DO NOT RESPOND HERE, I am creating another post just for responses because this is going to be a long post with many screenshots and I want them to be in a perfect order without 50 comments between.
Why am I posting a method here ? - because I want to thank all of you and because I feel comfortable in this forum so if I go against the regulations please let me know and I will delete this post.
Why am I telling you how I trade ? because you are not competing with me, if you go long together with me you are actually helping me. ( actually would love to start our own private trading room shared only by us and nobody else and of course no charge at all).
Why am I trading the ES ? very low commission, very low margin, huge volume so if you stopped out you don't lose 10 ticks like CL on a spike. Slow moves enable to think clearly about each entry and the most important thing- almost perfect fib behavior unlike forex or other markets that just jump up and down.
What am I asking from you ? Please let me know what you think and if you have any suggestions to make it even better. Currently I am using renko spectrum by RJ's which is worth every penny, if you think that there is a better time frame or a better renko or any other type of bars please let me know. i am using Hawkeye volume indicator which shows me when the buyers or sellers take over, and I ask you PLEASE- if there is ANY volume monitoring indicator for ninja that you are aware of please let me know and I thank you in advance for that.
So lets get started ( and I am not going to make it pretty or neat lol ).
The reason why most traders are losing is not because they are ****** or inexperience, its because they DO NOT read the market and find themselves at the wrong side.When you use lagging indicators like macd, stochastics and almost every indicator that is out there you are basing you trading on the last 14 or whatever bars and you assume that the market will continue that way.Sometimes it works but many it does not.
The only way to use LEADING view is by reading the market and watching every leg.the market or at least the ES does not change direction with no reason. 90% of the time it moves according to fib levels so lets analyze friday's moves (4-26-2013 ). I took out all the indicators so we just use fibs- nothing else.
This is going to be PART 1 of this tutorial because it takes me a long time . According to responses I will continue with part 2 which shows the actual entry.
So here we are- POINT A on friday around 8:40 am eastern time.: the market reversed to the upside refusing to go down and continue the down lower low trend- go long asap, all the shorts are going to run away and bail out helping our long. our target is 1.272 fib extension and we got it to the tick.
Point B around 9:40 am we go short IF and ONLY IF the short term allows us ( next chapter ) and it did, the reason WHY we consider a short is ONLY because we are perfectly at 1.272 fib. our target is exactly 61.8 fib to the tick and there we are looking to reverse to long , WHY ? BECAUSE WE HAVE HIGHER HIGHS HIGHER LOWS. our target is EXACTLY 1.272 fib extension no more no less WHICH we got TO THE tick. i DON'T WANT TO TELL YOU THAT BY NOW- 10:05 LESS THAN 2 HOURS OF TRADING WE CAN STOP AND GO TO THE BEACH :) BUT LETS FINISH THE DAY.
POINT D : 10:05 am, same as point B we go short. This time we actually got lucky and it went all the way down GUESS WHERE TO ? of course you guessed 1.272 extension.
POINT F : 10:43 am we expected the market to go to 61.8 retracement so we can reshort BUT- it surprised us and was tired and only got to 50 fib to the tick. THE MOMENT we got a short signal there WE TAKE IT and we hold keeping our stop 2 ticks above the entry. OUR TARGET NOW IS fib extension of 1.618 which amazingly we got TO THE TICK at point G at 12:05 where we reversed and went long.
ok i am tired lol enough, so what do you think ? there were NO INDICATORS involved and you could actually use the renko bars to trade as long as you KNOW where the market is going.
Hope this is helping and please put your comment in the other thread.if you like it then you can press the THANKS button so I know how many enjoyed this post.
HERE is the chart http://www.sendspace.com/pro/dl/dn0rc1
and please help me with any renko or other bars and any volume monitoring indicators.
Here is also a short I took so you can see the setup and maybe try to see if you can make it better. http://www.sendspace.com/pro/dl/wnkpkt
Thanks again for all you help.
