January 29 2010 Overlay, Trades, and VIDEO Commentary

CLICK HERE FOR TONIGHT'S COMMENTARY VIDEO WITH LIVE TRADES SHOWN IN HD 18 MIN

I got stopped out early today on my breakout long but made a recovery and ended the day slightly positive (.5 point virtual break even).

I did not catch the entire move down today but hitting a homerun is not my current plan. Getting down on a Friday and fighting back to positive feels like a win to me. It is a win.

Major volatility on the ES this week. The prep overlay and commentary had the premise exactly today.

I am working on ways to better execute my visualization. It has become a constant source of internal debate and frustration because the projections are consistently spot on.

I have a big goal here. It is a personal goal (this must be accomplished to continue trading) and also goal for the blog.

The goal is to create a steady and repeatable edge with a single entry and a single exit.

This is asking a lot. It can be achieved mechanically with a system but will not be consistently repeatable in changing markets. Thus, there has to be discretion.

The problem with discretion is that is can open the door to randomness.

I am looking for and testing (for everybody to see) the right balance of setups that are repeatable (via patterns) and can be executed consistently with discretion (in order to adapt to changing markets).

This is a tall order but I am committed to doing it. I have the knowledge and ability. It is a skill that needs to be refined.

Going for homerun trades all the time has proven to be too psychologically tough. I think I could do it over time but there is a better way.

I have adjusted to taking much higher probability profits. This does not mean I am scalping. I suspect my average win may come in at around 3 to 3.5 points but we will have to see.

I have been in this pattern twice before. I try to let the trades open up and give up huge amounts of open equity. Then I adjust like today, and take a 3 point profit on a trade that could have moved 14 points or so.

I am going to stick with the higher probability exits. I think it will come out ahead if I can still allow for the occasional homerun that just moves to full volatility without giving me a chance to exit.

I need to address my low trade frequency as well but we will have to do it in a different post.

This is getting interesting because I am going to do this live and show the executions. I have gotten off to a rocky start this year but have confidence that I will prevail.