Trading with PA "No Indicators"

[BlowFish]

Go for it email! I've spent a couple of weeks going through the Sanuk material and even hung out in there room a bit. It seems like a valid information to me. Having said that I'm 'sold' on PA. It can be used to find areas to trade, it can be used to trigger entries, it can be used for stops and it can be used for targets. Pure and powerful.

[james_gsx]

I continually find myself using PA and basic S/R for my trading. I have an oscillator and $tick to kind of help eliminate otherwise bad trades. After the close I plot the open, low, and close for the next day and scalp around those areas using basic candlestick analysis. So far it's been profitable, and the more screen time I get the better I do. But it should be noted, I have no problems finding support and resistance areas in real time, I guess that just comes with the screen time.

It works very well during range bound movements, but during big trends it's easy to miss the major trend. I will try to take screen shots and possibly a video this week to show everyone how I do it and maybe others could see what I could improve on.

[email]

Hello to everyone in this thread and thanks to drsushi for starting it.

drsushi ,you are very fortunate to have found that group, very neet. I am a big pivot point trader myself and would be paralyzed if I did not use them.
I see most guys here use the same method I trade with; floor traders pivots, YH, YL, UVA, LVA. A good understanding of chart patterns and candles are essential, especially at resistance or support.
Always on the lookout for triangles, AB=CD, Gartleys will give you a good edge.

I love this thread because it hits on most of the things I look at. Lately while I have been using the BID/Ask volume indicator on my charts (actually I would like if we could discuss this further). When approaching a key pivot, I notice many times that there may be a long bullish candle but the bid volume is twice as much as the ask, that is a good clue that we may be reversing.

Now the big thing the caught my attention in this thread was when drsushi explained his stops and profit taking. With the volatility we have been having lately I do not see how I could trade with less than a 3.5 point stop in the ES.
I enter my trades at either PV or VAH ot VAL, YH, YL or one of my De Mark projection points (tomorrows Projection, High of the day Low of the day) and want to ride a wave as much as possible so a one or two point profit is not my goal. You have to look at the big picture, if it fails at one of our points in the morning like, fills the gap and turns around or YH I want to ride that wave for at least six to ten points, maybe more, not two points, otherwise I am going to be in and out all day. I am not saying you cant do that just its not my style.
Another thing about stops as Torero mentioned you just can not pick a one or two point stops arbitrarily, you have to hide behind a wall or your going to get shot. What I mean is that the volatility and the way the market moves your stop will be toast if you do not place your stop below a pivot (and far away or they will hit it) or a MA, something. To make it float is nuts, unless your already in the money by six to ten points, thats different, but to do that at the start is going to get you stopped out allot, IMHO. Ok, I`m going to turn it over to you guys now.

Cheers to all,
email

[drsushi]

email,

I may have been a little unclear in terms of the stop strategy. I agree that the volatility could kick one out a lot. I by no means am an expert and am still learning. Much of the info I was sharing I have learned from the google group. I think the intent of the strategy is to place a stop above a previous high or below a previous low depending on the direction of the trade, of course. In the group they discuss using 3 time frames. The longer time frame gives general trend and the lower timeframe give the trade setups and an even lower timeframe is used for entry. The main method discussed in the group is the use of the 777tic for trend, 110 tick for setup and 16 or 8 tic for entry. Higher timeframes such as a 60 minute or 240 minute etc are used as well. One thing that is emphasized a lot is that if you see a double top on the 110 tic and then a lower high on the 110 tic you that would indicate sellers taking control. Assuming the trend is down that day you could enter short with a stop above the previous high wich may be no more than 2 points. Please don't shoot the messanger. This is what is taught/shared in the group. As far as exits go I've read concepts of scaling out in thirds or quarters mainly from the Trade the Markets guys and the theory is that the sooner you can move your stop to break even or break even minus a tic or two the less risk you have. If you scale out in thirds at 4 tics for the first third, 6-8 tics for the second third and open target on the last third with a stop at break even after the second target, even if the last third scratches you have a profitable trade. That is the theory. Is it a good one? I don't know. I too would rather hold for 5, 6 or 10 points. I would love to hear about other exit strategies. One thing I was thinking of would be to take a 100% fib projection from the prior swing as a first target and/or a 127.2 extension as a target. I don't like the idea of limiting myself to a 1 point or 2 point target, but it does seem smart to scale out and limit the risk as quickly as possible. If you get a runner or even 6-10 points on your last third that is still pretty good, isn't it? Let me know.

If you want me to post a chart of example trades let me know.

David

[CandleWhisperer]

	Quote:	brownsfan019
	And of course the next question is - what levels do you use and why? Use them all and your chart will look like a mess of horizontal lines everywhere. If you put enough lines on your chart, some will look like they nailed the HOD or LOD. Some will just get in your way. And the follow up question: are static, fixed lines that are based on YESTERDAY'S price action good for determining TODAY'S price action? Food for thought.

Simply, Yes.

They are far better than mathematically derived numbers like "Floor Pivots". Key Numbers, aka floor pivots, derive their utility from two things: regression to the mean, and self fulfilling prophecy.

Market profile lines have as their basis the concept that because the market found support/resistance at this level today, all things being equal it should find the same there tomorrow. The market has memory. It knows when a price level is reached that found sellers/buyers the previous time the level was reached. If 510 on the emini, for example, brings in the bulls today as they see value, there is a good chance they will again see value at that level going forward.

I have been playing with this concept a bit after reading an article from Straightforex.com. Instead of using key numbers, they use what they call a "Market Map". The map consists of:

1. YH (Yesterday's High)
2. YL (Yesterday's Low)
3. DYH (Day before yesterday's High)
4. DYL (Day before Yesterday's Low)
5. PP (Pivot Point) (O+L+H)/3

The first 4 are already HUPs (Hold Up Prices) and may continue to be. One thing the map tells us is if price is above the PP the trend may be up. If Price is above either or both YH or DYH and above the PP the trend is up. The reverse would be true for a down trend.

After reading a couple of threads on this forum, I have become predisposed to the Pivot Range concept that Pivot profiler talked about. So I add the Range to the map, plus a couple more HUPs.:

1. YH
2. YL
3. DYH
4. DYL
5. PMH (Pre Market High= highest high made between 5pm close and 2am open NY time)
6. PML (Pre Market Low= lowest low made between 5pm close and 2am open NY time)
7. PP (H+L+(2*C))/4
8. PRH (Pivot Range High)
9. PRL (Pivot Range Low)