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November 27 2009 ES Prep Overlay, Trades, and Commentary

I originally was not going to trade today. I had a good vision of what I thought the market would do and illustrated it on the prep via the rising channel.

I did not execute on the long because I anticipated more of an oscillating channel. In theory, this makes it hard to hold a trade for an extended period of time do to multiple retests of my entry price.

This is yet another example of how I can visualize what I think the market will do based on structure with incredible accuracy.

I had been tracking this move since late Wed night.

I need to lay down the bets and let them open up. I was mentally fixated on how bad of a trading day today usually is. This caused me to not be aggressive enough.

There was a good micro breakout entry at 9:40 AM EST. I knew it when I saw it but did not execute. I was simply not willing to lose today and it cost a good trade.

I have not had much reluctance recently. I set myself up for it today. I guess it is good to get a reminder not to hesitate on a day that I was not going to trade originally.

I will be ready for Monday.

November 27 2009 ES Prep Posted

Good morning. See comments.

November 26 2009 Updated Prep Overlay

Updated prep overlay looks good.

I am still debating whether I will be trading tomorrow or not. It is typically not a good trading day but the market has had a significant move.

It will depend on what the AM setup is.

November 25 2009 ES Prep Posted

Good morning. See comments.

November 24 2009 Overlay, Trades, and Commentary

CLICK HERE FOR HD VIDEO OF TODAY'S SHORT TRADE HELD THROUGH VOLATILE NEWS RELEASE WITH AUDIO COMMENTARY

Early posting today. No gym this evening.

I had 3 decent trades today. The read was good but the market was contracted and really did not go anywhere.

The first trade I took just after the open. It was a breakout short with micro confirmation and had a tight stop. I was 1 tick from getting stopped out of it. That is all it needed though. Had it moved up any more, it would have required a much larger stop.

It was a short into support. I will talk through this a bit because it is important. I was comfortable shorting into support out of a contraction because there is a kicker for a big move down.

The premise is that if support holds I could go break even or take a very small loss. I let it ride through the news release. I was expecting a volatile reaction.

I had 5 points open equity prior to the release. Some might ask why I did not cover. The answer is simple. I have really been trying to 'not think" at all about my trading decisions if that makes any sense.

Basically, if I would have covered and the market would have sold off 15 points, I would have been irritated and likely to take a much worse entry to try to catch it. Here is my thought process:

If I book 5 points after covering and then the market starts to selloff after the news, any subsequent entry will likely require a minimum 3 point stop to even have a chance.

If that trade does not work, I am left with 2 points profit which is insignificant and risking going negative on the day if I take another entry trying to get back into a position that I got out of.

Why not just let the premium entry work? I am risking repeatedly giving back 4-6 point excursions but covering early is risking missing additional 4-6 point excursions.

With proper prep work and understanding of market structure, I think it is easier to balance the exits by holding to targets. This can get ugly if a channel or contraction develops so I must trust that I can quickly identify these conditions.

The long I took had a very premium entry. It was actual confirmed with micro structure and below the support line. I was confident in the long because I read the depth of the extension past my zone.

This is key to my trading style and I would like to elaborate on my extension reads in the future. My inside lines act as a "baseline" or nested median of sorts. I rarely make plays off the line itself and gather information by how the markets "acts" as it approaches and comes in short of or extends a line.

I had a 5 point excursion and the price cam back and clipped me out break even almost at the low tick. I do not mind this.

One of my rare mechanical rules is a break even after a 5 point excursion. I will break it but not often.

When I see a deep extension like what we had today, combined with an extension retest, then a move up and pullback to initial support; I will never anticipate a significant run to the opposing zone.

In my experience, the market does what it did today almost all of the time. It grinded up off support but made no attempt to move back up to resistance.

A shallower pullback would have been more likely to produce the move to 1112.00 I was looking for. If it was shallower, there would have been no contemplation of a break even because the price would have never made it back to the entry point. It makes the right move fairly clear.

Some do not like passing on 4 points but I do not think I will make a career out of weak 4 point moves.

Overall, I think today was very well traded even though the profit was minimal.

November 24 2009 Trade Video With Commentary

I held a short through the news release this morning. It is interesting to watch how fast the DOM was moving just after the release.

