August 24 2010 Trade Review

I did not have any trades Friday or Monday. The August action has been lame in the past week.

I used to demand that I press through this type of action just for the sake of being active but lately I require that I feel my trades and I am not getting much. In fact, on Friday, I glanced at one chart for about 5 seconds and walked right out the door.

I had no interest in engaging and made the correct decision. I can not stress enough that in this action, with many of the players not participating, it is a total field day for the game players.

The ES is nothing but fake outs and washes and the TF is completely pushing virtually any entry way past the usual areas.

There are opportunities and they have to be hit with precision and conviction. My first TF trade today was a big stop out. It came out of nowhere. I was complaining to another trader that there was nothing going on then the trade appeared.

There was a wash just after the news and a nice cup distorted cup formed. I hit it early at a very retail price. The handle wash shallow. I did not want to miss it but knew I was risking some good heat.

The price pushed against me hard and shook me out. I immediately re entered because I felt I was low ticked. This is a crucial part of my plan. Even if my basis for entering is off, I must press the trade to give it every possible chance otherwise risk randomness.

It is amazing how the market knows exactly where I entered and just how far to push me in order to force a barf out of a position. This is absolutely true and something I think every trader should spend a lot of time reflecting on.

Our entries are meaningless. Finding the best area to enter a trade is a waste of time. It is the exit the drives the outcome. You can enter wherever you want and win if you manage and exit properly. It is a matter of risk. Better timing equals less risk, not better entry equals less risk.

Most of my best looking entries have turned out to be losers.

In fact, today, I witnessed another trader who has a set of rules to follow in order to enter, make a discretionary entry and perfect exit on a trade that I was unwilling to take. It was an optimal wholesale entry buying from those who were shorting thinking this lame action was actually going to sell off meaningfully then selling back to them at higher prices.

This was an adaptation to market conditions and that is what it takes to make progress.

PATIENCE

I trade the TF on a very fast time frame. I trade 100 tick charts. When I feel a trade coming, I glance at a 1250 tick and usually a 60 minute to make sure I have bearing but the 100 tick is my decision chart. I only look at one chart at a time and have stopped watching volume frequently.

I am finding that the setups I chase or hit early get stopped out or take big heat and the setups that work are often confirmed with a good retest fail.

This is a timing issue. I do have the ability to fight my way out of the early entries but could save a lot of edge by waiting. This will lead to misses but is something I need to work on.

It is in my nature to fight the market. I can operate a lot smoother if I give my setups some time to build and allow the quick pops and trades that just launch after 2 bars to get away.

It is an extremely fine line and the difference between winning and losing is often going to come down to a variation of one or two ticks.