notouch

I think the short term charts will become more volatile, not more trend friendly, as one automated system triggers another sending prices fluctuating up and down. The longer term charts, on the other hand, will still reflect the positions of the same old long term players so will look the same as ever.

I don't agree that any type of trading is speculative. Hedgers want to lock in profits by taking away the risk of price fluctuations. A corn farmer, for example, makes his money from selling corn and will enter the futures market to lock in profits of the corn he harvests. A Japanese exporter is an even clearer example. He has made profits by selling DVD players to Europe and now needs to change his Euros into Yen. He doesn't care what the exchange rate is, he simply needs to convert the money in time for end of quarter accounts.

For very short term traders it's difficult to find an edge against automated systems run by investment banks. I can't see how anyone could trade with a 10 or 20 point stop when it could just be triggered by a program. If you look at daily charts, on the other hand, they have exactly the same patterns that they had 20 years ago so nothing's changed. The same is probably true of hourly charts. I know currency traders in investment banks who trade using 4 hour moving average crossovers. Also only a minority of trading activity is speculative. The recent move in treasuries, for example, was due to hedging and most forex volume is commercial in nature. A high percentage of stock trading is by mutual funds buying on behalf of the public. There are plenty of opportunities as long as you don't decide to compete against arbitrageurs and programs.

I think there's too much variety to make simplistic classifications of smart money/dumb money or Professional/non-Professional Money. In particular I think professionals are mostly active on longer time frames which is why the daily charts are useful but the 5 minute charts are fairly useless from a VSA perspective. Those people buying the recent pullback may have looked dumb for a few days but they look smart now. It all depends what timeframe you trade. Also as I've said before I think hindsight analysis is worthless. With hindsight it's easy to see which bar in Tasuki's chart was the high volume bar. In real time though a high volume bar can be followed by a bar of even higher volume and then another one of even higher volume so you could end up selling into a rising market or trying to catch a falling knife. Only with hindsight does it all seem so clear where the high volume bar was.

Just multiply the tick value by the ATR and you have a contract with similar risk/reward characteristics. For YM at the moment it's $650, which is about the same as the full-sized ags, British Pound futures and treasury futures. Do you have a paper account with IB? Just pull up all the big ECBOT and GLOBEX contracts and randomly buy and sell stuff to see what your typical winnings/losses will be. I recommend GBP futures, ZN, QM and ZC.

I find the whole idea of an "assigned broker" a bit creepy. I prefer the Interactive Brokers style where you can anonymously make a million or blow your account without worrying about someone looking over your shoulder.

It depends on your trading style. I'm not very interested in the smaller time frames. At the VSA tutorial that a lot of us went to a few months back the speaker used daily, hourly, 15 minute and 3 minute charts.

Definitely a healthy body is the way to a healthy mind. Sitting in front of a computer all day is not physically or mentally healthy. I go for jogs by the beach to relieve tension.

Yes, in fact multi-timeframing is an important aspect of VSA. Using the daily for direction and then the hourly, 15 minute and 5 minute charts for entry works well, especially when used with candlestick analysis.

I like VSA in combination with market profile and candlestick patterns.

Not for VSA no. The theory is that ultra high volume on an up day indicates a transfer of stocks from strong holders to weak holders. The down day that followed the high volume up day shows strong holders were selling (taking profit aka distribution) at the expense of weak holders. As there's no longer any interest in buying from professionals, the only move possible is down. I find VSA works very well on daily charts but only for swing and position trading, not if you're looking for a precise entry.

To be fair to VSA the theory is that weakness follows up bars with high volume which is exactly what happened in the chart you post. I agree that the idea of "Professional Money" always being right is nonsense. I'm also sceptical that high volume means "Professional Money" is active. Where VSA has value is in stressing that a reversal follows ultra high volume. That's just old school technical analysis though.

Depends on your trading style. Why not just pull up a weekly chart of whatever you trade and see whether there's a big difference between summer and any other time of the year. The theory is that traders go on holiday over summer so there's less liquidity. I suppose there's a big difference between Europeans who get 2 months paid vacation a year and Americans who get 5 days unpaid or something.

I agree PYenner. Sometimes you have to be cruel to be kind. With 90% of traders blowing their accounts, when you see some totally clueless newbie asking questions I don't think you're helping them by giving them false hope.

I trade mini crude (QM) which is very liquid. Are you sure you're looking at the right month for mini gold? The most liquid month is usually the one ahead of the current contract. August is where the liquidity is right now. There are plenty of contracts that don't have the "mini" prefix but are of similar value if you take into account the per tick value and average true range. Try the 10 year note (ZN) for the ultimate in liquidity or British Pound Futures for very similar liquidity, tick value and ATR to YM.

I like what you say about energy, Janice. I find it important to surround myself with positive energy and to keep negative energy away from me whilst trading. The good thing about being part of a trading community like this is that we can draw from the positive energy of each other. Helping others and seeing others help others and being helped ourselves are all things that give us positive energy which puts us in a better frame of mind for the emotionally draining world of trading.

The stock indices are following the volatility on the the treasury market. Pull up a ZN chart and you'll see what's leading these wild swings.

Pre-market volume of what instrument?

The CFTC makes a very specific distinction between speculators and non-speculators (commercials). Going by that a speculator is just an entity (not necessarily a human being) without any commercial interest in the underlying instrument. The speculator's only interest is in making a profit from a favourable price movement. A hedger is the exact opposite and hopes to lock in profit regardless of the price movement. I think most people speculate at some stage in life, for example by buying a house in the hope that prices will increase. The difference is that traders speculate for a living.

We now have a harami cross pattern on the daily YM charts which Nison calls "a powerful reversal pattern" i.e. bad news for longs. Looks like typical summer volatility.

Doesn't selling options defeat the purpose of trading them? The big benefit of options (at least for simpletons like me) is the ability to limit your risk without having to worry about stops. What's the benefit of selling puts when you can buy futures?

Nison doesn't say it's necessary to wait for confirmation. Some traders do but some just wait for the close of the candlestick. It also depends on the strength of the pattern. A morning doji star, for example, is a very strong signal so waiting for confirmation may not be a good idea. A piercing pattern is also a strong signal, especially when it closes near the top of the previous candlestick's body. That doesn't necessarily mean the down move is over but it does point to strength ahead at least for a swing trade.

May has been an up month for each of the past 5 years. June has been very volatile. I read an article that said the phrase "sell in May and go away" should be replaced with "sell in June, not too soon". This was written in April and proved very accurate.

The ES down move stopped at the 38 fib level which suggests last week was just a pullback in a bull market. The daily candlestick was a bullish piercing pattern. Buyers in control.

Nick Leeson traded using Martingale money management and look what happened to him. I strongly recommend watching the movie Rogue Trader if you're not aware of all the facts.