March 31 Overlay and Trades

I had two very good trades today that I ended up scratching after good excursions due to asking too much of the market.

This inconsistency in exit strategy has been a common problem in the past six months.

The occurrence today was due to building up a decent run throughout the month by taking quick profits and then giving most of it back in a couple bad days last week.

Effectively scalping mid range requires larger stops and I got squeezed twice last week. This is probably a rare outcome but caused me to revert back to my stubborn hold until full target ways today.

As somebody who knows what they are talking about pointed out to me today, this would have worked well in 2008 but will not cut in now or in the near future.

I could not have said it any better. It is clear that I need to take frequent trades and quick profits to make my one contract one single entry/single exit project work.

It is a tall order when I am highly accurate with my macro targets and seem to have to widen risk as I cover and re-enter later in sequence.

At least I know what I need to work on.

March 31 2010 ES Prep Posted

Market continues to be very contracted. Premise for today is to see is 1166.00 inside support holds. If this holds, look for test of 1176.00 and extension attempt up. If 1176.00 holds, could see a sideways market 1176.00 - 1166.00. If 1166.00 does not hold, look for test of 1159.50. Overall range is 1159.50 - 1176.00. If price continues to stall out and can not reach the highs, there will be a downward correction. Volume has been light with the holidays this week. I will be looking to initiate longs off 1166.00 and 1159.50 and shorts if price extends 1176.00 and moves back inside. I will cover breakout trades quickly or scalp them if they do not move quickly if the price continues to grind. Volatility is low and in these conditions a move will likely be out of nowhere with little warning.

March 30 2010 Overlay and Trades

March 30 2010 ES Prep Posted

Price is very contracted this morning. Base premise is for test of 1176.00 as noted in yesterday's prep and last night. There is minor inside support at 1166.00. If this holds, look for test of 1176.00 and extension attempt. If 1166.00 does not hold, look for test of 1159.50 and sideways market 1159.50 - 1176.00. Watch for major congestion and low volatility. Price could congest between 1166.00 and the 1172.50 Globex high. I will look to cover any breakout trade quickly if it starts failing. I will look to initiate longs off 1166.00 as long as 1176.00 is not tested first and longs off 1159.50. I will look to initiate shorts if 1176.00 is extended and comes back inside the range and breakouts down of 1159.50.

March 29 2010 Overlay and Trades

Very tight market today.

I had a couple good long attempts targeting the highs but scratched them as the price congested.

I would not be surprised to see an overnight run at the highs.

I am going try posting mostly illustrations only for the next couple weeks and supplement with some good detailed commentary on a specific topic or trade sequence once or twice per week.

Detailed illustrations may be more useful since this is a visual line of work.

This blog remains the only source I have found to see consistent plotted executions and videos of live trades and I want to stick to that.

My focus right now is on increasing the frequency and amount of my trades. It should be interesting to see where this leads.

March 29 2010 ES Prep Posted

Premise for this morning is to watch for potential inside support at 1167.75. Base premise is for test of 1176.00. If there is inside support at 1167.75, look for test of 1176.00 and grinding extension attempt. If 1167.75 does not hold, look for test of 1159.50 support and sideways to downward bias. It is likely that the price will push through 1167.75 and washout prior to initiating a continuation up. I will look to initiate longs off 1167.75 and 1159.50. I will look to initate a breakout short if 1167.75 starts to hold then breaks. I will also look to initiates shorts after a test and fail of 1176.00.

March 26 2010 ES Prep Posted

New high yesterday and small correction down. Premise for today is to see if 1159.50 support holds. Base premise is for test of 1176.00. Watch for the price to stall in the AM at overnight Globex highs 1166.50 area and potentially retest the 1159.50 support. if this happens, 1159.50 is likely to be extended down. If it does not hold, look for test of 1147.75. If price moves back up to test 1176.00, look for grind up and congestion at highs with attempts to grind through and extend. Bias is still up but the market is due for a correction down and and I think we will get one over the next week. I will look to initiate breakout longs midrange and pullback longs from open targeting 1176.00. I will also look to but a retest fail of 1159.50. On the short side I will look to fade a test and fail of 1176.00 and take a breakout down of 1159.50.

