Forecast - Execution - Management

Many of my mistakes particularly of the impulsive type happen because  I lose focus on the likely Forecast that i so often get right but fail to execute in a way that allows the action to play out fully while I'm in it.
One reason for this is that when i lose focus I tend to look at the Lowers(500tick) for ENTRY'S, Instead of observing the entire trades likely targets (entries, stops, position sizes, targets)


In evaluating my perspective i came up with a good reminder acronym F.E.M. in order to re focus on what I must keep in the front of my trading mind.


Forecast - this is the preparation and analysis that tells me where the market is Likely to go for the day, starting with Globex into the Pre-Open, opening bar, 7 and 9bar zones. USE DAILY MARKET BIAS X and STAY WITH IT. The Forecast includes each section of the trading day including the Globex session, morning, midday and afternoon. When I view the market in sections it allows me to focus on specific conditions for each section. The Type of Gap day, Average True Range and what i can expect leading up to and thru zones. Forecast also includes the Setup potential based on the current sections Strength/Weakness Support/Resistance, VSA rational and Confluence Synchronization.
Execution - This is me actually recognizing and taking action based upon my forecast, including entering on a bar break confirmation, re-entering if needed and reversing position at key points. Also Exiting at max profit once I get the 1500 Exhaustion and Pro bar signals or when volume and market dynamics invalidates my bias for the entry. Execution also cover the concept of adding to positions that show signs of target potential early on in the trade. Equally as important is the ability to recognize and Exit a potential losing trade, When price Fights The Cycle/Ignores The Cycle or fails to move into the green in a reasonable amount of time.
Management - This is my ability to limit losses by managing the trade either using the ATM or manually moving stops up/down. Understanding when to scale in and out of positions is critical for Maximizing profits and limiting losses. Risk management can also include picking high probability trades at high probability TIMES and areas that provide lowest risk. Knowing when to avoid the market is just as important as knowing when to enter, when Im on the sidelines I'm essentially playing defense and this is management of Exposure


The 3 thirds of my trading are the cornerstone to progress. Each one of these must be mastered in relation to the other, No one can yield positive results alone. Each one needs the other just as a 3 leg chair would fall at the breakage of any one leg.


If I were running a restaurant the F.E.M would apply in the same manner. I would need to forecast what the customers where interested in, execute or product the entree, and lastly i would have to manage the process of transferring the desired product to the customer at a cost that provided my store a profit.


Cure for the breakeven blues - Wait until price cycles back to the original entry then reverses, then move our protect-profit order to protect at least half of our open profits. 


Things to Remember about the basic ebb and flow of all Markets

Limiting Market Exposure with 7 & 9 Bar Zones

In observing the markets it is no secret that time of day is Huge in determining the probablity of trades following through. This is especially true with the Forex Markets. They have an obvious US session where things are moderate to slow, then at 3:00 eastern the Japanese session starts and the Currency market basically stops, but in the wee hours of the US night the Euro session starts and this is where the action is. This is also the highest probability of Limiting out with profits. Unfortunately for most Americans it conflicts with our lifestyle and sleep schedule, and a tired trader is a poor trader so this complicates things. Also if a trader tends to over trade then the forex provides a 24 hour casino for you to donate your hard eared bucks to.

One reason I love the ES is because it is consistent with my basic sleep schedule. And since the markets close at 1:00 Pacific time Im forced to quite, win lose or draw. Even though you can still over trade the damage would have to be very hard and fast.

This comparison of markets is simply to point out the fact that you must choose the vehicle and TIME that is consistent with YOUR daily life and provides the highest probability for success. With that being said i want to share a simplification technique that I believe will help prevent over trading, provide high probability trades and increase focus at the most opportune times.

I Call This Technique THE 7 & 9, The 7 referring to activity just prior to (6:45) and just after (7:15) 7:00am Local time on tradestation, GMT pacific standard time.  The 9 referring to activity just prior to 9:00am and just after 9:15am Local time on tradestation, GMT pst.

