There's not much out there....
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Yes, I have entered the tape reading phase of my trading career. I mentioned before that there just isn't that many books on tape reading. A search on Amazon yielded the following books:
"Studies in Tape Reading", by Richard Wyckoff.
This book was originally published in 1910, but it seems to be popular enough to have lasted until today. I've come across a couple good reviews of this book from various trading websites. I think any trading methodology book that can stand the test of time and still have decent reviews is worthwhile to take a look at.
"Tape Reading & Market Tactics", by Humphrey B. Neill.
This book was published in the mid-1930's, and it also has received favourable reviews from various trading websites. And at a cost of less than $10 on half.com, it might be worth a shot even if it turns out to be a mediocre book.
"Techniques of Tape Reading", by Vadym Graifer
This is the newest book on tape reading, published just a few years back. It has received mostly positive reviews on Amazon. TraderGav also has it on his virtual library, but I don't know whether he has actually read it or not. If anyone has read this book, please leave a comment on whether you liked it or not.
Thursday, July 19, 2007
Tape Reading Books
Wednesday, July 11, 2007
Tape Reading Video
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At TradersLab, there is a 3-part video of a trader showing how he's using the tape (and the TICK) to enter a trade in the YM. Interesting and educational to follow along his trade.
I think I will have to start using QT's T&S window more.
Tuesday, July 10, 2007
Peeking at The Loonie
Taking a closer look at Canadian Dollar Futures
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Just in case you didn't know, the USD$ is hurting big time. All of the major currencies (Yen, Euro, GBP, and the CAD futures) were up today. But for me, I've been tracking the Canadian dollar for a couple of weeks now, and wondered how it would react to today's announcement by the Bank of Canada that interest rates would increase by 25 bps (0.25%). It turns out that the past week was a buy the rumour style run-up, and today was a sell the news day.
The Canadian Feds actually indicated that there maybe even more interest rate increases in store before the end of the year is up. Nonetheless, despite this bullish news and outlook for the currency, it sold off. But, it was not a blow-off type of sell off, and in fact, the current uptrend in the CAD is still intact. I think it could drop as low as 0.9450 and still not violate the current uptrend.
I came across this interesting site which provides comprehensive analysis on the Euro, GBP, Yen and the Canadian Dollar ForEx. It is also forecasting a continued uptrend for the Canadian dollar.
I will be watching the CAD futures for upcoming trading opportunities.
Today's Trades
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In that first trade I made, I moved my stop, which was a mistake which led me to take a larger loss than usual. But after that, I took a quick break, and regained my composure, and went right back at it.
The biggest difference in today's trading was that I didn't feel frustrated after starting off the session with that loss. Yes, it was a mistake, but I didn't dwell on it. The other difference was that I ended today's session with a win, rather than ending it with a losing trade. It's these little things that help me to get back my confidence.
The vertical lines represent signals which had I been alert enough at the time to take them, would have led to some tidy profits. I also read somewhere that 1536 was a support level (from last week), which would mean it is now resistance. But I forgot to write that into my notebook, and missed out on a great trade (short @1536).
The Keltner channels identify low risk trade opps, but not necessarily high probability trade opps. To increase the probability of a profitable trade, you would need to combine the Keltner with a TICK extreme, and even the MACD divergence. But again, this requires being alert at all times to what the indicators are doing, and sometimes, I get too bored to pay attention.
Thursday, June 28, 2007
Uranium Fakeout
Ok, so maybe Uranium is not back yet.....
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The recovery process may take a little bit longer.
I think I would have to see my Uranium Index clear 26000 before I think a recovery is underway.
I checked in on most of the components of the index, and most of them are under the 50d MA, which means a lot of technical damage has been done, which will require some time to repair.
Which means it's not the time to buy yet......
ES volume charts
It's (almost) all about the volume.....
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This is a 5-min. chart of ES from today's session:
This is a 7000/bar volume chart of the same session, starting at the FOMC announcement time:
The volume chart provides much more detail as to what is going on in between each 5-min. candlestick. The most obvious example that I can point out is the 1130am reversal @1518. In the regular chart, it shows a wide ranging bar, followed by another bar with a long upper wick. In the volume chart, you can see how the reversal actually unfolds, and I was able to actually "see" it coming in time to get out of my short.
Today was the first day I traded mainly off the volume chart, and I thought I did fairly well. I am starting to like the volume chart more than the PnF chart, because the PnF does have a bit of detail missing which I can find in the volume charts.
The volume chart tells me what it is doing much better than the regular charts, so I will start to use it more. I will continue to keep the regular 5-min. chart open, just so I can see any chart patterns develop.
Friday, June 22, 2007
Volume charts
started looking at volume charts last week.....