March 25 2010 Overlay, Trades, and Commentary

Today was an an interesting day. I had a good read and put together a detailed blueprint of what I was going to do before the market opened.

There is a key argument to discuss here.

Should I lay out my blueprint and trade it with confidence and not trade when the market is not conforming to my blueprint or should I modify my plan and trade what I see happening on the ground that moment?

Blueprint vs. reactionary

Today featured both options and an unforced error.

Trade #1 was not on the prep. I took it because the market was looking like it was not going to pull back to my blind inside support area.

It did pull back just shallow of my blind inside support and low ticked me. The low tick could have been avoided by trusting my zone and taking more risk but I do not want to discuss that right now.

Trade #2 was an obvious setup for me and well executed. Had I followed my blue print, I would have not been in trade #1 and taken trade #2 but had I followed my blueprint and the market not pulled back to my blind inside support, I would have missed the move.

Trade #3 was an unforced error. If you read my prep comments, I specifically said the plan was to short after an extension and move back inside resistance.

I got too caught up in wanting to be long and ignored the fact that the price traveled way too far above resistance to be in line with the mechanics of trade I wanted there.

I was not a bad trade but I took it for the wrong reasons. The right trade was what I had on my blueprint.

Trade #4 was likely to be squeezed and I knew it when I executed. I had to take it. I thought the price would test 1160.00 and it did but not before a nice short squeeze stopped me out for the third time today.

Trade #4 would not have been in play had I taken trade #3 according to the blueprint but trade #4 had to be taken according to the action on the ground.

I did mostly the right thing based off what I was seeing but did not execute according to what I envisioned as a speculator before the market opened.

My talent right now is much stronger as a speculator visualizing how the market will act than as an executor reacting to the market's actions.

Perhaps I should focus on the blue print and execute with more risk and greater confidence.

The blue print does not get faked out but it can not play some days. The reactor gets faked out often but builds great skill in execution over time.

The blue print wins today.

March 25 2010 ES Prep Posted

Price is siting on highs this morning. Prep is more speculative this morning. Premise is to look for potential inside support at 1166.50. This will be a shallow pullback prior to an attempt to extend the highs. The entire range 1170.50 - 1159.50 has pockets of support areas that will make trading difficult in this area. I will stay on the long side unless there is a clear washout extension of 1170.50. If 1166.50 holds, look for a continued grinding trend up. If 1070.50 extends and fails with good structure, look for correction down to 1159.50 and attempt at 1147.75. I will look to initiate longs with good structure off the 1166.50 area and shorts after the price move back inside if there is a washout extension of 1070.50.

March 24 2010 Overlay, Trades, and Commentary

I had a good read on this morning's contraction. My plan was to wait for a breakout but the price stayed congested all day.

I had a couple good long scalps later in the day off the 1162.00 area. I have adjusted the expectations in my trades to fit the tighter congestive action we have been seeing for the past 6 weeks.

CLICK HERE for raw VIDEO footage of the live executions

The only miss today was the long off the first touch of 1162.00 at 11:17 AM EST.

I was over thinking the trade. I did not believe the highs were done being tested and was not expecting a sell off.

I could feel that it was a good area to buy and was looking for a good pattern setup. I knew I would likely not get one.

The area simply needed to be bought and given room to washout. My primary concern was that it looked like too obvious of a trade; a retest and failure of the Globex low almost to the tick.

I do not like obvious trades because everybody sees them and the opposite outcome is common.

I thought the price would bounce then thrust down to 1159.00 (my original buy area from the prep).

I have a clear understanding of what I did and will not repeat.

I had been burned on this exact long setup before but know enough now to understand that this is a completely different trade in the context of the massive uptrend.

The setups that did not work out in the past were coming off clear highs, not pulling back in the middle of a powerful trend.

This demonstrates that setups mean very little. Context and direction are clearly the determining factor in whether a trade will be successful or not.

I took a small step towards increasing trades today. I will continue to do this.

