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Trading Journal: Path to Consistent Profitability + Trading Career
Shortened week this week - with Thanksgiving on Thursday. Friday I took off (and the market was closing as I was waking up anyway - since I trade only in the “afternoons”.
Glad to squeak out a positive P&L again this week. Action definitely seemed funny with both contract rollover and the holidays.
I’ve been noticing that the market is getting tightly coiled and I do expect a breakout coming soon; we’ve gone a while with no big price movement. I know this because my long term support + resistance levels (which I update every night) haven’t had to be touched in several weeks.
For this week, Wednesday was particularly choppy for me. I made a mistake by going long against the trend near the end of the day. I had waited for a fill for ~ 1 hr and only got it ~ 10 minutes before the close of the day. I hoped it would work out but ended up being a loss. Oh well, only one trade in a career = doesn’t matter. BUT: What I’m taking from it was that it wasn’t an A+ setup, I was bored, and so overrode my rules to take it (often there are “grayline” issues with taking trades).
Question is: what to do about these trades? I’m pretty sure I won’t stop taking them without changing something else. Here are two thoughts:
Add other markets. Yes, I know this seems silly, but sometimes the bond market is just too slow for me. I think maybe by adding another market I’ll be able to look elsewhere when it’s slow
Don’t add another market, but switch focus to something else (say, programming)
Start tracking it and see results
I’m going to do at least #3. This way I can at least get some data on whether what I’m doing is working or not - if not, then it will be much easier to cut it out (If it’s not an opportunity, there’s no reason to take the trade). There’s no FOMO without a perception/intuition of an edge.
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Related, but not directly relevant:
I’ve finished reading the 6 part CBOT Market Profile manual. Next up: Jim Dalton’s books
I’ve been backtesting in MT4 the NoNonsenseForex approach to markets; trying to keep adding things slowly so that I don’t make mistakes, tracking the results incrementally, adding only one piece at a time. I’m not really sure where this will lead as I probably wouldn’t want to trade this way but it is getting me good at MT4.
I happened upon one of Anton Kriel’s lectures - . Although I don’t trade the way he does, some of his points about financial freedom make a lot to me - particularly around buying power and perception of risk. I’m not applying this to my day trading specifically, but more to my quest to financial freedom (which is what this is all about, after all). One point he makes is that if you want to make 10% you can do so pretty easily in the stock market through dividend REITs - you don’t need to go to property. As a landlord myself, I’ve been thinking about my crappy returns and what to do about it; this certainly seems to be a solution (FINVIZ has some suggestions: https://finviz.com/screener.ashx?v=111&f=fa_div_o10,ind_reitresidential). I’m going to put a tiny amount of money to play with this idea and see how it works out after a number of months.
Also, I was playing Rich Dad Poor Dad’s board game with a friend (the online version). One of the strategies to winning is value buying cheap stocks. I’m going to allocate a tiny amount of capital to buying 5 “falling knife” stocks. This is basically throw away money - I assume all 5 will go to zero (so I’m not investing much). Why not just paper trade? I know that you never really understand something until you have some skin in the game.
Can you help answer these questions from other members on NexusFi?
A little disappointed this week as I both didn’t have a winning week, plus decreased my total winning day % (now down to 11/23 ~ 47%).
Looking through the week, Tuesday was the big volatile day, leading me to big wins that made up for mistakes on Monday.
The rest of the week didn’t have a lot in terms of opportunities - Thursday I didn’t take any trades and Friday I took a marginal trade that I scratched; my overall impression at the end of the week is that there was just no volatility in the market (at least during the hours I look to trade - during the “afternoons” - although it’s mornings for me on the west coast).
It didn’t feel like a down week, which made me question what was going on (see attachment). Turns out I was net zero on the week on a tick by tick basis - the other $30 went to commissions (or would have if I was trading live). This is definitely progress (although it doesn’t feel very satisfying)!
That spreadsheet has some interesting info on it. So basically this week I was at net zero aside from commissions. The other take away: if I had closer take profits, I would have done well.
