Brian Hoffman Trading Log

Trade Video Post With Commentary From The BH Trading Site

2011-02-06T14:27:00.002-05:00

CLICK HERE FOR THE LIVE TRADE VIDEO WITH COMMENTARY

Brian Hoffman Trading Website Released

2010-11-01T00:33:00.008-04:00

www.brianhoffmantrading.com

The new site is up. I still have a lot of content and features under development. Please check back frequently for updates.

I will continue blogging but it will be mostly in video format on the new site. The writing portion will be supplemented with articles on the new site.

I built this website mostly from scratch after months of trial and error. Everything on the site is something that I would want to see as a trader.

My intent is to provide a site where new and experienced traders can go to see the reality of trading.

There will be no gimmicks or smoke and mirrors.

It is bad business to be honest about this business but I am going to continue to press forward with my vision.

My basic premise for development was to create what I could not find online when I quit my corporate job to pursue a career as a speculator.

I want to show the good, bad, and ugly side of trading through various sources of media.

Please forward the link to other traders. There more feedback the better. I am willing to take this a long way if there is interest.

Live Trade Video With Desk Cam And Commentary

2010-10-30T19:40:00.004-04:00

CLICK HERE FOR HD VIDEO WITH AUDIO COMMENTARY AND LIVE DESK CAM

The new website should be ready later this weekend. I have a lot more to do with it but there is already quite a bit of good content.

I will continue doing posts here occasionally but will be focusing on frequent live videos and video blogging on the new site.

My goal is for reality trading. Good, bad, and ugly. I already have some pretty raw video in the tank from the past few weeks. Everything I do is being recorded.

I will supplement with detailed articles a few times a month on the site as opposed to daily blog post.

Here is an excellent video of a trade I had on Friday. It was a decent wholesale entry with the premise of looking for a squeeze.

I got the squeeze I was looking for then anticipated some follow through. In the video, I talk through exactly what I am seeing and thinking.

I start to get frustrated when the price stalls out and you can hear it in my voice. I was looking for a continued move up but my gut and experience was telling me to cover.

It is tough on the TF to hit moves greater then 20 or 30 ticks if they do not just explode. The ones that stall then blast off in your direction tend to shake you out at the last moment.

Then the ones you stubbornly hold repeatedly take back all the open equity. My best results come from letting the big moves happen naturally.

This makes for some frustrating 15-20 tick scalps off 50 tick moves. I did cover this trade for a scalp and it was the right thing to do.

All Of Today's Trades Video Edited To 3.5 Minutes In HD With Audio

2010-10-21T19:22:00.005-04:00

CLICK HERE FOR TODAY'S TRADES WITH AUDIO AND POP UP WALK THROUGH

I wanted to see how fast I could produce a video of the entire day's action. This is a beta test for some of the content that will be on the new site.

Good fight today after fumbling an order this morning in a bizarre turn of events. This kind of thing needs to be factored into your production expectations.

My reality trading concept has definitely had some good moments in the past couple days.

Trade Video With Late Day Donation And Pen Launch

2010-10-20T23:14:00.004-04:00

CLICK HERE FOR HD LIVE TRADE VIDEO WITH COMMENTARY

I have been having profitable mornings and then giving some back in the afternoons for the past few sessions.

Something that I am certain about in my trading tactics is that the market is often very efficient and even though there are many good setups throughout the day, only a few provide a true inefficiency to exploit.

I have had longs close to the lows each morning and taken 10-20 tick scalps even though I had an expectation of a larger run. This is part of my high probability tactic.

Today I was bullish and hit the initial long. I premise for the market to move up but did not see anything else I had conviction on until very late in the day.

My trading style is one of conviction. I could either hit all setups and play ratios or hit select areas and expect to win. I have found that simply playing ratios offers little edge in my own trading and perform better by hitting singles and doubles with high probability scalps.

Today was an example of seeing a late day trade that is often a winner for me any other time of the day. I usually do not trade after 3:30 PM EST unless I am already carrying positions because the price is prone to late day covering.

Today, I thought there could be a late day squeeze and was wrong. So I made a late day donation that halfed my profits from earlier in the day.

Since my new site under development is focused on reality trading I am posting the executions that went up on the new site today. There is audio from my side of some commentary I was doing throughout the day.

It is a little rough and includes a nice pen throw at the end of the video after I got irritated by my late day donation after stating it could be problematic with late day covering. You do not get this kind of stuff in simulated chat rooms.

Progress Update On The New Site

2010-10-14T23:30:00.004-04:00

I have finished coding most of my new site and am working on adding content. I am debating between releasing what I have done so far which is very functional and far beyond most of what I have found online or waiting until I get the site up to par with my original vision.

I have not completed the new layout for the blog yet. I may just continue using this blog for the time being. The site will have streaming videos of real trading, articles, analysis, and also track a live account that is specifically for the blog.

My goal is a place that will be brutally honest about the path to becoming a trader and show what real trading is like through various types of media.

It is a big project and will take time to get right. I will continue to post here until the new site is up.

Live Trade Video With Comments

2010-10-13T21:57:00.006-04:00

CLICK HERE FOR VIDEO OCTOBER 13 2010 TF SCALP IN HD

There was an exact repeat of a nice algorithmic trapping pattern today. The first one I observed was yesterday.

I have uploaded a comparison above. It is the exact same action.

My trading style has 5 major components to it and the most important aspect of how I make a decision is based on the games played by the other traders trying to take my money.

This will over ride structure, direction, bias and premise. It has been the most consistent opportunity to exploit that I have found after thousands of hours of observation and drilling.

Many times, a trader will have an argument for going long or short at a key area. The action is designed to generate a retail loss often in either direction.

Making the same decision every time based on action that is constantly changing is very tough. I use a filtering mechanism (mentally) based on what I think others are doing.

