The Technician – Larry Levin is a professional futures trader. He has been in and around the S&P 500 futures pit at the largest futures exchange in the world, the Chicago Mercantile Exchange (CME), for almost 20 years. Larry has been trading his own account or company’s proprietary accounts since 1993, trading an average of 2500-3000 E-mini S&P contracts a day. But Larry wasn’t always a successful trader, in fact, before he reached the top, he began his trading career at the very bottom.
He was lucky enough to be in an environment (the trading floor at the CME) where those trading secrets are readily available. Now, He can finally give back to others what he learned that led to his trading success. He was given the tools necessary to make a fortune in the markets and have a lot of fun doing it.
To be a successful trader, you need to learn in a very specific manner if you want to have any chance for success. If you deviate from this approach, your chances to become successful in the trading world are almost nonexistent. This is really the key to financial success in the trading game. So check in for Larry’s daily trading tips and trades.
Here are a couple of tidbits about what you’ll learn:
The Value Area:
Is the range of prices where 70% of yesterday’s volume took place. (For instance, if the Value Area in the S&P’s is 138500-139000, then 70% of the previous day’s volume took place between the prices of 138500-139000.) The Value Area and the 80% rule can be an excellent tool for judging market direction.
The 80% Rule:
The 80% rule is easy to understand. This is when the market gets (or opens) above or below the Value Area, and then gets in the Value Area for two consecutive half hour periods. The market then has an 80% chance of filling the Value Area. Many traders familiar with the Value Area and the techniques that go along with it use it to help them decide what trades to do each day. You will find (once you get used to it) that using the Value Area each day will be very valuable in your trading. With that in mind, a good strategy is to try and ride the market as it fills the value area. There are two scenarios to watch for:
* If the market opens above the value area and then gets in the value area for two consecutive brackets, there is an 80% chance of the market filling the value area.
* If the market opens below the value area and then gets in the value area for two consecutive brackets, there is an 80% chance of the market filling the value area.
Two Consecutive Brackets: When looking at a 30 minute bar chart, if the market is in the value area for one bar, and when the next bar opens, if the market is still in the value area, the market has then been in the value area for two consecutive brackets. This is the time to watch for the 80% rule.