How to Handle Mistakes, Glitches and Draw Downs

How to Handle Mistakes and Events that are not skill related such as computer glitches or hand errors. Mistakes can and will happen, but how I react to them is the key. This aspect is a little talked about part of trading, the reaction to adverse events. Every trader has gone thru a major draw down that had more to do with how they reacted to an unrelated event than the event itself. CLOSE ALL IMMEDIATELY IS THE RULE!! you can always recover small loses but Major Draw downs can effect confidence as well a capitol. 


Today i learned that you cant take the draw down itself personally. The event doesn't make you a bad trader, it had nothing to do with your skills. But it did have everything to do with your reaction to such an event an lack of preparation for that event. I made a bad mistake and had a bad reaction the mistake which led to a major draw down. However this does not make me a poor trader or any lesser skilled. The event was merely brought into focus by becoming my own truth. Now i can learn from it and release it for what it was, simply a mistake.


What can and will go bad:
Computer Freezes - this can leave you confused or cause panic if you are currently in a position.
Accidentally Canceled or placed Orders - This is a hand error that can be easily corrected simply by CLOSING ALL POSITIONS.
Internet Connection Loss - This can leave you blind and in the dark. the best thing here is to CALL THE TRADING DESK to get them to CLOSE ALL POSITIONS, post this number on your Review cards for easy access.


In The Event of these circumstances there is ONLY 1 RULE.
CLOSE ALL POSITIONS NOW!! we will live to fight another day.


Mentally we need address the issue.
Avoid Negative Mind Chatter surrounding the event, Take full responsibility by reviewing the event and facing the facts!


Don't Get down on yourself and watch your thinking. 
are you saying things like: 
THEY are cold, - Not taking responsibility
I cant believe this, - Denial. believe it and react accordingly!
I have to recoup this back NOW. - Revenge, when you feel this go away and take a break.
I have to make up x points today!! - forced pressure can lead to Unqualified entries and more mistakes. Don't ride the wave of emotions. 


All these are Very Negative mind chatters that can easily slip into your head and subconscious and cause you to react in ways that will be counter productive to your progress. If you get frustrated for any reason it is OK to slam a pillow to release frustration. But be sure to RELEASE the frustration and any negative thoughts surrounding the event. The best course of action is to quickly except the outcome and move on.


Review the Event or Cause of the Draw Down - Never avoid addressing the situation, always review the event in as much detail as possible. Research the sequence of events that lead up the Draw down and write it out if needed. This will help to bring clarity and draw out the facts so they can be corrected. 


Place a contingency plan for preventing and dealing with that event or similar events.
know how you will react under these circumstances, the detailed causes of events will help to defined the best courses of action.


This is a list of what to Do In the Event of an Emergency

1. CLOSE ALL POSITIONS or Call the Desk to have them CLOSE ALL POSITIONS.
2. Take a break, Release any frustration, doing something physical is a good way to release frustration. Slam a pillow!!
3. Avoid and/or Review any Negative Mind Chatter. This will realign your mind so that you can resume your trading in the future. By observing these thoughts we help guard against them by recognizing there forms. If we allow this chatter to persist we are programming our subconscious with counter productive thoughts.
4. Go back and Review the Sequences that lead to the Event or Draw Down, write them out. This is a form of release also and will help to clear your mind. Humans need to talk, or write out there feelings in order to help with the release.
5. Add what was learned from the event or Draw Down to your Contingency plan and Best Course action.(Write about it in your Daily Updates or Intangible Observations page) Visualize the event in your head and imagine yourself taking the best course of action. Do this as many times as needed until you no longer feel effected.

90 Minute Grind - Limiting Exposure with Time Interval Markers

In a continued effort to limit exposure the Markets while maximizing profit potential I have been working on Revising the 7&9 Zones. I Dropped the 9 bar study and Applied the same concept to the early opening bars of 6:45(5:45Dst ) and 7:10-7:15(6:10-6:1 Dst) Reversal Peaks. Thus the 1st 90 minutes after the open is the most important and opportune time for Focus and Execution.

As previously discussed the market has a tendency to reverse and/or Peak at specific intervals that can be marked by TIME. The idea is to use the time markers as warnings that Peaks and potential reversals are more likely in these area, If at these interval we get confirmation of trend continuation then we follow that. However We should at the very least consider the contrarian perspective and look for confirmation of the facts.

The Chart below is an example of the Early Reversal Peaks that have Reversed and/or Confirmed Trend continuation. (Notice the Red arrows for Resistance Reversal and the Blue Up arrows for Support Reversal. see R1 and Pivot low. )

 15 Minute look at the 7:10-7:15 Bar Peaks

Reversal Markers on the 5 minute chart clearly showing Peaks.  If We simply Sell at 7:10-7:15 RESISTANCE and Reverse into a buy at 8:00-8:15(True 7zone) SUPPORT we would have banked a healthy profit in 2 trades with only 90 minutes of Market Focus.
(Notice these reversal take place at Resistance and Support cycles particularly the 7:10 and the True 7zone (8:00) bars.)

Continuation of Trend confirmed at the 7:10-7:15 marker can bee seen very clear on the 5 minute chart. The Opening momentum was too much to overcome, after correcting at 6:45 we sold lower into 7:10. In this case we had a test of old Support /New Resistance at the 7:10-7:15 Marker, price failed on the 2nd attempt and continued lower

Another look at the Trend Continuation on the 4500 Tick (Notice price attempts to violate the BB mid but NEVER closes above, as price runs into Resistance at 7:00-7:15 it sells off into the lows.) Other confirming factors are High volume closing below BB Mid and making lower highs and lower low.

