Market Personality Helps Me Identify the Best Trades

Market Personality:

-          Size of the orders

-          Speed of the orders

-          Are we making new highs?, new lows?

-          Are we trading in a sideways range?

-          Double-tops and bottoms?

-          Is the price ‘following through’ on its moves

-          Are we seeing breakouts?

-          Are we seeing fake-out breakouts?

-          Bullish:  high speed, new higher highs, lots of follow through

-          Bearish:  high speed, new lower lows, lots of follow through

-          Sideways (indecision): inconsistent speed, not getting new highs or new lows, very little follow through

-          Too dangerous:  no speed…or too much speed…no follow through, and very whippy price action.

How do we use this information to make money?

-          Get in early and form an opinion of the personality as early as you can.

-          Then I track the personality all day long, looking for clues from the market im watching

o    Clues = slowing speed, no new lows, or new highs, or new highs or breakouts

-          Once I know what the personality is, and when it fits inside my risk tolerance and the best patterns, etc, then I will feel that much more confident that I know whats going.

-          Now I can trade with confidence….

If it’s a bullish personality I will buy at support as price drops and buy pullbacks as price rises.

If the personality is sideways/indecisive we then want o trade inside the range we’re in.  buy the lows, sell the highs, avoid the middle & fake-out breakout.

If the personality is bearish I will sell at resistance and sell retracements with new lower lows.

Different Market Personalities and how to trade them for YOUR personality.

Example:  Crude Oil is always moving, lots of action, no rest, tons of ways to get involved.

Someone who does NOT want to take more 5 trades per day will need to use a slower timeframe on the CL contract so their personality doesn’t interfere with the market personality.

Example:  If you trade the ES futures and you want more action this may not be a good fit.

The ES is highly liquid and very slow compared to other markets. 

Someone who can’t focus for a long time, short attention span, or wants to take more than 5 trades per day this will be a bad fit.

Different types of markets:

High-Liquidity:

Lots of traders, lots of volume, not that many big easy moves.

ES, ZN, ZB, FESX, EURO

Ill-liquid:

Not as much volume, times when there is very little speed, and we see BIG EASY moves without all the stopping and starting that comes with a high volume market.

CL, GC, TF, GRAINS, FDAX, NATGAS, YM, US DOLLAR, AUSSIE, YEN, POUND

Remember…sometimes you can’t find any personality…and that’s as good as confirmation of seeing it in the first place.

Using the trend channel tool:

-          This allows me to plot a trend channel and add extensions and place it on other timeframes

-          Watch the video on our trading blog

-          You can also log in and watch the recorded training from Wed 06-22-11

-          You must be using the newest version of NT7.6

Trade management

-          Everyone will be different with their trade management

-          Depends on the account size, the experience level, and the market you’re trading

-          Watch the video on our trading blog

-          Or watch the ‘trade management’ video lesson in the advanced course.

Entries:

We have two different ways we enter the market.

We do not enter with a market order, too sloppy.

Fast Track = limit order, sitting on the market waiting to be filled (very easy)

Advanced Method = The Trap uses a buy/sell stop to enter the market when the rules confirm. (takes practice)

When is the market too dangerous?

-          Too much speed

-          Not enough speed

-          Low atr

-          Too high atr

-          No movement

-          Too much movement

Speed and how we use it, watch these two videos on our blog.

Video #1

Video #2  

JJTriggerLines:

Will be added no later than 1pm EST today.

Big Money Trigger Line (BMT)

-          Its considered major support and resistance but its not the same as the others.

-          Its very sloppy, so it’s a great final target, not where I want to enter a trade.

-          So avoid trading around the BMT, and look to take profit just before you test the levels.

When does the Light bulb go off?

When do we finally ‘get it’??

Joe had his after blowing two accounts and taking the 1-trade per day challenge.