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cyclical turning point
professional activity leading up to and at the turning point divergence in order flow
trapped trader setup on the footprint
That's it. Entries & exits are not based on indicator signals but rather a confluence of the above criteria and my read on the market which includes price action, trade location, etc. I guess I make that sound simple but it's not easy to do it real time.
The difficulty is there aren't many tradestation or multicharts users here and the tools I use are not available for Ninjatrader. So that is a barrier for trying this method. But my goal isn't for everyone to use this method. My goal is just to share one way of trading and to get feedback and input from others.
For swing trading it's a lot more complicated. There are more data to analyze and a lot more discretion. When I have a year of profitability swing trading (I need 5 more months) then I will try to formulate all of it into a method.
Can you help answer these questions from other members on NexusFi?
Remember the top is not in until Ord covers! I'm going out on a limb and predict that he has a time stop and he'll cover it on May 13. Wouldn't that be sweet?
Two trades today in which the POT was just one of the data sources I used.
This is my only ninja chart that I have so I also use it to see my chart markers. I think that gives some people the impression that I trade this chart. I don't.
Remember you can't trade off his alone (well I don't think so but you could try). When I trade I don't see this chart, just the panel 2 sticking out an inch below my tradestation workspace. so I'm mainly going off the audio alerts. It's like someone whispering in your hear "hey that is exhaustion selling, don't join the herd here, stay calm and look for a buy". In fact I think I'll change the wav file to say that instead of "pace of tape".
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All my indicators are based on detecting professional activity and classifying it as buying or selling. So accumuation / distribution is just like an intelligent on balance volume that instead of using bar close up or down it uses pro direction.
The value line was based on an idea that value is where the pros are trading. and then moves away from that, if not "validated" by more pro trading, would be away from value. I actually arrived at it by trying different things that may not make sense. So the more I studied it the more I didn't like it. Because the pros will trade when price has went too far from value. So it was contradictory with my other tools and that's why I removed it.
It's very hard to classify activity as buying or selling, at least mechanically. With a lot of practice I can usually classify it my self but that requires a lot of discretion and "eyeballing it". The indicators are useful for analyzing what would be difficult to do by hand. for example acc/dist I could write down in excel all the pro buying & selling volume and do it that way and it'd be much more accurate, especially if I did it at the end of the day. The indicator just simplifies the process at the expense of less correct results.
An example showing the importance of trade location. My levels were drawn in before the open and you can see how price reacted to the levels.
This doesn't make trading easy, cause you never know which level will be support or resistance. But it does make it easier to avoid trading in bad locations and it does help to keep stops away from noise.
Well I guess you can't see all the levels in the first image cause they're lower but you get the idea. I didn't draw or move any of those after 7:30.
Did anyone try the experiment I mentioned about drawing horizontal lines at pivots on the 4 hour chart??
PS: Also note how 3/4 sine wave S/R lines occurred at my levels. That's pretty cool. Shows how the sine wave "determined" these levels real time.
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You can see how they come from key turning points (greyish blue and cyan) and/or high volume areas (prices that saw a lot of activity in red).
These levels aren't exact, and we never know how price will react to the level. This is the discretionary part which takes a lot of practice. Yesterday I thought I had a reversal at a level and then price dropped to the next one.
If you noticed in my trades yesterday, I scaled in. That can work if you trade small size but you can't work up to a large size that way. So today my focus was tight stops. Remember my 6 tick stop on CL that I tried to keep -3? I am trying the same on ES, which should be easier since it's less volatile. Today was actually pretty volatile once it started moving.
Take a look at my entries and compare them to the levels. You'll find that I was trading off these levels. Like the short from the top. Price hit my level to the tick and then backed off and I rode it down.
This is really important and has made a huge difference in my trading. I want to thank Fiki for teaching me some things about Market Profile and order flow.
It's friday and I always stop early so have a good weekend.
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Great job on the journal this week Michael, and I hope you have a fantastic weekend with your family! Live life, family is the most important thing! So enjoy that quality time! See you on Monday.
Panel 2 is the professional activity.
Panel 3 is amateur activity.
Both are measured in two completely independent ways. Both are my own proprietary indicators.
Notice how they're generally opposite. With pros buying the dips and amateurs buying the tops.
Notice that the amateurs are currently buying and the pros are not. In fact the week before last week showed record amateur buying. According to this calculation, more amateurs were buying the week before last than at the Oct 12 2007 high!! That's a lot of amateur buying. And when they've all bought there will be no one left to buy.
This leads me to believe that we'll have a correction "soon" (remember this is a weekly chart).
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