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(7 tick renko bars, VWAP bands, 20 ema, OBV, times are US mountain time)
Thoughts:
A. Long in error. The market wasn't done dropping. We were below the -1SD VWAP band, and this is NOT an area for longs (for me) until that breaks. Notice the OBV was still below price. Bad trade!
B. Good longs down at the -2SD band. While the market can keep dropping, it looked like we were making a bottom.
C. More good longs from the -2SD band. The OBV was above price. The market was down, and it is a great time to look for a bottom.
D. BIG CHOP. I took FIVE long trades and they were ALL bad. While the OBV was up and the 20 EMA was up, we were still below the -1SD band, and was too eager for a pop. Fortunately, the biggest loser was just $17. If you look carefully in this section, you will see something frustrating enough to make the most ice-cold trader cry: The first three losses immediately turned around and met their profit objective. Arghh!
E. More good longs like at B and C. OBV was above price, and it looked like a bottom forming.
So...
So, don't be jealous. Use YOUR indicators and become a master at how the price reacts around them, but remember... ANYTHING CAN HAPPEN at any time at any price. There is truly no "oversold" and especially no "overbought" (because of the bullish default).
I take my various inputs from my charts and make a probability estimation based on the "feel" which just means I am mentally "weighing" price action and my indicators after literally thousands of hours of screen time. But ANYTHING CAN HAPPEN. I know this.
When I "predicted" that the market would fall back in the big range of the last two weeks today, I was simply saying that the market will probably drop today (I was wrong). I made this call based on the thousands of ranges that I have watched in the past, and knowing that patterns generally "rhyme" with previous patterns.
I think the nomenclature is interchangeable as long as everyone knows that no one knows.
So in summary, I do not believe my "predictions are true" but they are in fact "just hooks to hang [my] idea on and see what happens...To give [me] structure...To structure a good R/R."
Part of trading this way is to get out of my bad trades quickly. I hover around the close button. I trade paranoid.
I trade paranoid . . . Not with elevated heart rate and fearful, just assuming that my entry is a bad one and I will have to get out quickly--the reverse of most traders.
I enter a trade based on a probability premise and then I assume I am wrong unless the market proves my premise correct. I try to get out at the first sign of trouble or if the market doesn't go my way in about 60 seconds.
This being said, what are some highly probable events? (You can start to build your own list.)
The market is currently mostly bullish, so favor longs.
Ranges tend to keep ranging for many minutes, so consider fading the edges and trade to the middle of the range
Areas of prior turn often have residual buyers or sellers, and these Support and Resistance areas usually give a pause or reversal.
(for example) Double bottoms often get strong bounces.
The VWAP is a good magnet for price, so in general trade in the direction of the VWAP.
When trendlines are broken, reversals often happen.
A strong break out will often get follow through
A big move based on a news report will often reverse
A 50% retracement of a big price leg will often continue in the original direction.
The list goes on and on and on. And each trader must develop his or her own list. Collectively, these types of increased-probability conditions are called your "edge" (if you follow them).
Trade with sim and try the "market replay" function on your platform. I PREDICT that you will be able to add to the list I have started above. By continuing on this path, you will PROBABLY become an even better trader.
Thinking probabilistically is the name of the game.
A fellow trader wrote me, "Think I’m following how you choose your entries. Can you mention what guides your exits in the wins and losses? I know you’re into Phantom of the Pits and wonder how you incorporate his concepts in your trading if at all? Thx"
Profitable exits:
(1) If the market shoots up or down fast... and I am in profit I will take that profit. Chances are we will get a fast pullback.
(2) The +1 and -1 Std Dev bands and the VWAP have held so well in the past year. The +2 and -2 bands as well.
(3) Exit at trendlines/channel lines
(4) Some fib lines and the 50% HWB line on big moves
(5) I used the NYSE $ Tick. If at extremes either up or down, I know the market will probably be reversing soon.
