Brian Hoffman Trading Log

Trade Video Post With Commentary From The BH Trading Site

2011-02-06T14:27:00.002-05:00

CLICK HERE FOR THE LIVE TRADE VIDEO WITH COMMENTARY

Brian Hoffman Trading Website Released

2010-11-01T00:33:00.008-04:00

www.brianhoffmantrading.com

The new site is up. I still have a lot of content and features under development. Please check back frequently for updates.

I will continue blogging but it will be mostly in video format on the new site. The writing portion will be supplemented with articles on the new site.

I built this website mostly from scratch after months of trial and error. Everything on the site is something that I would want to see as a trader.

My intent is to provide a site where new and experienced traders can go to see the reality of trading.

There will be no gimmicks or smoke and mirrors.

It is bad business to be honest about this business but I am going to continue to press forward with my vision.

My basic premise for development was to create what I could not find online when I quit my corporate job to pursue a career as a speculator.

I want to show the good, bad, and ugly side of trading through various sources of media.

Please forward the link to other traders. There more feedback the better. I am willing to take this a long way if there is interest.

Live Trade Video With Desk Cam And Commentary

2010-10-30T19:40:00.004-04:00

CLICK HERE FOR HD VIDEO WITH AUDIO COMMENTARY AND LIVE DESK CAM

The new website should be ready later this weekend. I have a lot more to do with it but there is already quite a bit of good content.

I will continue doing posts here occasionally but will be focusing on frequent live videos and video blogging on the new site.

My goal is for reality trading. Good, bad, and ugly. I already have some pretty raw video in the tank from the past few weeks. Everything I do is being recorded.

I will supplement with detailed articles a few times a month on the site as opposed to daily blog post.

Here is an excellent video of a trade I had on Friday. It was a decent wholesale entry with the premise of looking for a squeeze.

I got the squeeze I was looking for then anticipated some follow through. In the video, I talk through exactly what I am seeing and thinking.

I start to get frustrated when the price stalls out and you can hear it in my voice. I was looking for a continued move up but my gut and experience was telling me to cover.

It is tough on the TF to hit moves greater then 20 or 30 ticks if they do not just explode. The ones that stall then blast off in your direction tend to shake you out at the last moment.

Then the ones you stubbornly hold repeatedly take back all the open equity. My best results come from letting the big moves happen naturally.

This makes for some frustrating 15-20 tick scalps off 50 tick moves. I did cover this trade for a scalp and it was the right thing to do.

All Of Today's Trades Video Edited To 3.5 Minutes In HD With Audio

2010-10-21T19:22:00.005-04:00

CLICK HERE FOR TODAY'S TRADES WITH AUDIO AND POP UP WALK THROUGH

I wanted to see how fast I could produce a video of the entire day's action. This is a beta test for some of the content that will be on the new site.

Good fight today after fumbling an order this morning in a bizarre turn of events. This kind of thing needs to be factored into your production expectations.

My reality trading concept has definitely had some good moments in the past couple days.

Trade Video With Late Day Donation And Pen Launch

2010-10-20T23:14:00.004-04:00

CLICK HERE FOR HD LIVE TRADE VIDEO WITH COMMENTARY

I have been having profitable mornings and then giving some back in the afternoons for the past few sessions.

Something that I am certain about in my trading tactics is that the market is often very efficient and even though there are many good setups throughout the day, only a few provide a true inefficiency to exploit.

I have had longs close to the lows each morning and taken 10-20 tick scalps even though I had an expectation of a larger run. This is part of my high probability tactic.

Today I was bullish and hit the initial long. I premise for the market to move up but did not see anything else I had conviction on until very late in the day.

My trading style is one of conviction. I could either hit all setups and play ratios or hit select areas and expect to win. I have found that simply playing ratios offers little edge in my own trading and perform better by hitting singles and doubles with high probability scalps.

Today was an example of seeing a late day trade that is often a winner for me any other time of the day. I usually do not trade after 3:30 PM EST unless I am already carrying positions because the price is prone to late day covering.

Today, I thought there could be a late day squeeze and was wrong. So I made a late day donation that halfed my profits from earlier in the day.

Since my new site under development is focused on reality trading I am posting the executions that went up on the new site today. There is audio from my side of some commentary I was doing throughout the day.

It is a little rough and includes a nice pen throw at the end of the video after I got irritated by my late day donation after stating it could be problematic with late day covering. You do not get this kind of stuff in simulated chat rooms.

Progress Update On The New Site

2010-10-14T23:30:00.004-04:00

I have finished coding most of my new site and am working on adding content. I am debating between releasing what I have done so far which is very functional and far beyond most of what I have found online or waiting until I get the site up to par with my original vision.

I have not completed the new layout for the blog yet. I may just continue using this blog for the time being. The site will have streaming videos of real trading, articles, analysis, and also track a live account that is specifically for the blog.

My goal is a place that will be brutally honest about the path to becoming a trader and show what real trading is like through various types of media.

It is a big project and will take time to get right. I will continue to post here until the new site is up.

Live Trade Video With Comments

2010-10-13T21:57:00.006-04:00

CLICK HERE FOR VIDEO OCTOBER 13 2010 TF SCALP IN HD

There was an exact repeat of a nice algorithmic trapping pattern today. The first one I observed was yesterday.

I have uploaded a comparison above. It is the exact same action.

My trading style has 5 major components to it and the most important aspect of how I make a decision is based on the games played by the other traders trying to take my money.

This will over ride structure, direction, bias and premise. It has been the most consistent opportunity to exploit that I have found after thousands of hours of observation and drilling.

Many times, a trader will have an argument for going long or short at a key area. The action is designed to generate a retail loss often in either direction.

Making the same decision every time based on action that is constantly changing is very tough. I use a filtering mechanism (mentally) based on what I think others are doing.

I generally count on most traders making the wrong decision thus will look to take the other (wholesale) side of many scenarios.

The patterns illustrated above are created mathematically in my opinion by market making programs. It is basically sweeping action the naturally happens from these programs being run that results in traders getting whipsawed in both directions.

It is too much a coincidence to be naturally occurring. When I see this sort of thing, I know to stand aside and let others get stopped out. Then engage. This type of action is designed to draw traders in then push against them.

It is a very effective way to make money.

The shape of the pattern is irrelevant and not worth looking for again. This will change up as the action changes.

Even though the market does very similar things day in and day out, it will always unfold differently.

Part of what improved my trading dramatically over the past year has been understanding this and being able to detect traps that are often new patterns to me in advance of them unfolding.

This can be accomplished with proper training and drilling in the live markets.

I have also posted a video of a late day scalp with same commentary. It is a little rough in content and voice as it was at the end of a long trading day for me.

Still worth a view. The exit was the best part. There was not a huge profit but it was very well executed.

Observation On Exits

2010-10-10T22:00:00.006-04:00

Here is a quick TF trade of mine from Friday. It says a lot about the importance of exiting.

October 8 2010 TF Trade 1 Click Here

I had the premise and direction exactly correct as has been demonstrated in many of the preps I have posted in the past.

However, I took the same trade as this one on Thursday and produced a losing outcome due to my exit.

I held the trade past the retail exit area Thursday and got pushed out. I exited at the retail exit area on Friday with a scalp profit only to have the price continue up 100 ticks past my profitable exit.

In both cases, for the trade to continue, it required retail traders to come in and make the price continue in my direction. They could not do it Thursday and I lost. They did do it Friday and I appeared to leave a ton on the table.

The fact is that both had a winning wholesale opportunity that could be exploited but I only took advantage of one of them. It was not my entry that caused the outcome, it was my exit.

As for an important observation from me in the past 6 months, my best and most consistent trading outcome has come on the days when my exits are well before the price gets close to the full expectation of movement I have premised.

The vast majority of traders I have encountered are searching for the right tool or strategy to help them identify the correct area and direction to ENTER a trade.

Many resources available to a trader, even those few that are actually worth looking at, are focused on identifying a price to open a position. If action "A" happens then do action "B".

This is often a procedure that is developed by the designer looking at things that have happened in the past and expecting them to repeat.

The problem is that the market is an ongoing auction that is constantly trying to discover a price that everybody can agree on.

Thus, any expectation of an exact repeat of what happened in the past is going to lead a trader into a completely random situation that will often result in their money being taken by the market regardless if they had the correct entry area or not.

Even if a trader is a master at finding the correct areas of support and resistance, the way that the price reacts to that area will be different in each individual situation.

It is true that areas of support and resistance tend to hold upon an initial test. However, the manner in which the price respects the zone will be different each time.

For example, it may come in shallow of your support price and quickly reverse without allowing you to enter based on your strategy today.

Tomorrow, the price may push through your support price just far enough to sell to you at your entry price and then force you to sell back to the other side at a lower price once your strategy says it is not worth the risk.

This outcome of missing your winners and hitting your losers is exactly what the market is designed to do to the retail trader.

A trader should not expect that a fixed strategy such as an entry price based on a pattern, a stop amount and a profit target can overcome the efficiency at which more sophisticated traders can take their money.

The same goes for indicators and oscillators. These are ways of smoothing out the action based on hindsight. Anybody who has attempted to trade a strategy using a live account with these types of tools should be familiar with this concept.

These types of tools work great in theory and in simulated accounts yet completely break down virtually 100% of the time once a trader attempts to execute live.

The reason for this is because the market unfolds in a different way each time. It does repeat similar patterns but this is useless to the intraday trader who is taught to manage risk tightly.

The price is going to go exactly where the stops are. Your risk management is what is often providing liquidity for the market to discover.

I do not understand why so many experience this then move on to the next gimmick or fixed strategy expecting to get a different outcome.

There is a period of time that a strategy based on previous action can work but is inevitable that this will be rendered ineffective once the price starts behaving differently.

The key to successfully navigating the price action and being able to consistently win day in and day out is to be able to interact with the other players property, not to interact with the price and bars displayed on your screen.

You must separate the two. The price and bars are simply the footprint of what is happening, not the occurrence itself. Any strategy based of the footprint itself will require a trader to maintain such a high level of absolute rigid repeatability that few will ever be able to execute properly.

However, this is the preferred method many newer traders are lead to believe is the correct way to trade. This is myth often promoted by others who can not trade themselves.

It is the exit the determines whether you succeed or not. Your entry and even the direction of your entry is completely irrelevant when it comes to trading profitably intraday.

That exit includes the way your exit your losing trades. I believe it is far more relevant to your outcome to exit failed premises properly as opposed to exiting a profitable trade properly.

A trade at any price and in any direction can almost always have a losing or a winning outcome depending on how you exit. Many traders exit a winning trade with a loss.

Intraday trading is about exploiting short term inefficiencies. In order to do this, a trader must have an understanding of what game is being played by others.

Do you the sophisticated players care where the support or resistance is or what an indicator is doing? All they care about is how to trap you. There is no fixed strategy that can beat this.

In fact, many strategies often put a trader on the retail (losing) side of the market in almost every situation. If something can be averaged out or isolated based on previous action, it is a retail entry.

This can not interpreted any other way.

Many traders have struggled in the past couple months as the action has gotten more difficult. The few that have continued to trade well have developed an understanding through experience of how the trader on the other side of their trade behaves.

The market is very efficient and offers little edge. While certain areas can be mathematically verified to have a massive static edge, once you introduce a stop into this equation, the edge is dynamic as the trade unfolds.

For those few who know what to look for, there are constant opportunities to exploit the price. This game can be won with the correct understanding of the trader on the other side and it comes down solely to which party forces the other one out.

99% of retail traders trying to make it are not even playing the right game.

September 27 2010 Blog Update

2010-09-27T21:36:00.007-04:00

The action has been slow for September but I have continued to stay on the wholesale side of the market.

I find myself hitting trades lately that are the polar opposite of what I used to consider to be "confirmed" with structure or patterns.

Today was a good example of that as I shorted the ES and TF right after the open. I ended up scratching the ES and scalping the TF.

Early in the afternoon on the East coast, I shorted the ES again with a very retail entry. I had to hit where I did because I felt the price would sell this afternoon and did not want to miss it.

I ended up getting squeezed pretty hard but stuck with it. I used to stop myself out of a trade like that. Many do not understand why I would take 4 + points worth of heat.

The fact is that I believed the price was not going anywhere to the upside thus any cover would end up being a donation to the market.

I dropped the ball a bit after taking all the heat. I exited the ES followed by getting myself into a long trap on the TF because I saw a perfect cup. I was able to correct and get short again the ES into the close but was irritated by my break down in conviction.

I spent over an hour getting squeezed and believed none of it. I need to keep that up. That is how you win.

This tactic has led to a winning outcome on virtually every one of my trades in the past 60 days. Many were for just 2 or 3 points on the ES or 15-20 ticks on the TF but it adds up.

I used to say that a trader should not expect to win everyday but I now believe a good trader should expect to win everyday and should be winning virtually everyday.

This can not be accomplished with a fixed rule set or system based off hindsight indicators.

I am working on getting the new site up and running so I can take the blog to the next level.

I plan on writing in detail about my recent experiences over the past 6 months and opinion on this industry in general.

I hope to have everything up and running over the next couple weeks.

I am going to try to post some trades later this week.

September 21 2010 ES Trades

2010-09-21T21:50:00.003-04:00

September 20 2010 Trades

2010-09-20T21:07:00.002-04:00

September 15 2010 Trades and Comment Responses

2010-09-15T20:52:00.006-04:00

Anonymous said...: Keep posting Brian there are plenty of us reading your blog religiously! Thanks for contributing to the trading world.; September 14, 2010 11:34 PM
Anonymous said...: Hi Brian - I have noticed that lately the TF chart is under performing the ES in terms of movement and what is a cleaner chart to read (IMHO). Any thoughts on this? I moved from the ES to the TF as the ES was beating me up and did better in the TF but now noticed that the ES chart (using tick charts) has been cleaner. Yesterday intraday range on the ES was 12.25 while on the TF it was 8.5 which seems out of whack. Is this just something that is going to fluctuate from time to time and to be expected? I'm also asking myself if it's a case of the grass is always greener as well? Any thoughts philosophical or technical appreciated. Thanks; September 15, 2010 4:12 PM

Comment 1:

Thanks for your comment and support. It is extremely motivating to see that others are following and helps me to continue building the new site.

Comment 2:

I agree that the action in terms of data display patterns has been cleaner on the ES.

The TF was producing constant symmetrical setups that were very clear throughout July and early August while the ES was producing tough trading as it has for most of this year.

However, a few weeks ago, the TF became fairly irritable and started producing a lot more noise. Since then, the ES has actually been producing clearer setups and I have been executing more frequently there.

It is very rare for the ES to have a wider range then the TF as it did yesterday. The TF still offered more equivalent volatility as the 8 point TF range is equivalent to 16 ES points.

The TF also traveled more "nautical distance" in terms of movement from point A to point B.

If you look at my trades from yesterday, I took the same trades on both indexes. Some think this is doubling up on my position but it is closer to trading 1.5 X my regular size.

I was up 49 ticks on the TF which is equivalent to almost 10 ES points. The same trades on the ES only produced a profit of 3.5 points.

It is good that you have enough feel to use words like "cleaner" to describe price action and I concur with your findings.

If you only want to trade one of the indexes, I think there is much more opportunity on the TF. As short term exploitative traders, it makes sense that less liquidity should offer us a better edge.

However, I have been enjoying hitting the ES with my new techniques because the traps have been so clear to me. I can see them well in advance and instead of avoiding them, I mirror the positions the game players are taking.

Volatility and Risk/Reward

There are 2 factors to consider when choosing between the TF or the ES.

1. The TF offers a lot more bang for your buck but also requires more risk and better trading skills. Average risk on the TF if you want all your correct trades to work is 30 ticks in my opinion. Your average loss should be significantly smaller than that but many trades on the TF will push most traders way beyond their barf out points.

