Doji - Technical Indicator Or Work Of Art?
January 10, 2013 at 11:38 PM (QQQ)(DIA)(SPY)(FB)(SODA)
Doji - Technical Indicator, Fortune Teller, Or Art?
I should have added Classic Rock to the headline. It's all the above and more, yet just 2 lines in the sand. When the next tide comes in, it will be washed away, leaving a clean slate for the next trade. I write often about Candelsticks and Chart Patterns, but if you scan the archives you'll see that my relationship with the Doji runs long and deep. When the woman accused of adultery was brought before Jesus to be judged, he knelt and wrote in the sand. Scripture does not reveal what he wrote, but many theories exist. Don't get too serious on me.
I've said it before and it still holds true, you could build a trading career on 2 lines in the sand. This Doji tonight fell into a special category where multiple roads intersect, but that's often the case. Isn't it?
(ES) Emini Futures - Doji - 01/10/13
Aside from the Doji itself (Doji Reversal - Textbook Example) we were at fresh 5 year highs, a Weekly Trading Zone (WTZ) and the top of an ascending price channel. Entering short on the open of the following candle also limited risk on the trade to 4 points or less for the potential of a "big picture" move.
When I say you could build a career around this candle, I take some dramatic license, but the truth of the matter is, you actually could. To be classified as an "active trader" you would need to look at additional markets. Remember, it's not every day you'll see this type of "perfect storm" in the S&P. However, looking across the horizon of all Futures, Currencies, and the World of Stocks (approx. 8,000), it would be a rare day that you couldn't find at the very least, a spring shower.
After all, the only required ingredient is the Doji itself, in the proper context of course. Without proper context it's nothing more than a stall or a continuation signal or 2 lines in the sand. The good news is, with a little screen time, "proper context" begins to leap off the screen and jump into your lap. Once you get it, you'll never lose it, you can't unlearn it, you're stuck with it. Now if you decide not to use it just to be contrary, that's OK. But I can guarantee you this, once the scales fall from your eyes, you'll NEVER trade against it. If you do, it's only because you're looking to get into a different line of work.
From the close of the Doji @ 1469.75, to the first area of fixed support @ 1466.00 is 3.75 points. For a 1 contract trader that's $187.50. For the 3 contract trader it's $562.50 minus $6-$7 per contract in transaction costs. Let's throw in a nice lunch for 2 and round it down to $500. That's roughly 4X the average daily wage of the average American. I kid you not -
The average American earns $126.92 per day.
The average American has $3,800.00 in savings.
What does this have to do with 2 lines in the sand?
A lot!
I'm going to go deeper tomorrow about your expectations as a trader. Before I do, I want you to go back and read this article again - Definition Of A Professional Trader
If you have a reasonably new computer, a fast internet connection, a Demo Account via your funded account with Daniels and our Proprietary Indicator Set, the only other part of the equation is you. I'm going to post the last few daily recaps from the Live Trading Room tomorrow. I want you to watch them.
In the meantime, go through different markets and different time frames. Find the Doji's. Highlight them. Write down the market, the date, the time, the time frame, the context and bring the list to the Partners Meeting Thursday night.
It's time to make a decision. Do you want to be a high roller or build a business?
We're not "get rich quick" guys. We work hard and we work smart.
If you're ready to build a business, 2013 has a lot in store for you.
As opportunities unfold we'll keep you posted.
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candlestick patterns, doji, emini futures 
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