Determining Profit Areas....
One look at the chart that I have posted below looks more like a "run like hell" price action than a trade oriented day plan. I don't blame you for feeling that way as that is what it looks like to me too. You can see no clear direction at all as price whip saws back and forth blowing out shorts and longs alike. Yet at the same time I was able to trade and capture about 27 ticks profit after commission.
The key is you have to know where the major volume areas are. Not the ones that form day to day on the chart. If you rely solely on those you likely won't make any money.
The next step is you shouldn't expect large profits at any time. It is simply too hard to pick the days where the market is likely to trend in the short term. They say that you can pick trends and that you should follow them but how would you do that today?
The answer is you can't. Not when price is contained in a 50-70 tick range.
More times than not the trading day is like this.
You must realize a couple of things very quickly when you trade. The first and foremost is that liquidity is provided on both sides of the market. That is why you look at your order flow and you look at your tick tape until you are absolutely sure that there is going to be a move up or down where you enter and are promptly stopped out.
You see the orders you are looking at on a daily basis are NOT controlling price. The liquidity providers use those orders to trick you into thinking that you are seeing the real picture when in truth you don't know the real picture. They do but you don't. Retail order flow makes up a small portion of the market on a day to day basis. Maybe 17% at most. Orders can be placed and removed at any time by the market makers and liquidity providers.
Do you know who you are looking at when you see orders streaming in? Is it other traders like you or just liquidity providers adding or removing orders? You don't know do you? You can't know.
This brings me to the next point which is likely the most important if you want to make regular profits. You have to be able to use your own neural net (which is still more powerful than any quant or algo) to determine what other traders are likely to do and more importantly "where".
You ask yourself questions like, "What are they seeing"; "why are they likely to take a position"; and "if they are likely to take a position where is the market likely to head".
In other words in this cat and mouse game, you want to think and be like an LP.
Every trade I executed today went at least 20 ticks. It did so because I was not the target. Someone or many other traders were.
There will be days that YOU are the target. This is why most systems fail over time especially when others jump on board to trade the system. You then become a target for the larger funds to make money. When a series of traders take positions it is more lucrative to run them than to waste their time chasing your 1-2 contracts all over the place. Don't get me wrong, they will from time to time but most of the time there are bigger fish to catch.
If you think like this and limit your greed you likely will do ok. Risk is always paramount when you trade and it has to be mitigated properly or you will be a target always. Say that you have a ten thousand account and you want to trade three contracts. Well that means that you have over 300K in the market. Each tick takes 30.00 from your account plus commission. Do you think they know you are shitting your pants? Sure they do. They don't have to move the market very far against you before your human emotions cave in and you take a foolish loss.
There are execution zones that I will teach you and more importantly why they occur. Stay tuned:)
The key is you have to know where the major volume areas are. Not the ones that form day to day on the chart. If you rely solely on those you likely won't make any money.
The next step is you shouldn't expect large profits at any time. It is simply too hard to pick the days where the market is likely to trend in the short term. They say that you can pick trends and that you should follow them but how would you do that today?
The answer is you can't. Not when price is contained in a 50-70 tick range.
More times than not the trading day is like this.
You must realize a couple of things very quickly when you trade. The first and foremost is that liquidity is provided on both sides of the market. That is why you look at your order flow and you look at your tick tape until you are absolutely sure that there is going to be a move up or down where you enter and are promptly stopped out.
You see the orders you are looking at on a daily basis are NOT controlling price. The liquidity providers use those orders to trick you into thinking that you are seeing the real picture when in truth you don't know the real picture. They do but you don't. Retail order flow makes up a small portion of the market on a day to day basis. Maybe 17% at most. Orders can be placed and removed at any time by the market makers and liquidity providers.
Do you know who you are looking at when you see orders streaming in? Is it other traders like you or just liquidity providers adding or removing orders? You don't know do you? You can't know.
This brings me to the next point which is likely the most important if you want to make regular profits. You have to be able to use your own neural net (which is still more powerful than any quant or algo) to determine what other traders are likely to do and more importantly "where".
You ask yourself questions like, "What are they seeing"; "why are they likely to take a position"; and "if they are likely to take a position where is the market likely to head".
In other words in this cat and mouse game, you want to think and be like an LP.
Every trade I executed today went at least 20 ticks. It did so because I was not the target. Someone or many other traders were.
There will be days that YOU are the target. This is why most systems fail over time especially when others jump on board to trade the system. You then become a target for the larger funds to make money. When a series of traders take positions it is more lucrative to run them than to waste their time chasing your 1-2 contracts all over the place. Don't get me wrong, they will from time to time but most of the time there are bigger fish to catch.
If you think like this and limit your greed you likely will do ok. Risk is always paramount when you trade and it has to be mitigated properly or you will be a target always. Say that you have a ten thousand account and you want to trade three contracts. Well that means that you have over 300K in the market. Each tick takes 30.00 from your account plus commission. Do you think they know you are shitting your pants? Sure they do. They don't have to move the market very far against you before your human emotions cave in and you take a foolish loss.
There are execution zones that I will teach you and more importantly why they occur. Stay tuned:)
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