Posts Tagged ‘price action trading’

Reading Price Action in Any Time Frame

Monday, August 2nd, 2010

Today is Monday August 2nd and what a nice day in a perfect world as the Dow, S&P and Nasdaq markets put in solid gains across the board, with +208 on the Dow, +23 points on the S&P and +40 points on the Nasdaq.

If one went only by the news, everyone should be short as things don’t look or sound good on Wall Street. If you uncover the numbers, they are not that inviting, but we don’t trade numbers, or reports, we trade stocks and index futures.

I have been calling for a significant rise in the market for some time now and have been saying that the surprise will be coming from the upside. That is unfolding very nicely. I am sure there are bears, now running for cover. Those are the smart ones, cut your losses early. The ones who just know that this market has to go down, will be the ones who really feel the pain. It could be financial ruin for many as they hold on and on, just waiting for this market to turn, with hope slipping through there fingers each day. Pride, has often been the financial ruin for many traders and investors. When you enter a trade, you have to know exactly how much pain you can accept before you enter and never move your stop to a worst position. Justification, will soon be the thing that starts to kick in, as traders and investors will not throw in the towel, admitting they were wrong.

In addition to calling the larger overall moves by the market, I said in yesterdays blog posting that we would see 1115 on the S&P Emini futures in the early morning session. It could come in the night trading but a move to that area was very likely in the morning session. Well, that again, is exactly what happened. The market pushed up to 1115.50 and backed off that exact number by 5.25 points. The next part was for the market to continue higher from there through out the session and that is just what we saw.

In today’s trading it went good, as I picked up some nice gains from the sessions. Nothing earth shattering, but good enough. Just traded small, as I am marking time for better opportunities in the coming week. I am sure I will find at least one mega day this week. That is a day with 2 to 3 times or more a typical average daily gain. Having 3-4 of those type of days per month, can make up for a multitude of trading sins. A screen shot below of my trades today.

Being able to read price action is the key to successful day trading and or any kind of trading. I have said that many times before and is a valid point to be reminded. I like trading with trading indicators, but I don’t always lean on there every signal. I always balance my approach to what I know about support and resistance, as well as many other unknown trading techniques that I cannot discuss. I show these trading techniques in my video updates that I send to my students many times each week. It is so nice to see that so many of my students are understanding the trading concepts that I teach apart from any trading indicators at all and are able to apply them to the markets to get what they came for.

Recently, I have been expanding my trading concepts to include the ability to project where prices will likely go based off of many factors. One of those factors being the amount of stored energy in the trading instrument. That energy get reflected back onto the market in the expression of a long or short move, depending on the directional release of the energy. Many times you will see the market pull to the opposite end of the trading spectrum as that release gets played out. That is where and when you want to be able to position yourself in-front of that move. You then possess the trading advantage.

Depending on your trading time frame, a trader can do very well to hold onto large direction shifts in this energy. I am able to see these shifts in energy by understanding the price action trading that takes place on the trading screen. There is a reason why prices move as they do, it is not just random as some would say.

The recent expansion of this concept is what is giving me the ability to project future price action, with precision. I don’t always have to be right, but right enough to make it right. With good money management and having the ability to enter an S&P trade and risk no more than 4 or 5 ticks or a stock equity trade risking no more than .10 cents, gives you certain advantages over other traders.

Currently, my focus is still on short term trades, 1-3 points for many, with the occasional 5-10 point trade. Becoming a good day trader takes time and discipline and a good proven trading method. You need all of those, to make a living at this. If you are lacking the trading method and the discipline, I think I can help. The time, you will have to put in. Nothing worth while ever comes easy, but the rewards are outstanding.

Good Trading, Vince

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Bullish Set-Up or Bear Trap

Tuesday, June 1st, 2010

Today is Tuesday, June 1st and the market sold off into the close and I got my wish.

