Alright so this morning we opened up in balance, and in value. This essentially means we are rotating in yesterday's value area, i.e. directionless market. So without context, how could you trade a day like that? Here is what I did.

Based on the daily TPO chart, the last few days have been building value higher, but are seriously overlapping, which tells me the market is struggling to move higher already, even though we just recently broke out of the daily bracket to the upside. Now this doesn't mean that the daily uptrend is over, or going to end today, it may just mean that we need to auction lower first to find more buyers.

We opened rotating in the lower area of yesterday's value, in between VAL and VPOC. Mind you if the trend is higher, yet we break VAL it is usually defended well or we get a nice flush to the downside from long liquidation, there is usually not a lot of middle ground there. So always a good idea to keep that in mind in this scenario, and I did not fully take advantage of that today.

So the first chart you can see daily value overlapping each other, but moving slightly higher. Here is the first clue something is up. During the European open we rotated, building value in yesterday's excess at the highs. Excess is defined by a single spike in the TPO where price was not accepted. Well after trying to build value up there, we quickly broke lower. This immediately removes any strong bullish conviction for now.


Next chart is a bit more zoomed in. The lower rectangle shows the immediate balance area. You can see where the bulk of value was established yesterday, and that is a very real resistance level we would need to break through before the market can head higher. The lower ledge of that coincided with ETH VWAP, so my first low risk entry where I could be quite sure of a reaction was a short from that level. Just below the market was ETH -1SD/ONL/VAL confluence as my first low risk long idea.


And last is my execution for the morning. I never got to full size today as my original thesis' did not play out, but I should have entered my third contract with the 2nd after the first PB. You can't see it on the chart, but right before 7a.m. the market had a tight consolidation that it broke down on with good volume. This was my first indication we would at least test the downside first. So we need to quickly get a scale out in case my long thesis played out. Well the market was pretty choppy for the first little while, but never violated my short requirements so we played the idea out as well as we could with two contracts. A slam into monthly VWAP 1SD prompted the long at the end, which was also under committed and under utilized.

As I become more convinced of my ability to trade, my ability to trust myself to make the right decisions gets stronger, and I am definitely still influenced by my previous' days performance. These are flaws that everyone battles, but I am literally working off 4 months of losing so my goal is just to slowly improve day by day.

Man, writing about losing days is just not as fun as the winning ones!

Today the best trend was at the open prior to news, then the news just muckied the market. Struggled a little bit to get positioned, but finally got it, then the market reversed. So I reversed, and the market reversed again. No fun! Today I would consider average trading for me, mixture of great and ok execution. Losing days lately are about a third the size of my winning days lately, which is great for keeping that equity curve moving higher. Can't win every day, but I'm gonna keep trying! When you win, win big, and when you lose, lose small!

Will be back home from vacation Wednesday, and ready to trade Thursday. The down time has been nice, but I’m ready to get back in the saddle.


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One of the most important things in this game is learning from your mistakes, and then doing your best not to repeat them! Especially the critical ones. I have a morning checklist to get myself in sync with the market, and to get me focusing on the right things before we start risking money. Well for some reason I think I subconsciously either don't need it, or have it memorized enough to be able to skip it. Well when I do my performance seems to suffer significantly.

So once again, re-emphasizing the importance of following our routine, it helps keep us from doing dumb things.

Alright so today we opened with the market in balance. The market has been trending lower recently, so I should have been focusing on if fresh selling came in at yesterday's lows. Which it did, the day turned into a nice trend day down, but not before chopping me up in the beginning balance.

We essentially rotated between y VPOC and today's EURO open, until we broke down and never looked back.


So of course, I reduced size due to confusion, and missed the full move down. Made a few bucks back, but today should be considered a failure to take advantage of what was offered. This is why I am so convicted that morning planning prep is so important to long term success. This must also be paired with focusing on context correctly.

My biggest days of struggle so far are mean to reversion days, that have to work through a lot of S/R. I mean how do you gain confidence when everything in your mind tells you it's backwards lol. Working to see what I can do to take more advantage of these types of days, but honestly the fact that I can at least trade them profitably goes so far beyond what they used to be. My biggest losing days. And honestly I may always need to trade these less aggressively, which is fine as long as I am attacking my a+ setups full force.

