July 31 2009 Post Market Review

CLICK HERE FOR RAW VIDEO OF AN ENTIRE TRADE (CHART, ORDER DOM, PNL)





Good evening. See highlighted comments on prep and compare to my late afternoon short. Blog Trading Plan Rules are to trade the prep. I had a very slow week with a limited amount of trades. This is very uncommon for my trading style but my stats are still very much inline.

I have a very interesting topic to cover this evening. Viewing the screen shot of my trades for the day will help you follow. Also, I have uploaded the raw video of the entire second trade today. It is 16 minutes long and shows everything (chart, order DOM, trade PNL).

I had one loser and one break even trade today (trading 1/2 Blog Trading Plan Size due to late Friday activity). In my view, they were both good setups. You have your setup and your management. Both need to be well executed to win.

I believe the management is more important than the setup. Since I like to grade my trades, I give the loser a B+ and the break even a D.

This may seem contrarian to you and maybe it is.

There is nothing I can do about the first trade. I hit the breakout and it did not work. The plan was followed. You do not win them all.

The second trade had management issues:

It hit it's first natural target; the bottom trend line of the symmetrical triangle. I did not have any contracts to scale out due to the late afternoon reduced position size so I held for the HOME RUN.

This is not a bad move. I premised that there was a good chance of an additional 4-6 points. I've said before I expect my targets to get hit.

The problem is that when the market pulled back up, I had my stop at break even. I got clipped out at the high tick.

It would have been ok to either take the 4.5 points and have a break even in after a 3 point excursion or go for the home run and risk a stop out after the 4.5 point excursion.

The market is about risk/reward. You cannot mix and match strategies. I did and got nothing.

Had I played it right, I would have either had 4 points or 5 points profit in this situation. You might be asking "what if you had a 4.5 point excursion and then a 3 point stop out". That would have been ok with me. That is what my risk was.

That might sound foreign to many of you. In my opinion, if you want to talk statistics, I burned a winning opportunity based on my plan. If it got stopped out without going anywhere, that is built in to my premise. If I took the appropriate action and made profits, that is built into my premise.

What I did was effectively create a bit of randomness via an unforced error. Hence the D for today.

It is just one trade and very insignificant to my overall sample but I put each trade under scrutiny. I will improve my skill even if I have to do it one trade at a time.

July 31 ES Structure Update

July 31 2009 ES Morning Prep posted

Good morning. See comments. Good trading.

Midday VIDEO Observation

CLICK HERE FOR MID-DAY VIDEO

July 29 2009 Post Market Review VIDEO

CLICK HERE FOR POST MARKET VIDEO



We had a very good read on the market today. Unfortunately, the blog trading plan produced no trades today.

This is actually not a bad thing because as the day went on and the market constricted, there was less and less volatility to capture.

The number that matters for profits and trades taken is the one after each 20 trade sample in my opinion.

The prep was awesome today. The Blog Trading Plan is to trade the prep but there needs to be good risk reward and we just did not have it today.

The Most Ridiculous Prep Overlay So Far

Anybody new to the site please note that these projections (grey arrows, lines, zones) are made and posted PRIOR to the market opening.

The GREEN bars are what happened AFTER the projections were made.

Video commentary to be posted later.

July 29 Midday Prep Overlay

Wow!

July 29 2009 ES Prep Posted

Good morning. See comments on prep.

July 28 2009 Prep Overlay No Trades Today

There were no trades for me today. The inside support of 969.00 was tested and held after a failed extension attempt.

Market is constricting. The only possible trade for me was a long at 969.00. I could not buy without confirmation according to my plan. It would have been stopped out close to the extreme low tick if I had.

There was a good confirmed long entry after the failed extension attempt but I missed it. There will not be a C- issued because I was dealing with some Ninja Trader technical issues for 1/2 the day today.

I will post the missed entry with a marked up chart. It is not too often that I have no trades. We will have to improvise with a green outlined sticker for no trades.

July 28 2009 ES Prep Posted

Good morning. See comments. Good trading.

July 27 2009 Post Market Review VIDEO

CLICK HERE FOR VIDEO REVIEW OF TODAY'S BLOG TRADES

Live Intra Trade Conclusion C- is back today

The trade hit it's target one without me. I had noted that we had a tight and constricted market when I posted the original trade but also stated that I need to STICK WITH MY PREMISE.

