Trader X

Transcripts from this AM


teq56: got off 2 trades before lunch
teq56: first trade was I shorted 7275 area for Ib hi,yest close, vah, and gap
teq56: problem was It was the 3rd time it had been there during the day
teq56: very stupid
teq56: my teachings have been that the market acts like a membrane
teq56: it will resist a few time at a level... which each touch reducing the chance that it will hold
teq56: so by 3-4th time you know it's going to break!
teq56: 1-2 time is still strong enough to resist withthe first time being the strongest
teq56: by 3rd time % is prolly under 50% it willhold
teq56: this is the same principle regarding shelves on tpo charts... am I correct or not! Of course
teq56: they always fill..... just takes time to break membrane
teq56: ok so why am I shorting on the 3rd hit
teq56: because I'm stupid but I think I have a solution
teq56: I need to just make notes at those levels how many times it has been there already
teq56: OK
teq56: so I short 4 cars from 7075 to 7275
teq56: and get stopped at 75
teq56: crap
teq56: back to drawing board
teq56: so I look at numbers ladder again
teq56: ok
teq56: prev hi at 75 and IB 1.5 is 76
teq56: great!
teq56: JP has short in at 76
teq56: I short 4 at 76
teq56: stop is like 79
teq56: set PP on all 4 at 71 and change
teq56: only take 1 point of heat and about 30 mins later I take all off for a net gain of $25 for the day
teq56: great MP trade supported by another number (prev high) for higher % of working
teq56: also using prev numbers level to exit has worked great cause so far market hasn't penitrated the 71 area
teq56: also to learn which is why I'm writing this
teq56: jp took 2nd short at 71 ib level and made some nice scratch
teq56: but he didn't take the 3rd short there like I did
teq56: hmmmmm
teq56: wonder why he didn't do that
teq56: well.... we now have the answer don't we
teq56: market is like a membrane
teq56: it will only resist for so long
teq56: be smart, trade smart
teq56: I'm learning somthing I already knew
teq56: but that is a good thing
teq56: OK
teq56: lunch break

Here is an example of my worksheet. In the morning I work on my numbers on the left side and then star the confluences. Then as the day progresses I journal my trades and other comments on the left side. The more the numbers line up the more likely they are to react. It works! I use the trin at the top just to make sure I know the market isn't trending... of course I look at the chart as well!

Trader X

Everyone wants to know how to find the holy grail.......but the HOLY GRAIL is not in your charting package.......It's entirely something else, and once you find it....NO ONE CAN TAKE IT AWAY.....


I was reading the the tradersparadise blog and had to steal this.


Trader X

PS... there is a link on my blog to his.

Degrees of confluence. I found the Holy Grail. Seriously.... I did. OK, maybe not since there is no such thing but this has helped to make me profitable. I will call it Degrees of Confluence.
What does this mean? Well this is about the simpliest thing I've ever run across

If you are anything like me you tried trading just about every type of system out there and haven't traded it well. I have.

I've tried trading Pivots, Moving averages, Fibs, Support and Resistance, and Market Profile. I have not made money trading any of these except market profile. Market Profile has been profitable for me but I think I found a way to improve on even this.

Have you ever traded say pivots and had some trades just work perfectly... almost to the tick. the you will have the same setup at another time and the market just doesn't react the same. Why sometimes it will and others it won't? I think I have an answer. Degrees of confluence.

When I was trading some support/resistance lines by fading them with expectations of reversion to the mean I had a friend that was trading MP (Market Profile) and I found out that some of our numbers overlapped with an above randon frequency.


What I began to notice was that the numbers that overlapped had a much better chance of being a point of change of direction. Much higher % than the numbers that were just floating out there in space all by themeselves. I had and idea.

I went to a trading seminar where they told us to build a number ladder. Take all the major numbers from all the main systems and put them down on a piece of paper and just take a look at which ones have overlap. Are there numbers where a fib, a pivot and maybe a MA all fall in the same place? Those numbers have a higher degree of confluence. When you have 2 or more numbers in the same place (or area... say withing 1-2 points) you are much more likely to have a point that will have some reaction there. Those are the numbers that you should be trading.

Does this make sense? It works. If I have a MP number that doesn't match anything else I will be much less likely to take it. When I have an MP number with a fib or pivot on that same number I will take that trade without fail because it is much more likely to work.

Why? Because you have many more traders watching that same exact number! the more people watching it the more likely it will react.

Simple enough? You bet!

Trader X