We had a sell off into the close and ended the day at the lows, with the Dow off 112 points and the S&P futures off around 20 points. After yesterdays late post, we did go down again hitting the low estimates of the range I thought we might see. With the early target hit of 1080, that was good enough to minimally satisfy the pull back. As it turned out, we went a little lower than the low estimate of 1075 by about 5 points on the S&P futures. That was fine and all looks good for what I think may be coming.

After the open, the market was contained from going up, but did rally very nicely. We never got over the 1096 number that would send us higher as called and that was actually a good thing. This is just something that I see as a possibility and will remain open minded to it. With the market down today, the new sentiment poll will be taken after today’s close and it may sway the “Professional Newsletter Writers” to have a bearish bias. The trend for the last 4 weeks has been down and with last weeks poll, currently at 39 % we could see it get into the 35% area. It has dropped off from a high of 56% bullish just a few weeks ago. With the start of this week down, it may cause them to bit on a sell off scenario and push the bearish bias, which in turn will be bullish yet again.

I don’t know how they will react and I won’t know until Thursday evening as I do not pay for the real time service. I only watch and report it, because it is very interesting how accurate the opposite is so often true. This is only for the larger directional moves within the market. I would not be surprised to see a big up-day and move this week,  if in-fact the bearish trap was laid.

Just from a price action standpoint, if the market was going to make a run for it, we are in the area for it do so. It lines up with other things, making it a very possible move. From this point, it could move very big over the next few weeks, catching many by surprise yet again.

Keeping with the theme I was talking about in my previous post, traders need to look both ways. I will be looking for where the market will likely break down and break up big. That is also a very real possibility and cannot be ruled out. If you do rule it out, you won’t mentally be prepared to do what ever it is you may need to do, because your mind won’t allow you to take action against your strong directional bias. I often say, as traders we need to read the current action but see what the market is saying about each case, bullish and bearish. This is same for short term moves throughout the day. Build your case for bullish, but balance it against a move against you. which has more weight and how strong is the evidence. The strongest case, deserves the action and to what degree.

In today’s trading I had a good day. I was just trading small and picked up a few small scalp trades as the market was looking for direction. I saw a move short after we ran into some overhead resistance and initially came in a little early.

I did get stopped out, and I would have to say that this gave me a little  trading Fear attached to it. This is not the normal fear a trader will exhibit, but this was based on “trading fear of missing a move”. I have talked about that before, and it is something that needs to be monitored and controlled. If you feel strong about a particular move, and do not want to miss it, you have a tendency  to get in it to early. That can cause you to get stopped out and you may loose heart to re-enter thus truly missing the trade. There is a balance to the timing if you see a move coming. You still need discipline to hold yourself back and not take the trade until it is ready. Like baking a cake, if you pull it out early, it won’t rise and taste very good, but if you pull it out at the right time, everything comes together. (Funny example, but I just seen that happen in my home as my wife was baking one, L.O.L)

I did enter short on the trade and doubled up on it as well, because the evidence became very strong that a move down was imminent.  I would have like to have waited just a moment longer until all the evidence was in, but I did not and that is why I got stopped out. If you notice in the video, the indicator was spot on and I was not. That is why I do like using this tool. I don’t overly lean on it, but new traders could until they see and understand “price action structure” like they should.

That’s it for now, all traders need to find there trading edge and exploit it. What ever you do, try and be consistent. That way, once you find out what works for you, you will be able to do it again and again and that will take you where you want to go.     Good Trading to All !

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Price Action Trading & Trading Indicators

Sunday, May 30th, 2010

Today is Sunday, May 30th and I missed a couple of posts last week, but I am back.

