October 13 2009 Overlay, Trades, and Commentary

I usually do not make undisciplined trades.

Today's trade was the exact polar opposite of what I normally do given the same setup.

I attempted to short the pullback after a relatively shallow breakout. I am almost always anticipating a washout and move back into the range in these situations.

This was a 100% unforced error and very sloppy trading.

I had the correct long trade order set at 1067.50 initially.

When it did not get filled and the market pulled back, I basically decided to fade myself to the short side. Most of my losses are due to me fading my own premise.

This is particularly bad.

Shorting a pullback after a support zone can be a good trade but it is not one I usually take. This is the type of trade where I usually say "here is where all the retail traders are getting short".

Today it was me and there is no excuse other than it being a stupid mistake.

It may not seem like a big deal but it is to me because the trade had no chance according to my plan and I talked myself into it which meant I had to force the execution as well.

Action In The Past Week:

I think the trade was primarily a result of the fact that there have been ZERO premium setups since last Tuesday.

I have not seen a spell like this in months. Instead of standing aside I allowing pressure to succeed and move forward in equity get to me.

Both losing days since last Tuesday have been on setups that were marginal at best. They really were not even setups, just concepts. Concepts will not cut it.

If you look back, the market has not traveled more than 4-6 points in any one direction intra-day since last Tuesday.

All of the movement has been in the Globex session. Including today. Spiked 1068.00 - 1081.00 new high just after the close.

This is horrible action with limited edge.

It is a fine line between pushing yourself to execute and inventing setups or scenarios for the sake of engaging and it has put me on short term tilt now.

Basically, making the last week a scratch. That type of performance with what I know is crap and completely a result of mental distraction or fatigue.

Whatever caused it needs to be corrected. These issues will always exist in trading.

11:00 AM Trades:

I hate having to incorporate TIME into my trading plan because time has absolutely nothing to do with structure.

However, every single trade I have taken at or just after 11:00 AM that I can recall in recent history has failed.

SO I AM DONE WITH 11:00 AM TRADES FOR NOW.

This actually makes sense and is more in line with my universal view and strategy.

If I am not already in a position at 11:00 AM, anything I am going to get into is going to be reactive to missing an initial move and also OUT OF POSITION AT A WORSE PRICE.

This theory continues to prove itself day in and day out and has some significant ramifications to intra-day trading which I want to address at a later date.

Not all 11:00 AM trades are 11:00 AM trades. I know the difference and will point it out when I see it.

Why Not Trade The Pullback After The Price Broke Back Into The Range?

It seems like good trade.

Same reason as I stated above about missing a trade. OUT OF POSITION AT A WORSE PRICE WITH AN LATER IN SEQUENCE KICKER.

I believe position is everything in trading just like poker.

When there is a moderate extension outside a range and a move back in, there are several points that it could pull back to.

You can try to catch this but your reward is smaller than getting it right the first time and your risk is more with lower probability of success.

Is it worth 2 stop outs to hit a progressively worsening trade? No.

Why take the bet?

Get it right the first time. That's it.

I am rapidly evolving into a position on intra-day trading that says there are a couple times a day where the price is a bargain and will run in your direction that can be projected and hit consistently.

Everything else is manipulation and noise caused by Goldman Sachs bullies, scalpers, and arbitragers.

Some say you can not predict the price action.

I disagree. I do it almost every day with extreme accuracy.

It is not a prediction but rather a projection. The difference is that a projection requires real time course correction based on certain structural scenarios.

It works but you can not capitalize on it until you completely stick to it under pressure.

How many times will I have to prove my process correct before I trade it exactly as it is meant to be traded?