Keepin' It Simple: Supply and Demand, Volume, and Price Action

[pmccandless]

Hey guys. Somehow I’m just now discovering this site as I’ve been involved in the markets for almost a year and a half now. Seems like there is some good information to receive from this place. Hopefully I can help some others who are just starting out as well.

I’ll start off with a lil’ about myself… I began working my way to becoming a Firefighter/Paramedic in highschool as I thought this would be the perfect job for me. After working 4 years in the field as a Paramedic and Volunteer Firefighter I realized it wasn't what I wanted to do for the rest of my life. I basically dropped everything and moved to Lake Tahoe, CA where I lived it up and worked seasonal positions as a Snowboard Instructor and dockhand. I soon came to realize more and more that my problem didn't lie within the jobs themselves, but the fact that I hated having a boss. It was December of 2008 that a buddy I met up in Tahoe doing the same thing as me turned me on to the markets. I fell in love instantly and have dedicated hours on end to eventually becoming a full time trader.

I now live in Scottsdale, AZ where I trade the index futures full time, though not my sole income as I still believe I have a lot to learn. My passion and desire to make this my career has been what drives me to keep educating myself day after day and not take any short cuts along the way because you just can’t do that with trading. I’ve seen numerous people try to get the quick route to success by buying high-dollar systems that just end up failing them. You just can’t become consistently profitable without putting in the hours and hours of hard work and research and really understanding how the markets work. Sorry to burst any bubbles out there.

I’ve tried enough indicators, oscillators, head-and-shoulders, cup-and-handle crap out there to make my head spin. It was the beginning of summer last year that I came across a guy who’s methodology really clicked with me. Basically it was all about pure supply and demand, volume, and price action. Everything that the indicators and oscillators try to tell you, but receiving the information and putting it to use before the indicators and oscillators even know what’s goin on. After taking his course and private mentorship program my skill level has increased exponentially.

Anyways, enough about me. I just wanted to create a journal on here to share my strategy with everyone and show just how simple and straightforward it can be and hopefully learn from you guys as well. We all lose sight of even our own rules at times so it helps me to refresh on things I haven’t touched on in a long time also.

Making live videos of my trades has been a huge part of my growth so I will be posting as many as I can get in, but will also be posting the occasional screenshot with some notes. Alright this intro is out of hand I gotta stop…

Enjoy and let me know if you have any questions or comments.

[youtube]OjEg7YHnG0s[/youtube]

 

[DionysusToast]

I’ve tried enough indicators, oscillators, head-and-shoulders, cup-and-handle crap out there to make my head spin. It was the beginning of summer last year that I came across a guy who’s methodology really clicked with me. Basically it was all about pure supply and demand, volume, and price action. Everything that the indicators and oscillators try to tell you, but receiving the information and putting it to use before the indicators and oscillators even know what’s goin on. After taking his course and private mentorship program my skill level has increased exponentially.

Sounds good. Welcome to the board.

 

[pmccandless]

Hey I appreciate that. I hope to help and learn.

 

[timsk]

HI pmccandless,
Welcome to T2W!
I look forward to following your journal - good start.
Tim.

 

[fiatmoney]

Subscribed.. looking forward to your view on the markets

 

[Lord Flasheart]

im watching,

 

[pmccandless]

Wow. I really appreciate the feedback and interest guys. Good luck out there!

 

[pmccandless]

Hey guys. I caught a very nice TTB today. I'm really glad I captured it live on video as this is an excellent example of my style right here. It's kinda long, but it's very informative with zero bulls**t. The last time I say, "I'm going to pause here and I'll be back." I accidentally hit the stop button and ended the video. I did however exit the trade at 1971 even for a $150 profit. Anyways, enjoy and let me know if you have any questions or comments.