I generally count on most traders making the wrong decision thus will look to take the other (wholesale) side of many scenarios.

The patterns illustrated above are created mathematically in my opinion by market making programs. It is basically sweeping action the naturally happens from these programs being run that results in traders getting whipsawed in both directions.

It is too much a coincidence to be naturally occurring. When I see this sort of thing, I know to stand aside and let others get stopped out. Then engage. This type of action is designed to draw traders in then push against them.

It is a very effective way to make money.

The shape of the pattern is irrelevant and not worth looking for again. This will change up as the action changes.

Even though the market does very similar things day in and day out, it will always unfold differently.

Part of what improved my trading dramatically over the past year has been understanding this and being able to detect traps that are often new patterns to me in advance of them unfolding.

This can be accomplished with proper training and drilling in the live markets.

I have also posted a video of a late day scalp with same commentary. It is a little rough in content and voice as it was at the end of a long trading day for me.

Still worth a view. The exit was the best part. There was not a huge profit but it was very well executed.

Observation On Exits

2010-10-10T22:00:00.006-04:00

Here is a quick TF trade of mine from Friday. It says a lot about the importance of exiting.

October 8 2010 TF Trade 1 Click Here

I had the premise and direction exactly correct as has been demonstrated in many of the preps I have posted in the past.

However, I took the same trade as this one on Thursday and produced a losing outcome due to my exit.

I held the trade past the retail exit area Thursday and got pushed out. I exited at the retail exit area on Friday with a scalp profit only to have the price continue up 100 ticks past my profitable exit.

In both cases, for the trade to continue, it required retail traders to come in and make the price continue in my direction. They could not do it Thursday and I lost. They did do it Friday and I appeared to leave a ton on the table.

The fact is that both had a winning wholesale opportunity that could be exploited but I only took advantage of one of them. It was not my entry that caused the outcome, it was my exit.

As for an important observation from me in the past 6 months, my best and most consistent trading outcome has come on the days when my exits are well before the price gets close to the full expectation of movement I have premised.

The vast majority of traders I have encountered are searching for the right tool or strategy to help them identify the correct area and direction to ENTER a trade.

Many resources available to a trader, even those few that are actually worth looking at, are focused on identifying a price to open a position. If action "A" happens then do action "B".

This is often a procedure that is developed by the designer looking at things that have happened in the past and expecting them to repeat.

The problem is that the market is an ongoing auction that is constantly trying to discover a price that everybody can agree on.

Thus, any expectation of an exact repeat of what happened in the past is going to lead a trader into a completely random situation that will often result in their money being taken by the market regardless if they had the correct entry area or not.

Even if a trader is a master at finding the correct areas of support and resistance, the way that the price reacts to that area will be different in each individual situation.

It is true that areas of support and resistance tend to hold upon an initial test. However, the manner in which the price respects the zone will be different each time.

For example, it may come in shallow of your support price and quickly reverse without allowing you to enter based on your strategy today.

Tomorrow, the price may push through your support price just far enough to sell to you at your entry price and then force you to sell back to the other side at a lower price once your strategy says it is not worth the risk.

This outcome of missing your winners and hitting your losers is exactly what the market is designed to do to the retail trader.

A trader should not expect that a fixed strategy such as an entry price based on a pattern, a stop amount and a profit target can overcome the efficiency at which more sophisticated traders can take their money.

The same goes for indicators and oscillators. These are ways of smoothing out the action based on hindsight. Anybody who has attempted to trade a strategy using a live account with these types of tools should be familiar with this concept.

These types of tools work great in theory and in simulated accounts yet completely break down virtually 100% of the time once a trader attempts to execute live.

The reason for this is because the market unfolds in a different way each time. It does repeat similar patterns but this is useless to the intraday trader who is taught to manage risk tightly.

The price is going to go exactly where the stops are. Your risk management is what is often providing liquidity for the market to discover.

I do not understand why so many experience this then move on to the next gimmick or fixed strategy expecting to get a different outcome.

There is a period of time that a strategy based on previous action can work but is inevitable that this will be rendered ineffective once the price starts behaving differently.

The key to successfully navigating the price action and being able to consistently win day in and day out is to be able to interact with the other players property, not to interact with the price and bars displayed on your screen.

You must separate the two. The price and bars are simply the footprint of what is happening, not the occurrence itself. Any strategy based of the footprint itself will require a trader to maintain such a high level of absolute rigid repeatability that few will ever be able to execute properly.

However, this is the preferred method many newer traders are lead to believe is the correct way to trade. This is myth often promoted by others who can not trade themselves.

It is the exit the determines whether you succeed or not. Your entry and even the direction of your entry is completely irrelevant when it comes to trading profitably intraday.

That exit includes the way your exit your losing trades. I believe it is far more relevant to your outcome to exit failed premises properly as opposed to exiting a profitable trade properly.

A trade at any price and in any direction can almost always have a losing or a winning outcome depending on how you exit. Many traders exit a winning trade with a loss.

Intraday trading is about exploiting short term inefficiencies. In order to do this, a trader must have an understanding of what game is being played by others.

Do you the sophisticated players care where the support or resistance is or what an indicator is doing? All they care about is how to trap you. There is no fixed strategy that can beat this.

In fact, many strategies often put a trader on the retail (losing) side of the market in almost every situation. If something can be averaged out or isolated based on previous action, it is a retail entry.

This can not interpreted any other way.

Many traders have struggled in the past couple months as the action has gotten more difficult. The few that have continued to trade well have developed an understanding through experience of how the trader on the other side of their trade behaves.

The market is very efficient and offers little edge. While certain areas can be mathematically verified to have a massive static edge, once you introduce a stop into this equation, the edge is dynamic as the trade unfolds.

For those few who know what to look for, there are constant opportunities to exploit the price. This game can be won with the correct understanding of the trader on the other side and it comes down solely to which party forces the other one out.