What I have observed through experience and back testing is that the markets can be broken down into sections, these sections can help me to focus and concentrate more intensely at specific intervals.
Ideally, if I can execute 1 trade per section/quarter that would match my 3-4 trade limit per day. Understanding there is NO real perfection or Exact timing, this helps my awareness of what may be expected during each quarter. The 7&9 peak activity marks potential turning points for the Day. Preparing for these times and analysing the reaction AROUND these times provide clues that link the sections of the day together. Again this is not exact and i don't just trade the bars, neither am I changing my basic rules and signals that trigger an entry. Im still using tick charts for signals and triggers. However I use the 15 minute chart as a clear reference point for confirming exact times.  I am simply organizing my thinking around specific times in an effort to limit unnecessary market exposure.

The Sections are as Follows:
The Open - 1st 15-30 (1-2,15M bars) minutes after the open. I'm looking for an Open Ice Breaker trade here to get the ball rolling and taking advantage of the early volatility.

7Bar positioning - 5:45 - 6:45. Next 30-45 after Open Ice breaker (2nd, 3rd, & 4th 15M bars After Opening bar). This is where I probe for double bottoms, Gap Test, Cycle Support/Resistance bounces and Trend clues (Not necessarily for the Day but at least until the 7:00 O'clock bar). This part is the key, if i can ID the probable Range, Trend or S/R at this point I can look for entries and or position myself to Ride into the 7 bar where I may expect to exit positions. Again we know there is NO guarantee of exact occurrences but to have a generally clear idea about potential is the point here. 7Bars rule - If profitable 3+ points after the 7bar, then STOP for the day.

The chart below shows the activity on the 7bar as it peaks with Blocks Size. This is a Reversal day that features The Ideal Sequence: Opening Bar, positioning opportunities for 7bar, Dead Zone consolidation & Peaks at 8:30, then 9bar confirmation of trend for the duration of the day. 9bar breaks below trend line to confirm down side pressure. (The arrows point to the bars and sequence).

This is the ES 15 over the past 2 days in a very strong up trend, I Have placed arrows point to the 7&9 time zones and with Open and Dead zones and Peaks. Also note the Blocks Size that steps in on or around these times.

Dead Zone & Peaks - Dead Zone is from 7:15 - 7:30. This is where the market tends to drift off or Consolidate especially after a rally or sell off. I refer to it as the Dead zone, If there is ever a time to take a stretch break, use the restroom, or Re-Focus this is a good time. After the 7 bar we should have a good idea of what we can expect for the Peaks and  later the 9bars.

The peaks 7:30-8:30 refer to the potential to reverse or pull back at these points as well as positioning for the 9 bar. We are not looking for entry's per say, here we are probing for direction. If Trend remains strong from the 7bars, we look for the 9bars to confirm this and we roll with the trend. If a reversal has shown itself we Need to enter on the Qualified BB Reversal and consider a hold till the close.

The 9Bar Confirmation - 9:00-9:15. This is the last stop for a Real reversal, If we don't see a reversal by this time the odds drop substantially that we will get a reversal for the day. Thus we use the 9 bar and 9:15 bar as a clue to confirm trend potential for the remainder of the day. Reversals usually SETUP and Peak between 8-8:30, if this is true then the 9bars will offer confirmation clues. 
Why the 9bar is telling. At 12:00 noon in New York many traders on the floors of the stock exchanges break for lunch. This exodus to fulfill a natural need substantially reduces trading volume. This allows a number of reduced volume strategies to be played out in the markets by specialists and market makers.

There is one rule about the lunch hour: trust nothing you see.  However, if a strong trend is in effect, a new impulse for this trend can begin at this hour. In the event that the day’s trend is not clear, counter-trend moves are more likely to occur here! Traders Bulletin.

Notice the 9bars are usually Low volume bars that may be Doji's, test in rising markets etc.

Range Day showing 7&9 Bars at key points

AFTER THE SECTIONS:
potential to lose focus rises and volatility may become unpredictable. I don't have a hard rule NOT to trade during these times but if I can execute during the first 1-1/2 hours of the day I should have NO interest in trading into the close.

