Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.

TheNegotiator

A Very Very Very Clear Example of Context and Why to Not Always Fade the ES

Recommended Posts

As I hope more and more people will be realising the importance of context, I hope it was fairly obvious to most what was going on yesterday in the ES and I am in fact wasting my time in pointing it out. Given all the context heading into the ECB, fading the market should have been out of the question for traders. The ES had balanced and balanced and balanced some more with the VPOC (volume point of control - price at which the most contracts have been traded) moving closer to the middle as the balance progressed. The fact that breakouts often originate from the middle of balances shouldn't have gone unnoticed. Then after the ECB (even if you had no idea of what was said or the implications) on RTH open with the market gapping up (range and session) and immediately driving away from the gap not into it, it was very, very clear that it was a market to not fade and go with. See chart below.

 

attachment.php?attachmentid=31142&stc=1&d=1347019921

2012-09-07.thumb.jpg.1e424c8701aa3aa7d2200afe2372be39.jpg

Share this post


Link to post
Share on other sites
As I hope more and more people will be realising the importance of context, I hope it was fairly obvious to most what was going on yesterday in the ES and I am in fact wasting my time in pointing it out. Given all the context heading into the ECB, fading the market should have been out of the question for traders. The ES had balanced and balanced and balanced some more with the VPOC (volume point of control - price at which the most contracts have been traded) moving closer to the middle as the balance progressed. The fact that breakouts often originate from the middle of balances shouldn't have gone unnoticed. Then after the ECB (even if you had no idea of what was said or the implications) on RTH open with the market gapping up (range and session) and immediately driving away from the gap not into it, it was very, very clear that it was a market to not fade and go with. See chart below.

 

attachment.php?attachmentid=31142&stc=1&d=1347019921

 

I'm pretty sure I understand what you mean, but I think you need to clarify your statement a little . . . Pressumably you mean not to fade the up moves? Fading down moves, on the other hand, seems like the ideal scenario.

 

For instance, having identified the direction of the trend for the day using techniques such as you describe, then why not fade every significant pullback?

 

The only issue here is that some trend days (such as yesterday's) never really contain the kind of significant retracements that can provide low risk entries. I think that this then becomes a psychological issue - can I bear to sit on the sidelines and watch a market go parabolic without me on board, just because some specific entry opportunity hasn't presented itself?

 

As far as trading the ES in higher timeframes goes, range expansions such as yesterday's tend, for the most part, not to exhibit significant follow through. So fading the ES at yesterday's close would not have been a completely foolish thing to do, though when we're in a clear uptrend fading an expansion to the downside would be a much safer bet.

 

BlueHorseshoe

Share this post


Link to post
Share on other sites
The only issue here is that some trend days (such as yesterday's) never really contain the kind of significant retracements that can provide low risk entries. I think that this then becomes a psychological issue - can I bear to sit on the sidelines and watch a market go parabolic without me on board, just because some specific entry opportunity hasn't presented itself?

 

Exactly. So if you really want to get involved and believe me you absolutely do not have to (ES does not exhibit this kind of trading activity that often), then you try to get in on the best pullback you can where you can place risk the other side of what you judge would provide some sort of decent support should a deeper retracement take place. Ideally, the sooner you spot these days the better and then (at least I feel this way sometimes) it is a controlled leap of faith!

 

As far as trading the ES in higher timeframes goes, range expansions such as yesterday's tend, for the most part, not to exhibit significant follow through. So fading the ES at yesterday's close would not have been a completely foolish thing to do, though when we're in a clear uptrend fading an expansion to the downside would be a much safer bet.

 

To me, the use of range expansion is slightly misleading in this sense. Range by definition is high to low. However, trading ranges are usually seen as brackets - i.e. a balance in which two-way auctions happen. Specifically in this case, saying it's a range expansion re:the balance range I have outlined is not yet certain and potentially quite inaccurate. To me, a range expansion is just that. It pushes a little further then reverts to it's originally balance activity. The whole point of my post was that I believe that considering everything and at least for yesterday, the likelihood is that we are not balanced anymore.:2c:

Share this post


Link to post
Share on other sites

Hi Negotiator,

 

Thanks for replying.

 

Exactly. So if you really want to get involved and believe me you absolutely do not have to (ES does not exhibit this kind of trading activity that often), then you try to get in on the best pullback you can where you can place risk the other side of what you judge would provide some sort of decent support should a deeper retracement take place. Ideally, the sooner you spot these days the better and then (at least I feel this way sometimes) it is a controlled leap of faith!

 

My ability to identify trending or range-bound days early in the session is very poor. This is something that I wish to work on developing. Each day you post charts in the e-mini thread showing volume distributions - if I were to pick up a good general book on MP, would this enable me to understand how you are using these and the associated terminology, or are you employing a more specific approach with MP?

 

To me, the use of range expansion is slightly misleading in this sense.

 

This is just due to a different use of the word 'range', I think. By 'range expansion', I just mean a day with a high-to-low range that is significantly larger than it's predecessors. I'm using the term in the way that an author like Larry Williams or Toby Crabel might.