The Idea is to organize the trading day into small time windows that provide the highest probability of success.

Ideally I would want to ride one Peak into the other or as close as possible until indicators such as volume, S/R or BB setups confirm the time premise.

If I could script this day it would look like this:
Enter Open ice from Globex & Pre-Open momentum---------ride to -------> 6:45bar "Exit Open Ice" ---> Confirm/Reversal clues(looking for S/R BB Rev etc) Enter @ 6:45setup------------------ride to-----------> 7:10-7:15bar "Exit trade"---> Confirm/Reversal clues(looking for S/R BB Rev etc) Enter @ 7:15bar --------------ride to------------>8:00(True 7zone) Exit at Peak of 7zone. Done for the day!!


Recent example of the Ideal Time Interval Sequence. Open Ice Breaker rides to 6:45 where we get a reversal warning. Then 710 is the actual reversal play. 710 entry Peaks at the 7zone with Exhaustion and probars. 9/20/11. The rally was anywhere from 11 to 14 points in 45 minutes.

The above scenario would be 3 trades riding into the next reversal point ultimately closing at the true 7zone peak. This is of course a hypothesis but highly likely in many cases. I have seen this play out a number of times. The key is awareness to be very quick with adjusting mentally to each change.

I believe the reason these Intervals exits is due to the Commonality an Frequency of the 6:45 and 7:00 News releases.

If we can nail 1 to 3 of these clues we can limit our exposure tremendously as our day would end at the 7zone a time when volatility begans to wane.
Again this information is NOT an actual setup but only a reminder of the contrary potential that often appears in Time intervals.

What to look for at Time Interval's.

• SUPPORT OR RESISTANCE CYCLES lining up at Time Interval.
• BB Midline test with Probars at or around the Mid during a Time Interval.
• BB Reversals with Probar at highs/Lows accompanied with Exhuastion, Divergence and BB cross, close and Bar break against S/R.
• High Volume -Probars at S/R near a Time Interval.
• Hidden Volume - Block Bars at S/R near a Time Interval.

The Chart below summerizes much of what we want to look for at these time Intervals.
1st Notice the Probars @ 6:45 on the first cycle support with Divergence and Exhuastion in the Globex session.)
2nd see the Probar on tight range closing on high into the 7:10-7:15 peak, there is Divergence but no Resistance on this time frame (check for R on the other time frames). But the BB Reversal criteria is Met hear and
3rd price sells off into the True 7zone were it begans to stall in preparation for midday reversal

Another 4500 tick Example of a trend continuation @ 6:45 off Pre-Open Old Resistance / New Support Line, Then Peak Reversal at 7:10-7:15 and the final sell off into the True 7zone PB support area.

Get the POINT!!!

;-)

Ranking Sequences for Better Trade Selection

Trends & Confluence

AAA Sequence - Confluence & Volume Based
45/15/5 Cycle Syncs - This is the ideal sequence where All things line up. When i spot this take it every time. At least 3 of the 5 defined Criteria Point must be met prior entry with Trend, Volume & Confluence Most Important.

• 4500 TICK Trend Directed or SUPPORT/RESISTANCE on 45/15 or 5 minutes 
• Confluence on ALL 3 TICK Charts- Remember that Confluence is NOT Exact, there may be overshoots but the general spirit is in sync. Also be aware of the Actual S/R prints as they may print later than the Cycle Cross.
• Probars at S/R - These should show up in the S/R area and serves as confirmation of Buying or Selling, Use the Bar Breaks to confirm entry.
• Divergence at S/R - These may show up in the S/R area and are extra clue's
• Exhaustion Strength or Weakness in Background

VSA Strength/Weakness Sequences - This is the Bread and Butter Trade setup that plays out in every market as it is Fundamental to the nature of the Markets and How it Manipulated. This is Best seen on the TIME CHARTS, So Focus on the 1, 5 and 15 minute charts then cut to the Ticks. All 5 defined Criteria Points must be met prior entry.
The Sequence of 1st wide Spread Probars stalling at Old Tops / Bottoms -2nd Upthrust/Stopping Volume breaking Support/Resistance- 3rd No Demand/Supply bar retesting the area.

• 4500 TICK or 5 Minute Trend Directed or Strength/Weakness (A MUST)- Identify the LEFT SIDE of the chart for Background Strength or Weakness. Check for Saucer shaped bottoms & Mushroom Tops.  Look for the Trend to be on the Higher Time frames such as 40,500, 13,500 and 4500 as these trades can take longer to setup and actually play out. 
• Probars Closing on Highs/ Lows(A MUST)- I want to see Wide Spread Probars approaching an old Top or Bottom, closing on the highs/Lows prior to any End of Trend or Rising Market signals. This is a classic indication of effort that must be followed by a Higher/lower prices immediately. If Not then we interpret this as potential buying, a Selling Climax.
• Up Thrust or Stopping Volume (A MUST)- We Must See this Prior to entering. This is designed to Catch Stops and cause panic!!. This will show as a Hammer or Long Tailed bar closing on the middle or lows. Many times we will see hidden Up thrust that will be narrow spread close in the middle on new high or lows.
• NoD or NoS (A MUST) - This is the confirmation bar that Must close on LOW Volume (Blocks May be in the Background) If on a double Bottom/Top look for a Test of the highs/Lows in the same area as the Up Thrust or Stopping Volume but this time on Low volume.
•  Enter on the close of the low volume test bar (A MUST) - This should show up within 3 bars of Up Thrust or Stopping Volume. If the Test has high Volume then it failed and you should NOT enter.

