- 845am Crude Oil Pace of Tape Slowed as price rises for a 2-step long pattern
o Then increases speed when price falls again
o Short term market bias is the short side
- 900am Good Speed, but sideways, not many patterns
- Dollar is flat, wide sideways range, multiple days
o Confirms the flat market on Gold & Crude Oil
- 10:30am Dollar rests on Prev High of Day (support)
o Overhead resistance on the Gold, Crude Oil, Euro
The market told us to be careful because we had flat price action, lack of follow through the on the first moves of the day, and the dollar gave us issues with support and resistance.
We were able to grab a few trades early in the morning, but by 10am the price had slowed down tremendously and we were trying to keep focused on the very best patterns along with SPEED and SIZE on the tape.
As price slowed down we also took some time to learn more about the Wave Indicator, which is one of our oldest tools of the trade, and its STILL a very powerful trading tool.
We spoke about the different ways to use this indicator, but we spent more time speaking about how VOLUME and the SPEED OF THE TAPE play into buying pullbacks or staying away from reversals.
Volume / Speed is the most important thing in identifying the difference between a pullback and a reversal, and we discovered the many ways to avoid getting caught up in this reversal.
Make sure you keep an eye out for a new video tomorrow that will discuss this very technique…
3 trades today, 2 winners, 1 loss
Our trade management style is the reason we are profitable!
+26 ticks, $260usd
Only 4 contracts needed to achieve this today!
See you tomorrow @ 745am EST for the live trade room session!
Ready To begin Your Trading Career As A James Wave Trader?
Our 5th video completes our Discipline Cycle, and the cycle returns 360-degrees to its beginning
Where did we leave off last time?
• In Video #1 we heard from Joseph James himself as he shared his story of how he developed the Discipline Cycle itself, and we were introduced to the First Phase, which is Discipline, to follow your rules and only take the very best trade set-ups according to your mechanical rules.
• In Video #2 we were introduced to Consistency, the second phase of this 360-degree cycle. This Consistency in your trading comes from seeing the same patterns and the same set-ups with ‘consistency’ you will begin to see the same ‘consistency’ in your trading as well.
• In Video #3 we learned about Confidence, the Confidence in our Set-Ups, Rules and entries
• In the 4th Video we develop a sense of Patience in our trading, which allows us to wait for the very best opportunities to present themselves in the market
In this 5th video lets wrap up the Discipline Cycle:
Profits!
Remember…
• Discipline Cycle® begins with Discipline to follow those rules,
• Discipline leads to Consistency in your trading,
• That Consistency leads to Confidence in your trading!
• Confidence develops the Patience to wait for the best trading opportunities!
• Patience to wait leads to Profits!
Here is your final look at our Discipline Cycle diagram.
Do you have a suggestion for another video series? E-Mail JJ@SchoolOfTrade.com!
Hope it helps…Stick to those Rules!
See you in the Live Trade Room tomorrow @ 745am EST
Ready To begin Your Trading Career As A James Wave Trader?
You open your charts @ 8:00am EST on Monday, and you begin to prepare for the trading day ahead.
You set up your indicators, you mark support & resistance, and you get your trading DOM ready.
You go over your trading rules, you remind yourself about trading with discipline, and you’re alarm goes off @ 9:15am EST to warm you of the US Market OPEN at 9:30am EST.
The market opens; you begin to watch for price patterns, volume, momentum, market profile, and numerous other techniques you’ve learned.
A breakout pattern begins to set-up; you check your rules, no news coming, so you get into your first trade with confidence.
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2
3
4
5 Seconds go by…what do you do next?
Should you let the trade run?
Should you cut the trade early to avoid a loss…but also avoid a win?
There’s no rule for this situation, price is just sitting there, doing nothing!
This story is something that all traders can relate to.
Your rules line up perfectly, but the trade doesn’t work out as planned…why not?
What else can we look for? What other indicator (if any) could you enlist?
I learned the importance of SPEED a number of years ago, and it was just as important as learning to read tape and volume information in the market.
What is speed? And why should we pay attention to it?
Speed is one the things you learn with experience as a trader.
More time in the market and you learn the difference between a FAST & SLOW market, and with that distinction you can then avoid times in the market when it appears to be “slow”
Ask any experienced trader what “slow” means, and they have trouble expressing it though, it’s a discretionary approach to reading the market.
