The Trouble With Scribbles

At the risk of causing trouble, which isn't my intention, but I am trying to understand, is it possible to get 20 contracts AT ONE PRICE for the trade claimed by 40D here?

http://www.elitetrader.com/et/index.php?threads/es-journal-2015.288816/page-305#post-4111892

I'd like to believe him, but too many things don't add up. He has already said before that he doesn't use Ninja to trade, and doesn't this look like the Ninja platform? All 20 contracts are filled at exactly one price given that the stop for each of the 4 different targets is shown at the same price. So, if hitting a market order during this very quick down move, is it possible to get a fill for 20 contracts at the same price? If its a stop limit order, is this even less likely?

I have no experience trading more than 2 contracts, and even those I didn't get at the same price. So is this post by 40D yet another SIM trade?

 

In his defense, and I know you won't agree with me here Surf, price action hasn't changed in 100 years because its just a reflection of traders and their greed and fear. So I'm not surprised that some of the same concepts from 100 years ago still apply. I know you won't agree, but thats ok.

In fact, none of us really have to agree on any method, but if anyone could demonstrate consistent profits, this would go a long way to shutting everyone up. All that matters at the end of the day is how much money you're making, real money, consistent money, during both up and down markets, during all seasons.

 

I asked about a trade before that he showed, same thing, 20 contracts. On that one, he didn't have a profit and stop loss target on the chart which made it suspicious. He came back to say this was just posted as an example and it was a SIM trade. I looked into the hardcore tick data and saw that 20 contracts weren't even exchanged at this price and hence why I had hard data to present.

In this new example, the activity was moving quick, but I haven't looked into if even 20 contracts were exchanged at this price because I'm not sure of his exact entry time. He is showing 5 minute bars. If he could produce a time stamp, this would be better.

 

During RTH, yes it is very possible in NQ, especially if you were sitting early in the queue; and ES would swallow 20 like candy.

 

Wow.. 20 contracts at the same price.. really? The thing about the way 40D trades is that he's not sitting and waiting for a level with an order ready to go. From my understanding, he is watching price like a hawk, watching the right tick move, and when he sees what he needs to see, he pounces. He said that his orders are mostly market orders, although sometimes they could be stop limit, but in no way would he be waiting with that order ready and entered minutes before.

I figure that at the open, we usually have 2000 contracts traded every minute, but this drops down to maybe 1000 on average. This tells me that every second, roughly and on average, there would be 16 contracts every second. So I'm not sure how one person can get 20 contracts at exactly the same price, but like I say, I have zero experience and have seen nothing written. All I can put together is that traders spend time accumulating large positions.

 

So, since justrader has left, a little recap:

JT wanted to know why I was encouraging traders to trade chop on Thursday.

I wasn't.

JT wanted to know why I "liked" some post about encouraging traders to trade chop on Thursday.

I didn't.

JT wanted to know about my trades on Thursday.

I replied that the SLA discourages the trader from trading chop and explains how to avoid it.

JT provided an example of somebody who traded the chop on Thursday.

This individual overlooked the SLA's advice on the matter.

JT brought up something about "19".

This had to do with an example I posted of a LITHA trade, i.e., a trade that can be made by someone who can't be in front of his computer for any length of time. Since the entry was long gone, there was nothing to trade. That's why it's called an "example". Another example was provided Friday morning, by Eddie.

If I've forgotten anything, I'm sure someone will let me know.

As for the Investing.com charts posted, the charts are free, as are the charts from stockcharts.com and bigcharts.com and barcharts.com et al, all of which are posted by ET members and have been for a dozen years. I can, of course, explain all the necessary information in words, but I have been discouraged from using words. In any event, the first response would most likely be "show us a chart".

Anything else?

And for those who are wondering what the hell is the SLA, I will post, again, a crib sheet of the rules. Note 3h and 3i.



And as for an example of the first three:



Some investors have trouble making decisions to buy or sell. They are unsure because they really don't know what they are doing. They do not have a plan, a set of principles or rules, to guide them; therefore, they vacillate and can't make up their minds.

-- Wm O'Neil

A losing trader can do little to transform himself into a winning trader. A losing trader is not going to want to transform himself. That’s the kind of thing winning traders do.

-- Ed Seykota

 

Given that Saturday was given over to an influx of Piranhas, Trolls, and Trolls-In-Training, I have to back up a bit to return to business, which is deciding what to do this afternoon when the market re-opens.

