The transition to Futures trading

[CanOz]

Another range day for the FTSE and the DAX?

I've got the FTSE bracket at 6571/6562 to 6496.5

If we open up in balance 6510 - 6536 will look to fade these areas...

Looks like allot of short inventory at the moment on the TPOs, so be prepared for a short covering rally if we look above the bracket and find buyers....

 

[kid hustlr]

I don't really have a bias. Watching 6500 on the downside and 6560 or so on the upside

data @ 6.30 as well from memory.

 

[CanOz]

Pre cash open on the DAX is out of Yest value area, the FTSE is in yest value area...FWIW

 

[CanOz]

Another range day into an uncertain weekend?

Heres the news....

 

[skc]

Another range day into an uncertain weekend?

Heres the news....

I think there also a pretty bloated schedule of various Fed FOMC members speaking over the weekend.

http://www.forexfactory.com/calendar.php?

And the Chineses go on holiday for a week, as you would know.

 

[CanOz]

I think there also a pretty bloated schedule of various Fed FOMC members speaking over the weekend.

http://www.forexfactory.com/calendar.php?

And the Chineses go on holiday for a week, as you would know.

Yup, National Holiday... People everywhere....

 

[CanOz]

Here is a simple chart of the DAX and FTSE showing the range and value areas...the extremes are where i'll look to trade today if we open in the value area, which appears to to be the case again...

 

[CanOz]

One more chart then i'll exit stage right...Here's a 240m channel chart....

Larger consolidation here...today is the day, break lower or reject and eventually break higher

Some confluence here between the extensions and the anchored VWAP (Midas) for target areas...

 

[CanOz]

An interesting look at the Dax's bracket work these past 5 or 6 sessions....value up, value down, value up...

 

[havaiana]

I was trying to find some examples of patterns I trade for a couple of people to post as examples. Was an interesting exercise as I started to realise I don't have any TA type patterns I trade and the ones I thought I used I'm just as likely to be trading against them as I am with them. The trades themselves are also useless to post because without the context of the day and the moment as it was happening I couldn't even say why I did or didn't take a trade.

Anyway, there is no point me repeating things that have been said before so will just quote one of my favourite posts. This is for me, the best written and shortest general message about short term non-Technical Analysis pattern trading:

Brett Steenbarger
"Imagine the market affected by two relatively independent vectors. One vector describes directionality: the "trendiness" of the market. The other vector describes volatility: the degree to which markets vary around a central price.

The first vector describes the degree to which market participants are reassessing value in the auction marketplace.

The second vector is closely connected to volume and reflects who is currently active in the marketplace.

Both vectors are distributed in a non-stationary way through the trading day. That is, measures of trendiness and volatility exhibit different means and standard deviations through the day.

Early identification of when the vectors shift their means and standard deviations is important in recognizing the beginning and ending of trading ranges and market trends.

Many trading problems occur because traders trade the vectors as if they are stationary: they automatically assume that past levels of direction and volatility will be accurate estimates of future direction and volatility.

In other words, markets change their behavior faster than people can change their minds."

 

[CanOz]

lol...well done Hav...Not sure you'll get many responses on that one.

For me all the homework and analysis is for context, the IF-THEN, and most of all trade location. All i want is a place where i can risk as little as possible when i'm wrong and a decent move if i'm right.

My playbook has evolved from little stops runs to plays that take longer to develop but can have a higher reward.

 

[havaiana]

... My playbook has evolved from little stops runs to plays that take longer to develop but can have a higher reward.

Same here

For me all the homework and analysis is for context...

The context is by far the weakest part of my game and the part I'm having a lot of trouble moving forward with beyond the basics. I actually think I probably fail at identifying what type of day it will be more often than not

 

[CanOz]

The context is by far the weakest part of my game and the part I'm having a lot of trouble moving forward with beyond the basics. I actually think I probably fail at identifying what type of day it will be more often than not

We could have a whole thread on this i reckon...its ummm important, understated most times even...

I reckon allot of guys read it off the pace of trade, the order flow...you can a tell a slow range bound day. But there is something to be gained from thinking in terms of value and the auction process, who is trapped where?... as well as was there an open drive and of course whats the news or lack of?....

