April 9 2010 Overlay and Trades

I need to follow directions from the prep. This can not be any clearer.

I knew exactly what I was looking for this morning. The price made it's move toward 1172.50 just after the open.

It came in 1 point shallow and quickly reversed. I could see the reversal happening but wanted a test and even a slight push through of 1172.50.

This is why I can not make use of a more mechanical approach. Sometimes price comes in shallow of a zone, sometimes it hits it to the tick, and sometimes it pushes though.

Each of these outcomes is random but the zone is still valid. There is no way to know in advance how the zone will be tested or if it will be retested.

That is where the feel comes in. I could feel that I needed to execute prior to the test of 1172.50 but was again waiting for a pattern setup of some sort.

It is in these areas where the edge is made or lost. I took the early entry yesterday and got stopped out at the extreme low tick below the zone. The long was correct but it lost.

Today that level of aggressive would have worked. The determining factor in profitability vs. losing with my one in/one out strategy is how I play the game with the market movers.

My flat results as of late are a direct result of letting the other players bluff me out of money when I am right and trick me into taking pattern setups out of context in the wrong direction.

It is a poker game and nothing else. Many traders think the problem is stop placement or pattern recognition. That has nothing to do with it.

As a retail trader your results are a direct result of your ability to hold and fold in constantly changing environments.

The action in price is designed to make you hold your losers and scratch your winners. If this did not occur on the majority of transactions the market would only move in one direction.

I must stick with what I am good at. Right now that is forecasting the path of the market each day with extreme accuracy.

I have the directions every morning and they need to be followed.

Trades

Today's short was a result of seeing massive volume as price moved off the highs to retest the 1172.50 area.

This had nothing to do with my strategy but I built a premise off it.

It looked like major covering. Then there was an obvious head and shoulders which is generally meaningless to me.

I could not resist hitting the left should even though I thought it was prone to be squeezed. It was in the "too obvious" category.

Once I realized I was getting squeezed, I held my position out of stubbornness and took 4 points of heat. I am actually encouraged by this.

I was not going to be squeezed. I though the trade had a chance after it came back inside 1186.25 but then it put in an inverted pump fake.

I still held but then wisely covered and reversed after seeing an very obvious long setup. It was an encouraging setup but a flat week.

I had my opportunities this week. The difference between a scratch and a good edge comes down to a Monday morning hesitation and a Thursday early cover on a re entry after a low tick stop out.

There is a very fine gray line between winning and not winning in this market and I must step it up even more if I am going to prevail.