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- about finding a trade:
"Most traders are anxiously looking and trying to find a trade, and if you're trying to find a trade, you will probably find a trade but it won't be the right trade. It takes a lot of maturity to understand that if you get into the flow of the market when the trade is right for your timeframe you will recognize it."
- about price, time and volume:
"Price is an advertising mechanism, price advertises all opportunity, time regulates that opportunity and volume measures the success and failure of those opportunities. Most traders don't understand that and they chase price and price is simply an advertising mechanism."
- about the three biggest mistakes:
"1) being too anxious to trade in the morning. 2) trade too often. 3) putting stops too tight."
- about preparation:
"We should prepare every day by writing three potential scenarios that could happen. The worst trader is a trader that has only one idea. He may get lucky but there's too much randomness in the market. We don't know that's going to happen and if we don't have contingency plans for the unexpected, we're scrambling and when we scramble we do some really silly things."
I am not sure about this last one. Could it be better to have no idea at all and just go with the flow, I wonder? He said something like that when talking about finding a trade.
"Catching the turn is a bit controversial. "Get short, you idiot" is a common refrain. This is a wise thing to do, in general. However, if you know what to look for, it can actually be easier to spot the bottom than to spot when a pullback is over. It just depends."
I generally have trouble to get on board of a strong trending market and find it often difficult to enter on a pullback. Then at times when I do manage to get on board I often exit the trade way too early.
This morning the DAX approached a prior high, yesterday's value area high and was trading just above today's value area high. I watched the volume and could see that demand was diminishing and supply was coming in. Price was unable to advance further up and I sold with a tight stop above the high for a mean reversion trade to mid-range and VPOC. Then closed the trade for 20 ticks at the first trouble area where some consolidation started. I failed to re-enter on a break and also on the test of the break. The chart showed where buyers stepped in and where demand was absorbed. These buyers (probably trying to buy a pullback in an uptrend) then became sellers and as a result they drove price all the way down to the bottom. From there price managed to get back to the top again. Some relevant points are marked on the chart. I should mention that this not always plays out the way I think and often times I get run over. I only show the winners.
I understand but it's difficult to trade and post at the same time as things can change very quickly. It's also not that easy to explain things in a simple but understandable way.
Sometimes you don't get a reversal or reversion to the mean and price stays in a range. We speak of price acceptance which is often accompanied with a shift of the vpoc. We saw that today in the ES. It looks like the bulls are struggling (E/R) but there is no supply. Ideally you want to see Effort versus Result (bulls buying but not making much of a progress) followed by supply coming in then followed by a low volume (no demand) up bar. It's often difficult to spot the best moment to enter and sometimes more attempts are needed which can quickly runup losses and costs.
Sometimes price is accepted at a new level from where a new run starts. In that case it's better to play a with-trend value area breakout instead of trying a counter-trend mean reversion trade. Price always precedes value, price is advertisement, volume is confirmation, see 'James Dalton Unplugged' posted earlier (post #172).
Watching the battle in CL, highs are sold, lows are bought. Value is higher @82.00. Slowly drifting higher. Will we see 84 today? See how US will open @09.00 ET, sellers might come in, where will price find support. Also, it's Friday.