Noted characteristics and Observations about The 7&9 action

• 7&9 shows very strong consistency on TREND days.
• 7&9 appears on Range Days but the moves are Not as Prominant. On days when the 7bar is inactive we may expect ranges for a while.
• From 8:00 to 8:30 look for reversal peak or continuation clues regardless of direction.
• 9Bars must confirm with Background Strength or Weakness.
• Look for 9bars to confirm trend of the day.
• Prior to 7Bars confirm Background S/W and scount for S/R, Gap Test, Double tops/Bottoms or trends from, Globex or prior day.
• @ 7bars if market finds no S/R or bounces then look for continuation of current trend.
• @ 7Bar if No peaks tops or Probars then look for continuation of behaviors.
• After 7Bar market may consolidate for a few bars then peak at 8:00-8:30 prior to 9bars.

more examples
1500 tick 7&9 highlighted with red arrows

Same day on 15 minute chart with 8:00 peak down at Yellow arrow

What ALL My Worst Trades Have in Common

After writing the article about what my Best trades have in common i decided it will be equally if not more helpful to determine exactly what my WORST Losing trades have in common. In Doing so i came up with a list of mistakes that make most often. These mistakes are the akillies heal for any trader and must be clearly outlined diognosed and corrected immediatley upon discovery.

Before i List my own this is a list of differences between successful trader and Unsuccessful traders. They mirror each other

What I have observed in my own trading:
Over Trading. whenever i have a bad day i usually Balk more than once (I enter and re-enter in the opposite direction more than once over the span of a short time) This is completely horrible, fortunately it doesn't happen too often. But when it does it leads to multiple trade that just cost in confidence.

Trading against the TREND. Whenever I turn in a losing day it is usually hit hard by one or more trade against the Trend or trying to catch a reversal with a 2 point STOP!!! Doesn't even make sense when viewed from the perspective of a specialist, How can a trader be soo exact as to consistently catch the peak of a reversal without noting an Accumulation or Distribution Phase. Always Note your directional clues, Exhaustion, Divergence, Trend lines and Cycles.

Losing Focus - This can happened for any reason, a headache, having to use the restroom, a losing trade, a simple error or mistake, crash charts etc, either way you slice it, when you lose focus you should be mindful to stop trading until you can regain it. This will lead to loses and further loses as you spiral out of control.

Impulsive Entries, Breaking or Ignoring my Rules, recently happens early in the day as I tend to force the action, this leaves me playing catch up for the day and battling the markets instead of flowing with it. Also this impulsiveness can be triggered by emotional distractions. I'm correcting this by limiting my early trades to a specific entry to focus on in the 1st hour. see Open Ice Breaker.

Late Entries - All my Worst days will have a late entry on one or more trades.
Hesitation is a traders way of saying I'm not sure about this trade, when in fact every trade is only a probability distribution amongst the overall market consensus. Hesitation leads to late entries and missed opportunities, they cost you in points and confidence even though you may have a strong edge a late entry will need a larger stop throwing off your risk reward for that trade adding unnecessary pressure.

Moving MY Stops - Allowing Gains to become Loses, This must corrected by all who plan to undergo the rigors of trading. If you cant hold onto  the gains that you do receive than there is no way to make a living at this art form. Fortunately this is a thing of the past for me, but every now and then my Ignorant  side will try to creep in with a "this is a runner you should Move your stop to give it room"

Not Stopping to Analyse Loses - If you get stopped out, Dont reenter in the same direction without first understanding exactly why the trade failed!! Take the time to ANALYSE the mistake before reentering.

Time of Day - Dont trade during times of low focus, such as Dead Zone and After LAY LAY AND Feezah get active. This is a good time to think about wrapping up the day as focus tends to wane and distractions increase.

Examples of Poor trades taken in battle:

Mostly All my losers (3 consecutive) came after 7 bar zone, and where ALL against 1500 tick Exhaustion & Trend and within an hour!!

The 1st of these trades was a classic Resistance consolidation that never follows thru. I shorted @ 1319 The Hint to PASS on this trade was there was NO PROBAR AT THE RESISTANCE TOP

(look at the Red arrows on the 1500 & 500 tick, also see the 500 cycle to the long side)

The 2nd & 3rd Poor Entry's came 10 minutes apart in the same direction short @ 1320 & 1322.75 Both Stop Out.  (The Key here was both trades were taken short into SUPPORT and AGAINST the TREND and Exhaustion) 

The 2nd trade had NO cycle sync at ALL!!

