Saturday, February 14, 2009

Friday 02/13/09 - It's a Trader's Market

Just a reminder that I am updating the Gap Tracker post on a daily basis, and as of now, gaps have been filled on the same day 75% of the time!

This is a great market to be trading in. I personally love trading range-bound days, as long as the range is over 15 points. The ATR over the past 10 trading days has been around 27 points! Beautiful. If, as a day trader, you can't extract a few points from a 27-point day, you need to reassess your trading setups because there are plenty of opportunities on the long and short side in this market. On this end, I stayed on the Sim again and managed to eek out a $600 gain with a few trades. I can't emphasize enough the importantance of having a positive risk/reward ratio, with the minimum being 1:2 (risk:reward). I started the day with a gain, but gave it all back over the next 2 trades. But then on the 4th trade, I made 5 points which made up for the prior 2 losses, and then some. When I looked back at my prior 2 losses, I realized both of the setups did not have 1:2 risk/reward potential so I shouldn't have taken those to begin with, but I got caught up in the momentum and put on those losing trades. The important thing is they didn't do much damage since I was using a 7-tick stop-loss.

The TICK continues to be an excellent indicator. With proper money management (1:2 risk/reward), I'm confident you could make money with just a 1 and 3 min ES/TICK chart. Here's a 1-min chart with a short setup that appeared towards the close. We have negative TICK divergence with a double-top on price (excellent, high-probability setup). I entered short at 830.75 on the spinning top candle.

Gap filled in the morning session (5-min)

ES/TICK (3-min)

ES Market Balance (5-min Day Session Only)

TF Market Balance (5-min Day Session Only)

TF/TICK (3-min)

1 comment:

  1. Your one marked entry looks solid... I say that because I was gonna get short right there as well!

    The One Lot LLC takes another step forward!


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