Lloyds Bank Daily Chart

Hi Everybody,

I am often asked about the best way to trade shares, do you just trade them “in isolation”. I would say no, the best way is to always have an eye on the main Indices. So this Wave C low that unfolded on Lloyds (UK Bank) on March 9 was a perfect candidate to consider as it fell perfectly in line with the potential low on the FTSEE100 on Mar 9 (post below) as well.

As you can see, Lloyds has rallied nicely to reach the DP zone where a profit of approx +8R (ignoring slippage and commission) was available.

But the point is how the setup on the individual share also “fell in line with” the position on the Index.

Thanks, Steve

Daily FTSE100

Hi Everybody.

A few user have asked about the position of the FTSE100 (UK Stock market) on a Daily Chart.

So please take a look at the chart to the left, where we can see how the DP nailed the low perfectly on Mar 6. And since then the FTSE has rallied very nicely. It is always nice to nail the very day a major turn unfolds

But what now, well although we are at the “initial target” form the low (DP from the last minor high) because the weekly chart has put in a Wave 5 low (not shown) I suspect that this will only be a minor high. But we will have to wait and see how the next few weeks unfolds.

So for now the position is that we have made a very important low on Mar 6.

Thanks, Steve

Some days are hard

Hi Everybody.

You have heard me talk about the Cyclical nature of Trading a few times, well yesterday was a brilliant example of how we are now in the harder part of the cycle, which has come after a few good days on the US e-minis. As such a hard day yesterday should have come as no surprise.

There are too many amateur traders who expect everything to work out perfectly each and every day, this is not how the real world works. Trading is about probabilities and sometimes you can do all the analysis you like that points to a high (like on the 15min Russell yesterday, which was at DP resistance early in the day) for it to decide otherwise and the rally continue. Does this mean you have done something wrong, not at all, it just means that we are in the hard part of the cycle.

Trading is not about “predicting the future” it is about making money, and sometimes there will be losses or hard days. It is your job to either not trade when the picture is unclear or take the losses but keep them small (-1R) so you are ready for the good days when the big profits unfold.

Again, this is just the natural way trading unfolds. So to become a professional trader we all must understand this and accept it. There are too many Gurus who do not have a clue about real trading, who simply do not understand this, so many newer traders get fed misinformation by some Gurus. So when they come to us, and we tell it like it is in the real world, it comes as a bit of a shock. So that is what this daily Blog is all about, to tell it like it is, the Good, Bad and the Ugly, to help you prepare for how to tackle trading in the real world...

Thanks, Steve

OK, but what of the nice TS4 sell on the 3min Russell

OK, so far I have suggested that the YM was better than the Russell at around 10:40EST on Friday. But what if you prefer to trade the automatic setups and are uncomfortable with manual analysis ?

Well, this is why we always suggest that you follow all 4 minis (ES, NQ, YM and TF), because (as we have seen) the YM (and the NQ) was making a possible high, so if this was correct then all 4 minis were likely to follow each other down. So with this in mind you could have considered the TS4 sell that unfolded on the 3min TF at the same time.

Yes, this was not ideal, because the 15min TF was not clear, but do you all see how because you were anticipating a decline on the market as a whole it was OK. Please note, if you are at all uncomfortable about this kind of “correlated markets” analysis, then don’t take the trades, This is more of an “educational piece” for the more Advanced Traders among you to show you what you can do with more experience. All I would say, is that if you are unsure about a trade, then bring the protective stop to break-even faster to protect the trade.

Thanks, Steve

3min YM manual DP sell...

OK, now we have decided that the YM was in a clearer and more obvious position on the 15min Chart, lets move down to the 3min chart and see what we get.

Well, at 10:42EST the 3min YM was also at DP resistance and as such the Advanced Traders among you had a potential manual DP sell setup. As you can see, this was the high of the day off which the YM declined nicely.

Once the STF strength band was exceeded (after reaching the opposing DP) the ATRStop was used, this resulted in a nice +6.5R Profit (ignoring slippage and commission) .....

Thanks, Steve

The larger degree trend Part 2

In the 15min Russell Index chart (post below) the picture was very unclear, but now compare this to the 15min YM (chart to the right) and I hope you can all see how the picture was a lot clearer, with the 15min YM reversing off DP resistance mid morning.

So what would common sense tell you to do if you have a clear picture on the YM but not on the Russell ?

Exactly, pass on the Russell and focus on the YM for shorter term trades.... so let’s take a look at the 3min YM in the next post

Thanks, Steve

The larger degree trend

Hi Everybody,

Today I have some good examples that will help with many questions I get on a regular basis, and that is what to do when the larger degree trend is unclear ? As such I do suggest you read all of today’s entries to follow the examples though.

A good example was on Friday, so let’s start by looking at the 15min Russell Index chart ?

As you can see, the picture is not clear at all with no obvious DP support or resistance zones off which the markets is reacting.

Now compare this with the 15min YM chart in the next post (above)

Thanks, Steve