CLICK HERE FOR TRADE VIDEO WITH COMMENTARY 5 MINUTES IN HD

Novmeber 24 2009 ES Prep Posted

Good morning. See comments.

November 23 2009 Overlay, Trades, and Commetary

CLICK HERE FOR TODAY'S SHORT TRADE 5 HOURS EDITED TO 3 MINUTES IN HD VIDEO

I had a good read this morning. I was expecting a pull back but the market just took off.

There was a long entry at 9:35 AM EST. I had a good pattern confirmation and could just feel the price extending. Unfortunately, I hesitated for literally 2 seconds and price moved up to where I wanted to have my buy stop.

This puts me in a defensive position and causes further hesitation. The market was already extremely extended. It is very hard for me to buy an extended high but my read and gut feeling were both spot on.

The only thing to note is that I need to trade what I feel, trust my gut, and do not think much about my executions. This is the best possible trading plan.

Having said that, I have been hitting my setups with extreme accuracy and consistency. The mistakes have been limited in number and impact.

I made a good recovery after missing the long with hitting the short off the resistance area.

This is another example of the type of trade that I used to wait around for a clear setup on. Instead of waiting, I executed in the area where the market would fail if it were to fail. There is not much more to the setup than that.

The first short was a probing short and got stopped out. I did not intend on giving it any room. because the market was not rolling off the highs. This is often a sign that the price will extend. I wanted an immediate roll over or small loss.

The second short was a simple re-entry. It was a good risk reward bet with limited risk. There was not much of a pattern entry other than a micro breakout. Managing risk as tight as I have been has allowed me to simply insert orders where I feel the market will move.

I have given myself the freedom to take 2 or 3 shots at a move. It is my belief that my analysis is solid enough to make the probability of 3 tight entries failings very low. it will happen often enough but the edge will be greatly in my favor as long as I let the trades run to their targets consistently.

November 23 2009 ES Prep Posted

Good morning. See comments.

November 20 Overlay, Trades, and Weekly Commentary

I did not have any trades today. I premised for a tight sideways market and that is what we had.

There were not really any opportunities other than small scalps. I like my trades to have a kicker built in for a good run.

Weekly Review:

I had some good trades this week and kept the average loss per trade to less then 2 points. This is significantly lower than my average and in line with my tighter management style.

I was up for the week. Over the past two weeks, I am up over 25 points. This is a very significant edge. If I continue to maintain this type of edge I will ramp up to larger size.

The difference between what I am doing now and the flat performance in the last couple weeks of October is just a matter of allowing myself to speculate more and trading the areas I believe need to be traded.

Also, I am making more trades. I will see more edge if I make more trades within my plan. I must do this without manufacturing trades against my premise just for the sake of having more trades.

My reads are correct 90% of the time and I need to bet on them often.

Next week is a short week but I believe there will be good trading each day. I must continue pressing.

November 20 2009 ES Prep Posted

Good morning. See comments.

November 19 2009 Overlay, Trades, and Commentary

CLICK HERE FOR HD VIDEO OF THIS MORNING'S SHORT TRADE

Today is a little difficult to grade. The result was positive but I feel neutral on the play. I spent most of the day not pleased with how things were going.

Having said that, the short entry just after the open was excellent. It was in an area where I usually look for a failed extension and move back above support but I could clearly tell that the extension was not behaving correctly.

The short was came very natural to me and there was absolutely no hesitation. I knew exactly what to do even though it was opposite my usual play in an area like this.

The exit:

I was irritated when the market hit the 1089.00 area and spiked off it because it was apparent that the price action was going to get tough. I knew I would have to risk most of my open equity to hold for the remaining 5 points.

This started a great exit debate instead of me just allowing the trade to work.

My target was 1083.00. I know when to let my trades run and when not to. This was a situation that required me to let the trade run. It is still difficult to hold a short 25% off the next support zone with 10 points open equity though.

As the market started grinding up it was putting in a series of higher lows and a slight chance of a major move back to the breakout origination point. If you zoom out on a higher time frame this was just a pullback.

I started having flashbacks of the 2 occasions in the past 6 months where I have had 8-10 points open equity on a short exactly like this and given it all back.

Sometimes the market will put in what I simply call a "giant smiley face" and rally back to the breakout point. This was on my mind and I made a mediocre exit.

