Volume Profile to spot hidden S/R Zones

Using Volume Profile to spot hidden Support and Resistance Zones.

When looking at the market profile remember that the low volume areas are Support and Resistance also. Had i closed at this point i would have booked.

When in profit this early and price hits a double bottom a REVERSE trade is Ideal to lock profits and position for further gains.

Note the Low Volume Profile areas as S/R from previous Day, when price approaches these areas on current low volume, you can get an explosive response as there is NO interest in this price. This area will be rejected very fast as it represents a WHOLSALE price zone. This makes it difficult for public to catch the bottom. Also price will break thru these area on high volume wide spread bars to cross the creak where there is little interest basically manipulation.

See low volume areas on Daily Volume Profile. Daily Lows rejecting the prior days Low volume zones in up trend.

Now see price reaction on 2 minute chart to these same areas 4/29.

4/28 on 5 minute Open rejecting a low zone from the 4/27 area.

Another great S/R area is the @ES Continuous Volume Profile, when the  POC's and Hi/Lo Volume areas line up with the previous days these areas are great clues to Support/Resistance. Draw trend lines on chart to be aware of these areas prior to the open. Great for Globex Bounce trades and Ice Breaker S/R area and directional assistance.

Reacting to ULTRA Strong Trends with Irrational thinking!!

How to Respond to EXTRA STRONG TRENDS

These are things to look for when the TREND gets out of hand and has News to Justify. Usually there is a Buying Campaign in place by Specialist or Market Makers. In which case much of the basic rational goes out the window as price is basically MANIPULATED to a chosen price. (round number if NO Resistance is near) Trend lines on higher frames can be the guide.

EARLY SIGNALS

On the Open Internals (see Radar) were making NEW highs and Vix making New Lows, THE MAIN INTERNAL BEING: $INDU and SPX.X. when we See these extremes EARLY we should look to enter on a correction, it may be a Confluence Synch or Globex/Gap Bounce. I have seen this in the past with New Lows as well. Price would correct to the upside then sell off.

POINTS TO RECOGNIZE

When Price Moves Very Strong in one direction and the tick chart cycles are flat providing NO entry's, for extended periods of time. (see cycle below)

ENTRY SIGNALS

Enter at 0 Line Bounces and cycle S/R points.

look to trade the $TICK cycles in the trend direction, the $TICK moving average and cycles will confirm. $TICK will REACT at the 0 line. (** notice 0 line holds as solid support)

Bearish signal can be ignored when the trend campaign is SOOO Strong and there is News to justify the trend. Think Hold till the close!!

ENTRY SIGNAL

Enter On Trend Line Strength, look for low volume on down bars.

Draw Trend Line on high time frames look to Add-on when price bounces.

It is VERY important to stick with the TREND in these cases because the Market is Showing Irrational behavior, thus we must think irrational!! and ignore ALL bearish signal setups etc, these should be used to reenter at better prices.

Also look to Enter on 500 tick crimps cycle that may occur.

NOTES
Be ready to hold. Manage positions with Scale in and outs but keep a lot on for the long run.. Maybe till the close!!

THIS CONCEPT IS GOOD TILL TREND BREAKS ON HIGHER FRAMES. Once Trend Line is Broker Change your BIAS.


Expect some slowing and correcting around the 9 bar zones. Be aware of the time of day you enter as price could consolidate for 9zones prior to resuming afterwards.

Self Monitoring - Repetition - Process Performance

If I was what was needed to achieve success at any endeavour in a reasonable amount of time, these are the most important ideas I would want the subject to comprehend. They are the building blocks to my trading progress. I am convinced that when practiced with consistency these 3 Blocks will ultimately produce the desired rewards.

SELF MONITORING- A system put in place to Monitor personal performance, such as a Journal or Score card or any manner of documenting performance of self. This has NOTHING to do with  Profit and Loss, Bottom Lines or Outcomes but EVERYTHING  to do with grading things such as Quality of Thinking, Emotional control, Patients & Timing, Focus/Concentration and the act or repeating fundamental Process.

For this I use my FundsDirect Score Card. The original scorecard was created and provided by Don Miller. I changed his original to fit my personal style. Without self Monitoring  you can never review your progress thus you are prone to repeat mistakes.

