July 29 2010 Overlay and Trades

I was able to make an amazing comeback today after getting down 3 units (roughly 52 ticks) early in the day.

There was some market cooperation with the late day squeeze after the selling earlier.

I thought I was going to have one of my destructive Thursdays which almost always show themselves after a big winning streak but I managed to break the trend. I know when it is coming before the market opens and often contemplate not trading. However, that will never happen.

The prep read was fairly decent but the high just after the open was short of my ES resistance zone. It hit the TF resistance I had to the tick but I do not value the TF SR levels much.

When the market started selling it moved down to an area in the middle of nowhere and started basing. Then I made the mistake of drawing a line there on my chart because there was a sneaky pivot overnight on the TF.

I completely manufactured a zone, then proceeded to execute. I had discussed this issue wuith a couple other traders earlier in the week.

Yes there was a pattern and yes there was a zone. However, a pattern and a zone mean nothing and are not enough to make a trade. I must FEEL the trade and I did not feel it. I merely thought it should be taken "in case."

It is a process of convincing myself that I do not want to miss a squeeze in the middle of nowhere. The the price action bullies trick me into really liking a trade with an extremely good looking long pattern entry.

I was basically suckered into a premise. It was a trap by design. Once I got stopped out on the first entry and the price thrusted up again, I had to re enter. By that time I was pretty sure I was getting suckered but had to follow through even though it was a flawed premise. I was committed.

I would rather take a 2 unit loss than have a random outcome. I then escalated the situation by also getting long the ES which doubled me up in position size. The trade looked like it might work than ran me over for a fairly large loss for one sequence.

I was extremely irritated because my initial premise was playing out and I traded it completely wrong.

There is a thought process that I am trying to isolate that causes this. I justify the creation of the trade by assuming it is a 50/50 bet but it is not. Realistically, based on what I know, the odds of those trades working were virtually zero.

I need to wait until I FEEL the trade along with everything else that makes a trade good. This can be dangerous when the market is moving and I am not getting entries.

I like to hit the move at the initiation point but it turns out I am a much better secondary sequence trader after I have a clear read on direction.

I literally almost never lose when I wait for what I need. I almost always lose when I force an entry just because there are technical qualifiers.

Luckily today there was a big squeeze that I could clearly see and I exploited it with a sequence of 4 winners in a row. After tallying my early losses on both indexes I had a minor gain today.

I should note that I kept switching back and forth between many different ES and TF time frames trying to get my bearing on where the action was at. I needed context and could not find it.

I need to stay away when this happens because I will lay into an area once I decide I like it. I did not get the bearing until I reviewed a 15 minute TF interval chart. I never look at that but had to do something.

It turned out that my chop fest happened right in the middle of the local range which my plan says to stay the hell out of. Context and feel is everything and patterns are useless without it.

I was still off a bit mentally today regardless of the comeback. I have just developed the ability recently to make things happen in lieu of my defects.

In fact, right before the squeeze I Skyped another trader that I thought the price would come down to 1085.00 on the ES because it reversed in the middle of nowhere. I quickly adjusted because the long feel was overwhelming.

In defense of my bad call I think it will make it to 1085.00 tonight or tomorrow morning.