January

Time to look back. I've told you, that in November last year my troubles started. I made dumb errors, I lost confidence, my trading system seemed to have stopped working. And there comes a time, when you have to reconsider the trading approach you are making.

I'm not trading a mechanical system, I'm trading a kind of discretionary system, where I base my trading decision not only on mechanical indicators but also on intuition, a subconscious trading impulse to take a trade or leave it. Problem is, that this impulse is subject to a conscious filter, which allows or disallows it to proceed. And this conscious filter itself is subject to my moods, to my past performance, to my evaluation, how I do, I see myself as trader.

So, if I make trading errors, this filter will start to hinder myself, just to protect my account. Unfortunately the means chosen aren't always in my best interests as old, bad habits start to creep into my trading. Like adding to losers or not taking stops or swing trading losers, you know what I mean.

I had to make dramatic changes to my trading charts to find my equilibrium again, to become again confident. I have taken you on this journey, a journey which began with a trader telling me to think outside of the box, to look at the markets in a different way. I'm most grateful and hope he's well as I haven't heard from him in a while. Still he was there, when I needed a new impulse. Now I'm going along this new path, discovering new ideas, new approaches, new Do's and Don'ts nearly every day. I feel confident again.

I have always seen my account not different than any other equity. So once or twice a year I chart my performance, just to see, where I am, whether I would invest in myself or not.

Interesting, how a trading account can show patterns similar to the one's we see on the charts we look at day in, day out. In July 05 a clear Head and Shoulders pattern formed, the neckline was tested in November and December 05, then a consolidation and sausage bottom was formed until in July 06 the account took off, exceeding the previous high, only to come back and test the previous high made in 2005.

I was about to write, that I would like to see that as an A-B-C pattern forming, but that would mean I have doubts.

Therefore I end this article by saying that I see the pattern evolving as an A-B-C pattern, with the B wave just completed.

Countertrend - another example

• Low volume
• Bottom made on first breakdown candle
• Euro/USD cash broke 1.2900 for the first time today (the chart shows futures)
• Entry 1.2925, Stop below the low at 1.2920. Target next high volume zone at 1.2940
• Risk : Reward for this trade 1 : 3

Wall of worry

HSI is down 2% or 400 ticks today. Can't go down any further, so trade long? Forget about it, this thinking cost me 100 ticks a few months back, when I thought so myself. HSI can go down 3% or 600 as well. Just stick to your charts and trade the patterns you see on the chart.

A lovely countertrend trade pattern emerged today.

• Market profile shows a low volume zone, meaning no additional selling pressure is coming into the market.
• Candles are showing a bottom with the first low holding and the close of the candle around 20295
• CCI is showing a kind of inverted H&S pattern at the -100 line
• The Stop is 20 ticks, which brings it below the bottom made. The target is the high volume zone above at 20340-50. 
• Risk : Reward for this trade is 1 : 2.25

Can't ask for a lot more and something I will add to my repertoire of countertrend trade patterns

100 Ticks

Homeruns - we see them, they are there, aren't they?

Yes, they are there! Each and every day you can find them in hindsight. No need to revert to overnight swing trading, the homerun can be made during regular trading hours.

BUT

can we find them in advance?

Is there a way to hold-on, to keep a precious trade until it reaches the magical target?

First let's see which of the contracts I regularly follow made 100 ticks yesterday. That doesn't mean there aren't other contracts which make 100 tick runs, it's just a selection narrowed down to those contracts which show usually a very good daily range.

I don't distinguish between different ticksizes or tickvalues. You can easily compensate for that by trading 2 contracts instead of 1 contract if the tickvalue is 6.25$ or 5$ instead of the regular 10$-12.50$. I'm interested in 100 ticks.

The most obvious to do that on a daily basis, actually multiple times a day is the HSI (the HongKong Stock Index Futures traded on HKFE)

Times on the chart are Central European Time, which is 6h ahead of Eastern Standard Time. The 100 tick runs are marked on the chart with a white line.

