Thursday, June 4, 2009

Thursday 06/04/09 - Specialize in ONE Market

I didn't post anything on Tuesday because the day was spent on group trading education/mentoring with a couple of friends at my place.

Yesterday, I got the genius idea of trying out the mini-Russel 2000 futures (TF), and I thought I could just pull up some TF charts; adjust the time-frame on the tickbar charts and dive right in. Talk about being naive! The TF moves has its own rhythm compared to the ES, and over the course of the last few months, my mind has been trained to be in sync with the moves on the ES. I traded the TF in the morning, and was down -1.2 pts, which isn't too bad, but I quickly learned that you can't just jump into a new market/index without some research and dedicated screen time. Then later in the evening, I happened to be at Barnes & Noble and was browsing through John Carter's book in which he states that newer traders should start with the Mini-Dow (YM) since it's an "easier" instrument to trade, and has less professional participation. I figured I'd give it a shot, so I went over the Daily, 60-min, 15-min and 5 min YM charts, and set up my charts to trade the YM this morning. Again; not a great idea. I ended the first hour at break-even and then came to my senses and switched back to trading the S&P500. That was a good call. It was like I was back in my old neighborhood; in familiar territory. I traded the ES from 9:30 AM (central) till about 1 PM and netted +7.50 pts. This little exercise in trading the TF and YM showed me the importance of specializing in ONE market. The ES moves in a certain way, and after watching if for several months I've become comfortable with the way it moves. Over time you get a feel for how a certain market/instrument moves; to the point where you can get a feel for short-term direction just by looking at price action on the DOM. So no more dabbling in other markets trying to find the "easier" one to trade. Here are the Stats from today's trades in the ES:

# of Trades 18
Longs 11
Shorts 7
% Break-Even: 16.67
% Win 66.67
% Loss 16.67
Avg Win 0.85
Avg Loss -0.92
Largest Win (pts) 2.00
Largest Loss (pts) -1.50
Total Win (pts) 10.25
Total Loss (pts) -2.75
Net Gain/Loss (pts) 7.50
ES Daily Range 14.00
P/L as % of Daily Range 53.57

Not sure how many of you use Twitter, but I use it to document my thoughts and what I'm seeing Intraday. I'm also on StockTwits. You can go here: if you'd like to go over my posts and intraday charts from this morning highlighting support/resistance, $TICK Divergence setups, etc. Following are a few of my Twitter posts from today:
10:19 AM - Bulls in control as long as price remains above 835.50 on a 5-min CLOSING basis
10:24 AM - Good place to take some profits on Longs $ES_F Also seeing negative $TICK divergence on 1-min
10:27 AM - Shorted the pop into overhead resistance and negative $TICK divergence
10:59 AM - Trying a scalp short with tight stop-loss here
11:02 AM - Out for +2 pts
11:16 AM - Some support here
12:47 PM -$TICK Divergence providing some nice scalps today
12:56 PM - 938.50 important area for Longs IMHO
2:00 PM - Prior Resistance, now Support. I would avoid 938-942 or Scalp the range. - Done for day at +7.50 pts
2:01 PM - Negative $TICK divergence throughout the last hour

Report on Employment Situation out at 7:30 AM tomorrow. Going forward, I'd like to see price remain above 916.50 on a Closing basis for Bulls to remain in control. We also need to be mindful of overhead resistance at 950. Following two charts show the "big picture" structure I'm working with.

ES (60-Min)

ES (Daily)


  1. EP - It's about time you got a little perspective! :) Now maybe you can see why I keep going back to the TF after trying my hand at NQ and YM among others. I've spent the majority of trading hours watching the TF and I just feel like I have a much better sense for it. I do see some benefit in being comfortable with other products but there certainly is wisdom in focusing on one, especially for new traders.

    Speaking of the employment report...what's the status on your end by the way? When are you just going to give up on trying to find a new job and settle for becoming a lowly trader full time? :)

    Also, how's your buddy doing with trading since you've been showing him the way? You haven't posted on his progress for a while.

    Good work today!

  2. Yep, I totally understand your stance on sticking with the TF now. Keep at it.

    Regarding my job search, you obviously haven't been following my blog (how could you man? LOL j/k) I already got an offer and am starting the new job on June 15th. So next week is my last week of being able to watch/trade the market all day :(

    It's a consulting/contract position with renewal every 6 months so I can always come back to trading full-time after 6 months. We shall see. I'm looking forward to seeing you switch to full-time; sounds like you're pretty close! :)

  3. Couldn't agree more, you can't watch and learn the personality of 3-4 books while day trading. Just doesn't work. What I like to do is focus on one but be willing to trade others on extraordinary events or fundamental catalysts in those markets. Otherwise I stick to the ES.

  4. (If this post shows up twice please delete one. It seems the "edit" button doesn't like me).
    I started in the ES as a know-nothing newbie because that's what was traded by the "guru" who's course I bought. I started losing from the start. So I learned a little about futures and switched to the YM, where I've been for over 2 years now. It seems to me my best chance at making some serious money is in specializing in just 1 market and no more silly playing with different timeframes either (once you have decided on which to use of course, which can take some time). I spend the day in a chat room that trades YM and with the recent slowness I see the comments coming about switching to other markets "that are moving". "Just look at how good corn is moving!" Yada, Yada, Yada."What other markets should I be looking at?", says some other newbie. While some complain about no setups in the YM I do see setups. Maybe that's because I spend so much time just focusing on it alone. Just my 2 cents but I think a key is specialization and learning a market and its nuances as best you can. I don't think there is "easy" money in any market so switching to others may not be as great as it sounds. Once you been at it for at least a few years full-time maybe you can consider an extra market.


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