REPETITION - This  is the constant repeating of the fundamental PROCESSES that have proven to be successful. Creating good habits through constantly repeating things such as, Pre preparation Routines, Entering and Exiting on rule based Specific Setups, completing Self Monitoring Worksheet and Keeping to an well define ROUTINE. This includes keeping your VISUAL Screens and charts Stationary (ie. NOT CHANGING THE LOOK or ADDING EXTRA INFORMATION) for an extended period of time. Over time our brains will simplify seemingly complex patterns of information thus allowing us to act with subconscious wisdom. That is to act without thinking, the ideal state of performance or the "ZONE"

PROCESS PERFORMANCE - Continued Focus on the PROCESSES as opposed the Profit/Loss. If we can master the process needed to improve upon ones overall performance, then the P/L WILL reflect this mastery over time. This concept is VERY important and one that is simply overlooked by most as we are taught that the Bottom Line is the end all be all. This thinking creates ATTACHMENT TO OUTCOMES. When we become attached to an outcome we are blinded and unable to see other avenues of potential, and equally as important we become BLIND TO THE ACTUAL PATH TO THE OUTCOME WE WANT TO ACHIEVE. It is a self defeating process that is soo subtle it is very often over looked.
This is true for any life endeavour. Havent we seen the person, athlete or individual who casually performs fundamental aspects of their craft with a type of playfulness and calm that is seemingly carefree? And havent we seen the person, athlete or individual who stresses and strains over the need for the outcome to manifest while paying very little attention to the FUNDAMENTAL processes?
The former is usually the one that achieves greatness.
The later is the one that usually loses confidence in the process that was ignored the whole time, leading to failure or simply justifying Quiting.

Which one of these are YOU?

Timed Stops for Quickly Scratching loses

Timed stops for Trade management is a great way to determine exit necessity without focusing on price. The concept is to exit a trade that has NOT performed within a given period of time. The best way to determine the most appropriate time is to look for signs that signal exit (ie. Cycles) or use your Average Trade holding Time for winners and losers. 


Ideally winning trades should have a longer holding time than loosing trades. If you have long hold times on losers than this implies that you are not able to either recognize when a trade is not working or struggling mentally to let go and except the loss. 
Great Traders have longer winning hold times which implies that they are maximizing profits potential and likely recognizing signs within the market that further confirm their entry's. 
Losing Traders tend to Hold on to Loser for longer period in essence Maximizing loses.


There are a few ways to time stops for exits. 
I use 2 time stop exits for scratching loses.
One of the times I use is CYCLE STOPS - What I do is use the 2nd 500 tick cycle after entry to determine the potential for price to move in my favor. 

• If price has moved in my favor after the 2nd cycle I focus on signs that may indicate Target potential or a price reversal for a good exit. (ie. 1500 Exhaustion, Probars Etc.)
• If price Does NOT move in my favor after the 2nd 500 tick cycle I EXIT the trade win, lose or draw.

A Major Note Regarding trades that should be Scratched immediately. When we wrong about a position price may NEVER make it to the 2nd cycle at all. In these cases we should be aware of the clues that say GET OUT!!!!

The MAJOR CLUES to scratch or Reverse position.

#1 Price moves away from entry immediately and stays.

#2 Price spends little or NO TIME in favor.

#3 Price breaks S/R on 500, 1500 or 4500 tick charts.

The other way will be more of a result of the first method that then becomes its own source function by taking into account the time data of winners and losers. This method is still being developed and may change.
After I have determined through performance the average holding time from wins and loses I can then Clock A Trade to determine whether it is approaching that threshold for losers and then Scratch the trade at that time.


My method for monitoring my performance of Holding Time is to divide the winning time by the losing time to determine a ratio. 
Then I compare the ratio to a Scale for a determination of performance. 
This is VERY important in my trading as it keeps me cognizant of holding losers. It also helps to prepare me for reversing when necessary. 

**Average Holding Time Ratio should Coincided and Match The Over Trading (grade colour) to indicate GOOD performance. Non matching between the 2 means that you either Over Traded or held Losers too long. When these are NOT in sync the Bottom Line is Greatly affected regardless of other performers.**

The Ideal Score Combination Is:

Over Trading = Green -  Blue - Blue - Green

T Time Ratio = Green - Blue - Green - Blue

ANY other Combination is out of BALANCE and can indicate potential suffering performance.

The total Average Market Exposure Time is also noted at the bottom of the Time Ratio. This Number is used to determine how much actual market exposure I'm experiencing on a given day, or month. I want to limit my exposure to only the best trades (ie. Winners or Small loses). So keeping a running total tells me if I'm trading in a very slow environment (which means I'm Increasing my Exposure) or Maximizing my Exposure by spending time in winning trades to Maximize profits. This can be known after calculating the average Win/Loss time ratio.

click to see "The STOP LOSS Conspiracy:

Also Quick Max stop outs can lower the time in losing trades causing your ratio to be slightly misleading, BUT our STOPS should rarely get hit if we are Scratching trades upon 1st sign of fail er. Baring any Quick Stops being hit the ratio is a good indication of trade management performance.

