Rhythm showing a 2 hour bear trend channel within the daily bull channel. There is air on the 120 min channel as well as air on the daily channel. When these two rhythms align around 1650, I think there will be very high % long premises. Today we just chopped around inside of the top of that 2 hour trend. The high % trade today was the buy at the open, air fill to the top of that bear trend. Tonight something will give on the debt ceiling incident. Something will either be passed or in a more surprising turn of events, the gov't will temporarily shut down. Either way I believe there will be some sort of price reaction that could muddy the waters OR provide some great opportunity. Bottom line is be careful, stay patient and play your game. Not taking action is always better than taking losing action.

I hated today's action. As the market opened, I never was able to get in synch with the rhythm, pace and market pattern. I was also strapped for time because I had my other business obligations looming. I don't know why, but I was putting on position in a market I had no feel for. Maybe because I felt pressured to get something going because I wasn't going to be there all day? Or maybe I became complacent due to recent successful trades. Either way I got chopped up in that red circle there. No bother though. Every mistake is just an indication of where I am in my development as a trader and provides a lesson on what I need to do to improve!

Price traded in a range again today. But todays support and resistance levels were lower than the prior days. Could be a sign of weakness... Also, a slightly sloppy head and shoulders pattern is forming on the high time frames. Could see air on the daily channel fill down to 1650 if this breaks down. The break is hard to catch, so don't get emotional and try to preempt it, there will always be opportunity in the wake of a market splash. Let things develop and let the logical side of your brain stay in charge.

Week 3: The Tao of Poker

Rule 249: Enter the white fear. A really devastating loss can change your perception.
There is a certain kind of loss that is psychologically crippling. It is of such intensity and dimension that it takes the wind out of your sails and knocks you completely for a loop. It is both the magnitude of the loss and the way it happens that grants it special recognition, moves it up into your "Top-5" list of horror-shows. It almost feels like a personal offense, a betrayal the way it happens.

Will such an occurrence make you change your long-term approach? Probably not. But you'll never think of things in quite the same way again. Something changes in you. For you now know this type of situation is out there. it can exist and it can happen. From now on it will always be in the back of your mind, and will color the way you view the world forever.

 

Pretty inopportune action overnight. I caught a nibble at a long at that green dot. But price seems to really be on the fence at this 1690 level. I guess as long as its holding above I'm biased long. Be aware though that sooner or later a direction will be decided upon.

The 1690 support was tested about an hour after the open. Price traded below support for about 15 minutes, probing as low as 87.5. By retaking the 1690 support, stuck shorts set up a great long premise. As you can see on the 15 min. chart above, this second 1690 probe short showed a weaker stochastic. This plus the VIX (which isn't pictured) gave added conviction. I entered at the green dot when the bull cup patters was completed. Price eventually ran out of momentum at the 1700 resistance, which has proven to be legit. It finished down back at 1690. This has been like an extended MATD oscillation environment reacting to Friday's bear trend. Looking forward to see how this develops. #dialedin

Overnight price traded in a tight range respecting 1690. Twice it tried to trade up, trapping longs in the 62-63 price (red dots). Could possibly fuel selling if this breaks down the 90 support. On a trader development note, I am starting to literally feel in my body the difference when I look at a premise I want to take for emotional purposes and a premise I want to take out of detecting objective opportunity. Ne3ed to remain focused on developing this "feel". Star pressing the objective feel and trade very lightly on the emotional speculations.

The hardest part about trading is not  trading. I spent the hours between 3 am and that green dot getting chopped up in the markets trading a rhythm I did not have a feel for. The sequence I took at that green dot lasted a mere 3 minutes and erased the deficit I created up to that point. When I entered that trade, I knew it was a high probability hand. I knew that everything I did before was trash. The only problem was I didn't know it until I figured out what the rhythm was and understood how strong the premise was for that buy. I am starting to get sniffs of what it's like to feel a rhythm and trust it. What I need to focus on now is when I don't feel that rhythm and not trading when I don't have it. It's very simple to grasp but difficult to do.

Prior day's HTF bull cup continued to extend over night. Backdrop for bullish action plus pre-FOMC announcement tendency makes me long bias today. However the volatility and pace will be dried up so be aware of the potential per trades. 1700 appears to be new support level. Gift long would be down at 97 - DAX keeping ES under 1700.


...

Took one on the chin hard today. Never really was able to get in synch with the rhythm and got whipped up in the early day low vol. chop. I had decent entries on my TUB of support premise, but for some reason, in direct conflict with today's rhythm, I tried to force every entry by adding when price reached the top of its interim ranges. I went on tilt hard pretty early on and just pressed with no focus, regard or care for what was happening in the market. As the FOMC announcement of NO TAPER was released, I tried to press for it all back by fading what I felt was extreme prices. That is fine, but the problem is when taking blind, highly emotional fades, you must have laser like focus and I was basically on tilt. Barfing it out with the retail squeeze's every single time. Need to get up, dust myself off and regroup. Successful trading is a state of mind. It is not market analysis. The action from today will offer some pretty solid opportunities tomorrow (presumably). I just need to make sure I am awake for them and mentally focused when they arrive. Laughing Man out...