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On an unrelated note, I’m going through an old course by Anton Kriel (yes, confession, it was the first and probably most expensive course I’ve ever gotten). His take is that day trading doesn’t pay off - 80% of the times the volatility isn’t there. I’m sure that even if he isn’t a phony, that day trading probably doesn’t pay off for big institution money most of the times (for liquidity concerns, etc). BUT: I take his point that day traders live + die by volatility - and when the volatility isn’t there, it’s hard for a day trader to make $.
--
So a few big takeaways from this week:
When volatility is low, it’s hard to make money. Conversely, when it’s high it’s easy to make money
If I use closer take profits (at say, 5 ticks) when volatility quiets down I’ll do much better (although I’ll have closer to 1:1 R:R)
It makes sense to look at other, more volatile markets when volatility is low.
Also, I actually lose more money than normal when vol is low because I end up taking boredom trades. And to paraphrase Steidlmayer - “I tried for roughly 6 months to change myself, was unsuccessful, so decided to change how I traded to better fit me”. Amen, brother.
I can use the same market profile and pivot point techniques in other markets that are more volatile when volatility is low.
I think it makes sense to look at micro dow as a market; it’s a much faster market; the micros will also allow me to gain some exposure without taking huge risks (as per my tiny account).
For next week:
If VIX stays below 15, trade micro dow (MYM) in addition, using the same setups
If VIX stays below 15, try using 5 tick take profits
Not much to report this week; no trades on Monday, then Tuesday got totally chopped up. With the anticipation of FOMC, I decided to take the rest of the week off. I always do poorly around FOMC, there’s a lot of volatility with no clear trend.
I was highly discouraged on Tuesday as my “virtual” equity curve has now gone negative; so decided to take the rest of the week off.
Since I only had two days of trading, and only one with any trades, I’ll just put in my excerpt from the report card:
“The obvious thing to me is a need for formal rules around the day type. I’ve added them to the trading checklist.
On another note, volatility is really low and this isn’t really working right now. Although sometimes I feel like I’m a few feet from gold, I also know the market will still be here tomorrow and the next day; so I’m going to take some time off to get some of my day job done + make some more money.”
I think another thing that I started looking into is Anton Kriel; he was the first course I took and although he appears to be BS on the surface, it turns out that I think he’s talking the truth of how the big money operates; the rest of the week I decided to take a few investopedia courses on fundamental analysis.
One of the points Kriel makes (in his private course) is that because volatility has come down, day trading is a lot harder. I think he has a good point here. Another point he makes: traders at big institutions are there to make money no matter what; most traders at the big institutions are really just market makers and spend only 10% of their time prop trading; but when they are prop trading, they are a “slave to volatility”. Basically, if you are looking to make money, you don’t dictate to the market how _you_ want to trade but rather listen to it and tell you what opportunity it is giving you.
He claims that since volatility has come most of the time the opportunity is actually on a longer horizon (so emphasizes portfolio management and only day trade 20% of the time when the opportunity is there). You don’t dictate what you want from the market; instead, the market dictates to you the opportunities available.
I think this too is a good point and is in line with what I’ve heard and experienced from business: those who are successful do what their customers want - if it happens to be what they want to do, OK, that’s great; but if there’s ever a conflict between what they want to do and what the customer wants, guess who wins (if you’re going to stay in business)? Well - same here; and the customer here is my market. Day trading (at least bonds) in the afternoon has few customers so a different strategy (or a different market) needs to be found.
I guess another thing I’ve been thinking about is the time commitment involved; I’ve been trading from 8AM-12 every day; that’s four hours of my day and prime hours; being that I’m on the west coast I could try to wake up earlier, but I know I’m a grumpy asshole if I try to do that; likewise, what is paying me (my software consulting) has to take a backseat while I sit here and try to make virtual money. How long can the insanity last?