It was still decent trade but I faded myself and went against my gut on the exit. My rules would have had me out at 10 points which would have been almost the low.

My take:

My trading style requires that I hold my big trades until they hit there target or give me clear opposite direction entry structure and pattern.

I can not let a couple big equity give backs taint every subsequent trade I take. If I give back 10 points every once in a while it is OK.

If I bail on a trade I know is good and cheat myself out of 5- 7 points repeatedly it is more costly that occasionally giving back 8-10.

To sum it up I need to hold my big winners. Period.

The second long I took in the afternoon had the right idea and was not off in premise. I just got clipped out in the tough action. I am not going to be afraid to hit trades in this type of action.

November 19 2009 ES Prep Posted

Good morning. See comments.

November 18 Overlay, Commentary, and Trades

There was not much to do with the price action today. I had a good read and prepped for a minor probing extension after the AM contraction and then back inside the range.

I executed exactly where I wanted to in order to have an edge if the market open up. I thought the short just after the open was going to cut through the support after I entered but it held.

The long was a good micro breakout entry. I basically had to sit on the position. There was no way I was taking 3 or 4 points profit nor could I go break even. The position of the entry was right where deep higher low could have developed.

I was not interested in buying the fourth test of the support zone. Those typically do not hold and there was an obvious contraction in play today.

I have been executing well and believe I am doing the right thing. Trading is streaky and I am coming off a 21 point gain over a fairly small sample. This is a consolidation and I need to continue aggressive execution to push through.

I read several other trading blogs from time to time and just do not see anybody posting trades or talking about their losses. It is always a "minor draw" or "scratch" but never a loss.

I have never met a trader who does not lose. You always hear about about the winning streaks whether it be 1 week, one month, or even one year. What about the losses? What happens over time?

If a trader is legitimate and can actually make a profit for a living why are they reluctant to disclose their losses?

Most people who read this blog and contact me talk about their struggle. I have talked to literally hundreds of futures traders throughout my career.

There is a total disconnect from the complete crap you see out there from so-called educators and what actually happens when you are sitting in your home pushing the button.

All traders struggle immensely at times throughout their career including myself. There is no way around that. That is why there is is such a large payoff for getting this right.

I had a 1.75 point loss today. It is insignificant but still a loss. You can call it whatever you want but the reality is when you see the statement at the end of the day the balance is lower.

This is a common situation. Why can I not find any stories out there that are similar? If others are trading where are the executions?

I guess I just wanted to get some honesty out there and challenge others who do this publicly to do the same.

November 18 2009 ES Prep Posted

Good morning. See comments on prep.

November 17 Overlay, Trades, and Commentary

I was down a bit today. I hit everything that I wanted to. The chips were just not falling in my favor until the last trade.

By then, I was losing confidence in the market traveling anywhere and just gave up on the trade. This was a mistake.

When the market is pushing down and making lower lows and then gets sloppy at a support zone, this is usually a sign to me that if it holds, it will not travel very far to the long side during the day session.

My premise was correct but the trade should have been held. The price never tested my re-entry and that is my assumption on these low risk entries. I only had 6 ticks risk.

I think I left 4-5 points on the table which would have put me at BE for the day.

I am really demonstrating to myself that if I keep executing, even if it gets ugly, that my edge will prevail.

Selling the low tick of the day looks ridiculous on the chart but I had to take a shot of it. This type of trade is way outside my natural trading tendency. I am always looking for the support extension to fail, especially in a massive macro upward bias.

However, if I can not get short into support, I will take a low risk stab at selling the low. This is a decision I have made am am going to stick with it. I think there will be an edge over time. If that area did not hold, there could have been a significant move down to the 1083.00 area.

I have to say, I think I was the last one to get filled. The order just sat there and when it filled, it did not budge. I thought my DOM locked up. There was not 1 more seller left. This made it easy to take the long right after going short. I should have stuck with it. I will next time.

Look for the market to gap up to new highs overnight.

November 17 2009 ES Prep Posted

Good morning. See comments on prep.

November 16 2009 Overlay, Trades, and Commentary

CLICK HERE FOR HD VIDEO OF TODAY'S TRADES 1 & 4 EDITED TO 2.5 MINUTES

I caught the long just after the open. I prepped for a pullback to inside support at 1094.50 but it was not happening today.