The 3rd had one 1500 cycle but NO sync to confirm. (look at red arrows)

The 4500 turns at resistance BUT HAS NO PROBARS to confirm.

In summery, 

1. We should Never Enter without Probar Volume confirmation.

2. Dont Trade against the Trend. (here we were clearly in an accumulation stage and trending UP)

3. Dont Trade against 1500 Exhaustion especially after a large sell off that had probars to stop the run.

4. If you get stopped out, Dont reenter in the same direction without first understanding exactly why the trade failed!!

Spotting the Early Reversal and Trend on Gap Seals

I noted on the Aftermarket Gaps and the 15 Minute chart article how I spot the potential Days bias depending on the type of Gap printed on the Open.

Today I Noticed and confirmed that over the past 3 months when price gaps more that 2 points but less than 5 points we tend to get an early reversal and strong TREND that Seals the days Gap. The sweet spot that occurred most often was on the 3 point Gap day such as Today. More often than not the Reversal is a classic double bottom, Approaching on High Volume at support @ around 6:45 -7:00 bar then retesting the same area on low volume. This is a VSA signal testing supply on the 2nd test of support, I also noted that at the 9:15 bar usually started the consolidated into a flag and was likely just prior to the continuation of the trend. If you can determine the motive of the 9:15 bar you have a great chance of nailing the trend for the remainder of the day.

15 minute chart show today's Gap Seal after 3 point Gap early double bottom @ 6:45- 7:00 bar then Strong trend for the remainder of the day.

April 15 Gap Seal after 3.25 Gap

What to Look for:
Gaps that are more than 2 but less than 5 (3 is the Sweet Spot) = Strong Trend potential to Seal the Gap AFTER reversing and finding support/resistance level for the day.

Gaps that where less than 2 = usually fell into the CONTINUATION of previous day as defined by the small gap or NO Gap rules.

Also Gaps that were larger than 5 = usually fell into the Large Gap Rules trading in a tight range in one direction or simply stayed Range bound horizontally for the day. see Large Gap clues on Aftermarket Gaps and the 15 Minute chart.

After Market Activity.. The story between the Gaps

To Follow up on uncovering clues in the After market in an effort to Identify potential trading environments for the following day I wanted to show how I interpret the After Market trading activity.
This is fairly simple and straight forward.

To Began my analysis I first examine the 13,500 tick bar chart after the close, taking note of Cycle Support/Resistance, Divergence Nightly Highs/Lows, Block Size and Low Volume action. Also I take a look at Matrix Volume spikes as potential S/R wholesale and Retail ranges. (Treating these signals the same way I would during normal trading hours)


What I'm looking for is: 

• Strength or Weakness that has developed Overnight or Tested from the previous day.

If I spot areas of S/R on this frame.

•  I then Look for CONFLUENCE on the 4500 tick and 15 minute.

After noting these areas Overnight.

•  I return in the Pre open to determine if these areas are still holding.

If S/R area are still holding then:

• I treat the day as a continuation of the overnight session.

This is an example of how it all plays out. (aftermarket is the area between the dotted vertical blue lines)
13,500 tick after hours reactions at the highs with No Demand and double top in the pre open and opening bar.
4500 Confluence shows Double Top with End of Trend signal that started Overnight.

15 minute Opening bar failing at cycle Resistance with Profit Taking on a Probar.

These early indications show a strong probability of an opening Sell off if not a complete down trend day as we see here. Usually you see very large Blocks throughout the night indicating Dark Pool activity and Private positioning.

That's it!!
Basically the After Market can be viewed as simply a
CONTINUATION or ONGOING CONSENSUS of OPINION amongst the Specialist and Market Makers. Not so much the public as the amount of Dark Pool trading indicated by large BLOCKS imply True Manipulation.

Later I will post more after market charts to show BLOCK activity.

What my Best Trades have in Common!

