Monday, 22 June 2015

Sell that Resistance - ES

Its groundhog day most days in the markets. I have my trading pictures and when they appear in the live markets and are confirmed by order flow I just have to pull the trigger. Selling that blue line resistance was revealed by MP. There was a double resistance here - the blue line and the VAH of that distribution. It was the order flow that showed me which one to sell.

 I'm just finishing tidying up all the typos in the book so if you want to follow my methodology you will have a roadmap.

Wednesday, 17 June 2015

The Book

The book will be posted to the blog by the end of the month - June 2015. And it is free. Look for a tab at the top - BOOK. I am still having some Amazon issues but it will be published there as soon as those issues are resolved. The upside to having the book in the blog is that you can ask questions and also translate it into other languages.

The chart below is today's ES. Very typical use of my methodology. You can see that the MPs have been split and the resulting resistance revealed. The arrow shows the sell short point based on that resistance and triggered by the order flow - top of zipper and VAL of distribution.

There are trades like this in most markets and the techniques I have been using well before this blog started are still working well. Adding the raw order flow component has just made them better.

Thursday, 28 May 2015

Context and Order Flow

There is a great misunderstanding about order flow and context. I see this from both emails and people I am mentoring. This misunderstanding can be corrected by looking at markets in a different way.

I have repeatedly espoused that CONTEXT RULES. I have also said that order flow needs to be read in context. For example, strong buying can be initiative action that will continue or it can be stops being hit at the end of an up move. To distinguish between the two, I need to see the context. Context is made up of Market Profile and indicators that tell me where I am in context. Indicators no longer trigger trades. Order flow triggers trades. Indicators tell me trend and its strength, where the mean is and how far I am from that mean.

An analogy to this is tennis. We have a tennis court with a net and lines. That is our context. As a player we watch where our opponent hits the ball in that context and how hard. We look at where he hits it from.

I draw your attention to the lows of the open on 5/22/2015. The previous day's Profile was split to reveal the VAL support that held on the open. Then look across to the order flow chart. The price bounced off the support on the open and then pulled back to provide the entry opportunity. From there it was just profit.

Wednesday, 13 May 2015


The correct splitting of the Profile showed this resistance. It was not visible before the split. I know there are lots of support and resistance areas on a chart so which one will "work". That's an easy question to answer: "the one where the order flow reverses".

Support and resistance areas are decision points. Order flow makes the decision.

Monday, 4 May 2015

Follow-up to Friday's T-Bond Post. Great Trade!

Friday's post showed what was possible in the T-Bonds. As it turned out, price went lower after my post so the market opened inside the VA.  My bias, of course, was down so I was looking for a sell. Although it opened at the POC I didn't take a LONG because of my envisioning but I was ready to sell at the VAH. The pic tells the rest of the story. The level of profits on this trade were very dependent on what the trade management strategy was in my trading plan. Scaling out allowed for better profitability although the bulk of my profits were taken at the VAL with a trailing stop after that.

I plan on adding Part 1 of the eBook to this blog soon. Look for a separate TAB when you arrive at the blog.

Friday, 1 May 2015

No Substitute for Preparation

I've often said in this blog: "The harder I work the luckier I get". Its Mayday and Mrs EL's birthday holiday here in Europe so I thought I'd share a part of my daily prep on the T-Bonds. As I write the 30 Years Bonds are trading around  159 12/32nds, above yesterday's value. The picture speaks for itself and lays out my trading plan for today's trade of ZB. The horizontal lines are support and resistance areas.

The Profile give me the "where" and I look to my bar charts with the usual indicators (for context) that I use and of course, with the order flow volume bid and ask information for making a decision about the "when".

Wednesday, 29 April 2015

Lots of Action on FED Day

I didn't know where to look first today. Everything was moving: DAX, ES, ZB Euro and, of course the BUND.

I spent most of my time on the floor in the Bunds from  the day they were first traded on LIFFE, before the DTB existed. The Bund contract was taken from LIFFE by the DTB by making it cheaper to trade electronically That was the beginning of the end of pit trading for LIFFE. I was an early user of the DTB terminal that I had to use from my clearer's office - there was no PATS yet. PATS was started by an American LIFFE Local who saw the future of trading.

Anyway, the BUND was a great market on LIFFE, especially during the years of German unification after the Wall came down.

Today the Bund is still a great market. It has gone through a quieter period but its really worth trading now. If you are in a different time zone and looking to trade something in your ETH then maybe the Bund is for you. The cream coloured buttons on the order flow chart are algos that I can arm with a single click when the context is right. Trigger is the order flow. The indicators and MP are the context. As you can see, the indicators are the same ones I've used since forever and can be seen in this blog since 2010. They now are part of the context that makes understanding the order flow much easier.