The price was sitting just off the highs and extended. I did not used to be able to catch these. This was actually a fairly clear entry with very low risk (1.5 points). I do not mind buying close to the high of the day if I manage tightly.

This has been an adjustment in my trading style that has produced some good results. I feel like I have the freedom to make bets on what I am feeling and history has shown that my gut is correct far more than it is not.

I exited to long too soon today. If you remember last Monday I rode the trend up 10 points. This was the same general setup but very different price action at entry point. The pullback off the highs was very shallow.

Shallow means strength as I said in last Monday's post. However, this was too shallow. it was not deep enough and just suspect enough to convince me that this market was not going to trend up all day.

My read was absolutely correct but I left 1/2 the long on the table.

Note:

Just because I thought there was a lower probability of a major move up and tend to be correct in premise does not mean I should have been quick to exit for little or no reason.

Being correct in premise and executing profitably are totally separate. The execution is more important than the analysis.

The better course of action is to wait for a good reversal pattern. One that would cause me to get short. I think it is best to just hold these in the future.

Look at the re-entry. Any re-entry in this grinding move move realistically requires a 4-5 point stop unless you are going to manage super tight which is not practical in a grind.

If a re-entry is going risk most of the profits booked on the day than I should just hold my initial position. I am pretty clear on this and do not need to dwell on it.

My second entry was just a long in cast the trend took off. It was a good bet. Basically insurance against having to watch the price move up all day and not be in it. Only cost 3 ticks.

Again, this is part of my new management style. Get a bet in there at areas that could open up and manage tight.

I bought the high tick of the day thinking there would be some buyers up there. I quickly realized there were not and covered with a 1 point loss. I never used to allow this. I do not mind and need to keep hitting these. They will pay off over time.

The short in the afternoon had a clear setup. I was looking for the price to come in deeper but the market contracted a bit.

Overall it was a decent day. My execution and feel is quickly catching up with my reads and the results are starting to show.

I need to continue to allow myself to speculate and hit the areas that I feel are good regardless of what I think the outcome might be.

November 16 2009 ES Prep Posted

Good morning. See comments on prep.

November 12 2009 Overlay, Trades, and Commentary

I had a good read on the market this morning but it was a frustrating day for me.

Just after I completed the prep, I had to restart Ninja Trader because it locked up. It took me until 10:30 AM EST to get everything back up because my data would not load. The effort from Ninja Trader to resolve these issues is pathetic.

I had a premise for a mid-range breakout and mentioned it my prep commentary. There is often good information there that usually says exactly what to look for.

I was not up and running by the time the price tested 1101.25. There was a minor unconfirmed breakout to the downside but I do not know if I would have hit it.

After the lower high at 10:50 EST the premise was clearly down. The only other good short opportunity for me was the 11:02 AM EST breakout down. I decided to back off and reset for the afternoon session.

I do not like taking trades out of sequence and extended as this one was. I am working just hitting these unconditionally because that is what it will take for me to maintain a good enough sample per week to see a significant edge.

The long I took in the afternoon was simply an improbable bet to the long side with good risk/reward. It was a decent trade that did not work.

There loss was insignificant today. It will be good to continue having 10 point up days and 3 point down days.

I have quietly put together a pretty good sequence since last Friday and think I will keep it up. Everything is clear to me lately.

I will be off screen tomorrow and likely not be posting. I will be back and ready to go for Monday.

November 12 2009 ES Prep Posted

Good morning. See comments.

November 10 & 11 2009 Overlay, Trades, and Commentary

CLICK HERE FOR TODAY'S TRADES EDITED DOWN TO 5 MINUTES IN HD VIDEO

Here is last night's review as well as today's. This is one of my better posts.

November 10:

I premised for a sideways range bound market which is common after a big move. However, most of the bets I made were on the price breaking out of the range.

I had 3 very small losers at the edges of the price action. There are 2 ways to play a day like today. 1. Limit orders at the top and bottom of the range for a reversal. 2. Try to hit the breakouts.

In a range this tight, the edge for me was on a breakout. The price has a tendency to extend the tops and bottoms of a sideways market like today. To catch the oscillations requires risking 3 or 4 points at each reversal. It was just not worth it to me today.