So far, none of the trolls have offered any opinions on what should be done when the curtain rises. This may be the result -- or cause -- of a question that was asked earlier: "Don't you people ever tire of yesterday's news?" The answer, to a price action trader, is, of course, no, as yesterday's news and the news of all the days preceding yesterday (or, technically, Friday) provide the context for the upcoming session. Some traders prefer to wait until the market opens before they assess the situation and then trade by feel, in "real time". What they miss is that in the market there is no "real time". By the time that "real time" trade is noticed, much less posted, it's already in the past. In the market, as in life, there is the past and there is the future; there is no "now". Therefore, if one wants to make the most of the upcoming session, it is wise to prepare.

For example, here is Thursday's chart:



Notice that while the weekly trend is up, the daily trend is down. And it is down in a channel, which is common among mean-reverting instruments. Notice also that it reversed off the upper limit of the channel three days previous.

Here is Friday's chart:



In a mean-reverting instrument, price will gravitate toward the median of the channel that is created by traders as they move away from that median, i.e., the "value area", the level or zone where the bulk of trades take place within a narrow range of prices. Without knowing anything about "yesterday", a move such as this comes as a complete surprise, and those who trade by "feel" often end up on the wrong side of the trend. They are the buyers who are taking what the sellers have to sell on the way down.

For convenience' sake, this is a copy of the chart I posted two up. You can see that we are at a juncture here. Will price bounce off that juncture? Or will it plunge through and make its way toward the lower limit of the daily trend channel?



Astute price-action traders will note that we were involved in the same conundrum a few months ago: price dropped to the median of the weekly channel and seemed to hold there for weeks on end. However, if one provides the additional context of the daily channel, price held at that particular juncture for only 4-5 days:



And rather than make it all the way to the bottom of the daily channel, price instead rallied up to and through the upper limit of the daily channel all the way to the upper limit of the weekly channel. Will this happen again? Maybe. Maybe not. The PA trader doesn't care one way or the other; he goes where price leads. Which is where the range comes in.

Here is where we are now:



The range represents traders' search for equilibrium, or a balance between supply and demand. The juncture of the median of the daily channel at about 42 and the median of the weekly channel at about 37 adds drama to this, but what is more important is what traders are doing at this level in this timeframe (9 hrs). At noon they were hovering around 45. They then tested the waters at 50 and 30, coming back to 45, settling in at 47 just before the exchanges pulled the plug.

Though this is an embryonic range, there's enough information here to provide at least a preliminary assessment of what traders have in mind. A lot has happened since Friday afternoon, though, so the PA trader must be nimble. But if price settles into this 30-50 range when the market re-opens in a few hours, there are only two options available to the PA trader: buy long or sell short:



And that's really all there is to it: context, preparation, execution. If one ignores the context and doesn't prepare, his execution may not be quite what he imagined it would be.

There are three kinds of men. The one who learns by reading. The few who learn by observation. The rest of them have to pee on the electric fence for themselves.

Those who have just tuned in and are interested in this subject might find The Foresight Thread informative. These charts whizzed right by those who see no need for context or preparation, but that they are worth doing should be self-evident.

 

Two points.

First, it seems to me that anyone who doesn't agree with you, you call a troll, and this just isn't right.

Second, how profound of a statement is it to say that a PA trader can either buy long or sell short? Aren't you covering all the bases here? I can do one better than you and be a bit more descriptive.

When price reaches 4350, a trader can either look for the trade to buy the breakout and go long, or look for a reversal and go short. If price should reach 4330, he can either sell short the breakdown, or buy the reversal and go long. Of course what he chooses to do is based on his testing, be it an entry based on a retracement, or an entry based on price moving away from the level by a certain number of points.

His choice will depend on his comfort level with risk, balanced by his need for information about the trade moving in the direction. The more information he requires about the trade, the worse of a price he will get, and the larger the stop will have to be. If he jumps in right away, he has to be prepared to exit when the trade isn't doing what he expects, but at least he can get out for a smaller loss. Being in a neutral position will allow him to re-evaluate the situation for a possible re-entry, or even take a trade in the opposite direction. Its not about being right or wrong, its about evaluating the balance between supply and demand and following where price goes.

Did I miss anything?

 

Ever heard of breakout failures?

How about breakdown failures?

Chop ?

Trader Vic 2Bs at Resistance? at Support?

Barbwire action at key areas?

You actually think you can trivialize this, with buy above resistance, short below support?

You are insulting experienced traders and setting up newcomers into failure.