One principle mentioned by anton is I think how traders + money managers operate: when things are going well, they add; when they aren’t, they subtract. He suggests that human nature is actually to the do the opposite (add when something is going poorly, quit when you are up) - the exact opposite of what a good trader should do. And from that lense, it makes sense to quit or at least scale back day trading (I’ve now been at this for over a year and have not made any money - in fact, lost money). I can’t imagine having a job that I went to it every day for a year and didn’t make at least a bit of money. Such is market tuition, I suppose.
So I think going forward it makes sense to go back to my schedule of trying to trade for 1-2 hrs (8AM-10AM) then switching focus - either to a longer term money management strategy or towards software.
I still think that I’m “a few feet from gold” and now that I’ve read everything I can get my hands on with market profile, that I should just trade for a couple of hours and let the chips fall where they may. (Still doing daily reviews, etc). Just cut down on the hours I’m spending on it.
On a more specific note, I think the main development from Tuesday was a need to have objective rules as to determine day type. I’ve added them to my checklist so we’ll see how those shake out next week.
For next week:
Skim (again) Mind Over Markets
Trade only 8AM-10AM (cut off at 10AM)
Trade 100% off checklist, using objective day type rules
Finish investopedia course
Volatility was very low this week going into Christmas / New Years. I didn’t trade at all on Monday, and Tuesday I had one trade in the afternoon; put in a 4 tick stop and 4 tick take profit and watched it for two hours and took a loss at -1 after not hitting either stop or take profit.
To me, this is the extreme of low volatility. It’s apparent to me this has nothing to do with me, it has to do with the market (bonds), the time I’m awake (the mornings on the west coast - aka the afternoons on the east coast) and the time frame of my trading (intraday). There is absolutely no way to make money in this market as a small trader at this time with such low volatility.
So in my off time I started listening to more and more of Anton Kriel, happening onto his material (I had previously taken a course of his way back when and had saved the videos). I decided to revisit the videos and he spends several lectures talking about why retail traders lose. His #1 point - retail traders don’t understand that day trading doesn’t work because you need volatility to day trade, and 80-90% of the time isn’t there.
He does a relatively simple analysis using average daily range to show that most days the S&P doesn’t move much (½ percent) and that over time, this has been coming down. He claims that the reason the big banks + hedge funds don’t trade is because they can’t actually make any money on it, and the ones that do, do so through quant / algo trading. To me, that makes a lot of sense.
His solution: widen the time frame. Only day or swing trade occasionally when the volatility is there; otherwise, be a portfolio manager and be positioned appropriately (based on leading macro economic indicators). This overall makes a lot of sense to me. I think I’ve gone to the extreme of low volatility: trading the 5 year in the afternoon. What could be lower volatility (aside from the evenings?).
My low account size doesn’t help this either; I only started with 5k and did so knowing full well it was a learning vehicle. Although I knew conceptually it would be difficult to grow such a small account into a larger one, I also knew that it could be done. With 5k and a small contract size and a winning strategy I wouldn’t expect huge gains, but if I could develop positive expectancy, I was willing to commit more capital to it.
Unfortunately that’s not what happened and my account is now down to ~ $2k. I know that mathematically there’s really no way to come back from such a grind down of an account without recapitalizing. Likewise, with a tick size of $7.81, a 4 tick stop loss (which is pretty reasonable, normally) is already a ~ 1.5% bet on the account every time. I’ve been keeping the account open as a learning vehicle but hoped to recapitalize after both gaining some knowledge about market profile and being able to show positive edge.
In an attempt to salvage this, I turned to demo trading and initially saw some good results; that was all wiped away (and more) when the volatility decreased.
Thinking about this in a more holistic way, I’ve also asked myself: who is actually successful at this game, and why? And it seems here are some data points:
I talked to John Grady over skype way back when; he suggested that if I couldn’t trade in the morning (which is ~ 5AM for me) that I probably shouldn’t trade bonds (there wasn’t enough volatility). Of course this changed with a lot of the tariff news but now that seems to be dying down. (with vix at 12 going into holidays…)
I also looked at Dalton + Steidlmayer. Steidleymer traded bonds, but that was many years ago and he was also trading the 30 year. As you go further out on the yield curve, you see more volatility. Which is why something like eurodollar futures are untradable except on a swing basis. I’m pretty much prevented from trading a large tick size based on my account, so that’s out.
I see SMB + Merritt Black trading, but they are trading crude oil, which is probably the most volatile of all. Again, huge swings, much too big for my account
Then there are people who trade things like S&P, dow etc. I’ve looked at the dow a little bit, but I notice that it suffers from the same flaws as the bonds in the afternoons - basically everything dies / goes quiet.
As far as order flow is concerned, although every once in awhile I’ve seen edge in order flow, you (I) normally need to be highly reactive and have cat like reflexes; these sorts of edges show up occasionally, but I don’t think a career would be well built on them. I certainly think that trying to trade bonds on a fully order flow basis is a losing proposition.
Which gets me to a point Kriel makes in one of his youtube videos about the “inversion narrative” and it really does make me wonder. His main point is that the smart money does something totally different than the typically retail trader.
The smart money has portfolios and if short term trading (aka day trading), only does it during highly volatile times (where there’s huge opportunity) or does it with algos (HFT, etc). It’s also pretty clear to me there’s edge on a swing basis (which can be algorithmic - Simons or semi/manual Radschke). The dumb/retail money instead tries to day trade. The big money uses largely fundamental analysis, the dumb / retail money uses largely TA. I can validate this as my father worked at a bank and knows nothing about TA but plenty about balance sheets + cashflow statements.
But the really sinister part that Kreil points out is that there are whole industries that try to teach TA not because it works, but because it makes (them) money. Here’s how that works: a broker makes money in commissions (or spreads as is now the case). In the past they’d spend huge marketing dollars to get new customers. But they’ve now figured out that so called educators will go out there, spend their own money to advertise, and then get a kickback from the broker when they join. The broker doesn’t really care what/how they trade, and neither does the instructor. The reason they promote TA and not some other form is that it causes frequent trading; each of these lead to commission for the broker (and in some countries, the educator). So the broker basically gets free advertising. Why does the teacher promote TA instead of something that works? Because they get a kickback from the broker. Also, why would they be teaching it instead of busy trading?
In a way, I’ve wondered why it’s so hard to find day traders with edge; someone mentioned in a nexusfi.com thread that they seem more elusive than unicorns. Since no one is willing to show their statements, my best guess is that the people who have been around for a while probably have some edge and can make some money at it. And who has been around for a while who I trust? The big banks seem legit, SMB seems legit (they are only/mostly doing crude, as far as I can tell), and some scalpers on volatile instruments exist (on nasdaq + S&P - I know a couple). SMB’s equity division also seems like it’s been around for a while, and mostly what they do is trade momentum stocks (aka where volatility is present).
So this last week has felt like a bit of a “red pill” or “but where are the customers' yachts?” kind of revelation. Even around “names” I trust - nexusfi.com, for instance - take a look at who is advertising there. Jigsaw, ninja trader, etc. Why does anyone advertise anywhere? Because they hope you click, and if you do, they will make money on you. Simple. They never have win/win strategies - where they only make money if you do. Think about that for a minute.
Kriel makes the point that there is a conflict of interest there. If nexusfi.com lives off a broker advertising, and the broker is making money off of you trading frequently, and you discover that trading frequently doesn’t work and you stop doing it on that broker, don’t you think they will be upset? And if they stop advertising on nexusfi.com, what do you think nexusfi.com will be compelled to do? (TBH, I’m not sure...)
BTW - I’m not trying to pick on nexusfi.com here (obviously they also make money from memberships as well as advertisements - I also know there are many smart + good people on this forum) or glorify Kriel either (who has his own agenda); everyone is looking to make money in one way or another; the question is: how do they do it?
Another aspect Kriel points out is the obsession with the “latest tool.” I’ve certainly fallen for this one. 6 months of, “OK, having this tool will give me a big edge and of course I’ll be profitable then ...Nope; same results.” Maybe it wasn’t me, maybe it was the fact that the tool has zero or close to zero edge?