In my last post on Wednesday, I said that the market was ready to push much higher as the market closed around 1056. The target area I called for was 1110 on the S&P and it was likely to take a couple of days. Well, on the second day, we came up to 1106.75, call it 1107 and within 3 points of the target area before it started to back off. On Fridays session after hitting the high mentioned, the market sold off towards the low of the day around 1087. Currently the S&P futures are up about 3 point at 1091 but it is very possible we will see lower numbers before we attempt to go higher, but not by much and for very long. I am looking at 1075 to 1080 as a possible turning point area. We will likely see some buying come in around those numbers. How the market reacts will be important as it trades into those area’s. I could see a good rally coming off of that area if hit and it is possible it could take us up to S&P 1130 this time over a short time span, about 2 days. That is where we will see stiff resistance, from there?  This is just what I see as a possible market move and it would be within the realm of a natural rhythmic market.

The sentiment numbers were out on Thursday evening for me, but released on Wednesday morning and they were lower yet again, a good sign for the bulls as it gets now within striking distance of yet again another sentiment reversal. The bullish sentiment of stock market newsletter writers for the past four weeks starts out at a bullish extreme figure of 56%, followed by the massive sell-off we had right on cue. A figure of 55% or greater is usually a strong tipping point. The next three weeks we had all lower figures of 47%, 43.8% and last weeks 39.3%.

This latest figure is now very interesting as the market sentiment extreme is now closer again to a bullish tipping point of 35%. The way the market reacts on Monday and Tuesday will set the tone for the new weekly numbers that are released on Wednesday morning and if we rally big, that could send the sentiment back to neutral, 45%. Professional market newsletter writers are really no different or better at picking the markets major turning points than the public. They are all trend followers and always have been. The thing is, when the market makes its intentions obvious to the public, it is about to turn and go in the opposite direction. A simple and yet effective tool for trading against the public. All of this is not so critical as short term day traders, but its a good exercise for all followers of the market to look at weekly, daily and hourly charts to see and gain insight into where the markets next large moves will come from.

Below is a video I posted last week on U-Tube and am posting it here. I have been showing one of the timing tools I have available at Sniper Day Trading. I do not say what it is, but want to post this video, to show traders that it is possible to time the market and be successful at it, using the right tools. I have a few other things up on my personal screen, not shown here, which makes for a complete view of how I can handle the market. This is in my Trending T-2 model and works well, when the market is moving. When we are range bound and the moves are small, I just trade out of a different screen with a different set of objectives and goals. If the market is likely to make a move and reverse, it is best to take a all in and all out approach. If the market is trending I often times like to scale out of the trade and average the position out. The market always gets to decide. Either way, hitting a daily goal of 2-4 points per day is not that hard and can usually come rather quickly.

Trading is knowing when you go long and when not too. When to go short and when not to. As I have mentioned before, knowing when not to trade is just as important as knowing when too. If your timing is off, you loose. If your timing is good, “Bingo”, you got it. So, being able to say no to a trade that you may want to enter if vital to your success. Do you have a map or guild to tell you with some degree of consistency that you are making the right decision or are you going by just a gut feel. The later, will play games and tricks on your decision and you will often question yourself if you don’t have clear rules for entry.

With all that said about trading indicators, I feel, every trader should learn to read the price as it moves, thus the term “Price Action Trading”. If you know how to read the price of anything, you will more closely know why you entering long or short. Learning to read the price takes time, and often traders are not willing to put the time in to educated and expose themselves to all the different reads, tricks, fake outs and natural rhythmic moves the market can throw at them and that is where trading indicators can help, initially. As time goes by you will get the exposure you need to be well grounded and thus a profitable consistent trader.

The video’s are only to show you what is possible. You only need one or two of these trades per day to make very good money, not thirty. So, again, many systems or trading methods don’t show you how or even a part of how this can work for them. I am glad that I am able to show you something to help you better see, again, just what is possible.

Above,  is another video of a stock and I cover three days of typical movement here. I basically mark up the screen of every trade signal through out the three days and again shows you what is possible. This is in my T-1 Trade screen and is geared more for short term swings with an occasional runner. You only need two or three of these trades a day to make a good living not all the ones as shown.

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Day Trading Indicators – See the Difference

Thursday, May 27th, 2010

Today is Wednesday May 26th and the market had follow through from yesterdays close only to give it up into the close.