March 24 2010 ES Prep Posted

Continuing to observe the powerful trend up. Premise for today is to watch for potential AM contraction. This has not confirmed yet. Overall bias is up with the trend. The overhead minor resistance is the bull market high. I would expect this to be retested and for there to be an extension attempt. I will be looking to initiate breakout longs and shorts targeting the zones above and below the contraction. I will also look to initiate longs off 1159.25 with confirmation that it is holding and shorts if 1170.50 gets washed out if there is premium structure for a correction downward. The market is due for a downside correction but it is prudent to wait for good structural confirmation prior to taking any sh

March 23 2010 Overlay, Trades, and Commentary

Price came in just shallow of inside support and continued the massive grinding trend up today.

I bought at good prices and exited in a logical area even though I believed the price would continue to grind up.

I have done this 5 times this month.

The market is showing some good and consistent structure if you can look past the grind. Just buying the 1160.00 support area over and over again would have worked excellent.

I have to keep repeating that I need to trade more.

March 23 2010 ES Prep Posted

Price is at highs again. Premise for today is watch for potential inside support at 1157.50. If this holds, bias with be for congestive sideways action 1157.50 - 1165.50 with an upward bias. Watch for midrange contractions. Look for extension attempt of 1165.50 in this scenario. If 1157.50 does not hold, look for test of 1147.75. Oveall range is 1165.50 - 1147.75. I will look to initiate line in the sand trades off the 1157.50 area. Longs if it washes out and holds and breakout shorts with confirmation.

March 22 2010 Overlay and Commentary

I did not have any trades today. The only entry area for me was a long off inside support this morning.

I had a good read on the prep but had a short bias instead of trading what I saw. It was a tough buy for me because of the topping action at the highs and the lower high from Friday afternoon.

After missing the early long, I was not going to chase the action up.

I do not have much more to say about my trading tonight. I have been solid on the technical side and am working on the mental aspect silently.

I am at a point to where I can feel what I need to do but can not quite put the plan into words.

I have reached the highest level of discipline so far in my trading career. Now I need to slowly increase frequency while maintaining close to that level of discipline.

This needs to happen naturally and is making for slow progress right now. I have no doubt I am doing the right thing.

March 22 2010 ES Prep Posted

Price is sitting on 1147.75 inside support and looking weak. Retest of 1165.75 highs on Friday. Premise is to see if 1147.75 holds. If it does not hold, look for move down to 1135.00 support and potential continued move down over next couple days. Market is due for a downward correction. If 1147.75 holds, look for test of 1156.25 minor resistance. Overall premise in this scenario will be for retest of 1165.50 and range expansion. Secondary premise will be to look for 1156.25 to hold and create a lower high for a sideways to downward bias and potential continuation downward.

March 19 2010 ES Prep Posted

Quadruple witching today. Generally I expect to see an initial AM setup or move then grind and consolidation for the rest of the day. Price has been in a powerful grinding trend up for up. I do not watch indicators much but the VIX is at extreme lows. I will be prepared to execute if the market starts moving. Premise for today is to watch the minor support levels above and below the price. I will look for the market to be range bound 1156.25 - 1165.25 with the potential for an AM contraction. Bias is still overwhelmingly up. I will look to execute breakout trades from a mid range contraction targeting the top or bottom of the zone. Also, I will look for inside structure prior to a breakout of the zone to the upside and look to take a pattern breakout trade short if minor support fails. I will continue to favor long trades until this market puts in a significant lower low.

March 18 2010 Overlay, Trades, and Commentary

I had a break even plus 1 tick today on a decent pull back entry after the double bottom low.

I exited quickly after a thrust up into the highs. I just did not feel that the market was going to go anywhere and it did not.

I have not been posting much commentary or doing reviews because there is not much to review.

Making money in this environment requires extremely sharp execution skills and the ability to scalp effectively.

My style is more geared towards larger setups right now so I have little to do in these grinds. There is opportunity. I am beating the market this month but I could be doing a lot more with what I know.

I feel good about my trading. My reads and execution is better than ever.

I am simply not taking enough trades. I see opportunities but am playing it very safe. Probably too safe.

It is important that I start pressing.