AA Sequence - Confluence & Volume Based
15/5 & 45/5 Syncs - This sequence is the most common eye popper that i have had great success with. It is a basic Bread and Butter set up based on Volume, Cycle and Trend
At least 4 of the 5 defined Criteria Point must be met prior entry with Backgrund S/W, Trend, Volume & Confluence Most Important.

• 4500 TICK Trend Directed or SUPPORT/RESISTANCE or STRENGTH/WEAKNESS in Background on 45/15 or 5 minutes (A MUST) -Price must be Trending on the 4500 tick. Look for BB Midline rejections and blocks/probars at BB midline.
• 1500 Divergence in Trend (A MUST) - 1500 & 500 These must show up in the direction of Trend usually at cycle S/R, when the probar prints and breaks we enter.
• Confluence on at LEAST 2 Tick Charts (A MUST)- 1500 & 500 or 4500 & 500 or 4500 & 1500 - Remember that Confluence is NOT Exact, there may be overshoots but the general spirit is in sync. Also be aware of the Actual S/R prints as they may print later than the Cycle Cross.
• Probars at S/R (A MUST) - These should show up in the S/R area and serves as confirmation of Buying or Selling, Use the Bar Breaks to confirm entry.
• Exhaustion Strength or Weakness in Background.

EOT or PB in Trend Cycles on 13500/4500/1500 ticks - This sequence is discretionary as the factors are Basic VSA concepts around S/R. When I spot these take it every time. At least 4 of the 5 defined Criteria Point must be met prior entry with EOT or PB Cycle SUPPORT/RESISTANCE, Previous Exhuastion/Flush Signs & Pro bar Volume Most Important.

• 4500/1500 TICK EOT or PB Cycle SUPPORT/RESISTANCE (A MUST)- May stand alone without confluence other times it may sync with multiple Time Frames. Strong with 500 Cycle confluence.
• Exhaustion Strength or Weakness in Background (A MUST)-Signal is Stronger with Exhaustion in background Prior to EOT, Very Important!!- if Exhaustion is on the EOT wait for a 2nd Cycle Turn with Divergence before entering. Exhaustion should show up prior to the End Of Trend and the Actual EOT should have Divergence showing as a Tri Factor Signal). On PB in trends look for DIVERGENCE on the 1500 & 500 and CYCLE Resistance on the 500Tick. The 1500 cycle will overshoot in case.
• Divergence at S/R (A MUST) - These may show up on the Next Lower time frame. ie the 1500 and/or 500 tick. Exhaustion has shown Up, Particularly on the 4500. May show up on lower time frames.
• Probars at S/R (A MUST) - These should show up in the S/R area and serves as confirmation of Buying or Selling, Use the Bar Breaks on lowers to confirm entry.
• Confirm Entry on 500 tick and lowers with probars and rambos. Look for Flush, Exhaustion or Divergence on the this frame as well.

A Sequence - Single Cycle and Volume Based
4500 BB Channel Ice Breaker - This is a momentum based sequence that looks for price to open INSIDE the BB Channel, Test the Mid and Continue deeper into trend. It takes advantage of the Early Professional Consensus of activity. 
All of the defined Criteria Point must be met prior entry 

• Pre-Open Momentum - Price moving in Trend direction with NO 45/15 S/R Nearby.
• Price Opens In Channel - Price is Already in Strong Trend from pre-open momentum.
• 4500 Tick Probar - Price Testing BB Mid with Large Buying/Selling.
• Price Test Channel - Price should test channel with Probars.

B Sequence - Bollinger Band & Volume Based 
Bollinger Trend Channel - This sequence is a TREND CONFIRMATION and CONTINUATION trade that is Highlighted by Probars rejecting the 4500 BB midline and breaking the test bar. Occasionally this will set up with confluence with 1500 or 500 Tick chart. Will also setup on the OPEN and test the Midline before moving deeper into trend. THE PREMISE FOR STOPS ARE BREAKS BELOW BB MID.
All criteria must be met prior to entry.

• 4500 TICK Trend Directed  or Strength/Weakness (MUST) - Price must be Trading inside the Upper/Lower BB Channel in direction of trend Strength or Weakness.
• Price TEST the Midline - Probars or Rambo reacting to Midline. The volume at the midline will help to determine Price Acceptance or Rejection.
• Price DOES NOT Close Across the Midline - Here we need price to close on the Midline or in the trend direction channel.
• Price Breaks Test bar to Confirm New Direction - Price breaks the bar that tested the midline in the direction of the CURRENT TREND CHANNEL.

C Rank Sequences - Trend & Cycle Based
These trades have very little describable parameters, They are intangible setups that are intuitive based and many times impulsive. If entering a C Ranked trade they should at least qualify All Criteria to increase odds prior to entry:

500 Re-entry- This trade has 3 main Requirement for entry is Based on ULTRA STRONG TRENDS. ALL criteria must be met prior to entry.

• 4500 & 1500 TICK Trend Directed -Extended S/R Lines that clearly indicated the Trend
• 500 Cycle into trend- The 500 Cycle S/R Must Print or Cross into the current STRONG Trend.
• Probar on 500 Tick at S/R -We need to see a probar at the peaks & Lows to establish a confirmation break.
• Vix Must Be in Opposite Extreme - I want to see the VIX maxing
• STAY VERY FOCUSED ON THE TAPE!!!! - This will allow me to time the entry.