This is especially true pertaining to inside support zones after approaching a resistance area on the TF. It is very prone to start holding and even building multiple pivots with the intent of getting retail traders long at the area for an extension out only to violently push down 30-60 ticks to jam all the late longs as well as those who are greedy and holding too long.

This is merely a trap that is planned and set by New York traders who know what they are doing. It is an easy turkey shoot and an efficient money grab.

Many Fibonacci traders would call this a 786 replacement. Fibonacci levels are only a description of an effect of price action after the fact and have zero relevance as to what is actually occurring in my opinion. It is interesting how reality and hindsight theory blend together sometime though.

2. The ES requires less risk but sets many more difficult traps for retail traders. I suspect that this is simply because there is far greater liquidity and many more players on the ES.

Also, the slower pace and constant grind make traders prone to make more mistakes as well as have bad judgment.

These layering factors make the ES more difficult to trade even though the pace is slower and risk is less.

From the mental aspect, when I have a tough trade that I know could take a lot of heat, I still execute on the ES first. This is because there is a perceived sense of less pain on the ES when in reality, the opposite is true.

You can tell when I am most questionable about a trade when I enter the ES first then follow with the same trade on the TF.

The TF tends to lead the ES, so when I like a trade, I hit the TF first then add to the ES once the TF shows that the trade will likely work.

I play off both indexes and have a very efficient system (mental rationale and feel not rules) for effectively exploiting the opportunities provided on each.

New Technique

I could take analysis of the correlation and relationship between these two indexes to shocking levels after all the live research I have done.

The interesting thing is that while attempting to explain and justify the way the price moves and reconcile the difference between what is seen and premised and what can actually be executed, I have refined a 6th sense that just allows me to "look" at the chart and know what to do.

September 14 2010 Trades

2010-09-14T22:02:00.008-04:00

My feel continues to be spot on.

Today was an extremely solid trading day. The trades were clear and were all taken with the enhanced strategy I have been refining for the past number of months.

This is creating what I call "on demand" trades. Which means that I am not just buying or selling a zone or pattern but executing on a specific premise with the complete expectation that the trade will work regardless of what happens intra trade.

It is still a bet and always will be but it is a bet that I believe I can win almost 100% of the time as long as my head is clear and my gut confirms the trade. I have developed this feel by the constant drilling and RIGHT EDGE analysis I have been conducting over the past 3 years.

The value of this journey is starting to show itself.

This allows me to stick with trades that would have previously pushed or squeezed me out 100% of the time. It makes my entry price fairly irrelevant and allows for quick exits.

The basic foundation of the strategy is that almost everybody playing is wrong and that their actions will be faded by those who move the price.

I look to do the opposite of what I believe others are thinking and am generally entering at the areas where I used to get stopped out.

I noticed my blog traffic is trending down a bit lately. There are sill many readers who watch closely but I think I scared others off by recently stating that virtually every conventional method, strategy, or system out there is completely useless.

I stand by what I said and will continue to re-enforce it even if there are no readers. Virtually everything out there being taught that is not an outright scam is just theoretical and does not pass muster when it comes to reality.

I am working on a new site that will attempt to document my findings based on my own trials and difficulties over the past few years.

I want it to be an interactive site that will show trading reality as well as document my own trading results. I do not understand why this can not be found in cyberspace and am going to change that.

It is a labor intensive process. Until then, I am likely going to be posting charts only and limiting my commentary to once or twice per week.

September 13 2010 Trades

2010-09-13T22:42:00.002-04:00

No comments tonight.

September 10th 2010 Commentary

2010-09-10T12:48:00.003-04:00

Think about how it seems the the market always knows your own individual breaking point in terms of hitting your stop. Regardless of where you enter, it will often push just far enough to take you out before the trade works. This is not random. It is by design. It is the result of thousands of players running millions of strategies built exclusively to take your money.

Most traders early in their career and some well into their career think the goal is to outwit the fastest computers in the market by having the right stop or break even mechanism.

My opinion is that fixed strategies are virtually useless. The machines that the players use to make markets take all this into account in their algorithms and randomize the patterns at which they hit your bids and offers.

This is much like how data is encrypted. You may be able to crack the strategy if given enough time but next time it will be different.

This makes any system being sold by the cowards who consistently fill our inboxes completely useless.

Even when you have a method or just plain gut feel to precisely identify the areas that will hold, fail, continue, or extend, you must still time the trade properly and have the ability to successfully exit with a profit.

Since your edge and odds of success is dynamic and randomizing as the trade evolves, a single policy on how to handle each trade is unlikely to produce a positive result in a sample that is repeatable and without randomness. Thus, profitability on demand can not be obtained this way.

Understanding the structure and movement is just the beginning. After that, what will determine if you are profitable or not will be your ability to stand up against the other players you are competing with. No method or strategy can accomplish that.

This is a skill that is learned and refined by doing much like how a welder perfects the strength of their welds over time.

I have found that very often, the opposite of what I initially think is the proper trade. This is not a matter of simply fading myself. It is a matter of reading my initial emotion and psychology, considering what is causing those feelings, then questioning if whether the other players are actively trying to elicit those feelings.

Then I get bearing on my situation and the proper decision can be made based off my cumulative training and experience. It is usually a process of decided an action is dangerous, considering the oppose, then engaging the initial action that I felt should be avoided.

This can not be repeated through a static process. I consider the static side of trading to the the whole left side of the chart. This is where virtually all traders play their game.

The correct (wholesale) side of trading lies on the dynamic right side of the chart. This is where the few that take all the money play their game.

September 9 2010 Trades

2010-09-09T23:55:00.003-04:00

No commentary tonight.

I made some notes on the chart. Check out the this week's other posts if you have not already.

September 8 2010 Trade Review and Word On Conviction

2010-09-08T22:28:00.005-04:00

The blog is not dead yet.

I had an interesting trading day with many of my best observations occurring during the live action.

Part of the reason this format has started to bore me is that reflection on action and trading decisions in hindsight is fairly useless.

Who cares what I think now after the fact? It is irrelevant and helps nobody. Those who can not trade look at things in context of the past. I will look to the future and in particular, the hard right edge moving forward.

I suppose I need to stop using the word review and figure out how to make my insight apply moving forward.

Conviction

I laid out my exact premise and reason for getting long at the open in the ES chart. It is worth taking a look at.

I wanted to write about what I now consider the single most important element to successful trading...conviction.

Without it, your trading decisions have little chance of a positive outcome. As I have been saying, picking the correct price and direction is will not make you a profitable trader.

It actually has very little to do with your PNL. This debunks the concept of trading with a static strategy or fixed indicators. Many of you have witnessed how your setups look so clear at the end of the day but you lost money.

This is by design. The price moves efficiently and the process of the live auction coming to a fair price creates a completely random path from point A to point B with respect to any specific entry and exit point.

This means that anything can happen after you enter and your edge as well as your odds of success are dynamic. Your chance of booking a profit is rapidly shifting over a large spectrum of outcomes second by second.

Even with the prefect plan, price, entry, and exit point, the odds are against the retail trader. This is due to the many participants running a seemingly infinite number of strategies.

To put it more simply, thousands and thousands of people are running what could be millions of different strategies with the goal of selling to you at high prices and making you barf out at low prices or vice versa.

In order to overcome this, I must trade with conviction. I must believe in the trade I have taken and have little doubt about the outcome.

I have found that what works even better is NOT BELIEVING the move against me until proven otherwise. If I am going to lose I want to be SHOCKED at the outcome.

I spent most of my trading career getting pushed and squeezed out of my trades as opposed to my trades failing. I have made adjustments and devised techniques that can combat this issue.

Many do not want to hear this but proper trading probably requires a lot more risk than you want to take. Do you think this extremely efficient market is going to let you enter a trade with a 1 or 2 point stop and let you exit with 7-10 points profit consistently?

This is virtually impossible. Like anything else, there are one or two that can do this but most can not.

My last TF trade today is an excellent example. I had to stick with it through what would seem like ridiculous heat to most. The market does not care if I am down 8 ticks or 50 ticks. It will not respect my wishes to take only 15 ticks heat instead of 16 ticks.

As I was in the trade, I was getting angry at the thrusts down, not because I was losing but because I correctly thought it was BS.

I stuck with what I thought and got out with a small profit.

Important

It takes that type of conviction to win day in and day out. A strategy or methodology alone will not cut it.

You have to be able to this every day whether you are booking profits, broke, sick, tired, hungry, or whatever.

The only way to accomplish that is to trust you gut and be willing to let it lead you off a cliff if that is what it is doing.

If it fails you then you fail. Better that you fail out of principal or flaw in your technique than have the market bullies steal your lunch money everyday.

The concept of perpetually over managing risk is just plain wrong as are most who claim to be able to teach.

Every big trader I have met takes big risk regardless of what their advice is to others. If you think tight risk management is the way to go, watch the Paul Tudor Jones video floating around out there.

Do you think he lets the bullies take his lunch money?

September 7 2010 Trade Review and Blog Update

2010-09-07T21:33:00.006-04:00

The reconciliation with the ES continues. I had a clear fade of the move up just after the open on the ES.

Why did I take the trade? I faded the move up because I felt most traders were buying and concluded that this would lead to many retail sell stops below the congestion at 1095.00. I felt these stops would provide liquidity and pull the price in towards themselves.

There is not much more too it than that. I have refined my trading to a game of trying to trap others regardless of structure or pattern. I am still aware of the structure but am often on the opposite end of how I used to play it.

I have continued to take it slow on the TF as action has been nasty. There is no other way to describe it. There are plenty of opportunities but I have specific parameters I have developed and have not seen much on the TF. I sitll engage because I tend to like to get into fights where I am at a disadvantage.

I am doing the right thing. Even with caution, I got myself into the retail end of 2 short trades this afternoon. However, after entering and realizing my position, I was able to anticipate myself getting squeezed and refused to get pushed out. I had conviction due to my understanding of the game.

There were many different ways to lose today and only a couple ways to win and I found one of them. It mostly came down to conviction. I have reached a level of focus in which I expect to win everyday.

I used to think this was not possible but it is.

Blog Update

I have had so much to write about recently that I can not even begin to effectively get my thoughts and observations out in the manner that I would like to.

There is an evolution going in here. This is my 622nd post. The transformation that I wanted to the public to see is finally occurring. That is the transfromation of a trader who was winning some and losing some to a trader who is winning on demand.

I have a vast amount of data and helpful observations that I want to organize and get out there but can not find the time to properly execute a project like that. It has become a source of major frustration recently which is getting compounded by all the garbage flowing into my inbox everyday.

I was bombarded by emails today from all sorts of scam artist educators and would be gurus. One of them claiming to be the "messiah of trading" and several others making claims like their calls are 89.3% correct. (calls are meaningless you stooges. The exit is what counts.)

I do not know what is worse. Is it the fact that these parasites are making money doing this or that would be traders are stupid enough to keep paying them?

I understand if you get burned once by garbage like this (I was) but it takes repeated attempts to buy the "holy grail" to support all these turds. I do not understand it.

I have to go on record and tell everybody....clearly....that if somebody has something that works why the hell are they going to sell it to you for $3000.00?

If a system, indicator, or strategy worked period, why would it be for sale? It is all absolutely 100% garbage. Every last bit of it. I doubt if there is one single educator out there who advertises frequently that can make a trade to save their life.

Where do these people come from? I suppose many are failed traders who think they will "catch on" and are just trying to make a living but there are other larger operations that are clearly outright scams.

If an indicator actually worked, the market would perpetually travel in one direction. Think about it. If there was ANY single, static, and repeatable edge; the market auction would instantaneously close it. If it did not, there would be no market made because there would eventually be only bids and only offers.

The best use of these so called tools is mostly by the few that make money at this to trap retailers who have no idea what they are doing.

Most traders do not stand a chance regardless off how hard they work until they acknowledge and clearly understand this.

This game is a giant game of poker. With hands that evolve RANDOMLY as the action unfolds. There is no way to crack it with a static strategy. There is no right price or direction to enter.

If your entry has an edge at inception, there are an infinite number of outcomes that dynamically change that edge as the hand progresses.

Do amateur traders think some dumbass with a MACD and a candlestick pattern is going to teach them to outwit the fastest computers on the planet that are run by the best and the brightest mathematical quants?

It is a turkey shoot in favor of those who control the price. The one advantage we retailers have is size and dexterity. The players often can not get out of their own we an we can exploit that with POKER SKILLS and nothing else.

The art of accessing what your opponent is holding and acting according is how to win. This can not be taught in a course that last months let alone a week long seminar.

I think if a trader wants to get profitable they need to spend 6000+ hours of agony and defeat onscreen as I have. The learning curve can be cut dramatically with nothing short of daily coaching live in the market for months.

Who is going to do that? It is a horrible business plan and leads to no profit for the coach. This concept automatically makes virtually all educational efforts a waste of time and money. There are a couple good ones out there but they still leave a lot left up to the trader to figure out.

Having said all that, part of the reason I started this blog was to have something different out there. Something that I never had. I still can not find anything like this anywhere.

The problem is that recently I am realizing that my effort is not really penetrating. How can I compete will all the douches out there who are willing live with the fact that they help nobody and make their living by being full of crap.

This blog has helped me immensely and touched hundreds of others on a daily basis but I want it to be more. I am not sure I have the time, resources, or desire to make it more.

I do not want to compete if I can not develop what I envision and I certainly do not want to go through the motions just to continue being known throughout the business. I am more of a recluse than you can imagine in my personal life.

You can not do what I have done and have a life. Many get into trading because they want more free time but those who stick with it learn it consumes everything. It is worth it to me.

Part of me wants to expand this site and make it great. Even go as far as to start a real daily trading room where I trade live in front of everybody. Pants completely down like a reality TV show and made virtually cost free for most.

The other part of me is considering going into seclusion and just refining the technique I have developed over the past few months.

It is a tough call as I say often to others on Skype.

Some of my biggest breakthroughs in the past few months have come via comments I have made privately to other traders I speak with throughout the day.

It is an extremely powerful concept and I am not sure what to do about it. I definitely feel a calling to make a significant move soon but am not quite sure what that move will be.

It is a giant poker game in the end.

September 2 2010 Trade and Performance Review

2010-09-02T20:36:00.003-04:00

I traded the ES only today. I have not seen much to exploit on the TF this week and have correctly reduced my trading there in the short term. The TF is the one who has been doing most of the exploiting in fact.

I will go where I see an edge.

I suppose the ES and I have reconciled but the TF will remain my primary production vehicle as time goes on. I have an excellent system for using one index to initiate beginning scalps then doubling down on the other.

It is interesting how one sometimes leads the other and vice versa.

I finally capitulated and started trading the day after trend congestion and had good results today.

It is clear that after the price makes a significant move, the highest probability outcome for the next day is a sideways market.

I prep for this and have been aware of it for some time but have always been reluctant to engage it fully. Mostly because the risk in undefined.

Price rarely stays within a high and a low and is prone to wash stops above and below the congestion. Sometimes pushing 25%-50% outside the congestion.

Due to the fact that I have been specifically studying these squeezes and pushes for the past few months I have gotten more comfortable fading the top or bottom of a congestion with no stop with the expectation that the congestion will hold.

I will occasionally get run over but can no longer ignore the one of the highest probability trading days a trader can find.

I also have fine tuned my feel through studying and drilling and could just sense that price was going nowhere today. I really did not sweat my entries today until the last one and that was for good reason.

While I firmly believe that fading trending or extending markets is a losing proposal these day ofter congestion deserve their own classification.

Moving forward I will continue to aggressively play these even if I get bitten occasionally.

Performance

I have been trading well primarily due to developing some of my own techniques for identifying squeezes and pushes as well as refining my ability to tap into my correct gut feelings about where the price is going.

I have been able to manage my trades confidently and identify my areas of entry well in advance.

I need to remain level headed about this and try to keep it as simple as possible. I can break my technique down to many levels of complexity.

