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Posted by Asher on October 6, 2008, 1:58 pm
BS"D
Daytrading Course
Learn to Read the Tape
Exploit Pit Pivot Points
******************************
PIVOT MAGIC TRADING JOURNAL - EXCERPT
Good morning,
CAVEAT
The market is very jittery, hovering at a potentially significant
precipice.
Therefore, the red flag warning is still in effect. Now is a good
time for
paper trading and practice. Read and heed NOTES A & B, below.
Friday was full of hysteria and traps. PMTers scored a few points,
and
hopefully, got through the day with no badly skinned knees.
******************************
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:
=B7 MPG limit needs to at least as large as, or larger than, the average
candle.
=B7 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.
=B7 This represents an acceptable threat to well-funded Advanced
traders.
=B7 Intermediate traders might wish to trade fewer contracts than
usual.
Put less of your funds At Risk.
=B7 Beginning PMTers might be wise to sit out the fireworks.
That said, let us proceed.
*******************************************************
E-mini
Friday Oct 03, 2008
Friday morning opens gap-up above the Pivot. Sadly, there is nothing
tradable there.
The morning passes uneventfully and the BBs finally go out to drink a
leisurely TGIF lunch.
X =3D Fair amount of squabbling over the R1. A couple of Bear TELLs
(red arrows) and a couple of Bull TELLs (green arrows) combine to
leave us
completely in the dark.
1 =3D Powerful 2-bar "P" behind the MA informs readers of the tape that
a true reversal move is upon us. Do not be confused. THIS IS NOT A
TRADABLE SIGNAL. A "P" of the MA, preceded by a trend, by definition,
qualifies as an "S", or continuation signal (=3D continuing a previous
trend).
Plus, of course, the Price Window to the proven R1 support is too
small for our criterion.
2 =3D As this candle crosses below the R1 (on huge Volume, BTW), the
tape presents us a true "S" signal in the form of a 2-candle 123
continuation.
Entry below the R1. Initial stop advances above the R1.
NOTE: Wouldn't blame you a bit if you scratched as the bottom wick of
this giant, red spinning top retracted with your profits.
A =3D Giant red candle taps on the Pivot.
1. Though at the instant of impact it was as yet unknown, this turns
out to be a late-in-the-move DVS-driven (pink arrow) stretch,
probably
exhausting forward Momentum. By the end of the candle, it is clear
that a surgically executed Pivot Scalp exit would have claimed the
most
marbles. +/- 15.50 points
2. Our position is in extreme violation of MPG rules. Mental stop at
Giveback level.
* In spite of item A.2, nothing says we HAVE TO give back the full
amount.
Additionally, in light of the hindsight conclusion drawn in item A.1,
when
the Bears don't recover and the next candle clearly turns white, Exit
Now!
+/- 10.25 points
* Froze in the headlights? Your mental Giveback stop got run over.
+/- 7 points
[SNIP]
5 =3D The retest of the Close gave way to Doji Sandwich kicking off the
Pivot, through the Close. PMT entry placemen is already outside the
"green fog",
so it's all systems go.
D =3D Failed test of MA. Per our PMT stop rules, move the profit-
locking stop above the MA.
Relative to the ABS, the next candle (blue arrow) is just barely a
large candle, but with no visible Bear interest (pink arrow), tape
readers have become
more than a little bit wary of the longevity of this move. Move the
profit-locking stop above the high of the candle.
E =3D Pretty unusual that such a small blip is a DVS relative to the
surroundings. Nonetheless, late in the move, this is a sign of
exhausted Momentum.
The long-tailed, red, inverted (Bull) Dragonfly is a further sign that
Momentum has skidded to a halt.
Abandon the trade instantly, or very briskly move the profit-locking
stop above the high of the candle?
The deciding factor is the clock. EOD Hiccup is upon us! Exit Now!
+/- 4 points
Took the other choice? Cost you a point as you briskly get taken out
at the stop! +/- 3 points
EOD Hiccup (lavender lines) plunges violently to the S1, where Price
Action dies off.
PERSPECTIVE
(Daily, bottom chart)
Overcast and ominous!
The tape speaks for itself. I can't think of a thing to add.
REMEMBER: Trade the tape, not my prognosis!
Asher
=3D] ;-)>
Pivot Magic Trading Course
http://www.tradingthingys.com/PMTJ/Commodity%20Day%20Trading.html
Friday's PMT Chart:
Http://www.TradingThingys.com/PMTJ/PivotMagic100308.gif
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