Saturday

Lessons from the live room: viewing data events as interruptions

The intent of the live trading room is to maximise trader profitability in a focused environment.

Just prior to a data release I took partial profits only (see chart below) whereas I should have taken all profits with a view to sit on the sidelines until the reaction to data had passed. this is because:
 
Data events and changing trading sessions (eg London open) are best thought of as trade interruptions, rarely having a lasting impact on price moving in-line with agreement
 
What compounded my error was then taking a long trade based on how the price was moving at the time. It’s easy to be seduced into placing trades when the pace of the market increases as it reacts to data releases or trading sessions commencing, only to then find yourself on the wrong side of the market once the “reaction” passes. 
 
However, acknowledging data releases etc as interruptions is a big step towards sticking with trading the dominant auction theme.
 
(Note: the total ticks for each trade is based on trading up to six lots per trade)

Click on image to enlarge

Monday

Lessons from the live room: using multiple failures for exits

The chart below zooms in on one of this week’s trades in the live trading room. Within the white boxed area, you can see how as price repeatedly fails to move higher, profits are continually taken.
However, the take-away here is the exit is not based on the number of bars printed on the chart because how many bars print is also a function of the chart setting.
An accurate measure is to keep a mental (or written) note of the number of times price fails at around the same price. When trade choice is underpinned by a solid understanding of agreement and market structure, this technique is very effective for exits.

Click on image to enlarge

Lessons from the live room: changes in value during a trade

The intent of the live trading room is to maximise trader profitability in a focused environment.
The chart below zooms in to highlight the entry of a trade we took this week. Because price tends to move away from high-agreement (value), we entered long as shown below.


Click on the image to enlarge
As directional traders, we are looking to benefit from a lack of agreement between buyers and sellers resulting in price movement.
During the trade, value changed as shown below. We used this as a cue to exit because with buyers and sellers agreeing on business, there is no pressure on price to continue rising.

Click on the image to enlarge

By exiting when we did, we avoided price triggering our stop-loss as shown below. The outcome was either a scratch or very slight draw, both better outcomes than the initial stop-loss being triggered. For the record, we later re-entered for a long trade which produced a positive outcome.


Click on the image to enlarge




Tuesday

Example "market prep"

Daily prep prior to each trading session creates the blueprint from which the day's trades develop, see example below...

No news = continuous uninterrupted trading which lends itself to a trend day.
Currently, we are trading within longer-term high agreement range between 0.7803 and 0.7846. Also, note the high agreement node at 0.7856. If price breaks the range to the upside then this is a profit take area.

Click on the image to enlarge

 The high agreement area from Friday’s longer-term prep at 0.7790 has held with buyers bidding up the market at this level and slightly higher over the last two sessions.
It is not clear where traders see value from the last two sessions, so despite the market making higher highs/higher lows into the close of the last session, I am not biased up or down. The market will need to show me which where they see value for the upcoming session.
Despite the very complex price action in the orange box, we can see a substantial high agreement area between 0.7816 and 0.7822 which has been the catalyst for the recent directional change to the upside.
Currently, the price is approaching high agreement between 0.7841 and 0.7852.
Price could push up on the open and then turn down at this high agreement area towards the lower high agreement area also mentioned.

Click on the image to enlarge

 If the market opens and continues to trade higher, if there is evidence of multiple failures at the high agreement area and price is extended, this sets up a short opportunity with a max profit at lower high agreement from the last session.
If the market commences trading around where it previously closed followed by failures to move higher,  this will present a short opportunity. The profit target will be lower agreement from the previous session.
Longs can be considered at either of the last session high agreement areas if evidence exists buyers are bidding up the market. Max profit target will be to front run high agreement that exists at 0.7841 as it is evident from the last three sessions PLUS it’s also a major high agreement area on the longer-term profile.
Any moves higher will require re-prepping.

Click on the image to enlarge

Friday

Lessons from the live room

The intent of the room is to maximise trader profitability in a focused environment.

Yesterday’s live trading highlighted the importance of avoiding trading in high-value zones.
There is no directional bias during high value, so regardless of being long or short, you can’t generate trades which skew the reward to risk in your favour.

When the price is trading at high-value, a relatively high number of buyers and sellers are agreeing to do business. As a result, price will remain in this area until business is complete.

I’m sure you’ve heard of “choppy markets” and traders being “chopped up” in such environments. Well, by observing value (see area highlighted between dotted lines), these areas can be avoided.

Click on the image to enlarge




So, when do you take trades?
Yesterday, we took advantage of the aggressive move to the downside by trading during a low agreement zone. Morning prep highlighted these areas so traders were primed.
Click on image to enlarge

Log in to the live trading room and gain access to:
  • Daily morning prep
  • Real-time trade opportunities
  • Institutional tools including cumulative delta, daily and cumulative volume profile, CME unfiltered real-time price data
  • Real-time instruction on scaling in and out of trade sequences



Monday

March and April scorecards

The scorecard is a reminder that no single trading day or week is significant, and trading performance should be measured in meaningful sample sizes.

Last Friday and Thursday’s trading comes to mind, +3 and +21 net pips gained, see chart images below.

Disclaimer: Past performance is not an indicator of future performance

click on the image to enlarge

click on the image to enlarge