[youtube]GtCqsp5zRIM[/youtube]

 

[pmccandless]

Hey everyone. Crazy move today eh? I woke up kinda late but managed to get a couple trades in. First was a $90 loss due to a spike up to take my stop out. It then proceeded to tank down in the direction I anticipated but such is trading. Second play was shortly after for $180 profit. Shorted the pullback and rode the wave. The video is about 10 minutes. If it seems a little choppy in spots it's because I had to cut some wasted time out of it just to meet the requirements for youtube. Anyways, enjoy and as always let me know if you have any questions or comments.

There are also a couple videos from a while back on my youtube channel if you guys are interested. They're from when I was pretty fresh but still a couple good examples.

[youtube]wuXokbd1hBM[/youtube]

 

[robster970]

I now live in Scottsdale, AZ where I trade the index futures full time

I've stayed in the Scottsdale Princess on a number of occasions and have very fond memories of Arizona generally. I remember returning there after an absence of a couple of years to be greeted by one of the Tequilla girls who recognised me from the previous stay (mainly to do with the amount of money we spent in there one night - it was expensed and a bit crazy). My then wife was suspicious to say the least.

Good luck with the journal.

 

[pmccandless]

I've stayed in the Scottsdale Princess on a number of occasions and have very fond memories of Arizona generally. I remember returning there after an absence of a couple of years to be greeted by one of the Tequilla girls who recognised me from the previous stay (mainly to do with the amount of money we spent in there one night - it was expensed and a bit crazy). My then wife was suspicious to say the least.

Good luck with the journal.

Thats some pretty funny stuff robster. That place is nice. Went there for a company party a few months back.

 

[fiatmoney]

Hi PMcC,

Nice Journal.

You got taken out pretty quick on the first trade,do you have a rule for stop loss position?

Hey everyone. Crazy move today eh? I woke up kinda late but managed to get a couple trades in. First was a $90 loss due to a spike up to take my stop out. It then proceeded to tank down in the direction I anticipated but such is trading. Second play was shortly after for $180 profit. Shorted the pullback and rode the wave. The video is about 10 minutes. If it seems a little choppy in spots it's because I had to cut some wasted time out of it just to meet the requirements for youtube. Anyways, enjoy and as always let me know if you have any questions or comments.

There are also a couple videos from a while back on my youtube channel if you guys are interested. They're from when I was pretty fresh but still a couple good examples.

 

[pmccandless]

Hi PMcC,

Nice Journal.

You got taken out pretty quick on the first trade,do you have a rule for stop loss position?

The only rule I really have regarding stoplosses is to never risk more than 2-3% of my total capital on any one trade. So if I'm looking at a potential setup, the first thing I look at is how much I would have to risk for it to have enough wiggle room to not get whipsawed yet take me out when the play has most-likely failed. Obviously in this case I did end up getting whipsawed, but you can't win em all.

Like I said in the video, some people like to re-enter trades after getting stopped out but it's just not my style. Most of the time my stops are set at a price where the trade is now invalid and it just wouldn't make sense to re-enter.

Hope this helps.

 

[timsk]

Hi pmc,
I have a small observation about your vid's and a couple of questions for you. If possible, it would be good if you could include some extra blank space to the right of the current price action. In the vid's you've posted to date, the candles are butted up against the black background which is okay if it's a bull candle that's printing - but not so great when it's a bear one. Similarly, one's eye is naturally drawn to the cross hairs and the pointer which is often over to the left of the current price action which I find makes the vid's a little confusing. But that's probably just me on account of my advancing years!

Re. my questions - I just wondered how / why you opted to trade NQ as opposed to YM or ES? The thread title and your OP spell out your basic style but, even so, I wondered if perhaps you used any other tools to aid your decision making process - such as market internals or the cash index? I ask as I trade the YM and find the cash index often sheds light on the futures. Yesterday is a case in point. The YM spent most of the morning in a narrow 25 point range, before selling off around mid day. The significance of this price level was not obvious on YM, but was plain to see on $INDU, as price flirted with the major round number at 10,900. Also, there are often patterns that aren't quite perfect on the YM - e.g. double tops/bottoms - but they are nailed to the tick on the cash chart. Anyway, enough about me . . .
Cheers,
Tim.

