Daytrading Course
Learn to Read the Tape
Exploit Pit Pivot Points
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PIVOT MAGIC TRADING JOURNAL - EXCERPT

Good morning,

In the previous edition of the Pivot Magic Trading Journal, PERSPECTIVE
Section, we shouted: "BEWARE OF TRAPS ON FRIDAY!"
Sure hope everybody heeded the warning!

From = 1 on, Friday was a minefield, full of traps. One good trade, but
mainly we got suckered into a few SCRATCH! trades/traps. Trading
defensively, our PMT risk-conservative Money Management rules kept us out
of the red, with the all Scratches either breaking even or yielding a tik
or so of mini-profit.

The market has plunged over a very significant precipice and is teetering.
A Red Flag warning remains in effect.

CAVEAT
Guard your funds. Although a dangerous time for beginning traders to
get wet, this is an excellent time for paper trading and practice.

E-mini
Friday Jan 23, 2009

Morning session opens gap-down near the Low. Intent on closing the opening gap, the Bulls drive Price Action
(on ever diminishing Volume, green line) to the first obstacle, the S1.

1 = 123 continuation "S" Signals below and above the S1. Volume has drooped and is swinging, so our aggressive
entry techniques are not even considered.

A = The 123 lingers with two more Bull Dragonfly kickoff candles (blue arrow). Finally, Volume surges (pink arrow),
and Price action heads for the (theoretically) semi-permeable lavender line (LT SW Channel floor, Daily, bottom
chart), pulling us in. Initial stop advances under the LowM/LowW, reducing At Risk.

B = Large white Bull Dragonfly slams into the lavender line. Our position is in Pivot Magic Trading Maximum Profit
Giveback (MPG) violation. Mental stop at Giveback level (from a Money Management perspective, stop at "free trade"
and a tik is an excellent, risk-conservative, alternative).

[SNIP]

SCRATCH!

[SNIP]

2 = White Bull Dragonfly at the S1. Volume is too drowsy (pink arrow) to consider entry.

A = 123 retest/"S" (blue arrow). Volume surges (sky blue arrow), and we allow ourselves to be pulled in (prepared
for a Pivot Scalp type entry if the SW Channel repulses Price Action again).

No problem. Price action blasts through the LowM/W and the lavender line. Initial stop advances under the lavender
line.

NOTE B: The stop is not advanced to the MPG Giveback level because the DVS
(sky blue arrow) implies the expenditure of much energy, thus a breather may
be expected. In fact, with such force having been necessary to clear the
lavender line, that stall/breather further implies a probable retest of the
LT SW Channel floor. Expecting the floor, semi-permeable S/R (with
Alzheimer's), to hold, a stop (remember this is still the Initial Protective
Stop) under the line permits the move to work out, while also protecting a few
points of profits.

With Price Action well on the way to the Pivot/Close Primary Objective, this is
the stop-placement option that will best permit us to let our profits run, and
thus it represents the most effective Money Management choice.

C = If your discretion told you otherwise and you put a mental stop at MPG, you may well have promptly been forced to
abandon the move (re-entering immediately as Price Action tapes a 123 continuation/retest ("S" Signal) and heads for
the north country).

Advanced, experienced PMTers who held on, simply added contracts and scooted the mental stop to Giveback level.

D = Large, white, inverted (Bear) Dragonfly overwhelms defenses at the Mid, spikes through the Pivot, and retracts.
DVS (pink arrow) late in the move spells exhaustion. With TGIF party lunchtime exodus expected soon, hanging on and
waiting for Price Action (possibly) to briefly spike through the Pivot to gently tap on the Close offers little to
gain, and plenty of losses and/or ulcers to lose. The R:R aspect of good Money Management is clearly askew. Ideally
exit as Price Action crosses below the Pivot. Next best, per our stop rules move the profit-locking stop under the
Mid. When the next candle spikes through the Pivot and retracts, Exit Now!, even before the tape displays a Higher-
High-Turns-Red (another of our PMT Exit Now! signals). +/- 8.75 points

3 = The BBs don't appear to be thirsty yet (Volume is moderate, but steady), so you may have ignored the clock and accepted this red Bear Dragonfly "P" signal. Being pulled in on the next candle, advance the initial stop above the Mid, reducing the Undefended At Risk (good Money Management).

E = Large red candle puts the position in MPG violation. Mental stop at Giveback level.

The next candle turns into a mid-air 2-bar Reversal, and that's another of our Exit Now! Signals. SCRATCH!

BBs spring a quick tap-on-the-Pivot 123, shaking out the Bears and trapping the Bulls as Price Action resumes the
second test of the LT SW Channel Floor Support.

4 = Lots of swinging, but the tape now finally displays a large, Double bottom "P" Signal off the lavender line
(which, BTW is now rock-hard Support) for a failed TTT (if you count the 123). With the final bounce, the tape
displays a wide Failed TTT Corollary pattern, which means a TTT attempt on the Pivot Resistance. Volume perks up,
and, with a final 123, Price Action crosses above the Pivot and enters the "green fog" Ambush Danger Zone.

F = DVS (pink arrow) and we are pulled in, above the fog, on a large white candle. The required DVS energy to enable
the Bulls to blast free of the Pivot/Close may have exhausted forward Momentum. A breather is anticipated. Since a Momentum stall can easily give way to a retest of the Close, jump a mental profit-locking stop to "free trade" plus a tik (no rule, just good sense).

As soon as the next candle shows red, pull the trigger. (Notice that this is nominally a Higher-High-Turns-Red, but
it is also a true DT Triple top reversal, an Exit Now!. SCRATCH! +/- 1.75 points

[SNIP]

G = The two formations are very similar:

* A particularly large candle blasts free on powerful
DVS Volume.
* The effort to overrun massive Resistance exhausts
Momentum leaving the Bulls gasping in need of a
breather.
* On the following candle, the Bears eke out a small
red breather candle with an elongated bottom wick.

In spite of the similarities, do see why we held our position in through the dip in the
first circumstance (green dotted oval) and exited briskly in the second (plum oval)?

[SNIP]

REMEMBER: Trade the tape, not my prognosis!

Asher
=] ;-)>
Pivot Magic Trading Course
http://www.tradingthingys.com/PMTJ/Commodity%20Day%20Trading.html

Friday's PMT Chart: