May 24 2010 Prep Overlay and Commentary

I only had one trade today which is a lot less than what I have been averaging lately.

I bought 1178.28 just after the open but scratched it on the second wash down after a 2 point excursion. I did not attempt a re entry mid range and had no further entries on the grind up to 1087.00 support.

I had an interesting observation today. This has become a repeating factor in my trading.

The look of the overall structure was overwhelmingly up until about 2:15 PM EST today. I had no interest in shorting the market nor could I get what I would consider a safe high probability long entry.

However, My premise (and what I drew for my visualization) was a failure at 1087.00. That is exactly what happened.

It certainly did not "look" like it was going to fail due to the inside support and multiple higher lows into support.

The question I have been asking myself is does it matter what the action "looks" like? I have to clarify that the structure in question is the intra day movement in between key areas.

Obviously as technical traders, we base our decision on how the bars look. What I am getting at is that structure looked very bullish into the resistance area but reversed 30 points down off that area.

Why not make a short bet with some room based on my analysis and disregard the path that the price took up to the area?

I think I spend too much time trying to make sense of how the price approaches my zones and what patterns happen at my zones as opposed to playing the zones themselves.

With all the shenanigans going on with the tape at any given time I just do not think a certain structure occurring at a zone is going to be repeatedly quantifiable.

I am sure there are more probable and less probable occurrences that can be researched and learned but how does that help me in making an individual decision when I am using one entry and one exit?

The answer is that it does not. I know where the turning points are at. Even more important then that is that I know where traders are likely to get trapped.

It is becoming more clear to me that I simply need to lay down bets at these areas instead of waiting to see something I want to see to make me feel better about an entry.

Whether it occurs or not has nothing to do with whether the price will do what I am premising for.

Perhaps spending time looking for it is causing delay and hesitation along with second guessing and indecision.

My trading is rapidly evolving into a technique that picks a price (based on my analysis) and hits it looking for an action or reaction with little regard for the prevailing trend or pattern.

I like my chances more as somebody who bets on a premise and area than someone who tries to chase all the retests, shallow reversals, and fake outs I encounter throughout the day.