The important thing to keep in mind in order to continue to make the correct decisions on the hard right edge is to is allow my gut and subconscious to tell me where to execute.

There are too many reasons to consider for taking or not taking a trade. I do not believe somebody can expect to have a list of rules or qualifiers to run through every time they execute an entry or exit and be able to avoid all the traps and fakes out there.

The price is designed to bring a retailer in and squeeze them out. Proper training, drilling, and practice can develop the correct internal sense of what to do. Then one must be able to filter their feelings in order to "tune in" to the correct internal feel.

I do not want to talk too much about my day to day performance because it generally leads to bad streaks.

I have posted a chart above showing my winning vs. losing days since July 1st. It tells a lot about how an equity curve unfolds.

September 1st 2010 Midday Review

2010-09-01T14:02:00.005-04:00

I wanted to do a midday post to demonstrate my usual premise that the price action will often do the exact opposite of what many are expecting.

I also wanted to say that it is ridiculous that every talking head on radio and TV is trying to explain that this move is due to some fundamental reason.

If I was forced to value this market based off my daily experiences with those in finance and the public in general, I would value this market at close to $0. There is no level of reality with what most "investors" base their decision on. This is a topic that needs to be covered at a different time.

It is all part of the daily manipulation. These commentators know nothing. Those who speak the truth do not get much airtime because there is little money to be made with the truth.

There is an obvious massive head and shoulders pattern formed over the past week. I was watching this yesterday and told many who I speak with privately throughout the day that I will look for a giant left shoulder squeeze.

My premise was that many retail traders and systems alike look for patterns like this. What better opportunity for the market bullies to squeeze a bunch of suckers then one of the most obvious left shoulders a trader will see?

They squeezed the price up to the left shoulder neckline yesterday, then brought it down a bit just after the open. This caused many to get short. Then they jammed everybody. It was an obvious turkey shoot that could be seen well in advance.

It was not easy to catch with the news and structure but was an obvious sign of tough trading and absolutely no fades this morning.

This move was nothing but technical. Each trade and each pattern has a completely random outcome. The market NEVER repeats itself exactly. The only thing that is constant is the game of faking and squeezing.

This is nothing but a giant poker game where a few bullies take most of the money. The best area for a trader to focus on in my opinion is the interaction with other traders and not the news or indicators that most turn to.

August 31 2010 Trade Review

2010-08-31T21:15:00.003-04:00

I had a couple decent scalps on the TF today but the good trading happened on the ES.

Starting with the TF, I was distracted just after the open and did not engage. I am not sure if I would have engaged. The low was not very convincing and I could tell risk was high.

More importantly, I did not feel any trades so I stood aside. After the TF rolled off 606.5 I hit a sequence of inside support trades. These are not exactly part of my strategy and it was risky to take them.

Inside support on the TF is not very trad-able without very significant risk die to the fact that it often pushes ridiculously deep back into the range before reversing back up. Often, it pushes almost back down to support as I learned last week.

I think this is where the 78.6 retracement traders think they are on to something. It is not the measurement that makes the trade, the deep push down is simply a push out of retail longs. It is a game and nothing more.

It is notable that the fact that i scalped the exits as opposed to holding made the trades profitable. The structure "looked" like it would extend. This is often where I would give back in the past; holding the entries and hoping they would move up as they should.

The price came back for another retest and I took profits. I will catch way more of these than I will hold extensions to completion.

ES Trade

The ES trade today was excellent. It was another example of using feel and engagement in order to execute the correct trade.

I had a line at around 44.50 a couple days ago but had removed it. I traded the squeeze and fake premise on that long and nothing more. Had the line been there, it likely would have been a distraction.

In fact, I am considering removing all lines from my charts. That will bring my read and feel to it's most natural state. I suspect the lines are distracting and have determined that they mean nothing.

The market does not care if there is support there. The players actually use it to trap and manipulate. I will no longer play the "will it be shallow reverse prior to zone or washout extension game." I do not have an edge there without a discretionary decision.

If I need to be discretionary, why not just remove the lines and observe the price more like a machine. I know where is support and resistance is. I think I will get an even better read on the zones without the lines. I will focus on the clusters of pivot and make a gut interpretation based on experience and some framework I have been working on.

The ES trade came out of nowhere. I was actually complaining to another trader about how I felt there was no edge at the TF inside support. My premise was that there is no way to tell at any level whether that support would hold or not.

A trader could be right in any direction. There was no reason for it to have any particular outcome. I do not believe that some can be long and some can be short and both be correct. I support this statement by saying that a trade is never wrong if you have unlimited time and unlimited risk to work with.

A positive outcome is a matter of position and engagement, not price.

There are areas where there is a right and a wrong trade and that is what I am trying to hit.

About 2 seconds after I got done complaining about the lack of edge, the ES accelerated down and I immediately felt a buy. I did not see a pattern or a zone. I simply did not believe the move and bought in the middle of nowhere.

In fact, it was dead stick right in the middle of the range which I have spent a lot of time writing strategies to avoid these areas. I now believe that premise is completely irrelevant along with most of the other "rules" I have put together over the past couple years.

The premise and simplicity of my buy allowed me to sit through and ugly congestion and 3 thrusts down intra trade with a good level of confidence. I did not flinch during the trade. I knew I was was playing chicken with the price but that is what needed to be done.

There was a certain level of certainty about the outcome. I never would have sat though all the games and fakes there if my premise was buying support. I would have scratched or lost. Anything but won.

This can be dangerous. I have recently discovered that too much humility towards the market is not good. I need to respect the market understand the trouble I can get into but also must have conviction.

This trade was made with aggression and won. Many were shorting there and got squeezed. It was again a higher level of trading for me.

I need to work on continuing to tap into this feel.

August 30 2010 Trade Review

2010-08-30T20:55:00.003-04:00

I think this post is a must read for the week and will be in the key recent post section.

Today was one of my better trading days in terms of decisions and convictions.

I was thinking on Friday afternoon that the market would have a nasty gap down over the weekend. This was not based on structure but do to the fact that everybody seemed to close out last week and the price tends to punish those in the majority.

When I saw the big probe up and return back into the highs on Friday, I immediately felt a short bias and had a clear premise.

Also, I could not visualize the price selling down then reversing back up to retest the high. That would create a "U" or horseshoe like pattern and I very rarely see that.

Lately, I have been doing very little prep in terms of SR zones and specific pathway visualization. While I nailed these day in and day out the result were divergent from the reads.

I suppose it is a prep mutiny of sorts. I think I may have been focusing too much on macro direction and not enough on player interaction.

I still have zones that I watch which are very powerful and I still visualize. My visualization is quick and sharp. I have what I need after a quick glance of an ES 4000 tick, 60 minute, and 900 tick in no special order.

It is not enough to know where support and resistance is or to have pattern recognition at these areas. I have started watching a couple more elements even more closely.

The most important being having an understanding of what most of the retail traders are doing and taking the opposite trade. I am looking for the traps and fakes that I have spent the last few years getting into, usually via poor exits, and doing the opposite.

I will elaborate on this much further at some point in the future.

Premise Over Pattern

This is the single most important element to the last couple month's huge improvement in results.

Today is the best example so far. The price traded down to shallow potential inside supports just after the open and was stretched.

Many traders were looking long. There were plenty of reasons to get long. I had several including pattern confirmation and attempted inside higher lows temporarily. I literally had dozens of good long setups today on both indexes.

However, my gut and whatever trading wisdom I have managed to gather in thousands of hours of screen time kept telling me to short regardless of pattern. This was tough because as many know, I do not prefer the short side in this environment.

Today was different though. There was clarity in in direction via my feel. I can really feel a massive difference in how I look at things. The giant overnight upside probed helped as well but again patterns are not enough. There must be feel so there can conviction.

Without conviction, even the correct trades will not hold up enough to survive the constant assault from the bullies who move the market.

I hit the first short on the ES a little after the open. The entry felt awkward and too shallow but the direction felt right. Then the price did nothing and started to look like it would squeeze me.

I had to stick with it. I ended up cutting the trade too soon with a small scalp then re entered an even more stretched leg. I simply made the decision to trade my conviction which has been happening more frequently.

Things got tough during this trade as I saw a ridiculous long setup on the TF. I cut the ES for a 1 point loss and got long the TF. It did not feel right even though the long pattern on the TF was perfect.

As soon as it moved against me, I decided to do the right thing and stick with my conviction. I shorted the ES again, then cut my TF trade for another small loss and added to the position by shorting the TF. I had some entry cost but improved my ES position a bit.

This was a very tough trade and a defining moment as their was a cup forming on the TF. These almost always work but I faded it and had confidence even though it looked like I was going got get run over.

I told another trader on Skype that most retailers were getting long and that was why the price was not moving. Then I gave my premise which was the market bullies are trying to get as many long as possible so they can take the price down.

That is exactly what happened. I talked through it play by play. Reiterating that the structure and even tempo was against me but I was sticking with my premise.

This was trading at a much higher skill level than I have been at previously and felt very natural.

It is important to recognize exactly what I did today in terms on decision making and not let it give me a big head or a license to start fading every pattern I see.

There was much more to it. It was a very complex engagement on many levels but I also kept my thoughts simple and orderly. It was a precise interaction with the market in an intimate level.

That is what it took to make the right trades today.

August 27 2010 Trade Review

2010-08-28T03:42:00.003-04:00

Brief post tonight.

I had a decent day and a decent week for trades.

Exits today were way too early. I am heavily leaning towards a scalp and re enter strategy but took it a little too far today.

I need to monitor how this evolves. It seems to be working leaving a lot on the table and going for very high probability exits. I need to work on how to handle my exits on a day like today when the squeeze and likely run up was clear after the trades started working.

The issue is if I start holding some trades and exiting others quick, I will open the door up for randomness.

I will stick with what has been working for now which is consistent moderate daily wins.

August 26 2010 Trade Review

2010-08-26T22:55:00.002-04:00

There was an interesting role reversal for me today between the TF and ES.

I found myself focusing on the ES this morning as the TF looked nasty for execution. I was not something I thought about. I just happened after glancing at both charts just after the open.

My primary strategy is to lead with TF entries and initiate trades that allow me to scalp off edge. Then follow with an ES position after direction is clear.

This makes for only one or two ES entries a day but they are mostly winners and create much more an edge then constant back and forth ES engagement.

I had a structural premise on the ES that was clear to me since yesterday. I knew exactly what I would look for and was talking about what I thought would happen today yesterday morning.

This led to a conflict in my trading strategy. Lately, I have been looking for wholesale entries to exploit. Short term inefficiencies as other get caught in traps.

My ES trades this morning were based on a structural premise which is something I have been working on avoiding. I need to know and understand direction but want to execute traps and fakes (on the winning side).

I believe the price does the opposite of what it looks like most of the time and am willing to lose when I fade the obvious trades that work as they look.

However, I initially entered the ES only after I saw what looked like inside support start to develop and squeeze a bit. I said to myself...."this move up is BS".

I did not have an entry at all. Then I said it again and recognized my gut felt a trade. Then I had to enter. I scalped 2 points and exited just before the price squeezed again. A little more violent this time.

Amazingly, I felt the move up was crap again and faded it on an uptick. I was very confident and had conviction because this used to be the type of long I would hold that would obtain a decent excursion only to peter out.

So I shorted it confidently. Then hit the area a third time. The trades were just rolling off my fingers which is rare for the ES.

I was not able to continue hitting the move down as I lost some feel and also got into an ugly sequence on the TF.

Once I saw the ES working, I was confident the TF would follow. I ended up hesitating a bit on the TF and entered way late on my first entry. It was too ridiculous to hold and I quickly knew I was out of position even though I thought my premise would work.

I covered for an initial 9 tick loss then proceeded to trade an irritated crappy sequence on the way down that consisted of entering with almost immediate positive excursions followed by weak exiting or quick scalping.

I did not like the late entries at mid range. Risk was too much. I do not mind taking heat but not if there is a good chance I could be right and still squeezed out of the position.

Performance on the TF was just plain lame and I left quite a bit of opportunity on the table. I left some on the table on the ES as well considering that I had been all over the move in premise well in advance.

I am accepting this as my style. It has been producing wins virtually everyday. I will take extreme consistency and moderate daily profits over the constant outliers for and against me that many experience.

The question is can I continue this daily winning and sharp execution? I am slowly making it a habit to win and it is a little hard to believe after how tough this has been over the past few years.

It is a psychological balancing act keeping all the variables in check that are required to maintain what I have been doing. It requires always thinking about it but not exclusively thinking about it.

More of a passive obsession with maintaining focus on and off screen. The passiveness is required in order to be able to sense the true feel that I have developed over the past few years.

It is the feel that separates a winner from a loser.

August 25 2010 Trade Review

2010-08-25T22:46:00.004-04:00

I had some good scalps today as I have been trying to be patient in August trading.

It has been very interesting when I do decide to engage how absolutely focused I quickly get. In the last few sessions, I have felt a little off and uninterested in executing early on. It is not that I am uninterested in trading. The disinterest is in the ridiculous games and lack of edge I perceive at most points throughout the day.

Then I see something and immediately attack.

I liked the long side after the initial thrust down just after the news release this morning but also knew the price had been trending down in the past few days.

It was a good bet to buy the pain as the price came down but that is not my style right now.

I waiting for total clarity on direction then taking the very high probability scalps (10 -15 ticks TF...6-10 ticks ES). This is what has been working for me.

I have no need to catch the high or low. There may be more points available but I have observed that I rarely capture the lion's share of what is offered.

I am looking to capture the small inefficiencies and that is it. If the trade explodes in my direction I will hold it but am not forcing anything.

I am certain that I will perform better taking a later sequence setup with more conviction then an earlier setup at optimal prices with less conviction.

This is a game of fakes and traps and the one with the most conviction usually wins.

August 24 2010 Trade Review

2010-08-24T21:34:00.002-04:00

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.

August 18 2010 Trade Review

2010-08-18T18:21:00.002-04:00

I went on a fairly aggressive rampage this morning and was done for the day at around 11:00 AM EST.

Today I drew an important line in the sand and engaged the market on a higher level than what I had previously. While this required more risk than usual, it evoked glimmers of my overall goal which is to trade by premise only regardless of noise or pattern.

Early Shorts

The day got off to a rocky start for discipline and strategy as I took a couple early shorts just after the open. Sure there was a little double top forming some inside resistance and a shallow lower high but the price had already moved down significantly overnight.

I do not know what it is about the short side but it is nearly useless to hit these coming of newly established support after a stretched leg down. They seem to squeeze 90% of the time and that is what happened.

I realized the first entry was a likely trap once it moved 7 ticks in my favor immediately after I entered then hit a wall. I suppose I should just take the super scalp in these situations.

Then price pivoted again and moved down and I got sucked into the second trade which was a sucker short just before the squeeze.

The difference is I felt it immediately. I knew I was out of position and why and quickly covered for a small 4 tick loss.

Then I got on the right side of the market via the squeeze.

Longs

My read became very clear and focus was extremely strong. The next 3 trades were will entered and poorly exited as I kept covering with 5-8 tick profits instead of letting the trade open up to my usual minimum 15 tick benchmark.

I think this was because the low put in on the ES looked like a fake. I just plain do not believe anything I see on the ES. There is a circus of fake outs going on there non stop.

I netted 12 ticks on the first three longs which was kind of weak. Then came the mistake the may have changed my trading for the better.

I had already been getting away with sloppy near retail entries all morning and was irritated at my 12 tick net off 3 longs considering the move up. I was getting away with this because my feel was very spot on today.

Then I entered a long towards the top of the first squeeze leg at around 624.5. It was way too aggressive and I knew it could pull back. The funny thing is that I did not really care. I think I started getting a big head because the price was doing everything I thought it would and I knew it in advance.

So the price pulled back and it was fine. Then it started pushing down further and further. I started to get very irritated. Not because I was taking heat but because I just did not buy that the market was going to sell off.