Reversals  & Ranges
AAA Sequence - Cycle & Volume Based
End Of Trend Cycles on 13500/4500/1500 ticks - This sequence is discretionary as the factors are Basic VSA concepts around S/R. When I spot these take it every time. At least 3 of the 5 defined Criteria Point must be met prior entry with EOT or PB Cycle SUPPORT/RESISTANCE, Previous Exhaustion/Flush Signs & Pro bar Volume Most Important.

• 4500/1500 TICK EOT or PB Cycle SUPPORT/RESISTANCE (A MUST)- May stand alone without confluence other times it may sync with multiple Time Frames. 
• Probars at S/R (A MUST) - These should show up in the S/R area and serves as confirmation of Buying or Selling, Use the Bar Breaks on lowers to confirm entry.
• Exhaustion Strength or Weakness in Background (A MUST)-Signal is Stronger with Exhaustion in background Prior to EOT, (Very Important!!- if Exhaustion is on the EOT wait for a 2nd Cycle Turn with Divergence before entering. Exhaustion should show up prior to the End Of Trend and the Actual EOT should have Divergence showing as a Tri Factor Signal) 
• Divergence at S/R (A MUST) - These may show up in the S/R area and are extremely importany AFTER Exhaustion has shown Up, Particularly on the 4500. May show up on lower time frames.
• Confirm Entry on 500 tick and lowers with probars and rambos. Look for Flush, Exhaustion or Divergence on the this frame as well.

AA Sequence 
1500 Ice Breaker - Learned this sequence From Barry Taylor, he uses this as a simple Volume and Cycle Based Opportunity. It takes advantage of the Professional Activity AFTER the Open.
We look for 1st probar after open that appears at Cycle S/R on the 1500 Tick or BB Midline. We enter on bar break with limit or at probar high with limit.
All 3 of the defined Criteria Point must be met prior entry 

• Pre-Open Momentum (preferably in BB Trend Channel)
• 1500 Tick Probar - we want to see Probars at cycle S/R, entering on the break of the 1st probar.
• Cycle Support/ Resistance or BB Midline - This is the test of S/R

A Sequence - Single Cycle and Volume Based
1500 Tick Cycle S/R with Probars and Rambos at the Peaks.
This will usually have Confluence with the 500 tick BUT the 500 may be an overshoot, thus leaving the 1500 as the primary cue for entry. At least 3 of the Defined Criteria Must be met prior to entry.

• 4500 TICK Trend Directed (A MUST)
• Cycle Support or Resistance  (A MUST)
• Probars at S/R (A MUST) - These should show up in the S/R area and serves as confirmation of Buying or Selling, Use the Bar Breaks to confirm entry. DO NOT USE RAMBOS or LOW VOLUME BARS to qualify this entry. 
• Exhaustion Strength or Weakness in Background - If we have Exhaustion in the background this strengthens our bias
• Divergence at S/R - These may show up in the S/R area and are extra clue's.

4500 Tick Tri Factor. (An Early Reversal Entry Sequence) 
This will usually have Confluence with the 1500 or  500 but this is NOT necessary when taken during the 90 Minute Time Intervals. The difference between this setup and the BB Reversal or 1500 Single Cycle is that the primary cue for entry is the 4500 Probar Breaks for confirmation, the probars and S/R are key. However the overall Risk:Reward at this point is much greater. Additionally if price violates the BB Mid then we have confirmation to increase position size, Or extend target as we would be in profit expecting a greater move. At least 4 of the Defined Criteria Must be met prior to entry **.

• Following a Large Rally Peak or Selling Climax Spike. (A MUST) - It is ideal to 1st see a large rally or selling climax prior to this setting up. If we get Exhasution signals prior to the probar then this is good.
• Exhaustion Strength or Weakness in Background (A MUST)- This is best if shown up prior to setup.
• Cycle Support or Resistance  (A MUST) -May Overshoot cycle some times but Must Be Near a recent S/R Line.
• Probars at S/R (A MUST) - Ideally I want to see PT bars closing in the middle or ST bars closing in the middle  high or Block Volume. These should show up in the S/R area and serves as confirmation of Buying or Selling, Use the Bar Breaks to confirm entry. DO NOT USE RAMBOS or LOW VOLUME BARS to qualify this entry. 
• Occurring at or Near a Time Interval (HIGHLY PREFERRED) - within one 5 minute bar of Time Interval is very good.
• Divergence at S/R (PREFERRED) - These may show up in the S/R area and are extra clue's.

4500/1500 Tick Cycle S/R with Probars Double bottom/Tops
This will usually have Confluence with the 500 tick BUT the 500 may be an overshoot, thus leaving the 1500 or 4500 as the primary cue for entry. The Double Top/ Bottom must have Strength or Weakness in the Background. At least 4 of the Defined Criteria Must be met prior to entry.

• Following a Large Rally Peak or Selling Climax Spike. (A MUST) - It is ideal to 1st see a large rally or selling climax prior to this setting up. If we get Exhaustion signals prior to the probar then this is good.
• Cycle Support or Resistance  (A MUST) -May Overshoot cycle some times but Must Be Near a recent S/R Line.
• Probars at S/R (A MUST) - These should show up in the S/R area and serves as confirmation of Buying or Selling, Use the Bar Breaks to confirm entry. DO NOT USE RAMBOS or LOW VOLUME BARS to qualify this entry. 
• Double Top/Bottom (A MUST) - This usually sets up with a Probar on the first top that may have exhaustion or divergence. The 2nd top may be short of the 1st highs on low volume, with divergence. This is classic.
• Exhaustion Strength or Weakness in Background - If we have Exhaustion in the background this strengthens our bias
• Divergence at S/R - These may show up in the S/R area and are extra clue's.