99% of retail traders trying to make it are not even playing the right game.

September 27 2010 Blog Update

2010-09-27T21:36:00.007-04:00

The action has been slow for September but I have continued to stay on the wholesale side of the market.

I find myself hitting trades lately that are the polar opposite of what I used to consider to be "confirmed" with structure or patterns.

Today was a good example of that as I shorted the ES and TF right after the open. I ended up scratching the ES and scalping the TF.

Early in the afternoon on the East coast, I shorted the ES again with a very retail entry. I had to hit where I did because I felt the price would sell this afternoon and did not want to miss it.

I ended up getting squeezed pretty hard but stuck with it. I used to stop myself out of a trade like that. Many do not understand why I would take 4 + points worth of heat.

The fact is that I believed the price was not going anywhere to the upside thus any cover would end up being a donation to the market.

I dropped the ball a bit after taking all the heat. I exited the ES followed by getting myself into a long trap on the TF because I saw a perfect cup. I was able to correct and get short again the ES into the close but was irritated by my break down in conviction.

I spent over an hour getting squeezed and believed none of it. I need to keep that up. That is how you win.

This tactic has led to a winning outcome on virtually every one of my trades in the past 60 days. Many were for just 2 or 3 points on the ES or 15-20 ticks on the TF but it adds up.

I used to say that a trader should not expect to win everyday but I now believe a good trader should expect to win everyday and should be winning virtually everyday.

This can not be accomplished with a fixed rule set or system based off hindsight indicators.

I am working on getting the new site up and running so I can take the blog to the next level.

I plan on writing in detail about my recent experiences over the past 6 months and opinion on this industry in general.

I hope to have everything up and running over the next couple weeks.

I am going to try to post some trades later this week.

September 21 2010 ES Trades

2010-09-21T21:50:00.003-04:00

September 20 2010 Trades

2010-09-20T21:07:00.002-04:00

September 15 2010 Trades and Comment Responses

2010-09-15T20:52:00.006-04:00

Anonymous said...: Keep posting Brian there are plenty of us reading your blog religiously! Thanks for contributing to the trading world.; September 14, 2010 11:34 PM
Anonymous said...: Hi Brian - I have noticed that lately the TF chart is under performing the ES in terms of movement and what is a cleaner chart to read (IMHO). Any thoughts on this? I moved from the ES to the TF as the ES was beating me up and did better in the TF but now noticed that the ES chart (using tick charts) has been cleaner. Yesterday intraday range on the ES was 12.25 while on the TF it was 8.5 which seems out of whack. Is this just something that is going to fluctuate from time to time and to be expected? I'm also asking myself if it's a case of the grass is always greener as well? Any thoughts philosophical or technical appreciated. Thanks; September 15, 2010 4:12 PM

Comment 1:

Thanks for your comment and support. It is extremely motivating to see that others are following and helps me to continue building the new site.

Comment 2:

I agree that the action in terms of data display patterns has been cleaner on the ES.

The TF was producing constant symmetrical setups that were very clear throughout July and early August while the ES was producing tough trading as it has for most of this year.

However, a few weeks ago, the TF became fairly irritable and started producing a lot more noise. Since then, the ES has actually been producing clearer setups and I have been executing more frequently there.

It is very rare for the ES to have a wider range then the TF as it did yesterday. The TF still offered more equivalent volatility as the 8 point TF range is equivalent to 16 ES points.

The TF also traveled more "nautical distance" in terms of movement from point A to point B.

If you look at my trades from yesterday, I took the same trades on both indexes. Some think this is doubling up on my position but it is closer to trading 1.5 X my regular size.

I was up 49 ticks on the TF which is equivalent to almost 10 ES points. The same trades on the ES only produced a profit of 3.5 points.

It is good that you have enough feel to use words like "cleaner" to describe price action and I concur with your findings.

If you only want to trade one of the indexes, I think there is much more opportunity on the TF. As short term exploitative traders, it makes sense that less liquidity should offer us a better edge.

However, I have been enjoying hitting the ES with my new techniques because the traps have been so clear to me. I can see them well in advance and instead of avoiding them, I mirror the positions the game players are taking.

Volatility and Risk/Reward

There are 2 factors to consider when choosing between the TF or the ES.

1. The TF offers a lot more bang for your buck but also requires more risk and better trading skills. Average risk on the TF if you want all your correct trades to work is 30 ticks in my opinion. Your average loss should be significantly smaller than that but many trades on the TF will push most traders way beyond their barf out points.

This is especially true pertaining to inside support zones after approaching a resistance area on the TF. It is very prone to start holding and even building multiple pivots with the intent of getting retail traders long at the area for an extension out only to violently push down 30-60 ticks to jam all the late longs as well as those who are greedy and holding too long.

This is merely a trap that is planned and set by New York traders who know what they are doing. It is an easy turkey shoot and an efficient money grab.

Many Fibonacci traders would call this a 786 replacement. Fibonacci levels are only a description of an effect of price action after the fact and have zero relevance as to what is actually occurring in my opinion. It is interesting how reality and hindsight theory blend together sometime though.

2. The ES requires less risk but sets many more difficult traps for retail traders. I suspect that this is simply because there is far greater liquidity and many more players on the ES.

Also, the slower pace and constant grind make traders prone to make more mistakes as well as have bad judgment.

These layering factors make the ES more difficult to trade even though the pace is slower and risk is less.

From the mental aspect, when I have a tough trade that I know could take a lot of heat, I still execute on the ES first. This is because there is a perceived sense of less pain on the ES when in reality, the opposite is true.

You can tell when I am most questionable about a trade when I enter the ES first then follow with the same trade on the TF.

The TF tends to lead the ES, so when I like a trade, I hit the TF first then add to the ES once the TF shows that the trade will likely work.

I play off both indexes and have a very efficient system (mental rationale and feel not rules) for effectively exploiting the opportunities provided on each.

New Technique

I could take analysis of the correlation and relationship between these two indexes to shocking levels after all the live research I have done.

The interesting thing is that while attempting to explain and justify the way the price moves and reconcile the difference between what is seen and premised and what can actually be executed, I have refined a 6th sense that just allows me to "look" at the chart and know what to do.

September 14 2010 Trades

2010-09-14T22:02:00.008-04:00

My feel continues to be spot on.

Today was an extremely solid trading day. The trades were clear and were all taken with the enhanced strategy I have been refining for the past number of months.

This is creating what I call "on demand" trades. Which means that I am not just buying or selling a zone or pattern but executing on a specific premise with the complete expectation that the trade will work regardless of what happens intra trade.

It is still a bet and always will be but it is a bet that I believe I can win almost 100% of the time as long as my head is clear and my gut confirms the trade. I have developed this feel by the constant drilling and RIGHT EDGE analysis I have been conducting over the past 3 years.

The value of this journey is starting to show itself.

This allows me to stick with trades that would have previously pushed or squeezed me out 100% of the time. It makes my entry price fairly irrelevant and allows for quick exits.

The basic foundation of the strategy is that almost everybody playing is wrong and that their actions will be faded by those who move the price.

I look to do the opposite of what I believe others are thinking and am generally entering at the areas where I used to get stopped out.

I noticed my blog traffic is trending down a bit lately. There are sill many readers who watch closely but I think I scared others off by recently stating that virtually every conventional method, strategy, or system out there is completely useless.

I stand by what I said and will continue to re-enforce it even if there are no readers. Virtually everything out there being taught that is not an outright scam is just theoretical and does not pass muster when it comes to reality.

I am working on a new site that will attempt to document my findings based on my own trials and difficulties over the past few years.

I want it to be an interactive site that will show trading reality as well as document my own trading results. I do not understand why this can not be found in cyberspace and am going to change that.

It is a labor intensive process. Until then, I am likely going to be posting charts only and limiting my commentary to once or twice per week.

September 13 2010 Trades

2010-09-13T22:42:00.002-04:00

No comments tonight.

September 10th 2010 Commentary

2010-09-10T12:48:00.003-04:00

Think about how it seems the the market always knows your own individual breaking point in terms of hitting your stop. Regardless of where you enter, it will often push just far enough to take you out before the trade works. This is not random. It is by design. It is the result of thousands of players running millions of strategies built exclusively to take your money.

Most traders early in their career and some well into their career think the goal is to outwit the fastest computers in the market by having the right stop or break even mechanism.

My opinion is that fixed strategies are virtually useless. The machines that the players use to make markets take all this into account in their algorithms and randomize the patterns at which they hit your bids and offers.

This is much like how data is encrypted. You may be able to crack the strategy if given enough time but next time it will be different.

This makes any system being sold by the cowards who consistently fill our inboxes completely useless.

Even when you have a method or just plain gut feel to precisely identify the areas that will hold, fail, continue, or extend, you must still time the trade properly and have the ability to successfully exit with a profit.

Since your edge and odds of success is dynamic and randomizing as the trade evolves, a single policy on how to handle each trade is unlikely to produce a positive result in a sample that is repeatable and without randomness. Thus, profitability on demand can not be obtained this way.

Understanding the structure and movement is just the beginning. After that, what will determine if you are profitable or not will be your ability to stand up against the other players you are competing with. No method or strategy can accomplish that.

This is a skill that is learned and refined by doing much like how a welder perfects the strength of their welds over time.

I have found that very often, the opposite of what I initially think is the proper trade. This is not a matter of simply fading myself. It is a matter of reading my initial emotion and psychology, considering what is causing those feelings, then questioning if whether the other players are actively trying to elicit those feelings.

Then I get bearing on my situation and the proper decision can be made based off my cumulative training and experience. It is usually a process of decided an action is dangerous, considering the oppose, then engaging the initial action that I felt should be avoided.

This can not be repeated through a static process. I consider the static side of trading to the the whole left side of the chart. This is where virtually all traders play their game.

The correct (wholesale) side of trading lies on the dynamic right side of the chart. This is where the few that take all the money play their game.

September 9 2010 Trades

2010-09-09T23:55:00.003-04:00

No commentary tonight.

I made some notes on the chart. Check out the this week's other posts if you have not already.

September 8 2010 Trade Review and Word On Conviction

2010-09-08T22:28:00.005-04:00

The blog is not dead yet.

I had an interesting trading day with many of my best observations occurring during the live action.

Part of the reason this format has started to bore me is that reflection on action and trading decisions in hindsight is fairly useless.

Who cares what I think now after the fact? It is irrelevant and helps nobody. Those who can not trade look at things in context of the past. I will look to the future and in particular, the hard right edge moving forward.

I suppose I need to stop using the word review and figure out how to make my insight apply moving forward.

Conviction

I laid out my exact premise and reason for getting long at the open in the ES chart. It is worth taking a look at.

I wanted to write about what I now consider the single most important element to successful trading...conviction.

Without it, your trading decisions have little chance of a positive outcome. As I have been saying, picking the correct price and direction is will not make you a profitable trader.

It actually has very little to do with your PNL. This debunks the concept of trading with a static strategy or fixed indicators. Many of you have witnessed how your setups look so clear at the end of the day but you lost money.

This is by design. The price moves efficiently and the process of the live auction coming to a fair price creates a completely random path from point A to point B with respect to any specific entry and exit point.

This means that anything can happen after you enter and your edge as well as your odds of success are dynamic. Your chance of booking a profit is rapidly shifting over a large spectrum of outcomes second by second.

