Joey's MP Journal

This is a discussion on Joey's MP Journal within the Trading Journals forums, part of the Reception category; Part of the reason for starting this journal is to archive any ideas for future reference. In the last few ...

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Old Jul 5, 2008, 1:02pm   #9
Joined Mar 2005
Value Area Trades: Aggressive

Joey25 started this thread Part of the reason for starting this journal is to archive any ideas for future reference.

In the last few days there have been a couple of Value Area trades that have been confluent with trendline trades on the 30-minute chart.

This first trade from the 2nd July is aggressive in that the entry point is just above the Value Area High from the previous day's RTH session.

However, given that the natural tendency for a market that re-enters a 'balance area' is to seek out the mean and possibly the other side, it's probably worth a punt.

The left vertical line, on the 2nd green candle, is the RTH open at 8.30am Chicago time.

After 3 time brackets (1 1/2 hours!) there is a nice downward sloping support line, which is broken in the next candle. At this point I'm looking for the close of the candle to be below the trendline, with a limit entry sell at where the trendline should be in the next candle.

The alternative could be to wait for the price to actually penetrate the Value Area, but my basic philosophy starting out with daytrading is to wait for the market to come to me.

Joey
Attached Thumbnails
2nd-july08-aggressive-entry.bmp  

Last edited by Joey25; Jul 5, 2008 at 1:10pm.
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Old Jul 5, 2008, 1:27pm   #10
Joined Mar 2005
Value Area Trades:Conservative

Joey25 started this thread I didn't actually do this one, because I don't like having targets that need to be beyond the current range to offer a sensible RR.

However, there are good reasons for this one being a conservative entry for someone employing tighter stops than me.

(1) In the 8.30am to 9.00am time bracket, the candle extends upwards into the previous day's Value Area, but closes below. This is a "failed auction" into a level.

(2) There is an upward sloping support line that may become good resistance.

A limit order sell was a possibility at either the VAL or the trendline.

Joey
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Old Jul 5, 2008, 9:50pm   #11
Joined Mar 2005
Trade for Monday

Joey25 started this thread This is one I'm looking at for Monday, provided it doesn't trade there in the overnight session. Confluence between a major downward trendline, and horizontal support-turned-resistance.

Sell at 1273.00, with a stop at 1276.25.
Attached Thumbnails
potential-trade-monday.jpg  

Last edited by Joey25; Jul 6, 2008 at 8:44am.
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Old Jul 6, 2008, 10:49am   #12
Joined Mar 2005
Targets & Risk/Reward

Joey25 started this thread I've been reading the excellent article by dbphoenix which accompanies the Journals section of this site. The general message that comes across seems to be get prepared ahead of time as much as possible; try to commit to a plan.

So far I haven't mentioned targets. I'm going to distinguish between 'swing" and 'scalp' trades.

Trade Types

For my purposes, a swing trade is going to be defined as a 'big' level that the intermediate and position traders will be looking at. Also, it will be an area that has not been tested in the current 24hr session.

A scalp trade is going to be defined as an overall trade setup with a Risk/Reward ratio close to 1. I know there are other definitions, but this is the one I will use.

Risk/Reward

For the swing trades, I'm going to try and let the trade run. Firstly, the entry point should, at least in theory, interest the higher timeframe players, so there could be a big move. Secondly, if I'm putting my neck on the line anticipating a reaction, I sure as hell want to be rewarded for it.

For the scalp trades, trade location isn't as good since it is by definition not at the edges of the range. However, they should be good for 2 to 3 points.

Last edited by Joey25; Jul 6, 2008 at 10:55am.
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Old Jul 6, 2008, 1:54pm   #13
Joined Mar 2005
Trade Managment

Joey25 started this thread This final piece of preparation is to do with trade management, which for me is the method of trailing the stop.

(1) In the trade management timeframe, stop movement is firstly only triggered by the formation of a swing high.

(2) Trailing thereafter is based on an ATR calculation.

(3) Swing trades are left to run their course.

(4) Scalp trades have the added twist of not risking a bundle for the last few ticks at the end.

Last edited by Joey25; Jul 6, 2008 at 2:02pm.
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Old Jul 7, 2008, 11:50am   #14
Joined Mar 2005
Minus Development

Joey25 started this thread "Minus Development" is a phrase coined by Peter Steidlmayer, the original developer of Market Profile theory.

A good example of Minus Development is the 9ema/18ema moving average gap away, retrace and bounce system.

In profiles, Single Prints are the most obvious examples of Minus Development. Single Prints are areas of the profile where a price was only traded in a single half-hour bracket during a session. They represent areas of low volume, or prices at which there was a swift rejection by the market. I've uploaded the profile for the 2nd July EPU8 profile and identified two Minus Development areas.

The first area is 1286.00/1286.25 and the second is 1275.75/1276.25.

These areas can be used as entry levels in themselves or as areas for stop placement.
In the trend trade I posted yesterday, I'm hoping to use an area of Minus Development for stop placement:

Sell at 1273.00, with a stop at 1276.25

In contrast, the 1279.50, the point of control or the "bulge" of the profile is an area of Development. This is an area I'm interested in for another of my planned trades:

Sell at 1279.25, with a stop at 1282.50.

Joey
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File Type: xls EPU8 2nd July.xls (49.0 KB, 148 views)
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Old Jul 7, 2008, 2:51pm   #15
Joined Mar 2005
7th July Trade1

Joey25 started this thread Trade1 (Swing)

Entry: 1273.00
Stop: 1276.25
Exit: 1273.00
Gross P/L: 0

Got onside by 9 ticks with this one, but the objective is to let the swing trades run.
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Old Jul 7, 2008, 4:08pm   #16
Joined Mar 2005
Initial Balance

Joey25 started this thread 1 1/2 hours into the RTH session is about the minimum time that must pass before 2-way balanced trade can occur in the stock indices. This is called the Initial Balance.

At this point it's a good time to anticipate potential plays later in the day.

Today we have a narrow balance area between the high of the 4th July (1269.25) and that Minus Development area from the 2nd July (1275.75/1276.25).

An upside breakout form this narrow balance area will hopefully lead to a reaction from the 1280.00 area I'm interested in.

A downside breakout could lead to some single prints below 1268.00 leaving 2 potential trades of either the mean of the current balance area or a single print trade.

Only guessing of course, but it's good to write it down real time, like dbphoenix says.
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