July 8 2009 ES Trades

Had a very tough start yesterday. We were very clear on the zones and premise for the day but the price action was difficult between 9:30 AM and 10:30 AM EST USA.

The price was violently running the overnight highs by a few ticks then moving down and trying to find inside support and extending that slightly. Many retail traders get completely whipsawed in this kind of environment.

My premise was for 882.25 to hold and move down to new lows. I took a short right after the open with no confirmation. This may have been a bit premature but I needed to get my bet in.

I had a few excursions then got stopped out at the extreme high tick of the day. You cannot blame the high tick stop out. I have to look at the early entry. A little patience could have gotten me a better price and maybe avoided the high tick stop out.

I am an aggressive trader at my zones so the trade was acceptable. There was a re-entry just after the stop out. Excellent Pump Fake. It was objective at my zone and my gut concurred but I was rattled by the violent price action and stood aside.

It is easy to get caught up in quick price action and loose focus of the overall structure. However, the immediate local action and bar to bar structure was screaming that a breakout was eminent. It turns out that this was a giant fake out as it usually is.

It is never going to be easy to catch the high or low of the day even if you have the specific zone. The market will rarely allow painless home runs.

The second trade was an unforced error that was costly. After missing the high, I took a stab at inside support coming in which was contrary to the premise of my prep. I used my virtual maximum stop on this trade and got run over.

This is likely a result of loosing patience and discipline along with overconfidence because I have been trading well in the past few weeks. It is NEVER a good idea to think, speak, or write that you are trading well. It always seems to lead to a slump.

I think it is best to respect the markets and be quiet when you are doing well. I have to make occasional exceptions to make a point here. We will see how today goes.

The last trade caught the low of the day. There was no zone there. I was fishing for the low of the day and had a massive Pump Fake there. I have to stress that you should not trade patterns only.

There were a number of reasons for me to take that trade. The most important being risk/reward.

It led to a professional level comeback for the day. I hung in there and turned what could have been a fairly down day into a virtual break even. This preserved profits for the week and gave me a positive outlook for today.

I believe that the true skill of a trader is demonstrated on these types of days.