First, I’ll give a little background of my trading. I tend to trade in the futures market, and lately, I’ve been trading the Nasdaq. I like to intraday trade, and I look at the fast time frames, and use the longer time frames as supplemental to understanding market direction. I use candlestick action, support and resistance, and volume to get an understanding of the market direction. I seek to make trades in the market direction for that day, and to attain a good risk to reward ratio in my trading, which I believe makes it much easier to make money over time. In terms of risk to reward, I certainly aim at more than 1 to 1, and 1 to 2 or more is a good target or goal. I don’t take too much risk trading. I like to take 1 percent, possibly up to 2 percent risk per trade. I simply want to make money over time trading. I don’t believe in getting rich quick. If someone can make 50 percent a year trading, I think they are a superior trader. I’ll try to journal my trading activities, and maybe someone will find it interesting, For a little more info about the Nasdaq futures, they make or lose about 5 dollars a tick. A tick is .25 cents. So, they make or lose about 20 dollars for a dollar of movement on the Nasdaq. My trade cost is somewhere around 7 dollars a trade for commission. The spread stays very consistent and runs around 1 tick. I’m trading 1 contract per trade on this account. The Nasdaq futures are liquid enough during the US session to usually easily get 100 contracts filled, and sometimes, 300.
Friday 8/11/2017:
Inflation news happened today at 6:30am. I didn’t look at the market at that time. I was looking at the Nasdaq futures. At 7:30, I started to look at the market. This is really when the Nasdaq opens, and it’s volume goes way up. I was looking at the 1 and 5 minute charts, as well as I usually also take a look at the 30 minute chart. It started out with a hammer, and then, it proceeded up. It then fell back down, and started to look like it was going into a range. It formed a point of support, which it hit a few times. On the last one, it created a higher volume hammer like doji. I like this kind of strong price action on higher volume. Direction had not yet been established, and we were at the bottom of a possible range. I traded long off that candle. The trade made about 7 dollars, and I closed. I don’t think that it had a very good risk to reward ratio, about 1 to 1.
The market then broke out to the up side on stronger volume. Breaking out on stronger volume is a good sign that the market may have established direction. At this point, the market direction was possibly established up. Now, I was looking for a weak pullback, on weak candlestick action and volume. This would allow to enter long and attempt to take an effective trade. A range formed. I ended up trading toward the top of the range. A couple of 5 minute hammers formed. Then, a couple of 5 minute shooting stars formed. It did not seem to want to break out further up. I closed and the trade took about 5 dollars. The risk was a little high on this trade. It would be good once direction is established, to attempt to get in at the bottom of a range in order to reduce risk on the trade. Later, the market did turn against this trade after I had closed it. This day definitely shows why it is important to trade with the market and not against it. Counter move trading might seem fun, but you are always treading on thin ice. All it takes is one runaway day, and you could take some big losses trying to go against it. It seemed like a good trading day, although, the trades taken were not the most effective from a risk to reward perspective. Remember, always have a written trading plan, and always follow it. Trading without a plan tends to put you trading based on however you feel on that day. Maybe you feel more risk averse or fearful. Maybe you feel more daring and you want to take risk. I think that last one is the most dangerous.
Here is a picture where I can circled where I did the two long trades. As you can see on that last one, resistance did become support. However, the movement was not too long lived. I held because the support was not broken, and it didn’t look like it had strength. However, I had some risk as the market pulled back after my trade.
Monday 8/14/2017:
No serious US news events today. The Nasdaq started out with an immediate breakout to the upside at 7:30. It moved up and then corrected about 5 minutes after the open. The 5 minute chart had a consistent decline in volume on the correction. A sideways range formed on the 1 minute chart. When it hit the bottom of the range the second time, it went back up. The price action at the bottom was not that great, so I didn’t enter here. Once it hit around the top, a hammer like candle formed on the 5 minute chart. It proceeded to break out up. It has strong volume, and a strong candle finish. I entered long. I don’t really like entering on breakouts like that. Sometimes, they move, sometimes they correct. This one moved up some, but didn’t want to break the top of the breakout candle. I decided to go ahead and exit that one. It took a small 1 dollar profit.
