Wednesday, August 26, 2009

Putting yesterday's ideas into action

Chart #1: The overnite and pre-market price action was all over the place, creating a big "going nowhere" box (not shown). The 8:30 Durable Goods news was "good" but the market went down to test the DOUBLE BOTTOM from 8-24 and bounced up. That was a somewhat high probability bounce, but I didn't play it because the bigger New Home Sales news was due out in a few minutes. I don't want to risk getting caught in a news volatility jerk until/unless it has picked a direction.

Chart #2: Shortly after that the 10:00 New Home Sales number hit and it created a VOLUME SPIKE right into the gap fill. I am a price created S/R (support/resistance) player. That's what all the horizontal lines are. The blue ones are gap fill levels. The big volume spike created price resistance at its high. Shortly after that the momentum carried price over the gap fill (and over that price volume resistance) and pulled back to retest the gap from the top. It wasn't a perfect test but the risk was pretty minimal. That's an entry long. A second opportunity long is the retest of 9529 from the top at 10:09 (once the first S/R level held (the gap) I expected the next higher to hold as long as price had a clean break over it and could then re-test it). A 3rd potential long was at 10:15 as it tested the S/R band of
9546-9549. It tested the upper band to the tick and rose some more. It topped out later on a negative $TICK dvg just short of the 9576 S/R level, that is also the VAH (market profile value area high) for yesterday.

Lessons learned: 1) Don't get bummed by "missing" trades. Prior to the 10:00 news there were some OK short opps that I just sat on my hands for. Instant amnesia helped. Hey, the day is NOT over at 9:45 am!! I had to FOCUS to catch the ones I did. And when they setup I just had to BELIEVE they would work and get in. You can't win if you don't play. And if they didn't work out, well, that's what stops are for.

BTW, as I'm typing this I just saw another good short opp at the 9546-9549 band that just worked good (10:57 entry). It is currently +25 YM points and only had 1 point of drawdown before dropping. DANG! I'm sure many traders were able to get in at lower levels than me (obviously...that's why there are price bars lower), but this is the method that makes sense to me and that I've spent a few years working on. You have to have a plan that makes sense to YOU, based on your perception of how the market moves. Once you figure that out, ignore other plans. .....Update: that short I
missed because I was typing this eventually made 26 points before having a pullback, and bottomed out at +36 points. And just 1 freakin' point of pain to get in that trade. I may have to re-adjust my posting schedule.


  1. In the spirit of sharing the ideas and feelings about self trades, here is how my day is going....all time pacific

    I went short around 6:42 and have seen + 3 points gain, housing numbers were due, however I decided that housing numbers will not kill the short vibe I am long story short, the market did not care about my vibe and at 7:10 I was loosing -4.25 points, when I reversed and entered long and per my technique I took +4.25 points which was to to cover my first -4.25 loss(initial gain of +3)

    Now I am in the short from around 7:55 with stops in place...and so far plus +4 points

    Lesson: Take a look at the calendar, decide what is important news of the day and if you

    have a nice profit, just before the news hits, lean more in favor to grab the profit, although your technique still says "no"

    Now I still do not care what market is doing at any time, but these news items lately has been wild spikes, so perhaps I can adjust my thinking for short long as I have a nice profit at the time news hits....

    However, thinking about fundamentals is another burden I really do not want to add to my trading

  2. Thanks driven, you took the short that I would have also had if I had been trading instead of blogging! Lesson learned: After today NO BLOGGING until the day ends. I was honestly worried about this happening because I have market homework to do after the close and don't want to be sitting in this chair into the evening. So I've been doing blog entries during the day at the cost of trading. BAD TRADEOFF.

    As a daytrader my only interest in the news is noting when it is due out and sitting on the sidelines until a clearer direction is known. Big news can create a wave I can ride (like today), but if I get in too early before the eventual direction is determined I risk drowning in the riptide. BTW..nice recovery.

  3. Further to the comments on the last post, as a trader one wants to be able to capture more than a mere 30% percent of a's just that on a consistent basis it rarely happens for ma

    ...even with scaling in, scaling out, the last position has a chance to catch that trend, but net effectively the PF per lot doesn't change that much...

    A combination of one's trading ability and ones setup is a crucial recognition IMO to durability.

    That and being able to stay focused and disciplined.

    Getting it and having for short bursts (aka running the 100m anaerobic dash) is one thing....maintaining that over a longer stretch (over one's career) is the the real battle.

    Dr Brett identifies that in several places in his "Daiy Trading Coach"...

    The trading world is littered with so many traders that do well in short bursts and then settle back slowly in a gut and can't get back up, or if theydo, can't maintain that for long.....

    So goes our battle..


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