In an effort to highlight what i Actually do right for a change, I wanted showcase exactley what i want to see prior to entering a trade. Below are good examples incorporating all the signals and indicators that make up explosive moves.

Fading Block Size on the 4500 tick (set 50/10) proved to be a great trigger all day. Using the Block Size Bars close as a place to fade with confirmation on the $TICK and 1500/500 tick was very solid. I noticed that you usually get a Doji, upthrust or tight range bar following Block Size bars prior to mark up or in this case down.

Block setups (Purple bars) on the 4500.**Notice the bar close, once its cracked in the opposing direction it runs. Must be confirmed on TICK and lowers.

4500 minute Block trade taken off cycle Resistance (ref #3 @ 12:11 area)

1500 minute cycle Resistance in micro crunch with Bearish Diverence.

500 tick cycle Resistance in micro crunch with Divergence, many time you will get a double top on the 500 tick as it corresponds with the 4500 frame.

This Alone would be enough to enter a trade with confidence. But when we check the 2 minute and the 1 minute time chart and $TICK's index we get an even stronger signal with confluence being confirmed by cycle S/R. 

2 minute time cycle Resistance with $TICK cycle Resistance

1 minute time cycle Resistance with $TICK cycle Resistance

Confluence across the tick, time and $TICK index coupled with Pro/Am bars Block bars and the better indies make for explosive moves. This trade was good for 7 point move top to bottom. After entry confirmation and exit 4-5 point gain is highly likely.

A similiar setup happend again (ref #5 @ 13:40 area) Block Size steps in on an UP bar close, once the close of that bar is taken out we get another selloff.

4500 minute $TICK close at the top of the bar, absent cycle resistance, BUT once the close is taken out they began to mark the price down.

1500 tick shows a block bar closing up as it approaches micro crunch Resistance

500 tick view

Again I normally enter this trade with confidence as is, BUT again we see further confluence on the 2 minute time and 2 minute $TICK along with Divergence signals at Cycle Resistance areas.

2 minute chart and $TICK

This trade was good for 3-4 point move top to bottom with at least 2 points being the highly likely after entry and exit confirmations.

As you can see that what my best trades have in common is:

CONFLUENCE  across multiple time and tick frames. The $TICK index is an added bonus and 4th Non correlated indicator that gives further confirmation of entry and confidence.

Redefined Entry Rules

What I Need to see prior to entry:

DEFINE TREND

• 4500 Trend defined, use Cycles, Trend Lines, channels. For Reversals look for Exhaustion or Flush Signal  as well.
• 13,500 Trend Defined
• 15 minute Trend defined, Use cycles Trend Lines, Channels.
• 1 minute chart & $TICK trend defined (use price cycles and moving ave for $TICK,  Is Moving Average above/below 0 Line)
• 2 minute chart and $TICK trend defined (use price cycles and moving ave for $TICK, Is Moving Average above/below 0 Line)

DEFINE STRENGTH  OR WEAKNESS in immediate Back ground

• Look for Saucer shapes or Mushroom tops on the 4500 tick
• Look for Saucers shapes or Mushrooms tops on the 1500 tick
• Look for Saucer shapes or Mushrooms tops on the 2 minute

Once I know the the Trend and where S/W is coming from then i need to see.

HIGH VOLUME, BLOCK BOYS OR ULTRA LOW VOLUME Bars in areas of Strength or Weakness. This means Trend lines, Cycle Support/Resistance Gap Supports/ Resistance and Daily High/Low areas.

Finally i MUST SEE!!

PRICE CYCLE CONFLUENCE between the following:

• 4500 price cycles for Trend direction and reversals.
• 500 tick price cycle
• 1 minute $TICK price cycle
• 2 minute $TICK price cycle 

The above is MANDATORY prior to entry! If any of the above IS NOT in line DON'T TRADE IT. or you will lose all of your money and be a failure!!!!

**Many times you will see the 1500, 1 minute $TICK & 1 minute charts along with 500 tick, 2minute chart and 2 minute $TICK with Divergence/Exhaustion/Flush signal all Aligned with the above for the strongest signal possible.

BUT if the TREND is wrong the trade will likely fail!!.**

$TICK Uses and the TREND!!