Let's continue with European index charts:

The German DAX

It made the 100 ticks twice yesterday, as did the french CAC40

The Russell made the 100 ticks yesterday as well, but from my experience that's no longer really common, still an 80 tick run can be seen most of the days.

Gold makes them on a regular basis

Oil as well. But not in the usually in the US traded QM contract. 100 ticks can be seen most of the days in the COIL contract traded on IPE.

There was a sedate 100 tick run and a news inspired short squeeze.

Last the currencies. The major pairs Euro/USD, Pound/USD and (not as often) the CHF/USD have returned to daily ranges exceeding 100 ticks, which means we see the 100 tick runs again.

Euro/USD

The GBP/USD

and the USD/CHF (I have posted the Forex chart, the futures are traded as CHF against USD, but otherwise show the same pattern)

These were the homeruns I found for Tuesday, January 23 2007.

Now, do these homeruns have something in common?

Yes, they take time

There is usually just 1 homerun per day, with the exception of the HSI, which is about to make the 4th 100 tick run right as I'm writing this, but to trade this contract, you need to have deep pockets

I said, you need to give it time. A 100 tick run takes usually 3 to 8 hours to be made. That means, you can't trade it on a 3min chart. I've posted 9min charts, which is about the lowest I consider feasible to start trading a 100 tick run.

The runs usually start from a bottom or top and are actually trend changes. So the trade starts as a countertrend trade, after a previous trend move has exhausted himself. Look at the DAX or the CAC40 above. Both made a 100 tick run, bottomed out and reversed upward, when the US session started trading.

So we "just" need to find a way to identify a bottom or top enter and hold on to the trade. A lot easier said than done!

I will keep you informed. This post was just to make sure

THEY EXIST and are there for us to take them home

Chart Analysis

I discussed my new charts with a friend yesterday and was in a very friendly way reminded, that all I'm seeing might be hindsight. looking good in backtesting, but not tradable in real time. So I did my homework this morning and give you my analysis of yesterdays DAX trading

[02:36] hi, read what u wrote and looked at chart of dax but im wondering what u are looking for exactly....
[02:37] or are u just buying/selling off of the lines?
[02:37] with no other trigger action?
[02:37] after all how do u know its a peak on the vol until its past
[02:37] i could mark peaks on the price bars and say look at the top outs
[02:38] u know me well enough to know im not criticizing, im inquisitive that's all

[07:42] (croc): you are absolutely right, so let's see how the charts developed
[07:44] (croc): in the morning we saw range trading around 6764

[07:45] (croc): then prior to the first news release a ghost was developing and triggered 6764 short

[07:49] (croc): you always say in backtesting you don't see the news, you just see the signal
[07:50] (croc): the trade was great in hindsight as the news let DAX break down to 6732

[07:51] (croc): as I've written in my blog
[07:53] (croc): if a contract breaks up or down into new territory on low volume, it will reverse that move unless new volume comes into the market holding the contract down
[07:53] (croc): that's what's happening with DAX at the 6735-42 breakdown level
[07:54] (croc): an new volume mountain starts to form
[08:06] (croc): trend down, next CCI signal most likely is a zeroline rejection
[08:09] (croc): so short from the 6740-42 area, stop 46-47 as the moment we enter the low volume zone the theory is, that prices will cross it and go up again to 6765
[08:10] (croc): (if you think long instead 6732-34 would be the entry)
[08:11] (croc): we broke down again
[08:12] (croc): an inverted H&S is forming on the cci
[08:13] (croc): favoring a countertrend long (as I recall the YM was not breaking any further, also S&P was holding the post news level, so a snap back might be probable)
[08:14] (croc): 6715 was the 6675 DAX indexlevel, an area I was looking to hold, as I've noticed, that DAX traders look at 25point increments on the DAX as support or resistance levels
[08:15] (croc): if you take it long 6720 target would be the high volume zone formed after the breakdown at 6740

[08:18] (croc): the initial spike goes to 6739.50 and I would have been stopped on any long trade at 6737 most likely. If you held the target was hit and exceeded 10 minutes later

[08:20] (croc): still the low volume zone from 6752 down to 6745 remains untouched. If the next bar makes a lower low, with the turbo cci showing this nice little H&S, I would favor a short on a trend continuation
[08:22] (croc): that was violent, an stop limit short entry at 6736 would be fine, but I'm not sure I would have gotten it
[08:22] (croc): let's see the next bar
[08:23] (croc): interesting pattern forming now
[08:25] (croc): for me that's looking now as a Top at 6744, with a downside bias, the stop limit 6736 got us in short with a top 6738, I just don't like the stop to be within the trading range at 6741

[08:27] (croc): 6715 hit, which was the support level I mentioned above on the DAX index (6675), it also is a new daily low, for the entry 6736 a 20 point exit is really fine enough

[08:28] (croc): now we have a double bottom on price
[08:28] (croc): cci shows no signal atm
[08:29] (croc): we are in a low volume zone
[08:29] (croc): so either we break down fast into new territory (6700-6705 would be support on the daily)
[08:30] (croc): or we reverse again up to the 6730-40 zone (the volume is now evenly high at this level)
[08:30] (croc): I see no trigger so flat

[08:33] (croc): prices bounce up, aggressive long would have been 6720, as I said, no countertrend trigger signal on the cci, so I remain flat. On this chart the cci looks to be topping out and might form a rejection below the zeroline

[08:35] (croc): doing that, and testing the previous low
[08:36] (croc): we get a nasty rejection not tradable on the 5min chart
[08:37] (croc): a stop limit long on the cci zeroline cross at 6726 might have gotten you in
[08:39] (croc): cci is above the zeroline
[08:39] (croc): we have resistance at 6743.50
[08:39] (croc): looking for longs
[08:39] (croc): on a bounce from the zeroline
[08:40] (croc): 6730-32 would be a good entry it seems
[08:41] (croc): no entry, unless you trade the +100 sling with the break of resistance 6744 long
[08:41] (croc): I hate these trades, as they have so much pullback potential
[08:42] (croc): but this breakout worked
[08:42] (croc): target the higher high volume area marked by the red line 6762-6766

[08:44] (croc): target hit
[08:45] (croc): looking at a longer term chart, you know that the 6755-6775 was a range where DAX was trading for 2 days already, so resistance is to be expected on any further upmoves

[08:52] (croc): also DAX just made a 50 point run
[08:52] (croc): meaning consolidation
[08:53] (croc): short if the cci dips below zero from 6764
[08:54] (croc): short on a touch but without cci signal
[08:54] (croc): so no short yet
[08:55] (croc): but here a short is forming

[08:55] (croc): short 6752.5
[08:57] (croc): target 6740-36
[08:57] (croc): why? previous high volume area below

[08:58] (croc): end of trading

Observations

I continue trading with the Market Profile Chart and am noticing patterns. The questions remain always the same:

• Is there a signal to take a trade
• Do I go long
• Do I go short
• What is the trend
• Is the trade I'm about to make a trend or countertrend trade
• Where is my stop
• What is my target

I've written about Low-volume zones on the Price Histogram. And I've said, that such a low volume zone either breaks or that prices return to the previous point of control.

For a trader such a statement is just great! It actually helps not one bit!

That is, if you want to be right.

But...

if you see the next trade not as one, where you have to be right, but as one, where the probabilities are in favor of one or the other direction, then the trade decision might be not so difficult at all.

Look at this oilchart

Prices broke down, we are in a low volume zone and the CCI is forming a divergence pattern. Still this 5min bar closed at the low. We can agree, I think, that in this timeframe the trend is down.

Trade or No Trade?

• Trend continues, Go short
• Trend Reverses, Go Long

It's 30min to pit-close (my time at 20:30 CET), so you better be right about the trade as there won't be any reversal of a strong move into the close in these last 30min. I have to say, I favored the Countertrend signal, but looked for a test of the 50.125-49.900 area, not 50.900-50.700.

We can assume, that there are quite a number of large Buy orders around the 50$ Level. Either traders being short taking profit or traders initiating new long positions at this psychological level.

So any long trade taken above has some cushion below, on the other hand a run of the 50.000 level might be fierce and in such a way, that the Stops right below this level will get triggered for a spike into the 49.500 area. That would mean the 50.000 level would be no longer support, but strong resistance.

• FLAT is a position

10 Minutes later at the close of another 2 bars, we have made a new daily low and bounced with the 5min bar low above the daily low. We have clear divergence and we have a low volume zone below the current price level.

How do prices cross a low volume zone to the downside?

• By volume coming into the market at a new lower level.

This forms a new volume mountain below the previous mountain above.
So, if no volume is coming into the market at a daily low the market should bounce up.

Target? Simple! The previous area of high volume between 51.200 and 51.500

Stop? The low was 50.525. An entry between 50.600 and 50.750 would allow for a 10 tick stop, which would still be located below the daily low. I would avoid 50.500 as Stop, as it's a round number where I don't like to place the Stop, but 50.400 would be fine enough.

I'm developing/clarifying these rules as I write this article and I did not take this long trade yesterday evening. Still it worked nicely. It gave you enough time to enter and it went right into the target zone.

TTS - Target Trading System

What do you expect from a trading system?

It should give you

• an Entry
• an Exit
• a Stop
• an Edge

If you are reading this Blog, you can't have missed the fact, that  I have changed my charts. That now I'm using Price Histogram Charts and that I have removed most of the lines on my chart, especially Moving Averages, Bollinger Bands or Regression Lines I used to have on my charts. On the other hand I have kept the commodity Channel Index on my charts

Now let's take a look, why I've done it and what I have gained by doing the switch.

The Ensign charting package I use plots the Market Profile directly into the chart avoiding the use of these cryptic ABCDE... letter charts, which in my opinion make Market Profile Charts a bit difficult to understand at first. Different to Market Profile Charts Ensign can base the Price Histogram on Volume instead of price traded within a certain 30min period and it can be applied to any timeframe you like.

Now let's look at a very ordinary situation we all have to face. I have been starting my trading day at 10:50am CET with the markets open for about 3 hours.

DAX had opened Monday morning with a Gap up and held support at 6770 on 3 occasions before breaking that support and making a first Gap close attempt. Prices have bounced back and CCI would have me looking for a short on a possible sling formed one or two bars later.

Now let's look at the Price Histogram in a slightly different way. I've turned the chart counterclockwise, which gives me the following picture.

You see how the market has formed a kind of triangle with the highest volume at the peak and you see how prices are always returning, oscillating around that volume peak at 6777.5

What I noticed looking at a lot of intraday charts is, that you often have not one but two distinct volume peaks during the trading day.

Take this GBP/USD chart as example

So at the days close I expect to see either this

or that

Of course there is no guarantee, that the market will form 2 peaks, but I've noticed one more thing. If the market is not able to break through to a new level, where a second mountain can be formed, prices return back to the level of high volume trading or back to the peak. In the situation I was presented with this morning that meant:

If prices can not break down to the old peak build on Friday at 6756.5 in a spike, prices should return to trade at 6777.5 and, if we have enough momentum, prices should continue north to build a new higher peak around 6792, which corresponds with the 6750 Dax index level.

The CCI would support both assumptions: The breakdown scenario means we will see a sling on the CCI, the breakup scenario means we see a Shamu, a pattern introduced by Woodie a few years back, which resembles a ~ with the CCI crossing the zeroline to the upside.

Now which pattern has the higher probability? Of course the Sling as it is a trend continuation signal, but the potential sling would form just on this 5min chart. On longer term charts the trend is up and you don't need to look at the longer term charts to know that, as we still trade above Friday's highs and the Gap is still not closed. So longer term charts should support a long trade. Add to that, that a breakdown attempt was just rejected and we trade again a today's support at 6770. For me that meant prices would return to test the 6777.5 area at least before a new breakdown attempt would be made by the market.

I went long at 6770.50. Stop was 6764.5. A bit more than I like it to be, as I prefer a 10 tick stop on the DAX, but that would put the Stop at 6765.50 or one tick above the previous low. Really not a level you want to have your Stop. Even 6764.50 is not a real good Stop as a Gap close attempt would mean a spike into 6762 and we might trade back up right after. Still 12 ticks was the room I was willing to give the trade.

Target was 6777.5 or 14 ticks (usually I have a 15 tick target, but I have seen it too often, that prices just touch the POC (point of control or area of highest volume) and get rejected. So for this trade the target was 14. Trading 2 or more contracts the first target would have been 6777.5 the second 6792.

The trade went 3 ticks against me stopping very short term traders, which had taken 6769 as support, as that level had held for 20 minutes as support. Interesting enough suddenly big orders crossed the tape and the market reversed. Prices traded up to 6776.5 where sellers brought the market down to 6772.5 again, before a second attempt was made to trade up to the POC. The market ran again into offers and the CCI started to form a true sling at the zeroline with the TurboCCI above the 100 level. Seeing a profit of 12 ticks I moved the Stop to 10 ticks as I was not convinced, that the market had enough momentum to take out the POC on a slow day like today with the US on vacation.

True enough the market traded back to my entry at 6770.5 before it spiked into the POC at 6777.5 and was rejected a third time.

As of the time of this writing the market is still meandering at the 6770 level and it might continue to stay within the trading range made this morning, as there are no impulses coming from the US today. But coming from one week off I don't need to rush things and I sure don't need to force a trade on a slow day.

Right now I have made a few observations, which might be the basis for a KISS trading system.

• Prices oscillate around a volume peak
• If a low volume area is not broken, then prices return to the high volume area
• If a low volume area is broken to the up- or downside a new area of high volume forms
• A trade taken around the POC has as target an area of low volume
• A trade taken in a low volume area has as first target the previous point of control (POC)
• CCI patterns are traded around the POC or in a low volume area
• Before taking a trade, you need to identify where the market is trading at the moment

Preparation

Being back after 1 week off, I found an interesting website to get in tune with the markets again:

The week ahead

Even if you traded last week, I suggest you take a look, as it is well worth it for it's analysis of last week's keyevents and it's ramnifications for the coming week. The focus is on Forex trading.

On the road

I'm away for a week and thought I had it all setup, so I could login and check on the markets in the evening at least. The hotel in the Bavarian alps had advertised to have free WLAN access. Everything should work as I'm used to.

Switching on my computer the first thing that happened after WIN XP booted was that my notebook told me "No network found"

Shit

So much for WLAN access. But I remembered a nice program I had installed some time ago called Network Stumbler. I started it and suddenly I was presented with 4 free WLAN's. Knowing the channel the WLAN operated on was enough to setup the wireless Network connection and I was finally really connected with the Internet.

I got my Mail, I could connect to any Internet site, but IB TWS refused to load. I tried everything I knew, I looked at the logfiles and saw that a connection timeout was happening. I googled for the error message and got a hint, that the port IB was using to connect IB TWS with its servers might be blocked by the hotel ISP. The person giving this hint was suggesting contacting the ISP administrator.

Great. Try explaining to the nice lady at the frontdesk in your hotel, that she should please open ports 4000-4010 on the hotel WLAN, so you could connect to your trading account. If I have not already lost you, I'm sure this lovely young lady will be lost, when I ask her to do that for me.

But fortunately there is a way. You might know what an Internet proxy is. They connect you to an Internet site through their servers, instead of your request going the direct way. Living in a country where the Internet traffic is monitored and access to certain sites is blocked, such a proxy allows you to reach a blocked site as long as the proxy is not blocked. But the regular proxy will not open a blocked port. So something more advanced is needed.

Findnot provides such a service for a modest price ($29.95 for 3 months). They connect you through a Virtual Private Network with their servers, secure all the traffic coming from your computer to theirs, so no one can monitor your Internet connection, and open any blocked ports as all requests requiring a certain port to be open are routed through standard webports.

And, oh what a great wonder, I was able to start my IB TWS successfully.

But why am I writing about this? You might not want to log into your IB account when traveling, so why bother? Still the service Findnot provides has some advantages, which I like, so I will from now on use at home as well.

If a major Internet carrier between my office and IB's servers is down, I'm unable to connect to IB. But using Findnot's serverfarm of more than 20 servers physically located in different towns and states across the world, there might be a bypass available. Like going from Florida to New York not the direct way but using a line from Florida to Denver to New York. Longer yes, but so what, you are still connected. Usually the Internet can handle it alone, but there were times when that wasn't possible and having answer for that is worth 10$/month, if I have an open position. 

And there is this aspect of using an encrypted internet connection. No one can trace what I'm doing on the internet, no one can trace my computer and if they try, all they get is Findnot's Internet address. That's where it ends. If your connection itself is monitored for any reason at all, all you get is an encrypted datastream. I might be paranoid, but here in Germany there is a discussion, under which conditions the police should be allowed to break into any computer connected to the internet to search the harddisks without you knowing about it. There is no discussion whether that's possible, no, that it is possible is taken as granted. The question is only what the prerequisites are to allow such an intrusion. I don't like it. If the police wants to search my computer they should present me with a warrant and do it openly, not behind my back hacking into my computer.

So the Findnot Service gives me multiple routes to IB, allows me to connect on the road, even when the ISP has blocked the ports and gives me a secure connection to the Internet. I think it's worth the 10$ / month.

Another setup

Look at this FTSE chart

FTSE traded above a previous high, came back, tested that high, which became support now at 6270, formed a sling on the CCI and off you go with a resistance at a previous POC as target zone.

Trading with MP

Below is today’s DAX 2min chart I use for trading now.

To the left you see an arrow marking the POC level prior to the breakdown, which happened at 09:13 on my charts. You also see the marked downslope, which I saw and marked, but did not trade as it is just a setup idea forming right now, which still needs to be verified. Later at 9:42 I took a DAX long at 6686, as I saw a possible turn up.

Reason for the trade:

DAX trading above the new POC at 6683.5

CCI forming a sling and possible shamu pattern (as it was called a few years ago in Woodies rooms)

T&S (not seen on the chart) showing buying bias in the DAX

Other indexes I follow (FTSE and IBEX35 showing a similar pattern, so the markets were in sync)

 

Target: The previous POC area at 6700

I could have taken the FTSE or the IBEX35 (see charts above) instead of the DAX and both contract would have netted me a better result than the 6 ticks I took from the DAX which continued swinging around the POC, but I had reasons to trade DAX

1.       DAX has more liquidity so if wrong the chance to get out with no slippage is a lot better than in IBEX35, which is notorious at jumping my StopLimits (and I hate trading with StopMarket orders)

2.       FTSE can be very slow if going against a trend and it had a big Gap down today, so any upmove might have been faded (as it actually happened with the DAX)

3.       A shamu pattern, if it works is very powerful, so an uptrust into 6700 was sure a good possibility

Exit at 6689, as DAX was not able to jump the low volume area between 6689 and 6694, which marks the zone of imbalance between the 2 distinct bell shaped cones seen on the price histogram and CCI at extremes

 

Follow-Up: DAX retraced to the low of the range and is now making another attempt to trade up to the previous 6700 POC 

A trading system is still in development, but the charts became less cluttered with the removal of all EMA’s, Bollinger Bands or other lines I had on it. I see setups developing again, so it seems a path worth following

Follow up

Finally I get them again. I see them and I can trust them. There is a reason for a bounce, there is a good probability of the bounce working, what else can you ask for when looking for an entry signal

They won’t run that good every time, but this one is sure a beauty. Break down, holding the daily low, rejected from the POC (red line), higher low, forming a reversal signal on the CCI, breaking through the POC, swinging back into the POC and forming a lovely sling long on the CCI, while at the same time the POC provides the Support level I need to have nearby, so I can place a narrow stop.

I never could trade with volume on my charts, but seeing volume at individual pricelevels makes sure sense, as it tells me where the market thinks a contract is in balance. Funny thing is, I added this information on my trading platform a year ago, but could not understand/use it for my trading and removed it from my layout. Now I’m back at it with less cluttered charts. And having less on the charts, while still seeing the setups usually is a good indication that I’m on the right way.