Speed is important to traders of all shapes and sizes:
• Scalpers
• Day Traders
• Position & Swing Traders
No matter what asset you trade or timeframe you use, we all watch speed in the market to tell us when the odds are in our favor.
Speed is defined as the rate in which the market is moving, and this ‘speed’ can be seen in many places in the markets we trade:
• Speed at the Open
• Speed at the Close
• Speed of the Time & Sales Window
• Speed of the Patterns Developing on your chart
• Speed of each Pattern Triggering according to rules
• Speed of the Follow-thru after the pattern triggers, filling your profit targets
• Speed of the Continuation of the move, rather than the failure
• Speed of the Exhaustion of the move
• Speed of the Reversal of the move
• And the process starts all over again….
There are lots of times when speed is important, but let’s focus on the big three:
• Speed of Tape
• Speed of Set-up
• Speed of Follow-thru
Speed of Tape
This is the speed of the orders coming into the market, and can be seen on your time & sales windows.
Some traders will use technical indicators that measure the pace of the time & sales window to measure its speed, but many traders will also rely on their 2 eyes to do the work.
We want the speed of the tape to be as fast as possible at your time of entry, and we watch the speed of the tape throughout the entire move.
From entry to exhaustion, the speed of the tape is the most under-valued tool for understand when price will turn around and reverse, which makes the speed at the time of exhaustion a very effective way of identifying when to exit a trade or take profits.
Speed of the Set-Up:
Look for the patterns to set up quickly, in fact, we like to see less than 5 minutes for the pattern to develop. This can be applied to slower timeframes with a multiple of 1 x your fast timeframe chart (email me for more info on that if needed).
As the pattern is setting up we look for it to do so quickly. We don’t want a pattern taking too long, so look for the ‘slow’ times in the markets to also show patterns that are ‘slow’ as well.
Time is NOT on our side, and the longer the pattern takes to trigger the entry, the more dangerous it becomes.
A good example of a simple rule to use: if the pattern takes more than 5 minutes to trigger, wait for the next one, its taking far too long to trigger.
Speed of Follow thru:
This aspect is vital to your long term success, and it’s the difference between a 10-tick winner and a 100-tick winner.
Do you know when to hold it and when to fold it?
Speed of the follow-thru describes the way the trade finishes up:
• Did the trade go for 10 ticks in 10 minutes?
• Did the trade go for 100 ticks in 10 seconds?
• Is the market EXPLODING after a few ticks in your direction?
• Is the market STRUGGLING to move in the direction of the trade?
• Is it happening fast? If not, this market is one to avoid
Simply put, if I notice that my trades are only going 5-10 ticks in a very hesitant move, I will be very careful trading that market because its not showing the likelihood of moving in large chunks, which makes us more money.
Beware of trading a market that is slow to move after entry, it will make it hard to recover from a loss, or to make any real profits that day because it lacks the ‘follow-thru’ it needs to be a wide-range market for that trading day.
What tools do we use to watch for speed in the market?
• Time & sales window
• Fast timeframe (1-min, 4-Range, 89-Tick)
• Technical Indicators that measure the Pace of the Tape
No matter what type of trading you do, your level of experience or your objectives as a trader, SPEED will always have a very important part in your trading decisions.
Understanding how to use speed won’t happen overnight, but with the time in the market you need to gain the experience, SPEED will always be the most effective way on increasing the CONSISTENCY of your trading in the future.
Tomorrow morning when you open your charts, take a minute to consider the SPEED of the tape, the set-up, and the follow-thru of the market you are about to trade.
Your hard earned risk-capital will thank you for it!
Busy Friday! Dollar Index Correlation saved us today! Back Monday @ 745am EST
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SchoolofTrade.com Daily Commentary 03-05-10
We expected to see a VERY busy morning today with Non-Farm payrolls out @ 830am EST today, but it never really got into high gear in the markets we trade!
We watched the Dollar Index Futures correlation with Gold Futures and Crude Oil futures, and today’s video tells the story!
See you Monday @ 745am EST
Ready To begin Your Trading Career As A James Wave Trader?
