A GOOD TIME TO END 5/31/12

 BOT TRADING SYSTEM


5/31/12  THE end of the month and a good time to begin a break.  A break away so to speak,  It is time to move on, upward.  To go in a  new direction.

Each day, any trading vehicle will be bearish, neutral, or bullish.  The price action of that vehicle will find critical points where each position will be more favored than the others.

PA likes to test these key levels, and the +/- run points.  They are not pivots.  They are a psychological trading measures of where PA is likely to go, and if so, what it will likely do next.


The key levels are BOTs, Break Out Targets.  The BO or fade points are BO-5, BO-10 etc.  It is the authors opinion that these positions are favorable to trading and clearly keeps a stable perspective on the market Pa that minimizes, if not eliminates, the fear and greed so often referenced in trading dialogue.

Enough has been written for now.  Stating the obvious day after day seems monotonous, but it only seems obvious to those looking at the end of the day charts.  The real story, the BOTs are pre-market.

And that is sufficient to move on, because it is not time to reveal more.  With an eye on greener pastures, the move begins.....

SELL OFF WITH A REVERSAL 5/31/12

MAY ends with the US open at the EMA and the Mid BOT.  Selling continued to the  SBBO-10 where PA found support and a reversal for a range run to the Long BOT, a value no one considered possible.

The LB was the resistance, and sellers collected another 5 bar range run into the close.

Looking at the chart information above, this is how another trader used the data provided:

Similar action was seen across the markets as resistance hit and sellers took markets down at the close.

SELLING DAY WITH A TWIST 5/30/12

OK, we begin the day with a selling Range Run.  So far, not a bad day developing.  We had the ranges, we had selling PA.   We had price moving toward the BO-5 when fine when to bad.  Bad in the sense that the selling was in a B2 flag-channel up to the B48 area in the afternoon.  Whether bullish or bearish, these patterns are perhaps one of the more difficult to play.  The trash or thrash in PA  will stop you out, or push you out either by the move or the fear in a move.  There were some nice long and shorts available.  Knowing that does not provide console to many traders.

 By the middle afternoon we saw two head and shoulder patterns develop that were promising.  We had just added a comment in chat that (rather than a second push higher) PA was looking more like a rounded top H&S pattern.  The H&S prevailed.

 Rounded top type, with the second at a lower level suggesting more selling in a "M" pattern bear.  The shorting in this area is shown in this video,  Opinion, but the best trades are those PA moves beyond your targets, a guarantee for your exits.  Trying to time tops and bottoms, reverses, etc, for the maximum value will find you on the wrong side of a trade when your over confidence exceeds sound trading decisions.

http://screencast.com/t/1w6dxRUb

SELLING DAY WITH A TWIST 5/30/12

OK, we begin the day with a selling Range Run.  So far, not a bad day developing.  We had the ranges, we had selling PA.   We had price moving toward the BO-5 when fine when to bad.  Bad in the sense that the selling was in a B2 flag-channel up to the B48 area in the afternoon.  Whether bullish or bearish, these patterns are perhaps one of the more difficult to play.  The trash or thrash in PA  will stop you out, or push you out either by the move or the fear in a move.  There were some nice long and shorts available.  Knowing that does not provide console to many traders.

 By the middle afternoon we saw two head and shoulder patterns develop that were promising.  We had just added a comment in chat that (rather than a second push higher) PA was looking more like a rounded top H&S pattern.  The H&S prevailed.

 Rounded top type, with the second at a lower level suggesting more selling in a "M" pattern bear.  The shorting in this area is shown in this video,  Opinion, but the best trades are those PA moves beyond your targets, a guarantee for your exits.  Trying to time tops and bottoms, reverses, etc, for the maximum value will find you on the wrong side of a trade when your over confidence exceeds sound trading decisions.

http://screencast.com/t/1w6dxRUb

RANGE BOUND, TREND CONTINUATION SELLING 5/25/12

BOT TRADING SYSTEM
 C
WE get so accustomed to range runs and BO's that when a range bound day returns it seems so painful to try a trade or actually make a trade. In a tight range, each long push seems to be quickly followed by a selling PB.  Each sell off hits a quick support bounce by the longs.  So goes a tight range where PA trades between the BOTs and/or  TL's.


