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The Hardest Way to Trade: Context Trading

  • #1
  • First Post: Feb 2, 2019 5:03am Feb 2, 2019 5:03am
Hello fellow Traders.

Before we start i want to put out a quick word of Warning:

THIS WILL BE THE HARDEST BUT MOST COMPLETE TRADING SYSTEM YOU WILL FIND ON FOREX FACTORY!

The Plan for this Thread is to treat this like a Classroom or a Course at University. So the Thread should be read chronological.

My Intention of this "Course" is to evolve as a trader by myself by having open discussions and arguments about my/your marketviews!
  • #2
  • Feb 2, 2019 5:05am Feb 2, 2019 5:05am
Class 1:

Before we can even start to watch the upcoming Videos i highly recommend reading the following books:

Follow the Order:

  1. Markets and Market Logic by J. Steidlmayer, Kevin Koy
  2. Steidlmayer on Markets: A New Approach to Trading[/color]
  3. Steidlmayer on Markets: Trading with Market Profile
  4. Markets in Profile: Profiting from the Auction Process by [/color]James F. Dalton, Eric T. Jones, Robert B. Dalton
  5. Mind Over Markets: Power Trading with Market Generated Information [/color]James F. Dalton, Eric T. Jones, Robert B. Dalton


Some of them are available as PDF for free!

  • #3
  • Feb 2, 2019 5:58am Feb 2, 2019 5:58am
Before you begin, your list of literature has shown that this really will be the hardest way to learn how to trade. I prefer the simple and direct way, the one I developed over 10 years of trading.

Trade safe and prosper .

KP

Quoting HoldemTrader
Class 1: Before we can even start to watch the upcoming Videos i highly recommend reading the following books: Follow the Order: Markets and Market Logic by J. Steidlmayer, Kevin...
Do your homework, follow the footprints of smart money
  • #4
  • Feb 2, 2019 7:36am Feb 2, 2019 7:36am
Quoting KeenPips
Before you begin, your list of literature has shown that this really will be the hardest way to learn how to trade. I prefer the simple and direct way, the one I developed over 10 years of trading. Trade safe and prosper . KP {quote}
What ever works best for you sir. Wish you all the Best.
I can only share the path i had to go through.
  • #5
  • Feb 2, 2019 9:28am Feb 2, 2019 9:28am
Consider me to be in class, I was actually reading Mind Over Markets when I came across this thread. Looking forward to your words of wisdom. I like that you are using the Socratic method.
Buy, Sell, plus this other thing equals Profit!
  • #6
  • Feb 2, 2019 10:12am Feb 2, 2019 10:12am
Quoting JayDavis
Consider me to be in class, I was actually reading Mind Over Markets when I came across this thread. Looking forward to your words of wisdom. I like that you are using the Socratic method.
Welcome on Board Jay! Looking forward to an open discussion!
  • #7
  • Feb 2, 2019 12:04pm Feb 2, 2019 12:04pm
Quoting KeenPips
Before you begin, your list of literature has shown that this really will be the hardest way to learn how to trade. I prefer the simple and direct way, the one I developed over 10 years of trading. Trade safe and prosper . KP {quote}
Wao! 10 years.
Please kindly share your enormous wealth of experience with us.
Trade to trade well
  • #8
  • Feb 2, 2019 12:39pm Feb 2, 2019 12:39pm
Quoting HoldemTrader
Hello fellow Traders. Before we start i want to put out a quick word of Warning: THIS WILL BE THE HARDEST BUT MOST COMPLETE TRADING SYSTEM YOU WILL FIND ON FOREX FACTORY! The Plan for this Thread is to treat this like a Classroom or a Course at University. So the Thread should be read chronological. My Intention of this "Course" is to evolve as a trader by myself by having open discussions and arguments about my/your marketviews!

I am curious, subscribed.
LDFX Trading Ltd
  • #9
  • Feb 2, 2019 1:59pm Feb 2, 2019 1:59pm
Mate, it's not about me or even the OP. It's about helping fellow traders to be focused. Nevertheless, you may check my profile and visit a few of my threads. Perhaps, you will find something helpful.

Trade safe and prosper.

