Search This Site

Real-Time Trade Blog Archives
Connect with Tim Morge...

Follow Tim on Twitter
MedianLine RSS
Navigation
Wednesday
Jun032009

October 18, 2005

Click To Enlarge

Click To Enlarge

Click To Enlarge

October 18, 2005 Morning Comments: Looking at the three 7:45am charts I used for the pre-opening market strategy session with the seminar traders, you can get a pretty good idea of what I was thinking once the 7:30am economic numbers knocked the futures lower: Price failed to test both the Upper Median Line Parallel AND the Median Line yesterday and if the markets gapped open lower and the gap remained unfilled, Hagopian's Rule would dictate a likely large downside directional move. And note that yesterday's highs merely made it back to a perfect test of the confluence formed by the two major down sloping Median Lines in the cash S&P market. As always, the key to making money in this type of market is to wait until price plays ITS cards and then to watch for a high probability trade set up to develop.

Click To Enlarge

Price gaps open lower and trades lower. The longer the gap remains open, the more I like the downside potential of this market. I note with interest an area of Opposing Lines of Force and I'll watch to see if price shows me a high probability set up if it indeed tests this area.

Click To Enlarge

Price climbs higher and it does test the area of Opposing Lines of Force right when Time dictates it should. And note that although it broke above the confluence and had a good amount of separation above the area of confluence, it closed below the confluence, setting up a nice failed zoom and re-test trade set up [or it could be viewed as a simple test and re-test of the area of Opposing Lines of Force]. I am looking to sell the re-test of the confluence in the E*Mini S&Ps at 1191 1/2, with an intial stop loss 3 ticks above the 1192 3/4 high of the day, at 1193 1/2. My downside target is a test of the green Major Median Line, which gave us so many gorgeous short entries over the past ten trading days, which would come at roughly 1181 1/2. To get this profit level, I am simply eyeing what appear to be average sized bars and then I overlap them by about 1/3 of their range, as I project them lower and to the right, simulating the passage of time and an average move lower-and that gives me a rough idea of where price would intersect with the green Major Median Line IF price unfolds at about an average rate.

So I am risking 2 E*Mini S&P points to make roughly 10 E*Mini S&P points, which gives me a risk reward ratio of 5:1, which is very nice. And I am hiding my initial stop loss order not only 3 ticks above the high of the day but also just above where price would fill the open gap, in case traders get a bit itchy to fill it...

Click To Enlarge

Price does re-test the area of confluence, getting me short at 1191 1/2 in the process. I check to make sure I am filled and also that my initial stop loss order is still in the market and then I enter my profit order at 1181 1/2.

Click To Enlarge

Price runs lower and then consolidates, eventually leaving a spike high at 1188 1/2 that turns into a swing high when price makes a new low for the day. As that bar closes, I move my initial stop order down to 3 ticks above this new swing high, at 1189 1/4.

Click To Enlarge

After confirming the swing high, price consolidates again, this time leaving triple tops at 1187 3/4. It's getting late in the day, so at 2pm CST, I enter a MOC [Market on Close] Stop Order, because this is a day trade, and I don't want it to turn into an overnight trade under any circunstances. And as I look at the charts, I notice that price has tested the pink down sloping Median Line twice and is now consolidating again. The day is getting late and as the third of the triple top bars close, [which is also the low bar close for the move], I move my profit stop down to 3 ticks above the triple tops, boxing in profits in case price has run out of downside directional energy--which is possible, since it has now tested the pink Median Line twice and failed to close below it. If price heads back up in a late afternoon rally out of the hole, I want to make certain I keep some of these profits...

Click To Enlarge

And finally, price heads back lower and right before 3pm CST, I cancel my limit buy order at 1181 1/2 and close out my position "at the market," which turns out to be at 1182. I then cancel all my stop orders and double check that I am working no further orders and that I sold and bought the same number of contracts. I don't want to give away any of this hard earned money! This trade netted 9 1/2 E*Mini S&P points, which is a nice $475 per contract before brokerage.

This was a nice directional trade, set up by watching the open gap and remembering the implications of Hagopian's Rule. And price seemed to gravitate right to the green Major Median Line [or should I say the "golden line," after the way it has treated me the past two weeks...]. Waiting for Price to play its hand and then looking for a high probability set up, and finally sticking with the early plan were the keys to these trades.

For those of that didn't hear, we had a nice multi-media test today for several hours. People came into the private "virtual room" and got to hear my raspy voice, ask questions, watch me draw...It was a very nice time. I'm going to do my best to have the same room up and running by 10am CST tomorrow [Wednesday] so people can come in and watch if they're interested, ask questions, see what the software is like and frankly, to get me more time practicing on this new software so we begin doing webinars on it and also mentoring and advanced seminars. I'll only be there for 30-45 minutes in the morning, because I am teaching a seminar, but if you come to the room [even earlier than 10 am], I'll have AutoForks up "live" drawing on volume bars in the E*Mini S&P markets, so you can watch what we call "stealth Median Lines" call the tune in real-time. These are Median Lines of our own invention and we've found them to be deadly accurate tools...If you'd like to drop by, follow these instructions:

Go to: www.omNovia.com/sc/spiketrading/demo  and then follow the instructions and run the initial setup [it is very easy], then log in with your first and last name. The password is: 1235.