March 18 2010 ES Prep Posted

The relentless trend up continues. Premise for today is to see if potential inside support 1157.25 holds. If this holds, I will be looking for a continued grind up. Long opportunities are primarily scalps with the trend. If 1157.25 does not hold, look for a test of 1148.75. If 1148.75 holds, we could set up a range 1148.75 - 1165.25. I will not have a short bias until I see some major lower lows in this move. I will be looking to initiate continuation longs off 1157.25 and confirmed longs off 1148.75 if price gets there. I will initiate confirmed breakout shorts if 1157.25 breaks with premium structure. bias is averwhelmingly up so I will stick with the trend until proven otherwise.

March 17 2010 ES Prep Posted

Prep is very uncluttered today. For the first time since I started posting there is no established resistance that I am watching. Trend is continuing to press up with no correction. I have noted repeatedly that the market is stretched to the upside but am going to stick with the powerful move up. This is a quadruple witching week which also has a bullish bias. Everything is so bullish that it might be time to sneak in a downward correction. The reversal will happen once everybody stops trying to fade this move up. I will be watching. I will look to initiate longs with confirmation at the 1148.75 inside support area. I will look to initiate shorts with a break of 1148.75 inside support. The short side has not worked at all for the past 3 weeks so I will be looking for premium setups only.

March 16 2010 Overlay, Trades, and Commentary

The read was fairly decent today. The price came in a bit shallow of the 1144.75 inside support area.

I did not get a chance to initiate a long. The action was slow and grinding. I required a deeper move down to execute.

The structure followed my visualization closely. When to price exhausted ofter the Fed announcement and came back inside 1151.00 I was looking to get short.

There were plenty of negatives about this trade. Most importantly is the ridiculous uptrend we have been seeing for the past few weeks.

The other issue was that the price was due to pull back and prone to get short squeezed exactly where I entered.

I was fully aware that I could be selling into a wall of support but had no thought of skipping the trade. I had to give it some room and got squeezed for 3 points.

I do not pass on trades just because there are negatives. There are always reasons to not take a trade.

It is interesting because I knew this trade was not likely to work, however, I did not force it.

Most of my losing trades are good setups that I just do not like very much but take anyway because I feel that I "have" to take it. The justification being that I do not want to miss out if it works and risk trading randomly.

I felt good about this one and believed in it strongly but had a feeling I could be selling into a reversal. I confidently took it with no hesitation.

It got really violent for a few seconds as many traders shorted and some big players just bought up all the shorts and squeezed them out .

I guess I could have anticipated that had I been thinking about the trap or the fact that this was a good area to fool everybody.

I am trying not to over think. I can over think well but I want simple.

I am actually pleased with the outcome. I hate to lose but I like the way I decided to hit the trade and not care much about the individual outcome.

It was discretionary and mechanical combined but not forced. Just plain different. I think that is good.

This is the end to a significant streak of small winning trades I had been having. I made an effort to not count how many winners I had in a row. It never leads to anything good to know the number.

They were all longs. This is the only short I have had in 2 weeks. It says a lot for sticking with the trend.

March 16 2010 ES Prep Posted

Premise for today is to see if potential inside support 1144.75 holds. If this holds, look for extension of 1151.00 minor resistance and continued grind up. Market continues to be stretched to the upside but the trend is powerful. Overall range is 1136.50 - 1151.00. If 1144.75 does not provide inside support, look for test of 1136.50. If price hits and washes out 1151.00 prior to a test of 1144.75 and comes back down, 1144.75 will be unlikely to hold and the bias will be for a downside correction with a test and likely break of 1136.50. I will be looking to initiate longs if price pushes through 1144.75 and moves back above and shorts with pattern confirmation if 1144.75 does not hold. I will also look for shorts if 1151.00 gets extended and price moves back inside range.

March 15 2010 ES Prep Posted

Premise for this morning is to see if 1143.00 support holds after Globex probe back below the area. If it holds, look for retest of 1152.00 minor resistance and likely washout extension above. Could see a range 1143.00 - 1152.00 with a potential contraction in this scenario. The market continues to be stretched to the upside and is due for a correction. If 1143.00 does not hold and price breaks the Globex extesion lows, look for a more significant correction to the downside with tests of 1135.00 and likely 1128.00. If price starts moving down, traders will likely be looking to start covering longs and initiating short positions. I will be looking to buy the 1143.00 if it looks like it is going to hold and quick to sell any break of the 1140.00 - 1141.00 extension low.