49 Ticks LIVE Today; Non-Farm Payrolls Tomorrow @ 830am EST Don’t Miss it!
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We had another great day in the live trade room!
We made a handful of points in Crude Oil & Gold Futures!
We used the Dollar Index Futures to tell us when it was ok to look for patterns!
The day started off pretty slow, and we were expecting that.
Yesterday was very slow, and Friday (tomorrow) is Non-Farm Payrolls @ 830am EST, so we anticipated that the BIG MONEY would be sitting on their hands waiting for the news tomorrow.
We opened our charts and saw:
- Red Pace of Tape < 100 across all markets
- Gold & Crude Oil Futures sitting on their OPEN of the day
These two things told us very quickly that we had a flat market that was very slow.
Think of it this way…
If the market is sitting at the OPEN, it is likely to be a challenging day b/c there is very little buy/sell pressure in the market.
If there was ANY pressure in the market in one direction UP or DOWN, the market would NOT be sitting at the OPEN, it would be trading at its Highs or Lows.
So the market sits on its OPEN, that tells us to wait for the pressure either up or down develops, which will give us a higher percentage possibility of having a LARGER winning trade.
With that said, we knew we had to wait for this market to wake up for us to trade, and it certainly did, but we had to wait a little while.
830am EST had Jobless Claims Reports, and we were able to grab some volume from that and get our first trade of the day taken,…a winner on Crude Oil Futures.
5 trades today, 4 winners, 1 loss
Our PATIENCE and attention to DOLLAR INDEX FUTURES helped us tremendously today!
+49 ticks, $490usd
Only 4 contracts needed to achieve this today!
See you tomorrow @ 745am EST for the live trade room session!
Our 4th video of this 5-video series we talk more about the 5 evolutionary stages to our Discipline Cycle.
Where did we leave off last time?
• In Video #1 we heard from Joseph James himself as he shared his story of how he developed the Discipline Cycle itself, and we were introduced to the First Phase, which is Discipline, to follow your rules and only take the very best trade set-ups according to your mechanical rules.
• In Video #2 we were introduced to Consistency, the second phase of this 360-degree cycle. This Consistency in your trading comes from seeing the same patterns and the same set-ups with ‘consistency’ you will begin to see the same ‘consistency’ in your trading as well.
• In Video #3 we learned about Confidence, the Confidence in our Set-Ups, Rules and entries
In this 4th video of this 5-video series we get introduced to the 4th phase of the Discipline Cycle:
Patience
Just ask my Grandma…
Patience is one of the most important skills you can develop in anything you want to do, and trading is no different.
This is the Patience to wait for the best patterns, for all your rules to line up…this is the PATIENCE to wait for the very best opportunities in the market!
Without this patience, we risk taking trades that should be avoided, and this will hurt our long term success.
Remember…
• Discipline Cycle® begins with Discipline to follow those rules,
• Discipline leads to Consistency in your trading,
• That Consistency leads to Confidence in your trading!
• Confidence develops the Patience to wait for the best trading opportunities!
What’s next?
Keep an eye out for the 5th and final video in this series to learn the final evolutionary phases of our Discipline Cycle…you DON’T want to miss the rest of this series!
Ready To begin Your Trading Career As A James Wave Trader?
40 Ticks LIVE Today; 1-Contract Trading Webinar TOMORROW!
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Very challenging day today in the markets we trade.
The markets gave us some good clues this morning when we opened our charts:
- Red POT on Crude Oil @ 830am < 100
- Flat Trigger Lines on CL and ALL the same price level, also a BIG ROUND NUMBER = sideways, beware!
- Breaker Short on Gold took > 10 mins to trigger…still waiting…
- Lack of BIG MONEY in the market!
- Trading @ its OPEN of Day (Gold, Dollar, Euro)
o We consider the OPEN of the day to be the ZERO LINE, above/below will show buy/sell pressure.
So after listening to what the markets were telling us today, we knew one thing….be careful.
Our concerns were certainly justified today… we waited for patterns, and when they set up it became very apparent that we were lacking a lot of the fundamentals that we look for.
- Momentum would NOT confirm
- Flat Dollar at all times
- Lack of BIG MONEY to confirm the entries
So without our rules lining up as we like them, we were forced to use patience and discipline to sit on our hands and wait to see if the market made any changes to the way price was moving.
