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

Good morning and a good week,

In Friday's PMTJ PERSPECTIVE Section we said:
"As is very often the case with Triangle breakouts (see description in the Pivot Magic Trading course book),
shortly after exiting the LT Ascending Triangle (lavender lines), Price Action returned to test the base. First
Wednesday tested the base with a red Bear Dragonfly day candle spike through. Then Thursday completed
the test, nominally bouncing off the strong support. Going into Friday, the bounce sets up the tape for a
Bull assault continuation. On any other day, the expectations would be for a rather massive Bull charge, but
don't forget today is Friday! Anything can happen, so mainly, BEWARE OF TRAPS!"

Yes! That was definitely correct.

Having read the Pivot Magic Trading Journal, the BBs complied, and Friday, although a dangerous mass of traps,
taped a distinctly Bull day candle (Daily, bottom right chart). Following the Ascending Triangle (Daily, bottom
right chart, lavender lines) breakout and retest, at Friday's close the Bulls are set to assault the higher Historical
S/R (Daily, bottom right chart, aqua line). It will require a Massive Moveout Monday thrust to actually pull free,
however.

REMEMBER: Trade the Tape, Not my Prognostics!

Asher
=] ;-)>
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E-mini
Friday August 15, 2008

Morning opens gap-up, mid-way to the R1, and continues north, blasting through the R1 Resistance.

1 = Minimal trend precedes a gap-away Doji Sandwich through the R1. Quite possibly you applied aggressive entry techniques and thus,
first thing in the day, ate an unpleasantly resounding loss on the backlash!

WHAT A TRAP!
Count the steps:

1. Wham, Down!
On moderately strong Volume (pink oval tells the story)

2. Zap, Up!
Huge reversing DVS slaps a retest through the R1 (and our aggressive entry stop is hit,
but note that the tape displays a 123 continuation "S")

3. Crash, Down!
With all the money!!!

A = An even more gigantic re-reversing Bear DVS slams Price Action all the way to/through the Pivot. The long bottom wick tells us that the Bears desperately
want to tag the dotted blue line (Historical S/R, and the breakout level of the move currently trying to work it out on the tape).

Entry on this candle yielded terrible slippage, with only a Pivot Scalp Price Window open. Using the large candle through two PLs interpretation, the initial stop
may be instantly advanced above the Pivot.

Bears DVS-rally one last time, stretching victoriously to touch the dotted blue line (blue arrow). Actually, this is where the multi-step, multi-trap, Friday Scalp
plan culminated. As soon as Price Action retracts above the dotted blue line, Exit Now! +/- 4 points

2 = Multiple bottom off the Close, behind the Pivot. Like a rubber ball plunged under water, struggling against Momentum to pop out of the water, a series of
long-wicked Dojis struggle in the "green fog" against the surface tension at the Pivot.

A Classic Slingshot off the MA set up, with multiple plungers pulled back. Higher time frame tape (10-Minute, bottom left chart) presents a large Spinning top
Doji Sandwich.

The Volume is most confirming (pink arrow), as Price Action bursts through the Pivot and exits the fog, pulling us in.

B = Breakthrough gap/failed test of MA. Per our stop rules, move the profit-locking stop under the MA, reducing our At Risk virtually to nil.

C = Large white spinning top. Per Pivot Magic Trading stop rules, move the profit-locking stop under the low of the candle.

D = Large white candle spikes temporarily through the HighW. Per our stop rules, move the profit-locking stop under the low of the candle.

E = DVS (pink arrow). Well into a move this is a pending exhaustion of Momentum warning. Going into TGIF luncheon festivities, experienced readers of the
tape might possibly have exited as Price Action spikes through and retracts under the R1. The rest of us moved our profit-locking stop under the HighW, per the
rules, and started thinking Pivot Scalp.

F = Price Action surprisingly bursts through the R1 and closes above the High. Three choices:

* Following the exhausted Momentum and failed R1 test, risk-conservative traders
(like good ole risk-conservative me) elected to Pivot Scalp exit. Got positive slippage
this time. +/- 5.25 points

* Large white candle overruns 2 PLs. Aggressively move profit-locking stop under the
High. Stopped out. +/- 5.25 points

* Large white candle overruns 1 Primary PL. Less aggressively move profit-locking
stop under R1. Stopped out. +/- 4 points

[SNIP]

4 = Hour-long TTT attempt fails, and Bear Volume perks up. Pivot retest? Entry below R1 with initial stop advancing above the MA.

G = DVS (sign of exhausted Momentum, in fact it's a Twin Towers announcing a stall/sag).

Exhaustion gap. (No need to explain the import of that.)

Long, wispy-tailed inverted (Bull) Dragonfly (sign of exhaustion).

Put together with the high hit count on the HighW level, makes a HighW retest likely (after lunch, if the BBs come back at all, there might even be an R1 retest).
Applying our place the stop in the gap convention is thus not in accordance with our lunchtime rule of giving the move a drop of extra room to flop around. Stop
above the high of the candle, per our regular PMT stop rules. Else, you got promptly stopped out.

H = Large red Bear Dragonfly. This unexpected mid-lunch slide suggests we prepare for a Pivot Scalp exit. The candle also puts our position in violation of Pivot
Magic Trading Maximum Profit Giveback rules. Mental stop at Giveback level.

L = Long tail of red inverted (Bull) Dragonfly spikes through the Pivot and retracts. Two choices:

* Exercise a Pivot Scalp exit, getting a tiny bit of positive slippage. +/- 4.5 points

* Wait till Price Action retracts above the Pivot, which costs a bit of negative slippage.
+/- 4 points

And now the rest of the troops head out to join the party, never really to return.

[SNIP]

Pivot Magic Trading Course
http://www.tradingthingys.com/PMTJ/Commodity%20Day%20Trading.html

Friday's PMT Chart: