Tuesday, 23 February 2010

See the Leaves

Sometimes you can't see the forest for the trees and sometimes you need to know that a tree is made up of branches, trunks and leaves.

There were a couple of comments by cleon that I want to repost here because it was so well said and summarised, that everyone will benefit from reading it and applying what he said:

EL - Thank you and Kiki so much for taking the time to share your thoughts on the web. After reading the entire blog twice w/comments, and watching both webinars, I think it's interesting that most people are so focused on your indicator settings. It's kind of like getting hit by a car and worrying about what kind of tires it had, vs maybe not walking on the highway at night.

Anyway, I trade a similar chart as you http://snipurl.com/ugh06 which I am comfortable with, but thought that I would share what my takeways were from your very insightful posts. These are ideas that you presented that resonated with me, in no particular order:

Keep it simple and trade one chart (I realized I was looking at WAY too many marekts and timeframes looking for that perfect signal confirmation - and hence actually missing alot of great trades)

Don't forget that candles represent order flow and can be very useful for gauging sentiment (added back some key candles like engulfing and piercing and coded them to highlight bars in yellow when coinciding with delta divs)

Setups are really just a tool to get into a trade that has a contextual basis (focus more on what the market is telling you, and use the setups to execute against that vs just searching for setups all day long)

Location, location, location (similar to above)

Use your statistics to improve your trading, not just to track your performance (my biggest issue right now is my exit strategy, or lack thereof, and the way to fix that is to look back at what my trades do time and time again)

Trading the market profile should be an ACTIVE process (I realize that I am looking at the profile in a very static manner, and should really focus on learning how to read what it's telling me real-time, and to look back at previous profiles with a much more critical eye, decomposing prior price action)
Needless to say your blog has inspired me to spend less time tinkering with my layouts, and much more time going back through charts and looking at how price acted around various MP pivots. Market replay is vastly underrated, and to your often repeated point, it will benefit me much more to do this exercise myself, then to simply ask YOU how price trades around VAH. Thanks again for producing one of the most honest and useful trading blogs on the net, and sharing the story of your and Kiki's road to CP!

I almost forgot, the other key takeaway I had from your presentations is to really KNOW YOUR INDICATORS (I realize my indicators are fine, but I haven't put nearly enough energy into REALLY understand what they are telling me - they are so much more than just setup highlighters...they are giving you information about what is happening in the market at any given point in time). It was obvious to me from your blog that you really know your tools, and that is probably far more important than the tool itself!
Trading is an endeavour that requires me to go with the flow. I have to focus on what is happening. My job is to process the information that my tools give me and make trading decisions based on the information I receive. If I focus on indicators rather than on the total picture, I am looking at the leaves rather than the forest. By looking at the total picture and being part of the market I am assessing and weighting the total information I get in an intrinsic manner rather than looking at each of the components.


  1. Setups are just a tool to get you in the trade. Very good point.

    In terms of context Tom, you often mentioned that it is very necessary to create a possible scenario in your had to be prepared and take the right setup at the right spot in the right context.

    In regards to market profile, how important is the open (type) the trading away, back, through and around that level to create the scenario of a developing day?

  2. Hi Kiki,
    Hi Tom,

    This is my first comment for a blog. I truly consider your blog as one of most interesting blogs (on trading). I also want to thank your daughter and you for this wonderful work. I really appreciate your efforts!

    I wonder what you think about Renko or Kagi charts... What do you think about them? Have you ever thought about using Renko instead of Range bars? What is your opinion on them?

    Good luck to you and all the other posters on this blog.

    Once again, thanks a lot, Kiki and Tom!

    Should you ever visit Austria, please feel free to contact me at samer11 (at) gmx.at. I will be glad to welcome you here.

    Best regars,
    Thanks a lot!


  3. First thanks a lot for your excellent "Net-Mentorship", an excellent site to learn from!

    The most difficult part of trading for me is to have the patience to wait for the entry moments when all parameters are aligned, hard, hard.

    I noticed on friday you used STOXX50 with 5 bars range, stop at 5 ticks?



  4. timokrates, I've not been good at recognising open types until after the fact. I use the open to look for price acceptance or rejection and, of course, the gap trade.
    Samer T, Renko is quite similar to range bars. I don;t use them because range bars work for me and "what aint broke....."
    Martin, STOXX50, my drop dead stop is 10 or 11 ticks. Getting lots of losing trades taught me patience. It took a while though.