 

Cheers,

 

BlueHorseshoe

Share this post


Link to post
Share on other sites
My ability to identify trending or range-bound days early in the session is very poor. This is something that I wish to work on developing. Each day you post charts in the e-mini thread showing volume distributions - if I were to pick up a good general book on MP, would this enable me to understand how you are using these and the associated terminology, or are you employing a more specific approach with MP?

 

Should do. Read Markets in Profile and Mind Over Markets. Above all you should ask me or others in the e-mini thread if there's something you don't get. More than happy to help.

 

Working out what it might do in the session is a synthesis of technical and macro information plus experience of being smashed for six when trying to do certain things. If you have a framework to work with, recognising market behaviour is quicker imho. Market profile and auction principles outlined in the two books will give you a solid foundation for that framework. Then, you have to apply your various strategies within this framework.

Share this post


Link to post
Share on other sites
Should do. Read Markets in Profile and Mind Over Markets. Above all you should ask me or others in the e-mini thread if there's something you don't get. More than happy to help.

 

Working out what it might do in the session is a synthesis of technical and macro information plus experience of being smashed for six when trying to do certain things. If you have a framework to work with, recognising market behaviour is quicker imho. Market profile and auction principles outlined in the two books will give you a solid foundation for that framework. Then, you have to apply your various strategies within this framework.

 

Thanks Negotiator!

 

BlueHorseshoe

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Topics

  • Posts

    • Date : 23rd August 2019. MACRO EVENTS & NEWS OF 23rd August 2019.FX News Today A confluence of factors whipped the markets around Thursday heading into the Jackson Hole Symposium and Chair Powell’s comments Friday at 10 ET. Hawkish remarks from George (she dissented against the July easing) and Harker (who votes in 2020) weighed on Treasuries and erased early gains from Wall Street. Minutes from both Fed and ECB meetings were not quite the all out dovish signal that some had been hoping for and comments from Fed members yesterday also showed a degree of caution with regard to further easing measures. The curve in the US steepened again after inverting briefly overnight, the curve flattened and inverted further in Japan. Stock markets across Asia moved mostly higher although gains remained contained by caution. New Zealand’s central bank governor said he could afford to wait before declining on additional easing measures. Onshore Yuan set at its weakest for 11 years. Japanese core consumer inflation at a 2-year low in July. Meanwhile lingering geopolitical trade tensions and political jitters in Hong Kong, Italy and the UK add to an uncertain backdrop. US futures are also cautiously moving higher. The WTI future is trading at USD 55.37 per barrel. Charts of the DayTechnician’s Corner EURUSD returned to 3-week lows of 1.1064 today, after rallying to session highs of 1.1099 following the sub-50 US manufacturing PMI. Negative European yields appear to be taking their toll on the currency, keeping the Dollar in demand in place for relatively high yielding US Treasuries. This has likely been a major factor keeping EURUSD under pressure, especially ahead of likely ECB easing in September, and perceptions that the Fed will not be as aggressive in easing as previously thought. Key EURUSD level is the 27-month low of 1.1027 seen on August 1. USDJPY rallied to 106.64 highs. The risk-sensitive pairing can be expected to consolidate into today’s much anticipated speech from Fed chair Powell, from Jackson Hole. GBPUSD: Sterling had its best single day rally since March 13 against the Dollar. Cable’s high was 1.2273, which is the loftiest level seen since late July. The gains were sparked by comments made by German’s Merkel, who indicated that a solution to the Irish border backstop conundrum is doable by the October-31 Brexit deadline. UK Prime Minister Boris Johnson followed this up by saying at his joint press conference with France’s Macron that he was encouraged by his talks in Berlin yesterday, and that a deal, he thinks, can be done ahead of October 31. Macron, said, however, that while he has always respected the UK’s decision to leave the EU, the European project has to be protected, to which the Irish backstop remains an important part of ensuring this. Merkel’s remarks were little more than rhetorical platitudes, though enough to trigger a short squeeze in a heavy shorted currency. Main Macro Events Today   Jackson Hole Symposium – Day 2 Retail Sales ex Autos (CAD, GMT 12:30) – Retail sales are expected to have decreased in Canada, with consensus forecasts suggesting a -0.5% m/m decline should be registered in June and an unchanged ex-autos component at 0.3%. In May, Retail sales were disappointing, falling 0.1% for total sales and declining 0.3% for the ex-autos component. The decline in sales was driven by a 2.0% tumble in food and beverage stores. The report casts some doubt on the resiliency of the consumer sector to the ongoing parade of worrisome geopolitical and trade developments. Support and Resistance levelsAlways trade with strict risk management. Your capital is the single most important aspect of your trading business.Please note that times displayed based on local time zone and are from time of writing this report.Click HERE to access the full HotForex Economic calendar.Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!Click HERE to READ more Market news. Andria Pichidi Market Analyst HotForex Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • Thanks for your suggestions man!! Our own decision surely makes us or breaks us. Thanks once again, buddy.
    • Right, as a trader, we are our own boss so there is no fear instead of loss in this market. To learn the market we have to keep learning and following rules or our plan that we have decide for trading.
    • None trader or broker can control the market. There is no single person who is behind the Forex market so there is no way to be controlled the market with a man power.
    • EU is still trading in a range. I'm heading out of town tonight and won't be back until Sunday evening. 
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.