Prop Trading Skill Development for Intraday trading.
We always have to be asking ourselves what are we are seeing in the moment?
the below image shows the push up on the 1 minute chart and the footprint illustrates how the move took place.
We can see the absorption and backtick at 06 on the pullback which was the trigger to get long.
I’d like to thank you all for coming I think we have about 70 people here today and I’m very grateful and can honestly say it wouldn’t be the same without each and every one of you – it would have been considerably cheaper.
This is probabaly the one and only timne that I’ll be able to speak for myself and Carol
I’d like to say a few words before I spend the next 30 years listening
I have a couple of coping mechanisms one of which is in my right hand
We have very different personalities – some mornings I wake up grumpy and other mornings I just let her sleep. You know Carol and I have our moments and soemtimes I can go for a week without speaking. Mainly because I’m polite and don’t want to interupt. I can honestly say that before meeting Carol I was incoimplete and now I’m pretty sure I’m finished.
How do we take Slope Analysis and use it to Day trade?
Define the Weekly, Daily, 240, and 60 Minute Slopes and document and describe what is taking place from the perspective of the slope in each market.
Right the Analysis for that market and the opportunities that are may present on the trading timeframe.
Bring up a 5 minute chart for each market where we expect an opportunity to potential materialize and define the 5 minute slope and KRA’s. Use this to trade in ALIGNMENT with the expected opportunity on the hourly chart.
Example
In the Es the theme is that we are testing resistance at all time highs, we have a channel testing this resistance which we are paying attention to on the 5 minute chart.
I need to write this shit down and turn this shit around.
This is one of the Simplest methods I’ve seen. You identify a trend (Slope) and then identify whether there is consistent Support and resistance using that Slope.
Identify whether there is changes within the trend i.e strengthening or weakening within the trend and if so look for a slope in the other direction.
This is the important part to understand.
If we have an established uptrending Slope what makes me look for a down trending slope is a change of context in the uptrend. Either a blow of top or a lowered ceiling for example.
Validated Slope
Slopes should be validated before we start paying attention to them. We can see this by Price respecting the line on several occasions. Also when the line changes from Support to resistance this is strong confirmation.
Trade Entry
When we have a change for instance Price hitting resistance on the 240 min chart in the Euro. I Look both Intra Vehicle and Inter vehicle for confirmation and entry Ideas. Intra vehicle would be dropping to a lower timeframe and looking for an entry there. Inter timeframe would be looking at a correlated instrument for an entry idea.
An Intra instrument example is Crude. On the Daily and 240 we have Bullish Context and the 60 has pushed through resistance which we expected to become Support. It held perfectly on the 1 min chart and then initiated away from the area giving is the opportunity for a C1/C2 on the Dom as below.
This is using Multiple timeframes to gain an understanding of what the market is doing in that moment.
Daily up slope been in existence since January this year.
240
60
The ES is still in an uptrend in the 240 channel and has breached resistance on the 60 in the warning lines and found support at the latest median Line. We are testing horizontal resistance but have broken out on the lower 5 min chart
Directional trades are what we want to be taking. one way to get support from the longer term chart is to mix timeframes. Look for a Vol node touch or Channel overshoot on a longer term chart and then drop to the smaller timeframe chart to see if the expected reversal is trading as anticipated.
Below we have a reversal on the 15 min chart in the ES in the form of a channel overshoot. So our Longer term View is now Buillish. We look to the smaller timeframe chart to see if we can now get a short term bullish indicator to go long. this could be a Midas touch a push beyond a Vol node or a trend developing in the expected direction. This then allows us to scan a few instruments making note of trade Ideas and dropping to the Lower timeframe to manage.
First Idea – Live
We can see we have breached the Channel overshoot on the 15 min chart. We will now monitor the 3 min for bullish progress. We match the long term and short term view before entry.
I must have Brain damage because I cannot trade or even gather basic stats. I need to understand what trade types are available based on the market action. Then define those trades and take them based on Price action so there is no ambiguity whether they would have worked or not.
On the 30 Min Chart we define the market State. Then on the Trading Timeframe Chart we define the trend as either consolidation or directional. We then have trades based on those market conditions.
Universe I am asking for your help to finish this prove its validity and if profitable trade it consistently. I am lost without your guidance.
Look to define trend and market structure.