It is important to bring this up. Over a sample, trades that work that are managed poorly can make a significant different in equity curve.

It was appropriate to cover the first 1/2 of the position early. The issue is move to break even on the second contract.

I moved my stop to break even because the action did not "look" good to the upside, even though I had anticipated a move up all day. For me, structure and premise always out rank immediate short term price action and tempo.

The most important lesson today for new or struggling traders is that if you have a solid idea about the market, stick with it.

Pointing out situations like this can help limit their occurrence in the future. The blog serves this purpose well. Break evens have been extremely costly to me over the past couple years and I prefer not to use them.

Contrary to popular chat room belief, playing defense is often the best way to delay your success as a trader.

July 27 Live Intra Trade

Good afternoon. Took a not so symmetrical triangle breakout. Down a couple points so far today. 1 ratio scalp on 1/2 position and 1 loss.

Target is 982 resistance area and extension to 996 area. This market is tight and constricted. Low probability extension during afternoon session but have to stick with my premise.

If 963.50 holds, which is likely, we could see an extension overnight.

Let's see if this trade goes anywhere.

July 27 2009 ES Prep

Good morning. See comments on prep.

July 24 Post Market VIDEO (belated)

CLICK HERE FOR VIDEO

July 24 Post Market Review

Prep was spot on this morning and traded accordingly. There was just one trade for me today. I posted it intra-trade and then posted on overlay ofter the exits.

If you did not log on earlier please take a look at the progression of postings in detail today. It is a good example of having a premise, speculating, executing, projecting, and covering.

I am going to do a post market review video but I can not post it until this weekend. I want to spend some time on it so it is thorough.

Here are my trades for today and the prep overlay.

Have a good weekend.

Live Trade Update With VIDEO Overlay

This is an update to the prep trade I posted earlier. Took 15 points profit on 2 contracts. No other trades yet today. We are testing the top of my inside range but I will likely not take the short.

If you review the postings today, you can see that I had a plan in the morning pre-market that allowed me to execute the long and hold it with confidence.

This plan was reinforced by the second posting that established the first area to scale out and overall target.

CLICK HERE FOR 40 SECOND VIDEO OVERLAY OF TRADE

Mid Day Update and Live Intra-Trade Screen Shot

I bought my inside support zone from the prep this morning with moderate confirmation. The trade took a bit of heat on the entry.

I was comfortable doing this because of my constricting tight range premise. The market will often push against the longs at a support zone and attempt to get them out of the market prior to the move up.

Some ask why I do not wait of a better long entry price. The reason is that the price will not always come all the way back down. As a trader, I have to accept the risk. I only need to win this trade 3/10 times to be profitable.

I will take 1/2 the position off at around 973 and look to exit the other around 975.50 if I get confirmation.

This is a good example of making a projection, betting on it, and having confidence to stick with it when it was not looking so good.

You can see my recorder is on so maybe we can review this later in real time video.

July 24 2009 Prep Posted

See comments on prep.

July 23 Post Market Review and VIDEO

CLICK HERE FOR JULY 23 2009 VIDEO COMMENTARY AND ANALYSIS

Today was frustrating to me because I did not catch the move up. We had it as a premise on the morning prep.

I did not have an entry. The only way to get in would have been to take the break out trade. If you recall I took one yesterday that did not work.

That may seem random but I thought there was a difference in setups (there was not actually, I had a bit of a mis-read this morning). Yesterday there was significant constriction prior to the break out attempt.

I thought that it was missing today but if you look over the past few days there is a clear ascending triangle into the highs. For new readers, I do not trade solely based off patterns like that but when you combine them with S/R levels and premise for the day it makes for a powerful setup.

I missed it this morning. These things happen when you trade everyday. The important thing and what separates a trader who can survive from one who fails repeatedly is that I did not start fading the powerful move up out of frustration.

Nor did I start buying little micro pullbacks. It would have been a coin flip or worse getting long or short at any point between the breakout and the 974 highs. It is important to understand that in advance with forward looking projections. A moving average or MACD is not going to help in these situations either.

I probed the short side with a couple tightly managed scratches at my anticipated area of exhaustion then got a decent short setup the last 15 minutes of the day.

It took patience to leave today with a small winner but it is better then the alternative.