B Sequence - Bollinger Band & Volume Based 
Bollinger Band Reversal Trades - These are very Solid trades and should not be discounted due to rank, The Criteria is stringent. The Ranking has to due with Me NOT preferring to trade Reversals as much as trending trades. But when this sets up around 90 minute Time Intervals or after a large move this is a very Good Trade. All 5 criteria points Must be met Prior to entry. ** DONT NOT ENTER INTO SUPPORT OR RESISTANCE the odds drop tremendously.** DONT ENTER WITHOUT MULTIPLE EXHAUSTION SIGNALS ON THE HOGHER TIMES FRAMES.

• +2 or More Exhaustion Signals in the Background - This should show up the 4500 Tick, 1500 Tick or 5 minute chart in multiples after strong Rally or Decline. The trade should ONLY be entered Fading nearest S/R lines. Never Into S/R.
• Wide Spread Probar into New Highs/Lows - Probars at peaks should appear on 4500/1500 Tick Charts or 5 minute charts with No Demands or Rambos in the same cluster.
• Background Strength/Weakness Must appear- 
• Price CLOSES across the Midline - Price moves ACROSS midline.
• Price TEST Midline - Price Revisits the Midline on Low volume or slowing occurs.
• Price Breaks Test bar to Confirm New Direction - Price breaks the bar that tested the midline in the direction of the New Trend.

D Sequences - Discontinued Need More Development

Quad Triple & Triple Crown w/Jewels Double Bottom/Top
(An Early Reversal Entry Good in RANGING MARKETS) 
The Triple Crown is Reversal trade that happens occasionally and is very powerful. This setup combines the Basic VSA criteria with Cycles that show themselves across the Board with High Volume on Peaks and Spikes on 3 or More Tick Time Frames, this is the key to this trade. Look for this is RANGING MARKETS At least 3 of the Defined Criteria Must be met prior to entry **.

• Probars on ALL 3 Ticks (A MUST) - Ideally I want to see PT bars closing in the middle or ST bars closing in the middle  on high Volume on the 4500 mainly, but we may see wide spread closing on the highs or lows. Expect a 2 bar reversal on the 4500 with confirmation on a break of the probar. The 1500 and 500 tick charts just Need Probars at the Peaks/Spikes to qualify. Enter off the 500 tick bar confirmation and add-on at the 4500 tick bar break.
• Following a FAST Rally Peak or Selling Climax Spike. (A MUST) - It is ideal to 1st see a fast rally or selling climax prior to this setting up.
• Exhaustion Strength or Weakness in Background  (PREFERRED) - This is best if shown up prior to setup. or may be on the 1500 or 500 time frames. These are the Jewels.
• Divergence on or Near Peaks (PREFERRED) - We want to see these at the peak or Spike bar. These are Jewels.
• Cycle Support or Resistance - May Overshoot cycle some times but Must Be Near a recent S/R Line.
• Occurring at or Near a Time Interval (HIGHLY PREFERRED) - within one 5 minute bar of Time Interval is very good. May occur between 10:30-11:30 late day

Breakouts & Consolidation
AAA Break Out Sequences

Open Ice Breaker 13,500 Tick - (The Ice Trades are based on Momentum, Volume and Cycle Activity from Globex and Pre-Open.) 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.

• Use the Market Bias to get a general direction of trend and Strength/Weakness.
• 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.
• Look for the 13,500 Opening bar to print, 
• 2nd Bar Break in the direction of Pre-Open Momentum. **Tip** Allow the price to touch your break price, but wait!! many times price will retreat a few tick before returning with momentum. Use a Limit Order at Break Price for cheaper entry.

AA Break Out Sequences
Break-Outs From Consolidation. (Flags, Falling Thru Ice & Jumping the Creek) 
These sequences are Discretionary and should be thoroughly understood prior to entry. The good thing is that they are usually obvious to the trained eye. The trick is HOW to Enter the Breakout. 
At least 4 of the Defined Criteria Must be met prior to entry **.

• 13,500/4500 Trend (A MUST) - On  a FLAG breakout we want to trade in the direction of the Trend that proceeded consolidation. 
• Head & Shoulders or Clusters Near S/R (A MUST) If this is falling thru the ice or crossing the creek we may see a head and shoulders type pattern or a cluster prior to the  break, in which case we are against S/R Strength or Weakness and Recent Trend.
• Clear Definable Consolidation - May appear as Clusters or Flag, or just tight consolidation.
• Multiple test of S/R - We want to see price flirt with theses level on increasing volume.
• Multiple Probars at and/or pushing into Support/Resistance (A MUST) - These should show up in the S/R area and serves as confirmation of Buying or Selling, Use the Bar Breaks to confirm entry. DO NOT USE RAMBOS or LOW VOLUME BARS to qualify a break. Volume should increase on Wide Spread Bars. 
• Occurring at or Near a Time Interval (HIGHLY PREFERRED) - within one 5minute bar of Time Interval.
• Divergence at S/R (PREFERRED) - These may show up in the S/R area and are extra clue's.
• Exhaustion Strength or Weakness in Background - This is best if shown up prior to setup.

