July 9 2009 ES Trades

I took a good short just after the open. The premise for the AM was if 898 held, the price would move down and test the 866.50 area.

Inside support came in at around 874. I managed to take off 60% of the position there. This was the first obvious natural target. Left quite a bit on the table for a break even though.

I do not think there was any other way to play this one. My plan is to hit my targets. They will not always be hit. I can make money if they are hit 40% of the time.

Buying the inside support would have been the other good trade for the day. I often have conflict in these areas because I can see the support coming in but also have a downward premise and bias.

I often say in these situations "I would have have taken a long had I not been short". Some would say that if I saw the support coming in why not exit the full position. My answer is that you do not know what is going to hold and what is not in advance.

The important thing is to stick with a repeatable premise to avoid randomness. Randomness is more damaging to an equity curve than poor trading.

The other option is to take the long on another order DOM and manage that order separately. I may explore this type of trading in the future but for now will stick with simplicity.

I liked the short of 883-884 area late in the day but had a limited expectation of any significant volatility by the close. The range was constricting which means my chance for anything more than a single was low so I reluctantly stood aside. It was the proper decision.