FT71

Attitude, Psychology, ect...Overcoming.mp4 

• Attitude and Psychology is the most important obstacle to consistency.  No matter what you use to enter the market, this is your biggest obstacle
• You can't watch PNL when you trade.  You entered with a setup, you exit with a setup, PNL has nothing to do with trading
• Psychology - the daily trading coach (book
• Sports psychology books are more important than trading books
• Someone who is not consistent
• Looks for confirmation in lots of other random signals (MA, lots of other charts)
• Just looking for something that they want to see to confirm whether they are a winner or a loser psychology
• if you're risk averse  - they see things working against their trade
• if you're risk seeking - they see things that will get them into a trade
• Ideally you take every trade that has a positive expectancy, without hesitation or ignoring the information that makes the situation ideal.
• You only need a couple things to get into a trade, not too many things
• Most people have too much noise in their head because they haven't done their homework.
• Trading time is not homework time.
• Business plan
• what you're gonna trade
• when you're gonna trade
• how much time you will give yourself
• what are you costs - software, charting, commission structure
• how much time will you give yourself
• Journal
• Print out chart each day after close and write down where you are short and long and you can see your trades - you will see the pattern that you trade
• Your good and bad habits will become very obvious
• http://www.simplicitytradinghost.com/Webinars/2010-10-19-Journals/10-19-10%20Sample%20Trading%20Journal.pdf
• Statistics / Research
• All setups have their statistics in excel
• Don't use the same metrics to base a trade, ie: multiple price based indicators even if different time frames will give you the same answer
• Use volume
• Price
• Internals - tick, advance decline, breadth
• These are not calculated correctly by most exchanges
• # contracts
• 10k acct w/ 1% account equity stop has 390 consecutive losses for 75% loss
• recommends 1% to 2%

Volume Profile Mp4

• Principles of Auction Market Theory
• All markets operate as an auction regardless of the sophistication, technology, or product traded
• The purpose of the market is to create a price discovery process where the maximum number of buyer and sellers will agree on price
• Price is a common measurement of what the current value is for any given product. 
• The market will auction lower/higher to invite more buyers/sellers to step in and participate.  It auctions by advertising prices up or down which are expressed by bids / offers and trades
• Market seeks value by rotating higher or lower depending on how much supply or demand is available for a given product
• Never more buyers / sellers, just more aggressive ones
• Volume Profile
• HVN - high volume node - people agree on price
• When successful Price will act as support / resistance but rotate through this area
• LVN - low volume node - people disagree on price
• When successful Price should be quickly rejected with tails on the bar chart
• Profiles
• Balanced
• Compressed Profile, expect a move
• Long Liquidation
• Trend
• Short Covering
• The sharper the profile, the more imminent the move
• POC - point of control
• Most accepted price of the day
• Most volume price of the day
• Value area
• How to use
• How Far Back
• Big Picture overview - Uses Swing High to Swing Low over a 15min period
• Marks HVN and LVN and looks out how 
• After it moves down, he uses new Swing High to current
• Note all these major levels
• Usually uses the last 5 days for Daily VPOC
• Open gaps
• Open VPOCs
• Current Day Profile
• Usually only after IB does the current day's profile matter
• Then he's interested in how the VPOC is shifting up /  down
• Where we are in context of the IB
• Yesterday Profile in Context w/ composite is more important
• Look for confluence
• Context will give clues which way it will move
• Market moves from balance to unbalance to balance
• This is commonly seen as market moving from HVN to another HVN.
• Markets tend to test the LVN to see if they will move to the next HVN or fail back to the previous HVN
• HVN / LVN on dailiy charts that are close to each other are mostly noise
• Composite is more revelant
• 1st tests react the most normally
• Setups
• Close vs VPOC
• Open vs Range
• Open vs VPOC
• Open vs proximity to several previous days VPOC
• Opening Swing, first high and first low of the day
• Before rotations take place (can be very small rotations back)
• Might be more obvious on a 25tick chart
• Scaling in (very advanced) when market moving against him
• Scales out on every rotation
• Only takes a couple of ticks of heat
• Doesn't use tick charts, only uses DOM once he's identified areas to do business
• 
  