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Here is the chart of ES from today's market session:
Now, here is a volume chart (6000 contracts per bar, 250bars total) of the same market session:
Volume charts are fast becoming more interesting to me than the regular intraday charts. For one thing, I can see the change in momentum happening much more clearly than with the regular intraday chart. Not sure if this is typical of all volume charts, but I am leaning towards using them exclusively for my trading. In the mean time, I will start using them alongside the regular intraday chart starting next week.
Uranium is Back
Looks like it might be time to get back into Uranium.
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While gold, silver and copper seems to have lost their direction, the chart on my Uranium index speaks the truth - buyers are starting to buy again. If you look at the above chart, my Uranium index has broken above that bump at the beginning of June. I believe that sets the bullish case for breaking back above 26000.
I will be looking for the ones in my uranium index that look the healthiest. Hopefully I can report back on that sometime this weekend.
Thursday, June 21, 2007
Kinda, Sorta Back, but Not Really
I feel obliged to post an update.....
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Ok, I haven't been posting for almost a month, and my FeedBurner subcribers have doubled??? I'm not really sure what to make of that.......
Anyways, I felt obliged to post an update to my trading journal. But, I'm not sure where to begin. I've still been trading for most of the past 2 months. I've been trading mostly ES, and some silver and copper. It's been a bit of a slow bleed, and as a result, my account has dropped below the SEC's PDT threshold. The damage to my trading capital, while not insignificant, is not as significant as the damage to my psyche. I've been tempted to add funds to my trading account to bring it back above the PDT threshold, but have decided not to for now, until I can work on some of my trading weaknesses. These are the same weaknesses that I always babble on about - overtrading, patience, and discipline. I believe that I have improved a little in these 3 areas in the past 6 months. On the days when I am patient and disciplined, I feel I am "there", life is good, and nothing needs to be fixed. But on those days when these gremlins show up, it causes increasing damage to my psyche. So, I've decided to really, really address these issues to my own satisfaction, and until then, I will not add funds to my trading account. So I am undercapitalized by choice, and that means trading small size until I can practice patience, and discipline.
I've come across a trading service in ES that offers a 66% win rate and a +0.66 expectancy. Anytime you can capture twice as many winners as losers, it's a good system in my books. And nothing helps a damaged psyche more than a system with a high win rate, the higher the better. (Side note - my theory is that win rate is infinitely more important than +ve expectancy when it comes to addressing confidence issues; it only makes sense). So all I have to do on my part, is to follow the service like a trained monkey, and collect my money...... easy as pie, right?
Unfortunately, my 33% INFP personality is fighting that to the bitter end. I actually have trouble following this trading service to the letter !! There are two obstacles here :
1. I think I can beat the system and be smarter than that trained monkey. The service posts signals (long/short, with entry/exit and stop levels in real-time), and I try to tweak the entry and exit and stops to extract more profit, simply because I create the illusion that I think I can do better. But 2 out of 3 times, I wind up with less profits (or worse, a small loss) than if I had just faithfully adhered to the entry/exit and stop levels.
2. I lack the patience to wait for the signals to be posted. So sometimes, I make a trade because I am predicting that the system will post a signal imminently, or I am just plain bored, or I see something in the charts that I find is worth a shot (at least that is how I've rationalized it), or I just get the urge to capture every tick of movement.
Each trade that is placed needs to meet two (distinct and separate) criteria: low risk AND high probability. When I overtrade, I am making low risk, low probability plays, or high risk, high probability plays. A low risk, low probability play would be similar to entering a base and break trade before the breakout has occurred - entering inside the base is low risk, but without waiting for confirmation of the breakout, you're really flipping a coin as to which direction it will be headed.
A high risk, high probability play would be like entering a trade in the direction of the confirmed trendline after a TICK extreme has occurred. Although chances are good that the trade will eventually move in your favour (ie. in the direction of the trendline), you're probably very far away from the trendline when a TICK extreme occurs, so you'll be forced to use a wide stop, which means taking on unnecessary risk.
My New Year's resolution for this year was to double my capacity to carry out mistake free trading. I know now that that capacity comes from exercising discipline and patience. I am not there yet, and it is ever more imperative that I make progress in these two key areas. I look back at this trading journal in the early days, and I sometimes wonder how I made all those trades. I don't feel the confidence nowadays to do what I did a few months back.
The plan now is to follow this trading service to the letter, simply because I can't even do that right now. Yes, there might be a better alternative or approach to following this service and be handheld through trades. But, I am doing this with specific objectives in mind, and once they have been reached I will cut the cord, so to speak. In some strange and twisted way, I do believe that once I can follow this trading service to the letter, then a lot of my patience and discipline issues will be resolved.
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