Today we had a short bias.  Selling was evident prior to the US open, but traded sideways in a descending triangle for most of the day, finally breaking for a trend continuation shorting to the SBBO5.

RANGE BOUND, TREND CONTINUATON SELLING 5/25/12

BOT TRADING SYSTEM

WE get so accustomed to range runs and BO's that when a range bound day returns it seems so painful to try a trade or actually make a trade. In a tight range, each long push seems to be quickly followed by a selling PB.  Each sell off hits a quick support bounce by the longs.  So goes a tight range where PA trades between the BOTs and/or  TL's.


Today we had a short bias.  Selling was evident prior to the US open, but traded sideways in a descending triangle for most of the day, finally breaking for a trend continuation shorting to the SBBO5.

5/19 BULL STILL IN CHARGE 5/24/12

IS ES WEEKLY SETTING UP FOR ANOTHER BULL LEG? 5/19/12

 

YES.  The bull continued to play the ranges again in overnight and in the US market.   The BOTs were unchanged, with focus given to range runs in the BO5-10 areas and pullback support checks to the Long BOT.

We saw this in the after hours yesterday, and was discussed with traders in the Euro Zone.

BIGGER PICTURE

The two day look at PA trading with the BOT levels.  Each support PB allowed for another run long.

 

BIG PICTURE

The Euro Zone today had a nice PB check that found support at the Mid BOT before returning to the BO10 level.

By the US Open, we were shorting the BO10 PB to the BO5 level, followed by another 5-10 range run for a local double top and a PB to the LB by mid day.

PA had an extended stay at the support and finally gave the bulls another run to the BO10 followed by a BO15 effort in after hours.

New levels will be calculated for the US Open tomorrow.

RANGE BOUND-RANGE RUN-BO'S 5/23/12

BOT TRADING SYSTEM

QUICK NOTES TODAY.  The US market opened inside the BOT range and quickly had a range run from the SB at B4-5 to the LB at B7.  A FBO tends to reverse and test the opposite level and has a new BO5 attempt.  Today, the LB failed, and we got the range run and the SBBO5.  Support was found just shy of the BO10 area (SB+9).    A FBO reversal to where?  The LB+9.

Range bound, range runs, BO5's.  Another BOTtastic day.

BO TO BO RANGE RUN DAY 5/22/12

THE market began bullish with a nearly complete range run to a BO+5 and nearly a BO+10.  The Mid Range today acted like a 50CB for B2 and longs entered B3 for the expected bull move.  B7 repeated for new bulls entering the Long BOT above the EMA.

The bull pasted the BO5 and stalled near the BO10.  We discussed a H&S pattern that would see strong sellers pushing PA back to 1320-1318.  The 3m and the %m both broke the EMA and found that short scenario target.

Longs regrouped at he LB support around B32-34 for a fresh run on the BO5.  PA traded in a narrow range with two failed range reversals and two failed break outs of the BO5.

B 65 closed at the low of the bar and bull bars B66 & 67 closed below the EMA followed by the bear b68.  This weakness continued with  the range reversal with a range run to the opposite level and a short BO5 hit.

Overall, an enjoyable trading day.

RANGE RUN AND BREAK OUT LONG 5/21/12

BOT TRADING SYSTEM

THE day after the "long opportunity" post did well, very well with a range run and long BOT break out that ran to +5, +10, and +15 over the day.

Aggressive longs entered on the 50CB of B5 (entered in B6).  The LB at 1300.25 was an auto entry and was followed  by longs at the B11 (entered in B12) first pull back after the LBBO.


Institutional buyers were seeing a long opportunity coming into the US open.  The post over the weekend outlined reasons a bullish leg had an opportunity to develop.

IS ES WEEKLY SETTING UP FOR ANOTHER BULL LEG? 5/19/12

 

 Today, the answer was yes...