Today I made an error in judgement right off the bat, and remembered that I needed to print out instructions for my reversal type days. Essentially if there isn't enough distance to trade into developing value(1SD), and take profit, then we just need to trade with the proceeding trend to test strength, then we can reverse when 1SD is broken. Well today I took a long from a decent level that made it a low risk trade, but I should have traded with the confluence at 1SD, which would have resulted in a nice morning profit before the first news event came out. The fact that we also had two news items didn't help me with conviction either as the whole trend can reverse.

I do have two rules for trading before news and they are very specific. The market must be trending, or at least moved quite a bit out of value, and we must reduce size. Also if the market breaks out of value on strong volume we must trade that as well, again with reduced size.

We had a smallish range overnight, so I wasn't expecting any kind of large reversal, but after a large down day like yesterday we do tend to mean revert.


My first entry was after news at 8:30. I have been doing better with my entries since I have focused on getting good location on the RTH VWAP chart. Keeping note of ETH, but honestly if you follow price action on the RTH you can't help but do well. Got some scales in/out on the way up. Flat before 10 am news, re-entry etc. Made money so can't be too upset!

Alright, well my chance to test my reversal skills again came today, but with much better results! One of my biggest winning trades so far. Captured 75%+ of the daily range so very happy about that. Didn't get too much fuss from longs as the market started moving lower after the reversal first thing. Active profit taking/re-entering at key levels, and final exit at LOD makes for a good day!

So I have increased my size to the max I can in my account, and am still doing well, so I am at a dilemma. I can only deposit so much more at the moment strictly due to financial restraints, and time of year. Which is a bummer because I really need to be piling money into the account and growing it while I am doing well. So I have looked back into the Topsteptrader FX option again. They actually use the MT4 platform which is what I execute on currently, so seriously considering trading my live/combine platforms right next to each other. Definitely staying on the humble side this time, so no outlandish claims that I will crush it the first month. But based on my results from the last couple months it is indeed possible, and realistically I would complete it relatively quickly. Plan would be to set my leverage appropriately, then just trade exactly as I am doing now. Focusing on market action, and not trading my PnL. Easier said than done, but I believe I have a good handle on this these days.

Ok onto today's trading!

So we are definitely starting to pull back on the daily chart, even though it's not dramatic, it changes our strategy. We would generally focus on going long with the market's counter trend tendency, based on ON movement of course, but essentially we would be looking for the previous VAL to hold until it breaks in a major way, causing the downtrend to resume. Pretty clear cut.

Today we came in pre-market where the market broke down ON, consolidated shortly at Friday's value, then launched higher. This already comes in line with our thesis, now we just need to find a good entry level. Well ETH 1SD/VPOC was just under price action, so that's where we took a test long position. Then the market broke out, and pulled back into the early U.S. session and we got long. Market consolidated for a while and completely broke down, invalidating our long thesis, so we switched short. This is now the reversal scenario which I used to dread, but we were able to enter at a decent level, and actively took profits, and re-entered at key levels. You can see where the balance areas were, and once we broke ETH VWAP we began to build value there. You can see that on the TPO here.


Overall very happy with execution today. Even got full sized on a reversal day! Took final profit at LOD, very calm and collected trading today. Love it when I can see things clearly and objectively. I am mainly doing this to create discussion, and help anyone who is stuck in a rut or struggling. So far my posts have not sparked too much dialogue, which I hope changes in the future. If anyone has any suggestions please hit me up! Hope everyone had a great day!

Update: I have had no regrets thus far with ditching the EURO from my trading plan.

Alright, so since I have gotten back from vacation I have been going through some growing pains. Now that I think of it, it often happens when I step away from the markets for a week or so, and I don't necessarily see it at the time, but I usually come out stronger on the other side. I really find it's my subconscious questioning what and why I am doing certain things, and I am convicted to find the answer to get back to peace. My trading has taken a giant leap forward in the last couple months, and it takes some time to digest new important realizations, and learn to trust them 100%. For me it is a lot about figuring out the why that the new information is important, and gaining a deeper understanding of why I can trust it.

So this has happened in a few stages, and has led me to this point now which I am excited to share with anyone who gives a damn .