Inevitable Targets defined

The Inevitable Target is that price level That is most likely to be tested. I describe it as being Magnetic and almost Inevitable. It can be on any time frame BUT the Uppers are the best value area to consider.
Some characteristics of the Inevitable target are simple and many, but you can really get a feel for these targets in the heat of action.

• With S/W in background the Inevitable Target would be the nearest  area of Support or Resistance with Strength or Weakness BEHIND price.
• The Support or Resistance can be the NEAREST Pivot S1, R1, Cycle S/R or Round number ie. 1300.00
• The Target are very evident on the higher Frames such as 13,500, 4500, 15 minute. (I only use these)

This concept helps to get an exit in sight and encourages me to stay with position until I see signs the target may not be hit, such as a LOSS IN MAGNETISM (meaning slowing/increasing volume in my direction, opposing signals, ie. EOT or PB against my position, Exhaustion, divergence, Double tops or bottoms and areas prior to the target that get tested and hold)


YOU MUST FEEL THE INEVITABLE TARGET
This means that you know in you gut that this are must be tested or Broken in order for price to reverse or continue. Knowing the daily market Bias can help get this feeling.


Example on the 13,500 of Inevitable targets

Using internals for added confirmation

Market Internals are an aspect of S&P and Index trading that few people ever speak of, maybe its the keeping it simple concept at play, BUT it does make good sense to have an eye on the participants that are actually traded within your Index. As well as Cash versions of the like (ie. SPX)

Over the past few weeks i have been employing internals as a way to edge out information on consolidations, trends, reversals and confirmation of entry. I tested a few indexes and stocks and found the following to be the most useful, after all we are trying to simplify the trading process and too much noise (meaning charts and information) can be a huge distraction especially if your charting NEW issues.

The order of relevance may change but so far this is the priority list of Internals that have worked quite well:

$INDU - this is the Dow Industrial Index and seems to lead or slightly lag the ES & SPX, it is usually closer to the SPX which seems to be slightly ahead of the ES.

$SPX.X - This is the cash version of the S&P futures and can actually be traded, it can likened to a stock index.

$TICK - This is the NYSE measure of Up and Down tick difference of the total stocks that make up the S&P.
I have spoken of this Indie and some of the patterns over the past few weeks. Basically it can provide a snap shot analysis of all the stock traded in the S&P and provide a very short term bias.

$VOLD - This is the total Volume Difference of all the Stocks on the S&P.

$VIX.X - This has been tallied as a Fear index as it is suppose to show the number of "in the money"calls to puts for the current contract month.

STOCK LEADERS:
Exxon - leading Energy oil company
Chevron - Leading Energy Oil company
GE - Leading industrial stock
QQQ - Nasdaq 100 Exchange traded fund

Now to simply to viewing of this information i have 2 methods.
#1 being 4 charts of the $ index's in 1 workspace and the other small stock charts in their own workspace. The charts are used to provide alert information on the fly. I do peak at the $ indies when time permits but the main use is real time alerting updates.

WARNING, processing too much data while trading can be a distraction. I practiced switching as needed until it found myself eliminated the lesser used charts and only toggle during downtime.

The 2nd and primary method is the Radar Screen, where i list my indexes along with the New Intra-day Hi/Lo and ROC indie for quick glance update without toggling charts..

Once I got used to processing this information and disseminating  the importance of each index and indie. It all becomes seamless.

I still focus mainly on the ticks and lower time but can pick up quick clues from the Radar screen without losing patterns. And when time permits i can peek at the workspace for visual cues.

Another good clue that price may be reversing on a short term basis is when 2 opposing Radar indies appear. What I look for is the New intra-day Hi/Lo to appear and the ROC to be in opposition.

Here we see the VOLD and the SPX.X make New intra-day Highs (Alert of indie last for 5 minutes) and within this time the ROC goes Negative for both internals. This may be a goo sign that the New high may be topping out.

These are my basic internals and charts. I don't think my setup is for everyone and I would advise traders to try out a few options before committing to one.

Bread and Butter Setups and how to play em

These are my Bread and Butter Setups that I focus on every day. The core of each is the Trend direction, Volume activity, the S/R or Cycle and lastly the momentum of the price which includes exhaustion and divergence.
They are listed in the order of which I Stalk Entry's. A good day would be 1 or more setups in each zone starting with the Open Ice Breaker trade.