My adjusted trading style is to probe for long shots with small stops and hit my bread and butter zone trades. It has been working well.

The long shot attempts with tight structure stops can be compared to making a probing bet from middle position in a game of poker to find out if anybody has a hand.

I believe position and sequence in trading is more important than quality entries. The structure and premise must concur however.

That is what I did today. I lost 3 and hit 1 but was only down 3 points including commissions. I believe this style will show a massive edge over time. I just have to keep executing until I hit the eminent move.

November 11:

I had a very clear read on the market this morning. Also, my "feel" for the movement was extremely sharp. I wish I could be in this mode everyday. I think I will eventually.

I had the initial inside support zone at 1098.75. It is probably hard for most readers to understand my tactics but I actually look for my inside zones to get extended and come back for optimal executions.

I actually use the blue line that is getting violated as an indicator of sorts and like to see the price behave a certain way as it is probing this line. I am getting good at making repeatable interpretations of action and projecting outcomes based on extension and washout behavior.

You have to have the ability to place the line in the right place however. Not only do I use this read for my entries, but it can tell me a lot about where to exit. It is a simple concept with complicated ramifications.

My bread and butter trades are failed extension reversals. It is more difficult for me to hit a double bottom or even a pump fake because I always think the Goldman Sachs bullies are going to push the price even deeper past an obvious support or resistance zone.

Today was a very complex long. It had extended the inside support to the point where most would think it had failed yet had not reached the 1093.00 support zone.

I was able to hit this purely off experience and recogtnition of what was happening. Also, my gut said to get long immediately if the micro congestion at 9:55 EST broke to the upside.

I had seen this before and understood exactly what is happening. It is rare that the market cooperates like this.

Had I I waited for the price to move back above the 1098.75 inside support zone, it would have been a far more difficult trade. Also, over a sample, more prone to get whipsawed if the action contracts or forms a channel.

I exited at the extension high. The structure at this point was overwhelmingly up but if there was going to be a failure, this is where it would be.

Structure Observation:

This is important. On Monday, I took a similar inside support trade and held for a 10 point run. Today, I exited at the extension high then reversed short. This was not random.

Monday's long came off a very shallow pullback off the highs which indicates aggressive buying.

Today's pullback went deep into the range. Almost enough to call it a test of support but not quite. This was a warning sign of a likely sideways market and made iit easy to exit at the extension high with confidence.

I would have held had that pullback been shallower.

A difference between me a couple months ago and me now is the fact that I exited and made a bet on the short side today. It was fairly clear that a bet needed to be made. Keep in mind that this was lower probability.

I take under my "what if" strategy. I am going to do this often as long as I can manage it tightly.

I think a problem I have had over the past month woth my breakout trades is waiting until the market had clearly started to reverse. This required a much larger stop and did some damage in a losing streak.

I am really starting to prefer the tighter stop probing bets. It just makes me more comfortable executing because the losses are minor and the rewards are large when they hit. I have to be able to take more losers in a row than I am accustom to however and continue pressing into the losing streak.

This is more optimal trading.

I think this is the right thing to do for my style.

November 11 2009 ES Prep Posted

Good morning. See comments.

November 10 2009 ES Prep Posted

Good morning. See comments.

November 9 2009 Overlay, Trades, and Commentary

CLICK HERE FOR TODAY'S LONG TRADE 4 HOURS EDITED DOWN TO 2 MINUTES VIDEO IN HD

The 1073.00 inside support identified on the prep held just after the open.

I took an unconfirmed long just after that. There was no confirmation necessary. The pull back structure coming off the overnight high was clearly bullish.

It is fairly rare to get this clear of an entry with no heat. After the area held, I could tell that the market would grind up. There was no real resistance above the market.

Basically, there was a vacuum. The price moved up slowly because most retail traders were repeatedly fading this move up. In essence, providing liquidity on the way up.

I had no problem just sitting on the trade. The hard part is the exit. I believed that market would grind up all day and probably close at or near it's high but at some point the math has to take over.

I would like to catch the open to the close just once but that would pretty much be a gamble after holding through an obvious exit area. It is OK to gamble but a blind hold is not repeatable.