Week 2: The Tao of Pooh

To know the Way,

We go the Way;

We do the Way

The way we do

The things we do

It's all there in front of you,

But if you try too hard to see it,

You'll only become Confused.

 

I am me,

And you are you,

As you can see;

But when you do

The things that you can do,

You will find the Way,

And the Way will follow you.

 

I read this book in middle school about a decade ago. Obviously at that time I got literally no benefit from the content. I found this book extremely enjoyable. It was a very easy read about the principles of Taoism using the characters of Milne's Winnie the Pooh as the backdrop. I truly extracted a lot of wisdom from this book. The message can essentially be summed up in the poem above. It is a little cryptic but if you read it word by word, you'll figure it out. Everything has an inner nature. The quickest way to peace is to understand that inner nature and be aware and accepting of it. Do not try to force the ways of nature. They must be allowed to flow in their own natural ways.

 



 

 



Biorhythms

S&P 500 Future

What exactly is that a picture of? Well it is a bar chart of the S&P 500 future. It is a visual display of the futures price going back to 1999. Okay - that is what those bars tell us, but what do they mean? The futures market represents a never ending struggle between traders who believe the market will go higher from where it currently is and traders who believe it will go lower from where it currently is. In other words, those bars are visual representations of the actions, beliefs and emotions of people.
As these price rhythms are being driven by the emotions of the people involved, it is my belief that the rhythms we see on a price chart can be applied to many aspects of life. I've found my emotional and intellectual state to reflect the price rhythms I see on these trading charts. I'll experience highs one day, only to pullback and feel in the dumps for no reason the next (ever heard the term emotional roller-coaster). Sometimes my mood will consolidate for a couple days as I wait for that next breakout to be propelled to even higher highs!

The point I am trying to make here is that we have to take the highs with the lows. The good with the bad. Everything is in a state of perpetual change and motion, however that motion is not a neat and predictable. There are peaks and valleys, consolidations and breaks. This is important to understand because we find peace when we are in balance with our external environment. When you can accept that there will be highs, and sudden yet temporary pull backs from those highs - and lows that will reverse when you are so stretched that you can't go any lower, you will not need to struggle with the lack of harmony between the internal and the external. The same concept goes for success in the markets. When you can understand and detect the current price rhythms, you can trade in harmony with the markets. It's the old Wall Street adage "Dance while the music's playing".

 

 

Ugly chop action last night with high% longs at prior late day support (high 80's).  Expect continued range type trades. Look for fake outs to punish emotional retail traders!

...

Tricky stuff today with the only high hand really being that tail above 7.5 in the 10 o'clock hour. Didn't have an offer working so I couldn't get short. Really all day I was fighting the tape trying to find wholesale short entries. Unfortunately the volatility was virtually non existent and any high % entry was extremely difficult. Daily cup still seems to be in play, as traders trapped below the early 92.5 resistance were grinded out today. With the upcoming FOMC announcement tomorrow, clearly the participation was very low. Just want to note that today the 3lb was extremely laggard. This supports my early bias that anyone trying to run the market will get stuck.

Last night Asian traders took the US futures market up roughly 1%. The big news was Larry Summers' withdrawing of his bid for the next Fed Chairman. This secures the more dovish Janet Yellen the job. Apparently the market liked the certainty of knowing whom the next chairman will be. Larry Summers would have likely been more aggressive in his tightening of fed policy.

This all makes for great cocktail party talk, however all I care about is what the price is most likely to do next.  Shorts stuck in that daily bull cup drove the prices to new highs and now we have an overbought market with ample air on all charts. Need to respect stuck shorts who need to cover on any moves down, but see the best hands as wholesale shorts. look for divergences and exhaustion pushes.

The market exhibited MATD type action in response to last night's rally. Basically, wholesale entries presented themselves when whipped up traders tried to position themselves as if today would be a trend day. Best entries were taking advantage of emotional overshoots at levels of support/resistance. The opening short sequence, air fill on break of 97.5 support level paid very nicely (aided by an extreme tick with price declining). I took a little at the open, but failed to re-enter when 97.5 broke and totally missed out on the necessary opportunity. I should have used that to fire myself up and trade more intensely today. The low 90's support zone paid wholesale longs very nicely too, with fast rejections off those prices. Also take note of the failed retaking of the 97.5 support level, leaving late to the party longs out to dry. Should have been more on my game to sniff that out and sell hard into the move down. Overall my market read was not bad today. My complaint would be in my matched aggression on a day of decent rhythm and good opportunity. Price closed at the lows off a weak choppy 5-min. downtrend. Tomorrow look out for trustworthy support zones to get long off of. As prices is in back & fill mode, supports with the daily bull cup at their back should be pretty high probability. Stay especially on the lookout for guys getting trapped short trying to sell this hard.