Video Footage Of The ES Moving With Volume On Saturday

I am not not sure if this is a data error or not. I was seeing 5k - 20k 2 minute volume bars for about a half hour.

CLICK HERE for video of Saturday ES movement

March 12 2010 Overlay, Trades, and Commentary

Nice grind today. I had just 2 options for trades. Either a long off 1043.00 or a short if 1043.00 breaks.

I bid into the initial test of 1043.00 looking for a continuation of the trend up but the market congested for the rest of the day.

I took a 1.25 point discretionary scalp exit about an hour and a half later.

It was the correct exit. My plan lately has been to incorporate feel with my premise.

The interesting thing about today is that this long was the type of trade the I usually take because I felt it "had" to be taken and not necessarily because I liked it.

It looked great structurally but did not feel right to me after I observed the action as I managed the trade.

These trades have historically not worked out for me. There is a difference between this exit and the early exits of the 4 or 5 previous trades.

This may not make much sense to some but the previous early exits were taken mostly because I believed in the trade but did not like my position.

The thought process on the previous trades was that I thought the trades would work but was unsure if my risk tolerance would allow me to have a successful outcome if the market started pushing against my entry point.

The thought process on this trade was that I just did not believe the market would move up off the area today and had a chance of selling off from around my entry point.

As recently as a few weeks ago, I would force myself to stay in the trade even though I did not like it.

I exited on feel and was right today. Staying in would have been forced.

I exited on feel and was wrong on my previous exits earlier this week and last week. Those exits were forced.

The concept is that when I have to force an outcome, it is usually wrong.

March 12 2010 ES Prep Posted

***Update***Trading June contract only today. Volume low on March.

The prep illustration is a little rough today due to the quarterly data rape by Ninja Trader. A continuous contract is a simple concept. Price has extended the highs slightly. Premise for today is to see if support comes in at 1143.00 and continues the grinding trend up or if there is going to be a downside correction. I will be watching 1143.00 closely after the open. I will look to initiate longs there with a retest and hold and shorts with a breakout pattern confirmation down. If the market starts selling, longs will be tough. I will be looking for premium setups only today.

March 11 2010 Overlay, Trades, and Commentary

I had a good read today and executed a decent micro breakout long after the probe of the 1139.50 (March) inside support zone.

My feel for the market was spot on today as it has been for weeks. I almost bought the probe.

I knew what I had to do there. I was slow to bid because price was coming off the bull market highs at 1147.50.

I am working towards executing my feel on demand. I have learned not to push this tactic too fast. It has to happen naturally over time.

Forcing aggressive entries will lead to bad or incorrect entries.

Those who did buy the probe hit the trade of the day. Today was the fourth time in a row that I bought close to the low of the day.

CLICK HERE for raw footage of the live execution

I have a moderate level of confidence setting in. It is different than what I have experienced anytime previously in my trading career.

In the past, when I have felt like I am about to make a step up to the next level, I have felt extremely confident.

I think extreme confidence is too much. This moderate feeling of capability feels right.

We will see how it works over the next few weeks.

If anybody is interested, here are my key levels that I transferred from the March contract to the June contract.

They get fine tuned as I observe the action around them but usually hold up pretty well.

1147.50
1142.75
1135.00
1128.00
1121.25
1111.75
1099.50
1094.50
1081.25
1074.25
1051.50
1037.50
1030.25
1019.75
1004.00
1000.00

March 11 2010 ES Prep Posted

Contraction this morning. No significant Globex move. Price is congested at highs. Premise for today is to watch the 1139.50 potential inside support zone and 1147.50 resistance. Could see a range 1139.50 - 1147.50. If 1139.50 holds, bias will be up to sideways. I will be looking for a capitulative extension of 1147.50 in this scenario. If 1147.50 washes out and holds, bias will be for a significant downward correction and test of at least 1132.50. Trend up is still in tact. I will be looking to get long around 1139.50 or a breakout of the opening contraction to the highs and beyond. I will be looking to get short on a breakout down of 1139.50 or after a washout extension of 1147.50 and move back below the level.

