August 10 2010 Overlay and Trades

The price never got down to 1103.75. This is an important observation and a lot can be learned from these scenarios.

The important observation is that the price reversed at 1108.00. This is an INSIDE HIGHER LOW.

As soon as I see this I immediately premise for a contraction and draw a lower trend line. Then I eyeball a symmetrical upper trend line and leave it there until the price proves me wrong.

Anytime I see this, I anticipate tough trading, fake outs, and mid range antics. That is what we had.

In fact, did you see how the ES price was rapidly ticking and flashing just after the open as it broke 1113.50?. That was total crap. It was a fake out to make the pace seem like the market would sell.

That is why I exited with a scalp. Then it legged down a few more ticks to get the profitable scalpers back in at a retail price. Total games and I stayed away until after the FOMC announcement.

TF

I did not hit the TF until after the FOMC announcement. There was no insight or magic to it other then I just could not get a bearing on what the hell was going on.

I do not prep the TF so had no zones other then expired zones from last week (ES zones are mostly static TF are mostly dynamic).

Once the TF put in the 640 low I felt it was a low but was watching the ES. Then the ES started to clearly contract and I switched to a 1250 tick on the TF which also showed a contraction.

Then I had a bearing on what was going on but we were to close to the FOMC and the price action sucked. I went to lunch.

After the announcement, I did not see much on either index. The the first TF entry came out of nowhere. For the first time all day I felt a trade and focused like a hawk.

This has been happening lately. I feel nothing and am even a bit disoriented, then the setup is clear and I take it. I am mainly focusing on staying in that zone right now.

The Last Hour

I jumped all over the post Fed contraction. I think I had a little too much confidence and started scenario building. Then I took my second TF trade which I knew was not optimal. I even messaged another trader it was not optimal and said "I think the ES will sell."

Once I realized what was happening I covered the TF and shorted the ES for the standard ES fake 3 point excursion then break even.

This caused irritation to develop which lead me to start looking for a fight. I got one late day as I had dueling premises I was working. Both turned out to be correct but the problem was inside highs and inside lows (contraction).

I am pleased at how I navigated out of the last sequence with a small profit. However, fitting for a Fed day, I never got back to my equity high created after the first premium trade and exhausted lots of irritation capital cleaning up my fight trades that I intentionally stepped into.