OPEN ICE BREAKER
Concept:
The open ice Breakers is designed to take advantage of the previous days close and After Market and Pre-Open MOMENTUM. Using the 13,500 tick helps to eliminate NOISE and give clear break signals.


ENTRY SEQUENCE 13,500 tick for entry and 1500 for continuation clues ONLY.

• 1 I use the Market Bias to get a general direction of trend and Strength/Weakness.
• 2 Then I review Globex activity for changes and confirmation by noting Cycle S/R, Blocks at highs and lows and True Rambos at highs and lows to confirm direction.
• 3 Finally we look for the 13,500 Opening bar to print, 
• 4 Once printed we watch for a break in the direction of Pre-Open Momentum. 
• 5 Allow the price to touch your break price, but wait!! many times price will retreat a few tick before returning with stregnth. 
• Enter once price shows signs of breaking ie. 

(probar break on 1500 tick or 2 minute).

EXIT:
I'm looking to catch at least 1 point BUT the 1st Inevitable Target is my true exit, This could be Globex S/R, Pivot S1/R1. I watch very close and allow the market to tell me when to jump ship.
Open Ice,**Notice how the 2nd bar fails at the top of the Open bar, this happens very often**Also Notice the Block volume at the peaks.

Open Ice With Block Volume, it never test the high of the Open bar that Failed at Now Resistance.

Open Ice Example on 13,500tick and1500 tick.

Open Ice Breaker Fade: 

look to Fade the Hi and Lows instead of breakouts WHEN the Pre-Open has High Volume at tops/bottoms that NEED TO BE TESTED before continuing. The 2 minute and 1500 tick shows a closer look at the volume activity at this time also. These may be more likely to occur after a LARGE GAP above 8+pts (see more)

ENTRY SEQUENCE 13,500 tick for entry. And 2 minute and 1500 for Volume and test clues ONLY.

• 1 Market Bias Signal RANGE.
• 2 Pre Open Highs that have NOT been tested. May be at Cycle S/R, Pivots or  Globex POC. Also Blocks at highs and lows and True Rambos at highs and lows confirm direction.
• 3 Finally we look for the 13,500 Opening bar to print.
• 4 Wait for Price to test the Hi/Lo, many times it rejects quickly.
• Enter Fade in Opposite direction of Strength/Weakness

Blocks at pre-open highs, price retesting the area on the open.

13,500 and 1500 look at an Ice Fade.

-Also when the Market Bias calls for a Strong Range like today, Look to fade the Hi/Lo's or Stay out if their are NO signs of momentum or tight consolidation is on the pre-open.


When to Avoid Ice Breaker trades
The Open Ice is based on Momentum, so when we signs of slow or NO momentum these the cue to stay away.

• 1.When the After market is consolidated in tight range.
• 2. NO activity and NO peaks. 
• 3. Pre-open is Consolidated!
• 4. NO Volume on bars approaching openinning bar!

When these signs are evident STAY AWAY.  
Turn focus on the 7bar positioning. (this is clue of a slow day) 
Closed Ice NO trade example
Notice the tight range and consolidated pre-open. 
Still went 1.25 pts but may not be worth the risk. Tight 1pt limit required here.

A look on the 1500 **notice the Very tight range.

Another Consolidation. Trapped between R1 and support. No action on Open bar and subsequent bars.

Open Ice Notes:
Many time the price will touch the low of the Open bar then bounce back some ticks, often is a good idea to enter on the return 2nd touch or Break of the Hi/Lo to avoid taking heat on the trade.


BETTER CONFLUENCE SIGNALS
These are signal based on the better indies that employ 3 none correlated indies combined with confluence on 2 or more frames. They can be found all day even on the open, when combined with an Open ice breaker we can see explosive moves. But usually they form after the open. 
Remember 4500 tick TREND is the most important aspect of the these signals, If all sets up BUT if trend is off then the trade will more than likely go against you. 
If Looking to catch a reversal and Better Cons signals show up. Remember to Note Mushroom Tops and Saucer Bottoms before entry.
What I'm I looking for to Enter and Exit Better Cons?


1. Entry Signals: 500/4500 Sync
500 tick EOT trend cycle to Lock in Sync with 4500 tick trend cycle.

• 1.When this happens we want to see and End Of trend on the 500 tick.
• 2. Probars confirming the lower turning points. 
• 3. Break of probar for confirmation to enter.

