August 17 2010 Trade Review

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

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

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

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

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

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

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.