What is Trading?

Traders-

I am taking off on the road for the long weekend and wanted to send a small note to all the readers, expressing my thanks for being a purveyor of the OrderFlow and wishing everyone a Happy Memorial Day. Be safe out there. Enjoy!

I want to end the week on a certain philosophical note to share what I think trading is.

So what is trading?

In my mind, trading is not about a bunch of lines and indicators.

I view trading as the price. And the price is always right.

The market assigns a specific price to everything, and that price is almost always right in the context of that moment. No point fighting it. To make money in trading, I think everyone’s end goal is to buy low and sell high or sell high and buy low. There is no third way that I know about.

This is a crucial insight, and once anyone gets it, they can begin to focus on the market as an opportunity-generating place rather than trying to find out the holy grail. There is no holy grail. Stop wasting energy on finding the holy grail.

To trade the markets, we need levels. A good strategy does not require technical analysis. The analysis is for the analysts. Levels are for the traders. We need levels that can be support. Levels which can be resistance. I use two related markets for the most part.

NQ and ES.

NQ is the little brother. ES is the big sister. Sometimes NQ can get ahead of itself. ES then pulls it back in its place. That is all I use for all of my levels. Nothing else.

Everything is fine in the world when they go up and down together. When one of them lags the other, pay attention.

Come to think of it this way - you do all the analysis in the world to find levels. If the level is good, then the analysis that has gone into is also good. If the level is not good, then the analysis also is not good.

Remember, the price at which the market is willing to mate buyers and sellers, is always right. I can not stress this enough.

Have a great weekend.

Levels for tomorrow

Today’s level has been resistance at the time of this blog and has capped rally many times. About 3 chances to take it off but failed every time. Again I am not predicting it will break or not. I am just watching for the price to react here. I do not like to predict in the intraday time frames!

My main context at the open today was that there would be profit taking in NVDA at open, which means we could see a sell-off in NQ and ES at the open. This was correct.

Now for tomorrow, with this NVDA situation, as many are calling it the next big thing, I want to be cognizant if the profit-taking has been completed today and a new round of buying opens here or not. I have no idea how is NVDA next big thing at 400, and it was not so at 108 or 160?

Contending forces will be the debt ceiling drama over the weekend, we come out on Tuesday with 2 days to default if there is no deal by then.

This is how the market thinks in terms of themes, and one is free to agree or not but this is how I see this play out.

NQ is fairly robust today. ES not so much. I need to see if ES pulls NQ down or catches up with it at some point. If you look at the last few months, ES has been in the dog house, selling off at my key levels every time when approached.

With this said, my key level in NQ is 13865 (now 13980) and in ES it will be 4130. Now it is trading near 4153.

Scenario 1: I personally see a bearish auction if we open and remain below these levels.

Scenario 2: the bulls will need to take out or keep supported the 4130 level in the IB session if they want to see 4160-4170 tested.

I do want to add that as an investor tic, recent events WRT NVDA ER do not change anything for me. My long-term and valuation-based model themes are still intact, and I do not see enough yet to change any of my investment time frame views. I prefer companies in the 20-30 EPS range during the tightening cycle in the tech sector, not at 200.

An easy way to read EPS is that think of it as the number of years it will take you to break even on your investment based on current earnings. Investor Tic does not have 200 years, so can I wait for it to come down to 40-50 years? I think I can.

~ Tic

Disclaimer: This newsletter is not trading or investment advice but for general informational purposes only. This newsletter represents my personal opinions which I am sharing publicly as my personal blog. Futures, stocks, and bonds trading of any kind involves a lot of risk. No guarantee of any profit whatsoever is made. In fact, you may lose everything you have. So be very careful. I guarantee no profit whatsoever, You assume the entire cost and risk of any trading or investing activities you choose to undertake. You are solely responsible for making your own investment decisions. Owners/authors of this newsletter, its representatives, its principals, its moderators, and its members, are NOT registered as securities broker-dealers or investment advisors either with the U.S. Securities and Exchange Commission, CFTC, or with any other securities/regulatory authority. Consult with a registered investment advisor, broker-dealer, and/or financial advisor. By reading and using this newsletter or any of my publications, you are agreeing to these terms. Any screenshots used here are courtesy of Ninja Trader, FinViz, Think or Swim, and/or Jigsaw. I am just an end user with no affiliations with them. Information and quotes shared in this blog can be 100% wrong. Markets are risky and can go to 0 at any time. Furthermore, you will not share or copy any content in this blog as it is the authors’ IP. By reading this blog, you accept these terms of conditions and acknowledge I am sharing this blog as my personal trading journal, nothing more.