January 25, 2011
- in Uncategorized by schooloftrade
Multiple Timeframes for Market Sentiment
– Multiple Timeframes to define market sentiment
o We use different timeframes to see the big picture
o Then we use fast timeframes to use what we see in the big picture to make educated decisions.
o Look for the levels of S/R on the slow chart
o Slow chart tells me where to be trading, but it doesn’t tell me EXACTLY when, how, or where to enter.
o My faster timeframe shows me the patterns, shows me WHERE and WHEN to enter the market
o Don’t forget!!! Faster timeframes can use tighter stops, which is our goal.
o May tell you to enter a trade, exit a trade, avoid a trade, etc.
– What are the Big Round Number Factors for our indicators?
o Gold = 100
o Crude = 1
o Euro = .01
o Russell = 100
– 1 contract
– Advanced and Beginner Course video
– 10 tick stop = 10-tick target
– 1:1 ratio for 1-contract trading
– Stop = target
– Very simple is the key
– When momentum is all pointing down and price is rising
o Low volume and slow days always show us LAGGING MOMENTUM
o Momentum is not getting a lot of FEEDBACK from the market
o How does momentum work? With volume and disposition
o Which direction was the trade, and how large was it?
o More volume = better results using momentum
o
– 3-5 contracts…what is your max loss per day?
– For me personally, I stop trading live when I take 2 losses
– I will move a demo, but I will not stop trading
– Never stop trading, our goal is to build our confidence back up after taking loss.
– If you hit our daily goal, same thing, move to a demo (or cut your size down) and keep the good momentum moving. Keep trading as if you’re live.
– What about a loss that was NOT my fault?
– We all agree that losses can come in many different forms
o I make a bad trading decision (like JJ @ 900am EST)
o The market is not moving in its typical way (also saw this today @ 900am EST)
– If I make the mistake, I need to be very careful not to make another mental mistake.
– If I make 2 back to back mental mistakes I need to stop trading until I can make better decisions.
– If I take a losing trade and there’s nothing that I did wrong, just the MARKET is not giving us what we need to see winning trades today, I need to make an important decision.
– I cant change the market
– I can make better educated decisions.
– Learn from this and make these tough decisions about continuing or stopping once you take a loss.
10:30 Reversal (Russell)
– At 1030am EST we see the BIG MONEY enter the markets, and they move the price wherever they please.
How do we know when the dollar is sideways?
o flat trigger lines
o low volume (speed) at the Highs or Lows
o Double-tops/bottoms
o Average true range is falling to new lows
o Look for the dollar to be in the middle of a sideways range
– Which pattern do I take if I see different patterns on different timeframes? Long and short?
o Slower timeframe always more important
o Avoid BOTH of them if they don’t trigger at least one of the trades.
o For example on crude oil this morning we had 2 trade patterns, but neither of them worked out perfectly, so skip them both if you don’t feel confident.
o Beware BOTH of these trades b/c something tells us this is NOT going to be the perfect pattern.
– Trade management chart
– New video in the advanced course
– Do we care about swing highs and lows on 2-step patterns on the 4range?
o We certainly do care about them, we need to know where they are, and sometimes we will avoid a trade because of them.
o We use the swing indicator to get into a trade, but we really don’t need to worry about it when you see more of them above or below you.
o You do need to worry about these levels when they pile on top of each other.
– How many computers? 1 cpu
o I use 3 total computers: desktop, laptop, back-up
o I use 3 x 30” monitors
o You can start with at least 2 x 24” monitors
o Not as expensive, they use less energy, and they are easier to find REFURBISHED.
o Hdtv’s usually have less resolution than the High-Res monitors.
o End up getting BIGGER icons, rather than more space to use.
o ENERGY consumption is a BIG DEAL!!
– What’s my next favorite market to trade 24 hours a day?
o Aussie Dollar (630pm EST)
o FDAX (Eurex) (3am EST)
o Euro (3am EST and 630pm EST)
o Crude Oil (800am EST and 630pm EST)
o Gold: (800am EST and 630pm EST)
– What’s the difference between a 2-step and wave failure?
o Difference = 2step occurs at specific support and resistance
o Similar = we need to watch the condition of the trigger line.
– How do we treat a flat trigger line? AVOID!!
o Avoid trades with flat markets
o Flat markets = flat trigger lines
– What do we do with a runaway market?
o Must wait for an easier opportunity to get into the market
o You need to wait for a pattern
o Buy the lows with a 2-step pattern
o Sell the highs with a breaker pattern
o Sell a retracement with a wave pattern
o If price is dropping and momentum is oversold
o Wait for price to reverse, and buy the lows with a perfect oversold momentum indicator (best)
o The next best option is to read the tape and the speed of the orders coming into the market. The goal will be to read the tape and look for entries based on price action.
– Daily Charts are freezing (reload your data)
– ATM strategy for moving my stop to entry -5 ticks
o My stop is set for 6 ticks, and then at my first target I have to make a decision:
o If the price is moving quickly and im not concerned about this trade I will move my stop to my entry point at the first profit target.
o Sometimes if im concerned about the price action, if we have something im expecting to be a obstacle for the move to overcome than I will leave my stop @ -5 ticks so it has room wiggle around and wont stop me out.
o Remember, my first target is +5ticks so this -5tick stop will results in a scratch trade.
– What about the mini currencies? Or the mini gold?
o Make sure you have the volume you need
o I don’t trade any mini’s other than Russell right now.
o ES will work, but very sloppy and choppy.
– What’s our homework for tomorrow, Tuesday?
– Review the mistakes you made today
– Have some fun, forget about it!
– Prep for tomorrow with your slower timeframes, looking for the most important levels of support and resistance.
– Come back and see us tomorrow, hopefully for more volume and better speed and we will prep for another day in the room tomorrow.
