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horace

How Do You Decide the Next Move Will Be Big or Small

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Trading the ES I find that I wind up with a lot of small trades and only two or three decent trades most days.

The signals for the decent trades quite often are weak and some of the small trades have strong signals.

 

Do you Guys find the same thing and how do you filter out the potentially small trades

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Trading the ES I find that I wind up with a lot of small trades and only two or three decent trades most days.

The signals for the decent trades quite often are weak and some of the small trades have strong signals.

 

Hi Horace,

 

There are people here who are far better qualified to answer your question, but here are a few thoughts . . .

 

Rather than trying to decide whether the next move will be big or small (i.e. anticipate the quality of a signal), it might be easier to try and decide whether the current move (when holding a position) will be big or small. In other words, enter with the signals but then begin immediately to assess the probabilities of a favorable continuation of the move. Ask "what is happening now?" rather than "what is going to happen in the future after I enter a position?"

 

What is the nature of the small trades? If you can scratch three or four trades and then make a decent profit from one or two good trades, then that's actually pretty good going in my book.

 

Finally, remember that the ES is a mean-reverting market, so hoping for lots of movement on a typical day is always likely to disappoint.

 

Hope that helps!

 

BlueHorseshoe

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Trading the ES I find that I wind up with a lot of small trades and only two or three decent trades most days.

The signals for the decent trades quite often are weak and some of the small trades have strong signals.

 

Do you Guys find the same thing and how do you filter out the potentially small trades

 

Horace,

 

I trade the TF... kind of a different animal. The words "small" and "decent" are not very clear. I can assemble a very good day taking 7 to 10 ticks. If I manage to add a 30 tick move... well, I'm one happy clam.

 

Unless you need to have the liquidity that ES provides, give TF a try.

 

As far as filtering for large moves, it seems to me that a market is an ever changing equation. It's not extremely difficult to observe price action to see weakness or strength building. How far that move will evolve is largely a product of the ever changing equation.

 

S/R is of some help to gauge what's possible.

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Everything to the left on your chart is free information.

 

A small trading range is followed by a large trading range

 

Nov (SPX)

 

4th-7.2

 

5th-11.3

 

6th-9.3

 

7th......28.3....look for range to contract again

 

8th-23.1

 

 

11th-...5.6 ...look for range to expand again

 

12th-...5.5....look for range to expand again

 

13th....21.4 look for range to contract again

 

 

What else?

 

Volatility- high volatility is followed by low volatility

 

What else?

All the basic laws of trading-trend/pullback/reversal/consolidation/support/resistance

 

What happens next is based on what just happened.

What just happened is FREE information.

 

Judge the market by it's own action.

 

 

The signals for the decent trades quite often are weak and some of the small trades have strong signals.

 

If you expand on that a bit you may get more responses from others.

 

Personally.most of my best trades are planned in advance.Most of my worst trades...were not planned for.

Which suggests that a live signal is not ideal (for me)They're better for exits rather than entries.

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If you're looking at the depth of market then you can judge how far the market is likely to move based on how many contracts are trapped on the wrong side of the market. So if the market has been selling off, lets use es as an example, you'll be looking for everyone to get stuck selling the bottom. One you have an area with over 100,000 contracts absorbed then you know that will be a much bigger move.

 

You also want to look at the market relationships and understand how they work. For example if the dollar is up 0.40% on the day, crude down 0.70% on the day and ES is down 0.30% on the day then you know that ES has to be positive at some point during the session , so any longs in es you have you will be looking to hold them

 

Hope that helps

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Your signal dilemma....from what indicators? What form of analysis do you use?

 

I would look at that, and then wonder why I'm using a tool like that. But then I might say to myself, if every strong signal leads to no move while every weak signal leads to a big move...why don't I simply view the weak signal as my trigger?

 

A CONSISTENTLY bad signal is just as good as a CONSISTENTLY good signal.

 

What is an indicator? It's nothing more than a symbol.

A symbol of what? More than likely, it's symbolic of a trend change.

 

If your indicators are not CONSISTENT, then they're not indicating anything. It because a maybe it will or maybe it won't. I do analysis on all three axis' as well as run three different oscillators(which can change if my some things become blurry)

 

Having a complete form of analysis is extremely important...if what you're doing does not clearly define a point to pull the trigger, what use is it really? Studying the markets can become a very time consuming and exhaustive endeavor, though very beneficial. Knowledge is power in this instance, and that can only be gained one way.

 

I wish you success in finding truth.

 

Axiom

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