KP

Quoting Zillionaire
{quote} Wao! 10 years. Please kindly share your enormous wealth of experience with us.
Do your homework, follow the footprints of smart money
  • #10
  • Feb 3, 2019 11:59am Feb 3, 2019 11:59am
Quoting HoldemTrader
Class 1: Before we can even start to watch the upcoming Videos i highly recommend reading the following books: Follow the Order: Markets and Market Logic by J. Steidlmayer, Kevin...
Class 1:
By now (after reading is finished) we should be able to answer the following Questions and able to master the following tasks:

ad 1)

  1. What is the main Task/Goal of the Market?
  2. How does an Auction work?
  3. What happens when Supply exceeds Demand (and vice versa) -
  4. Mark Areas in the Picture below where

    1. Supply exceeds Demand
    2. Demand exceeds Supply




ad 2,3,4)

  1. Identify all basic MarketProfile terms in the Picture below:

    1. Value Area
    2. Excess
    3. POC
    4. Singleprint
    5. Gap
    6. TPO Charts




  2. Timeframes and Location

    1. Describe typical Market Behavior (Bracketing/Trend)
    2. Know different Timeframes
    3. Identify shortterm Brackets/Trends in the Picture below!
    4. Identify Pricelevels where other/higher Timeframes might be active or take/took over controll in the Picture below




  3. Daytypes

    1. Identify a Trendday on the Picture
    2. Identify a Balanced Day on the Picture




POST YOUR RESULTS/THOUGHTS AND ILL GIVE SOME FEEDBACK AS GOOD AND FAST AS I CAN!

Attached Image (click to enlarge)
Click to Enlarge Name: EuroDollarFuture(6EH19) TPO.jpg Size: 164 KB
  • #11
  • Feb 4, 2019 6:50am Feb 4, 2019 6:50am
Bear in mind that I am still studying the resource material.

  1. The main task or goal of the market is to find a price that facilitates trade.
  2. An auction works by finding a price where buyers and sellers agree on value.
  3. When supply exceeds demand price goes lower since not enough buyers agree that the current price is reasonable and does not buy as many items. If demand exceeds supply then there are not enough items to satisfy the buyers and price increases. Here is a good place for me to bring up a caveat, It could be ridiculous to look at the currency markets through a supply and demand lens. Is there really a point where we have too few dollars? Too many dollars? Is this even really possible?
  4. The value areas are probably the areas in white.
  5. Excess areas seem to be the portions in blue on the chart
  6. POC - Point of Control thin line usually around the middle of the white area, but not necessarily so.
  7. SinglePrint - Prices at which trades occurred only once or below some threshold receive a single print, on this chart just one dot. It usually happens in the body of trending markets and at the edges of normal markets.
  8. Gap - area that price skips
  9. TPO charts - We are viewing a TPO chart TPO stands for Time Price Opportunities and reflects the fact that a deal was made at that price in the selected time period.
  10. Typical market behavior results in one of three types of markets, bracketing, trending, or undefined. I know undefined may be a cop out, but sometimes, you just can't determine what the market is doing. Bracketing markets are when a market is going back and forth from support to resistance to back again. Trending markets is when the market breaks through support or resistance and makes new highs or lows.
  11. There are different timeframes of course, useful for gaining different perspectives.
  12. I don't understand what you mean by other time frames taking over?
  13. Also, what is context trading?

Attached Image (click to enlarge)
Click to Enlarge Name: JayDavisEuroDollarFuture(6EH19) TPO.jpg Size: 203 KB
Buy, Sell, plus this other thing equals Profit!
  • #12
  • Feb 4, 2019 7:49am Feb 4, 2019 7:49am
Quoting JayDavis
Bear in mind that I am still studying the resource material. The main task or goal of the market is to find a price that facilitates trade. An auction works by finding a price where buyers and sellers agree on value. When supply exceeds demand price goes lower since not enough buyers agree that the current price is reasonable and does not buy as many items. If demand exceeds supply then there are not enough items to satisfy the buyers and price increases. Here is a good place for me to bring up a caveat, It could be ridiculous to look at the currency...
WOW Jay great Job. Very sophisticated Answers!
POC = Most traded Price of the Day.
Areas of Excess are Areas that got rejected/traded through quickly (leaving a Singleprint or a Valley in the Profile)

