READING THE CHART

Tonights     blog will address Reading the Chart, the first part of becoming a trader.




Success in any endeavour requires a level of understanding, and, to a greater extent, a desire to put forth the effort to be successful.  This effort includes:

•  learning
•  developing tools
•  developing discipline
• practice until it is correct
• commit to it

Success will also bring you into contact with three types of people:

1. Those that legitimately want to learn.  They have the same discipline to succeed you possess.  They will succeed.
2.  Those that want the success, but not at the price that determines the success.  They will accept less, tend to fail or lose interest, and will move on to a lesser pursuit.
3. Those that want, will not put forth the effort, and will use resources against you, rather than for them. 

You will see all three.  Put your energy into number 1's, help number 2's with kind words, and let number 3's self destruct.  Keep your focus, keep your directive, keep succeeding.


READING THE CHARTS

TRADES have been removed for a purpose.  They are openly discussed in our chat room, and how many points or how much one does over another is not the focus. YOUR focus is what do the charts tell me and how CAN I find value in that information.

 This discussion uses the 5m chart.  Most, if not all, actual trades are generated with the 512t chart combined with a secondary chart.  But most traders are familiar with the 5m.

POINT 1:  Market opens with a duel between bulls and bears.  This shake out eats inexperienced traders lunch.  Line 1 is a rising bullish indicator, and aggressive traders will launch longs along this line.

POINT 2:  PA has cross a compressed ma area (CMA).  This is a long entry and your hold is to the first failure.  In this case, around point 3.

POINT 3:  Sellers entered, however it was more a profit taking selling.  You read this since the selling did not, some will argue could not due to buyers, continue with bar 15. (b15).

B15 then becomes your secondary entry if you missed P1 or P2.  Target will be previous high (14 area in this case) or a similar failure that took out P2 longs.

POINT 4:  Markets like to test highs and lows before completing the next move through those levels. 1314 had been establish last evening in after hours trading.  POINT 4 is your exit.  Your next effort will be a reversal from this point, or an additional leg breaking the 14 level.


Just as POINT 1 TL established a long bias, channels can establish a bias, and we can have mini channels within a major channel.


POINT 5:   Every trader seems to have some measure of  SUPPORT or RESISTANCE.  These levels can, and often will create 1) reversals, or 2)  trap and a continuation in the PA.  With a long bias and the expectation that 1314 would be tested again, POINT 5 become a long with a 5t protective loss.  If  the reversal #1 occurs, the 5t protection should be sufficient. NOTE   the S or R areas do not cause the PA to change.  PA changes/can change at these S & R's because they are psychological points, and react to trader's perceptions.

B49 can be your exit, full or partial for a +1 run to the EMA.

POINT 6:  Three stops at 1312.75.  SHORT.  You now have  two points ( # 5 and  #6) creating a channel.  POINT 6 also establishes (at the time) a lower high, suggested 1314 could be the high area for the session.


POINT 7:  Point 5 repeat.  Support, near channel bottom, LONG.


POINT 8:  b65, b69 and 70 having difficulty crossing 1312.  At upper channel, appears to be another lower high from point 6.  SHORT.

On POINT 8 the trigger was at 1312, with a conservative entry at 1310.75.  Both had a target exit at the 200ma, or at the lower channel line.


Little different approach tonight.  A focus on WHAT we were seeing, not on what we did.

But the "did" was very good indeed.  Have a great weekend.