I saw this move for what it was which were bullies pushing out the longs. However, I was taking way more heat than usual. At one point, I had almost $500.00 per contract in negative equity. I consider an average loss (1 unit) for me on the TF is around $175 per contract.

I got uncomfortable when the price penetrated 620 but I was pot committed and still did not believe the move. i was as confident as I could possible be that it was a fake and stuck with it.

Then I realized that if I was that confident in premise and going to follow through that it made sense to add to the position at the optimal prices so I did. This was total belief in what I felt in premise regardless of pattern. It felt very natural.

The price quickly reversed and the squeeze was clear. I was less concerned about the outcome intra trade on this trade then any trade I can recall over the past number of months. It is a huge step forward considering the risk taken.

I covered the trade right where I felt it should be covered with a net 25 tick profit. I was all done based on feel, premise, and belief. However, it is not my goal to add to positions and I will not make a habit of it.

What occurred was me making a live adjustment to a tough situation in order to successfully manage myself out of an over aggressive trade.

The other factor that allowed me to take 50 ticks heat there was that I now have the capability to get 50 ticks back if I lose it. I have the ability to let my bets work and can deal with getting plowed when I am wrong.

I need to ensure that I continue being aggressive when I do get down.

The other interesting observation is that where I exited the 1st entry after all the heat, I could have just cut the initial trade for a small loss then re entered at the lows.

However, you do not know what will happen in advance. Cutting a trade for a small loss for no good reason leads to pulling yourself out of winners. Plus, had I not been getting bullied, I would not have stepped up my personal aggression enough to add to a position that was that much in the red.

It was very much like somebody who has been getting picked on for years finally standing up and kicking somebody's ass.

That is what it takes to win intra day and I need to figure out how to maintain that mindset without getting undisciplined.

August 17 2010 Trade Review

2010-08-17T19:34:00.003-04:00

Payback today after yesterday's afternoon fight and near comeback.

Price had been in a sideways range for 3 or 4 days and opened with a tight congestion at the highs of the range. This is bread and butter structure indicative of a very high probability breakout to the upside.

Many retail traders short this but today was a no short zone all day. Structure was overwhelmingly up.

I waited for a few minutes after the open. When the TF broke down to the 617.00 area it looked like a prime squeeze opportunity. Once price reversed out of there my read was clear and I hit a long that was essentially a retail entry.

I was fine with the entry because of the overwhelming structure. I did not want to miss the first high probability move.

I locked up open equity at 15 ticks according to my strategy which allowed me to hit the local retail high and get ready for the pull back. The second entry was a little over aggressive again and took almost 2 points worth of heat.

That is what it takes to trade this stuff. If you stick a random stop anywhere close to the pull back it will get hit. The price faked down twice then put in an inside pull back and launched.

It was clear to me that price was breaking out but my game is to cover quickly and not hold as I used to. This causes me to leave a lot on the table on days like today but it is more than made up for in most other types of trades.

The ES was tougher as usual. You can see it took me 3 entries to hit the long. The ES is nothing but grinds and fake outs. Yesterday, it did crap then sucked me into a long. The only move it had was a 4 point push against me and stopped out then went flat leaving no opportunity for a meaningful come back.

I am confident that the intra day edge on the ES when using stops is close to fractions of a tick per contract traded. Some can still do but there are greener pastures. I still trade it because I want to win at it and I will eventually.

I do not believe anything I see on the ES and had to cover my first two longs quickly as they were not opening up. A helpful observation is that the longer the price sits there is a tight sideways congestion, the more tight stops retail trades put way too close just below the congestion.

What do you think happens? The other market players fill the stops with a wash before taking the price up. That is why I no longer leave my orders there unless I am will to risk 4-8 points.

I got long a third time on the ES after it was clear the TF was about to launch then covered with a weak 2.5 points. That is about as much as I can repeatedly book on the ES.

I am fully capable of holding an ES trade for 10 points as many have seen in my videos but the frequency of which that is possible is completely random and can not be done on demand.

I am out for on demand daily profits and nothing short of that. It requires quick profit taking and near perfect feel to do that.

I talked a few traders through what was happening on the ES and had the move nailed including that point at which the real buyers stepped up to take it up. I thought it would for sure get to 1100.00 intra day but it stopped short (another fake).

I did not have much to engage for the rest of the day. There where pattern setups but they did not feel right. Everything I could have gotten into would have halved my profits at least.

I need to keep in mind that less is better. I need to pick my areas and hit them aggressive then get out for the day. There is no need to force pattern trades all day. There is much more to it than that.

August 16 2010 Trade Review

2010-08-16T23:04:00.003-04:00

I had a tough day on the TF today and spent most of my time playing around mid range which is completely against my strategy.

I could not get my bearing on exactly where the boundaries were this morning as the price made a new local low in the middle of nowhere.

I started to engage the price once I could sense a low being put in and a reversal. My tempo was decent after the first long then I re entered later sequence after the news release.

The exits on the next 3 longs were too soon and I only netted 5 ticks on the sequence. This lead to some over aggression and a late sequence stop out on a shallow congestion near what I believed was the top of the range.

Everything was OK up to this point then I started watching the ES and started to get the feel for a squeeze. This was a good play and correct premise.

The mistake was switching back t the TF and not adjusting for the much larger volatility. I entered too soon on the TF. There was quite a bit of air to the down side and potential contraction low.

The players decided to trap the longs and inflict some pain prior to squeezing the shorts.

After the second stop I became irritated and started fighting the market which resulting in a 3 extreme low tick stop. I do not even thing the chart plotted the price I got filled at.

I then again doubled down and hit one last long. This was not a guess. I knew I was just low ticked and had to re enter. Another stop here could have resulted in a near record intra day sequence draw but I had to execute. I caught the squeeze into the close undoing most of the damage from the afternoon.

I put an end to my month + long winning streak with some sloppy management followed by over aggressive compensating.

It is notable that all the action occurred inside my SR lines. This is indicative of an overall locally contracting market and makes for tough trading on a day like today. Anytime you play mid range winning percentage is cit nearly in half. That is the nature of engaging mid range.

I have to reiterate today than many of the players are on vacation and there is pretty much nothing but games going on right now. It is a turkey shoot for those providing liquidity and pushing the price around while taking retailer's money.

It is best to hit quick high probability trades and exit with tight profits in this mess. Even though there are plenty of opportunities, just about everything is a contraction on one time frame or another. Things will pick back up in September.

August 13 2010 ES Prep Posted

2010-08-13T08:05:00.002-04:00

Price is at a line in the sand this morning. If this 1073.00 area holds, the overall up trend will remain in tact. If 1073.00 breaks, it will be a significant change in overall bias and could lead to some major selling. Price has made a move down this week and is a little stretched. A continuation down with this shallow pull back and congestion would mean that this is a powerful move down. If the 1073.00 area holds, it could be yet another higher low in this overall up trending market. Read is straight forward today. Short below 1073.00 to 1050.50. Long above 1073.00 to 1085.00 and look for extension. Be cautious of congestion 1073.00 - 1085.00 if price does not break 1073.00 early AM and late day rally. The market looks weak but could make a stand at this area.

August 12 2010 Overlay

2010-08-12T23:08:00.002-04:00

No trades today. I was off screen early in the day and did not see much to execute as the day went on.

I had a decent read today and the best premises to hit were in the first couple hours.

August 12 2010 ES Prep Posted

2010-08-12T08:05:00.003-04:00

I usually look for a contraction after a big move but I do not see a sideways scenario early on today. Premise is if price retest the Globex low at 1073.25, look for a continued extension down to 1059.00. There is a lot of air below. If price is able to break back above 1085.00, look for a grinding pull back up towards the 1103.75 resistance area. If the price breaks 1085.00 and grinds up, could see a contraction between 1085.00 and 1073.25. The line in the sand for this overall move up is 1050.50. If price tests that area and fails, we could see some major late August selling.

August 11 2010 Overlay and Trades

2010-08-11T21:01:00.010-04:00

I think this post is worth a couple reads.

I easily have 3 or 4 days worth of material that I could cover from today. I could probably do a day long seminar on all the lessons that could be learned.

I had an ugly streak early on followed by an amazing comeback and minor win on the day thanks to a lone ES trade that was all premise with no setup.

Prep Read

The first thing I would like to cover is the read this morning. I very rarely have my primary visualization extending a zone right at the open.

The most probable outcome is always going to be that a zone holds. I do not build the prep based on merely probabilities however. The prep is a detailed consensus of all technical aspects that I know reconciled with my gut feeling on sentiment.

Usually when I premise for a zone to break at open I have second thoughts but one major rule of my prep is that I go with my initial read. Whatever I see and feel as soon as I sit at my work station. No modifying or arranging except in very rare scenarios.

The reads have continued to be shockingly accurate day in and day out. However, one thing that I have been repeatedly telling traders I communicate with throughout the day is that the read is not enough to successfully enter a trade and exit with a profit.

First Sequence On TF

I wish I had more time to really elaborate on this. I need to document the most important observation of the day and probably for the week here.

I started the day with 3 losing trades for approximately - 50 ticks. This is a significant losing sequence for me.

This was not a clean loss, it was a mistake that was avoidable. The problem is that I was trading patterns at a support zone instead of following a premise.

Try to follow. I told another trader as I was working my second entry that there was no game here. What I meant by that is there was no trap, squeeze, or push happening. The price was simply taking a breather and congesting prior to continuing down.

There were more reasons technically to get long then short. There was a support zone, price was stretched, price made an inside higher low, price put in a long pull back retest setup, and support zones hold more than they fail.

One simple factor out weighs all others...the market had been contracting for days and extended down this morning...premise was for the price to continue to extend down period.

There would be no squeeze and no pull back on the extended leg down. Nobody was buying and nobody was covering. There was no game there because price was just drifting. The players were not even trying to draw me in, I drew myself in looking at patterns and not focusing on the overall game.

I knew it half way through the second trade but I was committed to the premise and had to follow through. The third entry was simply an angry attempt to get back at the market. It had a pattern but nothing else.

I will escalate a situation and worsen my position once I get into a fight. That stubbornness makes me a tough trader but can also lead to some ugliness.

One aspect that was reinforced today is that almost any setup will win if you are directionally correct. It is crucial to stay on the right side of the market even if the setups are not great. It is also crucial to stay out when direction is in question.

There were plenty of better areas to exploit the rest of the day. Note that all my stops were in the long side and all my wins were on the short side. This is no coincidence. There were no big squeezes today thus no reactionary profits to be had.

It is extremely encouraging that I adjusted to this.

Fight Back Scalps

After the bad sequence, I regrouped and got on the right side of the market. My plan was just to hit the short side and not get shaken out. There was nothing but air below on the TF. The ES was junk and not trad-able at this time (high volume high market depth grind down).

The problem was every time I entered short, the price would stall. Causing some break evens. Since I was down, I was a little bit on the defensive which was the wrong thing to do. It resulted in me adjusting to taking the most whole entries and exits.

It was a good adaptation as the edge on any entry on the TF2 chart was literally 4-7 ticks. I took what I could get and fought back.

You can see that I was not quite done fading myself as I hit another long entry pattern just prior to lunch. This had a premise though. I could have squeezed. It was probably the cleanest entry so far but lost. Still a fade but had some merit.

My Core Trades Are Concepts and Not Setups

A big difference in my trading lately and what is mostly responsible for the much improved performance is the fact that I am no longer merely taking patterns or playing zones.

I am engaging the other market players. Each of my best entries has a theme to it like "most retailers are looking short due to this pattern but I will get long because I think the players will try to get them in and jam them."

It is no longer about what I think I should do. It is about what I think others are doing wrong and trying to exploit it. Each trade has a concept. That means that the concept is not over because an area gets broken or the price has moved more against me than I would like.

It has allowed me to stay in my entries as long as I need to but also to get out much sooner with profits with the understanding that intra day wholesale opportunities happen fast and need to be exploited quickly.

I have also noticed my losing exits being much sharper. Often right at the point if the trade tilting prior to failure.

Anytime I have not had a concept with consideration for what others are doing behind one of my trades in the past 6 weeks, it has not gone well.

I must trust that I will feel the concepts. Instead of trying to find one, I must let it find me. My best trades have often come after the initial move.

I have really found a lot of success in talking myself through what is happening throughout the day and building a bias of how I beleive others will fail.

Beginning To Reconcile With Past Failures

I have realized over the past month that my grinding performance earlier this year was due in part to the fact that I was tracking zones on a high time frame and expecting to exploit them with a fast time from stop from entry point; while having a slow time frame exit point.

This was like trying to make a detailed painting with a giant paint brush. Perception, time, distance, and symmetry were all mis-aligned. There was no edge. I was just oscillating back from retail to whole over and over again intra trade.

The exit was completely random regardless of pattern or premise. This had nothing to do with my skill or interaction. It was a just plain mis-calibrated approach. That is why I could never find answers to the divergence between my prep and my PNL.

The divergence was in essence a lack of harmony between the time frame and size of the analysis and the actual playing field. Had I kept doing what I was doing I likely never would have accomplished the edge I wanted.

I am starting to understand this. It is a start and a major break through but by no means is the answer to all my trading issues.

Comeback Today and Time To Address The Winning Streak

Today was marathon trading session. I had 15 or 16 trades and came back from a tough early sequence.

I used all my skill today and frankly read the market far better than I traded it. I still hung in there and managed to get in the black.

I have been reluctant to talk about or even think about the streak that I have been on. This is due to my ability in the past to make new equity highs and then take a giant swan dive off a cliff.

I have not been counting the days or points involved in this recent run up. I know it is the longest and most consistent of my career so far.

It is not good to talk about good trading. It always ends badly. However, I have to bring it up today because I extended the streak by a thread today.

While I can not expect this to continue without a draw at some point, I am starting to realize that I can indeed expect to come in and win everyday and that a losing day should be a rare event.

This puts me one step closer to the elite status of trading that I have sacrificed virtually everything to obtain.

I also know that I have a long way to go and one thing that will not change is that a successful trader must continue to have everything on the line in order to continue advancing.

August 11 2010 ES Prep Posted

2010-08-11T07:56:00.002-04:00

Price has completed the test we were looking for yesterday. It turns out all of yesterday's action was price just drifting in preparation for the 1103.75 test. There are 2 scenarios I am watching today. The first is for a shallow pull back and then extension of 1103.75 down to 1185.00. Price is stretched to the long side and due for a correction. This is a key area. If price is going to sell, it needs to cut through 1103.75. If it starts to hold, the the significance of the area will build and price will move up and off this support. I will be looking for a sideways market 1103.75 - 1127.00 in this scenario. This is August trading but there is structure for a significant selloff to occur. We have to get through 1103.75 first and that could be a fight.

August 10 2010 Overlay and Trades

2010-08-10T20:09:00.002-04:00

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.

August 10 2010 ES Prep Posted

2010-08-10T08:04:00.002-04:00

Premise for today is to watch for test of 1103.75 prior to the FOMC Announcement then a potential contraction. Action has been tight on low volume as is typical for August trading. Price has been in this area for many days and needs to find direction. A break to the upside will create a no fade scenario as I will anticipate a grind up. If 1085.00 breaks, I will look to hit shorts on deep pull backs. Price has been trending up for a long time and is due for a correction but the short side will remain tough as we are in a giant squeeze on a macro level. I have illustrated structure to build in order for price to break out of this 1127.00 - 1103.75 range it has been in.

August 6 2010 Overlay

2010-08-07T00:39:00.005-04:00

The read was spot on today but I did not trade. I am trying to make sure that I am at an optimal level of focus when I engage and was distracted this morning.

In the past, I would just stubbornly mow through any distractions or technical problems but after an exhaustive review, I have determined that doing this just erodes my edge.

