Dragon Pattern

Last Month Performance

(Only Morning Sessions and not everyday)

Week 4: +17.3
Week 3: +33.35
Week 2: +31.05
Week 1: +21.9

Fed Meeting Monday/Tuesday

Where is my Dragon Head?

Dec 10th 30 Min

Dec 5th Trading Notes (Volume)

Pivots, Introduction

INTRODUCTION

I will be posting ideas, tips, and information about Support and Resistance lines which from now on I will call Pivots.

A Pivot is the price level in which the trend will find Support and/or Resistance once is reached. Depeding on the Strenght of the Trend compare to the Strenght of the Pivot, the pivot may pause or reverse the trend.

You can find Pivots looking for Highs, Lows and Boxes of volume. The best chart to find pivots usually is a volume chart.

Obviously the bigger the time frame that shows the pivot , the more important the pivot is. It will be a lot more significant a pivot found in daily chart than in a 1k volume chart. But if the pivot is found in the daily chart you should be expecting price react to the pivot in smaller time frames, so the 1k volume chart must show it as well.

These are examples of how to find pivots:

a) Examples of Boxes of volume showing us the Pivot

b) Example of Broken Support that is tested after (Perfect Entry) to continue the trend

c) Example of a Bottom (Be aware of false breakouts of Pivots)

Looking for pivots

It is not a perfect science, but if you trade every day you see how the price reacts to a price levels and you literally remember them.

First start with the daily chart, or weekly chart, look for highs, lows , support areas, resistance areas, close of the day etc. You will get the most important ones in the daily chart or weekly chart, as they are significant for big players. Intraday pivots are important for day traders to get in etc. but are meaningless for big players.I like highs and lows in the 100k. I like also the ones where there are boxes of volume in both sides of the pivot, so R->S and S->R. Also sometimes there is an overshoot effect on the pivot and the price cross but you can see a second test of the pivot to the tick later on in low volume (no strenght to cross the pivot). Be aware of the stop runs, so I might not take the high of the bar or low of the bar to mark the pivot.

With my risk ratio, I like pivots every 10 points more or less. Of course I dont force them , I let the price to show them. Some areas can be very noisy so the pivot is not a horizontal line is more like an area.

During the day AHG guys also mark the LOTM pivots (language of the market) which are intraday pivots which show S->R or R->S and can be use to entry.You can clasify the pivots in order of importance so you know which ones are more significant, I am trying to develop this more and clasify them. I do that with the trendlines btw, one day I will show it. I think we need to write a document about pivots and create a clasification.

Filtered Time & Sales

I haven't use the filtered time and sales window in a while since I started using the 5 seconds chart and also because the time and sales window makes me overtrade. In the last 3 months I have been using very wide targets with nice results so I stopped using the TS, I thought I didnt need it anymore.

Today I wanted to do an exercise with the Time & Sale window (TS) taking advantage of the low volume day. I have been reading the filtered TS looking to confirm Magic tick and breakouts and I have to say that worked beautifully. My only consideration it is to do it only in key areas, otherwise I become a momentum player and finish scalping and overtrading.I spotted good examples of how to use it.

1) The bar at 10:51 (In my chart 7:51) which test the open didn't have any big players so I spotted that would bounce from support (Open price) and I use it to close my short. That was wicked.

2) As soon as the price broke over 884.25 R for 2 ticks at 10:59 (chart 7:59) , big players started selling so I shorted again. It would be a good scalp as it test again the open price but I wanted to see if it would break the lows of the day which it didn't.

3) Once the price touched the open price for 3rd time 11:03, I saw a big sale 1 tick under open price but inmediatly the big guys started buying, I knew my previous short would get stop out, but I gave it the opportunity instead of closing. That was the beggining of the rally up that will continue until the session was close. I have to say that again it was very clear.

4) 11:42 price breaks over pivot 887 for 1 point , and big sellers started droping the price to the support at the 884 level. Pretty cool.I am not sure how easy will be to read this in a high volume day, I am going to try some replays this weekend. Again this is something to be used in key areas, close to support/Resistance , Open range , open price etc. And the idea is to confirm Magic tick and break outs.

Pivots on 100k

I have done a pass on the 100k looking for pivots (Support/Resistance) areas. They are more or less every 10 points. I will do a second pass on the 10k to refine them. We should be looking at this price levels how the price reacts. If it breaks and test -> entry. Target = At least the next pivot.

I am thinking to start with 2 contracts next week and set as first target next pivot +10 points , second target Lunch (I trade only half days).I have a theory to be confirmed of which ones are likely to reverse the price. Anyways, there is a behaviour very typical of a support/resistance area that you can see in any time frame. When the price has momentun is likely to look is breaking the pivot, but the truth is that this is either part of the momentun or stop loss (at any time frame). The important thing is that if the price goes back to the other side of the pivot, the second test as it has no momentun usually test the pivot perfectly to the tick, no kidding, and that marks what is likely a DT or DB and a nice confirmation of the reversal. Actually we can use that to identify the real pivot, we know there is overshooting or stop loss, but the second time it shows us the real pivot to the tick. There are lot of examples in the 100k chart I am posting.

Nov 26th (+5.6 No overtrading :)

Nov 25th Trading Notes

Nov 24th Trading Notes

21st Nov Trading Notes

Breaking year lows

Hm, unfortunetly I trade only half days so I missed a lot of the action today (+20.75)

Trades (half day)

I haven't post here for a while. These are today's trades.