March 10 2010 Overlay, Trades. and Commentary

The price reached the 1147.50 highs today. It has been a powerful grinding trend up to this point.

I played my prep exactly today. My comments said to look for the contraction breakout up or down.

I preferred the long side because of the bias to test 1147.50. I initiated a micro breakout long just after the price broke out of the AM symmetrical triangle.

CLICK HERE for raw footage of the live execution

I ended up just scalping the trade. My plan right now is to take very high probability targets instead of holding and constantly giving back open equity.

This books some profits and avoids stop outs for losses after significant positive excursion.

When I factor in a 2 or 3 point profit as opposed to a 1.5 or 2 point loss, that is a 3.5 - 5 point difference between a winning or losing outcome.

What I mean by this is that taking a 2 point profit in a situation where I would have previously let it have the excursions and then stop me out for 1.5 points makes a significant difference in equity.

I am still going for my full targets. However, to capture them, it will have to happen naturally via a powerful straight line move or I will have to force myself to adapt to a re-entry method.

For now my focus is high probability trades the concur with my premise.

I exited today quickly and decisively with no confirmation. This was because the price was approaching a major zone and susceptible to violent covering.

It was the right decision and the proper way to manage in my opinion.

Drills like today will build confidence in execution and management thus allowing me to slowly start adding scenario trades based on premise and feel only.

These trades tend to require more risk and more trust. I am working on developing the skill to confidently trade my prep like the blueprint that it is.

March 10 2010 ES Prep Posted

Contraction this morning. I am having some data issues so had to improvise a bit with last nights 4000 tick chart. Premise for today is to watch contraction and play the breakout up or down. Overall premise that I have had for the past few weeks is a test of 1147.50. Market is still trending up and has had no significant pullback. I will look to initiate longs off 1132.50 inside support with some confirmation that it is holding or contraction breakouts up or down into 1132.50 and 1147.50. If the action stays mid range and gets ugly, I will wait for a test of the top or bottom zones.

March 9 2010 Overlay, Trades, and Commentary

This is a tough post as I have been stalling all night. Something interesting has happened in the past few hours.

I was thinking about not posting because I did not want to be too negative about my trading.

I have been winning the game over the past few weeks but the edge is not close to what I feel I am capable of. I know I can do much better.

I spent most of the day being very angry. I always enjoy trading regardless of how hard it gets. The anger was directed at myself for not capitalizing on the action the past few days.

Yes I said action. While I have been complaining daily about the grind, I have been doing some of the best reading and executing of my career.

The management has been total crap but the reads and execution has been spot on. I have even been detailing specifically the way the market is likely to act in certain scenarios and then seeing it happen as I had premised.

I have posted a very compelling chart tonight. It is a high time frame of all my executions since Thursday of last week.

It is partially embarrassing but also shows some extreme skill and discipline in a tough market. The management is the embarrassing part obviously.

I bought close to the low of the day each day just after the open while avoiding the chop sandwiched in between the execution days.

I also did not start fading myself as many do out of frustration after scratching all 3 big winners for no good reason other than I did not like the pace or risk relative to my entry position.

I can only describe this sequence as cowardly.

The anger came about when I looked at this compelling chart and saw the placement of my trades relative to what happened.

I spent the whole day and evening repeatedly asking myself what the problem is and why am I not managing these properly.

I had tons of blog material in my head about how ridiculous the chart looked and had plenty of bad things to say.

Then I blew the chart up on the really large monitor to mark it up and had some clarity. The anger went away and was replaced by confidence.

The fact is that according to my plan, the premise, read, direction, and execution was perfect. I am not going to go into details but all 3 of these trades had the exact same complex pattern entry (complex meaning multiple layers of confirmation).

Seeing the trades from 4 days laid out as these are made me realize that there is absolutely no randomness to my executions.

Having 3 trades over 4 days is inviting randomness but it is not occurring. My trading is the opposite of random.

