The first step for a trader is to determine the current trend of the market. The second step is to determine one's place in the current trend. The third step is to determine the proper timing of one's entry into whatever it is he's trading.
The action of the whole market tells you when the selling is better than the buying and vice versa. You do not care why insiders are buying or selling, but you should care a lot about the action of their stock on the tape, for that is what tells you the truth. -- Richard Wyckoff
Remember that you can always take a day/week/month off if the market does not look right to you. You don't have to trade just so you feel that you are working. I take many "breaks" when things don't look right to me. In fact, numerous times I will do all my research, get up at 5:00 AM and be ready to execute my game plan, only to find out that what I was planning on doing was not doable, for whatever reason, i.e. missed an entry, big gap up/down, bad vibes, etc. When these conditions present themselves, I will call the local golf course, get an early tee time, and leave the trading desk. I do that, because I know that if I stayed around when I am in the wrong mental state of mind, I could make costly mistakes. I'd rather hit a white ball and get frustrated beyond belief scoring in triple digits than stick around when things don't feel right. The beauty of the stock market is that there are always new opportunities to make a trade. -- Tony Oz
A couple of apologies for the daily chart I posted on Saturday. When I said "if Monday we create a swing point", I had the ES and YM in mind. Technically, the NQ had made a swing point (Wednesday's low). However, since the other two were still falling, I didn't want to be stubborn, which is why I didn't suggest using Wednesday's low as a stop, though one certainly had the option of doing so. Also, putting a stop "under Friday's low" obviously meant Thursday's low since we didn't trade on Friday. Since there were no questions on this, I assume that nobody acted on any of this anyway, but even so . . . So if you're saving these charts on your hard drive or printing them out, you might tack this onto it.
The effects of fear on one's behavior are obvious, limiting one to the point of complete immobility. If you can't execute your trades properly, even when you perceive the most perfect opportunity, it is because you have not released yourself from the pain contained in the memories of past trading experiences and because you still don't trust yourself to act appropriately in any given set of conditions. If you did, there would be no fear or immobility. -- Mark Douglas
The "climax bar", in and of itself, in isolation, may be only a warning of a change in momentum (a "yellow light"). Which is where S/R come in. Hitting S/R is like creeping into the kitchen in the dark and flicking on the lights to watch the cockroaches scramble (in college, anyway). Do traders scramble or don't they? What looks like a climax bar in real time may just be an "indicator" of an overbought or oversold condition. [And by "overbought" and "oversold", I don't mean indicator settings. I'm referring to the original meaning, i.e., buying or selling exhaustion, at which point there are no more buyers or sellers, whichever the case may be.] But unless that bar occurs at some important level, such as S/R of some sort, it's less likely to ignite the greed or fear that is required for a decent bounce, not to mention a sustained move. Therefore, assuming you've found all your S/R levels before the open, look to what you think is a climax bar as a clue. Monitor the buying and selling pressure. Collect the evidence you need to determine whether this is just a pause, a continuation of the previous move, or a reversal. What looks like a climax may just be a preliminary "climax", or brake (I realize that, literally, a climax is either a climax or it isn't, but you get my drift). And don't hurry. The market's here, open for business every day, and for every missed opportunity, there are several waiting in the wings, and a lesson learned.
Most of us believe that money-making is a game that is played with forces outside ourselves, forces such as the economy, the stock market, interest rates, the Fed, government policies, employment statistics and the like. But as you move along a spiritual path and begin to get a taste of the power of your invisible self, you discover that money-making is merely a game that you play with yourself. -- Wayne Dyer