Pull back from Monday

Today's profit + 46.95 es
Accumulated week: +77.95 es

week 5: + 235 es
week 4 : +70.1 es
week 3 : +23.7 es
week 2 : +37.75 es
week 1 : +21.8 es

Today I try to scale in several time but still I need to improve the system, I don't think I am doing it right. Average losing trade today was 2.54, as I didn't use my fixed stop loss of 1.5 points. I was setting stop where it makes sense, but today in a 10k chart the bars were between 3-5 points!. Today I enjoyed price action as areas of support and resistance were very clear on the chart.

U2: It is a beatiful day +80

+80.7 es points in what I think it is the bottom of the market.

+235 es points for the week. With a 15k per contract that would be a 78% of the account.

Bottom of the Market

SPY has touched 83.5 and ES 837.

This is likely to be the bottom of the market.

Panic Selling

FTSE has gap down and major Asian indices crashed badly. FTSE looks like will try to close the gap.

I would like to see the ES gaping down finally to signal the end. The general thought is that an opening gaping down an reversal intraday could be the final bottom of this downtrend (it is more like a dead cat falling than a downtrend).

Tomorrow Bush will be speaking at 10:30 and it is also expected an emergency plan from the Fed pretty soon and it could be the trigger for a significant bounce in the markets.

This week unfortunately I couldn't trade too much except by Monday the whole day. I am +159 ES for the week with 1 contract (a couple of times I tried scale in, scale out). Which by far it is the best week since I started simming. I think the week has been very easy for day traders. I think it has been a very good experience in general and I feel closer to my target of being consistent.

I will look in the charts how high will go the bounce in the short term.

Don't break your trading plan

Last night couldn't sleep and spent about 30 minutes looking Z (FTSE) and watching ES reacting to its move. I entry long, and when the trade was in +5 moved the stop to BE then I set the target and went to sleep. This morning I woke late and the trade hit the target +25.15 points. It is funny but sometimes my best trades are like this and the reason behind it is that I don't move the target because simply, I am not looking at the screen, I just set it up where it makes sense. The whole point is "Don't break the plan", so many times I get out too early and the market finishes at the price I initially set the target.

Market Bottom?

I am thinking a couple of options here.

Black Monday ?

+ 81.71 ES points with 1 contract and a couple of scale in.

This was my best day since I started simming. Though I am very aware that this was an exceptional day so I am not very excited. I have to be consistent on weeks with 15 points day range.

These are the profits in the last 4 weeks with one contract in ES:
week 1 : +21.8
week 2 : +37.75
week 3 : +23.7
week 4 : +70.1

Today, all the trades were based on Resistance/Support and Price Action. Due to the volatility I moved lot of trades to BE + 1 ticks so I got stop out many times, but always I used the opportunity to get in a better price. I think I have still a lot to learn to avoid overtrading. This day was an excellent day for 4-5 trades such as: short 70 , short 60, long 45, short 60, short 30 and long 30 and very discipline with the targets.

Big Picture SPY

Day traders must have no BIAS to be able to adapt to any outcome and go with the flow but I like to play guess games where I look for mayor resistance support pivots and channels guessing possible outcomes in the market. The main idea is to look always for confirmation and follow the trend so I don't use this analysis to trade, I use it to exit or avoid trading in problematic areas.

There are lot of blogs watching for a mayor crash this week or next week. Actually, some blogs are pointing out tomorrow as Black Monday.

Option 1:

When I am looking to the downtrend channel, It looks to me like this wave from the 1315-ish to the 1100-ish has reached the same extension than the previous wave 1437-ish to 1200-ish, so It would make sense some kind of bounce. I am not sure what might trigger it because the sentiment is very negative but I would not be surprised either to see something from the FED or some bullish news (if that's possible in this market).

Option 2:

Otherwise, we would extend the wave down to the next pivot and possibly falling like a knife breaking all these supports quite easily. When channels don't make 3 Highs or Lows aligned and the third one falls short to reach the trend line the wave goes in acceleration mode. So breaking the red channel or getting short to reach in a pullback the blue channel the market goes down the rabbit hole again. If the bounce does not reach the 1220 and bounce from 1175 the wave might accelerate again. I am looking at the chart and there are so many possibilities about different bounces that this is a very difficult game to guess what is next.

I will be watching the support/resistance lines in the chart and watching how the market reacts (1220ish, 1275ish, 1104ish, 1060ish, 1010ish etc).

The next chart is a 100k of ES. Asia is droping already so if Europe continues the drop we might have the snow ball effect into the market tomorrow. It is interesting the Up Trend Line from the bottom 2002-2003 and more interesting would be the confluence with a resistance/support pivot.

About me

First at all, my first language is not English so I hope that people reading the blog will forgive many mistakes in my posts.

I have been trading for many years. I started with stocks, then progress into options trading which I have been doing for the last three years.

At this time, My main focus is to study the futures market with my determination to become a full time day trader. I want to replace all my swing trading with options for futures and shorter the time I am invested from days to hours or minutes, something that usually I can do only with options in the expiration week.

I hope that anybody that read this blog can learn from my mistakes or my success. I will be posting charts with my trades (part time) and studies. Do not worry, until I can make consistent profits every week for enough time I will be paper trading ES.

Thanks

Pacpac