The fact is that I am so consistent in my trading that I am mismanaging my winners with extreme accuracy.

I am doing the same thing over and over again. Regardless of the setup or scenario.

Realizing this and trusting it will get me half way to where I need to be.

I have a sense of clarity because I am seeing this issue in a whole new light and am ready to do something about it.

I am ready to make a significant change in my trade management. Not some changes. Just a change.

This is not a technical issue. I think I am 99% of the way there. The other 1% is going to be tough.

It will require applying trust, confidence, and feel to my trade management after execution. This is a tall order and will require work.

The clarity is that I need to start on this tomorrow and not look back.

March 9 2010 ES Prep Posted

Price is testing 1132.50 potential inside support discussed in yesterday's prep and last night's commentary. There are 2 scenarios this morning. Base premise is for a test of 1126.00 support. If this holds, look for a range to develop 1126.00 - 1138.50. The second scenario and more fitting to the trend is that 1132.50 potential inside support holds and the price tests and extends 1138.50 minor resistance. Price has already come off this potential inside resistance. I prefer to see this at the open. If price comes back down for a retest, action could be difficult in this area. I will look to initiate longs around potential inside support if it is holding and shorts with pattern confirmation if it starts to fail. If price moves up and off this area prior to the open and is sitting close to the resistance area, there will not be much for me to do. I want to get long but will not buy highs in this grind. Price is stretched and due for a correction. I will need strong confirmation of a correction down to initiate shorts until the market makes some lower lows.

March 8 2010 Overlay and Commentary

ZZZZZZZZZZZZZZZZZZZZZ.

No trades today. It was another total grind.

I needed to see a test of 1132.50 or a big washout extension to engage.

My prep work kept me out of trouble today. I have not seen a 4.5 point range day in a while.

I do not think the tempo will return to normal until the giant wall of fake bids and offers goes away.

A good 10-15 point move might accomplish this. My overall target for the past few weeks has been 1147.50.

The prep is still in effect. Let's see if the price tests 1132.50 overnight.

March 8 2010 ES Prep Posted

Price continues to be in a powerful trend up. My overall target for the past few weeks has been 1147.50. The market is stretched but I have to go with the trend. Premise for today is to see if price will push through 1138.25 from the current shallow pullback and congestion or if if will pullback to the midrange area and make an attempt up. Watch the 1132.50 area if price pulls back from where it is. Buyers may come in here and attempt to take the price up. This area will have less significance if the price extends 1138.25 by more than a few points and comes back inside 1138.25. I will be looking for long setups either out of the congestion around 1138.25 or around 1132.50 with confirmation and no washout of resistance first. Shorts will be tough. There will have to be a more significant downside correction soon but I will wait until I get good confirmation. If 1138.25 washes out just after the open and I get good supporting structure I will make an attempt but be quick to cover if the move starts grinding.

March 5 2010 Overlay, Trades, and Commentary

I had an excellent read this morning. There were not really too many outcomes. Even prior to the news release, the scenarios and areas to work off of were clear.

I executed a long just after the test and hold of 1126.00. The entry was a confirmed micro breakout entry. My gut said to bid into the thrust down into 1126.00 but my prep required me to wait for confirmation.

The trade looked excellent. I never doubted the upward bias but ended up scalping the trade instead of holding all day.

My simple answer to why is that I was not in the best position and thought there might be a retest of 1126.00.

Had there been a retest of 1126.00, I would have held even at a worse price. The tempo and wall a fake bids and offers made me very willing to scalp as well.

CLICK HERE for a short raw video of the trade

There is a larger issue I would like to explore here.

My thoughts on my trading plan and one entry/one exit or one contract trading

I do not scale into or out of my trades. I do not add to winning positions. I have attempted this in the past with mixed results.

My process right now is to master my edge with small size and then ramp up to larger size. I believe that I can develop enough execution skill to be able to get in and out with one entry and limited risk while still maintaining an edge.

The difficult part is creating outliers because I can not manipulate size based on the quality of the setup.

I am trying to develop a raw and consistent edge using fixed size and single exits which is very difficult.

