Posts Tagged ‘stock market fractal nature’

Successful Scalp Trading, Is It Possible ?

Tuesday, November 16th, 2010

Successful scalp trading, is it possible? That is the question that so many traders want to know and I will tell you the answer to that, which is “Yes”. It is not for everyone, that is for sure. Their are so many traders who are not cut out for this, but will only find out by going through the process. Getting good information and a solid trading method will have a lot to do with that success, but often traders will just beat themselves, through their own personal weaknesses.

If you have the passion for taking your trading endeavors to the highest levels, achieving success and harnessing your knowledge to produce the results you pursue, you will overcome all personal weaknesses.

Not all trading methods are alike and you need to find something that is tuned to your personality. What I offer may not be the answer for some, but on the other hand it could be just what the doctor ordered.

Being successful will require a lot and should not be taken lightly. Having the ability to block out distractions and focus on price movement will be the starting point. Trade indicators are only a reflection of what the price is doing and so the trade focus needs to be on the price first.

Recently, I have talked about the three elements for successful trading of any kind. “Time, Space and Energy”.  The first two lead to the third element, trade energy, but today in the daily charts, 11-16-10 Tuesday, we saw the first two elements exercised, in that the time accelerated the price, to the downside, to a level that I called yesterday. I said that I could see where prices were going to go on the S&P, 1175/80. I thought that it was going to take a few days to do it, so that is why I said 75/80. Not knowing that it would come all in one day with a near 200 point loss in the Dow and 20 point loss in the S&P changed the figure a touch. I would have said, 70/75 instead, but I did not know that then. Close enough through and would call that a good call. The next trick is going to come, when this market holds off of these levels and moves back higher. I would say, that we are in the general area of support and will hold these current levels give a take a touch.

Knowing what to expect from the market is key and traders can learn how to do that in any time frame if you know how to read the price. I look at price and can see basically where it is going to go ahead of time, so often. Many of those times, I would not want to place an order in all of those spots because we may have the third element missing (energy), but knowing what you can expect ahead of time is a great exercise for when it does line up and come together. At those times, the energy is their to carry the price through time and space as it releases the stored energy that was built up through time.

I look at three time frame tick charts and glance at a small time chart to better see the gaps, minus the Globex market. The first two time frames are really just one chart with the third chart an expression of the first two. Each time frame is much larger than the next, but it all works together.

The stock market is fractal in nature and I have pointed that out many times. Each time frame is apart of yet a larger time frame and so on. Knowing how to harness that information and put it into a structure that makes sense is essential. Market framework is another way of saying “structure” and shows how time, space (price is another way of saying it) and energy all work together to create small little windows of opportunities where prices can be exploited. Meaning, you have the clear advantage. But how can you see those opportunities and take advantage of the situation. It is all in “knowing”. Either you know how or you don’t. You may rely on other things that you do know and that may be enough if it works for you.


Above is a short U-Tube Video I did today showing the basic entry points I might have considered. These area’s happen all day, every day, with today being very normal and not anything special.

The power went out in the mountains where I live today and did not have enough battery back up supply to trade. I waited it out as long as I could and came in for the last 30 minutes or so. I hit my goal and that was good, but still was off in my timing. It still all came out good, but I was anxious because of the lack of trade time. Again, I forced my first trade and tried to take a counter trend trade short for just a few ticks, but got stopped out for a point. The next trades were all gains, but wish I could have waited a minute more to enter. The price would have been the same, but the timing would have been better. I am hard on myself at times because I know I can do better. Even though it came out in my favor, I rarely look at that. Doing the right thing at the right time is much more important than getting a winning trade. I don’t want to develop bad habits. I have to be my own trading coach and writing my blog is one way for me to do that.

Good Trading to all,

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Alert – Stock Market at Critical Levels

Friday, October 1st, 2010

Today is Friday, October 1st, 2010 and the markets did a great job in holding up as a lot of bears may be getting a bit nervous holding their shorts over the weekend.

Let me start out right now, I do not know which way this market is going to go with its next move. Many times the stock market has already tipped its hand and reading the move is really very easy.

It would appear that a break is in order, given the large run up and basing we have seen over the last two weeks or so. That has been the markets M.O. of the past and it is certainly possible again here this time around, but let me give you just a moment of pause.

Reading the market many times can not be done until something has happened. At this point nothing has happened that would say the market is going to drop. So the logical conclusion is wait until something has shown which way the future direction will take us over the next few weeks. It is very possible to do this and I have done it in all the major turns of the market of recent memory. Its not that I am so good at reading the market, anyone can do it;  you just have to know the language.

If you go to a foreign country, would you expect to be able to speak and read the language as you get off the plane.  How about after a few weeks or even months?  I don’t think that is realistically possible. The same is true when traders try and read the markets. It takes time. When you see and analyze price patterns again and again, you will see that certain characteristics are present in all of them. Since the stock market is factual in nature, meaning it mirrors the same type of price patterns or behavior across all time frames, you can learn the language that will bring you home, “trading for a living”.  A fractal Stock Market gives opportunities to all participants no mater what their style. The point here is, reading the market will open doors and give you the ability to write your own ticket.

So, back to the point. The market is sitting on cliff. That cliff will either be a stepping stone to yet a higher mountain, or it will be the catalyst for the tipping point over the edge it now sits on.

A couple of days ago, I wrote about the stock market having an inside day and that the volatility coming out of that inside trading day was going to produce big price movement. I did mention that we could possibly see two inside days together and that would create even more power and pressure once things got going. We have just seen two inside days but they are staggered. We came out of the first one violently, first to the upside and then quickly to the downside, + 100 points on the Dow and then down -200 points in a matter of a couple of hours. Today we saw the second inside day and yet again creating pressure for the next move.