 

 

IS ES WEEKLY SETTING UP FOR ANOTHER BULL LEG? 5/19/12

THE market has pulled back to test prior highs from last summer, May to July and PA trend lines. What is interesting is we are also in an area that can be a higher low support.  While the "trader on the street" may be seeing the sky falling, I sense smart $ is seeing opportunity.

RUN AND RETURN 5/18/12

BOT TRADING SYSTEM

OK, Facebook could not save the market.  Now we can get back to business.


The overnight action moved lower and found support around 93-94.  PA would run bullish but could not break the long BOT.  In fact, we had two failed attempts that produced LB Gaps.  We were not confident that the market could hold through the US Market.


[07:41] <CM> good morning (or night ) it has been an over night bonanza
[07:43] <CM> hard to say if us open will follow through but the bot targets today for us mkt 1311.25-07.25-02.25  (link deleted) prior buying at 93 area and 1301 has developed a bear channel and a bo of yday bear channel

A pre open LB attempt failed followed by B17-18 failure in the US Market.  Another weakness noted was the EMA holding close to the Mid BOT (not an arithmetic middle, i.e. (H-L)/2).  The Bear channel developed sending PA back to where we began.


Run and return,,,

A late pop at the end offered a quick CT trade for the longs, but it was the end of the day that was ending the week.  PA had decided to settle in the 1290-92 area.

PRE OPEN H&S BREAKS: BEAR CHANNEL FOR THE OPEN 5/17/12

IN the Euro Zone ES developed a head and shoulder pattern that broke lower developing a bear channel sell off that hit BO15.

B1 and 2 were open sellers followed by the first pullback in B3, an opportunity to join the bear TL and selling channel.

B8-9 was a short BOT fade that was a bullish counter trend entry.  Side ways action followed and seller again pushed the Pa to the SB.

A failed channel break out (FCHBO) hit at B34-35 with a HL long at B38 back to the upper TL and a fade of the SB (also a lower high from 15-15 area).  These shorts continued with an EMA established as the resistance and a final end of day channel BO.

DOING THE MATH: IS TRADING FOR YOU?

IS trading for you?  It's a question everyone attempting to trade needs to seriously answer.  The chart above illustrates two monthly targets ($5000 and $2500).  A seemingly reasonable starting point; no get rich quick, earn as you learn, etc.


But on a closer look, small contract traders may need to trade multiple months to reach the target, and this assumes they learn to trade with a winning strategy before crashing their account.


If they can be successful and grow their account, then the targets could be reached on a "trade" basis rather than a month basis.


A goal to target is to accumulate 20 times your monthly take home pay.  $5000 per month time 20 is 100,000.  Earning 5% per month on your savings will equal, yes, the $5000 monthly take home pay.


At a margin rate of $500 per contract, $10,000 will be sufficient to trade 20 contracts, and you could set your trading to 10 contracts holding 10 in reserve.  Even at 10c's you would need 10 points per month to hit your target.  The balance of your savings is invested in equities etc per your individual requirements.


If you can take the time to learn trading, keep you risk in check, and let your account build, you will be able to trade more contracts with confidence and reach your monthly target.  Any extra, give yourself a raise or move it to other investments.


It takes time, patience, and study.


Some will look at this and not bother for 5000 or 2500.  But they would miss a very important point:  the 5000 is potentially one trade with 20 contracts ( a 5 point trade).  What they miss by exiting is the real question, "How many of these can you do in a month?"

RANGE RUN BO AND BACK AGAIN 5/16/12

TO understand the US market today, we need to look back to the Euro Zone range run and break out.  PA hit the long BOT at the open and ran for a BO5 before fading at the 7.5-8 point area,

A reversal signaled, and returned to the LB and a range run in the PM.  Essentially, back to where it started in the Euro Zone.

Bull channel early to a bear channel later...

RANGE REVERSALS BULLS AND BEARS 5/15/12

BOT TRADING SYSTEM

TODAY we saw Range Reversals define the PA:  bear into the open, bull in the A.M. back to a bear afternoon to the close.

