I thought that this might be a good video to watch as I had to scramble a bit to salvage a gain from the trade.  The darn thing almost stopped out for a gain three of four times but stopped one tick short.  I finally had to move my stop up to 7 ticks as the market started to consolidate and I worried that the trade would go south.  It was a pretty interesting trade and I actually had to think a little as the trade played out.  Did I do the right thing?  Let me know what you think.

ES Emini Day Trading for Dec. 17, 2009

detailed trading ES Emini chart for Dec 17

ESh9 December 17, 2009

Pretty interesting day to day trade the ES Emini contract.   I didn’t have a losing trade, which is unusual for me.  I purposely left out one trade I should have taken, and you will notice that I bailed on two trades long before they had finished.  All in all a good day, though much of the later trading was very tedious and slow developing.  Tedious and slow developing is not something I am particularly adept at enduring, so that may have contributed to be over anxious to exit my trades.

Also notice, especially toward the end of the day, the market began some significant whipshawing, which is unnerving to trade, at least for me it is unnerving.  Of course, if it were easy everyone would be doing it.  Any way, the market seemed to lose it’s sense of direction as time went on and the trend was a bit helter skelter.

I endorse a state of the art trading program for beginners at Trading Concepts, Inc It’s an awesome product that will have you well on your way to success. Plus, it has a money back guarantee…you have nothing to lose and thousands to gain.

Fed and Fed Agency Announcements

MBA Purchase Applications
7:00 AM ET

Consumer Price Index
8:30 AM ET

Housing Starts
8:30 AM ET

Current Account
8:30 AM ET

EIA Petroleum Status Report
10:30 AM ET

FOMC Meeting Announcement
2:15 PM ET

Consensus Analysis

(Note:  I have no financial relationships with any particular charting software packages and my comments are for instructional and informational purposes only)

I believe the first variable to consider when choosing a charting package is the quality of the data feed that supplies the raw data for the charting software to operate.  Many of the current data feeds are based upon antiquated 1990‘s style technology and do not render data as some of the more modern feeds.  Now, let me tell you that no broker is going to admit that they are using an inferior data feed, you are going to have to do the research for yourself.  There is a wealth of information on Google critiquing data feeds and I invite you to do your research to determine which ones are up to your standards.   Of course, I have my favorite and will mention that choice at the end of this article.

It goes without saying that you are going to need a real-time feed to trade as opposed to the horde of 15 minute delayed feeds out there.  If you are fifteen minutes behind the market, well, you are fifteen minutes behind what is really occurring on the Chicago Mercantile Exchange.  I know of no methodology to trade a fifteen minute feed effectively, you are simply in left field without real time quotes.   And that’s where the data feed issue comes into play.  The question that is in constant dispute is how fast does real time data translate to movement on your chart.  It’s usually measured in nanoseconds.   The reason for all this concern is a slow feed will get you out of a trade late, especially on a closely timed trade, or can be the culprit in slippage, which is a situation where you place and order at a certain price and you don’t get filled at the price chosen.
Traders detest slippage in their accounts.

The next variable traders evaluate in a software charting package is the variety of options available to assist them in their trading.  All software packages should have a full compliment of common indicators and you should be able to adjust those indicators to your own specifications.   I also like my charting software to have the ability to be programmed with some of the proprietary indicators I have developed myself.  A software charting package with just a few indicators is of little value to a serious trader.

I like my chart to layout in a certain fashion, and I want my software to have the ability to allow me to layout my charts in the manner I feel comfortable.   Some packages do not have this ability, as they have a standard layout you have to live with. I won’t use such a program.

Finally, and most importantly, does the charting software have an effective customer service department.  One of the cheapest charting software programs, and it is of good quality, has zero customer service.  Basically, if have problems, it’s like communicating with someone in a black hole.  Who know when you will get an answer, or if you will get an answer?

I suppose you are wondering which package I use, so I will tell you.  I am very fond of Ninja Trader and using the Zen-fire data feed.  I have had a wonderful relationship with this program and highly recommend it.

