Putting Things Into Perspective
Both major
markets closed mixed for the week with ES
closing down six and the go-go Nasdaq tacking on four. So call it a stalemate on
the weekly charts as price vs. momentum divergences battle it out with daily and
weekly uptrend supports which remain in place.
In terms of the intraday trade, so long as the daily trends remain up, and in
light of some of the low-fuel gauges popping up from time to time, some of the
better trade opportunities have been of the bungee variety as price either
extends or retraces in air-pocket fashion. Should you favor reversals, waiting
for one- or three-minute trend turn signals to guide entries on the reversals
have been helpful in avoiding getting caught in the extreme, yet often
unsustainable intraday long and short squeezes, which may continue to be the
case as we head into next week.
Let’s go to the charts, and then follow up on the issue of market rhythms and
last week’s column.
S&P 500
src=”https://tradingmarkets.com/media/2003/Don/dm091203-01.gif” width=”574″ height=”617″ />
Nasdaq
src=”https://tradingmarkets.com/media/2003/Don/dm091203-02.gif” width=”570″ height=”610″ />
Moving Avg
Legend: 15MA
Larger Timeframe 15MA
See https://www.donmillertrading.com
for Setups and Methodologies
Charts © 2003 Tradestation
Weekend Musings
Market Rhythms
Over the years, I’ve had several discussions with
traders on market rhythms.
Last week’s column
— which by the way resulted in a flooded mailbag at this end (more on that
later) — seemed to stimulate interest in the “rhythm” issue, among other
topics. To this point, I’d like to first play devil’s advocate a bit with the
methods that I use in my trading and teachings — methods which reflect a single
market viewed in various timeframes.
I’ll start by asking myself, “Well, of course the charts look simple after
the fact Don … if you look at enough timeframes, you’re bound to find a trend or
setup.” Heck, just look at the above charts and those that we’ve been
reviewing on a daily (and now weekly) basis for over two years now, and such a
point can easily be made.
Yet ironically, such a statement actually serves two useful purposes. First, the
comment challenges the method — which I believe is not only highly appropriate,
but is highly constructive for it keeps us on our toes as we constantly
challenge ourselves and our methods. Yet second, the statement actually gets at
the beauty of trading a single market for short-term traders. For while many
traders prefer the tactic of trading similar patterns in different markets,
single market traders can search different timeframes within the same market to
find opportunities.
Find the 13-minute timeframe is choppy? Great, check the three-minute or the
hourly. And while such a strategy requires strong mental flexibility and both
the desire and willingness to trade more or less frequently at times (which
won’t apply to everyone) as well as the cognitive ability to view one timeframe
relative to one or two others, such “scanning” is really no different than
monitoring different markets. As with any strategy, it’s not for everyone, yet
if you devote yourself to finding which timeframe is “in play” at any given
time, you may find your setup opportunity count increased over time.
Last week’s Column
As I mentioned above,
last week’s column
generated responses that were not only large in number, but extremely deep in
emotion. And as we pause to remember the tragic events of two years ago and put
life and this business in proper perspective, I’d like to take a moment and
reprint a response I provided one reader that challenged my comment that being
“out of tune” with life and God had any impact on one’s trading.
For those who don’t believe such an issue belongs in a trading column or have
other beliefs, I greatly respect your views and wish you the best of trading
weeks beginning on Monday — you can simply stop here. Yet as I’ve said over the
past few years, you get all of me here … the successes, the struggles, and the
beliefs — they’re intertwined.
—————
For those that decide to read on, my response was to one
particular trader who was surprised to find a religious reference in a trading
column, and who, like many of us, had been through some tough times sifting
through the educational wheat and chaff of the trading world.
Here is an except from my response:
…Now I’m certainly not suggesting God can turn someone into an effective
trader … as I’ve said over and over, I believe trading is one of the most
difficult skilled crafts one can pursue, not unlike a surgeon, pilot, or
professional athlete. Yet I am certainly commenting in my case on the strong
linkage between the ability to perform any skilled craft and a higher strength,
as many Christian athletes have experienced and witnessed. As I mentioned a few
months ago, Normal Vincent Peale’s “The Power of Positive Thinking” does a much
better job at discussing the linkage than me … specifically, Chapter 3
entitled “How to Have Constant Energy”, which discusses a rhythm of every job
… and for many, trading is indeed a job. All I can do is share my own
experiences of when my life and performance (in anything) excels and when it
suffers. Based on the weekend mail, it seems many share similar experiences.
If you’d like to pursue the thought further, Peale’s book (the title is somewhat
deceptive) may be a good place to start. I know of other traders who consider
Peale’s insights to be useful. I’d also welcome a phone call, no “selling”
intended whatsoever. I’m sorry to learn of your experiences which most of us
have unfortunately gone through to some degree, some more than others.
I hope that helps clarify my comments a bit, and enjoy the rest of your weekend.
I’ll leave it at that. May God Bless the
families of those affected by the events of two years ago.
Good Trading and Have a Great
Weekend!
E-Mini trading
video course and
simulation
courses