Tuesday, 5 December 2017

Lets Not Forget Discretionary Trading

I thought it would be a good time before the end of the year to show my updated discretionary trading workspace.

The key, the so-called holy grail, the magic or whatever you want to call it is looking at what orderflow is doing at support and resistance areas.

This is now and always. Nothing has changed in what we look for although the tools we use have been updated considerably with the technology.

I now manually trade only for an hour or two a day. Its usually the DAX when I'm in the European time zone but can be the ES and CL or 6E in other time zones.

I still use Market Profile, Volume Profile as well as the indicators you see on the chart below to find the areas where orderflow will reverse or breakout. The arrows around the bars on the NinjaTrader chart reveal what is happening inside that bar.

I keep it simple. No complications. The context is king and I make a trade when the orderflow is interpreted as favourable in each particular context. This is understanding what is PROBABLE when certain things happen and understanding that the action will happen X% of the time. When it is clear that the action will not happen then I exit. If the market moves against me but I was too early and the trade is still probable, I will double down at certain distances from my original entry. I will then cut if the trade is invalidated. I do this because mathematically it works for me.

The bottom indicator is the Squeeze. It helps identify breakouts with momentum after a pullback or sideways action. But its the orderflow that's the trigger.

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