[iwshares]

Originally Posted by TheNegotiator »

Don't second guess the market. Let it tell you what it wants to do.

Great quote, I'll keep remembering that when the markets moves against my position!

[TheNegotiator]

Originally Posted by iwshares »

Great quote, I'll keep remembering that when the markets moves against my position!

Staying in an objective state of mind is one of the most difficult things in trading, especially when you have a trade going against you.

[TheNegotiator]

Thought I'd share a chart for anyone who is still out there! Who would have thought a couple of weeks or so ago that a 19.25 point day would be dull?!? In fairness, there have been a few very nice opportunities, such as selling the initial balance high back to vwap/50%/day low volume(and something else which I can't think of right now!), reversing the same trade and buying at double test and fail of yesterday's vpoc/close early on.

Anyway, seeing as how we are pretty well balanced up to now, I was looking at my chart to see what we would have to take out if there were to be a late break of any substance in either direction, barring any game changing news.

Here it is.

Any thoughts?

[steve46]

Again I appreciate the idea of using MP concepts to find potential "target" prices that the market may want to take out (I assume this is the point of the previous post)

What traders may find difficult however is the execution, especially when markets get volatile

And so I suggest that you may want to consider a method that accomodates intraday volatility. When we see the Vix come into the 30+ range I prefer Bollinger Bands set to 2 SD with a 20 period EMA midpoint....

To obtain volatility based intraday targets I simply review my time based pivots to find the nearest local extreme (today it was 1184) and then I read the tape and looking for price to test the upper band (or close above). On the next close below a band, I look for a favorable short entry...reverse the process for longs. The virtue of this method is that it adapts immediately to local vol...

Using that method today we got filled at 1139.75 (right at my target) in what would normally be a very difficult open to trade

Good luck traders
Steve

[TheNegotiator]

Originally Posted by steve46 »

using that method today we got filled at 1139.75 (right at my target) in what would normally be a very difficult open to trade

1139.75?

......................... ...

[steve46]

Yep, sorry about the typo

1183.75

The attached chart makes it easier to see what the mechanism is....basically you want to let the market show you a reversal of momentum, and from my point of view the best display of a change of momentum is seen when price tests a BB extreme, closing at or outside the BB then reverses direction moving back inside the band. In terms of my approach, I want to see this happen at the top of an overhead supply node (blue horizontal block). Preferred entry is just below the red arrow...

[TheNegotiator]

Steve,

I never really got on that well with Bollinger Bands personally, but I know people use them and they find them useful. What I think is key is how you are using them. That is in this case you are trying to see what the behaviour is of the market in relation to the BB, around the the zones you have identified as previous places where supply and demand were not in balance. The BB example you posted tells me that the market has pushed away from exponentially weighted moving average of price to the up side and has moved through the 2nd standard deviation and failed to move beyond the zone of interest. The point I was a little more interested in was actually the second attempt on the same level which actually showed a contraction in the BB at the high of the candle. I do seem to remember that BBs are used in this way sometimes, to identify potentially price reversal on an extreme test and band contraction. Question is, would you consider using this type of entry strategy to add more at the BB contraction point?

In all though, identifying zones and trading them is imo not going to be enough. There must be other factors in your trade selection based on what the market is doing as the zones which have been identified are based on what the market has done.

[TheNegotiator]

So for this week, my initial focus will be on listening to the market to ascertain its intentions. Will there be a move higher and what will that show? Will it be reversal type behaviour or will it be further retracement before sellers step in? Or will the balance from last week be retested? The boundary between the two distributions from last week fall at 65 and 63 is also an important area. The next thing I'll be monitoring based on this is the relatively tight balance from Friday and the conviction of any breakout from its price range. Overnight action so far has been skewed to the up side, although it has been contained by Friday's high(by 3 ticks). If there is more action upwards, I'd want to see development above 1193 and 1200 area.