Chart notes: Red line is opening price, yellow lines are IB high/low, Longs are green print, Shorts are red print
Trade 1: Long 99.20
My Thinking: The 99.08 area had been key from Friday, as we bounced off it 3 times, we then traded back through opening price, so I took the stab long (only 1/2 size) w/ a stop just under opening price looking for a test of the low volume node (LVN) we had at 99.85ish, and maybe get to the composite high volume node (CHVN) just above it in the 100.20 area.
Result: Got lucky and we moved straight up from there, scaled at 99.60, 99.85, & came 15 ticks from closing me out at 100.20, but I stopped out when we lost the lvn at 99.85 and couldn't make it up to the chvn (which I really expected us too)
Trade 2: Long 99.18
My Thinking: I was really just looking for about a .50 cent bounce here when it appeared we had bounced off the open, and we had a fairly poor high.
Result: Got 1 scale off then was stopped flat, hindsight, I should have taken the short when we rejected 99.85 on the re-test and couldnt auction up to the CHVN aka we were selling value, and when that happens we almost always go lower.
Trade 3: Short 99.18
My Thinking: We had range extension lower, and actually got back into the IB, but I figured the risk was larger on long attempts at this point. This is a trade that I was only going to give about 7 ticks & if we pushed through and held the open I would have flipped it.
Result: We auctioned back out of the IB which was what I really wanted to see, but I only got off 2 scales as we bounced right back up into the IB where I closed it out.
Trade 4: Long 98.99
My Thinking: Yall should be familiar w/ this play by now, if were gonna go, were gonna go, were not gonna keep coming back into the IB aka failed breakout so we "should" return to value (vpoc). I also saw some nice size buy blocks go through on the tape, so I front ran it a little bit right in front of the IB low.
Result: Textbook, failed breakout, return to vpoc where I closed out at the LVN we had failed at earlier in the day at 99.85.
And that was it, not my best day tick wise but for a Monday in front of the OPEC meeting, I'll take it. We should see some nice moves later in the week. It depends on what the OPEC folks have to say, but I think we see a very nice push down at some point, price action the past week has been pointing lower, hence why I have a nice position in SCO (the double short oil etf). Any questions/comments/ideas tweet me or just post them on here.
What TIME do you use for OPEN? E.S.T
ReplyDelete9 E.S.T
ReplyDelete@Ben - Interesting stuff. Just wanted to ask what is IB high/low? and how does it effect Oil?
ReplyDeleteCheers
Initial Balance, it is the high & low of the first hour of trade, so 9-10 est for crude. It effects all markets the same, it is a market profile theory.
ReplyDeleteCheers!!
ReplyDeleteHey Ben, how did you go about research your open and range extreme trades? Did you take a lot of screen shots or just many hours in front of a screen? Also, it seems like trade 1 and 4 you were reading the other flow and trade 2 and 3 you might have been sitting limit. Is this correct?
ReplyDeletethanks, Musky
Question 1: Its both, lots of screen time, and go just going back and backtesting.
ReplyDeleteQuestion 2: Its kind of the same answer, in 1 of the chapters of Mind Over Markets (the original market profile book) it talks about how a chess master played 20 people at once and beat them all, how did he do it? There was no way he could just sit there and think from beginning to end what had taken place in each individual game (there was a time limit), but because of his "board time," he has probably seen every possible combination of patterns on the chess board, its no different then w/ our screen time, eventually we will see every candle pattern there is, and w/o knowing anything else but the candle pattern, you can assess what the market is trying to do.
On trade 2, you could say the market faked me out because the candle it formed when it traded through, then back above the open looked good in my "pattern recognition," we had a poor high, and sloppy rejection of the LVN the second time.
On trade 1, it was just a risk/reward trade, I would have stopped out if we traded back through the open
On trade 4, order flow played a little into it, but I was just afraid that my trade location would be poor if we got back into the IB, because I was expecting a nice pop if we got back in, which we did. But if I didnt get in early, I still would have got long once we traded back into IB. At 10:50, I actually though that was the last push up then we would roll, but my pattern recognition kicked in here, and I knew we mostly should have rolled then if we were going to.
also, oil is more of a mo-mo market as is, for example, in the S&P, or Naz I like trying to play LVN's a lot more, even if the context tells me I'm going against the grain, just because these markets arent as momentum driven as oil is, so its really just a style thing, I like to go w/ the flow a lot more in oil then other markets. Even if it means I'm giving up better trade location for more winners.
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