Remember, our RULES are what made us money this week, and we cant forget that. We cannot decide to deviate from those trading rules SIMPLY b/c we didn’t see many patterns today within those rules.
Patience is key, we will be back here tomorrow looking for more!
2 trades today, 1 winners, 1 losses
Our trade management style is the reason we are profitable!
+4 ticks, $40usd
Only 4 contracts needed to achieve this today!
See you tomorrow @ 745am EST for the live trade room session!
Ready To begin Your Trading Career As A James Wave Trader?
We opened the trade room today @ 745am est and as expected..
• Red Pace of Tape
• Flat Trigger Lines
• Flat Dollar
• Very Little News to spark the price action
So we have a slow, flat market that doesn’t want to break out of its tight trading ranges
This includes the DOLLAR INDEX, which we’ve been watching for weeks now as a VERY consistent indication of price movement on the Gold Futures and Gold Futures.
One of the most efficient ways we use the dollar is to confirm avoiding a trade. It’s very easy; if the dollar is flat and slow, we need to be careful on the Dollar & Crude Oil.
With that finger on the pulse of the market we knew how to avoid a lot of trouble, and our quick exits should be example of that.
We don’t want to let trades get too far against us in choppy markets, so we cut losses EARLY>
The DOLLAR INDEX was a very efficient way of doing that today.
This CONFIDENCE in our trading enables MONSTER trades like the one we saw TODAY @ 1045 on GOLD FUTURES.
Traders often miss the importance of small LOSSES. Small losses earlier on in our day enabled us MENTALLY to be in a position to be in the market at the right time.
The Dollar was sitting on Resistance, and we were looking at the Gold Futures…
We got a little lucky on the SIZE of the move, but we know LUCK favors the PREPARED, and we were locked and loaded when the time came to pull the trigger, so congrats to all the members who made money today, even if there was a little extra help from the market
Watch the video for the details on that trade, it’s a keeper!
9 trades today, 7 winners, 3 losses
+132 ticks, $1320usd
Only 4 contracts needed to achieve this today!
See you tomorrow @ 745am EST for the live trade room session!
Ready To begin Your Trading Career As A James Wave Trader?
Our 3rd video of this 5-video series we talk more about the 5 evolutionary stages to our Discipline Cycle.
Where did we leave off last time?
• In Video #1 we heard from Joseph James himself as he shared his story of how he developed the Discipline Cycle itself, and we were introduced to the First Phase, which is Discipline, to follow your rules and only take the very best trade set-ups according to your mechanical rules.
• In Video #2 we were introduced to Consistency, the second phase of this 360-degree cycle. This Consistency in your trading comes from seeing the same patterns and the same set-ups with ‘consistency’ you will begin to see the same ‘consistency’ in your trading as well.
In this 3rd video of this 5-video series we get introduced to the 3rd phase of the Discipline Cycle:
Confidence
Confidence is like OXYGEN to a trader.
Without Confidence we may last for a few hours, day, weeks, but eventually we will die from lack of confidence as our trade account dwindles down lower and lower each stop we take b/c we don’t have the confidence we need to take only the BEST patterns defined by our rules.
A professional trader would trade thousands of dollars for an ounce of confidence b/c we all know that a confident trader is a profitable trader, and without the confidence, traders know they won’t last long.
Remember…
• Discipline Cycle® begins with Discipline to follow those rules,
• Which leads to Consistency in your trading,
• That Consistency leads to Confidence in your trading!
What’s next?
Keep an eye out for the 4th and 5th videos in this series to learn the final evolutionary phases of our Discipline Cycle…you DON’T want to miss the rest of this series!
Ready To begin Your Trading Career As A James Wave Trader?
Dollar Index Futures & Correlations to Crude Oil & Gold Futures Trading
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Scalpers, Intra-Day, Position & Swing traders alike benefit from the correlations seen between the US Dollar Futures Index (DX) & Commodity Futures such as Gold (GC) & Crude Oil (GC).
The US Dollar Index Futures is one of the most widely-recognized electronically-trader markets in the world.
Comparing the USD against a basket of major currencies, this futures index has relatively low daily trading volume compared to Euro or Pound, and is primarily used for its strong correlations to aid traders in many different situations.
