After party

This afternoon, I went to day trading friends party at his home. 5 traders, 6 if plus me. They all started less a year ago. 2 of them are younger, at around 26, one at 33, two are a little older ,about 38.

They were in the day trading class about a year ago, all of they went starting daytrading in the trading office after the training, one dropped out (I guess the reason was he broke the loss limit too many times), one is trading far better with 2000 shares buying power, one newer guy is trading 1000 shares, the other two are trading 300 and 500 shares.

if trader consistently makes more then his average profit for 5 days, then he will get more buying power, everytime go under his average profit, his buying power will be reduced accordingly. And stop limit will also be adjusted accordingly too.

if trader has 2000 shares buying power ( he can buy most of available stocks , not restricted by share price, but higher price stock will fluctuated more in cents) , his daily trade stop is $200 dollars, if he loss more then $200, he can't place any trade.

cut loss is 1, 2 or 3 cents for maximum.
only trade one market at a time, holding two or more markets will not work well
enter and exit using Level 2 screen to minimize slippage
use Level II to observe market strength

use daily P/L ratio: win average and loss average, number of winning trades and lossing trades use performance management:

300-500 daily profit with 300-500 shares buying power
20 day moving average profit/loss leads to increase or decrease of buying power
1/5 MA profit is the daily stop limit

There are a few tricks
- not trading in the first 15 minutes
- price top or bottom boundary is likely to be explored in the first hour
- gap fill , if not filled in first hours, most likely not be filled later
- gap fill, check the stock back in its history, if precedent gap cases gap filled, then more chances this time
- gauge the energy buy watching how the price moving across major levels, like 10.00, how fast and how much resistance ...etc
-technical analysis is not really helpful in timing, becuase when you see the moves on 1 min chart of SPY it is already too late, and the most of stocks follows SPY, then will be too late put limit order in. technical analysis doesn't give specific timing. for example of divergence, you will not know when it is going to happen, the price can be far over extended before
-

bad trade analysis

Observations:


1) enlongated bar at market top or bottom

Volume bar is likely to get elongated before reversal, I interprete this as sellers dry up in the case of touching bottom, price can be either up or down but the transaction hit the waiting bid order - buyers' limit buying order, then the Volume bar records this transaction as down tick, and then Volume bar shows in red color. This is a sign the buyers stepping in, I believe.

in the case when market at the top, the buyers slow down, the sellers put in LIMIT SELL ORDER, the transaction hit the waiting sell order, recorded as UP TICK, then the VOLUME bar shows GreeN, even though there are less new buyers step up. This could be a sign that the market topping out and sellers getting control .

2) UP VOLUME and DOWN VOLUME each follows its own trend line, breaking its trend line indicate a potential shift to the weight or confidence or energy of bears group or bulls group, it not necessarily mean change will take place right away, a short counter trend could follow. But importantly, take breaking trendline as a warning sign.

3) If at the time of VOLUME touches trendline boundaries, the price happens to be market resistance or support level, minimize risk - tight up stop loss limit !!! or don't trade or simply cover the trade, take profit on the table, or minimize loss and exit, the reason is I guess the collective large players trade with bigger trend know the stop loss the people put, or could be longer time frame players join in and care less.

4) range bound day, TICK extremes at +-1000 is a reversal play, oscalator

5) range day, price tends to explode the immediate previous upper and bottom limits once bounced by one side.

P/L +305

shares traded 4500, max holding 800

Short at 75
cover at 74.80

both Volume and Price pattern are important, and tick, find trend line in there, find retracement in there

trades analysis

P/L +763

( but very bad, this is done by highly leveraged revenge trading --- try to get even with the market or ego)

prep work

prep work: line in the sand 760

new finding:
Very often, /ES underwent a correction when market open at 9:30

(I only post lossing trades in chart for learning purpose
lossing trades were all placed opposite with bigger trend - always assume the market will keep moving in the old direction until trendline broken)


- 11:45 VOLUME trap, VOLUME jumps at the end of trend, it is a reversal signal, sellers are waiting with big limit orders, if no follow-through, no more buyers will keep buying, it will go down.
- Wrong trades were hold too long in the range bound day
- any trades should be timed with TICK MA
- range bound day-- divergence rule can play
- Use 5min chart to decide trade and direction, 1min chart to gauge price
- only see trees not forest today...be patient ...... dont need to rush into position!!!!






P/L -200



-

trade anaylsis

the above bad lossing trades

- long orders were entered at peak
- long orders, some are covered too quickly
- short orders - all mistakes in this market--- dont try to short in strong market, retracement is too shallow

Conclusion:

-long when VOL is coming back from resistence
-12 O'clock lunch time corrrection, and 13 still continue the VOL trend --- LONG ONLY
- in strong trendy market, Price and TICK divergence doesn't work well , still trade with bigger trend, don't Short
-When to enter Long order --- when VOLUME coming back up from retracement, that is the time to go LONG in, not early or late, when VOLUME get back all the losing VOLUME, bulls are showing hands in control.
- watch the development in lunch hour, retrace level,

P/L +128.00

Trade Analysis

- trade at tip of retracement , be patient

- trade in one direction only , the direction of bigger trend which only reverses a few times or NONE in intraday, don't try both long and short in the same leg.