Often when the market grinds like this and runs out of buyers, there can be a quick move down because a vacuum will form under the price action. This can cause a loss of 1/2 or more of your open equity which would probably result in a break even for me because I would likely not exit.

I exited just after the price thrust into my local resistance area at 1087.50. This was a logical exit.

There was no reason for me to re-enter. Even if I thought the market had 10 more points to go, re-entries in extended markets tend to just cause me to give back.

Good start to the week.

November 9 2009 ES Prep Posted

Good morning. Comments on prep.

November 6 2009 Overlay, Trades, and Commentary

CLICK HERE FOR TODAY'S BREAKOUT LONG HD VIDEO

There was a textbook inside support zone this morning. When I did the prep, the price was actually below the zone. This is something I look for.

I like to see the zone get tested and penetrated prior to a move up. It gets difficult when it gets extended, back inside, then extended more.

This was happening often a couple weeks ago and made for a very tough sequence. I think the difficulty made me start to doubt some of my prime setups and led to some skipped trades over the past few weeks.

I am working on the mindset that I need to execute everything I see and just take the losses on the double washouts.

There was not much of a short entry at the highs other than just making a blind short bet. This is not a move I will make when there is an inside support zone that has been extended and held.

After the move off the highs. I anticipated a contraction and was looking for very premium setups only.

Weekly review:

I was down a little bit this week. This is mostly due to missing a couple key moves. I had losing trades in the right direction at the right areas but did not re-engage after I took the initial stop out.

I think this is going to prove to be a pivot week. I had some good trades that sis not work out and suffered from a bit of reluctance due to less than optimal personal performance over the past few weeks.

I am reading the market well and after this week, my execution confidence is higher than it has been in a long time.

There is clarity in what I am doing and I think the PNL will reflect that next week.

Also, I had a solid Friday which has been something that I have had at the top of my trading "to do" list for a long time.

November 6 2009 ES Prep Posted

Good morning. See comments.

Novermber 5 2009 Overlay, Trades, and Commentary

I mentioned the overnight extension probe of 1042.50 in the prep this morning. This is a strong indication of an upward premise.

I prepped for pullback and a move up to attempt to extend 1057.50. That is what we got.

However, I got into 3 shorts today and 1 long. The long worked and the shorts did not.

The first short was a bet on a deeper pullback with an outside kicker of a potential test of 1044.00-1042.00.

Once it became apparent that it was likely to be a shallow pullback I attempted to cover and had a technical breakdown with my order platform. Just plain bad timing in the midst of a tough sequence of trades this week.

I had to manually add the exits on the first two trades because I did not close through the Ninja platform.

I got out at 3 points worse price that what I wanted. It was an ok trade. While I was working on the problem, I got a clear long entry but there was not much I could do.

I have adjusted my breakout trading to much tighter management as evidenced by the other 2 short attempts.

You can see that they were at areas that would produce a large winner if they worked but because of their placement, were lower probability. This is part of my "what if" scenario building.

I am satisfied with my execution because I hit everything I wanted to with the exception of the technical issue.

I need to keep up the aggressive execution. I have found that if I take more entries, I may be prone to more stops, but I hit the moves when they occur and this will produce a significant edge as long as I exit properly.

I must remember to keep it simple. Simplicity works.

November 5 2009 ES Prep Posted

Good morning. See comments.

November 4 2009 Prep Overlay

Good read but price did not come back to inside support this morning. No commentary tonight. I will resume tomorrow.

November 4 2009 ES Prep Posted

Good morning. See comments.

November 3 2009 Overlay, Trades, and Commentary

I had a very good read on the market today and anticipated a contraction.

I had 2 good breakout trades for a break even today. This is actually a very acceptable outcome for this type of price action.

There was not much else to do and pressing today would have led to trouble.

I felt better about my execution than I have in weeks. I have made some minor adjustments to my trading plan which will help.

I am going to start asking myself "what if" more often and taking scenario trades that fit my premise. Even if there is no confirmation.

This will cause me to get into some whipsaw trades but I think I need to in order to properly execute my prep.

November 3 2009 ES Prep Posted

Good morning. See comments on prep.

November 2 2009 Overlay

November 2 2009 ES Prep Posted

Good morning. See comments on prep.

Goals For Today:

1. Take more trades and engage the market.

2. Let your edge show itself.

3. Be confident.