The market then corrected more, and the volume on the 1 minute chart kept decreasing. That is often a sign we are in a correction. It went back up to the top of the movement, and appeared to be forming another sideways range. This is a market where the upside directionality has been established. I’m looking for a really solid entry, and I will only trade upside, or I will not enter, (according to my trade plan). I’ll only enter for the first hour. That might give my trade some time to move, and give me the chance to enter an effective trade. It is part of my written trade plan. The stock market starts to move around 9:30 eastern time. It really usually stops around 12:00 eastern. It might start back up after 1:00 sometimes, but I’d just really rather be done with it after the first hour. My goal is to get 1 or 2 effective trades, preferrably one.
Now, we’ve moved up to the top of this range, and we’ve had a very small up candle on higher volume. Usually, that means selling. Something was going on in that candle to have that increased volume, and it didn’t move up. Sometimes, a move like this is getting ready to break out, and maybe it will. Now, it has had another even higher volume small bodied candle. It slightly broke the resistance. I am not trusting the upside here, so I’ll just stay out at this point. It has now fallen some. It just went back up, and trading is over. It may glide on up for the morning.
Here is a picture of what was going on today on the one minute chart. From left to right, the first circle is the open. The second circle is a point where someone might want to go short. It might make a little, but trading counter the market direction doesn’t usually get you much. The third one is where I went long. That could have made more than what I made as you see, but I did trade into a small correction, and just decided to exit, which is ok. The fourth and fifth circles are the small higher volume candles. As you see, the movement didn’t last really that much longer. The lines are points of resistance I was looking at as the movement progressed. As you can see, where I did my trade, the market actually only correct down to the previous resistance, so resistance became support. Holding on here would probably have been a good play. But, that’s sometimes the way it goes. As you can see, that last resistance finally did not hold up as support. The strength of selling had increased. If you were trying to buy at that point, you might have been late to the party, and the big operators were waiting for you.
I think down side movement has been established today, so I will only trade in that direction. I didn’t take an entry today. I might have been able to take an entry somewhere in the circled area. Here the market retraced and nearly hit the first support after the open. Support becoming resistance in a down market and resistance becoming support in an up market are something to look for. They tend to signal that that market may have trend like characteristics, and they tend to start to happen earlier in the trend, and later, they tend to happen less as the market really takes off. If I take a trade, I need to take trades on something that’s convincing to me and that I have confidence in, and is according to my trading plan.
The second run down is an interesting one. Notice how it just barely broke support and then went back up and failed. Also notice how the volume is growing on the green candles to be above average on the lower side of the move. It’s trying to give us a clue into the failure of the movement. Volume is a powerful indicator in future’s markets. It probably still has validity in the Forex market even though there is no central exchange, and the complete and real volume is not really known. When analyzing volume, using what they call volume price analysis, there are a couple of things that you want to notice. The first one are small candles on large above average volume. The second are large strong looking candles on small below average volume. This clues you in that there is something wrong here. I didn’t really see much of this going on today.
The size of spot forex volumes can’t even be estimated, for the reason you mention. But its total size isn’t really what matters to the individual trader, anyway: the proportionality and relative increases/decreases are what’s significant.
These figures are readily available simply by looking at changes in the closest month’s equivalent futures volumes. (For pairs that have an equivalent future available, of course.)
Absolutely, good point
Today, the market opened and then, broke out to the down side. You can see at the first circled area, that there is increased strong volume. The down side was established and I would only trade down side. Because the movement was heading into yesterday’s very powerful support, it was not one that I wanted to hold with much confidence. It did make around 10 dollars at it’s maximum, which is a minimum amount I am trying to take on trades in order to satisfy risk reward ratio. Sometimes, I realistically have to close the trades earlier, and that is fine too.
After that, the market went sideways. It floated up to the previous support that it had broken. It seemed like it might be trying to entice late traders into going short. Take a look at the second circled area. But, you can see that the down side movement has little to no volume behind it. It then broke out to the upside with increased volume. That could be a place where one might go long, but that is not part of my trading plan. It drove up quite a bit from there.
Today after the open, there was a break out on higher volume to the upside. You can see this on the far left circle. I was actually thinking of trading this, but it didn’t have a good candle finish. The next candle finished within that candle’s wick. Having a candle within another candles wick is never a good sign. After that, I could see that we were likely going to correct. The correction had no strength, and no up side strength was established. Instead, downside strength and volume came in with a strong down side candle. A fake out had occurred.
