Aug 192010

There was a short trade opportunity on the 9:46 6PnF bar but I will not post it because the LVN area was not listed in the potential short trades list.  The jobless claims number caused the ES to slice right through the 89/91.  This area was still a valid LVN area when the market opened however now it was above price and thus resistance where previously it a support area.  A second fade trade opportunity was available after the 10am EST news.  The market obviously did not like the news as it fell and paused at the 77 / 78.50 area.  Price had enough bounce for a scalp trade but continued to tumble down without a good fade trade opportunity.  Price finally stopped at the S2 pivot and the top of the 74/75 level.  Here we had a lot of trapped traders for a good long opportunity.

 Posted by at 10:28 am

  5 Responses to “8/19/2010 Post Trading Analysis”

  1. “Here we had a lot of trapped traders for a good long opportunity.”

    First of all, I’ve read every blog post and watched your webinars and I thought you didn’t trade the first push into the level, but rather waited for it to setup on a 2nd test? Am I incorrect?

    Second, I’ve been looking at FP charts for over 3 years and that is not a “lot of trapped traders” setup. It’s the lowest volume bar on your screen, it’s the lowest # of sellers on your screen. The 9:59 bar is a nice trapped traders setup (that went nowhere, but still).

    We only spent 30-50 seconds in that bar, by my recollection.

    I think a more appropriate description would be “based on our experience as traders, the importance of the level, and the fact that we had fallen too far too fast after the #, we took the trade.”

    This move happened too fast for me, and based on the action after the 9:59 bar I did not want to chase it. I did however take the retest of this level at around 10:40, which setup nicely along the lines of what you have been showing in countless posts.

    I am not sure this response makes any sense. It was a good trade you made and it’s your trading and your blog. I just don’t see this as a trade that fits into what you have been teaching, and for some reason that annoyed me this morning. Sorry about the rant.

    Have a great evening.

    • I didn’t realize it was not a second push until after the trade, I had written the post, snapped the chart and went to draw RG’s level. My level from my own pre-market research extended up to 76. I trade my own levels which in most cases correspond well with RG’s, but this time it made a difference in how the trade opportunity was perceived. I guess I should have commented about the level discrepancy or given your reaction; should not have posted that trade opportunity at all. In retrospect, I would have been better off posting the first trade opportunity… 🙂

      FYI, we do trade first pushes but they are generally for 2 to 4 tick scalps and is intentionally not a focus of this blog because it requires scalping skills we are not willing to formalize and try to articulate.

      I cannot argue with you over the meaning of “a lot”. We generally focus on the relative numbers and there was twice as much selling as buying below the previous swing low. The 9:59 bar does not have trapped traders by the definition we use. By our definition, there needs to be a swing low and then a second push swing low that extends a few ticks beyond the first with sellers unable to push price lower.

      The 10:10 setup bar was at least 3 minutes, however I agree the 10:11 bar was very fast. Since my actual entry was before the 10:10 bar closed, entry was easier than trying to enter on the 10:11 bar when price was blasting higher. We miss trades sometimes too because of the market speed (or I’ll catch a trade and RG does not; or vis-versa).

      Good job with your trade!

      • Can I just say that you guys freakin’ rock! What a great, polite and educational reply to my post! So many of these BS guru sites would take a comment like mine and either ignore it, insult me, or reply but not actually answer the questions (trust me, I’ve been on too may of those sites)

        I see what you mean about if 76 is your level, this was a 2nd push. Also, thx for the definition of trapped traders that you use, that really clarifies a lot of what you do for me.

        Don’t worry about my reaction, my emotions are one of my challenges, trying to turn from a weakness into a strength is a battle I fight in most aspects of my life 🙂

        Have a great weekend!

        • Thanks Brian. We’re just trying to be as truthful and honest as we can about our trading. It’s actually a lot of work to provide coherent information about trading, so much of trading is discretionary and hard to articulate. We don’t think of ourselves as gurus (every time I start to think I’m a really good trader, the market has a way of proving me wrong :)). RG and I have been burdened for some time over the amount of effort it takes to answer trading questions (through both the blog and emails). Between trading our accounts, dealing with clients and partners, publishing the blog, writing in the member forum, and running our algo business; we’ve stretched ourselves pretty thin. We had decided a while ago that we need to stop interacting with the general public and have been discussing blog changes over the last few weeks. Now is the time. We’ll be turning off comments on the blog. We’ll continue to post the trading sheet and an example trade each day (if there is one; Edit: there was a trade off the YC earlier that I missed), but we’ll only discuss trades and trading in the member forum where it’s better archived for future reference and where we have a better understanding of the individual members’ trading perspective.

          We’re glad to know you’ve found some use for the information we’ve presented through the MD webinars and blog. You’ve asked some good questions over the last few weeks and your passion for trading is a good thing. I wish you continued trading success!



          • P.S. You will start seeing example trades posted that will not seem to fit within the framework detailed in the MD webinars. When RG came up with the “setups”, he was trying to encapsulate what we do in a few setups. We soon realized (and have been discussing in the member forum for months), that those “setups” are too restrictive. We are focused on trading the key price levels, not specific price or order flow patterns. They are only additional confirmations that are nice for any given trade but often the best trades are those that are uncomfortable and have little in the way of supporting confirmations.

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