Maybe we cannot have too many Dollars but we can have too many ppl who want/need to sell/buy the Dollar at a given Price. So the Price would still be regulated by supply and demand

Your Question: What is Context trading?
This will be the Topic of next class when we add another Tool to our Arsenal. For now i think understandig the Auction process and reading a MarketProfile is the more important Piece to the puzzle.
  • #13
  • Feb 4, 2019 9:52am Feb 4, 2019 9:52am
While I do suggest reading the above-suggested material, I would like to include this short article from "Stocks and Commodities" Magazine from 2002 on "Market Profile Basics" as additional study material.
Attached File(s)
File Type: pdf Market_Profile_Basics.pdf   499 KB | 706 downloads
Buy, Sell, plus this other thing equals Profit!
  • #14
  • Feb 6, 2019 2:45am Feb 6, 2019 2:45am
Class 2:

If you read through the Books of Dalton and Steidlmaye you might realize that they want to know
"What the Market is trying to do?"
"How good of a Job did the Market do?"
"What will the Market do next?"

Before we can answer the most important Question for all of us (What will the Market do next) we need to find an objective Way of measuring what the Market is trying to do.

I use a classic Priceactionapproach as the next piece to the Puzzle:

I recommed to read the following Book(s):

YTC Priceaction Trader Vol. 2 and Vol. 3- by Lance Beggs

There also might be some free Material on his Website or on his YouTube Channel
  • #15
  • Feb 10, 2019 1:46pm Feb 10, 2019 1:46pm
Class 2:
Practice

1) Mark New Lows/Highs and lower Highs/ higher Lows on the following chart!
2) Mark 1 Swing with high Momentum an 1 Swing/Retracement with low Momentum
3) Mark an Area/Series of Swings with increasing Retracements/decreasing Projections
Attached Image (click to enlarge)
Click to Enlarge Name: PA.JPG Size: 69 KB
  • #16
  • Feb 13, 2019 12:08am Feb 13, 2019 12:08am
Quoting HoldemTrader
{quote} Class 1: By now (after reading is finished) we should be able to answer the following Questions and able to master the following tasks: ad 1) What is the main Task/Goal of the Market? How does an Auction work? What happens when Supply exceeds Demand (and vice versa) - Mark Areas in the Picture below where Supply exceeds Demand Demand exceeds Supply ad 2,3,4) Identify all basic MarketProfile terms in the Picture below: Value Area Excess POC Singleprint Gap TPO Charts Timeframes and Location Describe typical Market Behavior (Bracketing/Trend)...
What is the main Task/Goal of the Market?

It's task is to get weak hands to participate in the market ( traders who don't understand orderflow )
It's goal is to enable pro's to complete their business (traders who understand orderflow )
Never said I was Batman,all I'm saying is you'll never see us together.
  • #17
  • Edited 4:50am Feb 13, 2019 12:32am | Edited 4:50am
Quoting headfake
{quote} What is the main Task/Goal of the Market? It's task is to get weak hands to participate in the market ( traders who don't understand orderflow ) It's goal is to enable pro's to complete their business (traders who understand orderflow )
There is some true aspects to your answer but it is highly depended on the Timeframe.


I would say its the Salesmenīs task to get weak Hands into the Market not the Markets goal! The Market has no other intent as to faciliate Trade.
I definetly agree with you that people who understand Orderflow have an edge IF they are using it IN CONTEXT!

As a private Person with little capital/bad Internetconnection (compared to the Marketmakers with very low latency) and the fact that you execute your orders manually(not algorithmic) you will get lost and run over/tricked in the Tickbattle between Marketmakers whos intent is usually to fill large Orders on an advantageaous Price (meaning 1 or 2 Ticks better than the Price they sold/bought it)

Edit:

Orderflow is a very important Part of my trading and will be discussed in this thread but as the last piece of the puzzle
  • #18
  • Mar 6, 2019 12:38am Mar 6, 2019 12:38am
Example of Preparation with Market Profile and Priceaction!
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  • #19
  • Mar 7, 2019 12:28am Mar 7, 2019 12:28am
Daily Preparation - Trade the Context

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  • #20
  • Mar 8, 2019 12:31am Mar 8, 2019 12:31am
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