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This may be semantic and it does not deserve any more discussion IMHO. It is a way at least for me to keep my mental state where it needs to be - detached from any specific trades outcome.. :2c:

 

The reason I make the point is that while it may well be useful for you to believe the next trade is 50/50, I know for a fact it does not sit well with many people to think like this. Personally I don't think it's right, but I absolutely understand what you are trying to achieve by believing this. Non-biased market execution. However, what sits well with me which has the same effect on my trading is that I know I don't know (which is a phrase you have used before ;)) the probability for any specific data point i.e. I don't know where in the probability distribution of historical occurrences the very next trade will fall.

 

We both attend to our psychological requirements effectively the same way, I just wanted to explain so that others who might question such an important point could approach it from a slightly different angle. Anyway, to the current day! :)

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Okay, my first take on weekend of european elections is that it shouldn't be positive for markets at all. Indeed, @PIMCO tweeted yesterday:-

 

"Gross: #Greek elections in addition to #French should be watched closely. Fiscal #austerity as policy thrust may weaken."

 

Sunday gbx trade saw a low of 42.50! But then what? On open, the DAX briefly looked lower but didn't find sellers. Really? Say again? No sellers huh? Does that mean RTH won't see selling to 'properly' test the lower levels for buyers or sellers? No. But the fact is we are much higher right now. So, either we can accept back into Friday's range and create a substantial 'Electronic Tail' or participants can view the retrace as a temporary misprice and hammer it in RTH.

 

To take into account, we are nfp week +1 which I usually find a bit lame. Nothing as far as releases out really of any note although german factory orders was better than expected. There are a host of earnings out. It's a UK bank holiday. Lot's of other potential problems ongoing in europe. blah, blah, blah. Overall, news flow and volatility is potentially high because of weekend events and price movement. I don't know what will happen, but often when these types of scenarios present themselves, we either see big price movement (sometimes both ways) or nothing happens at all. I guess we'll see soon enough ;)

 

I watched the GLobex open and trade last night off the news and "expected" this thing to flush... Now I see short covering and a good buying tail so it "appears" we over shot and are rejecting the balance area 41 - 54.00 so this should be interesting... are we going to balance up here? I would have rather seen good selling on the open then a short squeeze but heck I don't lead... SO we gap lower on RTH - then what? We have several distributions up in Globex, 54.50, 51.00 ish - midpoint... etc... Always a conundrum.. :missy:

 

Good trading everyone..

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Tom, I know (as I'm sure others do too) where this idea comes from of the next trade being 50/50 probability of outcomes. Although I agree whole-heartedly with the implications, I disagree entirely with the idea.

 

The very next trade and I know to some this will be purely semantics, has very specific odds of being one outcome - in fact 100% odds. But the thing is we do not know all the factors which make up what is going to happen before the event (or even after), whereas afterwards a dataset can be analysed and probabilities artificially assigned. The truth is, when people talk about historical probabilities, they are really just talking about historical occurrences unless they truly understand the exact nature of why the market traded in such a way. This in my mind is why so many 'systems' fail. Think about a simple stat over the period of 2010. I haven't done this btw but if you said buy on rth open and sell on rth close then I'm sure the stat would be at the very least a favourable one. Yet try to carry that forward and without a deeper understanding of trend mechanics and fundamentally why one is occurring, a trader could have used this probability and lost a great amount of money.

 

Just to be clear, I feel market statistics are a very useful part of trading and if used as a guide or a yardstick for market activity, they can really help in decision making. But ultimately, it is my point that we never really fully understand (well maybe some guys do) why something has previously occurred at specific points in time and so can't reasonably be expected to predict when these certain behaviours will recur.

 

The next trade is not 50/50, but it may as well be because we don't know what the odds of the very next trade being a winner or a loser are. :2c:

 

I wonder if we spent less time on statistics and complexity and more on truly defining the most simple "market truth", if maybe then we would succeed more often than not.

 

If we truly believe in the ability for randomness or the entrance of an OTF trader to spoil our contextually unique setup, then we should constantly trade the simplest of setups. They offer the least amount of mental drawdown with an equal amount of probability for success.

 

Perhaps success in trading is more about embracing simplicity that must simply be "true" and the acceptance of being overwhelmed by the unpredictable from time to time. If the unpredictable is going to happen no matter how much thought and preparation we put into a trade than why waste time on complexity?

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I wonder if we spent less time on statistics and complexity and more on truly defining the most simple "market truth", if maybe then we would succeed more often than not.

 

If we truly believe in the ability for randomness or the entrance of an OTF trader to spoil our contextually unique setup, then we should constantly trade the simplest of setups. They offer the least amount of mental drawdown with an equal amount of probability for success.

 

Perhaps success in trading is more about embracing simplicity that must simply be "true" and the acceptance of being overwhelmed by the unpredictable from time to time. If the unpredictable is going to happen no matter how much thought and preparation we put into a trade than why waste time on complexity?

 

If they were random, then they wouldn't be "setups" at all. Just click your mouse button and pray. But they're not. This makes me think of the phrase again about "throwing the baby out with the bathwater" and really it's at the heart of why concentrating purely on TA is wrong. Trading has many facets to it which must be seemlessly integrated into a coherent trading plan in order to achieve long term trading consistency. Ignore any parts and I think the plan becomes shaky.

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Just one last thing to point out about the markers as perhaps this is a good example of how I see high volume as useful. If we get beyond these markers, we are looking for acceptable prices as to where 2-way trade can occur. This usually means looking at previous "value" or high volume areas. These can subsequently either 1- accepted or 2- rejected. The former tends to push through the high volume but ultimately develop new volume somewhere in the midst of the old high volume. The latter can of course go straight through as price is perceived to be fair further away or, it can reject at or around the high volume which can lead to a counter test in the retracement direction.

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If they were random, then they wouldn't be "setups" at all. Just click your mouse button and pray. But they're not. This makes me think of the phrase again about "throwing the baby out with the bathwater" and really it's at the heart of why concentrating purely on TA is wrong. Trading has many facets to it which must be seemlessly integrated into a coherent trading plan in order to achieve long term trading consistency. Ignore any parts and I think the plan becomes shaky.

 

I certainly accept the fact that you would never trade if you embraced the idea that markets were simply random. But its still true that the outcome of each trade you place may not fare well or end where you expected it to.

How you define the "why?" of a failed trade may only lead you to a complexity that might be unnecessary, as you might be attempting to explain failure instead of embracing the probability of it.

If my entrance was based upon the simplest of logic, math that would be understood by a 5 year old, the only variable that matters would be that it was true. After that wouldn't I just retrade that truth? (is there such a word as retrade?):rofl::rofl:

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Expect some really handsome trading opportunities today. Bring a big bucket.

 

Agree, but also be careful if for whatever reason you aren't alligned with mkt.

 

So far, we basically drove back into Friday and prior balance area. 1st major high vol development was 65(long term prof) and 66.50 on the balance prof. We initially rejected at 66.25 which tells me that there's a chance we aren't going to accept this previous value. The danger imo lies if we drop back below the open and make new lows. Of course the other option is short squeeze if we hold here.

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Good support at VWAP expecting new highs and targeting 68.50 and 76

would be wrong if 1360 doesnt hold

 

Yeah, looks that way potentially. Although I think it's been a little odd so far. The lack follow through kinda had me suspecting if it fell back out of friday range and broke to new lows, there could be a flush at least.

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bakrob, why do you believe it's key resistance? (I'm not disagreeing btw)

 

Sellers were active there on Friday. 4 pushes did not get thru. in other words, if we do break thru it, it will signal to me that sellers are not present and hiher prices can be expected. nothing fancy

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Sellers were active there on Friday. 4 pushes did not get thru. in other words, if we do break thru it, it will signal to me that sellers are not present and hiher prices can be expected. nothing fancy

 

This is what bakrob was talking about:-

 

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2012-05-07_2.thumb.jpg.b5c827a51c1a2537ff780e1d192b28a0.jpg

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1380 possible and would be a measured move to a CLVN ... not expecting it today though. ES still having difficulty finding new buyers and the demand from shorts dumping their positions is drying up. but I don't see too much standing in the way

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I was at the CBOT probably after you were there. As I recall, Peter's assistant who taught the Market Profile classes was Sherri Buyer.

 

I'm not familiar with her... I think I was in his first class.. materials were very crude. I can't remember but he rented space maybe a block from CBOT..might have been west of Wells on W. Jackson...can't remember anymore... It was early 80's...

 

As N: will attest, statistics is not my thing so it was more difficult for me since Pete S. came at it from that side but I had figured out myself about market rotations (auction theory). Initially it was those guys running the stops but my thinking changed that the market would need to go there to do business..not to pick off the stops (unless it was mine getting taken :rofl:).

 

Early on I started with AG's and then went to AG spreads - Old Crop/New Crop Bean spreads... there's an easy way to get carried out in a bag... Once I understood spreads I moved to currencies... Early on I really enjoyed T-Bills then T-Bonds and then S&P when they were introduced. A lot has changed since then...

 

I bet we know some of the same guys. I spent time at CBOT and CME... but I was always an upstairs screen trader... I couldn't deal with getting stabbed with a pencil in the pit... :helloooo:

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Roztom:

I traded mostly the Muni bonds and also the Major Market Index. Some of the best tracders I knew at the CBOT were actually screen traders: they could focus more on the market and less on pit issues. The disadvantage to upstairs trading of course was that if you were a decent sized trader, you missed getting the edge on order flow.

I arrived in 9/1986 so we may have overlapped.

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Roztom, for the last 20 years, I've been trading stocks for myself and as an investment advisor. I'm looking to get into trading ES or TF. Is there a reasonably priced charting program with Market Profile that you would recommend?

Are there FCMs I should be looking at for ES or TF?

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Sorry to be a little off topic but am reading "Profit With The Market Profile" by John Keppler and am wondering if any of you have read it and what you think of it. Even though I don't personally draw context from MP, some of its ideas have helped me to see the market in a new way.

Seems better than "Mind Over Markets" for understanding MP. Any opinions?

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