Welcome to my Quick Summary. There is just no way to tell when my mind collapses and I start to trade like lunatic, of if I didnt changed this setup three times over. Nevertheless here is my setup if anyone cares, just please remember that so far I fail to make money and I am still learning.
My view of auction theory:
- When you enter trade other traders that for any reason come in market after you decide while you earn money or not. What they do and when they do it? There is no way to tell for sure.
- When markets slow down, barely moving, it is harder to make money and people have to increase size to earn money. Since future contracts have 2 sides we have a lot of people in both ways, then, when market moves, people start losing money and have to get out unless they are hedged somewhere else. They getting out pushes prices higher, no one knows how high, while other side is making money. There is no way to tell when they have enough and start taking profits, but we can have clues. I think trend is an collective opinion forming. It is very interesting to study trends in normal life. Trend ends when everyone jumps on board so there are no more traders to move price, or when collective opinion shifts.
- When trend ends market tends to revisit those prices and test them again to correct price with value. There are many market participants and in educational videos they are usually referred as "other time frame participants". There is no way to know what they do and when, but same as pattern trader is not watching price ladder, they most likely dont watch intra-day like I do, they see day as a candlestick - open high low close. Those levels are important.
- Price moves as liquidity gets eaten. People say that big liquidity attract the price, might be true, but in the end value is determined by correlations and underlying assets. Futures possibly can affect price of underlying asset, but during news, crisis and such events market makers just go away, liquidity vanish, price have gaps and auction gets wild, yet market doesnt crumble to dust, because there is some value and that is holding it together. Still I like to see good liquidity eating in one direction to participate. Also Im testing a 60 min MA, I dont believe in MAs, but they might offer somewhat vague information.
- I would like to change my time frame for a bit to get good entries. Trendlines are just areas, zones, waiting for exact cross is silly. I used to be quite ok in watching inbalances in market, it might even help to justify a bit late entry. But this is something I am uncertain about. Micro gold IMHO doesnt offer enough volume to watch inbalances, but I might have a regular gold open for that.
I have three charts up:
Day chart to see where we are.
I watch three other markets to see whats up.
And this is my execution chart. I decided to go for range bars, because micro gold have a lot of small gaps and it annoys me. This is demonstrative situation. We are on way down from yesterdays low, VWAP is tested and that provides three points to form a trend channel. Trend channel is basically an angled Trading Range. There are several opportunities to enter the market, but I take only trades in my dedicated direction, because otherwise I have no idea where to place my profit target.
So far my profit target is last Lower Low, yes I know that this is the area most people would sell, but my logic is that if it is a trend down it should keep making new Lower Lows, or Double Bottom. If I think that it will make Head and Shoulders I go just for middle of last move. Middle of last move would be my target in Trading Range.
Then I set up 2:1 risk reward stop loss and I am good to go. I might add a runner later, but so far one of my problems is early exists, so I dont concern myself with that.
What I need to bring:
- I need to trade my own ideas, calculate my own statistics and have fun.
- I want to be process oriented instead of result oriented. I am losing money, but my early exit problem is doing away? Or I am losing money, but not as fast as before? …