Even with the prefect plan, price, entry, and exit point, the odds are against the retail trader. This is due to the many participants running a seemingly infinite number of strategies.

To put it more simply, thousands and thousands of people are running what could be millions of different strategies with the goal of selling to you at high prices and making you barf out at low prices or vice versa.

In order to overcome this, I must trade with conviction. I must believe in the trade I have taken and have little doubt about the outcome.

I have found that what works even better is NOT BELIEVING the move against me until proven otherwise. If I am going to lose I want to be SHOCKED at the outcome.

I spent most of my trading career getting pushed and squeezed out of my trades as opposed to my trades failing. I have made adjustments and devised techniques that can combat this issue.

Many do not want to hear this but proper trading probably requires a lot more risk than you want to take. Do you think this extremely efficient market is going to let you enter a trade with a 1 or 2 point stop and let you exit with 7-10 points profit consistently?

This is virtually impossible. Like anything else, there are one or two that can do this but most can not.

My last TF trade today is an excellent example. I had to stick with it through what would seem like ridiculous heat to most. The market does not care if I am down 8 ticks or 50 ticks. It will not respect my wishes to take only 15 ticks heat instead of 16 ticks.

As I was in the trade, I was getting angry at the thrusts down, not because I was losing but because I correctly thought it was BS.

I stuck with what I thought and got out with a small profit.

Important

It takes that type of conviction to win day in and day out. A strategy or methodology alone will not cut it.

You have to be able to this every day whether you are booking profits, broke, sick, tired, hungry, or whatever.

The only way to accomplish that is to trust you gut and be willing to let it lead you off a cliff if that is what it is doing.

If it fails you then you fail. Better that you fail out of principal or flaw in your technique than have the market bullies steal your lunch money everyday.

The concept of perpetually over managing risk is just plain wrong as are most who claim to be able to teach.

Every big trader I have met takes big risk regardless of what their advice is to others. If you think tight risk management is the way to go, watch the Paul Tudor Jones video floating around out there.

Do you think he lets the bullies take his lunch money?

September 7 2010 Trade Review and Blog Update

2010-09-07T21:33:00.006-04:00

The reconciliation with the ES continues. I had a clear fade of the move up just after the open on the ES.

Why did I take the trade? I faded the move up because I felt most traders were buying and concluded that this would lead to many retail sell stops below the congestion at 1095.00. I felt these stops would provide liquidity and pull the price in towards themselves.

There is not much more too it than that. I have refined my trading to a game of trying to trap others regardless of structure or pattern. I am still aware of the structure but am often on the opposite end of how I used to play it.

I have continued to take it slow on the TF as action has been nasty. There is no other way to describe it. There are plenty of opportunities but I have specific parameters I have developed and have not seen much on the TF. I sitll engage because I tend to like to get into fights where I am at a disadvantage.

I am doing the right thing. Even with caution, I got myself into the retail end of 2 short trades this afternoon. However, after entering and realizing my position, I was able to anticipate myself getting squeezed and refused to get pushed out. I had conviction due to my understanding of the game.

There were many different ways to lose today and only a couple ways to win and I found one of them. It mostly came down to conviction. I have reached a level of focus in which I expect to win everyday.

I used to think this was not possible but it is.

Blog Update

I have had so much to write about recently that I can not even begin to effectively get my thoughts and observations out in the manner that I would like to.

There is an evolution going in here. This is my 622nd post. The transformation that I wanted to the public to see is finally occurring. That is the transfromation of a trader who was winning some and losing some to a trader who is winning on demand.

I have a vast amount of data and helpful observations that I want to organize and get out there but can not find the time to properly execute a project like that. It has become a source of major frustration recently which is getting compounded by all the garbage flowing into my inbox everyday.

I was bombarded by emails today from all sorts of scam artist educators and would be gurus. One of them claiming to be the "messiah of trading" and several others making claims like their calls are 89.3% correct. (calls are meaningless you stooges. The exit is what counts.)

I do not know what is worse. Is it the fact that these parasites are making money doing this or that would be traders are stupid enough to keep paying them?

I understand if you get burned once by garbage like this (I was) but it takes repeated attempts to buy the "holy grail" to support all these turds. I do not understand it.

I have to go on record and tell everybody....clearly....that if somebody has something that works why the hell are they going to sell it to you for $3000.00?

If a system, indicator, or strategy worked period, why would it be for sale? It is all absolutely 100% garbage. Every last bit of it. I doubt if there is one single educator out there who advertises frequently that can make a trade to save their life.

Where do these people come from? I suppose many are failed traders who think they will "catch on" and are just trying to make a living but there are other larger operations that are clearly outright scams.

If an indicator actually worked, the market would perpetually travel in one direction. Think about it. If there was ANY single, static, and repeatable edge; the market auction would instantaneously close it. If it did not, there would be no market made because there would eventually be only bids and only offers.

The best use of these so called tools is mostly by the few that make money at this to trap retailers who have no idea what they are doing.

Most traders do not stand a chance regardless off how hard they work until they acknowledge and clearly understand this.

This game is a giant game of poker. With hands that evolve RANDOMLY as the action unfolds. There is no way to crack it with a static strategy. There is no right price or direction to enter.

If your entry has an edge at inception, there are an infinite number of outcomes that dynamically change that edge as the hand progresses.

Do amateur traders think some dumbass with a MACD and a candlestick pattern is going to teach them to outwit the fastest computers on the planet that are run by the best and the brightest mathematical quants?

It is a turkey shoot in favor of those who control the price. The one advantage we retailers have is size and dexterity. The players often can not get out of their own we an we can exploit that with POKER SKILLS and nothing else.

The art of accessing what your opponent is holding and acting according is how to win. This can not be taught in a course that last months let alone a week long seminar.

I think if a trader wants to get profitable they need to spend 6000+ hours of agony and defeat onscreen as I have. The learning curve can be cut dramatically with nothing short of daily coaching live in the market for months.