As I said above, I'll try to be there around 10am CST and stay for as long as I can before the seminar I am teaching begins. If you beat me there, the room will be open but you won't see me logged in. Once I get in, I'll leave my charting package running with live charts, so you can watch what I am watching. I may be away from my trading desk for periods of time, but while I am there, positions permitting, I'll draw live, answer questions, maybe even show you what I am looking at in a particular market. I mentioned our short S&P position several times this morning--though we are in no way giving trade signals--so some folks got to follow along if they were there for the early session. Everyone is welcome--the room holds up to 100 people.

I wish you all good trading!

Tim

Wednesday
Jun032009

October 17, 2005

Click To Enlarge

Click To Enlarge

October 17, 2005 Morning Comments: First, I owe the green Major Median Line a "thank you," for 11 straight wonderful winning trades. I did indeed sell against it Friday, taking a small profit out on half of the position but getting stopped out for a loss on the second half of the position. Lines that are tested that many times and keep producing deserve to be tested until they are bested...

On to today's trading: You can see the pre-market charts I used for the strategy sessions with the prop traders before the markets opened. I felt today was likely to be a two-way market, because price was running into overhead resistance early, but the strength of this move out of the hole was also unlikely to go quietly--So I marked both the early session confluence above the market at 1193-1194 and the confluence formed at the up sloping blue Median Line near the 1186-1187 area, which would likely act as support. I thought we might see something akin to "pinball" between these levels. As I said in the strategy sessions, the key is to wait for a clear set up, with good measured stops and solid risk reward ratios--and don't initiate a trade on either side until yoiu find one.

Click To Enlarge

Now note the very nice zoom bar lower, through both the blue Upper MLH and the red Median Line at the 1193 area. Once this bar closed, I was willing to be a seller, because there was a suitable measured stop area, with an acceptable risk reward ratio.

Click To Enlarge

As the bar closed, I checked where price would intersect with the blue Upper MLH during the next bar. Then I put in an order to get short at that level, with an initial stop loss order 3 ticks above the spike high of the day. So I was selling at 1193 1/2, with an initial stop order at 1196 1/2. My profit target would be a test of the blue up sloping Median Line--but note that it is an up sloping Median Line, so my potential profits will decrease as time goes on, due to the upward slope of the Median Line. If I get short, I'll have to carefully adjust my profit target as time goes on to match the intersection price.

Price came back up and tested the blue Upper MLH, getting me short at 1193 1/2. I checked that my stop loss order was in the market and then placed my profit order at 1187 1/2. I came to this price by looking at the average size bars over the past 20 periods and then I overlap them about 1/3 of their range and measure where price will likely hit the target, IF the average bars give a true projection--I can always adjust my profit order as price nears the Median Line.

Click To Enlarge

Price formed an Energy Coil with double tops at 1194 and four bottoms at 1191 3/4. When price finally broke to the downside, the length of time spent in the Energy Coil dragged up the profit target because of the upward slope of the blue Median Line. As price approached the Median Line, I carefully measured the intersection level and finally adjusted my orders to 1188, where I was filled on my profit order.

Click To Enlarge

Once price left double bottoms at the lows of the day and also began to creep higher along the up sloping blue Median Line, I wanted to try a long position. I monitored the intersection value of price with the blue Median Line as each bar closed, looking for a re-test to buy that was close enough to the swing lows formed by the low of the day at 1187 3/4. And five bars after the double bottoms were formed, price re-tested the blue Median Line at 1189 1/4, getting me long at the projected intersection. My initial stop on this long position is 3 ticks below the low of the day, at the 1187 3/4 double bottoms: 1187. And my profit target would be a re-test of the red Median Line, which measured to 1193 1/2.

In all honesty, the risk reward ratio was on the skinny side for my normal trading, but I liked the size of the stop and I had a nice buffer from the profitable morning trade to work with, so I was willing to take this second trade because it also fit with my pre-market view that this would turn into a "two way" type of day.

Click To Enlarge

It didn't take long for price to climb out of the hole, filling my profit order at 1193 1/2. I checked my audit trail to make certain that I had sold and bought an equal number of contracts and also that I was no longer working any further orders.

This was a nice "two way" day that netted 5 1/2 S&P points on the down side and 4 1/4 S&P points on the upside, for a total of nearly 10 S&P points, which was $487.50 before commissions per contract. Looking for repeatable set ups and sticking with the early plan were the keys to these trades.

For those of that didn't hear, we had a nice multi-media test today for several hours. People came into the private "virtual room" and got to hear my raspy voice, ask questions, watch me draw...It was a very nice time. I'm going to do my best to have the same room up and running by 9am CST tomorrow [Tuesday] so people can come in and watch if they're interested, ask questions, see what the software is like and frankly, to get me more time practicing on this new software so we begin doing webinars on it and also mentoring and advanced seminars. If you'd like to drop by, follow these instructions:

Go to: www.omNovia.com/sc/spiketrading/demo  and then follow the instructions and run the initial setup [it is very easy], then log in with your first and last name. The password is: 1235.

As I said above, I'll try to be there before 9am CST, which means as soon as I finish the pre-market strategy session with the prop traders, I'll pop into the room. If you beat me there, the room will be open but you won't see me logged in. Once I get in, I'll leave my charting package running with live charts, so you can watch what I am watching. I may be away from my trading desk for periods of time, but while I am there, positions permitting, I'll draw live, answer questions, maybe even show you what I am looking at in a particular market. Everyone is welcome--the room holds up to 100 people.

I wish you all good trading!

Tim