Thursday, May 17, 2012

Big Picture/Little Picture: New Look

/gc 15 minute / 1 minute candle charts provide macro/micro view

Quite honestly, I wish more CP (consistently profitable) traders do what I do -- attempt to actually show their trades and thinking.

Yesterday I was thinking about how hard it is to trade and see the markets clearly and I realized it might be best to trade with two charts of the same market in multiple timeframes.  It was an experiment so I chose to enter in my PaperTrading account.

The morning was obviously a mess -- it's a bear market and all.  For futures, I look only /cl, /tf, /es, /gc, and /6e.  Just so you know.

And in the morning, the /gc just stuck out like a sore thumb.  What the heck is /gc doing breaking out of its longer term (15m) trendline?  Gold has been a horror show for weeks.  So even though I tend to avoid /gc because it's just a beast,  I decided to take a shot in my Fake Money account.

 I saw the wedge in the 1-min chart and had a clear trendline drawn in so I decided to make a not so good entry just under 1548.  My stop was much much wider than usual -- just under what should have been the support line.  I then went to make a cup of coffee.

So I come back, sit down, and discover the papertrade is up 80 ticks and I watch a bit longer because I have a target at 1558 and hit flatten to close it out with 94 ticks profit.  In 27 minutes.  Best futures trade ever.  Fake money.  Bought myself a fake fancy watch with the fake profits.  And /gc went on to rip 300 ticks a half hour later.  For some reason I was watching something else.  Which is good.  The only thing worse than losing money is making $3900 in fake money. 

 As for /tf and the rest of the market.   The prevailing trendline in /tf broke down around 11 am and at this point -- you could just throw out the rulebook.  The Market Signals were mostly bearish, although gold and OIH were hanging on.   Since the daily charts of most indices are in correction mode, you have to always be looking to short into resistance these days.  The Daily Timeframe determines your general mode of attack, then the 15 min. and 1 min. charts help you pinpoint the exact area to enter.  Which should mainly be to the short side.

Unless of course you see gold doing what it did. 

I'm not sure if anyone else trades this way with multiple timeframes simultaneously.  I feel like there's more insight to be had as I trade with this on the screen.  It doesn't really change any of my strategies or patterns or rules -- it just helps me sees things a little clearer.

Anyway, I've got a lot of thoughts about the meltdown and the general markets but I'll leave that for another time.  My main focus here is to share specific trade ideas that may spark insights of your own.

These bear markets are scary times but for futures traders... they are certainly full of opportunity.

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