Who is going to do that? It is a horrible business plan and leads to no profit for the coach. This concept automatically makes virtually all educational efforts a waste of time and money. There are a couple good ones out there but they still leave a lot left up to the trader to figure out.

Having said all that, part of the reason I started this blog was to have something different out there. Something that I never had. I still can not find anything like this anywhere.

The problem is that recently I am realizing that my effort is not really penetrating. How can I compete will all the douches out there who are willing live with the fact that they help nobody and make their living by being full of crap.

This blog has helped me immensely and touched hundreds of others on a daily basis but I want it to be more. I am not sure I have the time, resources, or desire to make it more.

I do not want to compete if I can not develop what I envision and I certainly do not want to go through the motions just to continue being known throughout the business. I am more of a recluse than you can imagine in my personal life.

You can not do what I have done and have a life. Many get into trading because they want more free time but those who stick with it learn it consumes everything. It is worth it to me.

Part of me wants to expand this site and make it great. Even go as far as to start a real daily trading room where I trade live in front of everybody. Pants completely down like a reality TV show and made virtually cost free for most.

The other part of me is considering going into seclusion and just refining the technique I have developed over the past few months.

It is a tough call as I say often to others on Skype.

Some of my biggest breakthroughs in the past few months have come via comments I have made privately to other traders I speak with throughout the day.

It is an extremely powerful concept and I am not sure what to do about it. I definitely feel a calling to make a significant move soon but am not quite sure what that move will be.

It is a giant poker game in the end.

September 2 2010 Trade and Performance Review

2010-09-02T20:36:00.003-04:00

I traded the ES only today. I have not seen much to exploit on the TF this week and have correctly reduced my trading there in the short term. The TF is the one who has been doing most of the exploiting in fact.

I will go where I see an edge.

I suppose the ES and I have reconciled but the TF will remain my primary production vehicle as time goes on. I have an excellent system for using one index to initiate beginning scalps then doubling down on the other.

It is interesting how one sometimes leads the other and vice versa.

I finally capitulated and started trading the day after trend congestion and had good results today.

It is clear that after the price makes a significant move, the highest probability outcome for the next day is a sideways market.

I prep for this and have been aware of it for some time but have always been reluctant to engage it fully. Mostly because the risk in undefined.

Price rarely stays within a high and a low and is prone to wash stops above and below the congestion. Sometimes pushing 25%-50% outside the congestion.

Due to the fact that I have been specifically studying these squeezes and pushes for the past few months I have gotten more comfortable fading the top or bottom of a congestion with no stop with the expectation that the congestion will hold.

I will occasionally get run over but can no longer ignore the one of the highest probability trading days a trader can find.

I also have fine tuned my feel through studying and drilling and could just sense that price was going nowhere today. I really did not sweat my entries today until the last one and that was for good reason.

While I firmly believe that fading trending or extending markets is a losing proposal these day ofter congestion deserve their own classification.

Moving forward I will continue to aggressively play these even if I get bitten occasionally.

Performance

I have been trading well primarily due to developing some of my own techniques for identifying squeezes and pushes as well as refining my ability to tap into my correct gut feelings about where the price is going.

I have been able to manage my trades confidently and identify my areas of entry well in advance.

I need to remain level headed about this and try to keep it as simple as possible. I can break my technique down to many levels of complexity.

The important thing to keep in mind in order to continue to make the correct decisions on the hard right edge is to is allow my gut and subconscious to tell me where to execute.

There are too many reasons to consider for taking or not taking a trade. I do not believe somebody can expect to have a list of rules or qualifiers to run through every time they execute an entry or exit and be able to avoid all the traps and fakes out there.

The price is designed to bring a retailer in and squeeze them out. Proper training, drilling, and practice can develop the correct internal sense of what to do. Then one must be able to filter their feelings in order to "tune in" to the correct internal feel.

I do not want to talk too much about my day to day performance because it generally leads to bad streaks.

I have posted a chart above showing my winning vs. losing days since July 1st. It tells a lot about how an equity curve unfolds.

September 1st 2010 Midday Review

2010-09-01T14:02:00.005-04:00

I wanted to do a midday post to demonstrate my usual premise that the price action will often do the exact opposite of what many are expecting.

I also wanted to say that it is ridiculous that every talking head on radio and TV is trying to explain that this move is due to some fundamental reason.

If I was forced to value this market based off my daily experiences with those in finance and the public in general, I would value this market at close to $0. There is no level of reality with what most "investors" base their decision on. This is a topic that needs to be covered at a different time.

It is all part of the daily manipulation. These commentators know nothing. Those who speak the truth do not get much airtime because there is little money to be made with the truth.

There is an obvious massive head and shoulders pattern formed over the past week. I was watching this yesterday and told many who I speak with privately throughout the day that I will look for a giant left shoulder squeeze.

My premise was that many retail traders and systems alike look for patterns like this. What better opportunity for the market bullies to squeeze a bunch of suckers then one of the most obvious left shoulders a trader will see?

They squeezed the price up to the left shoulder neckline yesterday, then brought it down a bit just after the open. This caused many to get short. Then they jammed everybody. It was an obvious turkey shoot that could be seen well in advance.

It was not easy to catch with the news and structure but was an obvious sign of tough trading and absolutely no fades this morning.

This move was nothing but technical. Each trade and each pattern has a completely random outcome. The market NEVER repeats itself exactly. The only thing that is constant is the game of faking and squeezing.

This is nothing but a giant poker game where a few bullies take most of the money. The best area for a trader to focus on in my opinion is the interaction with other traders and not the news or indicators that most turn to.

August 31 2010 Trade Review

2010-08-31T21:15:00.003-04:00

I had a couple decent scalps on the TF today but the good trading happened on the ES.

