Wednesday, 3 February 2010

The Day After the Day Before, Again

Today was a typical day after a trend day. The feature of these day after days is  that the market is two way rotational, absorbing the previous day's action. Sometimes it just takes out the trend day's high, sometimes it fails to do that which gives you some good information.

It's just before New York lunchtime as I write this and the market has acted as expected. On these types of days we look to take profits at resistance. If there is a later breakout then we change tactics and look for a re-entry. These once or twice a month trend days provide a different type of opportunity when they live up to your vision of the day. I usually bracket the last distribution(s) as the expected range for the day.

Click to enlarge


  1. Any reason why you did not enter trade #2 2 bars prior?

  2. I am pleased to say that I got every one of those trades today at the same price/time/bar. (I also had a gap fill trade which was nice but not a EL Setup). Thanks EL for your patient help and education.

  3. Curious as to why you are using MarketDelta and not Investor RT with Market Profile? Are you using the bid ask footprint charts, or any of the other stuff unique to marketdelta?


  4. I also took trades #2 and #3 (I wasn't trading for #1), along with the same gap fill (I assume) that bakrob99 took. Unfortunately, I took a few trades I shouldn't have too, which hurt the bottom line.

    The trades that have given me trouble are when we have a fully developed distribution and I enter when price crosses the EMA caused by order flow from the edge of the VA, lets say selling from the DVAH for example. Usually once I enter these type of trades the market reverses fairly quickly, chopping me up in the process. Do you generally either enter earlier or not enter at all on order flow coming in from the edges of developed distributions?


  5. EL,

    Thanks as usual for an informative post. Quick question...what kept you away from the long at 9:35 or possibly a later entry at 9:40?

    Mike L

  6. Hi Tom,

    Is there someplace on your blog you could direct me with more of the specifics of "how" you decide on which Bar you are entering? I have scanned back through the posts, but I have not been able to come up with anything that describes the specifics of how you are determining Filtering out those potential entries that do not appear any different than the one you end up taking. I am sure I am missing something obvious here, and I hate to ask you to repeat something you may have already explained, so just point me in the right direction and I am happy to re-read material.

    Similar to Anonymous post above, I have the same types of question about the bars to the left of your entry. The 4th bar to the left, at 10:11am EST my time, shows VB support to short, Cum Vol Delta as you have said lags, so not keeping me out there, the 45 CCI is losing momentum, the 6 CCI is the only one that I guess might have kept you out, as it was heading up to the zeroline, and I think I recall reading that you like to wait, and make sure it won't plow up above the zero line. In that is the case, then I understand why you would not enter on the 10:11 Bar, but then what I am missing is why not the 10:12am EST Bar as the entry? In this case, now on that Bar, even the MomDot is "above" the Candle, and even the 6 CCI has now shown rejection off the zero line from below.

    Now, to be honest, I am still struggling with this "Intrabar" entry methodology, so please forgive me, but if I had entered on that 10:12 am Bar, I would have had my entry sitting at the low of that Candle of 1096.75, on the next bar, I would have been in and taken 1.75 pts of heat before it rolled over. Grant it, a 2 Pt stop survives the assault, but it's not the type of trade that I know you like to take, where the Momentum is taking you into your first targets rather quickly.

    As I said, I am happy to do the heavy lifting here, if you would be so kind as to point me in the right direction as to where I can learn more about the specifics of your entry technique.

    Thanks so much for your sharing !!!


  7. Would love to hear some more about your re-entry techniques.


  8. Anon 19:44, I didn't enter because support was holding.
    bakrob99, good on you!
    MikeL, Chop!
    AaronP, if I am leaning against DVA or VA, I trade in the direction of range extension from as close to the top/bottom as I can. Some of these trades are outside in so you need that good trade location.
    Richard, the "how" is up to your trading plan. If I, and Kiki, had not done this work the belief in how you are trading is not there and you will risk filtering out the winners and keeping the losers. I think that just about everything I look at has been explained in the blog. I look at the snapshot picture at the close of every bar to make my decision based upon processing the info. This stuff is not mechanical although some setups can be made that way but then your win rate is lower and the mechanical exits are poorer.

  9. EL,

    One more for you answered AaronP's question with the term "range extension". Can you clarify this? I take it to mean in the direction of the trend for the day but that may be incorrect. Thanks!


  10. EL: thanks for all the great information. I am still confused about the meaning of "Inside-out" trades versus "Outside-in" trades. What specifically are you referencing with the term outside/inside? Is it Value, Keltner channel, trend...? You have said that all (or most?) of your posted trades were "Inside-out". I can see that these are generally pull-back trades to the center of the K.C. and entered in the area of the fast EMA in anticipation of trend continuation. However, there are several trades that were initiated from outside the K.C. which appear to be reversals.

  11. MikeL, Range Extension is a Market Profile term.
    Without endorsing anything else on the site, I found this nice explanation of it:
    Anon 13:08, Yes Outside in are the traades usually at the extremes of the KC and they lean against Profile S&R