in , in this case responsive buying and get the POC established at 70-71. We are on for a choppy open tomorrow.

After an almost neutral day on the previous day , today we got a textbook neutral day. IB broken early to the upside and late to the downside.

Anyway we should be ready for a break any day now , as OTF are playing hard and a winner could emerge.

May 9

This day was the end of the week long face off.

This kind of days ( bracketing-choppy) are best traded waiting and gathering odds with previous days relationships, the open came just on previous day close , in value and in range. The next move will be aggressive , aggressive moves come when the market is on balance.

The open was choppy enough to open on 72 and fall to 62 , just to recover on the next period to 70. And fell once again on E period , breaking IB low by one tick. This is a huge long signal in the ES a double bottom and a shy IB low break , just one tick. Nevertheless this low is also a weak long term low , as buyers did not enter at this level in a landslide , the prove is that sellers manage to touch it twice , so it is not a level that buyers consider that unfair.

Buyers established value at 68 , and coming from 62 a rotation to the upper side of 74 was on the table . 75 was touched on H period , just to fall of to POC 68 on the next 3 periods. OTF activity that created 5 points rotations , this day was quite the day traders want to trade. The close was strong and ended on the upper side of the profile.

There are big chances next day open tries higher prices as we reach 3 days of strong construction on 74 to 60 levels.

The weekly profile :

High 84.75

MCPOC 71-74 (Macro Composite Point of Control)

Low 55

Target is set to 1894-1895.

This week ended with strong construction , establishing a strong MCPOC at 74.

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  #4 (permalink)
Posts: 15 since Apr 2014
Thanks: 7 given, 1 received

This week was really a text book week ,I will make this post short and divide it on 2 separate parts as the week can be seen as a double distribution week with a large LVN area.

May 12

We start the day with a 5 point gap , this poor structure should be targeted by smart money as the up auction fade. We are now reaching almost 5 months of poor volume on highs , this is something that the market is telling us about the up auction. Now , a strong open that took us from 81 to 88 on the first trading period. POC was established on 89 and a rotation took us up to the high of the day of 93 on the last period of trading.

Now the symmetry is completed

Target from last week 94

High (reached today) 93


P Week Low 55

As the target was reached , levels above 94 could be logical spots for beginning short positions, anyhow the close signal a weak high , so we come to the next session keeping in mind the volume traded on this day.

May 13

After Y close , we should go seeking higher prices , the open comes fast and take us to 97.25 , 2 points above our previous 95 target. Period D took us to all times high of 98.50 on the ES , weak volume could not sustain highs and as we approached 98.50 heavy responsive selling came in , I will post the 1 minute chart to you can see the huge volume on this level.

The day ended with a POC on the target we identified on the previous week , at 94.

Now a great trade was in place , how to identified it ? First of all, get the odds , then measure your risk-reward.

Trade Scenario

Long , who would buy at this levels, smart money is not coming in as the poor volume on this session showed, there was no acceptance at all on this levels. Long participants will wait for better prices.


There is poor structure under us , a LVN on May 12 from 88 to 81 , along with a GAP from 80 down to 75, and above all we have a huge magnet on 74 the MCPOC just down of that poor structure , we know that 68 to 60 is a pretty well constructed zone.

Volume is also on our side, pretty low.Some players came in hard on 98 , we should monitor that and take a decision early next day.

You could set your trade with the following risk/reward scenario.

Short at 94-95 zone.

Risk 1900 -5 points

Reward 1874 +20 points

May 14

The open came on the previous day VAL , on 93 , the market spend almost all day establishing a value zone on 91 and 88 . This zone should be a target for future movements to the upside.

On the last 3 periods , the market (after 5 tests at 88.50) attacked the first weak structure from 88 down to 82.25 , market close came on 84.75.

This day confirmed that the weak structure was under attack and a 74 MCPOC will be visited.

May 15

This is an important day , as heavy volume takes place and move the market on a swift strong bias.

The market opened outside value and outside range , a swift strong open from 81 up to 71. Open gap 84-81.

It was very important to notice that the MCPOC was completely ignored and did not slowed trading , HVN almost always slow the market on its zone. Anyway we did experience a bounce from period B low 70.25 to 74.50 on C period. From there a complete break to 59 on period F.

From period F onwards , strong construction of the profile , up to this period a strong trend day was on place, but two periods (12 to 1 pm) gave responsive buying the upper hand , it is not common for a strong trend day to slow for 2 consecutive periods, the first sign was the strong answer on the low , which came on 59 up to 66.