Other good programs, in no particular order:

1.  TradeStation
2.  ESignal
3   Multi-Charts
4.  Sierra Charts

You usually can get a 30 day free trial with charting programs and I encourage you to take advantage of that offer to see if you are comfortable with the chart layout and features.

I endorse a state of the art trading program for beginners at Trading Concepts, Inc It’s an awesome product that will have you well on your way to success. Plus, it has a money back guarantee…you have nothing to lose and thousands to gain.

Fed and Fed Agency Announcements

4-Week Bill Announcement
11:00 AM ET

3-Month Bill Auction
11:30 AM ET

6-Month Bill Auction
11:30 AM ET

Ben Bernanke Speaks
12:00 PM ET

Consumer Credit
3:00 PM ET

Consensus Highlights

Chart patterns can develop simultaneously across multiple time frames as well, so they are particularly well suited to handle any trader’s demand, from the end-of-the-day trader to the most hyperactive daytrader. So far, we have looked at chart patterns as they have developed in the indexes, however, chart patterns are especially accurate in the forex market due to its 24-hour trading. The US dollar/Japanese yen 15-minute chart in Figure 3 shows a symmetrical triangle forming.

Click to Enlarge

A symmetrical triangle is formed with a downtrend line and an uptrend line. Earlier, we mentioned that understanding a pattern’s quality is crucial to trading patterns—that every pattern is not a trade, but a potential set up. This pattern is a good quality symmetrical pattern for a number of reasons. The two keys to look for are the balance of the pattern and the balance of price.

Specifically, we are looking for the two trend lines to form a triangle that is squeezing price in a way that if we were to imagine folding the pattern in half lengthwise, the angles would be almost identical. In other words, the angle of the trend lines must be balanced. The other visual cue to be aware of is whether prices are balanced within the pattern. This balance can be seen if prices are bouncing off both the downtrend and the uptrend lines. As this symmetrical triangle pattern was developing, another pattern on the US dollar/Japanese yen was also shaping up. A rising wedge was developing on the 15- and 30-minute charts (Figures 4 and 5, respectively).

Click to Enlarge

Click to Enlarge

As you can see, both of these patterns were using some of the same touch points to create the uptrend lines. In rising wedges, there are two uptrend lines where the lower one is support and the upper one is resistance. In rising wedges, we must be especially mindful of the lower uptrend line support because this is the level at which we can buy a bounce. If this level breaks, it could signal a reversal of the uptrend in which the pattern formed.

These two patterns were not the only opportunities a chart pattern trader could take advantage of. Another 15-minute rising wedge had also formed and this wedge was a larger pattern (Figure 6).

It used many of the same touch points, but the difference between this rising wedge and the smaller rising wedge is that the “look back” of this pattern was longer. Look back is the amount of data used to form the pattern. In this case, you can see that the look back goes to 7/31, as opposed to the smaller wedge that originated on 8/1. This may seem like a small difference, but consider that the charts are 15-minute time frames and that each new hour presents four new candles. The difference of even just six hours is 24 new candles from which to connect touch points and create a pattern.

Let’s look at some more examples. Again, remember all your studies should be geared toward training your eyes to notice the nuances of patterns because this allows you to make the distinction between good, better, and best patterns. So far, we’ve looked at patterns that are dominated by trend lines. Now let’s examine patterns formed by more horizontal levels.

A rectangle pattern is similar to a channel. The difference between the two is that a channel is typically narrow and a rectangle is wider. It’s much like the difference between accumulation and distribution. Just like triangles, rectangles (and channels) can develop simultaneously across multiple time frames.

Let’s take a moment to discuss time frames. Ultimately, which time frame you chose to trade should be based upon the quality of the pattern and risk/reward ratio it presents. Other considerations are more individual.

For example, if you are an intraday or full-time trader, many shorter-term time frames will be available to you for analysis. However, if you are a part-time trader or someone who prefers to look at the charts once or twice a day, then certainly, longer-term intraday charts, like the 240-minute chart or the daily will suit your time constraints or preference. Regardless of your preference, it must be said that chart patterns that develop on daily charts are more psychologically significant than those that develop on any intraday time frames. This is mainly because daily charts are by far the most followed by the general public.