Starting with the TF, I was distracted just after the open and did not engage. I am not sure if I would have engaged. The low was not very convincing and I could tell risk was high.

More importantly, I did not feel any trades so I stood aside. After the TF rolled off 606.5 I hit a sequence of inside support trades. These are not exactly part of my strategy and it was risky to take them.

Inside support on the TF is not very trad-able without very significant risk die to the fact that it often pushes ridiculously deep back into the range before reversing back up. Often, it pushes almost back down to support as I learned last week.

I think this is where the 78.6 retracement traders think they are on to something. It is not the measurement that makes the trade, the deep push down is simply a push out of retail longs. It is a game and nothing more.

It is notable that the fact that i scalped the exits as opposed to holding made the trades profitable. The structure "looked" like it would extend. This is often where I would give back in the past; holding the entries and hoping they would move up as they should.

The price came back for another retest and I took profits. I will catch way more of these than I will hold extensions to completion.

ES Trade

The ES trade today was excellent. It was another example of using feel and engagement in order to execute the correct trade.

I had a line at around 44.50 a couple days ago but had removed it. I traded the squeeze and fake premise on that long and nothing more. Had the line been there, it likely would have been a distraction.

In fact, I am considering removing all lines from my charts. That will bring my read and feel to it's most natural state. I suspect the lines are distracting and have determined that they mean nothing.

The market does not care if there is support there. The players actually use it to trap and manipulate. I will no longer play the "will it be shallow reverse prior to zone or washout extension game." I do not have an edge there without a discretionary decision.

If I need to be discretionary, why not just remove the lines and observe the price more like a machine. I know where is support and resistance is. I think I will get an even better read on the zones without the lines. I will focus on the clusters of pivot and make a gut interpretation based on experience and some framework I have been working on.

The ES trade came out of nowhere. I was actually complaining to another trader about how I felt there was no edge at the TF inside support. My premise was that there is no way to tell at any level whether that support would hold or not.

A trader could be right in any direction. There was no reason for it to have any particular outcome. I do not believe that some can be long and some can be short and both be correct. I support this statement by saying that a trade is never wrong if you have unlimited time and unlimited risk to work with.

A positive outcome is a matter of position and engagement, not price.

There are areas where there is a right and a wrong trade and that is what I am trying to hit.

About 2 seconds after I got done complaining about the lack of edge, the ES accelerated down and I immediately felt a buy. I did not see a pattern or a zone. I simply did not believe the move and bought in the middle of nowhere.

In fact, it was dead stick right in the middle of the range which I have spent a lot of time writing strategies to avoid these areas. I now believe that premise is completely irrelevant along with most of the other "rules" I have put together over the past couple years.

The premise and simplicity of my buy allowed me to sit through and ugly congestion and 3 thrusts down intra trade with a good level of confidence. I did not flinch during the trade. I knew I was was playing chicken with the price but that is what needed to be done.

There was a certain level of certainty about the outcome. I never would have sat though all the games and fakes there if my premise was buying support. I would have scratched or lost. Anything but won.

This can be dangerous. I have recently discovered that too much humility towards the market is not good. I need to respect the market understand the trouble I can get into but also must have conviction.

This trade was made with aggression and won. Many were shorting there and got squeezed. It was again a higher level of trading for me.

I need to work on continuing to tap into this feel.

August 30 2010 Trade Review

2010-08-30T20:55:00.003-04:00

I think this post is a must read for the week and will be in the key recent post section.

Today was one of my better trading days in terms of decisions and convictions.

I was thinking on Friday afternoon that the market would have a nasty gap down over the weekend. This was not based on structure but do to the fact that everybody seemed to close out last week and the price tends to punish those in the majority.

When I saw the big probe up and return back into the highs on Friday, I immediately felt a short bias and had a clear premise.

Also, I could not visualize the price selling down then reversing back up to retest the high. That would create a "U" or horseshoe like pattern and I very rarely see that.

Lately, I have been doing very little prep in terms of SR zones and specific pathway visualization. While I nailed these day in and day out the result were divergent from the reads.

I suppose it is a prep mutiny of sorts. I think I may have been focusing too much on macro direction and not enough on player interaction.

I still have zones that I watch which are very powerful and I still visualize. My visualization is quick and sharp. I have what I need after a quick glance of an ES 4000 tick, 60 minute, and 900 tick in no special order.

It is not enough to know where support and resistance is or to have pattern recognition at these areas. I have started watching a couple more elements even more closely.

The most important being having an understanding of what most of the retail traders are doing and taking the opposite trade. I am looking for the traps and fakes that I have spent the last few years getting into, usually via poor exits, and doing the opposite.

I will elaborate on this much further at some point in the future.

Premise Over Pattern

This is the single most important element to the last couple month's huge improvement in results.

Today is the best example so far. The price traded down to shallow potential inside supports just after the open and was stretched.

Many traders were looking long. There were plenty of reasons to get long. I had several including pattern confirmation and attempted inside higher lows temporarily. I literally had dozens of good long setups today on both indexes.

However, my gut and whatever trading wisdom I have managed to gather in thousands of hours of screen time kept telling me to short regardless of pattern. This was tough because as many know, I do not prefer the short side in this environment.

Today was different though. There was clarity in in direction via my feel. I can really feel a massive difference in how I look at things. The giant overnight upside probed helped as well but again patterns are not enough. There must be feel so there can conviction.

Without conviction, even the correct trades will not hold up enough to survive the constant assault from the bullies who move the market.

I hit the first short on the ES a little after the open. The entry felt awkward and too shallow but the direction felt right. Then the price did nothing and started to look like it would squeeze me.

I had to stick with it. I ended up cutting the trade too soon with a small scalp then re entered an even more stretched leg. I simply made the decision to trade my conviction which has been happening more frequently.