A break of today’s lows at 1134.50 first and then on too yesterdays lows just after that of 1131.25 will produce a multi hundred point loss in the Dow and dozens of S&P points in just the first few days of breaking those levels. (my opinion only) (this is not investment advise)

If you know what is their, you would understand. What is their is, sell orders. They are parked there like automobiles in parking lot, just sitting there, waiting. If you get a few whales to push it over the edge they are all going to go off and it will induce mass selling.

On the other hand, everyone is looking for this market to roll over after putting in a reversal day yesterday, they are just waiting like it is a for gone conclusion. It very well may be that it will crack and I said I did and do not currently have a strong opinion one way or another right now at this time, but I believe we need confirmation to get this one right for sure, is all I am saying.

Their is a chance we can still rally from here. It sure would catch everyone by surprise. The sentiment numbers still have bullish tones to it at only 43% bullish right now. Also given the fact that the first 4 trading days of the month are traditionally very strong. You can go back to 1930 and see a very consistent pattern of this being true. Call it human nature, but it is a fact that a lot of buying comes in at the first few trading days of the month. So, lets just see what the market is telling us on Monday first before we take the ride down. Once we see it, we will then know what the trading bias will be, in the days and even weeks to come.

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In today’s trading I had a nice easy day picking up a some nice trades. A few small scalp trades and one nice trend trade for 4 + points but only small size. It all adds up and made for a nice finish to a good week. I had good gains all week except one day of flat returns. I have been trying to change up the screen shots I post and am not sure what I will be showing in the weeks to come, but I don’t always want to show the same thing. In the mean time I was just showing my equity chart and not my trades. I am still thinking about how I will post future progress, but today I will show just a clean chart, no indicators in a different size tick chart. I will come up with something new, but don’t know what yet. today’s trades below.

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The Stock Market and Time Element

Wednesday, July 28th, 2010

Today is Wednesday, July 28th and the market is pulling back a little after yesterday’s gap opening higher.

We hit some resistance yesterday, as the market pushed up yet another day in face of bad news, but today, it looked clear that a pull back was in order. After early weakness, the market did present itself for new short opportunities, of which I did not have the time to trade. I got stuck in the dreaded dead zone, mid day. The market performs so much better in the AM and afternoon trading sessions, but I am partial to the AM.  I don’t often trade it, as I wish sometimes I lived on the East Coast. That would make it a lot easier. I should not complain, so I will just clam up about it. All I can say is, I am working on it.

The after market trading in the S&P, is showing some strength, with the current price at 1104. I see short-term resistance coming in at 1105.50 and will likely trade back down, for at least a moment. If  this market can get over the 1106 futures number, we could see 1110 pretty quickly. This is just the next couple of likely moves in the morning session. If 1106 is broken, we should trade up to 1110 or so.

The market is going to need an element of time. Time is very important in the trading equation. The stock market moves through time and space. It has a natural rhythm to it and natural trading target area’s that it will gravitate to. The element of time is something that is often forgotten. Without time, the market would not move. I know that sounds like an obvious statement, but traders often want what they want and they want it now.

The market will not give you what you want on cue. You have to be in tune with it and trade on its time. After a big market move, many times you will see the market go into a slow consolidation, of short swings up and down. With no real direction, it is in effect moving sideways trying to digest the big move it just made.

When you have a large meal at home or at a restaurant, you need to pause, take a break and then maybe have desert. The desert can be the last wave up in an ongoing move, but after that, it is time to relax and digest the meal. Every chart has a left and right side of the chart. The left side is called the acceleration phase, the right side is called the deceleration phase. There is a top in the middle that separates the two phases and that is an expression of time as the market goes back and forth, up and down, as the struggle for control takes place. This happens everyday, a balance of power is waged. We should not consider ourselves smarter than the market and we should not argue about its directions because the market is always right. We are the ones who at times don’t get it right. So what are we going to do about, ( I ), get on the right side of the market and go with it and not against it. That too, seems like an easy answer to a not so easy task, but every trader needs to find the rhythm of the market and trade with it.

I put up a couple of indicators on my screen shots to show my readers how the price drives the market to these natural turning points that we see everyday. Day trading or any kind of trading, is about getting into sync with the natural rhythm of the market in that specified time frame.  This is expressed in many time frames across the board. The market is amazing and I don’t know of anything else like it. I have talked before on how the stock market is “Fractal” in nature. That means that it expresses itself in exactly the same way, but across a multitude of time frames. That is why I have put up different time frame charts a few weeks ago of the Dow Jones and the S&P in 30 minute bar charts.(U-Tube Video Gallery)  This is just an expression of what is happening in that related time field as the synergistic effect is still always present. You will see the same expressions of timing and natural rhythm expressed across a multitude of time frames and that is just amazing to me. In the beginners section of my website, I have a few pictures of this symmetry as examples, that are found in nature. If you care to take a peek, just go to the heading “Beginners” and scroll down to see a few pictures of this. I am easily impressed, and I think this is just amazing, but that is me.

In my first trade today, I took profits to early and on my second trade or so, I should have closed out my second half before I gave it back for -1 tick. I did OK and came out on top, but came up short of my daily goal and was getting tired so I stopped. I new the market was going to get going in the afternoon session, but I burnt myself out already looking for movement where there was little.

Yesterday, I had only two trades, and hit it nicely, roughtly 2,3,4 points on one trade and just a small scalp for about a point on the next.   Both days of trading are below.

That’s it for now, we will see if the market marks time by going sideways or pulls back, both will accomplish the pause we need for further advances.

Good Trading,

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