Actually I'm very curious what a guy like TH does for a couple of things:

1.) weekly homework - broader market

2.) daily context - plan

 

[havaiana]

...
Actually I'm very curious what a guy like TH does for a couple of things:
...

Me too! I think that it is the implicit learning he talks about though so, not something he could write in a post, maybe just a whole lot of experience

This is a post from TH a long while back:

"A bit of context is all you needed yesterday. Everything (FX, commods, equity) was green and taking out recent highs. In that type of market its a matter of buying pull backs and hanging on. Top down trading fundamentals on a short term trading are much under utilised, especially in regards to short term analysis application. IMO."

And another from TH

"You need to work on implicit knowledge to become a good fulltime futures trader. Daily traders mostly hunt trends/breakouts/bigger moves etc, I think you would agree?They turn up and trade when it suits their style of application or scan for setups that suit. As a generalisation.When you're trading indexes intraday the market from day to day and hour to hour changes dramatically. Therefore so to should your tactics need to change. One hour/day/week your a scalper the next hour/day/week your a big dick intraday position trader holding till the close. Recognising the constant change IMO is the skill needed for a fulltime short term trader.Granted this happens on all time frames but intraday traders have to recognise this in very compressed time frames or run the risk of getting chopped to bits on every move. I would guess if you needed a heap of indicators to tell you this you haven't the implicit knowledge I'm talking about."

 

[CanOz]

Yeah, i mean what kind of indicator is going to tell you how to trade that day.... Yet many, me included, would come into a trend day looking to fade highs/lows and getting reamed out in the process, or buying false breakouts on a balance day and wondering why there is no follow thru...

But the market tells you so much when it opens (around the globe too as he says), and when the trade starts, if things are a bargain they're moving quickly, the pace of trade is fast as price tries to discover value. When markets open in balance the trade can be slow and choppy until it gets to the extremes of value and gets more participants attention by advertising price at a better price...That's my take on it, but i'm a fan of Auction Market Theory and one of the few on this site. That's why i don't post much on the topic. Everyone's into flags and triangles...

TH has some gems on here...He's got enough little paragraphs to start an ebook...i told him i was going to put a PDF together of his stuff one day!

 

[havaiana]

I've only looked at the basics of auction market theory, will give it another look

One more TH post on this topic for the ebook:

"Trading and certainly intraday cannot be done without context. Where are we in the daily trend, in relation to yesterday, in relation to overnight, is there a 5 day pattern playing out, what did OS markets do, what is moving in commodities and FX. On and on.
What patterns have you seen and are trying to profit from when they repeat? The idea that some made up data is going to relate to the real market feel is well - laughable!
What are the underlying stocks attached to the index doing? Whats the A/D look like. Oh thats right there is no underlying market, its pretend data!!"

My trading notes have been reduced down to a heap of posts from TH and that one post from Steenbarger I posted before. A TH ebook would be something i would love to have but also something i would rather not exist to be honest

 

[CanOz]

I think TH has a natural feel for AMT, he doesn't need to study it, he doesn't need market profiles...he has a sense of it because he knows his market so well.

A good example of how context helps is the NK this morning...It gapped down and then tested the bottom of the longer term bracket and found buyers. Shorts are now trapped, and covering as the gap tries to fill....

Also an example of one of those days you don't want to fade! This trade is on a simulated account.

 

[avion]

A TH ebook would be something i would love to have but also something i would rather not exist to be honest

Why not Havaiana? Finding good first hand knowledge is such a hard task in the trading world so why not be grateful that there are guys like TH happy to share theirs. I am sure there are hundreds of guys like him out there but most choose not to share their experience.

 

[kid hustlr]

Why not Havaiana? Finding good first hand knowledge is such a hard task in the trading world so why not be grateful that there are guys like TH happy to share theirs. I am sure there are hundreds of guys like him out there but most choose not to share their experience.

I'm guessing he means the knowledge is so good and so applicable that he doesn't want every man and his dog knowing it

 

[skc]

Context: Don't forget it's quarter end to a pretty solid quarter in various markets.

What does it mean? :dunno: Go ask a futures trader...