My philosophy on time frames runs somewhat counter to the prevailing approach. While most traders look to longer time frames to confirm the movement on a shorter time frame (known as multiple time frame confirmation), I do not subscribe to this.not at all. In fact, my belief is that the smaller time frames are the “canary in a coalmine” and give a trader acute and more sensitive cues to shift in the market. Taking this one step further, treat each time frame as a stand alone and remember that the 15-minute chart is the building block to the 30-minute, and the 30-minute is the building block to the 60-, to the 240-, and then to the daily. A trend shift starts on the shorter time frame, and if that shorter time frame persists enough, it will affect the larger time frame, and so on.

One of my students told me that I described this effect as the “stream leading to the river leading to the ocean.” I frankly can’t remember saying it, but it sure is accurate! So the 30- and 60-minute charts would be the stream, the 180- and 240-minute charts the river, and the daily the ocean. These time frames are simply my preference when analyzing forex. Some traders use a 15-minute chart, which one of my students called the “creek that leads to the stream.” Well said.

This rectangle appears on the 15-, 30-, and 60-minute charts (Figures 7, 8, and 9, respectively).

The horizontal support and resistance levels that created the rectangle all use the same touch points. The main determination of which one to trade would be which pattern was the best example of a rectangle. After this determination, you would follow your preference for a specific time frame. As you can see, chart patterns offer accuracy, flexibility, and the boundaries traders need to identify in order to locate where we choose to enter a trade. Most of us have studied these powerful and simple-to-understand tools. Just do not make the error in thinking simple is ineffective.

Click to Enlarge

Click to Enlarge

Click to Enlarge

My continuing trading adventure is sprinkled with many things I would have never thought I would be doing, like public speaking and seminars, online classes, software development, books, and more. In the end though, I know it’s just me and my charts. My friends and family even joke that I’m “off the chart” on weekends and vacation. When I present my trading approach at any of the Expos where everything always seems “new and improved,” “hot,” and “advanced,” I am proud to say that the people who taught me were those who traded, wrote, and taught in the early 1900′s, and that the tools to my trade are a century old. That’s before computers, television, and back when “Wall Street” was a street with a tall wall built along it! Time-tested, tried and true suits me just fine

ES Emini Chart for November 30, 2009

ESZ9 for 11-30-09, what a great day to trade.

There are not many days when the market is in such an obliging mood for traders.  Instead of being the usual brutal beast, we were treated to a very gentle and easy day to trade.  Just the same, I did manage to blow one trade.

The Dubai issue dominated most of the action early on and drove prices down with force, but then the market reconsidered the impact of the Dubai restructuring and decided it wasn’t as big a deal as originally thought.  I caution, though, that the stock market is a fickle beast, and might well decide, at a later moment, that it needs to worry about Dubai after all.

]]> http://www.emini-maven.com/wordpress/2009/11/es-emini-day-trading-detailed-trading-chart/feed/ 1 http://www.emini-maven.com/wordpress/2009/11/es-emini-day-trading-detailed-es-trading-chart/ http://www.emini-maven.com/wordpress/2009/11/es-emini-day-trading-detailed-es-trading-chart/#comments Tue, 24 Nov 2009 01:19:39 +0000 trader7757 http://www.emini-maven.com/wordpress/?p=1039 Chart courtesy of AMP Trading, get a free demo account and paper trade.

detailed ES Emini day trading chart ESZ9 for Nov 23, 2009

Well, the market started out with a great up move and then sort of unwound for the rest of the day.  Notice that I put the Fibonacci replacements in the chart and the market found support at the 61.8% level and then hovered above and below that level for quite some time.

It was not an exciting day to trade, though I had to fight impulses as the market faded of the highs to stay and in the trade and let it ride.  Not an easy thing for a devout scalper, but I managed to stick by my guns.  The volume, as it has been for quite a while, was not overly impressive which, in my mind, doesn’t point to a terribly robust market.  We shall see.