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.