- winning trade - can be hold a little longer

- lossing trade - get out earlier


-

P/L +92.00

scalping with big whales

Update:

Expected opening at 779
1st support 774, 1st resistence 786

Monday Preparation

day trading preparation

-review yesterdays profile
-review the overnight market
-compare the expected opening to yesterday's range, value area
-relative to the expected opening, identify 3 reference points


weekly high
previous days' high
top of previous day's value area
high of recent trading range
------------expected opening price ---------------
low of recent trading range
bottom of previous days value area
previous day's low
weekly low

####after opening######

-Note what kinda opening is occuring, and what I'd want to see in order to quickly judge the resulting directional confidence

-Note whether or not there is clear attempted direction, and whether that actitivity is supported by volume

-Does the market appear to be within balance or out of balance?


-visualize the remainder of the day. Will it look elongated, squat, fairly normal like a bell-shaped curve. Note any unusual shapes or patterns that may suggest somthing unexpected is happening


-estimate how much effort is being used to move price directionally, and note what that suggests about the inventory conditions of your competitors---too long, too short, above water, below water...

-flat in front of significant new announcement

if up and down volume is the acumulated number of shares traded for the day, why the UVOL or DVOL line can retrace lower then previous recorded volume????

NYSE UP and DOWN VOLUME = AMOUNT of INTEREST = AMOUNT of CONFIDENCE

let's explain what up and down volume really represents. You'd think that up volume means buying and down volume means selling but that isn't true. Up volume is recorded by the NYSE when a trade occurs on an uptick and down volume is recorded when a trade occurs on a downtick. An uptick means that the price rose by a penny and a downtick means that the price dropped by a penny. Plus remember that at any given time you have both buyers and sellers in the market and that every trade represents both a buyer and a seller. You can't have a buyer without a seller and you can't sell without a buyer. So what the NYSE is showing isn't really buying and selling but rather the amount of interest in stocks rising versus the amount of interest in stocks declining. This confusion with up volume as buying and down volume with selling is very common, but it isn't accurate. Please note that not every order in the market is a market order. Limit orders for example, are executed when the investor's price target gets through the bid and offer and are generally counter-trend orders. Remember that a limit buy gets executed when the current price drops down to the order's price and limit sells are when the price rises to the order's price. So these limit orders contribute to up and down volume but the limit buy order increases the down volume and the limit sell order increases the up volume. For example, let's say that you are looking to buy a stock but you are waiting for a price that is 5 cents under the current price. The price drops a nickel and your order to buy is executed. Your volume is considered down volume despite the fact that you were a buyer.

Always true:::::

Don't need to extract information from the chart and gusessmate whether bulls or bears are going to be in control, you need to quickly join the directional and dominant move as soon as the market tells you

Always true:::::

Don't need to extract information from the chart and gusessmate whether bulls or bears are going to be in control, you need to quickly join the directional and dominant move as soon as the market tells you

Always true:::::

Don't need to extract information from the chart and gusessmate whether bulls or bears are going to be in control, you need to quickly join the directional and dominant move as soon as the market tells you

P/L -80

lunch hour correction and follow through

Great Loss as a result of not following VOLUME trend

P/L -192.00
paid expensive price for not joining dominant bears -- simply follow the volume

New development during the day

afterhours of /ES, broke out, at the Tuesday's resistence level

-- indicating bulls still have energy to push back
/es traded at yesterday's POC level two times in afterhours
/es 930 opening at yesterday's POC level
retracement before 12 lunch hour at yesterday's POC level

--but bears are more forceful, it went further and faster, only getting weaker each push-down from the tick reading!!!


###a price balance day in general, the price movement is shaky with bigger retracements
***after a consolidation or balanced day, the game rule is to follow any market's directional move earlier in the morning, get in at 0.37 retracement but watch out for potential big reversal.

1) learn to trade the volume trend channel, spot them and trade them

2) two price vs tick divergences both at extrems, didn't have patience and missed the first one

38 long and short trades
commission $76.00
P/L -$35.00
most lossing trade -$52.00

trend watching: Emini future trading before market open

/ES retracement after market open is so weak, failed reaching resistence level 800 formed at early morning, this is a early warning, the VOLUME reenfored the selling

not about forecasting the future
not about being right or wrong
not about feeling good or bad, or excitments or thrillers
all care of is to make money


you need to extract information from the market and find out whether bulls or bears are in control, you need to measure the strength of dominant market group and decide how likely the current trend is to continue

you need to practice conservative money management aimed at long term survival and profit accumulation


you must observe how your minds works and avoid slipping into greed and fear

I know I shouldnt bet and guess what will happen tommorrow as a day trader, just from swing trader's perspective, I put my own educated guess for tommorrow.

tommorrow still in the down trend, as the selling of this time is stronger then 10/2 based on the TICK and Volume. the price is stuck in a range today but down volume is much bigger, remind me back in January .... follow the volume trend is still the right thing.

I should not collect biased information to support my speculation, all will change tommorrow morning when market opens.

my range day trade setup

Enter in the direction of bigger up-down Volume bar, when the Vol break trend line

Exit when

1) Vol break trendline

2) $TICK hit 500

3) Tick and price shows divergence

4)

my trading method for a Trend day

I am using trend following method to day trading SPY. firstly, early in the morning try to identify the trend day or range day senarios .

Trend day: smooth and directional up-down volume, in the direction of price, retracement or correction is less then 0.618, gap is not filled Range day: the rest of trend dayidentify a trend day by

1) $UVOL- $DVOL volume on NYSE is stronger and directional, and smooth.

2) gap up or down and not being filled
3) $UVOL- $DVOL and SPY price goes to same direction
4) retracement around 0.375


if not trend day, then it is range day. please not try to guess how many trend day and range day in a month.

I will post SPY trade setup and mental activities here