Yom Kippur: The Day

Leviticus 16:30
       
       “For on this day He will forgive you, to purify you, that you be cleansed from all your sins before God.”

Yom Kippur literally means "Day of Atonement". It is the holiest day of the year, devoted to reflect and repent on sins committed in the past year. The Day takes place 10 days after Rosh Hashanah, the Jewish New Year. The Day is spent "afflicting your souls" by abstaining from the body's main needs - an expression of pure faith in God.

Life can simply be described as a collection of tests and rewards. The trying times are our tests and what we gain from those tests are our rewards. Each day we face these tests and how we respond determines those rewards. Some tests we will pass, but much more we fail. Even in failure we are rewarded through the lessons we learn from our mistakes and the strengthening of our soul after getting back up when we've been knocked down. I've referenced before in this blog the importance of how we respond to failure. Pain and failure is inevitable in (trading) life. If we do not learn from these tests and move forward, than we are not living.

Take today to reflect on the pain you've caused yourself and others. Remember the mistakes you made and the failures you endured this year. Take everything you can from those experiences and ask for God's grace. Your soul will be freed and you will become wiser and stronger than before. Life is amazing in that it can take you from a state ignorant bliss, to the greatest heights - higher than you ever dreamed - than leave you feeling sorrow you never thought was possible. Life's trials can not be forecasted. They can not be avoided and hit us when we least expect it. All we can do is batten down the hatches and hold on, for it is always the most beautiful after the storm.

Overnight rhythms still choppy and range bound. Supports held. Just tried probing long on that news focused pullback to the moving average, but scratched on 3lb turn south. Until proven otherwise 75-80 is the interim range. I do not really have a good feel, from looking at these charts right now. I didn't sit down until about 7:30 so I haven't gotten a feel for the pace yet. SOH and SOOT until the music starts to play a little louder.

Pace and setups have been awful. All day I've been playing defense. The only real mistake of the day was getting mixed up with that opening action up around 80. Remember stay high % and all will be well. Don't buck your plans and best judgment by chasing into moves that may or may not actually occur.

The key to success is trading is identifying high value situations and pressing your edge. One gets into trouble when they enter the day without a plan, or even worse have a plan but allow their emotions to take over and the plan goes out the window! Always know where and what your edges are when entering the markets and have a plan of action to execute those edges CONSISTENTLY. Even if you are wrong, and believe me you WILL BE WRONG (we are only human) - as long as you are following your best judgment with consistency you will be okay. Generally when our emotions take over, most dangerously fear, our perception becomes distorted and what was once well planned, prudent action is replaced by erratic and thoughtless behavior.

This principle is so important, not just in trading but in nearly all aspects of life. Don't get me wrong, emotion is extremely important, but it must not be allowed to interfere with intuition and high percentage successful planning. We must know when to say no to our emotional desires. Emotions are to be in harmony with our intellect, not at odds.

Price in back and fill mode in this low vol. bullish environment. Again support zones provided high probability entries with high probability exits into interim resistance. Time did its thing in filling the higher time frame air. Only substantial air remains on the daily chart. Continue to trust support zones until broken.

DAX consolidated during its session, it gave a long entry at support at 8450. I of course was not up, but even if I was, I can't trade DAX and the ES entry was nowhere near as attractive. ES is still in that 80-82 range it was stuck in during the afternoon. Could be setting up for a range break. Price in consolidation, HTF long chart patterns at the market's back and air on the higher time frames all make things somewhat uncertain. Need to wait and let the rhythm develop.

...

Today was a successful day in reinforcing the idea of waiting for those high % hands. I realized I lose sight of what is the highest probability market action from here to look how much the market will move IF it takes this action, with no regard of the probability of that outcome occurring. Call it greed, call it seeing $$$, but it causes me to trade lose and reckless. The fact of the matter is, you can tell where the pocket aces are on the board (unless some unexpected market action occurs and changes the current rhythm), so wait for those high end hands to show up and stop burning blinds on the trash!
Otherwise you ARE trash.

 

Support zones in the mid to high 70's was the high % hand. Looking for a break either way in the 80-82 early morning and mid morning range was the TRASH.