My recent conclusion

I am correct on direction and premise almost all of the time but have only had a minimal edge lately.

I can beat the market right now but am prone to long grinds and break even spells. This is ok but I know I can do better.

The issue is that I manage my trades very tight. When I am wrong I always get stopped out for a loss. When I am right, I am only taking profits about 35% of the time.

My stubbornness in taking profits is making me dependent on my trades going in a straight line from entry to exit. The market is rarely going to cooperate.

I do not have a re-entry mechanism to get back into a move after it has come off a zone. I like playing off zones because I know exactly what my risk is.

Not engaging between zones is leaving a lot on the table.

Today is a good example. I scalped a premium entry but did not re-enter. I have known for some time that I do not like to re enter so my previous plan was just to hold.

I have stopped this because I was letting too many trades hit 4-6 points open equity and then stop me out.

It is not that I can not trade in between zones. I have many different ways to execute regardless of where the price is at.

The issue is that if I do not use a tight structural stop, I need to pretty much have no hard stop and let the price push against me until my premise is really invalidated.

Many traders trade this way. It requires taking occasional losses of 4-8 points. I have not been able to accept this.

The flip side of the argument is that if I take a 2 point loss 2 or 3 times on a re entry attempt because I did not give the trade any room, I have still lost 4-6 points on the attempt.

This is a matter of trust and feel. Trust in myself and feel are what I am working on now. This is key to being an elite trader.

I have the feel without a doubt. It is trust and confidence that I am working on now. I need to be able to let the price push against me when I feel strongly about a premise.

I am getting stopped out too often in the noise just to see my premise end up working.

I took a stab at this method on Tuesday when I bid into the move down just after the open. I stopped myself out at 3 points loss knowing it needed another 1 point of risk.

The price low ticked me and then went on to win. I lost that battle but demonstrated that I can open things up and get more aggressive.

To sum it up, I am going to slowly start taking quicker profits and allowing more risk in certain scenarios. I need to allow myself to trade and not get too caught up in the noise or micro structure.

It is very rare that the price ends up somewhere that surprises me. I need to exploit this.

Interesting observation this week

I beat the market this week. It was not a massive victory but is was acceptable in this action. I traded well but not enough.

Strangely enough my edge was created by several small 1 point trades that would have normally been break evens.

Had I held today's trade instead of scalped (like my original plan earlier this year), I would have had a larger profit this week BUT...

I do not want to have to make a career out of needing the market to move in a straight line to my target like it did today without significantly pulling back or testing my entry point.

I am not going to set out to just scalp either. My success will come by allowing myself to take high probability profits and slowly increasing trade frequency. Home runs will occur naturally.

It is key that I have more trades but I can not force them. We will explore this more next week.

March 5 2010 ES Prep Posted

Indexes have been tight and grinding for days. Premise for today is to see if volatility returns with today's news release. I am visualizing an expansion in volatility. Read is basic. If 1126.00 does not hold, look for move up and test of 1138.25 and potentially 1147.50. If price snaps back inside 1126.00 after news release, watch for sellers to step in and potential sell off through 1115.00 and down. If there is no large expansion, I would anticipate a smaller expansion by extending 1126.00 then coming back and extending 1115.00 then returning back inside range. Watch out for a contraction if price comes back inside range after news realease and volume is light at open. This prep is prior to news realease so premise may need to be adjusted based on what happens. Zones will not change. I will be looking to work off of breakouts of zones and extension failures today.

March 4 2010 Overlay, Trades, and Commentary

Total low volatility grind today.

I anticipated a slow day and was rooting for an attack and break of 1115.00 so there would be something to trade.

I took a shot at a long after support held this morning but scratched after a wall of fake bids and offers surrounded my entry point.

I have seen this a lot lately. It usually precedes a ridiculous grind so I just exited due to my near mid range entry.

I will hold through a grind if I can get in at the top or bottom of the range. This was technically a breakout trade and is designed to capture a powerful move. No move = enter at a better price or stand aside.

We should see some good action tomorrow. I am actually having an acceptable week for the action we are seeing.

I will press tomorrow if I get some premium setups.