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2014 Year to date as of July 31st- $ES_F +215 $NQ_F +442
Important Areas on my Charts
VPOC or POC – volume point of control – price where the most shares have traded for the day/or composite longer term view. Magnetic when price is near these levels. Pink line on charts, also known as POC Point of Control. VPOC – volume point of control, also VPOC shifts – point of control may shift throughout the day as one price become more traded that any other. Sometimes means exhaustion by other side – VPOC shift up then sellers are holding price from going higher or VPOC shift down buyers are keeping it from falling- this is showing acceptance. These are important later than the first 2 hours of trading as VPOC could shift often before much volume has traded. During open drives (trend days) vpoc shifts are less important as they may continue to shift throughout the day in the direction of trade. On VPOC shifts you want to see price reaction fast in the opposite direction (shift up/ price down) otherwise the current direction may continue.
NVPOC - naked point of control an untouched vpoc generally a magnet and then acts as support/resistance when hit also known as
VWAP – volume weighted average price. Light blue line on charts that acts as support/resistance Light Blue line on charts
ONHI – over night high. Blue label on charts
ONLO – over night low.Light blue label on charts
ONVPOC – over night VPOC. Purple label on charts
MID – the Mid point of today’s trade. label MID on charts
Histogram – the jagged edges that are to the right of my charts Saw blade looking. The points/peaks show where price is accepted and the valleys show where price has been rejected support/resistance. My histograms are right aligned so right to left
HVN High volume Nod/ HVT (High Value Target) using HVM (mode) - Area where price is in general accepted and no can be a telling point for who is in control if rejected. In the chart I use green shade to identify around the HVM
Initiative buyers/sellers - buyers buying within or above previous days value area. Sellers selling within or below previous days value area. Shows larger conviction IF OPEN is outside of value area then trades back in it is a strong sign of rejection and previous days value acceptance. Bullish signal if trading above previous days value and able to hold on test. Bearish if trading below previous days value and able to stay below when tested.
Responsive buyers/sellers – buyers below value of previous day OR sellers above value of previous day. IF OPEN is outside of value area then trades back in it is a strong sign of rejection and previous days value acceptance.
Normal Day: Wide IB. IB high and IB low are not breached. Least likely type of day but called normal.
Normal Variation Day: “Normal” IB Range. Either IB is violated. This occurs the most over 40% of the trading days.
Neutral Day: Normal IB range. Both IB High and Low are broken. Market doesn’t stray too far from IB, closes not too far from IB and generally closes within it.
Trend Day: OTF is in control from the open and remains in control throughout the day (buyers or sellers). Little to no counter trend rotation and extension through initial balance is large. Occurs less than 25% of the time.
Open Test Drive – markets go beyond and test a point of support/resistance for a test then reverse swiftly and should not come back to violate the Open Swing that is in the opposite direction – so drive down the O/S high (reference point) should not be violated or drive up the O/S low should not be violated.
Open Drive – other time frame buyers/sellers drive the auction in one direction. With this type of Open your reference point is the Open Swing High or Low in the Opposite direction of the Drive. Drive down and O/S high may not be violated, Drive up and O/S low may not be violated.
Open Rejection Reverse – market moves one way to support/resistance then finds strong enough action to push it back through the opening range.
Open Auction – in general would be seen as balanced no control by buyers/sellers but to be viewed in context. Did it open inside of yesterdays range =Open in range- this leads to a non-event day in general no extremes. Did it open out of previous days range = Open out of range- if so then we know OTF drove it up/down creating a GAP. This could lead to more conviction from buyers/sellers
OTF – other time frame buyers/sellers. Very apparent when they are present which causes the market to drive one way
Rotations – areas where the market turns the opposite way in general what we are looking to happen at Shade/grey levels
SCALE – taking contracts/risk off as price moves your direction. The above levels should be used as areas to scale as well as entries. DO NOT add to a Long at Resistance and DO NOT add to a short at Support. These are areas to SCALE/watch and be aware of price reaction here. Your trading plan/style should always know the previous listed reference points.
Tick - in particular the S&P 500 tick we are trading the E-mini S&P
Trade Location – price point where you entered a trade or look to enter a trade
Trend – where sellers OR buyers drive the activity for the day.
YdayClose – yesterday’s close. An important reference not only as support/resistance but are buyers sellers strong enough to push it above/below this point. Orange label on charts
YdayHI- yesterday’s high. Support/resistance and is price willing to go beyond this point? Green label on charts
YdayLO – yesterday’s low support/resistance. Green label on charts
1st Hr HI – Initial Balance (1st hour) High support/resistance. yellow line on charts
1st Hr Lo – Initial Balance (1st hour) Low support/resistance. yellow line on charts
Profile – when viewing a chart these are the blue shaded histograms that identify today’s trade. We can see fat parts where price is accepted and skinny/this parts where price was rejected. This particular one from 11/09 shows double distribution
Balanced profile – neither buyers or sellers have control a balanced look without extension up or down.
Balance Limits – top and bottom of current balance area.
P shaped profile – simply a profile shaped like a P and the thin lower part has little volume where to top is fat/heavy and has volume. When it trades down to the lower of the FAT/heavy volume area this acts as support BUT if broken price sometimes explores back to the lower part of the profile/day
Opening Swing – This is a high and low that is set by the initial auction right after the open. Independent of time and is not the same as an opening range.
The opening swing is the high of first push up and low of first push down or vice/versa. Also measures how far the Market On Open orders took the auction right after the open.
Price GAPS - when price opens above or below the previous days close. Identified by a white dashed line on my charts. In FX (forex) gaps are filled a very high percentage of the time from Sundays open. Pay attention to the type of open and identify a support resistance level to enter for a try at gap fill
Island Top/Bottom – created by a gap up/unfilled then a gap down/unfilled. OR a gap down/unfilled then a gap up/unfilled. Island days are extreme excess. Island bottom after a Gap down (not filled) 3/22 followed by a gap up 3/26
Value area – 70% of the days trade has taken place, horizontal Blue lines identify the areas
Value area low - lowest point of value area defined by a blue line
Value area high – highest point of value area defined by a blue line
Value area Rule – when price opens outside of the previous days value area and then enters the previous days value area and has a 30m bar CLOSE inside = next 30m bar OPEN inside the value area there is a high % chance the entire previous days value area will be retraced/explored. The rule is satisfied as long as ONE bar closes inside the value area, no need to wait for second bar to close inside. The rule can still occur if we open inside of value then trade outside (above/below) and re enter it for 2 consecutive 30m bars
Head & Shoulders – price goes up (left shoulder) and then declines to form the neckline. After this price goes to a new high (head) then declines again to the neckline. Then price rises again to the shoulder area (aggressive setup = shorts at former shoulder area & stop is head top area) before breaking down below the neckline (conservative setup waits for a neckline break & stop would be top of shoulder area) Target is a measured move ( distance between head and neckline ) once price breaks below the neckline. Do not try to get 100% price discovery SCALE out as it moves your way at 50% target take half off
Inverse Head & Shoulders - price falls and holds steady for a while & then falls to a new low bottom (forms Head/bottom) and rises again but stalls in the former steady area which becomes a shoulder line. Pictures have a no profile view and then one with a profile showing levels that match Fibs/Extensions
ZN – 10 year treasury note
ES – Emini S&P 500 futures
PIP – 1/100th of a cent in general 10$ move per normal contract may I suggest trading mini contracts $1 dollar/contract for accounts < 50k just trade in 5/10 contract increments if you wish to trade larger. This makes it easier to exit/scale
6E_F – eur/usd euro futures contract forex/currency $12.50 per pip/contract approx & you can also use M6E mini futures 1$ per pip per contract OR E7 half of 6E approximately suggested for accounts < 50k lets you scale out and take risk off
NQ_F – nasdaq mini futures contract
6A_F – aud/usd aussie futures contract forex/currency you can also use M6A mini as well $1 per pip/contract approximately suggested for accounts < 50k again you can trade 5 (or more)= half 6A and scale easier
COT data – commitments of traders report which is released weekly. this shows Commercials (big boys) and NON – Commercials (you and me) In general I look for WIDE changes in positions OR LARGE differences between NON and Commercials.
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