Professional traders watch the Dollar Index at the times it is most active, which occurs from 8am to 12pm EST during trading days.
The times also correspond well with Crude Oil & Gold futures, which also see more activity at these times as well.
There are many ways to use the US Dollar Index for trading opportunities, but most traders find the DX to be most consistently-used as a filter for high-risk trades.
Let’s first discuss the basic correlation that traders use.
There is a negative correlation between the DX and almost every other market that traders watch.
The Dollar is negative to other currencies b/c it’s the world reserve currency, and it’s negative to commodities b/c of the simple laws of supply and demand.
Let’s focus on the correlation to Gold & Crude Oil Futures.
When the Dollar is rising, Crude Oil & Gold falls
As traders, there are lots of different times in the day when the dollar begins to move more dramatically, such as the open of the US Markets @ 9:30am EST, before and after major news events such as Jobless Claims Reports or FOMC News.
We look for the Dollar to begin its trend, and using the negative correlation between these markets, we look for crude oil & gold opportunities to the opposite of the dollar’s trend.
When the Dollar is trending, traders use Breakout Patterns to capitalize on this correlation
With the dollar rising, look for high-percentage entries to the short side of Gold or Crude Oil Futures.
When the Dollar is flat, the Crude Oil & Gold is flat
Most traders will use the Dollar correlation as a filter because it allows them to avoid high-risk entries on Gold & Crude Oil Futures.
Without a trend on Dollar, the Gold & Crude Oil Futures also show flat price action, and tend to reverse their current trends often.
The dollar has a tendency to get very choppy during indecisive times in the market, and we tend to stay away from higher-risk trading on Crude Oil & Gold during these times.
When the Dollar is Flat, Traders use Trend-Reversal Patterns to Capitalize on this correlation.
Another important thing to watch on the Dollar is key Support & Resistance around simple chart patterns.
For example, using a Head & Shoulders pattern on the Dollar, traders will avoid trading Gold & Crude Oil when the Dollar attempts to complete the trend reversal.
Smart traders will wait to trade the reaction to the move around these extreme levels, rather than trying to be the first to enter the market when the Dollar here.
In closing, the Dollar Index Futures can be used very effectively with a negative correlation with many of the market we love to trade.
Of all the uses for this index, the most effective way most traders use the Dollar is as a filter, to avoid taking high-risk trades on other markets such as Crude Oil & Gold.
Ready To begin Your Trading Career As A James Wave Trader?
We opened up the live trade room this morning @ 745am EST and we noticed the market trying to tell us a story:
• Monday morning
• Red Pace of Tape (slow speed of the market)
• Flat Trigger Lines (sideways market)
• All Trigger Lines were the same price level (broad sideways market)
• Dollar Index was sideways (caution)
• Dollar Index has triple-top overhead resistance (negative correlation)
Since it was a Monday, we had to beware of a slow start. The same reasons why YOU don’t want to get up on Monday is the SAME with other traders, so we wait to see if volume will be an issue on Monday’s always.
In addition, we also saw Red pace of tape indicator and flat trigger lines across all timeframes.
Red pace of tape shows slow price action speed, and flat trigger lines tells us that the market as a WHOLE is sideways, everything from Daily charts down to Minute charts…sideways.
We then looked at the Dollar Index today, and we noticed 2 key components:
• Slower timeframe had overhead resistance w/ triple-tops
• Fast timeframe was flat and sloppy, no trend
The slower timeframe tells us to BEWARE trading when the Dollar Index is trading into MAJOR resistance/support, which it was.
The fast timeframe on the Dollar Index tells us we need to wait for it to begin trending. We like to avoid trading ANYTHING when the dollar is flat like it was today.
So we had to be cautious with the Dollar looking like it was, and our patience always pays well
Today was a challenging day, we took 5 trades, 2 of them were winners BEFORE 930am EST, and then we managed to give back a few ticks, but for the majority of the morning, the Dollar Index kept up on the sidelines, where we belong when it trades like it did today.
5 trades today, 2 winners, 3 losses
+18 ticks, $180usd
Only 4 contracts needed to achieve this today!
See you tomorrow @ 745am EST for the live trade room session!
Ready To begin Your Trading Career As A James Wave Trader?
