The Premise = Background Strength and Weakness on the Higher Times Frames ONLY!!

Current Premise = Background Strength and Weakness Consider on the Higher Times Frames ONLY!! -Use the 40,500 13,500 and 4500 tick to determine the Background S/W as well as Tops and Bottom Shapes (ie. Mushroom Tops/Saucer Bottoms) and S& R lines. 4500 is good for Identifying current waves entering the market. This makes up my current Trade Premise at ANY given time during the session. As long as the premise remains Trade with it. Dont focus on point stops, rather focus on target exits as it pertains to the premise and timing.


Take Note of the Incoming Waves of Strength and Weakness that show up intraday. Usually the previous days close, Globex and Pre-Open will provide background S&W for the Open. BUT many times there may be a wave of S&W appearing at the Open, 7 zones or even midday during the dead Zone. Keep an eye out for current S&W.  If longer term Strength is supported  by current Strength, then we have odds on favor when a sequence sets up.

Examples of Block Volume on the 13,500 and 4500 indicating waves of Strength and Weakness. Revealing the short term inventory objections of the MM/Specialist.
13,500

 5 minute

 4500

Ice Fade's - Previous Days/Globex/Pre-Open S & R Bounce

MATD Morning After Trend This Sequence is based on Don Millers MATD trade along with my own observations of Globex and Pre-open Bounce near the open. 

The idea is to Fade the S/R area after a Trend Day to take advantage of Wholesales prices and Traders needs to React at theses areas. 

These Days Bring stuck Traders that NEED to take action (If Support, these Traders Bought at the highs and are Now under serious Pressure and will panic out at these lows by Short Covering which will strengthen our position. Vis versa for Resistance) Other Traders that Missed the trend altogether and are Now Upset and will rush in at these Support Levels which will further Strengthen My position.  Best on Mornings After Trend Day.

• I.D. Longer Trend 13,500, 4500, 135 minute ( MUST) -  We want to trade in the direction of the Longer term trend. Draw Trend Lines if needed
• I.D. Prior Days, Globex, Pre-Open S&R - We want to Draw S/R line on the 13,500 and 4500 and note any Tick confluence cycle's around these areas. This is the Background.
• Probars or Block Volume Reacting at these levels  ( MUST) - We want to see Professional activity reacting at these levels. On Retest(Double Tops/Bottoms) of Globex S/R we May Get No Supply or No Demand at these level. The rules remain the same.
• Take the 1st Tick Bounce off Extremes  ( MUST) - When Tick begans to turn at the first Low Extreme you should have position on. On 2nd or 3rd Bounces look for $TICK Divergence for great confirmation.
• Entering with Bids or Offers above and Below Market  ( MUST) - We want to place Buy/Sell orders above/below market - No need for probar breaks prior to entry - We Want to catch the price closest to S/R as possible as price stalls and turns. If we are not filled when the $TICK turns then forget the trade. DONT Chase the market.
• Exiting Into The Market - Price should bounce into favor fairly quickly. Allow time for price to move in favor. Im looking for the market to take me out of the trade. Read the tape and when Price starts pausing and stalling while in profit drag limit to exit. Give it at least 5 minutes. **Note** When Longs are not getting Filled that is a Strong Sign of Weakness. When Shorts are Not getting Filled that is strong sign of Strength. Best to Close All or readjust limits and Reassess the premise 
• Money Mangement.Use a 2pt stop on the trade with max 2 lots not wider than 1pts apart. ie If i enter the 1st trade at the 1200, then the 2nd entry should be 1199 or 1201 Risking max 2 pts each for a 4 point total Risk, the same as a single lot entry with 4pt stop.

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)

• 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.

Another Example of Ice Breaker Fade

Ice Fade Characteristics - This is MATD variant, we are taking into account the fact that Weakness/Strength was in play on the PRE-OPEN. So the results would likely happen on the open.

1. The Pre Open had Blocks and high volume leading into the Top. 
2. The Top was the Actual High, Needing to break New ground for any profit.
3. There was NoD on the 4500, 1500 TOPS and No Pro bars on the Actual Open. 
4. $TICK printed Exhaustion after Consecutive tight range bars leading to the peak.

Tick View of the Ice Fade, Notice the prior days Close showed strength that played out in the after market moving to NEW highs peaking on the Actual Open.

 13,500 View of the Ice Ice fade. Waves of strength and weakness must be viewed as continuos as we see here that the close Strength playo ut in the globex and Weakness was set in by the open.

Specific Order of Thinking Prior to the Open

The order of Thinking and Focus that must be addresses prior to starting the Day is as follows:

Acknowledge the EGO - Determine that we will Not rush the open or allow Mr EGO to take control of our actions. We are NOT trying to be Right about the outcome. We have No expectations for each outcome. We will be observers of our thoughts and maintain a positive focus for the day.


Determine Background Strength & Weakness -This is the Very first thing we Must Determine before going any further in our analysis of the morning potential. This includes the Globex and Pre-Open, taking into account any New S/W that appears after the previous days close.


Determine Most Recent 4500 Tick Trend - Use the Bollinger Band Channels to guide the direction. Be sure it MATCHES the Strength or Weakness. If not, then stay out. Conflicting Trend and Background means choppy markets and indecision. This is a High Risk Environment!!


Qualify Sequence - This has proven to be a bit tricky if we don't follow the rules Specifically. If the Sequence is not VERY clear then pass on it, chances are we may be creating or confirming a bias. This usually leads to Unqualified trades. If we notice that we have entered an unqualified trade then we should EXIT Immediately!! Don't allow an Unqualified Trade to linger at all!!


Managing the Risk - Management is Not constantly moving stops around But IDENTIFYING LIKELY AREAS WHERE STOPS MAY BE. Specialist will often go to where the stops are prior to moving into intended direction.

Signs of Price Rejection at Extremes on the TAPE

Signs of Price Rejection on the Tape 
Its Best to Focus on the Tape once price is nearing New territory. tape reading too early can promote early exits!

1. Price breaks into new ground. 
2. Then it breaks only by a tick or two and retreats (may have already broken by more but is now stalling) 
3. Volume bars print small number ie. 63 as price attempts the next break in direction. 
4. A general slowing down in activity. (I may see Rambos' or Probars around this area)

Rejection can happen very quickly, if we watch the tape closely we may see that price is rejected without ever seeing a move into the rejected price.
(notice the last price @ 1209.75 had 63 Trades!! After printing 7839 previously! This is Selling into the highs by Pro and No current interest by Pro's at that price)

Price may eventually return to the rejected level BUT it may take a substantial amount of time and heat before doing so. 

Example of Falling Thru the Ice

This is another good example of Fallling thru the ice. You get multiple probars pushing thru supply on the higher time frames, notably the 4500 and 1500 shows best. The 500 does show it well.

another Falling thru the ice with a 1500 retest of new resistance, multiple 1500tick bars breaking support. This happens very fast so be alert.

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!!!

;-)