Charts

Have you had the feeling that the charts you have no longer tell you what you want to know, but the charts you then construct to adjust aren’t right either. The last 2 months I struggled and that means I need to go forward. The system I used to trade no longer works, but an adapted one is not yet implemented. Markets change and either you change as well or you perish. A proven system should not be abandoned lightly, but there is a point when it becomes necessary to adjust it, so it again shows you what you expect it to do: Giving you an entry, an exit and an edge in the ever changing markets.

As I already wrote I had been introduced to Market Profile charts and it’s adaptation Ensign is using. Something enthios is using for a long time by the way. And his system was the only mechanical system which tested positive in my attempts to create a mechanical trading system, so that gives his ideas credence in my eyes.

My current interpretation of market profile charts based on traded volume (Ensign offers different ways to display the price histogram) is, that high volume at a certain price acts as a magnet. Price swings around this highest volume price, breaks out and finds a new price where it starts to swing around.

Now that’s something you can very nicely see on todays DAX chart

But what is missing in this chart is the information, when to enter, when to exit a trade. When is price ready to go from one level to the next? I tried using different timeframe charts, but got confused. I had this chart as a 9 minute chart on my screen, but that made it worse, as I saw nearly 2 days of action on the chart, which led me disregard, that the average range of 1 bar was about 10 to 20 ticks and I sure don’t like trading with a 20 to 40 tick stop in the DAX. (The HSI was worse btw, there the average range of 1 bar was 40 points with the HSI displaying extreme volatility of 300 to 500 points within 1 session or about 2 hours trading). I hesitated for a reason taking trades, but switching back to my charts, as I used them last summer did not help either.

Still this chart had something familiar, something missing on my new charts. I decided to add the CCI to my new charts. I have a preference for the CCI as it is the oscillator I used for the longest time and the one I can interpret a lot better than any other oscillator I tried. So now I came up with these charts

Will see how these charts work.

 

New Year resolutions

Recently I have been introduced to Market profile charts. And they sure look interesting, especially the way Ensign implemented them. But that's beside the point. It seems I'm at a point in my development as trader, where everything looks interesting and where -after an introduction- I can use nearly everything to trade. I remember 1 year ago these charts made no sense at all, now charts like this 30min DAX make sense to me.

Still I’m not extraordinarily rich, having accumulated huge fortunes.

WHY

It’s me, my own lapses, my own shortcomings, which are so difficult to overcome.

What are the worst ones?

Number 1 on a long list
I know this trade will turn around

Number 2
It made not Number 1 as it occurs too seldom, but when it happens, it spells disaster
No Stop and it’s companion Average down

Number 3
Just one more trade.
And it’s brother: I made no trade today, I take a trade now and swingtrade it, if necessary meaning: I hold it at a loss and cover, if I see a small profit

Number 4
It’s moving, take the trade

Number 5
How could I miss this breakout, breakdown. 100 ticks and I got 10

Number 6
A special one, as I trade related markets: IBEX35 moved up, Z moved up…DAX should move as well. The important word is: SHOULD

Number 7
Breakeven is better than no profit at all. That’s a real nasty bastard, as it’s 50:50. Sometimes it’s the best I can do, sometimes I miss a 40 tick profit just minutes later

Let’s make New Year resolutions

1. No trade, if I have to leave the screen within the next 30 minutes

2. No trade, if I have not looked at a chart at all. (Yes it happens as a combination of Number 6 and Number 4 above)

3. No trade, if the market has already made 100 to 150 ticks. V moves are very seldom. Usually a breakout, breakdown is followed by consolidation with a bias in the direction of the break

4. No trade, if I expect distractions from the family or if I have other pressing things to do. Do them first, then trade.

5. Think first about the Stop. At what price is the trade no longer valid. Then what is a reasonable target. A signal might be great, but as long as I’m not trading HSI after +150 ticks the upside might become limited.

6. Three hours maximum at the computer. Then I take a break. And have fresh sparkling water at all times at my desk.

7. No trading after 19.00. No trading SPI overnight. No midnight trades. No overnight swing trades unless the trade shows a profit at the close of the day.

8. Use common sense