Take care
Jane
I wanted you to go though older posts not only because repeating again what was already written here would be boring, but also because reading the discussions and our thoughts when we were developing this might give you an additional value. But there is also a lot of not-that-valuable-information to dig through, as you say, so it's somewhat a double-edged sword I guess.
I am not rude to people who are asking for information. I do mock and strongly oppose people who don't know something but they think (or pretend) they do know and thus they don't and won't listen anything and anyone no matter what. That is what s.t.u.p.i.d.i.t.y is and it's the most dangerous thing on Earth, not the lack of knowledge (sometimes people confuse these two things). Actually, when you don't know something and are aware of that and want to learn that's what makes you wise (remember scio me nihil scire).[spoiler=why human s.t.u.p.i.d.i.t.y is so dangerous]Even though there is probably always some person or persons truly evil at the top, it's not them who actually do the evil. It's all those s.t.u.p.i.d people who listen to them. Hitler didn't kill millions, s.t.u.p.i.d Germans did. Stalin didn't kill millions, s.t.u.p.i.d Soviets did. If retard Kim ever stop only empty talking and start doing something, it won't be him who will launch the missiles, it will be s.t.u.p.i.d Koreans. It wasn't retarded Popes or Cardinals yelling "she is a witch, he is a non-believer, kill them, burn them to death" who killed many innocent, it was s.t.u.p.i.d people who listened them. Obama is not really responsible for the damage he is causing, it's s.t.u.p.i.d people who voted for him, listened to him and still keep listening to him. It wasn't Bush who invaded a sovereign foreign country under false pretenses, it was s.t.u.p.i.d brainless American soldiers who do what they are told like puppets. It's always the same, s.t.u.p.i.d mobs, over and over and over again thorough all human history.
It's not Rothschild, Rockefeller and other retards them alike who are enslaving this world and destroying all the good there is, those don't really do anything, they are old and degenerated. It's thousands and thousands s.t.u.p.i.d people who work for them who are really responsible for all the evil, for billions people suffering. Think about that.
There is a few bad people making up their plots and intrigues, but they themselves don't do anything real. They are the same human being like the others, they are not better or above others, they were born naked and will die and rot naked. The only thing different about them is that they have this strange urge to manipulate, control and enslave other human beings. Their existence is not very surprising, there are all kinds of people so it's to be expected that even such retards will happen. What is a huge surprise, though, is that these retards always find a bunch of s.t.u.p.i.d sheepish servants who for an inexplicable reason are willing to not only listen to them but also fight for them their wars, kill the innocent people and do the harm to this whole world. And until the scientists find out what makes these s.t.u.p.i.d people behave s.t.u.p.i.d like that and listen to those very few evil mastermind wannabes, this will go on forever until the human kind is extinct.
Well, no, in general terms it's not hard to understand. As you say, for the new thread the info should be consolidated so I just may as well start writing some brief overview right now:
(the following is a draft)
To understand the OBELs and the reason why they "work" it's necessary to have a basic understanding of how the Options work in general.
For the following watch this page http://www.cmegroup.com/trading/fx/g10/euro-fx_quotes_settlements_options.html and you may also take a look at this formal introduction: http://www.cmegroup.com/education/files/options-on-futures-basics.pdf.
New things we see here is that the price range of the underlying security, EURUSD futures in this case (which is nothing else but a spot EURUSD adjusted by the forward points), is split into levels called "strike". These strike levels are further divided into two types, one is called "call", other is "put". There is also an expiry date.
Now, traders can write (create) and sell the call and put Options and they can also buy them, thus an Option has its own quote and this price is fluctuating based on several factors (the quote of the underlying, how much time remains to the expiry, perhaps supply and demand etc.; the quote is set by the exchange so whatever it is based on that's just that). So the Options themselves are being traded thorough the trading session, they have their open, high, low and close, as well their own Market Depth via which the actual offers and bids are done. When looking at the already finished trading session the price of given Option is called "settle", that's the information we will need to know later.
Simplified call and put Options mechanics
If you buy a call Option for 1350 strike it means that you can request the seller of such Option (this is done automatically via the exchange) to sell you EURUSD for 1.35, no matter what the current spot quote is. You don't have to request it if you don't want to, it's your right, not an obligation. You can exercise this right anytime from the moment you bought the Option up to end of the expiry date (this is true for the so-called "American Options"; there are also "European Options" that can be executed only at the expiry date, not before that; we are interested only in American Options). Obviously, you will exercise your right (you will "call" for his EURUSD) only at the moment when the (spot) quote is above 1.35 so that you could immediately sell his EURUSD on the (spot) market for profit (this all is done automatically via the exchange too, so you just indicate your will to exercise the Option and you get the profit).
Therefore, your motivation to ever buy a call Option is your belief that the price of EURUSD will rise above the strike level before the expiry date is over. Similarly, the motivation of a call Option seller would be the opposite - he would sell such an Option only if he believed that the price of EURUSD will rise above the strike level not until after the expiry (thus the Option he sold would expire worthless). And, logically, you can only buy a call Option if the current price is below the strike (otherwise there would be no Option seller to buy it from).
For put Options the situation is somewhat reversed. If you buy a put Option for 1350 strike it means that you can request the seller of such Option to buy EURUSD from you for 1.35, no matter what the current quote is. Obviously, you will exercise your right (you will "put" your EURUSD on the table for him) only at the moment when the quote is below 1.35 so that you could first buy cheap EURUSD on the spot market and then force him to buy it from you for more so that you make profit (again, this all is done automatically, you just "click" and get the profit).
Therefore, your motivation to ever buy a put Option is your belief that the price of EURUSD will fall below the strike level before the expiry date is over. Similarly, the motivation of a put Option seller would be the opposite - he would sell such an Option only if he believed that the price of EURUSD will fall below the strike level not until after the expiry. And, logically, you can only buy a put Option if the current price is above the strike.
Options Break-Even Levels
The above was a simplified explanation for buying/selling call/put Options. What was simplified here? We didn't take into account the actual price of the Option. Because if you buy for example a call Option for 1.35 strike, you can't rush into executing it once you see EURUSD at 1.3501 because the profit you would have made would be probably lower than the price you originally paid for the Option, so the expense would be bigger than the income resulting in a loss for you.
Therefore in reality for a given Option you first need to calculate so called Options Break-Even Level (OBEL, in short), that is the price the underlying security must at least reach so that if you executed your Option at that very time you would end up at break-even (income = expenses = 0 profit). The calculation itself is obviously very simple, you either add or deduct the Option price from the nominal strike level.
For example, for 1350 call Option the OBEL is 1.35 plus the price of the Option. That is, the EURUSD must rise not only to 1.35 but also a little bit higher so that if you execute your right to buy EURUSD from the Option seller for 1.35 and you sell it immediately on the market your profit would be equal to the price you originally paid for the Option.
Similarly, for 1350 put Option the OBEL would be 1.35 minus the price of the Option, so that you will be only interested in executing your right and thus selling your EURUSD to the Option seller for 1.35 if the market falls below 1.35 by that much that the profit you would have made would be equal to the price you paid for the Option.
So in other words, if you bought a call or put Option and now are thinking about executing it, you don't really watch the nominal Option level (strike) but the OBEL because that's the very point when (if exceeded, either up or down) you would start making an actual profit.
Now it should be clear why OBELs are so important. All those who bought Options want the underlying to cross OBEL from non-profitable (worthless) zone to the other side. All those who sold Options want to prevent just that. To better understand this it will be useful to look how the buying and selling of Options differs and who is a typical buyer and typical seller.
If you buy an Option you pay a little price. That's either the end of story (nothing more will happen, you won't execute the Option) or, if the underlying crosses the OBEL, you exercise the Option and have profit. So your possible loss is limited only to the original Option price, it can't be any higher. Your possible profit is unlimited, you don't know by how much the underlying rises or falls above/below the OBEL until the expiry is over.
