World of Warcraft came out with Cataclysm. Its fun!! One of the skills you need to play WoW is known as “Raid Awareness”. In a raid, a lot of things happen as the fight progresses. You need to know when to move and position your character, when to stop your attack, when to interrupt an attack and other things that normal gamers don’t get to do in many games. You will also come prepared knowing what the fight mechanics requires. You will also know how to react if certain role players fail, so you can step in and take over. Many games really just have you stand in one spot and attack and you can win. The latter is not too realistic. And that is how many people who trade, trade.
Have you ever heard of that ex-cme floor trader who claims to not use charts? He poopoos charts but the truth is he can’t trade without them. He uses PnF charts. Its an old school charting but highly effective. You don’t have to wonder too long why he was fired from the floor. He goes out and says things like “you just got to feel it in your gut”. Comments like that really lessen your credibility. It shows how much market awareness you have. The beauty about PnF is that is provides you the range and they will be hit every time. So how can you say “gut move”? unless you are trying to bolster your ego?
Market Awareness
Market awareness is being prepared. Market awareness suggest you understand the longer term trend, the intermediate trend and the current small trend. Not only do you understand it, but you know how they will all fit in together. Because all those trends can seemingly contradict each other. “Seemingly”? The real trend is always the higher time frame trend. The smaller time frames meander through the levels and sometimes will sell to build up momentum to the upside and rally to build up momentum to the down side and all that work to effect the rally of the longer term trend.
Really a lot of what you must know is to thoroughly understanding the S/R that are relevant to the current move. Momentum will adjust accordingly to respect those levels of S/R. You must match the current action to the definitive time frame. The definitive time frame is the time frame that has matured in its accu/dist process and is/will be affecting its pop/drop. It will be at the significant S/R.
Lets consider BAC. A few people in my group played this out really well. In the weekly, BAC has been selling but was about to arrive at a region of support.
The daily and the 4hr and 2hr were very telling of the accumulation process. It formed double bottom with supporting momentum. Kudos to the gang who took the profits!
If you consider the 4hr, it dropped really low, before popping. The low was achieved at 1pm 11/30 est. Some people classify those moves as shake out or false moves. Market awareness and because you now know about S/Rs explains that it was necessary to hit that lower price. It was the level!! So was it false? Was it a game being played? Were you being shaken out? Hell no!! It was technical.
What is interesting to me about some traders who claim to trade the futures is that they have no market awareness. They don’t know what the higher time frames are doing. They don’t even know what their intermediate charts are doing. They don’t understand progression. They don’t understand how the market moves. You hear a lot of POMO, market manipulation, PPTs and crap like that. They are your number one resource for market events. They are your number one resource for news. I really love it when they flood the chat room with a novel for you to read. To them this is being market aware. How many times have you seen these people frustrated and angry. Dejected that things didn’t work out how they figured. Market aware? Hardly.
Trade well, read your charts!