Flags Bull & Bear- usually show up midday after a rally or selling climax that does not come off. When this pattern shows up Just after after the 7bar look for the Break out at around 8:30-9:00.
At least 2 of the Defined Criteria Must be met prior to entry **.

• Following a Large Rally Peak or Selling Climax Spike. (A MUST) - It is ideal to 1st see a large rally or selling climax prior to this setting up. If we get Exhaustion signals prior to the probar then this is good.
• Clear Definable Consolidation (A MUST) - May appear as Clusters or Flag, or just tight consolidation.
• Multiple test of Consolidation S/R - We want to see price flirt with theses level on increasing volume and test on low volume.
• Reading the Tape - You must read the tape and allow price to show Increasing Volume on the approach. If price breaks only a little past S/R with low activity exit. There should be stops triggered upon a true breakout.

Falling Thru the Ice/Crossing the Creek
This setup can look very similar to Tripple Crown. When price is rallying or moving toward S/R we must respect the Probars and be sure not to mistake the break for a reversal is the key to this trade. Look for this is RANGING MARKETS At least 3 of the Defined Criteria Must be met prior to entry .

• Head & Shoulders or Clusters Near S/R (A MUST) If this is falling thru the ice or crossing the creek we may see a head and shoulders type pattern or a cluster prior to the  break, in which case we are against S/R Strength or Weakness and Recent Trend.
• Clear Definable Consolidation - May appear as Clusters or Flag, or just tight consolidation.
• Multiple test of S/R - We want to see price flirt with theses level on increasing volume on the approach to S/R.
• Multiple Probars at and/or pushing into Support/Resistance (A MUST) - These should show up in the S/R area and serves as confirmation of Buying or Selling, Use the Bar Breaks to confirm entry. DO NOT USE RAMBOS or LOW VOLUME BARS to qualify a break. Volume should increase on Wide Spread Bars. 

Liquid Scalps
AA Liquid Support & Resistance Bounces
Wholesale Price Reversal Bounces. (MATD, Globex Gap S/R, Round Numbers) On Liquid sequences we are taking advantage of WHOLESALE PRICE POINTS that are PRE-DEFINED!! they could be Round Numbers, Prior Day S/R from a Trend or Range, or Globex S/R or Gaps that are tested. These Sequences ARE NOT ENTERED WITH BAR BREAK CONFIRMATION, but rather $Tick, Block & 3Line Break Turns at or near the pre-defined wholesale S/R points. I use 1 lot to PROBE 1st. Bar Breaks are added confirmation and may be used to add-on to the current position. The Position is managed with Size within a predefined Range or Premise. The Best Times can be 2nd Time Interval of 90 Grind or Pre 9zone  9:00 - 11:00am.
At least 5 of the Defined Criteria Must be met prior to entry .

• Defined Premise (A MUST)- Prior to entering we must have a basic premise of Strength or Weakness, We want to ask where is the most CURRENT wave of S/W likely to push prices. ie where is momentum headed. If the paramaters of the premise are Broken, then look to scale out of any positions and reassess the next wave of S/W.
• Pre-Defined S/R (A MUST) - WHOLESALE Price points must be defined and Marked on the chart prior to price testing this area.
• Limit Orders Above/Below Market (A MUST) - Once we have a define price range We then Place LIMIT orders at or near those markers. If Not filled allow for only a few ticks to chase or let it go. This is where we use the $Tick to time the chase.
• Block Volume & Probars (A MUST) - We want to see Block Volume or Probars at or near these levels to confirm corroborating action from Professions.
• $Tick Turning at Extremes and Bouncing (A MUST) - To time our entry we want to see the $Tick reach key points, either at extremes +/- 1000 reading or Reacting to the 0 Line.
• Confirmation - I use the 3Line Break and Pro or Block Bar Breaks for confirmation that my entry is progressing with my premise. These are good add-on points. 

Managing Liquid Sequences  - These sequences should remain within the Defined Premise,  If we entered correctly at the Premise Extreme WholeSale level then our STOPS should be very clear, usually between 2 ticks and Max 2pts. We settle for 1-2pts profits but may extend if added confirmation is present. 

Key Points to Remember - Start with 1 lot and When price is confirming get bigger, when price is not confirming stay small or get smaller if holding.

Heat Zone Defined - The area after entry where you No longer like your Odds in the trade. This depends on where you enter at. If your entry is Near support then your heat zone is shorter or very LOW RISK.
If your entry is say 2pts away from Support then your Heat Zone is wider which mean your RISK is HIGHER.


Tri Factor Signal Defined - The Tri Factor Signal is when you get a Probar at Suppor/Resistance with Divergence on or very near the bar. his may show up any time frame and is solid signal that Buying or selling is taking place at the point in the cycle.


Even After Qualifying The Above Criteria Think in terms of Risk, if the trade ran too fast and you are outside of your Heat Zone (1-2+ pts from entry, then let it go and wait for the next entry). There is Always More Opportunities, even if its tomorrow.