Things got tough during this trade as I saw a ridiculous long setup on the TF. I cut the ES for a 1 point loss and got long the TF. It did not feel right even though the long pattern on the TF was perfect.

As soon as it moved against me, I decided to do the right thing and stick with my conviction. I shorted the ES again, then cut my TF trade for another small loss and added to the position by shorting the TF. I had some entry cost but improved my ES position a bit.

This was a very tough trade and a defining moment as their was a cup forming on the TF. These almost always work but I faded it and had confidence even though it looked like I was going got get run over.

I told another trader on Skype that most retailers were getting long and that was why the price was not moving. Then I gave my premise which was the market bullies are trying to get as many long as possible so they can take the price down.

That is exactly what happened. I talked through it play by play. Reiterating that the structure and even tempo was against me but I was sticking with my premise.

This was trading at a much higher skill level than I have been at previously and felt very natural.

It is important to recognize exactly what I did today in terms on decision making and not let it give me a big head or a license to start fading every pattern I see.

There was much more to it. It was a very complex engagement on many levels but I also kept my thoughts simple and orderly. It was a precise interaction with the market in an intimate level.

That is what it took to make the right trades today.

August 27 2010 Trade Review

2010-08-28T03:42:00.003-04:00

Brief post tonight.

I had a decent day and a decent week for trades.

Exits today were way too early. I am heavily leaning towards a scalp and re enter strategy but took it a little too far today.

I need to monitor how this evolves. It seems to be working leaving a lot on the table and going for very high probability exits. I need to work on how to handle my exits on a day like today when the squeeze and likely run up was clear after the trades started working.

The issue is if I start holding some trades and exiting others quick, I will open the door up for randomness.

I will stick with what has been working for now which is consistent moderate daily wins.

August 26 2010 Trade Review

2010-08-26T22:55:00.002-04:00

There was an interesting role reversal for me today between the TF and ES.

I found myself focusing on the ES this morning as the TF looked nasty for execution. I was not something I thought about. I just happened after glancing at both charts just after the open.

My primary strategy is to lead with TF entries and initiate trades that allow me to scalp off edge. Then follow with an ES position after direction is clear.

This makes for only one or two ES entries a day but they are mostly winners and create much more an edge then constant back and forth ES engagement.

I had a structural premise on the ES that was clear to me since yesterday. I knew exactly what I would look for and was talking about what I thought would happen today yesterday morning.

This led to a conflict in my trading strategy. Lately, I have been looking for wholesale entries to exploit. Short term inefficiencies as other get caught in traps.

My ES trades this morning were based on a structural premise which is something I have been working on avoiding. I need to know and understand direction but want to execute traps and fakes (on the winning side).

I believe the price does the opposite of what it looks like most of the time and am willing to lose when I fade the obvious trades that work as they look.

However, I initially entered the ES only after I saw what looked like inside support start to develop and squeeze a bit. I said to myself...."this move up is BS".

I did not have an entry at all. Then I said it again and recognized my gut felt a trade. Then I had to enter. I scalped 2 points and exited just before the price squeezed again. A little more violent this time.

Amazingly, I felt the move up was crap again and faded it on an uptick. I was very confident and had conviction because this used to be the type of long I would hold that would obtain a decent excursion only to peter out.

So I shorted it confidently. Then hit the area a third time. The trades were just rolling off my fingers which is rare for the ES.

I was not able to continue hitting the move down as I lost some feel and also got into an ugly sequence on the TF.

Once I saw the ES working, I was confident the TF would follow. I ended up hesitating a bit on the TF and entered way late on my first entry. It was too ridiculous to hold and I quickly knew I was out of position even though I thought my premise would work.

I covered for an initial 9 tick loss then proceeded to trade an irritated crappy sequence on the way down that consisted of entering with almost immediate positive excursions followed by weak exiting or quick scalping.

I did not like the late entries at mid range. Risk was too much. I do not mind taking heat but not if there is a good chance I could be right and still squeezed out of the position.

Performance on the TF was just plain lame and I left quite a bit of opportunity on the table. I left some on the table on the ES as well considering that I had been all over the move in premise well in advance.

I am accepting this as my style. It has been producing wins virtually everyday. I will take extreme consistency and moderate daily profits over the constant outliers for and against me that many experience.

The question is can I continue this daily winning and sharp execution? I am slowly making it a habit to win and it is a little hard to believe after how tough this has been over the past few years.

It is a psychological balancing act keeping all the variables in check that are required to maintain what I have been doing. It requires always thinking about it but not exclusively thinking about it.

More of a passive obsession with maintaining focus on and off screen. The passiveness is required in order to be able to sense the true feel that I have developed over the past few years.

It is the feel that separates a winner from a loser.

August 25 2010 Trade Review

2010-08-25T22:46:00.004-04:00

I had some good scalps today as I have been trying to be patient in August trading.

It has been very interesting when I do decide to engage how absolutely focused I quickly get. In the last few sessions, I have felt a little off and uninterested in executing early on. It is not that I am uninterested in trading. The disinterest is in the ridiculous games and lack of edge I perceive at most points throughout the day.

Then I see something and immediately attack.

I liked the long side after the initial thrust down just after the news release this morning but also knew the price had been trending down in the past few days.

It was a good bet to buy the pain as the price came down but that is not my style right now.

I waiting for total clarity on direction then taking the very high probability scalps (10 -15 ticks TF...6-10 ticks ES). This is what has been working for me.

I have no need to catch the high or low. There may be more points available but I have observed that I rarely capture the lion's share of what is offered.

I am looking to capture the small inefficiencies and that is it. If the trade explodes in my direction I will hold it but am not forcing anything.

I am certain that I will perform better taking a later sequence setup with more conviction then an earlier setup at optimal prices with less conviction.

This is a game of fakes and traps and the one with the most conviction usually wins.