Just a quick entry to show tonights actual trades based on the professional/amateur blog.

My first short entry was as price traded to the opening high at 5640.

Price did move my way but was only a small retracement.

There was not enough supply at this area and I was stopped out.

The greater supply area was 5650 and my next trade short proved successful.

I scaled out  (maybe a little too quickly) with 1 contract left for a test of the day lows.

Last exit was at the logical bounce area which was a retest of the lows at 5620

Initial short trade loss was around $500 US. Initial winning short trade was $2000.

Total profit was $1500 US.

The importance of the demand and supply areas can be seen on the chart.

Demand at 5620 area. Smaller supply which became a demand area at 5637.5 and the greater supply area from yesterday's high at 5650 area.

The other important thing for me was to execute the next trade at a potential supply area even after my initial trade was a loss.

This chart shows my x-trader entries and exits with the the side arrow showing short entries and the small line showing exits.

The large line shows where the positions were closed out.

Dax 3 min.jpg (96.16 kb)

Let's look today at what separates professional traders from amateur traders.

To make money from buying and selling requires a mismatch in supply and demand.

Professional traders are those that consistently derive income from exploiting this mismatch.

To do this the probable areas of supply and demand need to be known and the distance between these areas becomes the profit opportunity.

The skill is therefore to look for areas where amateur traders are taking positions in high risk zones and taking the other side.

Buying when panicked retail selling is moving to a demand area.

Selling when excited retail buying is moving up into a supply area.

Have a look at the Euro charts and see if you can identify where supply / demand mismatches are possible.

Euro-SR.jpg (220.22 kb)

The link below has Supply Demand areas marked and how price reacted.

Euro-SR1.jpg (247.28 kb)

One rule for trading that I use is never be on the wrong side of an engulfing bar.

They are hazardous to your account.

On the other side of the coin, they can be very effective for entry criteria.

The importance of engulfing bars gains if it comes after a directional move.

For this bar to occur it must reverse the previous move from a new high and close below the low of the previous candle.

This requires a significant change in value perspective.

Engulfing bars.jpg (165.02 kb)

I've been a little slow in getting blogs done.

The late nights staying up trading the Dax then trading the Aus market have kept me busy.

I've also just had a small chunk cut off the top of my head to get rid of the beginnings of a skin cancer.

Must be the early morning sun out surfing. Not that there has been many waves lately.

When trading the Dax it is important to know key levels not just on the Dax but also on the S&P 500.

The advantage that it can give when positioning trades is huge.

The Dax today had key areas in 25 point ranges.

When the ES pushed down to a support area at 1056-1058 I had a perfect area to close shorts and enter long on the Dax at the 5600 matching support area.

Earlier I also was able to take a short trade on the Dax at 5675 as the ES bounced off resistance at 1069.

Alexander at tradewithpride.com is very skilled at putting these areas in context and basing a trading approach on these zone scenarios.

We keep in regular contact since my time trading at his firm in Atlanta and his morning prep is a great start for trading on the ES futures.

We have a project we are working on which I will give details on as we move closer to the end of the year.

Dax prep.jpg (258.40 kb)

ES prep.jpg (198.13 kb)