August 29, 2011
- in Uncategorized by schooloftrade
Fibonacci retracements & extensions are worthless if you use them like this
– Every candlestick has a specific amount of RANGE (in ticks)
– 4-range chart has candles with 4 ticks of trading range inside the candle.
– When it breaks to 5 ticks of range it then creates a new candle.
– Time is not a variable
– Volume, or tick size is not a variable.
– 3 main reasons why I use range charts.
– There isnt a very consistent time equivalent
o 89range = 10min
o 34range = 5min
o 21/13 = 3min
o 4/8range = 1min
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I don’t TRUST Fib extensions and Retracements
Retracement: price makes a new high and then retraces off that high. The theory will identify where that exact retracement will be.
Extension: use the same tool and these are above the swing high or swing low we used to find our retracements.
Tool I’m using is the F8 key in NT7.
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Trend channel tool: # of test, and moving the anchor
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– I use this to draw trend lines
– I do not use these on 4range charts b/c I only use 1 day of data
– All chart timeframes need to have the same # days of data.
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– Identifies all of my support and resistance levels automatically
– It can be applied to any timeframe, any market, anything works!!
– I use my Auto Levels on the 34range.
– It locates the levels on the 34range (slower) and then places those levels on the faster timeframes so we can use those to know when we want to be trading.
– I am ALWAYS looking/considering a trade around an auto level.
– Add this to a faster chart and get more S/R levels to use each day
– Add this to a slower timeframe and get fewer (more powerful) levels every day.
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Hotkeys and your workspace:
– I use this to save my workspace
– I do NOT use this to enter/exit the market
– Make sure you keep track of the hotkeys
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What times of the year do we need to be aware of more difficult trading:
– Beginning of the Year is one of the best times to trade
– End of the first quarter is one of the worst times to trade.
o Quadruple Witching is the worst!
– End of the Summer is almost as bad as the end of the first quarter, but much different
o Lower volume in the summer
o Much different than the HIGH volume but whippy price action we see end of March
o Last 2 weeks of August are the worst
o First week of September is also slow, but we do see the volume come back on THURSDAY of that week.
– Last week of the year of the year is also tough
o High volume
o Traders are trying to finish off the year
o A lot of global policies change, new things happen
o High volume, but traders are doing impulsive things, making it hard to trade the way you should.
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Price Magnets:
– OPEN today
– OPEN Yesterday
– BMT on any timeframe
– Big Round Numbers
– Transitional magnets (you can trade them)
o PHOD/PLOD
o Double-tops/bottoms
§ When price action slows down (volume and speed is low) these price levels are the most OBVIOUS and therefore traders seek to test them.
When volume is low, the BIG MONEY is no longer trading.
When the big money is no longer trading, the retail traders can move price up or down.
Where do you think a retail trader will move price to?
The most obvious levels of support and resistance.
The levels that show up on EVERY timeframe…
Open…BRN…BMT’s….
People see them, and therefore price goes to them.
