July 21 2010 Overlay and Trades

I had another ES TF divergence today. It was partially due to the fact that I was mainly focused on the TF for most of the day.

I was down 4 points on the ES and up 45 ticks on the TF. The net on the day was only equivalent to 2 ES points after everything.

The important thing is that my edge on the TF is more than making up for my draws on the ES. This is a major clue in my search for the overall divergence in my reads vs. performance.

I am convinced it comes down to raw edge in exploitative opportunities simply being more difficult to catch for me on the ES right now.

I am fairly certain that the reason is mixing and matching my exit areas (scalp or hold for target). I think one or the other would work for me but my blending of strategies is causing me to actually scalp down equity on the ES.

So I will focus on the TF for now and phase out my trades on the ES. I am still going to trade both even if my ES trades are sloppy due to less focus because I am net profitable with what I am doing right now.

I will likely move to more of an intra swing style with the ES and hedge on the TF. I am betting that the TF scalps will outperform the ES swing trades.

I think this is simply a matter of less games being played on the TF. It is less packed with automated sweeps and other traders pushing the price around trying to trap retailers prior to a move.

The difference is a small one but enough to magnify my edge significantly.

I will continue doing ES preps because I think the ES is more representative of the overall market. I do not do as much visualizing on the TF.

This is because the overall major SR zones are not a significant factor in how I am executing the TF.