I am posting this for reference. It is from a post made in the trading thread here:

http://www.mypivots.com/board/topic/6676/27/trading-discussion-week-of-5-9-11-to-5-13-11#81267


Glad you reminded me, I knew someone would. This is a somewhat subtle point, but one that is important, I think. Given my task to post in here, do it quick while trying to trade, and yet give relevant, salient information in a timely manner, well, that's tricky. Try it sometime, anyone. So, I can't go into great detail each and every time with each post. Some concepts have to be taken as a given. I have to assume people understand my underlying viewpoint just from what I have said.

I try to throw quicky explanations out there, but I wish I didn't feel it was necessary to even do that, so I could post faster. An example might be 'watch 1345', and then I say 'from a management standpoint this area is a place I am concerned about', or some such thing. If the readers were on top of the methodology then they would be able to look at the layout and the work and know if that was a management area or an area I may short against. But, not everyone is there yet. So, I compromise and throw in some additional comments to try to clarify things.

Now, on to the 'magnet' concept. Sorry it won't have much that is of actual use as far as duplicating it. It is more an explanation of how I view things, and a way for me to easily distinguish when I point out an area if I see it as a 'magnet' or not, and for those that have read this post to grasp what I am saying.

Many times I think of what the 'driver' is for the move. Like today, the LOD was a key area I expected a strong move off of. It was the driver for the entire day, and may continue to drive this to new highs, depending on how it reacts to the two areas right in here, the potential 'W2's' off the high. The market, I feel, is going up because something is pushing it up. Sometimes I see a layout, and I get a 'feel'. I can't really explain what the layout looks like, but I can recognize it the second I see it.

The area that would normally be my 'area of concern' (not 'target' or 'profit target', I never use those terms or concepts), or the completion area for a potential setup, it calls out to the price. I can just sense it. It looks like a super-powerful magnet to my eyes. I do not see this all the time, in fact, it is rather uncommon on a percentage basis. There is something about the layout that I feel draws price to that level. Instead of being pushed on, the market is now being pulled, like a tractor beam.

I saw this last night in the ES when I posted that 28-29 level, and back when I discussed SLW and just knew it wanted to get to that SL area and set a new high, even if nominal. And it did. I saw it in GDX when it had that ABCD area. GDX ultimately went well below that level, but the point is, it seemed drawn to that level, and it went right there. I am probably best at seeing these magnet areas on the intraday ES when the levels come from around a 13-min or 60-min chart, and then correspond with 3-min or 5-min levels. With intraday I can also get a read from the other 'risk on' assets (like CL, GC, SI, AUD, ZN, etc.), and the dynamics and the 'feel/sentiment' of the trading. When this happens I can get a very strong feel for an area acting as a magnet.

I also think of it this way. When an area is hit and pushes on something, I think of it like a repulsion. They want away from that level. When a magnet comes into play, they want to get there. Not away from somewhere, but to somewhere. Drivers and magnets. This is not a great analogy, but recall the inflation terms 'cost push' and 'demand pull'. Same idea. Pushing, or pulling? The obvious question that may come up is, do I ever see both? Usually by the time the push starts to settle down the pull kicks in, so I rarely feel both. Sometimes an issue can be moving in a direction and then I start to see the magnet layout and price action come together, and I can start to feel it building.

When I see this and I post, I make comments like 'It just wants to get to xx.xx soooooo bad', or 'They want this level so bad they can taste it', or 'This area is just drawing them like a siren song', and so on. That's what I mean when I post this, I see the magnet coming together. It doesn't always work out. When it doesn't hit the area, I have noticed it falls short by a fairly consistent amount. I probably could quantify it, but I do it by eye, and I know right where that spot it. So, I watch that, and if it 'fades' that's a big clue. It may also be a place to set up a trade a little early, based on that loss of 'magnetism' when it should finish the move. So when I mention magnet areas, watch what happens, and if it fades a bit early, look at where it faded. If you get enough examples you may be able to see where it seems to fade.

Okay, that's all I have to say on this. If everyone was hoping for a magical formula to do this, sorry. Like roofer says, now go and do a few tens of thousands of charts with this in mind, and see if you can develop the ability. It's not something I would suggest anyone working on until they have the basics down cold, and then some. But this is one of many additional skills that may be on the table if you put in 38,000 screen hours. I wanted to clarify this so when I do shorthand in posts it will be clear what I am doing, and where the concept is coming from. I'm trying to find a way to post useful information to guide the readers to things to study on the charts, and do it 'real-time' or close to that, with lots of posts on a regular basis. This is very challenging, so I'm trying to refine my posts, and explain things to increase the value.

Try to take advantage of all these posts now, because at some point I will not be posting as often. I'm not going to run a chat room, I want to get more concentrated on my trading going forward, not less concentrated. This is it, and it has a limited shelf life. Other issues in my life (health mostly) will limit me more in the future. I'm doing the best I can in here, and hopefully it is enriching those doing the work. I have been watching lately who is coming into the forum, and we have a small, core group who follow along every day. Those are the people I am 'busting my hump' for. I'd like to feel it's worth my effort.