I am always highly concerned about randomness and I think every trader should be. However, the recent adjustments I have made seem to have eliminated the need to be on screen every minute and to hit every setup the presents itself throughout the week.

I want to hit the action hard and with the maximum bet when I am highly focused and the action is allowing for inefficiencies that I can exploit. There was decent action today but I was not as focused as I needed to be and also had some technical problems this morning.

I have also been distracted by other obligations so all this added up to a recipe for a potential Friday stomping.

I must be cautious not to confuse lack of focus with exhaustion or laziness. It is my job to engage everyday and I take it seriously. I will trade rain or shine but have a new focus threshold that must be made in order to maintain the highest possible edge.

August 6 2010 ES Prep Posted

2010-08-06T07:56:00.002-04:00

Price is still contracted between 1129.50 and 1113.50. Premise is to play the range until breakout. Jobs report out this morning might get the price moving. Price has not tested 1129.50 or retested 1113.50. Direction is sideways and contracted. I have illustrated inside structure to look for that could initiate a breakout of this area. Price is overall in a uptrend and extended. Watch for slow action and deep market depth as August trading tempo has kicked in this week.

August 5 2010 Overlay and Trades

2010-08-05T21:28:00.004-04:00

Production was good today considering the tough action. The ES was contracting all day and the TF made a couple good fakes that I was able to exploit.

It took some conviction and patience.

Slinky Pattern

I was talking through a trade with another trader today when I observed the 2nd long that I was in go into what I call a slinky pattern. This is not too common but worth discussing.

It is basically a nested sideways oscillation that will usually occur mid range. This in indicative of an indecisive move.

If you look at my first trade, it was a basic continuation and I was able to confidently scratch it. Once it failed to open up, I was confident that it would retest the pivot it just came off of.

The only outcomes were that it would break that pivot or that the pivot would hold. If the pivot held, I would have what I call a pull back retest entry. That is what happened and I re entered long.

However, after I re entered, the price failed to break the high pivot again. I could not scratch this one. A scratch here would have allowed me only two out comes in the trade. Either a loss or a break even.

My thought on this is that I can usually not scratch because this is often the case. You are going to take all your losers. If you scratch your winners, even some of them, your edge will be eroded to zero.

I had to stick with it. The reason I am bringing this up is that it demonstrates that a trade is constantly changing in both risk reward and probability. I used to only make my exit decisions based on the stats at entry. Now my exit strategy is dynamic. (I have more on dynamic vs. static action coming soon)

When I entered the trade, it was a good looking retest pull back entry with a target potentially at resistance. Once the slinky pattern formed, everything changed. Now I was in a poker hand.

The probability of the trade went down as well as the potential for profit. Once the oscillation started, the local expectancy for a high probability move I had changed to only the width of the slinky pattern (about 40 ticks).

What I mean by poker is that I was trapped long. There was no good area to stop out the trade that was not far below the low pivot of the slinky. I was the aggressor when I entered but quickly became a potential victim. This was a trap that was set and I went for it. However, I knew it very early on and adapted instead of cutting the trade.

This may be very technical for some. My options were to have a guaranteed non win by scratching (which is a losing strategy over time...can not scratch your way to profitability), hope the trade runs to resistance before pushing against me, or trust my feel and let it wash upward for a good scalp.

I took the third option for a 14 tick high probability scalp. It turns out that I got out at a retail price (a wholesale exit for me). The price reversed just after that.

Through the process of elimination and a dynamic strategy, I was able to take profits on a trade that I would have taken a BE on at best just a few months ago. This was done without being defensive or stubborn and it is repeatable.

Fakes and Squeezes

I have refined my trading style to an interaction with the other players. The goal is to take advantage when I see them squeezing other and avoid not getting squeezed myself.

It is 100% a mental game and has little to do with patterns or even structure intra day. These things are very important and I could not trade well without them but the overall deciding factor in my edge is how I play and engage.

Question from Earlier
Hi Brian - Nice job on standing aside yesterday rather than risk money in a tough market. Something I am working at improving myself. To give me some guidelines can you talk about what signals you look for when to stay out and also if you have an average number of days per month that you either stay out completely or trade very very lightly? That would help give me some context of what I should be aiming for as I improve. Thanks mate.

This is a good question. I will start with the easy part. I rarely stand aside. Most months I do not have a day without trades. This trend may change as I have recently required mush more confirmation of my entries.

There are 2 things I look at...structure and feel.

Understanding market structure will allow you to premise for contractions but there is no way to know for sure. I also utilize to my feel. By that I mean what is the pace of the movement? Is it mushy or sluggish?

If you watch the action for long enough you can tell what mood it is in. That does not help much.

I could write about this for hours but here is a brief overview that might help. Watch for these things:

1. Price has extended its previous range's high and low the day before and has come back inside the range.

2. Market is opening mid range with no gap.

3. Specifically on the ES the first few 2 minute volume bars are less than 8000 followed be decreasing volume.

4. Price established an inside high followed by an inside low (or vice versa)

5. Look at the market depth on your DOM. If the bids and offers are all way higher than usual, a grind is likely. I look for depth of 1200+ 5 ticks above and below. When it gets to stacked 2000+, price is going nowhere.

6. This month particularly, the fact that everybody is on vacation. Price has no conviction and many of the best traders or taking time off thus the game players are having a field day with the retailers.

Some of that may not make sense. Feel free to ask a follow up.

August 5 2010 ES Prep Posted

2010-08-05T08:00:00.002-04:00

Light prep this morning as the market has gone to sleep this week. I will look for sideways action and potential contraction today. There is no immediate significant support below until 1113.50 which is a long way down in this volatility. I will watch for an AM contraction and stand aside until something clear sets up. Once price clears this area and gets moving I will play the continuations off the move out. August trading can be slow and I will not try to force any action.

August 4 2010 Overlay

2010-08-04T23:08:00.004-04:00

No trades again today.

Action was completely lame and I noticed it within a few minutes of watching.

Tempo has slowed and there is no conviction. It seems that everybody is on vacation.

I will execute in this stuff but need very clear setups.

August 4 2010 ES Prep Posted

2010-08-04T07:54:00.002-04:00

Action is tight this morning with minor support at 1113.50. I was forced to moved resistance up to 1122.00. This area is tough for zones as there is a freight train trend up with lots of air below the market. Premise is to watch 1113.50. if it holds or washes to 1110.25 and holds, look for a continued grind up to 1129.50 and beyond. If 1113.50 does not hold, look for a downward correction. There is not much established support below until 1085.00. Price will likely find new support and attempt to make a base prior to 1085.00. This will be an area to cover shorts and watch for a higher low reversal. Overall premise will be back to 1085.00 overall in this scenario.

August 3 2010 Overlay

2010-08-03T23:21:00.002-04:00

No trades today. I had some technical and data issues this morning. After confirming my visualization of a tight market I decided to stand aside. There was not much to do.

August 3 2010 ES Prep Posted

2010-08-03T08:05:00.002-04:00

Premise for today is to see if price continues up from 1116.50 minor support or corrects down. I will look for a wash of 1116.50 just after the open. This will be the key area. If price thrusts back above 1116.50 look for a continued grind up. If price starts to sell, look for a potential test of 1085.00. There a several potential areas of minor support on the way down but I anticipate these breaking as the price corrects. If support structure builds with basing action between 1116.50 - 1085.00, I will look for a range from that area to 1116.50. Trend is still a freight train and grinding up. There should be a correction down soon. However, the short side will be tough and prone to squeezes. I will continue to try to stay on the long side until the action changes.

August 2 2010 Overlay and Trades

2010-08-02T19:08:00.002-04:00

I had a decent day on the TF today. Zippo on the ES. However, the ES prep and subsequent shallow inside support at 1110.75 drove my bias for the day.

You can see on the prep that I was looking for a deeper pullback to the 1103.25 area on the ES. I though we would get it after the 10:00 AM news spike to 1116.50 resistance and reaction off that area.

Price congested and started hooking at 1110.75 instead. I clearly saw it and knew what was happening. It was too shallow with no no setup to trade however. You would have missed it had you been watching an interval chart.

I do not want to mess myself up with too much analysis. I have been demanding extremely good fast time frame setups and am trying not to execute if I do not get them. Thus, shallow inside support was not on the menu.

However, if you have been reading closely for the past few months, you can see how I handle shallow inside support. The premise is that if the price does not pull back to potential inside support, I expect it to grind up for the remainder of the day.

That is what we had. Since I could not catch the entry on the ES I looked for longs only on the TF. I caught 3 entries that I call pull back retest entries and scalped them according to my exit strategy. A scalp for me is anything less than 20 ticks on the TF.

The TF did have a tough sell off mid day that was deceiving but my long-only bias kept me out of trouble. Some may see missed opportunity there but where could I have entered repeatably with limited risk in order to catch this move now and in the future? The answer is nowhere.

There was no wholesale setup unless you faded the freight train up and that will not work over time as a viable strategy.

Price clearly washed 656.00 and moved back above. Once this happened, my long bias remained in effect and I bought any good retest pullback after that.

The interesting observation today is that my zones on the TF were dynamic. I have said before that I use static zones only which is true on the ES. They may have been part of the randomness problem.

That is trying to intra day swing trade macro static zones but enter using pattern scalp methods. It just does not line up.

Lately, on the TF, I have been using pattern entries on dynamic zones with bias and scalping quickly to create an edge.

July Results

I traded the ES only until the last 2 weeks in July, then focused primarily on the TF.

I was up 4.25 points net on the ES and 32 points (320 ticks) net on the TF (in just 2 weeks).

It is clear where I need to focus my intra day efforts. However I am not done with the ES. I am going to continue to work on a more effective strategy.

It will likely call for more of a swing trading mentality for the ES.

August 2 2010 ES Prep Posted

2010-08-02T08:03:00.003-04:00

Price continues to trend up. Look for potential inside support at 1103.25 and sideways action 1103.25 - 1116.50. If 1116.50 does not hold, look for continued grind up to 1129.50. If there is no inside support at 1103.25, look for test of 1085.00 and wide range. I will look to stay on the long side as much as possible as shorts will continue to get squeezed.

July 30 2010 Overlay and Trades

2010-07-30T20:42:00.002-04:00

ES prep was good today. I want to stick to mostly charts today.

Another blogger wrote about how Chicago locals get in and do their business and then leave. I have been keeping that in mind which has helped me only hit the best sequences lately and not re engage after the edge is reduced like this afternoon.

The one notable thing today is that I opened with an overaggressive short. It was a trade based on a pattern. There was some feel but feel can be wrong, especially on top of a support zone.

I need to remember that I simply do better when I wait for the price to make it's move and then play the continuations. Even if I miss the initiation point. My win rate skyrockets when I wait.

Check out the July 28 and 29 posts if you have not already. There is a ton of useful analysis in those posts.

July 30 2010 ES PRep Posted

2010-07-30T07:59:00.002-04:00

Tough read today. Premise for today is for test of 1085.00 and watch for potential inside resistance at 1104.25. If 1104.25 holds, watch for potential sell off to the down side. The squeeze yesterday was significant but price failed to follow through and put in a lower high. Other scenario is 1104.25 - 1085.00 range until breakout. If price holds at 1090.50 (unmarked) this morning, look for a drive up to 1116.50. The key area to watch will be how price comes off these lows. Action yesterday shifted to a selling bias but we are still in major uptrend. I will favor the short side as long as 1104.25 holds but watch for squeezes. I will stay away from shorts if 1104.25 breaks.

July 29 2010 Overlay and Trades

2010-07-29T21:10:00.003-04:00

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.

July 29 2010 ES Prep Posted

2010-07-29T08:02:00.004-04:00

Premise for today is for sideways market 1116.50 - 1099.50 until breakout. I have illustrated potential inside structure at the top for a breakout. If 1099.50 starts to extend, action will be tough and prone to extension retests. The area likely will not hold or break cleanly. I will sell any extension retest and buy any pull back after a move back inside 1099.50 if price test the area.

July 28 2010 ES VS. TF Post

2010-07-28T20:59:00.010-04:00

Double posts tonight. The overlay and trade post below is a good one and definitely worth reading as well.

This turned out to be a huge amount of information and requires more focus than many will give in one read.

I have had a few requests to talk about the differences between the ES and TF. I will start by reviewing my thoughts on pros and cons and then move on to my interesting conclusion on the ES after months of fighting. Lastly, I will address a question about stops.

ES vs. TF

The major difference between the ES and TF is the volatility and liquidity. There is less liquidity on the TF thus more volatility.

On average, the TF moves twice as far as the ES on a given move. Often the TF will move the equivalent of 6-8 ES points while the ES is just grinding and congesting.

While the indexes almost always trade in the same direction and macro pattern, there is a significant difference in key areas like breakouts and reversal points.

I find that reversals and continuations are much clearer on the TF. Then once you enter a trade, the TF produces a result much faster with limited retesting of my entry point once I have obtained a positive excursion.

This leads to far less management issues such as scratching winners and having positive excursions turn into losers. The primary reason is that the TF produces so much more bang for the buck that psychologically, I can scalp it while still feeling that I caught a reasonable move.

Dollars should not matter in trading but when you trade small size like I do, it is tough to take a $75.00 profit per contract on the ES. It feels useless because you can lose that quickly.

The equivalent move on the TF is usually $150.00 - $250.00 per contract. That feels more significant thus allows me to exit trades on the TF sooner than I would have on the ES.

This by itself should not change anything but it just so happens that a missing aspect of my trading was early profit taking. In fact, based on the results I have been getting, it is possible that this was the elusive problem and key to solving the divergence between my analysis and my performance.

Only time will tell.

Basically, what I am saying is that the TF is faster, crisper, and less mushy than the ES. What does less mushy mean?

Less mushy to me means that the TF oscillates, extends, breaks out, and trends. The ES primarily sweeps, sweeps, and sweeps for stops then breaks out, congests, backs and fills, then trends.

Many may not get this but try to think about and visualize what I just wrote.

It is the constant sweeping that makes the ES so difficult for me. I usually get the analysis right from point A to point B but a positive outcome depends on how you manage the trade from point A to point B.

I have some deep analysis about the differences in overall structure of the two indexes that I want to review at a later date. It has to do with how the structure is stacked relative to extensions, extension retests, previous support acting as resistance and vice/versa, and how the price travels from your entry point relative to your expectation.

I am going to name this study and start working on a methodology around it. I can not properly put it into words yet.

The other observation with the TF is that I am playing mostly for pattern and retest opportunities with bias than overall zone and direction.

This in itself needs to have a dedicated post.

My Conclusion About The ES

It is tough for me to say what I am going to say about the ES because I am stubborn and have been fighting it for months.

I simply think that there is far less edge for a one entry/one exit trader available in the ES when compared to the TF. I will add to that by stating that I think the ES is also tougher to trade right now than the TF (for somebody who knows what they are doing).

It is hard for me to accept that my execution and feel is not universal and that I can get better results on one instrument as opposed to another using virtually the same technique.

I can reconcile this by acknowledging that the difference in performance is due to there being something about the flow and tempo of the TF that better suits my psychological capacity to execute my exits.

Basically, the TF and likely most other lower liquidity and higher volatility instruments cause me to naturally do something that I can not consciously fix about my trade management.

I will take that and am not going to question it much further. My mind is getting so vast with knowledge from all my analysis that I risk going into gridlock so things must be kept simple.

This confirms what a couple other more widely read bloggers have said about trading literally being 95% mental and a matter of how you play the game. I believe this.

However, I also believe the 5% needs to include a sound understanding of how price works and moves which very few traders I speak with have.

What is causing less edge on the ES? I believe it is do to the fact that there are so many players involved. Massive amounts of retail traders giving away money to highly complex computer programs run by quants who have virtually unlimited risk and capital.

Does that mean a trader can not win. Absolutely not. I believe some do.

However, I have NEVER seen a one contract trader do anything on the ES. I read about supposed successful ES traders who trade huge size and scale in and out say they could it one entry/one exit but there is not one single chart out there is cyberspace demonstrating this.

Everybody that is public takes small profits on 1/3, then takes off another 1/3, and holds the smallest portion of the position for the move. This is insane and I would like to see executions of this strategy day in and day out for a months.

I think is sells well and performs like crap. That is why nobody posts it. It does not hold water like most strategies. You need to be mentally tough, no mechanical procedure can make up for mental inefficiencies.

Once I acknowledged this, I started molding my own trading style to something that can perform while trading just one contract or using a one entry/one exit style with multiple contracts.

The ES is just too damn efficient right now and conflicts with my style.

By being too efficient, I mean that the opportunity to enter a trade and successfully exit with a booked profit on the ES is very limited and does not occur frequently.

Basically, there are limited wholesale opportunities and the efficient market corrects them quickly. You have to be extremely skilled to catch these inefficiencies. More skilled than I am to do it enough to make a consistent living off small size on the ES. Probably more skilled than I will be one year or even two years from now.

That is a tough admission to make. The caveat to this is that I am talking about winning with smaller risk.

I think I could stomp the ES if I could swing trade and had the courage to take 6-10 points risk frequently. I can not do that right now. I have limited resources and just plain have not adjusted to taking that kind of heat yet. I will over time.

This is an important statement...I think the real edge in the ES for a tight risk trader is a matter of 2 or 3 ticks per trade and it takes great skill to capture it.

I think a good edge can be produced consistently be either scalping rapidly and scratching often of taking large risk and swing trading. Nothing in between.

Thus, my attempted hybrid strategy and tendencies to mix and match big winners with smaller scalps is a dud for this trader with 3 years of experience. I think thing might be different in the future.

I thoroughly believe in the 10,000 hour theory that I will not get into now.

In conclusion, the ES has limited edge for tight risk and is extremely hard to capture (we know that).

The TF has clearer entries and produces more bang for the back. Most importantly, it forces a correction in my trade management that i can not make on my own.

STOPS

I get this question a lot and think it is best to keep my answer simple.

The best stop is no stop. Anywhere that YOU want to put a stop is where the price will likely go to prior to moving in your direction.

The market is designed that way. It is a big game of sophisticated machines trying to fake you out and take your money. They know exactly where you want to enter and exactly where you want to barf out of a position.

Stops are merely risk management tools. The best stop is to cut the trade once the overall premise has failed.

I hate when professionals say what I just said but it is true. This can lead to giant stop outs but will avoid pulling yourself out of many losers.

A more practical approach is this:

Use a very tight stop or a very large mental stop and nothing in between. Do not enter your entry order with a tight stop order. If you must have a stop enter a catastrophic stop.

Best Stop Advice I Received

Stop your self out, do not let the trade stop you out.

When you are ready to exit, let the current bar close and place your stop below that.

I Actually Give Numbers:

I know many just want a number so here it is.

If you had to pin me down and demand a number, I would say optimal stop on ES is 2.5 points and never less or 5 + points. Nothing in between.

Optimal TF stop is 12 ticks and nothing smaller, 22 ticks if you want to give it room, and 4 ticks below a retest low for optimal results. This much room can lead to a significant single trade loss though.

I really think stop outs should be manual and only after you trade is clearly not working. The most destructive thing early in my trading career was a mandatory 2 point ES stop. It caused me to take all my losses and get taken out of all my winners.

Remember that the price never does the same exact thing twice and is rapidly evolving. If a pivot is put in that is obvious, the price will often probe for stops 2 or 3 times before moving on. Often pushing deeper each attempt.

My Project

I have shifted my trading operation to refining the way I exploit the inefficiencies of the price. Period. This can be ticks on a fast time frame or a swing trade on a large time frame.

Once you have a sound understanding for structure and direction, you still have a long road ahead in learning how to engage the other players and actually booking a profit consistently.

The odds are stacked way against you even if you trades have a built in implied edge. This is due to the mental aspect and the winners on the market know exactly how to exploit that.

I am working on finding a way to manage these inefficiencies that has the least mental difficulty in execution. Once this is achieved, I will start accomplishing my goals.

July 28 2010 Overlay and Trades

2010-07-28T20:42:00.007-04:00

Very interesting prep overlay today.

My hold visualization and breakout down visualization were the exact length and volatility. The interesting part is that the price followed both closely. Resulting in both a short and long bias.

I had a long and short execution box at the same exact price. The only difference between the two was what the price action did in the extension area.

I am pleased to say my plan held up and produced the correct bias. If you look at the hold (long) bias, the visualization includes one thrust down and return back above the 1106.75 inside support area.

The short bias visualization includes an extension retest (double bottom) below the inside support area and move back above. This is what actually happened. It is amazing to me that my AM reflection and visualization focused on this area and actually produced a pattern in my mind in advance that I was able to draw.

This allowed me to subsequently act on what I saw. This is a powerful concept and demonstrates what constant focus and visualization can do.

However, I did not execute perfectly. This is the other part of trading and much more crucial to ones success in my opinion.

First off, I executed on the TF first since the ES was grinding. You can see that I initially took a long even though the trade was in the middle of the short scenario.

I think this was over aggression due to the action being relatively slow. I did not realize the short pattern was filling exactly until I was talking about it with another trader on Skype.

It was like my subconscious inadvertently stuck the thought out there as I was typing a message about what I thought about direction.

I immediately stopped out my long on the TF and shorted the ES, followed a few minutes later by a short on the TF.

I did not feel great about the long but there was a zone there. I had clarity about the short.

This is what me being a successful trader will come down to. Will I have the discipline to wait for the clarity and be able to separate clarity from deceiving patterns.

The game players know what we look for and will create traps that look good. My gut can filter most but my current battle is making my mind catch up.

There are some very sharp skills showing themselves lately but they are tough to reign in and organize.

July 28 2010 ES Prep posted

2010-07-28T08:14:00.001-04:00

Price is sideways 1116.50 - 1106.75 with an upward bias. Premise is for sideways contraction between this area until breakout. I have illustrated pattern inside structure that I will look for in order to catch a breakout out of this area. Going to play the oscillations until then and stay out of the mid range. Price is still overdue for a downward correction and short side will be prone to constant squeezes

July 27 2010 Overlay and Trades

2010-07-27T22:26:00.003-04:00

I have had a few request this week talk about the differences between the ES and TF and why I have started trading the TF.

I will do a detailed post on this subject tomorrow.

Today's post will be mostly charts. I did not have any ES trades even though the read was solid. We had the 1106.75 inside support zone identified but I did not hit it.

I have been focusing on very high probability entries lately and that requires a retest pattern entry. I more courageous trade would have been to bid into inside support and trust the premise of a sideways contraction after yesterday's trend.

I had a decent TF day. It is interesting that I have been finding my best rhythm and feel by not hitting the initial AM move (which is usually the largest) but hitting the clear pattern entries once I am extremely confidence in bias after the pull back or congestion.

More on this tomorrow. I traded a cup and handle pattern today. You can find this in any tech analysis book. Cups are good long pattern entries and occur frequently. This was a good one and they rarely fail if traded with the correct premise.

I posted a couple charts highlighting the pattern. One is the hard right edge I took a snapshot of just after the entry.

July 27 2010 ES Prep Posted

2010-07-27T07:56:00.003-04:00

***UPDATE to prep 9:15 AM EST....I keep illustrating a test of potential inside support but the freight train continues to drive up. The price will need to come back inside 1116.50 resistance and push through 1114.75 to have any chance of a correction. If price bounces of 1116.50 or just pushes up from here, I will go with the grind up and attempt no shorts until a lower low is put in.

Premise for today is similar to the past week. However, there will be a higher probability of a pull back prior to a continued attempt up. I will look for inside support at 1106.75. This is deep inside support coming off a stretched leg and will be prone to create a sideways market 1106.75 - 1116.50 prior to breakout. premise is the if price does not pull back as it has not for the past week, continue to hit continuations on the grind up, if 1106.75 does not hold, look for test of 1099.50 and tough action in that area. Price continues to be stretch and is due for a correction but has enough steam to push to 1150.00 from here. The short side will remain tough. Keep in mind that it is not worth repeatedly getting stopped out on the short side to hit the one correction down. This action is prone to squeeze.

July 26 2010 Overlay and Trades

2010-07-26T20:30:00.004-04:00

Once again today the price did not come back and test inside support. It has been the same thing almost everyday and I exploited it today.

The read was clear in the prep overlay. Either test inside support and have a higher probability for a downward correction or no test of inside support and grind up all day.

The cause of the type of action we had today gives an opportunistic trader an opportunity to fade what all the retail traders are doing.

This action is the result of retail trades fading the move up over and over again. When they enter short, stops are placed above the action which creates liquidity that the price is drawn to. Thus the shorting actually adds to the liquidity on the way up.

I was able to enter multiple longs on the TF even the the price was stretched. My trading style at the beginning of this year would have had me looking for inside support and then trying to fade or wait until a significant pull back on a day like today.

My trading has evolved more towards exploiting short term opportunities than hitting structured setups. The combination of a clear bias from no test of inside support and good feel about direction kept me out of trouble today.

There was one point where I was strongly considering a short at about Noon EST today when a clear bearish wedge had formed. I did not try to front run it and waited for confirmation.

Then, one simple 3 or 4 tick thrust up prior to the entry confirming made it clear that I was not even going to consider shorting this move up today. It was an example of old bad habits trying to manifest but feel and clarity taking over.

The other notable observation today was that again the TF had more than twice as much volatility as the ES. On the fast time frame I was trading, it looked like a freight train even though it was a steady grind up.

My feel and premise allowed me to see it for exactly what it was.

July 26 2010 ES Prep Posted

2010-07-26T07:55:00.002-04:00

Same premise this morning as we have seen for the past few weeks. Looking for potential inside support and continuation attempt up. Must be aware that price is coming off key 1100.00 area so will need to confirm potential inside support at 1093.50. Market is stretched to the upside. The theme over the past few weeks has been for price to take off prior to testing inside support or to break inside support and correct down. I will be watching 1093.50 closely. If price extends 1099.25, look for a grind up to 1116.50. If 1093.50 does not hold, I will look for a test of 1085.00 and be ready for a deeper correction down.

July 23 2010 Overlay and Trades

2010-07-23T20:48:00.004-04:00

Almost the same post as the others this week.

Continued aggressive winning on the TF and lame action on the ES. The divergence is amazing.

The main difference between the two is less games on the TF. The main difference in my strategy is that I have been simply hitting pull backs and covering quickly then looking for a re entry if my premise remains in tact.

While I missed out on larger moves by covering early in some setups I also scalped others that would have been BE or losses in the past. The tighter exits are higher probability and gives the market manipulators less time to shake me out of a winner.

I do not have much else to add other than some speculation about this weekend.

The price structure is overwhelmingly up. Usually when I see a contraction at the highs I expect a major gap up.

Also, the structure on the higher time frame is extremely bullish. If the price pushes much higher, it could accelerate up and easily test the 1210 area.

However, I will look for some bad news or other primer this weekend to cause a big gap down for Monday. The price rarely does what it looks like.

Let's see what happens.

July 23 2010 ES Prep Posted

2010-07-23T07:57:00.001-04:00

Premise for today is to see if 1099.00 holds or not. Structure is very bullish but price is due for a correction. I see potential scenarios. Either 1099.00 holds and prices moves down to test the 1059.00 and goes sideways with an upward bias or price extends 1099.00 and make a major move to the upside. Today I will watch the 1099.00 area closely and look to fade failed extensions and buy any inside supports that develop. The short side will be tough with the upward structure. If price does start selling, I will wait for a lower low if I do not hit the failed extension and the execute continuations to the next support level.

July 22 2010 Overlay and Trades

2010-07-22T20:40:00.003-04:00

I had the ES early AM inside support pull back identified to the tick but did not take any ES trades.

The 1073.25 inside support area from the prep was hit prior to the open and I do not trade prior to the open. After that, there really were not any good entries for me.

A powerful observation I will share about AM inside supports is that if the inside support is hit prior to the open, it will either just take off and extend a vast majority of the time or come back for the retest and break the inside support level.

This means the zone is far less trade-able if it is tested prior to the open. Usually what happens is that it will extend and move back above the inside support like I like to see but then fail and sell off.

Based on my communication with several other traders throughout the day, there are not many that even hit the inside supports. Especially the blind ones. I think they are powerful areas to trade.

I had 4 longs off the 628.00 area on the TF and went 3 for 1. The stop out was inside where I would usually place a stop but my tactics are different with the TF.

I would rather cut the trade with a small loss (shooting for 1/2 unit) then take large risk. This means I have to play for accuracy. I am OK with this because I have a significant edge on the TF and trade a very fast time frame which gives me plenty of opportunity to fight back.

There are times when I need to hold however. My entry after the stop out for example required more room than the initial entry. It was two completely different types of trades even though they were essentially at the same price and time. I am not going to get into the mechanics of that tonight.

I started to think this evening that it is possible that the intense visualization and depth of the morning prep may have been causing problems with my ES trading. I have not completely thought it through yet but am going to review.

I am certainly not looking too hard at a higher time frame on the TF. I am using the ES as an anchor of sorts though.

July 22 2010 ES Prep posted

2010-07-22T07:53:00.001-04:00

Overall range 1063.25 - 1085.00. Premise for today is to look for potential inside support at 1073.25 and see if price will remain sideways or make an extension attempt to 1099.00. There is an upward bias with the lower highs in place below and I will look for a test of 1099.00. if price fails at 1085.00 and inside support 1073.25 does not hold, look for test of 1061.25 and likely push to 1055.00. Bias will remain sideways to up as long as 1055.00 holds. If 1055.00 breaks, I will be looking for a significant downward move.

July 21 2010 Overlay and Trades

2010-07-21T21:56:00.002-04:00

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.

July 21 2010 ES Prep Posted

2010-07-21T08:01:00.002-04:00

Premise for today is to look for a pull back to potential inside support at 1070.50 and a congestion with a sideways to upward bias. Price is close enough to 1100.00 to get pulled up toward that area for a test. Price is stretched in the and going to be prone to move sideways or grind up. If 1070.50 does not hold, look for test of 1055.50 and potential continued correction down. This is a key area. If price can not get to 1099.00 it could roll over hard. If price tests the 1099.00 area and is able to build inside structure and extend, I will be looking for a powerful continuation up past 1120.00.

July 20 2010 Overlay and Trades

2010-07-20T20:50:00.002-04:00

I had another day with interesting divergence between my ES trading and TF trading.

I was down 2.75 points on the ES and up 3.8 points (38 ticks) on the TF. For those not familiar with the TF the net gain on the day is equivalent to a approx. a 5 point gain on the ES.

TF = 1 point = 10 ticks. Each tick = $10.00 per contract.

The overall direction and macro structure of the indexes is generally the same but I am finding significantly better setups as well as intra trade action on the TF.

I speculate that there are less games being played on the TF thus less fake outs. My first trade today on the ES was my only loss and it was a total fake out. Not a bad bad bet though.

I have revised my trading down to a game of trying to exploit short term opportunities and avoiding getting squeezed. Even trying to ride the squeezes.

I am still visualizing and watching my zones but it is more important to me to consider what others are doing and where they are getting trapped regardless of bias or direction.

I told another trader yesterday that my TF trades look sloppy but produce a constant edge and a majority of my ES trades look very well executed but frankly suck when it comes to production.

I can win playing the ES but have not come close to hitting my goals do to conflicting strategies and mental issues.

It is my opinion that the intra day opportunities on the ES for those who want to trade small size and risk less than 5 points per trade are frequent small scalps (3-10 ticks) that take extreme skill to consistently book.

This is after months of awesome preps and spot on visualization resulting in virtual equity gridlock.

I think that for some reason, the ES right now is a tough mountain to climb in an already extremely tough line of work. I would probably do much better swing trading it with big risk and big reward but that is not a game I can play right now.

So am I divorcing the ES? Right now I am trading both but there will be a separation until I start holding positions overnight.

Today

I had 3 long attempt on the ES after getting stopped out on a lower probability short. That is 3 long attempts in front of a 20 point run up.

I was waiting for a more structured pull back. This is the issue I have been having lately on entries and exits. If I wanted to catch the ES move, I needed to hold and risk 5-7 points with no anchor other than the extension bottom.

Realistically, the best ES long was my short stop out exit price.

The TF provided no clear entry off the lows but offered several good inside support trades and continuations on the way up. The trades tend to work or quickly fail and there are far less fake flash orders and depth stacking which is a nuisance to an observer of details like me.

Keep in mind however that the TF is not for timid traders or those who do not understand where the price is prone to squeeze. It can stomp you quickly if you stay on the wrong side for too long.

For some reason, that type of action better suits my trading style. All this analysis just after a couple days.

We will have to see what happens when things get ugly. It is certain that they will.

July 20 2010 ES Prep Posted

2010-07-20T07:59:00.001-04:00

The 1055.50 area we were watching yesterday was tested overnight. Premise for today is the same as yesterday. I will watch to see if 1055.50 is going to hold. If it holds, look for test of 1069.50 and continued sideways action with a downward bias. If 1055.50 does not hold, look for test of 1044.50 and likely sell off to 1036.50. There is nothing but air between 1055.50 and 1044.50. A break of the 1055.50 extension area could lead to a quick sell down to 1044.50. Overall, the indexes have put in a major lower high and will like to either extend down past 1000.00 or put in a large contraction before deciding on a direction.

July 19 2010 Overlay and Trades

2010-07-19T21:12:00.002-04:00

Another trader suggested over the weekend that I start trading other contracts instead of the ES.

I have been been trading the ES almost exclusively since the old ER2 converted to the TF in 2008. The reason I have been focusing on the ES and reluctant to move into other contracts is that I feel that my feel is extremely sharp for the ES.

The way I look at structure works for anything that can be charted but each contract has it's own rhythm. My premise was the once I was acceptably proficient with the ES I would open up into other instruments.

Lately I have been in a state of gridlock with the ES. While I have many excellent reads and trades, the edge has not been anywhere close to where it needs to be.

I have been reviewing, reflecting, and evaluating almost non-stop for the past 6 months trying to figure out what my problem is.

I said out of frustration over the weekend that I believed the edge right now in the ES is extremely small. Even with premium entries and good reads. It is hard for me to say that something is just simply too difficult or in a state that is almost un-tradable.

I am not wired that way. I believe anything is possible with effort and focus. However, I think there is some relevance to my premise to the extend that there is likely very little edge in the ES for me right now.

Meaning that with my current mental state, strategy, and skill level, there may not be much I can pull out of the ES.

My premise is that the edge is extremely small due to the massive amount of strategies being executed and games being played. Meaning that I can enter at the right areas but have a reduced likely hood of a consistent (non - random) exit.

My gut tells me that to be consistently profitable on the ES, one needs to swing trade with large risk or scalp frequently taking 3-6 tick profits and constantly scratching and re entering.

The few traders that publicly speak of being profitable on the ES are scalping in sequence for small profits while constantly scratching and re entering. I think that is a good way to tackle the ES but requires an extreme amount of skill and also the ability to scale in and out which I do not want to do.

I still do not see anybody else claiming profitability showing their trades consistently so who knows what is really going on.

I was executing on a 100 tick TF chart today but plotted the trades on a 200 tick so they would fit.

It was interesting because I had virtually the same trades but the TF trades setup more clearly and traveled from point A to point B more cleanly.

The is the big advantage I see. The price traveling from point A to point B more cleanly.

There is far less liquidity and seemingly less games being played. I will try to elaborate on this more later in the week.

There is a huge amount I could say about this. More than what most will take the time to read about.

July 19 2010 ES Prep Posted

2010-07-19T08:00:00.001-04:00

Premise for today is to see if 1059.50 - 1055.50 holds and look for potential sideways congestion 1055.50 - 1069.25. There is potential inside resistance at 1069.25. If this holds, bias will be sideways to down. If 1069.25 does not hold, look for test of 1079.50. I will be looking for a test of 1036.50 over the next few days and will have a short bias as long as the price remains below 1079.50. Strategy for today will be to initiate shorts at good prices prior to the move and do not chase. I will play potential squeezes to the long side.

Reply To A Good Question About Prop Firm Regulation

2010-07-16T11:02:00.005-04:00

This is my personal opinion and I am not representing anybody I am affiliated with. I have not stepped into any issues on this blog other than technical analysis before but maybe I should start.

Hey Brian,

I was wondering what you and your firm's take on the recent Steven Schonfeld letter on the troubles of prop traders?

http://notablecalls.blogspot.com/2010/07/schonfeld-letter-to-traders-it-is.html

Hello. I can not speak for the firm but my personal opinion is that this has nothing to do with legitimate prop firms who do not take deposits from traders.

FINRA is a self regulating body for FINRA firms. This is not "new legislation". They are concerned about sub accounts in terms of customers opening accounts and having a registered rep trade their funds.

Prop trading has nothing to do with that. Somebody who has capital has a right to let others trade it privately. The regulation comes in when you accept other people's funds to trade on their behalf. It is apples and oranges.

This looks like to me compliance attorneys once again creating paranoia so they can steal money from businesses. It is pathetic and I am fed up with those who have no talent and no ability to earn from hard work living off the fruits of those who produce.

Schonfeld and others are just trying to protect their money as everybody is being forced to do in this environment of stealing.

Unfortunately, it is affecting those like us who are trying to produce and make a legitimate living.

July 15 2010 ES Prep Posted

2010-07-15T08:01:00.003-04:00

Premise for today is to look for test of 1101.75 and see if it holds or not. If 1101.75 holds, look for test of 1084.50 and potential sideways market 1101.75 - 1084.50. If 1101.75 does not hold, look for continued tough grind up until correction. If price tests and extends 1084.50, look for correction down to 1073.25 and potentially more significant support at 1063.50. Price is very stretched and due for a correction but I will stick with the trend until clear short side structure comes in. The short side will remain tough and prone to squeezes. There will be a good downside correction soon but I will be careful not to take losses constantly fading this move looking for the one good correction. If price starts to trend back down, then adjust.

July 14 2010 Overlay and Trades

2010-07-14T21:24:00.004-04:00

My read was off this morning and it really showed this AM.

I have said before that anytime I mess with my zones while preparing the prep that there is something off.

I moved the 1091.25 resistance area to 1089.50 but the problem was that support was at 1085.00. I had a tough time with my zone reconciliation because there were multiple oscillating bounces and support areas between 1063.25 and the Globex high.

It did not look right and instead of taking the extra time to visualize I produced a cookie cutter zone. This is not typical of how I conduct the prep.

I played the manufactured 1089.50 potential inside support and got chopped with 3 stop outs. I managed them tighter than usual so the net result was not too bad. I knew something was off and should have waited for a clearer setup.

The only trades that were according to plan were the first and the last. I was looking for a short squeeze all day and had a decent plan but I was chasing the entries.

It will never work to chase a squeeze. You need to be in prior to the squeeze or you miss it. If you are able to make a late entry, you become the squeezee.

Action was ridiculous and there was no follow through to the upside as should be expected in this stretched trend up. The short side was also tough as noted in the prep.

I am down a couple points on the week and need to exploit what I can over the next 2 days.

July 14 2010 ES Prep Posted

2010-07-14T07:12:00.002-04:00

Premise for today is to watch for test of 1101.75 and see if there is a reaction. Trend up is very powerful and has not made a significant pull back in days. I will look for potential inside support at 1089.50 just after the open and an attempt to run to 1101.75. If 1101.75 holds, look for a range 1101.75 - 1089.50 with potential contraction at highs until breakout. If price comes off 1101.75 and builds inside support, go with the trend and extension up. If 1089.50 does not hold, look for correction down to 1080.00. The short side will remain tough to hit and shorts need to be initiated at good prices. Late shorts with too much confirmation will be prone to get squeezed.

July 13 2010 Overlay and Trades

2010-07-13T21:13:00.002-04:00

The powerful trend up continues.

My premise today was for an upward bias with a warning that shorts would be tough. It is interesting that my only trade today was a short.

This lead me to start thinking about what it is that I am looking to trade. I have a good read that is correct a vast amount of the time. However, I am still able to put together a series of losing trade sequences.

I came to an interesting conclusion:

Most traders, including myself, spend a majority of their time focusing on where to trade. For example, a specific price or S/R zone.

I am beginning to see that it is much more important relative to achieving a positive outcome to focus on when to trade. By when, I mean timing the entry and timing the exit, not anything to do with time of day.

I by at an extremely good price and the price can move up to achieve a 4 point excursion. However, if I do not properly time the exit, the price could come back and retest my entry. Leading to a break even or a loss.

Likewise, if I exit immediately after I achieve a few ticks profit all the time, I will never be able to overcome my much larger losing trades even with a high winning percentage.

It is the timing of the entry and exit (the management) the drives success or failure.

I could take this a step further and say that on days like today and most other days, the best setups (for timing) are not going to happen in the direction I would like them to.

Otherwise, the market would not be efficient and these obvious setups would be exploited. The more probable occurrence I see intra day is that the opposite of what looks like is going to happen tends to happen.

This is a game of convictions constantly getting tested under pressure of loss with fake outs and illusions.

So today, even though I had an overwhelming long bias and warned about not taking shorts, the only setup I saw that was indeed trade-able was indeed a short. This is what I was able to exploit even though it was opposite my bias.

Any long I would have attempted other then buying the 4:00 AM inside support zone would have been a discretionary entry that was all feel with no defined risk. A trader can win by doing this but it is not my plan right now.

It is important for me to start thinking more about what I can exploit and when to do it as opposed to only where to execute.

July 13 2010 ES Prep Posted

2010-07-13T08:12:00.001-04:00

Price continues to press up. This area is tough for resistance and structure. Inside support at 1073.25 was hit overnight and 1079.50 has been extended. Premise for this morning is to see if price pulls back and holds at 1079.50 then continues to grind up. If price pull back inside 1079.50, I will look for a test of inside support. I will watch this area closely because 1073.25 has already held and will be more prone to break on a retest. I will expect at least a wash prior to a reversal. I will stay on the long side as much as possible until the price shows a clear reversal. Market is due for a correction down because it is stretched but the short side will remain tough.

July 12 2010 Overlay and Trades

2010-07-12T23:26:00.002-04:00

I was looking for a retest of 1063.25 just after the open but the price just grinded up and gave me no opportunity to get long.

I ended up executing a shallow retest pull back that was lower probability but within my plan. It was stopped out the price contracted for the rest of the day.

I took a shot at a perceived upper trendline of a symmetrical triangle forming late in the day and scalped it due to my 2-3 point open equity booking requirements.

There was a re entry attempt but I scratched it after the contract developed a nested contraction which invalidated my premise.

We did get the test of 1079.50 I premised for after the close. Let's see if it continues up or follows today's prep visualization and retests 1063.25 again.

July 12 2010 ES Prep Posted

2010-07-12T08:03:00.002-04:00

Premise for today is to look for test of 1079.75 resistance and see if price will continue the grind up or make a downside correction. I will look for an early AM test and wash of 1063.25 then move up to test 1079.75. Trend up off the 1000.00 area is strong but price is stretched and due for a correction. If 1079.75 is tested and holds, look for potential range 1079.75 - 1063.25. If 1063.25 does not hold, I will look for a correction down to 1055.50 and 1045.50.

Separate Post Of Trading Plan

2010-07-11T23:26:00.004-04:00

********REVISED

1. Enter wholesale and exit retail.

2. Look for what most retail traders are doing and do the opposite.

3. Play like the aggressor. Play as if you are trapping others and exit after the squeeze or push.

*************************************************************************************

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.

July 9 2010 Prep Overlay and Trading Plan

2010-07-11T22:59:00.005-04:00

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.

July 9 2010 ES Prep Posted

2010-07-09T08:02:00.001-04:00

Premise for today is to see if power move up continues or if it exhausts and pulls back. I will play potential inside shallow support at 1063.25. I will look to initiate longs upon confirmation that it has washed and held and shorts if it breaks and gives a good pullback to sell. If there is no shallow inside support at 1063.25, next level of support is 1055.50. If this area breaks, I will look for potential covering and a downside correction. I will stay with the trend up even though price is very stretched and cautiously hit shorts if the price starts to correct to the downside. The short side remains tough as virtually any confirmed entry gets squeezed prior to continuing down. This move needs to correct soon but it is not worth continuously being on the wrong side trying to hit it. I will wait for a clear reversal to aggressively hit and hold shorts.

July 8 2010 Overlay and Trades

2010-07-08T21:44:00.003-04:00

I prepped for a correction off 1063.00 just after the open but the price continued to grind up.

My premise was off almost immediately this morning and I had to adjust. There was no way I was getting long without a pullback to at least the 1055.50 area.

I started initiating shorts after 1063.00 got extended and the price moved back inside. All 3 shorts were irritating because as soon as I had some level of confirmation on each entry and executed, the price immediately started acting like it was going to squeeze me out.

I stuck with the trades. I just did not believe that the price would continue grinding up without a correction. The short side remains completely ridiculous and almost not worth it in this market even though there have been some good shorts in the past month.

The shorts seem like they need to be hit with no confirmation and held though tough micro squeezes against them.

The last couple weeks has been the first time I have seen any follow through to the short side in a long time. Let's see if the bull move up can continue or if the price will break 1000.00 and make a drive down.

My opinion is that the technical action is strong to the upside even though fundamentally, I have no idea who could possibly be buying right now. What I think fundamentally is meaningless however. I do not consider it in my trading.

The 2-3 exit rule kept me out of trouble today and lead to a profitable day on a day where none of my entries went anywhere.

It seems the more I lock up open equity at 3 or 4 points and look for a re entry, the better I do. However, we will need to see how it holds up after a 10-12 point draw.

July 8 2010 ES Prep Posted

2010-07-08T08:07:00.004-04:00

Premise for today is for sideways congestion after big squeeze yesterday. I will look for a range 1063.00 - 1044.45 with the potential for a mid day contraction until breakout. If price starts to sell just after the open look for a test of 1044.75 and likely push through to look for sellers. If price move back inside, look for move back to mid range and congestion. If price continues down, look for minor support and area to cover shorts at 1035.50. I will wait to confirm longs off this area. If 1063.50 does not hold, look for continued slow grind up to 1079.50.

July 7 2010 Overlay and Trades

2010-07-07T20:51:00.005-04:00

I did an enhanced prep overlay in attempt to demonstrate visualization vs. real life action that unfolded where I executed today.

My premise was a little off today with respect to me looking for more of an AM contraction followed by a retest of the top/bottom of the immediate range and move to form inside support.

What we had was just one big grinding squeeze all day. This is the type of day where many traders think what if they had just bought the open and held all day.

Is that a valid strategy most days? Today was a lower probability outcome and I do not expect to make a living off days like today. However, many traders who missed the early AM premium prices spend the rest of the day fading the trend in frustration.

I have learned to try to adjust as fast as I can once I realize what is happening and then pick the best possible later sequence entry with the trend.

More recently (today), I also just wanted to make an efficient exit and lay off engaging too much when the market was prone to afternoon covering (which never happened).

It is worth noting that this week I have been cutting my trades early intentionally. This is something that has consistently worked in the past and I am trying to force it until it becomes habit.

I am the opposite of most traders. I tend to hold too long and give back too many 3-4 point excursions while not catching the 8-12 point moves often enough to compensate.

Of course, as soon as I back off on the stubborn holding to targets everything hits it's target. There is something to be said for getting good results when I am not focusing too much on the perfect execution. Thus, not fighting to the death for every tick.