Slope Analysis is the best thing I know to define trend. Volume Profile and Swing Points define structure.
Slope Analysis has the added advantage of forming a holistic viewpoint of the market and enabling With trend trades.
Entries are at Volume Profile Steps or Channel Overshoots.
What is an overshoot of a channel?
Its a two legged move that extends relative to the central Median line around which price is oscillating. This may well be the longer term slope.
In a crude awakening I talk about one setup type. Well that setup doesn’t work in all market environments. This article will document this using a simple 5 minute chart. The raw stats will then be filtered to only taking trades in the right market environment, i.e with trend and the same stats reproduced. This will be accurate enough for our purpose however it assumes we take every trade. This will not consider the pace of the tape which is a critical component but is a start.
Market condition is one of three things – uptrend, downtrend or consolidation.
The trend definition and future strength is defined from Lance Beggs Works and Price action course.
Above is the mental checklist we go through for a trade. We define the structure placing our framework of Support and Resistance and then define the trend.
Right now from the 30 min chart we can see we are in a consolidation and downtrend on a smaller timeframe chart.
We will get to the point where we have a checklist to maintain situational awareness which asks – what is the market condition and what trades are available to us right now within this market condition (context). Like lance does use a buzzer every 5-10 minutes to update this. Doing this should provide he means to only take the highest probability trades with a positive risk reward. We are aiming for 70% winners with a 2-1 Reward to Risk ratio. At least 10 trades per day. This should allow us to top the leaderboard frequently.
30 Min Trends
Below is a 30 Min Chart showing breakouts into trend that happened over 7 trading Days. There were 16 instances which is over 2 major trends a day that could have been captured.
The Market condition went from Consolidation to trend in that Timeframe.
That also Means that prior to those breakouts we had a consolidation which meant we should not be taking trend trades but playing consolidation trades.
We assess the likely future trend direction with the following principles
First principle – We expect a directional trend to continue in its current state until the next S/R barrier, unless displaying evidence of weakness.
Second Principle – When an up or down trend shows weakness we expect a higher likelihood of a complex correction rather than a reversal until such time as the market shows both price acceptance and strength in the new direction.
Third Principle – A sideways trend within the framework is expected to continue in its current state, unless displaying evidence of strength towards the range boundary.
Fourth principle – When a sideways trend shows strength towards the range boundary, we expect a break of the boundary.
Fifth Principle – We expect our S/R framework to hold unless strength is displayed approaching the S/R boundary.
Initial market Analysis Process
Setups
There are five primary setups
TST, BOF, and BPB at S/R levels and two with trend setups, Pullback and complex pullback.
An Uptrend is a series of Higher Highs and Lows with the price extensions being longer than the pullbacks. Extensions will break above previous swing highs, pullbacks will not break below previous swing lows.
The uptrend is classed as over when price breaks the last swing low that lead to the High.
failure to break the the last swing low could simply be a complex pullback as demonstrated below.
w
An Uptrend from the perspective of supply and Demand and trade Decisions
An area of support has formed as trades have decided that the swing low was good value and established new longs. Much of the pressure in a sustained uptrend is the shorts exiting out of their losing positions. In addition to those anxious to get onboard chasing the move as its underway.
Sideways trend – consolidation
A Sideways trend officially starts when 4 turning points develop within the range of a previous swing. Less than 4 (3) may simply be a two legged or complex pullback.
A sideways trend ends when when price breaks either the high or low defining the sideways trend.
Trend Example
We are constantly assessing the Supply/Demand Dynamics of the market. Point G would have brought many shorts in on the test of D. The speed of the move would have trapped those shorts on the push to H. We would therefore expect their Buy orders to provide support so a change in this level is a change in the supply/Demand Dynamics of the market.
However we want to see price accepting the change. The first break of G was on bearish volume. We then had three weak no demand bars. If there was significant demand price would have immediately rejected the low causing a swift reversal and trapping the shorts.
Further examples
Although this may look like a change of trend E did not lead to a higher high and therefore is simply a complex pullback. Price would need to break below C to signify a change in trend.
Above we have a consolidation and then a break below the low at C. however this is just a probe and price moves back into range. We have a second probe at E which officially suggests the start of a downtrend although a very weak one. This is negated at F when we take out the swing high at D.
hh
fff
