The transition to Futures trading

[pavilion103]

Up 42 points tonight.

Could have been much more but I'll happily take that.

 

[dlineinvestor]

Pavilion,

If you got a minute ...
Can you throw us a chart with how you traded, I'm assuming it was the FTSE ?
Just a few entries, mate would be great.
Cheers

 

[fiftyeight]

It is designed to trap the obvious play

Everyone not just TH talks about traps and shake outs like there is one person deliberately taking money off of chumps like me. Surely retail investors are small enough that we are not worth the risk.

Who is buying in a falling market just to take out a few stops, they have now bought high in a falling market? I more thought maybe it got cheap enough that someone with a different strategy or time frame decided to enter (or profit taking or one of the many reasons why someone might buy), not that someone decided to take out some stops. I

I am not arguing that these do or do not happen as I have fallen in many of these traps.

Such a newb

 

[pavilion103]

Pavilion, If you got a minute ... Can you throw us a chart with how you traded, I'm assuming it was the FTSE ? Just a few entries, mate would be great. Cheers

I'll see how I go tomorrow when I'm home.
Not a conventional play by me but I'll write up my logic. Not a text book one that I'd show to aspiring traders but I'll post one up if I get time tomorrow.

 

[dlineinvestor]

SPI - ASX200
Into major resistance now see if it holds or makes it back down to prior resistance to become support. (redline)
Bearish wedge ... indication this could happen

 

[Trembling Hand]

Understood
Larger time frames s/r .. I use 1hr and 15 min s/r to guage my 5 and 1 min trading.
What I need to get under my belt is the process or technique to better know if that "s or r" will break or hold.
Any input on that would be great
Cheers

Nah you probably still haven't got it. What was S/R an hour ago may no longer hold, or it may. Actions have consequences. That's the problem with static thinking and a chart example of 'this is how I trade'. The chart I posted a few days ago and the process was completely different to what I did yesterday. If you want an answer to that bit I underlined you will be in for a long and frustrating search.

Everyone not just TH talks about traps and shake outs like there is one person deliberately taking money off of chumps like me. Surely retail investors are small enough that we are not worth the risk.

No you misunderstand how large traders accumulate size (and the cunning ones). If you are a 500 lot trader you don't just hit the buy button and smash out for 500 lots into the market then do the opposite to get out. If you move size you have to go for large moves simply because it takes time to get in and get out. Now given that - you have to do a few things. Use that size to maximum advantage, protect yourself from being wrong because you haven't got stops (think about that for a while its important)and take entries and exits when people are spewing orders because that is where the volume is. See the chart that I used the other day for what is happening.

1. You have large volume as its gapped down and kept on going down as people sell into an 'oversold' market that actually has some nice divergence. If you are Mr Big on every push down you hit up get nice fills creating those nice up trust bars.

2. Now this needs some thought. Who would be stupid enough to be supplying large volume into up trust bars to new highs? Its clear someone is covering shorts and new traders are entering break out plays by buying but who would be stupid enough to sell into that?? People with large amount of holdings. Its the perfect time to lighten the load from what you accumulated at 1. What happens next? Panic dies down, demand drops, prices fall back into the old range as the break out dudes take heat and spew orders. Mr big is smiling as he has already booked a good profit on 1/3 of his holdings and his thinking "ok where can I top up?"

3. The nice safe up trend breaks as demand keeps on falling and all the new longs take more heat. Mr Big who has been sitting back and is still bullish as all stink, has a good size from much lower and some room to take on more. As the trend breaks its clear because the volume picks up that people are selling but who would be stupid enough to buy? Someone has to be on the other side. Its Mr big protecting his position. Oldest trick in the book. Read Reminiscence of a Stock Operator. It moves back into the old range,

4.Supply dramatically dries up. Up she goes to new highs.

5.More high volume trades. Lots of break out trades and panic shorts but who would be stupid enough to sell into that? I mean its new highs dude!- let it run! You know who it is, Mr big getting out and supplying all the volume.

 

[ThingyMajiggy]

What about the one way train days TH, where it's just a big push all day, do you these big players often get prepared for those the days before in the lead up to trend days or are the trend days themselves the days where they are doing their business and need to get in/out, therefore driving it one way?

So basically we fade big volume bars, the bit that catches me is when I think it's some big volume coming in then the next few bars just keep exploding further and you realise the one you thought earlier was the big boys coming in looks pathetic now

 

[dlineinvestor]

th I'm willing to take the heat for an explanation like that
Cheers brother.

That would explain the smash up candles just when players get in shorts, big boys covering near turning point.
Pretty good indicator for a novice that his posi might be in danger.

 

[CanOz]

For those that trade the DAX, retest almost here...more downside but a slow and grinding journey...enjoy!

 

[pavilion103]

For those that trade the DAX, retest almost here...more downside but a slow and grinding journey...enjoy!

Expecting price to push up a bit first from this base? Especially after such a huge move.

That's what I'm expecting. Not sure how far it will go. But medium term downside.

 

[lesm]

Everyone not just TH talks about traps and shake outs like there is one person deliberately taking money off of chumps like me. Surely retail investors are small enough that we are not worth the risk.

In simple terms, you and other retail traders are just collateral damage when it comes to a stop sweep. There is nothing that differentiates between you and the larger players. Play the game, experience the pain.

Read TH's response, inclusive of the lead in paragraph and the 5 points, until you really understand what he has described.

 

[lesm]

No you misunderstand how large traders accumulate size (and the cunning ones). If you are a 500 lot trader you don't just hit the buy button and smash out for 500 lots into the market then do the opposite to get out. If you move size you have to go for large moves simply because it takes time to get in and get out. Now given that - you have to do a few things. Use that size to maximum advantage, protect yourself from being wrong because you haven't got stops (think about that for a while its important)and take entries and exits when people are spewing orders because that is where the volume is. See the chart that I used the other day for what is happening.

TH, no one appears to have picked up on or questioned this one (underlined) yet.

 

[Wysiwyg]

Read TH's response, inclusive of the lead in paragraph and the 5 points, until you really understand what he has described.

Well the facts are that from point three the price does continue down at times to either test support level or set lower low. Understand that explaining past price movement on a chart is easy.

 

[pavilion103]

As promised....


I wanted to take the entry in the blue (long) but wasn't brave enough after the day before.

This is exactly what I'd anticipated the day before but it crashed down. I knew it would be turning at some point. Thursday was not the day. Friday was. Friday's action gave a clear indication that a bullish day(s) would likely follow.

I was short initially and lose a handful of points because my stop wasn't quite at BE. Then, where my short failed around the 85 level, I took a very aggressive long. I felt for 7 points, if it took off, it took off and could be big.

When price stagnated around the top I knew price would have to come back down and test. I wasn't sure how far back. Taking out the 85 level was unlikely but I've seen it happen, particularly at the start of a decent up move. I took the points off the table.

 

[pavilion103]

A second trade that I took later at night which I didn't mention in here because I was waiting to see how it would play out.

I was driving home at about 10 or 11 and I saw this. I thought it was worth a chance.

My thoughts are on the chart.

Purely a context trade. Reading the context and believing that there was a high probability that price would move up given where it was at.

 

[dlineinvestor]

Very helpful to see your entries and your narration ... nice 2nd entry entering on previous resistance which then acted as support.
TY

 

[pavilion103]

In that second spot I didn't mind whacking on a bigger risk than usual with the intention of letting it go overnight. Given that it had tested that area, I felt it unlikely it would go lower. If it did, I lost 20 points, no biggie.

My general rule is my low-risk setups, but I have nothing against, in certain spots, getting in with a wide stop if I think the context is good and there is big upside potential. I wouldn't recommend that for those who aren't familiar with the markets. Once it ran, I thought I'd take it. I was content. The plan would have been to leave it overnight and then see if it takes off Monday night.

With taking larger than usual risks I believe it all has to be relative. The reward needs to be large. And the risk can't be a large portion of your average weekly profit.


One thing I really wanted to do was to get in in the pre-market on Friday and just have a wide stop right to the bottom. It would have been enormous risk (130 points), so I couldn't justify doing it, but I was very confident that we had made a new low and to get in that close to the bottom would have been gold for a position trade. By the end of Friday I think price had moved up 150 points from that level, stop could have already been to BE and holding 150 points in the black with little chance of being stopped on a re-test to the low.

If my weekly average profit was 200 points, I may have done it. I believe that there are some spots where this is warranted and if it represents half a week's profits then it is worth the risk for such large upside potential.

Some may disagree with me, but I felt the night before was a big stopping bar on huge volume.

If I was only making 20 or 30 points a week then I wouldn't risk over a month's profit on such a move. But if it was half a week's profit then probably.

 

[lesm]

Well the facts are that from point three the price does continue down at times to either test support level or set lower low. Understand that explaining past price movement on a chart is easy.

Then, why do some people make trading harder than it really is?

The above is actually meant as a rhetorical question, but everything is easy in hindsight.

 

[CanOz]

Some analysis on the FTSE, FWIW. I reckon we might get a continuation of this short covering rally to test 6521, the volume point of control. If this is rejected then i reckon sellers will return and push the market towards a test of 6000. I think there is a good chance to see a test of 5400 if we take out 6000....and 5750.

Again, i believe we could have a santa rally but i reckon it may be short covering only...

Just a bit of fun from the sidelined trader!

 

[pavilion103]

Some analysis on the FTSE, FWIW. I reckon we might get a continuation of this short covering rally to test 6521, the volume point of control. If this is rejected then i reckon sellers will return and push the market towards a test of 6000. I think there is a good chance to see a test of 5400 if we take out 6000....and 5750. Again, i believe we could have a santa rally but i reckon it may be short covering only... Just a bit of fun from the sidelined trader!

That's how I see it too.