  We got decent HL's with the bull, but the EMA Gaps were weak.  The Bear run in the P.M. developed increasing EMA Gap size as it faded the TL.  Just an extra piece of the puzzle when looking at staying with a BOT trade.

PRICE ACTION +EMA GAP = A TREND 5/14/12

THE week started with a gap open that eventually filled but stayed in a narrow channel for most of the Euro Zone trading.  At the US Open, PA bulls and bears battled inside the BOT Range and had a narrow 2 point break out.  RANGE BOUND anyone?

By bar 14 longs were back in play.  By bars 15-21 we see a series of higher lows PA.  This, combined with BOT range run, was enough for the bulls to hold.  By bar 230 area we have part 2: the EMA Gap showing strength.

Higher PA+EMA Gap+ BOT Range Run/BO/reversal equals a bull trend.

 The first expansion stalled around 1342.5 and a nice fade was shorted back to the long BOT.  PA was supporting and new long were taken for the second expansion, albeit it was slightly weak compared to the high of the first expansion and shorting began to hit by bars 54-57.  A HOD expansion failure for a reversal in the market.

Lower PA +EMA Gap+ BOT Range Run/BO/reversal equals a bear trend.

We like BOT plays and trends...

Considering the news, the market actually did well.  Could most of the news now be factored in?  Are the bulls ready to see an expansion?  Is the Euro Zone without some players actually good?

There are some conditions in play to suggest bulls are stronger than most think.  We have not seen a strong bear sell off.  Controlled selling to lower levels yes, but not panic selling.  Today was a win for the bulls.

LOS BOTS 5/11/12

BOT TRADING SYSTEM

Today was another excellent day for the BOTs.  In the pre open there was a range bound PA that allowed a long at 1350 and a later short at 1350.25.


The BOTs were set at long 1352.5 and short at 1347.25.  At Bar 1 we had the "perfect storm" for trading:  A reversal of the SB, a break of the EMA, and the 1348 magnet from this week.  Price ran the range (5.25 points) then added another +5 and +10 in the break out.


At the LBBO10 (b23-24) price fades the BO10 and reverses.  A two to three bar trend line and the EMA was solid resistance for the bearish channel.  Channels this strong, and after a reversal, are very productive and easily played.  Bull pull backs will be counter trend, and offer entry points in the channel.  Another plus for BOT players:  the tendency for price to return to a lower level (BO10 to 5) and even the LB in a strong channel.  Bull reversals would PB to the SB.


The value play is with trend (the channel) at the resistance (EMA or TL) or the support (EMA/TL for the bulls). Counter Trend (CTs) are higher risk and stressful plays in a channel.  They can be sluggish and stop short of a reasonable profit.  It is also believed that they promote over trading.


Today, the reversal channel hit with trend +5 then +10, with another +3 to the middle BOT at the end of the day.  CT longs(traders looking for the bottom, or a channel reversal) offered the following:  
Trader sees a bull bar and enters the close. Max profit if order hits, timing perfect , etc.
B28    .5   
B35   .25
B37   .5
B42    0
B46    0
B48    +2
B53    .25
B58    0
B60     0
B63     .5
B69    .5
B72    0
This is perfection, and I have never met one of those traders.  Twelve trades for 4.5 points, and that assumes the trader quickly hit break even (a 0) when the trade sold the bar after the bull entry.

RANGE BOUND LIMITS 5/10/12

BOT TRADING SYSTEM

THERE is a reason to play with trend, and to play the range run only.  In any market, PA can run for an extended BO or a moderate +5 type.  Then there are the range bound days that seem to stay in a range run over and over; waiting.  Seems that waiting ended after the US close when the SBBO hit.


Other notes for today can be found on the chart.

RANGE BOUND SWINGS 5/9/12

WE are in a multi-day range roughly 1340-60, and will continue to focus on range runs and break outs that run the day range, then be aware of PA reversals.  This will continue until the market makes a move to expand the 40-60.

pre open range run LB to the short.  PA trapping around the EMA at the open.

