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BS"D
Daytrading Course
Learn to Read the Tape
Exploit Pit Pivot Points
******************************
PIVOT MAGIC TRADING JOURNAL - EXCERPT
Good morning,
BBs trapped us out before the big EOD move. We clipped a couple of
decent bites though.
FED TODAY!!!
The market is hovering at a potentially significant precipice.
Therefore, a red flag warning is in effect.
CAVEAT
Now is a good time for paper trading and practice.
Read and heed NOTES A & B, below.
******************************
Pivot Magic Trading
First rule:
"Any time you don't know what is happening, get out!"
******************************
NOTE A: The ABS has been bloated for several weeks. Should bloated
ABS conditions continue,
high-wind warnings, and precautions apply. To avoid getting stopped
out at every Price
adjustment, expand the Pivot Magic Trading Maximum Profit Giveback
(MPG) and stop
placement spacings.
To reflect the ABS, and to avoid sudden-death Price Action swings:
* MPG limit needs to at least as large as, or larger than, the average
candle.
* Stop placement (still applying our PMT stop rules) spacings backs
off by to
approximately 1/2 ABS.
NOTE B: The expanded spacings obviously make for greater risk
exposure. Of course, the
profit-per-minute potential increases as well.
* This represents an acceptable threat to well-funded Advanced
traders.
* Intermediate traders might wish to trade fewer contracts than
usual. Put less of your
funds At Risk.
* Beginning PMTers might be wise to sit out the fireworks.
While the market is excited (ABS is large) and skittish (Price Action
is basically sideways, a minefield
full of traps), every small hiccup "scalp" travels a dozen points or
more, in minutes. Observe how
careful application of the PMT rules, nerves of steel, close attention
to the tape (and our primary
indicator, Volume), together enable the (well-funded and) experienced
PMT trader to avoid traps,
and to even profit from the occasional "accidental" blips.
That said, let us proceed.
****************************************************
***
E-mini
Tuesday Oct 28, 2008
Morning opens gap-up at the R1, bounces, and dives to test the Pivot.
Nothing tradable.
1 = Clear, 2-bar Reversal to test Support-turned-Resistance at the
Pivot. The Reversal is mid-air and PMT entry criterion is not met.
PMT Readers of the tape
may well have also noted that the Reversal is DVS-based, thus not
reliable for longevity. It was easy to predict that this attempt at
re-crossing the Pivot was
unlikely to succeed.
2 = Meanwhile, an Ascending Triangle (lavender lines) has formed. The
Triangle breakout is supported by decent Volume (pink arrow). Why no
entry?
Preceding the "butte" of elevated Volume bars, = 2, Volume had already
begun to fade, indicating an early lunch exodus. This Volume burst
therefore comes
too late to carry Price Action over Time.
A = It is however, a great TELL (blue arrow). Smaller TELLs
throughout lunchtime kept the drift wafting gently upward to finally
tap on the R1.
4 = At this point the BBs felt satisfied and went back to drink some
more lunch. With gravity, and the rubberband to the Pivot, and the
Revolving Door, all
encouraging a Pivot retest, you may well have taken this trade.
REVOLVING DOOR
Review:
When two people, A & B (Bulls and Bears), push in opposite
directions , if A suddenly stops
pushing and steps away, a Revolving Door situation occurs, and the
door will yield to the
pent up force behind B, flinging B in the B-preferred direction.
What is more interesting in this exercise is the TELL. While the
instantaneous ebb of Bull interest might have resulted in a Price
Action revolving door, the
Bears didn't materialize, nor did Price Action get flung toward the
Pivot. Yes, the BBs have some Bull plans for late afternoon.
B = Pulled in on this red candle.
At 1:30 Action Time, Price Action stalls briefly at the MA.
C = Large red candle below the MA. Per PMT stop rules, move the
profit-locking stop above the MA.
D = The low Volume has taped a slow down drift of Price Action. All
of the abovementioned forces we anticipated pulling Price Action
toward the Pivot have
not exerted to any great extent.
Note the long lower wick on the red inverted (Bull) Dragonfly candle.
This too is a possible sign of failing Momentum.
Since the drift is still gently Bearish, PMTers continue to move stops
aggressively, and prepare to exit with alacrity.
Calling this a large red candle through the Mid, move the profit-
locking stop above the Mid.
E = Underscoring our observations re: = D, another large, red,
inverted (Bull) Dragonfly candle appears on the tape. The Bear move
has skidded to a halt.
Want more proof? Our "Lessons on Volume" already warned us that a
Twin Towers Volume pattern (pink arrow) precedes a stall/sag/
retrace.
Next candle shows white, Exit Now! +/- 6.50 points
[SNIP]
6 = Volume has seriously begun to build and Price Action to
accelerate. A welcome 2-candle 123 continuation "S" permits us
latecomers to join the fray.
Brave, advanced PMTers who entered on = 5 (not good ole risk-
conservative me, boo hoo), take this opportunity to add contracts.
H = Large white candle. Per PMT stop rules, move the profit-locking
stop under the low of the candle.
J = Jumbo white candle, and our position is in violation of MPG
rules. Mental stop to Giveback level.
K = DVS (pink arrow, late in a move spells exhausted Momentum) drives
a large white candle slightly through the High. Aggressive choice is
to move the
profit-locking stop under the High. If, equally soundly, you
concluded that the penetration of the High was insufficient to warrant
the aggressive choice,
mental stop goes at Giveback level.
L = Black Volume Bar of Death (pink arrow). If you were previously
unconvinced that the Bull Momentum has failed, this diminutive Doji
spike should warn
you out. The instant the next candle shows red, Exit Now! +/- 18
points (from = 6); +/- 29 points (from = 5, for the daring)
Sadly, the zig-zag retest of the MA shook us out early, whereas the
move resumed on ever-building Volume (green arrow), ultimately gaining
an additional
50 or so points. Yes, = 7 meets the minimal requirements for a "P"
off the MA is an "S". The clock, however, has pushed breakout/entry
too close to EOD
Hiccup Danger Time for risk-conservative entry, so we miss the train.
PERSPECTIVE
(Daily, bottom chart)
Well, well. Tuesday's Price Action taped a large white candle,
reversing off the contract low (indigo line)
before retreating to the safety of the LT SW Channel (light blue
lines). Surely that's a much cozier place
to await the FOMC hysteria onslaught.
REMEMBER: Trade the tape, not my prognosis!
Asher
=] ;-)>
Pivot Magic Trading Course
http://www.tradingthingys.com/PMTJ/Commodity%20Day%2
0Trading.html
Tuesday's PMT Chart:
Http://www.TradingThingys.com/PMTJ/PivotMagic102808.
gif
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