Wednesday, November 25, 2009

Wednesday 11/25/2009 - Market Review

I can't stress this enough: Enter trades at Key Levels! Don't get caught up in the DOM, the tick moves or the color of the current bar/candle. Have a plan prior to the market open, then be patient and wait for price to get to the areas where YOU want to conduct business. A few benefits to this approach:
1) You will have better control over your anxiety/psychology since you're waiting for price to get to the area you want, and you'll be prepared to enter the trade at that level
2) You'll avoid the chop in the middle
3) You'll be able to use a tight stop-loss since the difference between the level where you enter a trade, and the level where you're proven wrong will usually be within 2-3 points, if not less.

Following is today's 5-minute day-session chart. Look at the 5-min chart in conjunction with the Key Levels and Scenarios post from last night. This is simple stuff, just requires some patience and discipline. Happy Thanksgiving!

ES 5-Minute Day Session Chart for 11/25/09


  1. Happy Thanksgiving. It is nice to see you encouraging other trades on the proper ways to analyze the markets.

    However I do beleive that you never explain how you arrive at these S/R KEY levels. You did say that you use S/R + Volume. If you feel like letting traders who follow your blog be aware of this technique, perhaps more detail explanation is needed. Happy Trading!

  2. driven, the levels I post are support/resistance areas derived from looking at the daily bar chart, volume profile, 60-minute or lower time-frame charts, and taking some Fib measurements. Nothing proprietary or secret. Pretty basic stuff.

    BUT...just to be clear, I'm not pushing MY key levels on to other traders. Every trader should be doing his/her own homework and deriving the Key S/R levels as they understand and view the market. That's the only way you can really have faith in the numbers; by doing them yourself and understand the significance behind each level.

    What's your current nightly homework routine? How are you currently deriving key S/R levels? How are they working out for you?

  3. I stated earlier...I do not do my homework or S/R levels.

    I trade based on the short/long intraday price trends paying attention to 2 volume indicators, with stops under the certain pivots. Plus, I also trade intraday countertrend if price and volume presents itself. Start trading 6:40 am Pacific, out by the EOD.

    I feel generous today :), so here is a tip.
    Try to trade very selectevly during non-volume periods(usually 8:00 am - 11:00 am).

  4. Very generous "tip"! And here I thought trading selectively or not trading at all during the low volume chop period (lunch time) was common knowledge lol :D

  5. You be surprised how many traders(including me at times) try to find a rhythm in a CHOP.

  6. Yea, over-trading is a problem for a lot of traders, including myself, but I'm working on it. Identifying the areas where I want to enter the market also helps cure the over-trading issue.


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