The Road Map Less Traveled w/ John471
Imagine you are visiting Pittsburgh for the first time, completely unfamiliar with the city. You might ask someone more familiar, me for example, how to get to the city from the airport. I would tell you once you leave the airport to look for I-376 East, and to follow that highway for 16 miles. After that, depending on where you are going, it may get more complicated as I would tell you to look for specific exits, certain bridges or possibly landmarks.
If you are an experienced driver, this may be enough to get you to where you need to be, however for many of us, it is not. After all, “turn left after the bridge” is less descriptive in a city with almost 450 of them, so you may open up a map, or these days, Waze or something similar.
A map, as we know, would give you a visual reference of your environment, important features, obstacles, and roadways you may travel, and likely would highlight your expected path and the destination you are aiming for. The map would be a bird’s eye view of your entire trip and destination and would be especially useful when those are not otherwise visible, i.e. at the corner of Penn and 31st, where traffic is often congested and there are no clear signs.
In short, this map could help you stay on course to your larger destination when it is out of sight, possibly out of mind, or when the next step is not immediately clear. It also would likely help you find another route if traffic conditions changed abruptly.
It is in exactly this way your price map guides you through the trading day.
Analogous to roadways, bridges, landmarks, construction, detours, and your start and stop points on Waze, the price map for your product will include important pieces of technical analysis that you use: HVN’s, LVN’s, singles, VPOCs, expected areas of support and resistance, and areas where you expect to possibly initiate or target your trades. Like Waze, your price map should be reminding you of what you should do in certain areas to get to where you planned to be when that may not be clear.
“Like Waze, your price map should be reminding you of what you should do in certain areas to get to where you planned to be when that may not be clear.“
– John471
If you are new to trading, or new to a product, just like being new to a city, the process of creating a price map will likely take time as you get to know the lay of the land, and what’s normal in this new environment. After a few weeks of learning your way around, you’ll likely find it much easier.
This is a very simple analogy, but I feel it does a very good job of giving you an idea of what a price map is and how it is used, but for me at least, it is not exactly right. I do not think any of us draw a map to get to the grocery store or use Waze much for just running around our neighborhood. However, I still create a price map for the ES every single day, as I have since 2019, and I still draw my expectations for how I think price may traverse that environment, sometimes with Epic Pen for CT members, sometimes just for myself. It’s a step every day.
It is part of my process, an important part, that adds to my outcome. Not in a measurable way each day in my PnL, but in my progress over time, and the consistency I bring to the screen and my daily approach. Creating a price map grounds me in the most recent and most important information, the most up to date expectations; it calms me down and lets me see the forest for the trees. When I am on each day’s journey, in the middle of whatever road price is taking that day, I can zoom out and look at my map, and where we are on it to remind myself of my key plans for the day, and what I am obligated to do for my business at any stops, scheduled or otherwise.
John471
CT Head Trader