62 Ticks Live Today! Avoid making the same mistake…I almost gave it all back!

The Market Gives us clues today…

830am EST

– Dollar Index Futures are trading off their highs from last week, and now trading sideways in a tight range.

o Trying to break the up-trend line, it’s running into problems and we see very choppy price action.

o Pace of the tape is slow < 100

o Average true range is dropping, and at its lowest levels in 2 weeks

o This info tells us we may have to wait this morning before we take any trades

– Most important things:

o Speed of the market (pace of tape indicator)

o ATR (wider / higher is better)

o Some trend developed

– Euro Futures are trading sideways off their lows from earlier this month

o Speed has been pretty slow on the euro this morning

o Average true range is VERY low, lowest levels of the past week.

850am EST

– We noticed a DX-pattern SHORT setting up on the Euro.

o We have the dollar needs to break above 86.300, and the Euro will then enter below 1.2399.

 Make sure we see BIG MONEY BUYERS on the dollar to confirm entry on the euro

 Make sure we don’t get caught in that big round number, so give it a little room away from the 1.2400 as much as we can.

– Gold Futures trading off its all time highs last week, no ran into a major support trend line and now trying to bounce off those lows.

o Trading sideways, with an upward bias

o Very slow pace of tape < 100

930AM esT

– Crude Oil futures are off their lows from yesterday, and now trading very sideways and quiet

o Lots of trendlines above/below

o Double-tops and bottoms to contain the price action

o There really isn’t much wide open space on the crude oil until we break above 75.40

o Speed has been slow b/c we rolled forward to the 07-10 contracts today.

 Blog: search for ‘contract rollover’

o Average true range was at its daily high at 900am est, but now falling back to its lows

 We may have already seen the best price moves on the crude oil

 Beware we’re sharing volume with he 06-10 contract because we just rolled forward so some traders will yet to do so.

Contract Rollover:

– Video on our blog: search for ‘contract rollover’

– Specific videos for each different market

– Crude Oil Futures

o They expire MONTHLY

o Gold = bi-monthly, every other month

o E-mini’s = quarterly, March, June, Sept, Dec

o Bonds, Notes, Dollar = quarterly

– How do we know when to roll forward to the next front month?

o Watch the volume

o Market Analyzer

Trend vs. Counter-trend trades:

– Trading with the trend will always be higher percentage winners

– Trading against the trend can be VERY profitable, but you need to make sure you manage the trade properly.

o Because counter-trend trades tend to reverse frequently, taking back your money

o Be aggressive with taking profit when using a counter-trend trade.

o Lock up profits quickly, tighten the stop to eliminate the risk, and then take it to the bank!

– Using the Pace of Tape with your trades

o We look for INCREASING speed of the tape to enter our trades

 Descrease in speed shows a sign of a potential reversal

• Look for the slowdown in speed

• Look for the momentum indicator to turn

• Look for the sudden increase in speed, with momentum confirming the reversal.

Trading around big round numbers

– Psychological price levels that we have a hard time forgetting

o 70.00 on Crude Oil

o 1.2300 on Euro

o 86.000 on Dollar

o 1200.00 on Gold

o 800.00 on ES

– I use a 5-tick Rule for avoiding those areas on my chart

– Will wait for 5 ticks above to enter long, or 5 ticks below to enter short when price is trading around a big round number

Candlesticks to identify the market bias/sentiment

– Big wide candles, extending all the way to the high and low, this shows a TREND

o New highs, or new lows = new developing trend

o However!!!!!!

o Be careful when those new lows, are followed by a quick reversal

 We see that right now (1000am EST) on Crude Oil

– Open/close of the candle

o It will show more of the bias/sentiment, but I don’t use it for much more than that

o If we close above the open, the candle is GREEN

o If we close below the open, the candle is RED

– Hammer, Doji’s, shooting stars, these are also good candlestick patterns to use as sentiment

– I don’t use candlestick patterns for ALL of the ENTRY, still need to use RULES for entry!

2 things we learned on the DX Pattern today:

– Wait for the DOLLAR’s BIG MONEY to confirm the entry on the Euro

– Only trade around the extremes (HOD/LOD)

Big obstacle for new traders:

– Emotions

o Patience / Discipline most important

 Find something to look for

 Do something else to pass the time

• Look over your charts

• Practice reading tape

o Bracketing your tape

o Watch the ‘discipline cycle workshop’

Why don’t I trade the Bonds? Or why not the S&P?

2 types of markets:

1. Highly-Liquid: Bonds, Notes, S&P, Eurostoxx

a. Lots of participants

b. Not much up/down movement b/c it takes SO MUCH pressure to move the market

c. We can still trade this!

d. But why would we if we see more opportunity in other markets?

e. Have lower volatility, lower MARGINS

2. Illiquid: Crude Oil, FDAX, Russell, Pound, FTSE

a. Not as liquid

b. Times when the market can be dangerously low volume (DAX)

c. Follow the rules, trade with BIG MONEY and you can trade these slightly less-liquid markets for MORE volatility

d. Less volume = less pressure needed to move up/down

e. We can still trade this stuff!

f. Have more volatility, more MARGIN required.

6 trades today, 4 Winners, 2 losses

+62 ticks, $580usd

Only 4 contracts needed to achieve this today!

See you tomorrow @ 745am EST for the live trade room session!