The first stage was discovering the tidal flow of value. And that's kind of how I want to document this because I have heard it referred to this before, but I think it's different than just time frames. So in my eyes we have tides, wave, and ripples.

Now the tides and the waves are fairly simple to understand and see as long as you are looking at the correct things. It's the ripples, it is learning the nuances of the small time frame, and how it transitions in direction throughout the day, that really sets you up to position well to ride the waves. And that my friends is where the money is. If you know what to look for, and have developed some intuition to go along with it, then you are on your way to making consistent profits.

First stage, the tidal flow of value: I know I've gone over this before, but it's honestly the largest thing that almost put me out of business, so I consider it super critical. If you understand this fact, then you can at least limp your way to profitability. The market moves toward and away from value when trending(in my case I am referring to the daily time frame), and rotates back and forth between the extremes of the value area when the market is consolidating. So if the market moved 100 points away from value over night in the direction of the trend, chances are very high that the market will be moving counter trend for the bulk of the day. The market trend may be down, but if you are shorting every day while the market is moving lower every night for weeks in a row, this will destroy your bottom line. Take a wild guess as to how I know this. You must anticipate and respect this natural phenomenon of the markets. If anyone can disprove it, I am begging you to show me a better way of looking at it.

Second stage is the waves(momentum): This I get from the market profile TPO charts. The TPO is broken down into 30 minute sections of the market, and just shows basic info of how the intermediate time frame is trading compared to previous value. This information is quite simple, but also very powerful. Fight the TPO trend at your own risk, trading with the trend though brings freedom. The TPO is always doing one of three things, trending higher, trending lower, or bracketing. The power lies within its simplicity. What is the most difficult, is reading the nuances as the market shifts direction for the short term, and in meaningful ways.

Third and final stage of realization are the ripples: So my biggest struggle this last week had to do with the whole ETH and RTH VWAP fiasco. Why do we have two VWAP's during the day, why do we need it, is it important, do we need it? My answer to that now is an unequivocal yes. So here is what I have come up with, if you are familiar with VWAP, which I think most people are by now, the idea is that if we are trading between the +/-1 standard deviation then the market is in balance for that time frame, and a break out and trend outside of the 1SD is out of balance. Balance = consolidation, out of balance = trend. So when the U.S. traders come in at 7 a.m. EST, new money comes pouring into the markets(we see this through the increase in volume), and a new(RTH) VWAP becomes necessary to track value for that session. This is the MOST up to date information on current value, and is therefore one of the most important things you can watch, and take trades from.

Therefore price action, momentum, and RTH VWAP all work together to help us form the context to make good risk:reward decisions from. Remember, momentum of the TPO is a shifting 30 minute support/resistance level, but momentum reversal fake outs do happen, but regardless it's a long enough time frame that the moves are meaningful so you get positioned based on the tide, momentum, and VWAP positioning, then ride that sucker for most of the day's range a lot of times.

The game changer for me is learning to watch how price action responds and develops once momentum shifts, and how the RTH VWAP develops. To trust that developing S/R, and build a position around it, then quickly reverse and build in the other direction if the situation calls for it. The market truly is a living breathing organism, with no two days ever to be able to be exactly the same, and this is why buy/sell indicators do not work.

So my future posts will be structured around these three concepts of market development. Hopefully some can use this information for their benefit in the future.

-Chris

Great stuff Chris. A few questions if you don't mind...

Are you still trading the Cable? And do you strictly use TPO in lieu of, say, volume profile?

Rrrracer 

Great stuff Chris. A few questions if you don't mind... Are you still trading the Cable? And do you strictly use TPO in lieu of, say, volume profile?

Thanks so much, @Private Banker once said that volume accumulation was specifically from these levels based on MP TPO. That has been my experience since switching, as I was an avid VP guy prior. Not that it doesn't have its utility, but to think it is more important, or to place more emphasis on VP than MP is that of the tail wagging the dog IMO.

Yes still trading Cable, but this information applies to all markets the same, although all markets behave differently, and have different characteristics. Looking forward to expanding into more FOREX markets in the intermediate term. But honestly with this info, you can cherry pick the ones that have the best opportunity, or at least fall in line with your best trading style.

Cheers!