Another “where are the customers' yachts?” moment I’ve had is related to prop shops. If so many people are trading intraday and making money, where are all the prop shops who do this? OK, let’s say Axia and SMB are legit. Where are the remaining ones? Why are all the existing prop shops algo based ones (like Jane St., etc)?
Another thing Kriel points out is the emphasis that everyone places on psychology - this is just a load of horseshit. No, that doesn’t matter. SMB makes the point that most traders think it’s their psychology, but in fact, they just have a losing strategy. That would be like a wife having an abusive partner. Every day he comes home and hits her in the face. “I just need to be nicer to him”. Yeah, OK. The only thing wrong with psychology in that situation is acknowledging the facts: “It’s time to leave” (aka it’s time to find a winning strategy).
Is psychology an important part of trading? Sure, if you’ve made a million bucks and given it back up in a stupid way; yes. If you’ve taken wild risks and martingaled, yes. If you’ve done risky strategies like 10:1 option selling (which I’ve done) but haven’t fully accepted the risks of blowing out your account, yes. So yes, psychology is an important part of trading if 1) you are engaging in self-sabatoging behaviors by first running up an account and then running it down or 2) not fully accepting catastrophic losses (which hardly anyone can or should do). But otherwise, if you are just consistently losing money and you are following your plan, no, your strategy just sucks. It’s not you, it’s not your psychology, it’s your strategy / plan.
So today I’m deciding to shut down my futures account and switch over to a longer term trading style.
One thing that I’ve taken away from all of this is doing more of a process of due-diligence. I hate to say it, but I’ve fallen into all of the typical retail traps: of losing most of my money (over 50% of my account) in under one year. That was something I never expected to do. And I’ve also fallen for all of the other typical traps - the hot new tools, the new education programs, etc. And TradePro Academy - they looked legit from the outside, but I’m about 99% convinced it’s all a scam. They taught everything imaginable under the sun *except* market profile - the one thing that I think might have an edge.
(BTW: Props to futurestrader71 who basically says this - I saw this in his latest webinar).
But what pisses me off the most isn’t failing, or even feeling like the wool was pulled over my eyes, but the fact that I let it happen despite knowing better; the mathematics are just totally against you even trading smaller tick sizes with a big account; if I were to do it again, I probably wouldn’t start with anything less than 25k. When I talked to (the unnamed) pro scalper who trades nasdaq, he matter of factly said, “sure, you can make it...if you have about 250k to trade with and have an income source on the side”. Yes, this is what he considers a decent enough account size to learn on - AND - you need to be working on the side.
So...could it eventually work, trading intra day? I think so. Here’s what that would involve: 1) trading during the most volatile hours. This is 8AM - 12PM Eastern, roughly 5AM-9AM my time (in California). Sure, some people may love that schedule; but I’ve found that I’m super sleep deprived and hate life if I wake up at that time. I also know how much poor sleep can effect your health. 2) Trading the right instruments. This would be more volatile instruments - NQ, YM, GC, CL.
I’ve asked myself several times: am I willing to pay that price? And the answer is consistently: no, I’m not willing to wake up at the crack of dawn to really make that happen.
Here are some other factors that go into my decision: I’ve realized market profile can be a winning strategy. How does that work? Well, you look at the profile and try to figure out if it’s in a trend or in a range. If it’s in a range, you range trade, if it’s in a trend, you trend trade. There seems to be day types and drive types and those can give you some edge. OK. What else works? Well, pivots and tests of levels seems to be a real thing. OK, cool. Can I see myself doing that for the next 20 years? Will I really be happy in my 40s and 50s waking up every day at 5AM to hit some buttons to make some more money? Well, if I need to, sure, but will I be happy doing that? Answer: No, I will get bored of it. I think there’s an equivalent to steve jobs saying to Scully - “Do you really want to sell sugar water for the rest of your life?” and I’m thinking the same for myself: “Do you really want to hit sell when the price hits R1 for the rest of your life?”
