Stops That Adapt With Market Volatility

One of the few things we have some control over in the markets is in defining our risk. We don’t want to use some out of touch arbitrary stop method to define risk. There are no perfect formulas but if we can develop an understanding of volatility and market structure, we can come up with logical places to place stops. In this video, I show 2 simple methods for calculating stops using swings and ATR, and these are based on price flow itself and adapt to its everchanging volatility. Traders seem to devote all their time to entries but we should study everything we can about stops because a well thought out stop can also be an entry idea. I will often look for where I might place a solid stop in a market and then use that for an entry.

Following Live: Theory Into Practice November-December 2020

Keep in mind that when I use the word “follow” I’m not just talking about trailing along behind a market. The word is describing an experience of setting yourself aside and learning from what they are doing. Using a simple swing framework, we learned a few ways we could trade the S&P E-Mini and AUD/USD that we were following. This month we will follow Soybean futures which have been running up smoothly and USD/CAD which has been running down smoothly.

The Swap, a Simple Frame for Markets

It’s easy to get overwhelmed when looking at all the crosscurrents in markets along with all the technical analysis that is out there. Trading does not have to be complicated, it’s a matter of using our tools to see if the buyers or sellers are in control and where that changes. We have several simple ways to map and read markets. In this post, we are going to focus on the simple swap area of a swing and use that as a framework to read and trade markets. The swap area of a swing turning up or down is a significant market structure where the balance of power changes. Learn to see it and then make observations as to how price interacts with that area. Then design ways to read and trade it.

Following Swings Into the Gap on the Left

In the previous post “Gap On The Left”, we looked at a simple, relaxed way to read and follow markets. In this post, were going to combine that with relative swings and follow price down into the gap on the left and let it tell us when it wants to turn back up. So often as traders, we ignore “what is” occurring in favor of what we think or want to occur. You can reference the post “One-Line Practice For Personal Insight” for practice in following swings.

The Gap on the Left

In this video, I will show you a simple visual way to read the flow of the market. Big Gaps are easy to see on the chart, our eye naturally gets drawn to them. A gap is a quick supply-demand imbalance that pushes all the guessing traders (contraction) into or out of their positions (expansion). Use this simple framework to make observations then create your own ways to trade it using those observations.

Following Live: Theory Into Practice. October 2020

This month we’re going to follow the E-mini S&P and Aussie 240 minute swings. Last month saw a big jump in volatility as we followed silver and the Swiss currency. We learned a lot from these charts as bigger swings carved themselves out and the USD/CHF did a transition from down to up. It’s good to see these transitions take place live as you follow and learn to change with change.

Beginners Mind

What if there were no books or any instruction anywhere on how to trade and you figure it out by just observing and discovering? You would begin to trade based on your fresh observations, trying this and trying that, until you found your way, getting more efficient at it as you went, like a child learning to walk. If you did this, you would be learning from the price itself as it flowed, from a place of discovery and not-knowing. In our live Language of Markets session, we did an exercise where we took an active Emini-S&P market and learned as we went. I did this video later that afternoon to demonstrate how that exercise led me to my own beginner’s mind.







How Swings Grow Up and Expand

In these blogs, we have done a lot of work on mapping markets with swings. In this post, we will look at how minor swings grow up to be major swings and ways we can read and trade this dynamic. These will fall under the category of type 2 trades, expand then continue. Its a type of waiting outside the immediate price action that can be very relaxing. You can read about “The 3 Types of Trades” options on the Language of Markets home page.

Finding The True Levels In the E-Mini S&P

To find the true structured support and resistance levels in a market, we use a contraction of price and a wash of that contraction. You can see these true levels on this 20 minute E-Mini S&P chart I posted for our members. In the video, I describe the steps to the process of a wash and rinse structure as a pivot component of a swing and how that can help us to read the true supply/demand levels.

Crashing Expectations

This is a live clip from the Aug 3rd Language of Markets Live session where we discuss how approaching any method, structure, or trade with predetermined expectations blinds us. It’s a valuable thing to eventually have our expectations disappoint us. We are forced to give up and this frees us to see the whole picture. I then demonstrate how to discover the essence of swings by discovering controlling buyers and sellers in the live AUD/USD. I also give an example of how reading price action (bar-by-bar) easily shows us the controlling buyers and sellers that showed the swing to project for an entry.

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