(6) But most importantly- i will take profits at my regular horizontal S & R lines on my 7 tick range bar chart. I draw them all the time, and have been for about 10 years now. Any time there are two bars of the same color - whether or not there is another color between, then that is a pivot and I draw a line at the OPEN of the relevant bars:
Losing Trade exits:
(1) I try to get out asap if it feels like a trade is going against me.
(2) I try to get out if the trade is going nowhere for 60 seconds
And if some some reason I am still in and missed exiting due to 1 and 2 above, then #3 kicks in:
(3) I get out at my emergency stop of $10/per micro, except for the MNQ, which is $20 per micro. So 8 ticks MES, 20 ticks MYM and M2K, and 40 ticks MNQ. Again, this is an emergency stop, and I try to NOT let it get hit.
#1 and #2 go right along with the Phantom's method for losing trades:
"The correct way to control positions is to only hold them once they prove to be correct. Let the market tell you your position is proven correct but never let the market tell you that your position is wrong. You as a good trader must always be in command of knowing and telling yourself when your position is bad.
"The market will tell you when your position is a good one to hold. Most trader do the opposite of what is correct by removing positions only when proven wrong. Think about that. Your exposure and risk is much higher if you let the market prove you wrong instead of your actions removing positions systematically unless or until the market proves your position correct.
Rule #1 is
"IN A LOSING GAME SUCH AS TRADING, WE SHALL START AGAINST THE MAJORITY AND ASSUME - WE ARE WRONG UNTIL PROVEN CORRECT! (We do not assume we are correct until proven wrong.) POSITIONS ESTABLISHED MUST BE REDUCED AND REMOVED UNTIL OR UNLESS THE MARKET PROVES THE POSITION CORRECT! (We allow the market to verify correct positions.)"
Here is the Extended Trading Hours (ETH) daily volume delta chart from the last few weeks.
I want to address both (A) areas of confluence, and (B) underlying aggression as shown by volume delta.
I have highlighted the areas of interest. The are made from the confluence of the High, Low, Open, Close, and the POC over several days.
I especially like to watch the yellow POC, which is the price at which the highest volume traded each day. This is a magnet on each bar. It is the "fair price" for that day, where buyers and sellers were generally in agreement as to the "true value" of the asset.
A confluence of the OHLC and POC means this area will continue to be a magnet if price gets close enough.
Right now, we have a breakout above the 4190 area of interest, and the 4225 area is exerting its influence, potentially leading us to new ATH's.
However, something caught my eye.
Notice that the bars on the last two days on the volume delta chart were RED.
Compare that to the green bars on the standard chart:
The volume delta chart clearly shows that the UNDERLYING buying and selling aggression are bearish. Aggressive buyers use market orders. Aggressive buyers hit the ask. Aggressive sellers hit the bid.
This is one of those strange times where the market is NOT what it appears to be on its face.
Yes the price went up the last two days, but the bigger volume was actually bearish. It is a hard concept, but one that can be seen more readily using Cumulative Delta or OBV intraday.
Bottom line for today? We have some bears getting ready to pounce.
Will they succeed? Will they be able to pull it back down to the 4190 level or the 4155 level? Or will the bulls reach the 4225 level, then the ATH at 4238, and then the moon????
A big THANKS! to BigMike for the journaling contest and Peter Davies from Jigsaw for the prize.
I just got the Jigsaw tools today. I will go through the educational material and learn the software over the next few weeks.
I have a basic understanding of order flow, as evidenced by my previous post about volume delta and my use of cumulative delta and OBV. And I have used footprint charts. But let's see if Jigsaw can help me up my game.
I am also thrilled to have the Journalytix software which should help me really dissect my trades to see where I can improve.
all 1 lot micros with a maximum of 3 micros in a trade but 90 % were 1 lots. yes you can make an ok living off of the micros but you will
need to bust your ass everyday for months on end and when not at the computer be thinking about the mkt and why it works the way it does and how YOU WORK with it
do not give up unless you are doing the same stupid shit everyday and not making changes