Know Yourself

 Life is full of obstacles and bumps in the road. These are inevitable, nobody is immune to them. What sets us apart is how we can respond to them. Right now I am going through one of the most emotionally trying times I have ever experienced. When we suffer loss, we can either live our way through it and end up standing on simply drown in our sorrow. To know, and understand who you are, is important in overcoming whatever emotional pain being felt. The feelings of pain can not be fought or pushed out. They must be felt and embraced. Knowing yourself helps you intellectualize how and why certain things hurt so much. When you can understand who you are, you can accept what you are feeling and begin the process of healing. I say this because emotional pain is about YOU (ME). Again, grief is a process. The destination is moving past grief with the rewards that are earned through that test. One must use the grieving process to reflect on themselves and their experiences. Embrace the pain, Enjoy the sadness. It is not everyday you get to live with such extreme emotions - there is a lot to be taken from it. The important thing is to try to remain strong and positive throughout it all. At the end of the day, we are our own worst enemies.

The DAX gapped open and ran carrying the ES with is. Yesterday ES trended but DAX traded more in a consolidation rhythm. So the expected MATD oscillations didn't really show last night. As we open we will be stretched to the north on the HTF's. Play today like MATD but be careful.
MUST dial in on that mental intensity and stay patient until I have caught onto the scent of today's rhythm.

Final hour of trading, looking for a break north, pickup in volume. Price above resistance zones. Cup patterns, stuck shorts.. Still air on 60 however... TMAR exits.

 

 

Today was a big chopfest. Another example of the lesson is you have to be ready when the opportunity is there. It was a tough day with the air on the HTF's, but the overall rhythm is bullish. Respecting supports and being aware of air going forward. The bear trap in the 11:00 hour at that 77.5 interim support (in hindsight of course) was the nice play today. Need to be there and be aggressive on sequences like that to offset the scratches throughout the day.

So shorts are stuck, ticked off longs want in, and the price is stretched. Going forward, look out for wholesale longs entries. Mid to high 70's support zones. Remember, always stay focused!

 



 

 

 

 



Week 1: Chronicles of a Million Dollar Trader

             I am starting with Don Miller's Chronicles of a Million Dollar Trader. I will be finished on Sunday and will come back to this post to write my synopsis and review of the book. Sunday night I will choose a new read. The goal is to try to get through 50 pages/day.

...

9/15:

"Chronicles" is a trader's memoir written by the gifted ES trader Don Miller. He has been my inspiration and role model in my pursuit of trading success. The book is a peek into the mind of a man who traded for a net $2,000,000 profit in roughly 18 months. I found the book to be an easy and enjoyable read and a great book to kickstart my 52 book challenge. Don successfully dispels the myths of what it means to be a trader by displaying the slow grinding journey down a bumpy road of tests and rewards. This read was rewarding to me because it opened my eyes to where I stand in my development as a trader. I'd say the greatest lesson I learned from this is that Don made mistakes. A lot of mistakes, and mistakes of the same size and nature that I have made. I realized that Don did not have some mysterious gift that I don't have. What sets Don apart from the rest is his understanding of the trading game. It is about mental focus, HARD WORK, practice, failures and most importantly response to those failures.

The book has given me confidence and inspiration to pursuit this business aggressively. To traders, I highly recommend reading it. Non traders might get lost in the trading lingo, however, Don displays strong work in providing valuable life lessons using his trading ups and downs as a backdrop.

Rise Up




 

“Bad things do happen; how I respond to them defines my character and the quality of my life. I can choose to sit in perpetual sadness, immobilized by the gravity of my loss, or I can choose to rise from the pain and treasure the most precious gift I have – life itself.” – Walter Anderson

 As the Phenix rises from the ashes, so will I. Not just spiritually and emotionally, but in my pursuit of happiness. I respawn this blog to guide me and keep me focused and motivated on my path to becoming a profitable intraday ES trader. Trading is a high intensity, extremely focused practice, and quite frankly what has been my primary obstacle has been my failure to commit. Its been long enough that I know the principles of successful trading and market reading, but I can not execute and monetize that knowledge. The last piece of the puzzle is to start doing. I must do what everyone else is not willing to do. That means getting out of bed in the morning to trade the DAX session. That means maintaining my laser sharp focus in periods of dead action. That means forcing my energy to remain engaged and energized as I dive into the futures market everyday.

 Today's performance was a great reflection of those principles of mental intensity and focus. Despite all the negatives in my trading today, mostly inability to press on high % setups and lackluster exits, I was able to detect the rhythm and flow with it. I achieved this through a combination of premarket planning, and mot importantly, focus and mental intensity. If you are not willing to work for this, to exert energy, both mental AND physical, you will never succeed, no matter how well you think you can perform technical analysis. My goal is to find ways to maintain mental intensity and a winner's attitude while trading, and find ways to find it when it is lost. If I do not have that connection with my mind, body and soul, I must not put risk into the markets.

The market is a very unique creature. You can never predict what she will do next, but if you listen closely, you can connect with her in the most powerful of ways - and she will reward you beyond your wildest dreams.