Bonuses clues: Divergence in the direction of trend After Exhaustion or Flush signals, Internals and VSA logic on time charts.
Notes: when this locks. The 1500 will usually overshoot S/R and may show Rambos for extra confirmation.
Exits Signals: 
When we get exhaustion signals AND probars on the 1500 tick, we exit if our limit has not been hit. Make adjustment while managing trade.
Re- Entry's of trend:
On 1500 tick We want to see Divergence patterns in direction of the trend in sync with 500 tick cycle turns. These are ideal Entry's after established trend moves.


2. Entry Signals: 500/1500 Sync On 1500 tick We want to see END OF TREND In sync with 500 tick cycle turns.

• 1. 1500 tick We want to See previous Exhaustion.
• 2. When this happens we want to see cycle turn on the 500 tick.
• 3. 500 tick Probars, NoD and Divergence confirming the lower turning points. 
• 4. Break of Pro/Am bar for confirmation to enter.

Bonus clues: Setups happen at Open or Around 7&9 bar Zones. VSA and Internals are great confirmation.

Notes: when this locks. The 500 will usually show divergence on 500 tick and overshoots also.

Exits Signals: 

When we get exhaustion signals AND probars on the 1500 tick, we exit if our limit has not been hit. Make adjustment while managing trade.

TIPS:

Head and Shoulder Intr-day pattern clues.

**End Of Trend on 500 shows the 1st shoulder of a Head and Shoulder pattern Intra-day.
End Of Trend on the 1500 is the Head of head and shoulder.
Entering on the End of Trend Warning, when we get an end of trend warning.


**On the 1500, 500 and lowers when we see Exhaustion ON the End Of Trend -Then we need to WAIT!! for a 2nd cyclical turn after End of Trend. 
If we see ONLY divergence when the End Of Trend is shown, then - We enter here as this shows the selling/buying is much weaker.


Mushroom Tops and Saucer Bottoms show early on the 500 tick, many time we see End of Trend at the highs and lows, be observant of the curves, They show up early in the lower frames.

3. Entry Signals: 1500/4500 Sync

4500 tick EOT or PB trend cycle to Lock in Sync with 1500 tick trend cycle.

• 1.When this happens we want to see and End Of trend or PB on the 4500 tick.
• 2. Probars on 500/1m/2m confirming the turning points. 
• 3. Break of probar for confirmation to enter.

Bonuses clues: Divergence in the direction of trend After Exhaustion or Flush signals.

Notes: when this locks. The 500 will usually overshoot S/R and may show Rambos for extra confirmation.

Exits Signals: 

When we get exhaustion signals AND probars on the 1500 tick, we exit if our limit has not been hit. Make adjustment while managing trade.

#3 Globex S/R Bounce
This Sequence is a momentum continuation setup from the Globex and pre-open activity.
Don Miller refers to this as the MATD or Morning After a Trend Day setup because support and resistance are particularly prominent after trend days. The momentum can be spotted in this session by Block Volume and Rambos reacting at key S/R Levels,
In my experience these sequences show up after range days as well.
Using the Market Bias I determine a potential direction for the upcoming day, THEN I revisit my charts prior to going bed at 10:30 to see if that bias has changed and what activity if any has shown up. If i spot Blocks failing at highs and my Bias was bearish then I may look for a retest of those highs or a break point to enter short. Often we see Mushroom tops or Saucer bottoms that form overnight and roll over into the open. These are treated as continuation patterns and traded as such. 
The main point in this observation is treat the overnight session as one continuous day. It usually has less volume so it will have more manipulation. see The Story between the Gap article for more on this topic


What I look for to Determine and Entry:

•  1. Recent Highs/Lows that are tested Overnight, including Mushroom Tops and Saucer Bottoms.
•  2. Block activity at S/R cycles, daily High/Lows
•  3. True Rambos at highs, Lows or Cycle S/R that has formed Over Night.
•  4. Early Retest of the S/R

I wait for probars or rambos to show up on ANY tick chart to fade the test.


EXITS are determined by points similar to the Open Ice Breaker. I have a minimum of 1 point but often allow the markets to dictate the exit, primarily the Inevitable Target. This move happens early sometimes coinciding with the Open Ice Breaker so after a solid move Im expecting a quick reversal.
A few examples of the test and continuation of overnight momentum.
Blocks Activity at the Pre-Open highs with Exhaustion at Cycle Resistance, good for 5 pts

Flush signal at overnight high led by Amatures

Support overnight and short Cycle break down

Retest of previous days top on Rambos overnight

Rambos overnight and morning Retest of Cycle Resistance

Break of Support Overnight and weak restest in the morning.

..
Internal Syncs and Generic ticks

Internal Syncs with Overshoots