B10 SBBO which was valid (+1 before -1) that held at the lower day range target 1340

B12 doji inside prior bar was a turning point that signaled long in B13 LONG REVERSAL HOLD!

Range run with a LBBO to +5 level which held the reversal at 1348+.  1348 has been a multi-day long  and short consideration. B39-40 add longs or new entries at the LB.

+10 break out run was stalled creating a high of the day and a selling signal at B53-54.  Shorting began with 1355 and later 1350-53 as targets.  Some CT longs  at B69-70 stalled at the BO5 for additional shorting.

Back to the 1348 area.

RANGE RUNS & BREAK OUTS, AGAIN 5/8/12

BOT TRADING SYSTEM

PRE open range run short to long

reversal back into the ranges for a Long to short run

PA staying in a range but shows weakness at the EMA and middle range.

US opens, market enters a sell off with another EMA failure

PA and EMA head lower into the Lower Trading Range ( area below 1357.75)

Back to the 1348 long area from previous bull break out

PA selling extension/exhausting pattern at B22 area

Shorts exit zone as PA hits the EMA/BO10 area

Bull TL develops.  HL and TL buy signal at B43 area

Exits at the SB for a complete reversal.

Yes PA went higher.  Set a target. If it hits, exit.  A good trade beats the risk associated with greed any day.

OVERSOLD =BUY OPPORTUNITY 5/7/12

THE sky is falling. Sell, get out.  Sell in May and go away. On and on the news gurus pedal the rumors and panic wheel.  ignore them...  The market does.


From last evening:   

[19:08] <CM> need to test the gap  long es 48
[19:09] <CM> the daily is a possible signal for a rebound w/ a double down a 3rd bar a gap dn

That daily pattern was an exhausted sell off, and longs worked well before and after the US open

ALL THE ANSWERS: A LOOK AT 5/4/12

BOT TRADING SYSTEM

FRIDAY was one of those days that BOTs really shine and work extremely well.  So let's cover what IT is all about.

Each day, the markets will trade a given range.  There will be two points in that range that will  define bull strength or bear strength.  This is a market value where one side has an advantage over the other and the dominate position will be with trend, the lessor will be counter trend.

These points are the break out or the start of the dominance.  Thus, break out targets (BOTs) were developed to capture the market dynamics.

When a BOT breaks, the position is with the trend.  The CT's are for scalpers or used for the with trend exits.  The money is with the market.  The CT's are playable but not optimal for long term trading.  They will work enough to get you in trouble with higher probability losers.  The money is in higher probability winners.

Extended break outs will run to a +5 (BO5) +10 (BO10) or more.  These suggest that a trader should hold until price action PA returns to the prior BO level or the EMA.  This eliminates the need to monitor every bar.  You are looking at the market; playing what the market makers are allowing.

We had a range run (one bot to the other) in the pre open that hit the Long BOT (LB) and began selling for another range run.  Once the EMA falls below the short BOT (SB) the market was decisively bearish.  Holding until the EMA hit was nearly the max playable for the day.

Duh.  Looking at the chart TODAY anyone can see that the market was a short, and you would be correct.  But BOTs were showing the bias BEFORE the market opened.


BOTs, then the market PA.

RANGE RUN TO EXTENDED BO 5/4/12

THE pre open US had a nice range run and nearly two short bo-5's by the open.  The BO selling continued as PA sold off to bo-10, then bo-15 with an EMA as a strong resistance.

The exit strategy:  take the first hit; either the BOT tracker (not shown) or PA hitting a prior SBBO level or the EMA.

When in a strong selling trend, all longs were CT and subject to fail.  The exit strategy would eliminate early fake outs and attempt to maximize the exit value.

RANGE RUNS & A BEARISH CHANNEL 5/3/12

BOT TRADING SYSTEM

TODAY PA was in a pre open bearish channel and a range run from the long 1400.75 to the short at 1392.5.  By the early afternoon, a BO-5 level hit.

KEY POINTS:

1:  bearish channel beginning at the Long BOT.  Also note the resistance ledge that was a micro resistance, but an appropriate low risk short.

