July 9 2010 Prep Overlay and Trading Plan

There was not much action on Friday. I had a scratch long that I took off the 1063.25 inside support area identified on the prep.

I could not get in at a low enough price to hold because the test I was looking for of inside support happened in the Globex session.

Written Trading Plan

I decided to write down exactly what it is that I am looking to execute in attempt to more consistently hit a defined trade.

Making lists has done little for me in the past. I do need reminders of what I need to do.

I am speculating that maybe having a basic plan on paper will help me more with what I do not want to take as opposed to what I should take.

The main issue with my trading is randomness in the execution of my good reads and my randomness shows itself in undefined setups.

It is tough for me to require patterns for entries because 1/2 the good trades have no patterns and 1/2 the trades with patterns fail.

However, I need to identify what exactly is consistently failing and upon hundreds of hours of studying my trades I have determined that my thought process and scenario building is far too complex to have repeatability at the level I am trading at.

Here is the first plan in writing. I will track this over the next couple weeks and make revisions as necessary:

1. Wait for price to build formation prior to entering a reversal at support or resistance. This can be a retest fail, bounce and shallow inside pull back, or high volume extension with capitulation.

2. Look to hit all continuations in the direction of a the premise. The first pullback can be bid or offered into. Later sequence pull backs need to be a higher/low or lower/high retest fail.

3. Anticipate all zones to hold upon first extension. Anticipate a zone to fail and extend in the event of an extension retest. Buy or sell unconditionally once an extension retest has failed and price has crossed back into a zone after being stopped out.

4. Unconditionally lock up open equity at 3 or 4 points and force a re entry if stopped out of the trade. Do not re enter close to a potential cover zone without a pull back.

5. Do not blindly hold open equity that will require a zone to break in order for the hold to work. Take profits and re enter.

6. Do not execute mid range without a contraction break out or clear pattern entry supporting premise.