Part of trading seems to be about “knowing yourself” - not in a hippy dippy, let me get in touch with my soul kind of thing, but what will I be really excited about waking up every day to do? Basically, knowing yourself in this context means being honest with yourself about what you will and won’t do to make this money and what you will be excited about and what sorts of pains you can tolerate. And the answer for myself is still unclear to me, but I know I’m too smart to just hit sell at R1 and hit buy at S1 every day for the rest of my life). Or at least I would be unsatisfied doing it every day for the rest of my life.
Another thing that people always say is: “Don’t trade with capital you can’t afford to lose”. OK, but what exactly does that mean? If I lose all of this money, I’ll still be able to pay my rent and feed myself. I’ll still have plenty of safety + security elsewhere. It won’t change my life at all. $2k or $5k or even $10k isn’t that hard to just go out and make. But it’s also not play money and I think a healthy respect for money is important.
It’s almost a paradox that everyone who gets into trading does it for the money, but yet you need money and to move from a position of strength (already having money) to make more of it by trading.
So even with 2-5k, it’s a question of risk:reward and trade off. How much time do I have to spend here and how much will it pay off, and when? Even with my current schedule (waking up around 7:30AM on the west coast and trading from 8AM - 12AM), I’m basically giving my software clients the shaft by not working for them for several hours - these are the people who pay me well. I’ve been at this for over a year (closer to two) and a sense that I’m no closer to making money than the day I started. Also, this money could be used in a safer way. Instead of constantly trying to hit home runs, what about some singles? What about just making contact with the ball?
And this all gets to: why did I start trading to begin with? Well, the real reason was to make money and because I see money as a source of freedom; with more / “enough” money, I can do whatever I want when I want to. And I got interested in day trading because I got interested in compounding quicker. And I’m happy to try things and make small bets in an attempt to see what works and what doesn’t, but at this point, it’s pretty clear day trading isn’t working out for me and probably won’t work out any time soon.
I’m reminded of a quote that I heard long ago…”you can be right or you can rich”. And it’s occurring to me at this point that I care more about being rich than being right. This is a painful decision as I really really really wanted this futures thing to work.
So...where does that leave me?
I’m going to try to trade Kriel’s style. It’s almost a 180 from what I’m doing right now. It’s not futures based at all, but rather fundamentally based. It’s a much slower form of trading - slower than swing trading. That slowness encourages good decision making; on a short time frame you need to make good decisions and this is hard (for me) to do consistently. I’ve also taken three courses on investopedia about fundamental analysis; I have no doubt this is how the big money makes money.
I think when things become volatile, I will attempt to day trade; but do so with less capital and in less levered instruments; I think TLT or IEF might be interesting ETFs to trade that can mirror the price action of the bonds at those times. Of course the run of the mill etfs like spy / qqqq / dia will be fine for the equities.
I’ve also realized that getting in these trades at good prices is important; something that could run for weeks might get stopped out if taken at a bad level; all of the intraday price action stuff I’ve learned isn’t for naught; I will look at pivots, market profile, who is lifting or hitting on the tape, and big volume hitting the tape; opening range breakouts (ORB). when getting into these positions.
Also, another thing that I think has been really good is the weekly review. I think doing a summary once a week really helps me solidify my thoughts and evaluate what is and isn’t working and why.
My plan going forward: to more or less follow Kriel’s process. This will be creating a watch list and evaluating companies fundamentally based on macro themes that I’m seeing. I’ll be posting a full trading plan later.
I have no idea what you, or anyone, should do, and I'm essentially neutral or agnostic on your conclusions, and on most trading/investing methods for that matter ( )....
But this is a well-reasoned, experience-based consideration of the situation as you see it, and something more traders should be doing, whatever their conclusions.
I think people find different paths, and they don't need to be the same. But first they have to be looking, with their eyes open. Kudos for doing the work of honest assessment.
I hope the new approach works well for you.
Bob.
When one door closes, another opens.