Using the $TICK to help determine Trend and Overbought and Oversold levels on an intraday basis can improve your entry and exit accuracy.

Over the past week I have been incorporating an added Index into my chart analysis called the $TICK.  The $TICK is an NYSE index that provide up and down tick data from the combined issued that make the S&P, DJIA etc. Click here for more on the $TICK.

My trading is mainly based upon non correlated indicators with an emphasis on volume and how it relates to price and time cycles. Now with the inclusion of the $TICK infused with better sine for price cycles and better momentum for divergence at the Bid/Ask along with a 5 period moving average on both the 2 and 1 minute $TICK I have 4th non correlated indicator that can be crossed reference with my other charts. Many times the price cycles correspond very well with the 500 tick chart and 2 minute time frames. I also have the $TICK applied to my 15 and 5 minute for glance purposes.

What im looking for:

• Trend confluence with the 4500, 1500 or 500tick charts - is the $Tick trending in the same direction as the above?
• Cycle confluence with 4500, 1500 and/or 500 - is the $TICK entering the same cycle as any of the above, if so how many? Is the $TICK responding to the same S/R area as above.
• Checking to see if the $Tick is showing Divergence in the same areas as above frames.
• Lastley I look to see if the $TICK has been or is at Extremes during the same time as ES area of S/R. If so this is added confirmation.**The $TICK can also be used with candles to ID Doji's, Hammer's and other candle patterns that may coincide with my bar charts.*

This may seem like alote but when properly place on your screens chart scanning of all this information is quite simple.

Another important feature of the $TICK index is that it is on separate exchange so the data does not come from the futures market. The $TICK is a NYSE cash index which means it trades in actual tangible products (ie. you can actually pick up your stock certificates etc.) thus acting as a precursor to futures market moves!!
Here is a chart showing the 5 period moving average breaking and failing at the 0 line before and After Today's Massive sell off.
**Notice the $TICK breaks down below -1000 and corrects at the 0 line. After a brief rally above 0 and repeats the sell off by breaking below the 0 line and remained below correcting at 0 for the remainder of the day.**

What this looked like on the 4500 tick ** $TICK moving ave and price aligns with trend

Another example of the moving ave breaking and correcting above 0 Line till the close.


As the $TICK remains above the 0 Line we can safely follow the
trend of the ES watching for pullbacks along the way.

As you can see there are multiple uses with the $TICK that do not interfere with the 3 basic indicators, but simply adds to them what the basket of stocks making up the S&P are doing at any given time. A 4th Non correlated indicator at glance.

Learning how to Learn

Learning how to learn should be the very 1st thing a new trader should learn.. say that fast!!
One of the toughest things about trading is figuring out exactly what one needs to do to get better. We have always been taught to work hard, learn everything you can, talk to the experts etc etc.

This is all fine and dandy but unlike a sport there is really no clear point of study, There are NO experts, and No success stories in most peoples sphere of influence. There are so many methodologies and so much psychological work that needs to be done within, many times we simply cant see what to work hard on and we wind up spinning our wheels LEARNING WRONG. That is, NOT Learning the necessary things to be a good traders. Trading is an art of SUBTLETY. Meaning intangibles and tiny details about YourSelf and the Market are the make or break factors in trading.

So I put together some Exercises that will help develop certain aspects of my trading. I will continue to add more over time as think of them.

This week I'm working on
CUTTING LOSES, NEVER GIVING BACK PROFITS and EXCEPTING SMALL GAINS.

• The exercise will be to move my stop to break even after a 3/4 - 1 point profit.
• Then trail the position to allow for further profits if available. 

Knowing I will be stopped out most of the time i feel this will help to develop a habit of humility and ward off greed by excepting tiny profits and breaking even an most of all NEVER letting winners become losers.

This idea was influence by Richard D. Wykoff method of the NIMBLE 1/8 and how very small AVERAGE profits over time can add up to substantial gains.