Taking Profit Signals and When MUST I EXIT
Typically I want to Exit a position at the 4pt Target, however we know that each sequence is unique in that we dont know  how or when the Best Exit Opportunities may present themselves. With this in mind the following EXIT signs should be ACTED Upon once recognized.
Max Exit is 4Pt Predefined Target - This Target is based on the basic Average True range of the S&P Eminis. typically 3 ATR's is the ideal Stop and Target in any given direction on any given day, so I use this as my Predefined target to Exit the trade at target or Stop. Usually the 1500 Tick ATR is in the rang of 1.20-1.75 x3 gives an average of about 4pts Max Exit.
To the Degree that i Honor This number goes my Success and P/L percentage. It is normally best to honor the Stop to Max UNLESS there are Obvious signs of Strength or Weakness signaling otherwise, such Pro Signal Exit or S/R Breaks on Wide Spread, High Volume bars with peak closes.


1500 Pro Signal Exit - This is High Volume coming into the market with Exhaustion Momentum indicating that supply or demand is limited and prices are likely to reverse very soon. The Only Exception to this RULE is when Price quickly Breaks below the probar and prints a 2nd probar that closes on the low.  This would be an extension that needs to be predefined either prior to entry or shortly after entering the trade. If Target is NOT filled here CLOSE ALL POSITIONS on the Market.


Tape Reading - This important when in a sequence that is breaking into New territory. See Signs of Price Rejection at Extremes on the TAPE


Exit All Trades on 4 pt target unless VSA signals or Pro Signal Exits allow for more extended targets, even then BE VERY Specific about NOT taking the 4pts!!

Trade Review Cards to Help Analyse Each Sequence Upon Exiting

Im now using Trade Review Cards for the purpose of documenting the Good Bad and Ugly of Each trade in order to further recognize mistakes and Highlights. This will be linked in Excell under Trade Selection. The excel doc should show an Entry Rank for Each Trade.

Upon Entry i will Rank the trade to Justify the entry - Is this an AAA Sequence? or a C Sequence
If C sequence further Explain why your taking this Risk

After Exiting the Trade Explain what I saw. - Did i take alote of Heat? Did I Max out? Did I exit too soon?
Explain the early Exit
Any Regrets with Exit?
What Mistake did i Make?
Any Small Victories?

This is a Example of what the Card will look and function

TRADE REVIEW

Sequence #1
Trade Rank = AAA
Exit Review = Exit too soon.
Mistakes: My Nerves led me to believe that the trade was going to come back and stop me out.
Highlights: This trade synced on All 3 ticks at key POC Cluster. I spotted this setting up early and entered perfectly.

Sequence #2
Trade Rank = B
Exit Review = Max Exit
Mistakes: Could Have moved target as the POC was 3 points more in my direction.
Highlights: After price broke Midline test bar it started pressing the extremes so i held

Sequence #3
Trade Rank = C
Exit Review = Stop out
Mistakes: I missed the Signs of Strength that appeared on the 4500 tick and there was NO justification on the 1500.
Highlights:

Sequence #4

Trade Rank = C
Exit Review = Closed out early
Mistakes: Bad Entry, entered too late and took alote of heat.
Highlights: when price returned to my entry I closed out for small loss.

Using the BB Channel to Spot the Opening Trends and Reversals

After taking some tough loses I realized that my biggest problem was that I was playing from behind whenever I missed my Ice breaker, or took an early trade on the open without any true directional clues other than the day type established with the prior days close. While the 15 minute close bars and day type are very helpful many times this past information confuses my present view leaving me basically guessing the Open DIRECTION. 


So after reviewing these mistakes I noticed that the BB Midline was very Accurate at spotting Open price Direction. It acts the same as the intraday Trend Guide, Except it has taken into account the Globex and Pre-Open session providing the most current momentum swings, something i have been trying to nail for a while. 


Hear is How im using it


FINDING THE TREND EARLY - look for trades in the BB Channel Trend Direction early on the Pre-Open and Open; Often we get test of the midline early prior to moving deeping into the trend. ( see arrow )

Another Example of BB Channel pointing the way on the open

 Testing the BB Midline before Continuing deeper into the trend, Probar Down Close (Notice Price tested BUT NEVER CLOSED across the midline)

If Price Opens against Support or Resistance outside the BB Extremes, look to Fade these areas early, these confirm Globex momentum and insures that you are trading with the trend.
(Notice the Cycle Resistance above BB Mid with Probar, Notice Price NEVER CLOSED across the midline)

Price Opens Near Cycle Support at BB EXTREME

 Price Opens Near Cycle Resistance at BB EXTREME

If Price crosses the Midline multiple times early Be Wait before entering a trade as the trend has not been established.
(Notice the Choppy Open with Midline Violation on both side before the trend emerged, best to wait on these opens)

Another Choppy Open

Remember that Bar Breaks MUST confirm Trend Direction or look for the BB Midline to be Crossed, Closed and Tested with Bar break in cross direction prior to entering, These Open are treated like Reversals

 Another Test of BB Midline, Failure confirmed with Bar Break.

Adjusted Scorecard and Trade Prep Routine

Entering into the month of September 2011. I feel its time to adjust How i Critique my trading after each session and also update my Routine in order to tighten up my game and address problems that need improvement while eliminate problems that I no longer have any difficulty with.

Score Card Adjustments & Additions to my Score Card that need specific improvement:

Mental Pre-Prep Routine - Focused on the Mental Visualization techniques to a eliminate Nerve and Anxiety problems during the session.

Trade Selection - This is to place emphasis on Focusing on the very best Trade setups of the Day. This will help with Maximizing each opportunity while preventing Over trading.

Maximizing Exit Targets - Monitoring the ability to allow the trades to play out and hit inevitable targets. My Exits need improvement. Use the Anti Nerve mantras and breathing techniques below. click for more info (see Sigh Breaths)

Emotions / Nerves & Anxiety - This is very important to gauge my mental progress when executing sequences. Am I applying the techniques consistently through the day? (This includes pre entry as well as monitoring the market for high quality sequences.)