-- Cervantes, Don Quixote
Nice post and realisation. I was wondering you wrote "They taught everything imaginable under the sun *except* market profile - the one thing that I think might have an edge."
Curious to know, why do you think MP can have an edge. It is just a tool like any other to see where some of the previous ranges or areas of consolidation were formed. You can do the same thing with the regression channel if drawing it parallel to the x axis around previous areas of consolidation.
Here is a 5 min chart of the Dow. What would MP reveal that is not already visible using this simple tool which highlights various areas of consolidation?
I only happened upon your Journal today as I was skimming across the numerous "End of Year" entries that so many here on nexusfi.com are posting this week.
To start I have to say the thoroughness of your introspective review of your End of Year results was impressive.
Having said that I have a couple of questions regarding your approach. (You don't have to answer, I'm just curious.)
1.) What made you choose the 5-Yr Note to trade?
(I've always found it difficult to trade something that by it's nature trades in relatively narrow, low dollar-value, ranges.)
2.) What made you move away from trading Options?
(I think you mentioned early on in your journal that you were profitable then.)
3.) Did you ever consider trading Options that augment the holdings in your longer term portfolio and only using Futures to offset some of the risk in that portfolio?
(I only mention this because it was a grain farmer in Manitoba that first introduced me to Futures. He used them to limit his exposure to the inevitable fluctuations in the market price of the grain he had sitting in the silos on his farm.)
Lastly, if you haven't yet had an opportunity to read any of the trading related ideas posted over in the journal titled " Tao te Trade: way of the WLD" by @wldman.
I would suggest you take a good long read through his journal before you decide to "throw in the towel" on your Futures account.
Good luck, enjoy the holidays and I hope you have an amazing 2020.
R.I.P. John Bottomley (Botts), 1956-2022.
Please visit this thread for more information.
I can only speculate without looking at the profile, but here are some things I'd suspect:
1) that's drawn after the fact; things always look better after the fact. of course you could say the same about the profile that's already developed. but I'm guessing that if you were to look intraday you wouldn't be able to draw that purple line in the middle of the last day until the day was completed (or at least it would be in a different place).
2) check out the obvious resistance around 28500 (on the last day). it's between top and second to top purple lines. you might be tempted to go short there and puke. But it does look like a pretty good resistance level - intraday hitting that level 4 times. The profile might agree with this tool - that it hasn't spent much time trading there so is likely an excess area (aka a good place to go short). OTOH, it might show that it has spent a lot of time there, so is likely to breakout. Again, not sure if/what the profile would say. But that's all to say that just because it worked or didn't work this time that it may or may not be a good trade.
3) how about the section between the second to last and last ranges? (Teal and purple). When it breaks the teal range, how are you going to know if that's going to run up or if it will fall back into the range?
4) how did you draw those ranges? The point I'm getting here is that often s+r is relatively subjective and at least in the bond market I saw that major S+R (that could be seen on hourly or daily charts) was definitely heavily traded, but intraday s+r weren't big turning points (at least as of my observation on a 5 min chart of ZF). MP OTOH is relatively objective (it traded there or it didn't).
Of course, if it works for you, more power to you! And yeah, I agree - just a tool and I think both MP's faults and its powers lie in the fact that it also prescribes no setups so can't be falsifiable.
Oh - another part is this idea about day types, which is not clearly about range trading or trend trading. It's the ability early in the day to determine what is likely to happen later in the day based on the day's development. (of course one has to factor in upcoming news, etc)
I found this pretty helpful with bonds because I could say: Ok, the opening range was 10 ticks, it's only traded 3 ticks above that so it's a "normal day". This means that it's most likely to trade at most 5 ticks above the opening range (only 2 ticks higher), so my probability of going short here is at max X (depending on where price is now). The middle of the range (where presumably the most volume took place) is at Y so that's a good target.
Market Profile and Value Area were the last "indicators" to get removed from my charts. I only have VWAP...which IS dynamic value and a single Klinger volume oscillator remaining.
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