"Strive for an increasing average profit but I do not keep my eye so much on the fraction or points made or lost, so much as on myself and keeping alert. I endeavor to perfect myself in resolute calmness and precision, quickness of thought, accuracy of judgment, promptness in planning and executing my trades, foresight, intuition, courage and initiative. Masterful control of myself in these respects will produce a winning average - it is merely a question of practice."

Spotting a Test In a Rising Market

One of my favorite but often overlooks signals is the TEST IN A RISING MARKET.

Many times i miss this signal due to being on the wrong side of the market, when this happens I tend to ignore clear signs that we need to change our bias. When this signal appears it is a very clear indication of a Bull move. How long the move will last may depend on the time frame or Tick Chart it appears. The higher the time maybe the longer the move. Also the faster the move has gone the faster the correction.

Spotting a test in a rising market can be a great signal to Enter long, Exit if short or STAY in a profitable position.

What to Look for:

• Background Strength with Saucer shape or correction.
• Usually a Down bar with Narrow Range, close in the middle or high and often very close to the previous bars close.
• On Very LOW VOLUME.
• Next bar breaks the high. (Confirms itself)

This usually happens multiple times in uptrends
2 minute uptrend *Notice the missed test on # 3*

1500 Tick shows Multiple test on the way up, Better Indies missed 2, 3 & 4. ** Notice 3 &4 happend at Resistance and broke out after testing on higher Volume**

15 minute chart test at support on low volume (tip toeing up)

**Better Pro/Am misses this signal and may refer to it as a Bearish
Rambo, This must be ignored unless obvious weakness appears, this may explain Failed Rambos that i spoke of in a previous article. Better Volume does a better job of catching this BUT you may have to eyeball the bars to notice this.

Always keep and eye out for a TEST IN A RISING MARKET!!!

Even The Perfect Setup Can Fail

I wanted to mention a trade that happened mid afternoon today as an example that there is NO perfect setup NOR guaranteed trade, When I remember this then i can focus on PROBABILITY which is all we truly can strive to put in our favor, When my edge appears it is my duty to participate. That's it that's all. NO more No less. Spot the Edge and participate. If i truly have an edge the account will average profitable.

Ok so we had THE PERFECT setup, we had Confluence on the 1500 tick with End of Trend Warning and heavy Pro Bars, on the 500 tick we had Cyclical End of trend warning with Rambos and Pro bars at Resistance, on the 13,500 we had strong Support from yesterday that was Now Resistance along with a bearish PB warning. on the 2 minute chart we were at resistance with NO demand Bars and Pro bars and on the 15 minute chart we were at gap resistance from Yesterday.
What ensued was very common in that the price continued to test these areas with very little push to the downside, then it broke  up ever so slightly and consolidated on top of the 500 tick End of Trend resistance but still at or under the other resistance areas in other time frames. Even the $TICK was showing divergence and the After perching upon this 500 level for about 15 minutes it resumed its move to the upside and slowly continued on for the remainder of the day. This particular trade happened at 12:00 on a Friday (NOT A GOOD TIME TO BE TRADING AT ALL)

Talk about CONFLUENCE!!. ** Notice the slight up trend on the 500 with strength in the background.

2 minute Resistance making higher highs

What i did do was Notice this happening and changed my view, after all this was a Flag/ consolidation that was trending up and bound to break out eventually with Strength in the Background, the path of least resistance was UP. After being stopped out I was able to reverse my position for a nice gain.

The lesson here is that even when everything lines up perfectly I have to be ready to change my view on the spot and roll with the tide. 

REMEMBER:

• Time of Day Matters -  Clearly by this time The campaign to the upside was well under way and was bound to continue. Trading at these times  Negates all rules!!
• Remember that the more  S/R gets tested the more likely it is to break.
• When Price consolidates it tend to break in the direction of the trend. Look for background S/W and look for No supply/No Demand bars at S/R. Ask is price being supported at the moment?
• PRICE RULES above all signals signs and indicators.
• Price travels in the PATH of LEAST RESISTANCE, if the obvious is NOT playing out then you got to reevaluate and be ready to execute.