CLICK HERE FOR JULY 23 2009 VIDEO COMMENTARY AND ANALYSIS

ES Updated Zone

Here is an early overlay with an updated zone of 973.75. This is not confirmed resistance but an area where I anticipate the market to exhaust and potentially pullback.

I missed the move up which frustrates me. It was a scenario in the prep but again today I favored exhaustion in my visualization. Would have been a good time for yesterday's breakout attempt trade.

I tend to follow this pattern with breakout attempts. A bit of randomness that needs to be corrected in my own plan.

I will need a significant pullback with confirmation to consider engaging this market today. Do not get caught up in repeatedly fading this move. There is not much resistance between here and 1000.

July 23 2009 ES Prep

Good morning. Check comments on prep.

July 22 2009 Post Market Review and VIDEO

CLICK HERE FOR JULY 22 2009 VIDEO COMMENTARY AND ANALYSIS

Had a good read on the market today but I strayed from simplicity. It seems that the simplest concepts are often the most difficult to follow when it comes to trading.

The morning preps posted had clear zones that were very trade-able. However, when it came to my grey visualization arrows, I started to speculate a bit.

I think the fact that we have had essentially the same inside support set up day in and day out for a month finally got to me. I started thinking about how the market is overextended and should exhaust. This caused my mind to start manufacturing reversal setups.

This was not a major break down in discipline but a nuance that became very clear to me in the last couple hours of trading.

My best setups are basic support and resistance entries. It takes training to find them but once there is an understanding of structure, they can be quickly identified. Then successful trading becomes a matter of consistent execution.

Today I found myself with a short bias. What is interesting is how this type bias or distortion of the facts about structure can corrode the mind when it comes to trade decisions.

I had a short bias, but the worst trade I took today was a breakout attempt to the UPSIDE. I almost bought the high of the day. Very interesting. I do not want to explore this further tonight.

I was down 4 points today total. It was actually a fairly decent day for my trading. I am pleased with my decisions and executions. You simply do not always win.

I have a video post below.

CLICK HERE FOR JULY 22 2009 VIDEO COMMENTARY AND ANALYSIS

ES Live Morning Trade Short 951.50 & 951.25

July 22 EUR/USD Fast Prep

Fast time frame EUR/USD prep. The faster time frame prep is more speculative and has more directional bias.

July 22 2009 ES Prep Check Comments on Prep

July 21 2009 ES Trades/Overlay and EURUSD Overlay

If you have not been on the blog for the past few days there are number of new postings below. Including a video post that I think is pretty good.

I have decided to start posting more material throughout the day. For example, I am going to start posting more screenshots of executions as they unfold. We can then review them via video after the close.

I had a pretty good read on the market today. Both ES and EUR/USD preps were posted.

I BID into the potential area of inside support on the ES this morning (944.75). My target was the 952 resistance area. I exited the 1st contract with 4 points.

The price then moved up a bit higher right at 952 and offered an excellent area to exit. I have to give myself a C+ for the exit on the second contract because I hesitated, partially out of greed, then the price quickly moved off the highs.

This is worth exploring. CLICK HERE FOR VIDEO COMMENTARY

Video Posting From July 20 Finally

This is my first video blog posting. I am going to be doing more of these.

CLICK HERE FOR VIDEO POSTING 29 MINUTES

Live ES Trade Long @ 946.25

Just bid into potential inside support from morning prep. No confirmation. Yes or no trade on my zone.

Will cover 1/2 at the 952 area with confirmation.

July 21 Fast Time Frame EUR/USD Prep

Fast time frame prepared on the fly. No commentary. Just zones and visualization arrows.

July 21 ES Prep

Posting some extra prep this week. Live trades coming soon. Video blog from last night will be posted this morning.

July 20th 2009 ES Trades And Prep Overlay

Excellent read on the market today. Screen shots here. 30 minute video post to follow. Listening now. Sounds pretty good.

Had to red circle the spelling errors. Prep is prepared on the fly in the AM. Extremely accurate for 10 minute analysis. This is a skill that can be learned.

Live ES Trade

I have traded my morning prep that I posted this morning exactly. This is absolutely a roadmap for the day.

You can see that I caught the short on the way down then covered at the projected inside support zone.