• Homework - FT71 approach
• 3 Hypothesis when the market closes
• 2 hypothesis when overnight finished the next morning
• Visualize what the market will look like to satisfy your hypothesis in each of your areas to do business (AOB)
• Homework after market closes
• Answers these questions
• What did it do
• What is trying to do
• How good of job
• =>What is most likely to happen
• Find your spots (levels), and wait and execute only at those points
• What is the flight plan(pilot example)?  
• Don't go into a plane w/o where you going.
• QuarterBack doesn't go out on the field and wonder if the play is going to work.  Already figures out the plays and just tries to executes perfectly
• Enter on setups
• Uses the following
• Overnight
• High, Low, Overnight VPOC
• RTH VP - 15min, 3min, 2500volume bar
• Swing High / Swing Low VP - Daily Bars
• Watches as market hits the levels and see how is reacts
• First LVN of the day is important for subsequent days
• Sees which hypothesis is being confirmed by the market
• Current VP is the most important
• Understanding what the market is trying to do
• Only very balanced profiles have Value areas
• Scalping
• Look for absorption by the trade you want to take when it hits a level
• Absorption
• Prices will not move past a certain point
• Bids / Offers hold when price moves to them, and when they are hit they refresh
• VPOC outside previous days value area or range, likely means there will be a pullback
• Sp500 tick
• +250 to -275 is 95% of the dataset
• Context
• What is your time frame? scalpers dont need to look at weekly
• What will affect your time frame? scalpers may 
• OTF - Opening Swing tells what the other time frame players are doing
• How far does it push before those orders are satisfied
• Significant break of IB hi / low and we're pushing one way by the OTF

• Psychology
• Your method is not how you make money, it is actually your psychology
• Make a plan and stick with it, most people don't ever get to profitability because they keep changing
• Trade Mechanically
• Stop once you hit your daily loss limit
• Every plan hits a losing streak
• Be confident and stick to what works for you, there is a lot of misinformation out there

DOM Reading

• Only interested in DOM at area you want to do business, otherwise it is just a casino blinking lights
• DOM only refines order entry, doesn't mean much in the bigger picture
• Useful for 40+ lot trades
• Only really interested in in the 3 inside levels
• If interested in getting short
• Watches that the offer stays firm
• Print on offer getting slower and smaller
• Poor prints on the retest
• Feel
• It's like hitting a baseball, its different every time but you get a feel of what to do
• Naked VPOC often tested
• VPOC = highest number of occurrences closest to the center of the range
• Value area is is defined by 70% around the VPOC.  This is the most common range.
• Choose greatest values closest to VPOC, keep including values until you get to the 70%
• Velocity, Size
• Bigger orders coming in w/ less frequency, and the size is getting smaller
• Fills 1 tick worse (at market), in front of bigger size or right setup
• Entries
• Does not work orders in books because you need to see at the time you enter what is going on
• In 2008 volatility was so great he 'learned' his lesson of levels holding
• Does not add to positions because he is not a trend trader
• Stops
• When he puts in stops he feels passive
• Stop is based on where you will be wrong
• Homework
• Only uses charts to find areas to do business, then he doesn't use price action or even look at charts during the day
• Only records the levels he wants to do business and wait for the market to get there

AMA

• P profiles that form where the HVN forms early in the day are unlikely to revisit it later in the day.  P that happens later in the day are more likely to move away from it by the end of the day
• 3 pieces of info you need to trade any product
• hours that volatility occurs
• range of that volatility (should be able to capture 50% of range)
• size of rotation during that volatility, targets or stops should be related to the rotation during this time
• CL respects weekly levels

What is Context?

• Context is looking at the bigger picture and relating it to what is happening now
• What is your timeframe?
• What will affect your timeframe?
• 
  
• 3 questions? 
• What has it done?
• What is it trying to do?
• How good of a job?
• =>what is it likely to do now?
• Volume profiles
• Composite is from last swing, just trying to pull in enough data to see the key areas above / below
• Micro-compsite, overlapping days  of balance to see a smaller picture
• daily profiles
• Look for confluence among these profiles
• Opening Swing - OS 
• where the first major buyers / sellers step in and what we should expect from the OTF
• IB- break shows that OTF is interested
• HVN are slow & mean price was accepted
• will probably be slow so not looking to get in on the first test
• LVN are fast and mean price was rejected
• looks to get in on first test, but could slip through
• Ex: We move from a VPOC to create an HVN above, if price moves away from HVN, if LVN fails, expect to move back to VPOC
• If we create a VPOC and then continue moving, in the same direction has a different interpretation then create a VPOC and move away
• Only do business in areas you've outlined
• he scales into trades if areas are close to each other
• learn where the areas are to do business, then use DOM to refine entry by 1 or 2 ticks.  this only matters when you're at > 50 lot