The second circle is a nice trade opportunity to the down side. The next candle took about 10 dollars. The third circle from the left was just an interesting candle. It is a weak looking up candle on very strong volume. If that had been upward strength, we certainly would have had a strong up candle. I think we can say there was lots of selling going on in that candle. The sell side then continued. Once we got to the bottom, a 5 minute hammer candle formed. The fourth circle from the left is where the volume increased on increased upward strength. The market went a little bit more up after that, but it entered a side ways area at that point. Entering side ways movement after a big move like this is very common.
Today, we could see that we had another down side break out. The left circle is the open. The second circle is a nice trade entry short, after the bearish engulfing. This made about 15 dollars in the next two candles. This movement did not hold up today, and we had a more unusual V bottom. This started out sort of like a correction, but it had strength. A bullish engulfing formed on the 5 minute chart. Some of the upward candles had above average volume. Then, another strong candle formed on the 5 minute chart as it broke up through the previous support.
I was always a fan of protecting profits, such as breaking trades even, and moving stop losses to lock in profits. Today was where someone can see the benefits of doing that. One probably needs to have a systematic way of doing this, or they will probably have solid winning trades turn into losers. Having this happen is not what someone wants in their trading.
I didn’t trade this afternoon, but I wanted to put up one more post. Later today, after the Nasdaq moved up for some time, it started to move back down after lunch. I have circled a couple of areas where support became resistance with good price action. Also, volume was strong on some of these shooting star type candles. These can be areas where a short trade can be put in that has very limited risk, and can easily be held for a quick trade with solid risk to reward. However, keep in mind that sometimes, this sort of trade will lose. That’s why limited risk and solid risk to reward is so important in trading.
Today, I ended up +1.50. I traded short early, and exited with about 5.50 loss. I then, went long, and made some profit. I didn’t hold the long trade as the direction was not established, and simply tried to take some decent profit out of the trade. This kind of a trade day kind of annoys me when it fakes out multiple times after the open, and I generally feel lucky if I get out without a loss for the day. 
Yesterday, there was a good trade to the up side, but I just missed the trade. It seems good to learn how to be happy with days where you take no trades. It’s certainly a better idea than trying to jump on board late, or trying to trade the counter move because you missed the real trade opportunity.
On the picture for today’s trading, the far left circle is the open. It moved slowly to the upside. It wasn’t long before I could see that it was ranging in an upward range like pattern that was wedge like. Volume declined continuously, which helped to show that there was nothing behind this movement. Then, it broke out on stronger volume to the downside. It retraced and formed a nice shooting star type candlestick pattern at the 20 ema on higher volume. I entered a short trade there. It was running down toward the original support at the open. I was able to make a pretty effective trade making about 7 dollars. I would not have wanted to hold it past the support. From there it seems to have moved sideways.
Today was the Jackson Hole Symposium, which might be expected to cause some unusual behavior in the markets. I didn’t take a trade today. The movement was definitely unusual behavior and is not usually how the market acts, so it seems like a good day to not be a part of that movement.
It started out with an upward fake out. Then, it fell, and broke out to the down side. There was never any good price action or really good entry points where I had good confidence to enter. The market fell through and V bottomed which is also more unusual behavior. There was a nice looking 5 minute chart hammer before the market picked up speed to the upside. Trading that would be more trading into a counter move, which is not part of my plan.
Today was a pretty interesting day. The far left circle is the open. It started out moving down and broke the recent support. You could see that there was a lot of upward movement. You could only see that on the 1 minute chart. You missed it if you were looking at any slower time frames like 5 minutes and above. The way it was moving made me not want to enter short. It then did turn around and move up.
I thought could have traded up at the second circle to the left, but I missed the entry. You can see that it had no strength, and had a hanging man candle inside the upper wick of the previous candle. I figured this was going to move back down, at least some. I made a trade up at the third circle from the left, which was my only trade for the day. There was a high volume hammer like doji here. I waited for it to start to move up. The trade made a small amount, but because there was nothing behind it in terms of movement and volume, I exited the trade.
There was then a break out to the down side on higher volume, so another multiple fake out day. But, it was breaking out into the previous broken support support from earlier, so I didn’t want to enter there. The last circle was just interesting in terms of volume. You could see very high volume, but it was not moving. You can actually see later that it tried to entice you in to the down side with a slight break out. Volume is a beautiful indicator.