 

[Yamato]

The only rule I really have regarding stoplosses is to never risk more than 2-3% of my total capital on any one trade. So if I'm looking at a potential setup, the first thing I look at is how much I would have to risk for it to have enough wiggle room to not get whipsawed yet take me out when the play has most-likely failed. Obviously in this case I did end up getting whipsawed, but you can't win em all.

Like I said in the video, some people like to re-enter trades after getting stopped out but it's just not my style. Most of the time my stops are set at a price where the trade is now invalid and it just wouldn't make sense to re-enter.

Hope this helps.

You can't win them all, and your strength is that you manage to not be destabilized by these 2-3% losses. I agree with your theory of never risking more than 2-3% of your capital, and it works in my automated trading. But, as soon as I try to implement it with discretionary trading, it stops working, because even a 2% loss, will make me lose my ability to trade profitably. Whereas in automated trading a loss cannot affect your system, because it consists of univocal rules, in discretionary trading, that is not the case, and your emotions interfere with your discretion.

 

[pmccandless]

Hi pmc,
I have a small observation about your vid's and a couple of questions for you. If possible, it would be good if you could include some extra blank space to the right of the current price action. In the vid's you've posted to date, the candles are butted up against the black background which is okay if it's a bull candle that's printing - but not so great when it's a bear one. Similarly, one's eye is naturally drawn to the cross hairs and the pointer which is often over to the left of the current price action which I find makes the vid's a little confusing. But that's probably just me on account of my advancing years!

Re. my questions - I just wondered how / why you opted to trade NQ as opposed to YM or ES? The thread title and your OP spell out your basic style but, even so, I wondered if perhaps you used any other tools to aid your decision making process - such as market internals or the cash index? I ask as I trade the YM and find the cash index often sheds light on the futures. Yesterday is a case in point. The YM spent most of the morning in a narrow 25 point range, before selling off around mid day. The significance of this price level was not obvious on YM, but was plain to see on $INDU, as price flirted with the major round number at 10,900. Also, there are often patterns that aren't quite perfect on the YM - e.g. double tops/bottoms - but they are nailed to the tick on the cash chart. Anyway, enough about me . . .
Cheers,
Tim.

Tim,

Thanks for your feedback and I will definitely look into the issue you mentioned. I need to do something with the overall coloring as everything seems to turn out with a blueish tint when the videos come out. When I'm making them they don't look blue at all.

As for your question regarding the NQ choice. It was basically what I started with due to the low point value and overall leverage and how it fit my max risk rules with my low starting capital. I've just been trading it exclusively for a period of time now to where it's just comfortable for me. My goal is to start throwing in trades from other instruments as well though. It's a matter of just breaking habit I guess.

And no I don't use anything other than what I say on the videos to analyze a setup. A buddy I trade with over skype a lot that uses pretty much my exact same style tries to use other things like the dollar to confirm trades, but in the end he realizes it's just another one of those things that is a feel-good indicator and doesn't really make his trades any more prone to being successful. This is just my style and I've learned to make it work and I love it because it does away with the BS.

"Simplicity is the ultimate sophistication."

 

[pmccandless]

You can't win them all, and your strength is that you manage to not be destabilized by these 2-3% losses. I agree with your theory of never risking more than 2-3% of your capital, and it works in my automated trading. But, as soon as I try to implement it with discretionary trading, it stops working, because even a 2% loss, will make me lose my ability to trade profitably. Whereas in automated trading a loss cannot affect your system, because it consists of univocal rules, in discretionary trading, that is not the case, and your emotions interfere with your discretion.

Well said.

Thanks for commenting man.

 

[pmccandless]

Well, an uneventful day today. Can't trade just to trade. I'll be picking it up tomorrow...

 

[pmccandless]

Next level I'll be looking at will be 1954ish, if we even make it. We'll see.

 

[pmccandless]

Eh. Callin' it a day. Goin' to see the Giants vs. Cubbies. Good luck everyone.