Now rotations should have taken place around 64 and 70 should act as a resistance. The day ended up shy from a trend day and behave more like a normal variation down.

Huge value area , 69 down to 60. This area is presenting itself as a well constructed one.

Odds are next day to chop around this area, smart money should wait for a test of today´s lows.

This day is the confirmation of a good trade scenario, identified on Tuesday. Shorts placed above 88 , yielded a good 20+ points move.

May 16

Open on value , a long scenario is emerging as Y session fell short of a trend day and responsive buying came on 60 levels. Double bottom was established early on the session on period C 61.25 and 61.75 period D. This structure gave us a good setting for target 1 64 and a rotation to 69. The day build up value all day and eventually broke 70 resistance , to look for the 74 MCPOC.

Close was on high of the day , 75.50. Higher prices coming next week.

I am posting the 98.50 all time highs on a 1 minute chart, the spot where a reversal began.

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  #5 (permalink)
Posts: 15 since Apr 2014
Thanks: 7 given, 1 received

Yesterday was a continuation of Fridays move ,

85 Target

72.50 Late in the session POC

60 Low

The open came swiftly with an open drive , upside of almost 10 points , from 69 to 78. This LVN area is going to be set as a target by sellers, a short between 83 and 87 is a logical spot , but we could be testing the VPOC on 89-92.

VAH 82

POC 80.50

VAL 77

Volume is against the up move , as yesterday we printed less than 1 million contracts , poor volume for the Es.

May 20

Fed Minutes are to to tomorrow and we have 2 Fed speakers scheduled for today. Plosser at 12:30 and Dudley at 1:00 , we are going to look for subtle hints on the auction , whatever happens and what does not happen is very important.

We are looking for a good short trade location , considering the minutes due tomorrow the smart thing is to wait for this scenario. The up move from yesterday , should take us past Y high 84 , nevertheless volume was pretty poor and the 70-79 LVN could come under attack.

Our primary hypotesis is a test of this LVN , from there 68 should hold. The 63-69 area is pretty well constructed so any down move will slow down on this levels, in yesterday´s session there was not a single proper down auction. Anyhow the profile and the move is still pushing up , my target is around 1902.

Overlapping will mean acceptance and a future down test to 74 and an intermediate target of last week weak low 60.

I will be posting on the session.

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  #6 (permalink)
Posts: 15 since Apr 2014
Thanks: 7 given, 1 received

So, the market attacked the weak structure of Y open , 78 to 69. The logical spot for longs and important magnet is 74 the MCPOC ( Macro Composite Point of Control) heavy volume there committed from both sides.

The great trade of the day is already done , short above 81 level yesterday on the close was a pretty good level, with low volume and 74 as a powerful magnet. I got short at 81 but did not carry it overnight.

My trade has good characteristics:

Risk : -3 84

Reward: +7 74 , first target

Anyhow, I was waiting for a short at 84 at the open , then went for 80. I waited, selling came in , and the logical spot for a long no came at 74, which I did not waited for in the first trade.

1) Long 76.25 , gave me one point quickly. But the auction signal more downside I got the offset at 75.25
-1 point

2) Long 74.25 , IB low of 74. I came in one minute after IB low at 10:00. My stop was at 72 and my regard was set at 77. This trade was scalp.

Offset :76.75 +2.5 points

Steps to trade:

A) Strategy, POC 74 is a logical spot , that will let you evaluate the power of the down auction. It was the first real responsive buying of the day , it took 4.25 points to 78.25 , 16 minutes later.

B) Volume and price action from 9:50 to 10:00. The structure was weak and sellers did not came hard on this one, price was slowing since 75 showing some support. The auction was weak to break 74, and huge support volume came in at 9:59. This set up a scenario for a good low.

C) I used a range chart of 8 with a Holt moving average , that gave me some idea of a good offset level , between 77 an 78 , this chart is only used as one of different steps used in my trades. I took the offset because volume decreased and a possible retest of IB low was probable.

3) Long 74.75 10:31

Just as the initial balance was closing, the auction took another test to 74 , we know have a double bottom a structure that can be interpreted as a good spot for a long taking in account volume and auction behaviour. I went for a long at 74.75 one minute after as I saw responsive buying. 74 is a weak low that is going to come into play in the future.

Offset: 77.50 +2.75 points 10:37

Now the market took a stand on this LVN , so we could se an overlapping downside , this is a good construction and will be a good base to take a visit to the 90 VPOC (virgin point of control).

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  #7 (permalink)
Posts: 15 since Apr 2014
Thanks: 7 given, 1 received

YLVN is now out and the market has extended to 67 , looking for the other MCPOC 64.

The first shadow area represents a great short trading opportunity, the first arrow shows volume coming and taking out stops at 78.50 , the 80 level which is on Y value area, was the big level today, yielding nearly 13 points up to this moment. The low volume was a subtle hint ( 11 to 12 is normally an slow time) , the big factors for a short were the 74 magnet , along with the weak volume of Y session. A test of value area and possible rejection will cause the IB low 74 to be a target for smart money.

I took 3 trades , with a scalping mode on , I was looking for a larger move on the last one, looking out for a possible construction and acceptance at this levels and a rotation to 74 , looking for a close on this MCPOC. This did not pay off and I got out with almost 2 points on the red.

I am now on the look for a long trade near MCPOC 64.This trades are against the strong down move, as I am looking for a balance and rotation up, the big swing trade as I have posted on previous days came on Monday above 80, a great example of auction continuation was the mentioned touched at 11:00 today , a great second entry available. Now yielding 15 points. I was to slow to identify this scenario, got my short position too late.

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  #8 (permalink)
Posts: 15 since Apr 2014
Thanks: 7 given, 1 received

I identified two opportunities, on the last hour of trading. Now, this final periods can be quite volatile and trading on the last period is not something one should do , as one has to wait for the next day for a trade to unfold , if you are scalping you can take a quick trade.

Last Trades

Long 15:23 , I identified a possible zone with stops so I set the target to this area.

Long 68.25 Offset 72 + 3.75 points

The scenario that was developing was :

Acceptance of lows from 13:44 to 2:00 pm , with decent volume , creation of a support , I was on the hunt for some hints on the 1 minute chart. I got those on 14:19 and 15:06 , I think I was pretty slow on this long and got on a little late , nevertheless the next trade was a far better scenario.

After stop were out of the way on 69 and 70 , the next resistance zone was 73 , near the 74 MCPOC , I have placed the stops zone on a blue rectangle and the short zone on a circle , right above 71. I took a short at 73 , but got out as the closing was near. A decent swing move from 73 to 68 on the close came in. Dalton states that the best trades are the ones flying in front of us we just do not see them or do not want to. This was true for this swing trade. Odds were on the side of sellers as 73 was a strong resistance.

I am attaching a 8 range chart , to show how the balance from 2:00 onwards was key. Natural pace of the market , imbalance-balance-imbalance.

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  #9 (permalink)
Posts: 15 since Apr 2014
Thanks: 7 given, 1 received

Just before the open , market set to open with a Gap 75-70. First hypo is for responsive selling to come in at 77-79 level , 80 is the logical target for buyers. Remember to trade with odds on your side , odds are in favour of trade on value and a test of YPOC after a decent move down, anyhow on the May accumulate we got a big value area around 1882-1860 , 1880 and YPOC come as important levels to evaluate next move, a choppy open can come today. Also remember the weak low of 1860.

I will be posting on the day.

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  #10 (permalink)
Posts: 15 since Apr 2014
Thanks: 7 given, 1 received

Continuation for the long side on the open , the gap 75-69 remains open and should come as a target later in the auction , if weaker structure along with low volume come a good short swing trade could be in line. IB was broken by one point , we have a LVN that will come under pressure during the day , a long position could be initiated on 77 , but if you want to go along with odds on your side better levels will come.

Now , I did 2 quick trades , one short too early on the opening which I offset with 1 point on the red, I did not waited for any signal and this trade was really a mistake as I was approaching this trade with thing I wanted to see , I decided to wait for confirmation.

1. Short 79 , offset 80 - 1 point

I then saw upside pressure targeting 83 , so I went on and bought at 80.75 which gave me 2 quick points , I saw some signs of reversal and was too slow to offset so I only managed to take 1 tick.

2. Long 1880.75 Offset 1881

I have an open position at 1881 short, since 10:00 AM , with a risk set at - 4 points , 1885 . As you can see I made the trade before volume confirmation that showed a weak hand from buyers ,the auction took stops at 83 and went to the days high of 83.50 . I see 77 in play as the day unfolds. My target is for the opening LVN to be tested and a possible GAP fill , the auction will tell us what we need to know.

At this moment 77.50 was tested.

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futures io Trading Community Trading Journals > Road to become a Trader

Last Updated on May 28, 2014

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