Advanced VSA sell on 3min YM

As the larger degree trend was up yesterday, most traders should have been focusing on long trades. BUT, and this is only for the Advanced Traders among you. There was a classic and perfect high volume (VSA) sell at DP resistance on the 3min YM at around 1:00pm EST.

This was a perfect example of how a market broke above old highs only to stop dead at our DP resistance and all on a high volume spike. A classic “fake out” by professional traders, and the sign for a sharp reversal.

The reason I say that this was for the Advanced Traders among you was because it was “against” a larger degree up trend, so you should have protected the trade quicker (using the 100% initial risk level). But this short trade declined past the initial support zone and found a low as the TS4 buy (next post) on the ES came in. The result, a nice +4R Profit (ignoring slippage and commission)

Thanks, Steve

Lovely DP open play on the 3min ES

Hi Everybody,

I hope you all have not forgotten to use the DP on any move from just after the open on the US e-minis. If you look at this 3min ES chart, you can see how the ES declined just after the open but ran into DP support. This was also at the Typical Wave C WPT support zone as well. This then nailed the very low of the day for you !

The ES then rallied into the “opposing” DP for a very nice +3.9R Profit (ignoring slippage and commission). A very nice start to the day.

Yes this was a slightly Advanced Trade, but it is one that I have looked at many times before.....

Thanks, Steve

FOREX – CADUSD 240min Chart

Hi Everybody,

This is a follow up on a post Tony made to the Forum on the CADUSD – please see http://www.mtptrader.com/showthread.php?p=19969#post19969 where Tony highlighted that the CAD was at the maximum Wave 5 WPT and as such was at a high risk area for a high to unfold.

Well, that nailed the high perfectly and the CAD has declined nicely since.....

So this was a great example of a FOREX trade called “at the time” by Tony on the Forum :-)

Thanks, Steve

FOREX – GBPUSD 240min

Hi Everybody,

I would just like to remind all the FOREX traders among you not to forget the longer time frames. We suggest 60min, 240min and 480min for FOREX, as these longer time frames give smoother charts.

A great example is the recent TS3 buy on the GBPUSD on a 240min chart that caught the rally up into the 170 area....

A note for the Advanced Traders among you. When this trade reached the Maximum Wave 3 WPT (purple zone) “and” you were sitting on a +8R Profit what do you think would be the sensible course of action ? Exactly, tighten stops as this move was likely nearing an end. This is exactly what happed with the high unfolding right at the maximum Wave 3 WPT...

Thanks, Steve

Not all trades work out.....

Unlike most Gurus I do talk about the bad and hard trades. This is important so it gives you a balanced view of how trading unfolds in the real world, it is also important as there is so much B.S. (if I can say that :-) ) in this industry.......

So here is a TS3 sell on the 3min NQ that did not work out as anticipated. At worst it would have been a -1R loss (which is still smaller than the +2R Profit on the 3min YM), and at best a break-even trade. But the important point is that it did not work out as anticipated.

This is an important point, not all trades work out, loses can and do happen, your job as a trader is to keep the losses small at those times.

Thanks, Steve

The Cyclical Nature of Trading..... Again !

Hi Everybody,

We should all know about the Cyclical Nature of Trading by now, but it is always work reminding you all. Yesterday was a quiet day on the US e-minis with few trades. This is OK, because this comes on the back of some very good days recently. This is just because we have now entered the quiet period of the cycle. It will not be long before we get back to the profitable part. Again, this is just the natural way Profits and losses unfold in the markets

The YM did give us a small +2R Profit (ignoring slippage and commission) on the 3min Chart, but overall it was a quiet day yesterday.....

Thanks, Steve

Size matters.......

Hi Everybody

The 3min Dax this morning has just shown us a perfect example of why correct position sizing works and why it is so important to keep your losses small.

Here we had two losing DP sell’s as the DAX continued higher, but then on the 3rd sell the market collapsed. As you can see from the chart, this 3rd trade netted a massive profit of approx. +7R Profit (ignoring slippage and commission). Now compare that to the two losses earlier at only -1R each. So 3 trades, 2 losses and 1 profit but overall you ended up with a massive profit....

This is what amateur traders do not understand, they seem to only strive for a high % of winners, not understanding that you don’t have to win on all trades to make money overall. Here we had more losses than winners and still came out with a huge profit overall.

This is what separates the losing amateur with the successful professional, the understanding what is important in trading, and that is to keep losses small (not avoid them).

Steve

PS, this was taken using a Beta copy of the new MTPredictor v6.5 RT that has history trades shown by small triangles on the chart. Click here for a video on this new feature.