We saw a good follow through move from yesterdays strong close, but as things started to settle down later in the session, the market sold off. I did hear of some good news on the economic front, housing starts, PPI Index and a couple other good bits of glitter, but it was not enough for the general market to hold on to there gains.

Currently the after market is pushing up nicely as the S&P is up 15 points as I write this late Wednesday evening. Looking at the daily charts, we just stayed above key support I pointed out last week on a closing basis and that was good to see. I do also see a continuation of this night trading move into tomorrows early session and expect the market to hold on to those gains and even add to them over the next few days. That is what it looks like to me. This is that bounce that I figured would come as I see the S&P futures moving up to 1110 area or so before it takes a break for the next move. That could take a few days, but we are just taking back some of what was lost over the last week.

Tomorrow, the sentiment numbers come out and it would be interesting to see how the public now see’s the current environment in the face of this sell off. We did come off a lot in the past two weeks and it is possible the trading public got very bearish this last week, which could have pushed us into the opposite scenario very quickly. We were at 43   %bullish and 35 is a bullish trigger point for the market to rally. The numbers were out this morning and most have seen and reacted off that reading already, but I will not be able to see them until tomorrow evening. You can get the link in the resources section of my website if you want to keep up to date with it yourself in the future.

In my last post, I put up a video of the S&P turning points for Mondays session. For those who trade the S&P emini market you are familiar with how it is works. We trade futures contracts to buy or sell, which gives us the right to buy in the future the basket of stocks at a specific price. Most people who trade the the S&P never really hold until the end of the contract and take delivery as you could do with a commodity, but it is traded more like a hedge against a portfolio or as a speculation instrument. That is what we do, as we trade contracts at specific prices. The smallest measure of movement is $12.50 and that is considered a tick and 4 ticks make a 1 point which then is $50 dollars. If you day trade 3 contracts, which you could do with a margin or deposit of roughly $3,000, each 1 point is worth $150 dollars. Having a daily goal of 2-4 points per day is the minimum daily goal I like to set and there are days it is 8-10 points or more.

Picking up this daily goal is not really that hard if you know when to buy and when to sell, to start. Then it is learning how to manage the trade and lock in profit and book your gains for the day and do it again tomorrow. The first key is knowing when to buy and when to sell. If you can not get that part down, you will never make it. If you don’t have a game plan on when to buy and when also not to buy, which is just as important, you will struggle.

I teach traders at Sniper Day Trading to read the price action and trade off of that. I have a few simple ways to make it easy to learn, but it does take time to build a data base of various market reads that can and will be shown to you. That part takes time to build, but in the mean time, while you build this knowledge of learning price action trading, I have a set of indicators of which I have one of them shown in today’s video to help you with timing of when to go long and when to go short. My trading method is based off of something different then what is in the video, but it compliments what we do very nicely.

To many traders are trying to learn how to trade just by following the indicators and not by learning what drives the indicators and that is, “the price”. In addition the indicators that they follow, usually are lagging and not that efficient. That is not the case with what we offer. You will never have to look for another trading program or method again as long as you live on this earth and trade the stock market.  That is how I truly feel. This can be set up in any time frame to give you the trading edge you need to beat Wall Street. The Stock market is fractal in nature and any good trading method will and can be applied to all time frames and styles of charts.

When you combine this method with at least two time frame charts, the smaller chart is shown in the video you will get a crystal clear picture of what you need to do and when. The video shows clear entry area’s both long and short, exactly what you need to profit. When you consider, this trading method can be run with only a tiny 4 tick stop, (5 is OK) that is hard to believe, but the proof is in the video. The turning points happen like this every day the market is moving.  When it is a choppy session, I have another screen set up just for that, with the results no different.

Traders need precision timing  to be successful, bottom line. If you don’t have it, do what it takes to find it, email me for more details. This works on individual stocks just the same. Turn your trading around, protect your trading capital and live the dream.

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