Mental Routine Focus Points and Meditation
Concepts to Remember

Remember that each trade is a small part of the whole sample size, no need to put so much emphasis on each sequence. I am the Casino and My Mind, Discipline and Focus ability is My Edge..
Take Every Sequence that fits my Criteria as an A, B or C trade. Loses are a natural part of this business.
Consider Loses as the cost of doing business, the overhead that allows me to be successful.

Exposure Routine

Do Exposure visualization before bed with fear and focus tones, do this for as long and intense as possible.

Do Exposure visualization again in morning but very quick.

Use Frequency Tones for Fear, Focus, Concentration and Relaxation.

Visualization

Imagine sequences - waiting for a great trade, getting excited when i see the opportunity, quickly assessing risk, entering with confidence. This all happens naturally as if on auto pilot.

Then watch trade go against me or stay still, watch how i feel about this and when anxiety shows, breath deep and say "I have to give it some time" keep the slow breaths and mantra while the trade goes in and out of profit. as the trade moves deeper my favor, assess the broader view of the market and say " i need to see the 4500 or 1500 tick exit signal. stay in this scenario for as long as needed. then feel yourself limiting out.

Do these types of meditations and include loses, especially tough 1 tick target misses and reverses. imagine how i will react to these in preventing loses, included dragging orders, bad fills etc. Also imagine moving past these tough trades without dwelling or losing focus.

Visualize my Equity Curve moving UP (Not my Account P&L) taking small loses and managing large wins. Imagine a strong Win/Loss Ratio 80%, 100%

Tips to Practice

You can do this even during trading hours as if you are going to enter a live trade while waiting for setups (Do NOT Jump In Live Without a Setup) But create the feeling of pre war anxiety and listen to it, use breathing techniques to quail this feeling, keep practicing this until the anxiety begins to fade and lessen. When we do finally enter live use the same breathing techniques and mantras to mentally manage

the anxiety of each sequence.

The Idea is to get as close to the feeling of trading anxiety as possible and DEAL with it enough times to eliminate its important to your subconscious us mind.

THE SEQUENCE CYCLE START TO FINISH

Pre Sequence Behavior - Analyzing the Open and Daily Progression with a Focused detached  Mind.
Scanning the markets on Auto Pilot as a detached witness that only recognizes Low Risk High Probability Trades that are listed as key Sequences A, B, and C. 


Looking at the Broad View and asking the pertinent questions as if I'm in a trade can help with Quality Trade Selection.


Use the whole ACTIVE Trading Session as a Meditation/Visualization by Monitoring your Breathing While Focusing on the Activity.


Read the Tape to get a feel for the market Pulse.


Use the information from the Pre-Prep Routine, ie. Daily chart, V Profile, Globex Session, Market Bias and Day Type and try to Visualize How the Day will End Up.


Question the Higher Time Frames (13500t, 4500t, 15m) Ask yourself, Where is the Ideal Entry Located? At what Price would I like to enter?


Try to foresee what is likely to happen and where you Would like to Enter at.


Listen to your body. I often Get Excited and feel Very Confident when I see a Low Risk Opportunity, This the Time To Jump In!!!


Positive Things To say Myself (while in a Sequence) - Quality of Thinking can be managed with pertinent Mantras that are in line with my trading goals.

Notice the Anxiety, listen to it and call it by its name (Nerves, Post Entry Anxiety etc.)

Take a few moments to notice my breathing patterns.
Take slow and deep breaths. focusing on the pause at the end of the breath .
Relax my Face, Throat, Jaws, Shoulders & Abdomen.
Click for more breathing info (see Sigh Breaths)


Mantras
Stay Positive..

My Mind provides the winning Edge..
My calm is my advantage.
I want a pull back to my entry, that may be a good add-on opportunity.
We should hit the inevitable target soon.
I have No thoughts of my own im just listening to the markets

I need to see the 1500 probar with exhaustion before exiting.
Give It Time, at least 15 minutes then i'll reassess the odds.
A test in a Rising or falling Market means we have more room to go. 

I'm getting better at this.
This thing is going our way.
Whats the worst that can happen?

Its Not life or death

its only one sequence out of many

fed reserve notes are not real money

Productive questions to ask while in a trade. -
Is the trend still strong?
Are we pressing the BB Extremes? This is a sign of momentum
Is the Tape Volume Progressing in our Favor? Supply or Demand
Where is the Strength or Weakness in the current background?
Are there any recent test of Strength or Weakness since entering?
Are we near a Time interval 5, 15 or 30 minute bar open/close?
Can i visualize where the 7 Bar will peak?
Is the next POC holding?
Is the Tape Consistently reading in your direction?
Is the 500 cycle moving in our direction?
Is VPOC Value moving in our direction?

Review The Sequence After You Close Out- Review after the trade will provide a Break From Intense Focusing and provide some time to Re-Assess the Current Action.
Note my thinking before entry, during sequence and at close out.
Was my thinking positive?
How did That Sequence Feel?
Did i notice anything Different about my thoughts or Feelings?
What could i have done better?

Consider Going to the Restroom, Stretch or taking a walk around the house - Its good to go Away from the Screen after intense focus periods. This is a great refresher and things often appear clearer upon returning.

Move On - After reviewing the sequence forget about the last trade and began the process of probing the market with a focused but detached perspective.