There was a good long entry with confirmation at 938.50 then I added to the position at 943.00. You can see where my target is.

Let's see how it turns out.

You can also see my recording equiptment on the screen. Real time recordings of live trades are coming soon!

July 20 2009 ES Monday Prep

US Dollar Looking Weak Vs. Euro

I started doing some longer term analysis on the EUR/USD because there is a massive "cup and handle" pattern forming. This is something that you will find in any book containing basic patterns.

I want to preface this post by saying that the pattern itself had ZERO relevance to my projections and offered no quantifiable input to the analysis. It was simply an amusing pattern to show.

I was just going to post the "cup and handle" pattern on the EUR/USD with an arrow pointing up and ask everybody what they thought about the US Dollar. Then I started breaking down the mechanics behind the "cup and handle" pattern and lo and behold I found structure that contained a major support zone, trend up, pullback with significant inside support, and significant constriction at the top pointing to a high probability chance of a big move to the upside.

WOW! This is very clear structure that shows a probability of a test of the 2008 highs in the Euro and likely extension attempt to new highs.

My analysis is purely technical in nature. I do not take into account ANY fundamental aspects when developing my projections. You can not quantify Geo-political events. My opinion is that the event is simply an excuse for natural buying and selling structure to play out.

This is not a political blog so I will refrain from opining on why this scenario could be setting up. I think we have smart readers so most of you can figure it out. As a trader, I have learned to not wonder why.

There are 3 screenshots. The first is a basic chart highlighting the pattern and projections. This is the original slide I wanted to show.

The second is a chart that is more like the morning prep I do but on a daily chart. This shows the mechanics behind the projection and the "cup and handle" pattern.

The third is a chart containing visualization arrows of my projections. It looks like structure is there for a fairly powerful move up to me.

I would like to encourage you to comment on this analysis and even offer your own. I will be glad to post your projections whether they agree with mine or not.

July 17 2009 ES Trades and Prep Overlays (1st Posting of EUR/USD)

This week has been an extremely slow trading week for me. I think I will need to bring back the weekly accountability report.

You do not need an accountability report when production is good. I would have to attribute this week's mediocre performance to less than usual intensity.

Do not confuse lack of intensity with lack of motivation. I am more motivated than even. I think the intensity ended up being scaled back a bit due to veering off course slightly and simple exhaustion.

Notice how I have said nothing about setups, stop outs, bad entries, ect. This is because poor trading is mostly due to factors that have nothing to do with the physical act of trading (once you have a methodology and can push the button).

I was still up slightly this week and traded with discipline and consistency.

I did everything I could in today's grind. The prep was awesome. The overlay looks good. I executed where I needed but had a lackluster result.

Some are probably wondering why I held the 2nd half of the position all the way back to break even. I got stopped out almost at the low tick prior to the reversal.

Answer: My plan was to shed risk quickly on the first half of the position because we had a very tight market. That was well done. On the 2nd half, the plan was to hold for a test of 941 and see if it would extend. I had to go break even after a 5.75 point excursion because the minor resistance I spoke of in the prep was extended and failed. Everything was completely objective and executed correctly. Trades do not always preform like planned.

I like to show these type of situations because many of the educational options out there do not address this. Traders think that if they can get into a trade that achieves a few ticks profit with an oscillator or Fibb tool that they can then figure out how to make money consistently.

There are 2 outcomes with this strategy:

1. Complete randomness in a sample size of trades due to taking profits when it "feel" right. This will work well for about 1 out of 1000 traders who are naturals. I am not one of them.

2. Scale out of the position in thirds taking quick profits on most of the position and "hoping" the rest will extend in their direction. Most traders favor this strategy because they want to get out of trades quickly without taking heat. This also generates random results...as well as massively inverted risk/reward ratios combined with the unavoidable fact that when you do hit that home run, it is with the smallest portion of your position size.

Think about this. When you invert your ratios and have a draw down, to come back you must produce better than average profits when you are trading your worst. Can you do that for a career month after month?

Most end up increasing position size or risk to try to make up for poor execution and end up turning a bad situation into an impossible situation.

Just a few thoughts for those struggling right now.

Check out the 1st EUR/USD Overlay. It was done midday so I saw half the hand before making my bet.

Check back tonight or later this weekend for some very detailed long term analysis on the EUR/USD.