If you sell an Option the situation is exactly reversed. When you sell it you get a little money immediately, that's the price you sold the Option for. This money is all your possible profit, you won't get anything more. Now either the underlying will not cross the OBEL and thus the buyer you sold your Option to will not execute it (and thus nothing else will happen to you thus you end up in profit), or it will cross and he will execute and you end up in loss. Your possible loss is unlimited, the same as his possible profit.
From the above it is clear that buying Options is relatively safe because the loss is limited. Anyone can buy an Option, there are no special requirements. However selling Options is not that safe, therefore to avoid a situation that you would be insolvent and unable to fulfill your obligation towards the Option buyer, if you want to sell an Option you are logically asked to maintain a certain deposit in your trading account. On the other hand if you are selling Options you get immediately some money that you can perhaps use for something else so that maybe even if the OBEL is crossed and your Options executed and you must fulfill and have loss, maybe that loss won't be that significant if in the meantime you have made a profit elsewhere using the money you got by selling these Options. In any way, Option sellers typically will be the bigger players, institutions, banks, whereas Option buyers will be smaller fish. But there is no reason why the bigger players couldn't be also the Option buyers and if the smaller players have enough money there is also no reason why they couldn't be the Option sellers too.
So we have these big and small Option sellers and small and big Option buyers. Now, some big players, or group of players, have power to move the (underlying) market, that's nothing new, we can see it every day on the charts. So it should be not really surprising that there are players who do both - trading (and manipulating) the underlying while trading the Options at the same time, i.e. selling call Options and then trying to keep underlying below the respective OBELs, or selling put Options and then trying to keep underlying above the OBELs, or buying call Options and then trying to push underlying above OBELs or buying put Options and then trying to pull underlying below OBELs. All variants are possible and you can see battles around the OBELs every day. Keep in mind that these are American Options which can be executed anytime. And also keep in mind that there are wide spectrum of players (scalpers as well as short, middle and long term traders) so even if the OBEL is crossed and thus the respective Options become worthwhile that doesn't automatically mean that the battle is immediately lost because not everyone will hurry at that very second to immediately execute his Options. That's why some battles continue and sometimes the underlying is even pushed back to the worthless side of the OBEL.
Being said all these basics you now need to think about it and use your common sense. Just because this is certainly possible to happen and is indeed happening it doesn't mean that it must happen or that it will happen every time. Guessing which Options are being sold or bought for these speculative purposes and thus around which OBELs you can expect the "sure" battles is the tough part. Also, sometimes a cigar is just a cigar so not every move of underlying around an OBEL must necessary be a result of manipulations and battles orchestrated by Options players.
So in conclusion, there is no magic to the OBELs, it's just a tool, rather a simple tool, that could help you if you learn how to use it.
Does this basic overview make sense? Please comment so I can polish this text.
Also, while writing this I realized what I was missing, the "mystery" I mentioned in my previous post, that is why OBELs calculated from yesterday matter today. It's actually very logical. The reason is that when you buy or sell Options you calculate OBEL at that very time using the Options cost you either had to pay (being an Option buyer) or you received (being an Option seller). So this particular OBEL will be valid for you from now on all the way till the expiration.
For example, yesterday you sold EURUSD call Options for 1350 strike. The price of these Options was $x, that's your income, so you calculated your OBEL and found out that the "decision point" for you is 1.3530. As long as the spot market price is below 1.3530 the one who bought Options from you will most probably not execute them and even if he will and you will have to sell him EURUSD for 1.3500 you will still end up in profit. Only if the market price rises above 1.3530 and the Options you sold are executed only then you will end up in loss. So 1.3530 is your OBEL and this is the OBEL that is valid for you for the whole time until the Options expire. Thus if you are a big player you will try the whole time to prevent spot EURUSD from exceeding 1.3530, no matter what the price of 1350 call Option is today or tomorrow or any other day. You already sold or bought your Options so for you only your particular OBEL from that time matters. Makes sense?
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