The complete polar opposite is definitely a proven fact...I have fought to the death for every single tick and failed many times.

The psychological aspect is fascinating. When I directly set out to accomplish a particular act or statistic with my trading, I tend to not get the results I want.

However, when I take my focus slightly off the target I think I need to hit, and zoom out a bit, the desired result tends to happen naturally.

I can not figure out how turn that mode on and off. Once I am able to do that, my edge will be unlimited.

It may be a matter taking my eye off certain aspects of my trading and feel and trying to let my natural feel take over but that can not be produced on demand so far.

July 7 2010 ES Prep Posted

2010-07-07T08:04:00.001-04:00

Price is contracted mid range. Premise for today will be to play the break to either support or resistance. Action will be tough mid range. Price will likely need to build inside structure closer to the edges of the zone in order to have a meaningful breakout. Look for range bound action 1032.75 - 1006.00 and formation of inside support or resistance prior to an initiation of a move out of this area. This is a key area for direction. A break in this area will continue the short term trend down and likely lead to a significant sell off over the next week. If the 1000.00 area holds, it will be a significant lower high and price will make a continuation attempt to the upside.

July 6 2010 Overlay and Trades

2010-07-06T20:24:00.003-04:00

Price did not come off 1026.00 this AM and test potential inside support at 1018.25 that I was premising for.

I identified the major probe of 1006.00 that happened during the Globex session in the prep commentary.

These often lead to major short term reactionary reversals which is what we had pre-market and just after the open.

There was not any opportunity for me to get long. I was looking for an area to fade as a play on the stretched price action. I made a move at the 1032.75 resistance area.

I exited today at the first area of potential inside support with the intent to re enter. This is how I am going to handle my exits for now.

Once a 3 or 4 point excursion is achieved, I will lock up the equity and force a re entry if I want to continue to participate in a premised move.

This is a basic premise that it is more probable to catch two 5 point winners then one 10 point winner in normal market volatility.

I did not re enter today because I was looking for a contraction after the Globex low probe and resistance high probe had occurred. That is what we got today but that contraction included a 10 point sell off to mid range that was trade-able.

EXITS

The theme of my review and commentary in the upcoming weeks is going to be exits.

It has become more and more apparent to me recently that profitability is determined almost in it's entirety by how a trade is exited.

I always knew this as it was one of the first things I learned once I committed to robust training. However, I am living now as I have had one stellar entry after another over the past couple months and it led to sub par results.

It does not matter how good you can read the market or how well you execute your entry if the exit is not consistent and repeatable.

I have been through many phases in my trading journey. When I started this blog over a year ago, the goal was to hold for larger intra day moves greater than 8+ points.

My style has shifted to one that takes profits more frequently thus forcing multiple re entries in a trending market.

This has resulted in me frequently taking 2 or 3 point profits on trades that hit my overall volatility target and then holding trades that obtain a 2 - 4 point excursion followed by taking a BE or loss on the entry retest.

Overall, my trades tend to hit the area premised for. However, price does not move to point A to point B in a straight line.

Management is what drives profit and it is time for me to join one camp or another and stick with it for a major sample size.

I am even considering drilling by taking somewhat random entries and working on managing the outcome. I am confident the where I enter has little to do with my profitability. I will explore this more as we move along.

It is more important intra day how you play the game. As in how you interact with the other players who are actively playing against you and trying to take your money.

Most intermediate and beyond losing traders are forced to give up their money. They often do not lose from being wrong.

I am working on a strategy and protocol that will allow me to be wrong when I am wrong and consistently take profits on my winners as opposed to being driven out of the trade or driving myself out of the trade.

This is a major crossroads in my evolution as a profitable trader and all my effort needs to be put into mastering my exits.

July 6 2010 ES Prep Posted

2010-07-06T08:09:00.003-04:00

Premise for today is to look for potential inside support at 1018.25 and see if price can push through 1026.00 and 1032.75 for an upward correction. There was a significant probe of 1006.00 overnight. If 1018.25 holds, look for a grinding move up to test 1032.75. 1032.75 is a significant resistance area. if it breaks, price could grind up to 1049.75. If it holds, I will look for a retest of 1006.00 over the next couple days. If there is no inside support at 1018.25 look for retest of 1006.00. If 1006.00 is retested I will be looking for and continued move down since this area was probed once already.

June 25 2010 ES Prep Posted

2010-06-25T08:11:00.002-04:00

**Levels in commentary on prep are mis-typed. They have been corrected below.
\
Premise for today is to see if 1066.75 holds. Price has moved off 1129.50 and is making an attempt to retest 1048.75 and 1034.50. Price has pulled back about half way and may get a bounce up off this area. There is some overnight support at 1075.50. This area is the line in the sand for longs above and shorts below (after failure). I expect this to be extended and have illustrated it as an area to work off off. I will be looking for tight congestion just below this area and a break up and through. The next level above is 1084.50. If 1075.50 holds, I will look to get short for an attack of 1066.75 and extension down. Move off 1066.75 looks strong but a good downward scenario would be an extension and fail of 1075.50 follow by contraction between 1075.50 and 1066.75 with a breakout down. I will watch for this.

June 24 2010 ES Prep Posted

2010-06-24T07:53:00.005-04:00

Premise for today is to see if the price continues to trend down or if it make a bounce to the upside. Price is currently trying to break and extend 1084.50. I will watch for a pull back and to 1084.50 or 1090.50 in the early AM and look for a continuation down. If price moves back above 1084.50 and hold, look for test of 1101.75. If price does not retest 1084.50 and moves straight down to 1070.50 pre market, look for move to test 1084.50 just after the open and potential range 1084.50 - 1070.50. There is room for a major move down but price is a little stretched and going to be prone to short squeezes as it moves down. Shorts need to be made at the initiation point of the leg down and not chased.

June 23 2010 Overlay

2010-06-23T23:45:00.003-04:00

Data and connection issues today. Not much to review.

June 23 2010 ES Prep Posted

2010-06-23T08:09:00.001-04:00

Price is drifting in between 1101.75 - 1084.50. There is not much happening here. Premise for this morning will be to see if price retests 1101.75 or moves down to 1084.50. I will be looking for an initial contraction and watch the break for direction. There will likely be one good move prior to the pre Fed contraction. I will focus on hitting trades at the zones directly above and below the current price unless I get a significant directional setup with pattern confirmation mid range. The zones are always in effect but visualization will need to be re-calibrated after the Fed announcement.

June 22 2010 Overlay and Trades

2010-06-22T23:16:00.004-04:00

I had a fight with my bias during the prep this morning. I felt the selling coming in but did not want to believe in an extended and continued move down on the day prior to a Fed announcement.

The positive thing about today is that I would not let myself stand aside. It was not a clean move down and I forced myself to get in and engage. I felt like I was doing something wrong by not being short and that is a good sign.

I have been extremely sharp about knowing my areas and gut lately. The slightly positive outcome is a result of poor management but that is coming around a bit.

I have to admit I hesitated on what I knew was a good trade off an upper trend line at 1113.50 today.

I could feel it but kept flipping back and forth between my high and low time frame execution charts to find an excuse to sell shallow of the 1116.50 resistance area. Then the price moved off 1113.50 as I decided to hit it. That is usually how hesitation works.

I hit the blind short at 1110.00 and immediately took heat. Price pushed 2 points past where I though it would. Then the market went to sleep trading in a 2 point range for one hour. Very rare.

For the first time I can recall, the action actually looked unsymmetrical for a while and it shook me out of the trade followed by a timid re entry and small loss cut trade out of frustration.

I saw the congestion and fake low inside support at 1105.00 but did not believe it would hold at all. This is a good sign. I am getting stubborn at the right areas.

The management was poor and I knew it as it happened. I am close to beginning to eliminate this. It will never be completely fixed however.

I know what my operation is about right now and that is helping. The operation is to reconcile the read and feel with the timing and management.

It is also notable that the last long was a trade made with extreme aggression. I need to see more of this.

I went from being irritated and disappointed today to slightly positive about my trading and that may well lead to trouble tomorrow.

If I draw tomorrow I will fight back.

June 22 2010 ES Prep Posted

2010-06-22T08:06:00.002-04:00

Premise for today is to watch the 1101.75 area and see if it holds. This is a key area and a line in the sand. Price is looking weak as it approaches this area. It would be a good support for a short squeeze. I will watch this just after the open. If it holds, look for a test of 1116.50 and a sideways market 1116.50 - 1101.75 ahead of the Fed announcement tomorrow. Scenario #2 is that 1101.75 breaks just after the open and price starts to sell. If this happens, watch for test of 1184.50 and potentially a deeper correction. An extended move down today would be a lower probability event but structure is set up for that to happen if price clears 1101.75.

June 21 2010 Overlay and Trades

2010-06-21T22:47:00.002-04:00

I started the week with a scratch today.

You can see in my prep that I had a massive long bias. I should have read into my own commentary and shallow inside support more.

I rarely draw inside support that shallow and there is a good reason for it. The only way I could visualize what I premised would be a likely continuation to 1142.00 was if the shallow 1125.25 area held.

Thus, any break of this area should lead to a move to test at least 1116.50 and it did. I know I said that in my commentary but with the early grind and limited conviction I was only looking for long opportunities.

It is notable that I had another short magenta execution box that I did not execute that ended being a good trade.

I am working hard to hit these. I would have never even considered some of these shorts I have been identifying pre market prior to using the drawn execution boxes.

They are opening my mind up to good setups I stayed away from previously but I have to push the button and make a bet.

June 21 2010 ES Prep Posted

2010-06-21T08:05:00.002-04:00

Premise for today will be to see where price pulls back to in attempt to build inside support for a continued move to 1142.00. I have illustrated very shallow inside support at 1125.25. This is indicative of a very strong move if it holds. If the 1125.25 area breaks prior to the open, look for a move back down to 1116.50. If 1116.50 does not hold, trading will be very tough in that area. Price is currently trending up so I will go will the flow until proven otherwise.

June 18 2010 Prep Overlay

2010-06-18T23:48:00.003-04:00

I had a decent read this morning and the execution boxes were well placed.

I could not reconcile the action between the 4000 tick prep and 1000 tick execution chart and mostly stood aside.

There was not much action this week for me to speak of and I ended the week in slightly positive territory.

It continue to execute the more complex sequences and avoid the most basic areas. Today, a bet needed to be made as the price approached the 1109.00 inside support area.

I was focusing too much on the "what if" scenario and wanting to see more evidence that 1109.00 was going to hold. There was too much thinking about what the outcome would be if the price started selling through 1109.00.

My issue lately is not being concerned about my trades working and being directionally correct. It is whether I will be able to stay with the trade as it pushes against me or retests my entry point after an excursion.

This is causing me to try to get too precise of an entry. I can not expect to make a career out of perfectly timing my trades. It will not happen regardless of how skilled I become.

My attempt to hit the precise moment and price I want is actually leading to bad timing.

This is not an exact game and never will be. It is best to just hit the simple areas and get executions painted in my blue and magenta boxes.

I am working on figuring out how to overlay the 1000 tick execution chart onto the higher time frame prep.

I think this will go a long way into demonstrating how I truly visualize the market and may help to reconcile the divergence between my reads and execution.

June 18 2010 ES Prep posted

2010-06-18T07:59:00.002-04:00

Quadruple witching today. Premise for to is to find good entries of key areas as setups are not likely to be clean. Price is contracted early AM. I will look for congestion at 1109.00 potential inside support and attempt to initiate a long if it starts to hold. If it holds, look for test of 1119.75. If 1119.75 holds, look for sideways congestion and likely contraction 1109.00 - 1119.75. If price breaks 1109.00 it will get interesting. Look for test and likely extension attempt of 1101.75. It would be rare for a sell off on an expiration day but price has failed to move up off this area all week. If price extends 1119.75, look for a complete grind up. Price will be prone to congest, contract, then run stops today. There should be one decent AM move followed late morning contraction. If games are being played and market depth is packed I will stand aside today.

June 17 2010 Overlay and Trades

2010-06-17T22:14:00.002-04:00

Charts only tonight.

June 17 2010 ES Prep Posted

2010-06-17T07:56:00.001-04:00

Premise for today is to watch for a pull back to potential inside support at 1111.50 and a continued move to the upside. If price holds at 1111.50, look for a test of 1119.75 minor support and extension up. If price continues to trend it will will likely be a slow grind up above 1119.75. Overall short term upside target is 1142.00 but the market has a lot more room to the upside after that. If 1119.75 holds, look for a retest of 1101.75 and likely extension down and tough trading in that area below. Tomorrow is a quadruple witching day and the market will be prone to contractions and sudden thrusts of stop runs as positions are being moved around.

June 16 2010 Overlay and Trades

2010-06-16T20:54:00.004-04:00

I did not have any trades Monday and Tuesday. This is a result of tightening up my setup criteria too much which always leads to missed opportunity.

I am going back into brief commentary mode for a while. I think the executions and overlay are the most helpful aspects of the blog.

I have to note that I absolutely had the action laid out in advance in the prep commentary. I am not bringing this up tin order to give myself credit. It is actually the opposite.

It is ridiculous that I hit the premise almost exactly day in and day out but do not capitalize on it like I should.

I had a tough break even today after holding an excellent long for too long. I projected a HI-LO washout and contraction. That is what we got but I held for a lower probability trend up.

I still think the price will trend up to at least 1140.00 but the probability today was for a congestion. That is what happened.

I also skipped my first key entry. It is not complicated. I just have to push a button when the black bar enters the blue box.

Experience in trading is watching this stuff work over and over again until you are fed up with yourself and just start trusting your judgment.

June 16 2010 ES Prep Posted

2010-06-16T07:54:00.002-04:00

Premise for today is to see if 1101.75 minor support holds or if price pulls back inside. Bias is up. Price has broken out of the large range that was establishing. Premise now is for move up to 1142.00 area and potentially beyond. If 1101.75 holds, look for potential congestion range 1101.75 - 1111.75 with upward bias until breakout. Price will likely wash out both these levels and move back inside. If price moves back below 1101.75 action will get tricky as price will look to establish new support to continue the move up. If there is no resistance at 1111.75, look for test of 1119.75 and potential range 1119.75 - 1101.75.

June 15 2010 ES Prep Posted

2010-06-15T07:53:00.003-04:00

Premise for today is to see if 1084.50 inside support holds. If it holds, look for test of 1101.75 high and sideways market 1084.50 - 1101.75 with an upward bias. Keep in mind that we are at the top of the overall range 1037.00 - 1101.75 and due for more of a correction downward. This is a key area. If price extends 1084.50 this early AM look for a test of 1075.50 and 1067.75. 1084.50 is not major support so do not make a stand there. If it breaks, follow the move down and look for inside support at better prices. I am anticipating the price making an attempt to extend 1101.75. If it fails again, look for a deeper correction. This is a quadruple witching week which tends to be a bullish week with one good correction down.

June 14 2010 Prep Overaly

2010-06-14T22:18:00.005-04:00

I did not have any trades today. There was only one good setup for me and it was the unconfirmed short off 1102.50 marked by the magenta box.

1102.50 is the September price for the 1106.00 resistance area and top the range we have been watching for days.

My plan is to hit my price regardless of structure at major zones. I obviously broke my rules today and missed a good setup.

My prep had the move visualized well off 1102.75 but the did not pull back to test 1084.50 as I had premised for.

I am having a conflict between hitting my zones unconfirmed and waiting for some type of retest.

A retest and fail should provide more confirmation that the price is reversing and has structure so you can define risk.

However, the fact that the price is bouncing and attacking again means that opposing structure could be building for a zone extension.

Fading the move into the first touch of a zone (providing liquidity) is more prone to get run over and has no structure to use in order to measure risk.

Also, if the trade produces an excursion, it is prone to a retest which opens up the door for trade management errors.

I have decided to press forward with hitting my price regardless of confirmation. It is a bet on my analysis.