2:  PA completed the range run and reversed for longs at the Short BOT and the lower TL of the channel.


3: Upper TL of the channel, and we see another micro ledge for new shorts.


4:  A new support ledge develops at the Short BOT.  The EMA and the SB are more stronger as a resistance, than the micro ledge is as support.  The channel is still in play, and PA breaks for the BO-5.

5:  PA trapping at the BO-5 with a test of the 50% level of the control bar # 51 with the bull PB stopped by another micro resistance.

THE BIGger PICTURE 5/2/12

KEEP IT SIMPLE...

TODAY the big picture, and the bigger picture.  The big picture is the trend, and what price action has been doing before you begin to trade.  I know some people only look at the Rth charts.  But if I start at 7:30, the Rth US chart starting at 9:30 does me no good.  Traders must know what the market has done/is doing when they start trading.  Gaps at the US open are artificial, since PA has been ticking away from the prior day.


THE BIG PICTURE

A bear trending channel coming into the US Open which reverses at Bars 13-14 and begins a bull channel trend into the close.  Channel and Break Out Targets reflect support and resistance as PA moves in a narrow range.





THE BIGGER PICTURE

The bigger picture is, when PA sentiment offer the opportunity for a profitable trade?  The trend is great; the channels and the breakouts.  But PA reflects the sentiment of traders, and not the guys in your trading circle.  It is the sentiment of trading giants and it will direct you toward profits.

Trading can often be judgmental, however there will be PA reads that tell enough of the story to take action.


The chart has been expanded to see more PA detail.  We begin at #1.  PA is at the top of the channel, in a range run for the BOTs, and at the EMA.  Bars 2-4 are expanding the B1 range.  Notice how PA pushes up to the Long break out (green line) and pulls back.  Look at the bar bodies.  We are in a narrow range from pre open B276.  PA is saying shorts are in the 1394.5-1395.5 area and they would have a stop around 1396 to LB+5t.  The short worked as PA moved down the BOTs and to the lower TL of the channel.

#2  Pa showing  weakness.  Seems it is having trouble with 1390.  Longs are in at 1390-91.  If you do not understand BOT levels or channels or break outs, understand when and where PA shows multi-bar support or resistance.  Make the trade with a  protective stop just ahead of the s/r.


#3  When in a trade, look for a reason to exit.  Again, a range run (which is a play) after the reversal.  PA again hits the "memory" area of resistance and has an EMA pull back.  Continues to follow the channel with EMA as support.

#4  Finally break the long BOT and notice the resistance at 1397.5.  Average shorts are in at 97.5-97.75 area with stops around 98.75.

#6 and #8 are at similar levels and exhibit similar bar patterns showing a sluggish bull at resistance.  note after the two selling bear bars 61-62 a relatively low risk short is available to the #7 area.  This was the trade discussed in the chat.  Sluggish bull, PA looking lower to around 95.


#5 and #7 are similar bounces at the LB support and higher lows from B32 area.



All lines and signals could be erased.  The PA would still tell a story.

SCALE IN-SCALE OUT OF EXTENDED RUNS 5/01/12

BOT TRADING SYSTEM

BOT levels are played for range runs and for break outs.  PA that stalls around a BO level tends to PB to a prior level.  For instance, today we saw a stalling at BO-15 that returned to the BO-10 then BO-5 as the DT trade developed.

 Normally scaling is not a recommended trade.  However, there are times when it can be a benefit if the trader maintains a risk level and gets out if the trade does not materialize.  An acceptable scale technique is scaling where PA indicated exits by longs/covering by shorts.  Thus, scale in points and scale out points.  The scale in points today were in the general area of 6.5, 7.75. and 10.25.  These scales were looking at the extended run and betting it was finished within the BO15.  Another key was a pattern we have discussed previously: the DT or "Dick Tracy."  A nice left side push, a stall and a lessor push.  Part 1 and 2 completed, now look for the right side selling.  It did in the ES and TF.


DT

ES TODAY

TF TODAY