"I am the CASINO NOT the SPECULATOR or GAMBLER"

Block Trades on the Ticks

Today I was able to further test the block trade indication. It is used to specify a number of BLOCK TRADES on any given bar. In my research im using 10 contracts size. What this means is that every time 10 contracts that ARE TRADED LIVE the right axis will count as 1 and the histograph will increase in hight. So if the axis shows 20 then i multiply that by 10 to get = 200 blocks on that bar.

Block Trades seem to show better fluctuations on high tick chart such as 4500 as apposed to standard Volume bars.
In Looking at Block trades I get VOLUME clues that dont appear on Better Pro/Am and better volume on the all charts. BUT i do get same bar confirmation of Pro/AM, Better Volume from time to time which is great for Confluence confirmation.

My Findings
Block Trades will be implemented on a daily bases as it is a great way to confirm the better Volume and Pro/Ams and may have a bit of an advantage as you get real time Trades Size per bar moment to moment.

• Provides great early clues as to impending Pro/Am bars.
• Also Gives same bar confirmation of Better Volume and Pro/AM
• Great visibility and can easily be employed when anaylsing volume.

Bock peaks on the 4500 tick *Notice how they show prior the pro bar confirmation and impending move**

Blocks on the 1500 confirms Pro/Am and Nailed a Top.

Blocks on the 500 confirms Pro/Am and Nails Top with Divergence, the selloff insuse

More on Block Trades usage and results to come

Analysing Gaps and the PrePrep Routine

Understand Gaps and Applying a Pre prep Routine can point the way to great Daily Forcast and 1st hour of Trading.
In looking at how Price behaves around gaps I decided to give a breakdown of the type of REACTIONS that I can Expect on most days trading the S&P Emini. When looking at the 15 Minute chart we can see that the Emini gap about 80%-90% of the time (speculating). in the Previous Article After Market Gaps and the 15 minute Chart. I explained what to look for and how we can respond to this information.
Here I wanted to further organize price behavior into sections that can be easily refered to and thus Recalled during the heat of action.

3 Price Reactions to Daily Gaps:
 

1. Gap Seals - When price test the lows of the gap areas by trading THROUGH then reversing back and trending in the INTENDED direction. (This is the Specialist Selling the open in order to Accumulate at WHOLESALE PRICES). Today's Example. 

Other Gap Seals that reverse midday, usually after a Large Gap 5+ points this was a 7.5 pt gap up.

2.   Full Break - When the Gap area is broken and price continues to Sell off or Rally. (This is the Specialist creating demand in order to distribute inventory at the highs if long, or panicing weak holders to they dont buy against them and actually start selling at wholesale price). see Richar Ney Specialist control over market Closes and Opens. 

1. 3.  Gap Test - When Price test and Bounces off the Gap Areas. This can include entering the area and reversing or bouncing of the GAP Top/Bottom. 

AFTER MARKET PREPARATION ROUTINE

Night Prep - Find tommarrows Trend potential.

1. 4500 Tick - Look for Exhaustion Signals, Better Sine S/R and Background Strength and Weakness.
2. 13,500 Tick - Look for Background Strength Weakness in After Market with Mushroom & Saucer patterns Better Sine S/R and Divergence signals.
3. 15 Chart - Look for CLOSE bar UP/DOWN and Background Strength & Weakness.
4. Check Calender of Events - This could give us an idea of potential Volitily for the day.

Morning Prep - What will today bring
Review Night Prep

• Confirm the Overnight Trend,
• Confirm Overnight Suppport / Resistance 
• Confirm Background S/W
• Exhuastion & Flush Signals.

Check Pre-Open  - for GAP RANGE and TEST AREA on 15 Minute chart and Note likely Ice Breaker direction from the Overnight and pre-open trends S/R S/W.

The Open - The 1st Hour is Critical.

1. Look for the Open Ice Breaker on the 13,500 tick chart, measure break point and entry's and potential exits, Also look for 1500 tick probar ice breaker for insurance.
2. Pay very close attention to the 1st four bars on the 15 minute and Opening Gap Area and probe for 7bar positioning.
3. Look for CONFLUENCE of signal on the Ticks and stay Focused. 
4. Ask Where are the Wholsale Price ZONES? What is the Likely Day type, Trend, Range and are there areas that MUST be tested.