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[Printable Version of This Page]

07/27/2014

Increase Trading Success by Organizing Price Structure

Learn How To Trade Futures Like A Pro #001  July 27, 2014

Greetings Traders,

Although some may want to debate me on this, I can say that after trading for over 15 years the original works of some of the trading pioneer technical analysts still work the best of all.

Specifically I am referring to Simple Moving Averages (SMA), Relative Strength Index (RSI), Stochastics, Moving Average Convergence Divergence (MACD), Fibonacci numbers and Elliot Wave 1-5 patterns.

I have developed some of my own indicators also which are my lifeblood that I rely on each day when I trade. However, I also refer regularly to readings on these key foundation indicators which are proven winners if understood and configured correctly.

Configuration is the secret key to winning in trading combined with actual time tested skill and research in the markets.

A carefully configured chart with specific time frames, indicator “tweaks”, and knowledge of the intraday patterns is what allows a trader to develop the best skill in placing trades that pan out.

First, take a look at the chart below. This is an EMini S&P500 chart using 4 period range bars. Range Bars can be highly effective in organizing price. Range bars will just record the pre determined price movement range without the time factor element. This can tend to have a smoothing value to your bars or candles on the charts.

[Image 1]

Notice how the chart without any price organizing features tends to appear just as a more random view of prices. Although you can see through price movement along higher highs, lower lows and contracted range areas, there is really not a clear overall picture of the market here.

Now take a look at the chart below which shows the same chart but with Boomerang Scalp Trader applied to the chart. Boomerang is a top selling software I developed for day traders of active markets to assist them with reading of the price bias. Notice how the clarity on the chart jumps out and price is organized more efficiently.

Each chart needs to be adjusted with the specific configurations of the moving averages and bias readings according to the time frame one is using.

For example: a 5 minute chart which is based on the price movement over the last 5 minutes of trading is certainly going to look different than a 4 period range bar chart.

<[Image 2]>

In my previous articles I have described how traders can in combination with organizing your charts for maximum clarity of price structure also learn Intraday Price Phases, Elliot Wave 1-5 micro structures, as well as specific indicators that coincide with all the above.

Trading Mind Set....the key to success! One of the most important aspects of trading from the very beginning of your trading practice to the stages of being a seasoned trader is learning correct Trading Mind Set rules. I am surprised how often I will mention this in my communications with traders and find that many traders do not take this seriously. I think this is a great mistake because as traders we are dealing with an almost unlimited range of possibilities for price movement.

When a new recruit is enlisted in the military and decides to engage in combat missions then correct battle psychology is one of the key elements of training. It is not just about weaponry and how to use your weapon, clean it, care for it, fire it etc. It’s also about conditioning your body and mind to prepare for a hostile environment and avoid getting killed in battle.

Similarly in trading we sometimes find that the environment can become hostile and in order to prepare for victory we have to not only understand all of our chart setups, indicators and other tools (weapons) but we also have to condition our body and mind to adapt to this type of environment.

When I discuss this topic of Traders Mind Set I make it simple. I simply advise you to get a copy of Mark Douglas book “Trading in the Zone”. Mark and I did a large seminar together some years ago in Boca Raton, Florida where over 300 traders attended from around the globe. I had met and worked with Mark before but after hearing him speak again and then reading his latest book I realized this was all you needed to get the psychology aspect of trading handled.

<[Image 3]>

So my advice, and I hope you will take it right away, is to get Mark Douglas latest book,. Then get a yellow pad for taking notes and a yellow outliner to note specific information in the book that stands out for you. Now commit to spending at least 1-2 hours a week away from your trading desk without distractions studying this book. Then, do that for the rest of your trading career. Repetition is the mother of all learning I’ve found...especially in trading.

I hope you found today’s briefing valuable and be sure to email me if you have any questions on any aspect of day trading. Mohan@daytradersaction.com

 

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