Summary
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I shorted the Euro Futures just before 730pm (PST).
Short E6Z7 @1.4285, stop @1.43, target 1.425
I shorted the British Pound Futures just before 715pm
Short B6Z7 @2.0423, stop @2.043, target 2.039
updates as the trade evolves.
UPDATE (715a PST): got stopped out on both trades. The sad part is that both trades were profitable before I got stopped out, which means that I should have considered using smaller profit targets. My original intention was to place the trade, and hold it through the night. Unfortunately, I never made it past midnight with these trades.
Also, I probably entered the trade in Cable too early, as the real down move in Cable did not begin until after midnight. I am beginning to see a pattern in Cable's behaviour emerge, and will look for this pattern in the upcoming days to see if it is a solid, trade-able pattern.
With Euro, my stop was too tight. That and I also entered the short trade a little too early. Euro would have actually hit my profit target.
I do want to hold these forex futures positions overnight, so I will try again either tonight or tomorrow.
Sunday, September 30, 2007
Forex Futures Trades
Friday, September 28, 2007
Sickening
Summary
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I made 3 trades of the British Pound futures yesterday.
Trade1: long 6BZ7 @2.0173, stop=2.0165, exited @2.0178
Trade2: long @2.0165, stop=2.0158, exited @2.017
Trade3: long @2.018, stop=2.0172, exited @2.0179
I knew that a big move was going to occur in Cable, and had a hunch that the big move was going to be up; however, I felt tired, and didn't have the energy to stay up to see what was going to happen.
The worst trade I made was that last trade. Even though it never hit my stop, I closed out that trade manually. I thought it was taking too long for the trade to unfold, and my eyes started becoming droopy. I was debating whether just to leave that trade on overnight with my stop in place. It was in a nice area which defined my risk. I decided against doing so, and that was the fatal mistake, as I woke up to this consequence this morning:
My trader's intuition turned out to be correct, but my thought process at the time was, "I'm tired, I don't want to risk the 10pts that I made." This meant that my trading decision for that last trade was affected by my previous trades.
Every trade should be treated as a new, and separate trade, like a clean slate, independent of whatever happened before. I really need to learn this lesson quick if I am to ever have any hope of catching the big moves in Cable.
Thursday, September 27, 2007
Plan for Thursday, Sept 27, 2007
Summary
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ES Resistance @1541-1544, 1550-1553
ES support @1530-1534, 1516-1520, 1500-1505, 1485-1490
VAH=1539
POC=1537
VAL=1533
Open gap @1529 (9/25)
Open gap @1490 (9/17)
Open gap @1467 (9/10)
Open gap @1450 (8/28)
This recent consolidation has been captured well enough by the S/R levels that I have identified.
Markets gapped up yesterday, and attempted to, but never completely filled the gap. Looks like the market is gapping up today, and if this recent pattern persists, this gap up probably won't get filled either. In my opinion, an unfilled gap up is bullish, regardless of whether the gap up occurred during consolidation or otherwise.
The market might break above the 1541-1544 resistance zone today. In that case, I will look for a clear trend and sustained move above 1543, and buy the break once I see that clearly happening.
Otherwise, we will be back to the same old consolidation between 1540 and 1530. In that case, I would sell the break below 1540.
Tuesday, September 25, 2007
Plan for Wednesday Sept 26, 2007
Summary
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ES Resistance @1530-1534, 1541-1544, 1550-1553
ES support @1516-1520, 1500-1505, 1485-1490
VAH=1529.75
POC=1526.25
VAL=1524.75
Open gap @1490 (9/17)
Open gap @1467 (9/10)
Open gap @1450 (8/28)
NR5 day.
Yesterday it was sell at resistance, buy back at support.
Today it was buy at support, sell at resistance.
Good to see that my S/R levels are working.
SPY behaviour is starting to align with ES once again, but I will use the ES chart as it better reflects the S/R levels for the futures market.
Volatility has dried up ever since the FOMC breakout. The 5day ATR is just over 16 points, but in reality, the intraday range has been more like 10points - at best. We should be due for a range expansion day.
The resistance zone @1530-1534 could become support tomorrow if we get a breakout to the upside, or stay above the key level of 1530.
If we gap above resistance tomorrow, then I will look for a gap fill play.
Otherwise, if the narrow range, low volatility theme persists for tomorrow, then it will continue to be sell resistance, buy support.
Plan for Turnaround Tuesday Sept 25, 2007
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ES Resistance @1530-1534, 1541-1544, 1550-1553
ES support @1515-1520, 1500-1505, 1485-1490
VAH=1542
POC=1539
VAL=1432.25
Open gap @1490 (9/17)
Open gap @1467 (9/10)
Open gap @1450 (8/28)
As mentioned previously, 1530 level is the key level to watch for this week. As it turns out, ES dropped below that in the overnight session, so we are gapping down to open today's session.
My Resistance level @1541 was spot on for yesterday's trading, and my support zone was just 1 point below where ES reversed in the morning. Not bad.
If ES does not close the gap, then we are headed back down to 1515. But for now, I will see if there is a reversal in the 1515-1520 area and look for a long play on the attempt to fill the gap down.
UPDATE: Out of stupidity, I used Monday's post to write this post, so I have overwritten Monday's post.
If anyone has a copy of Monday's post on file, please forward a copy to me, or if anyone knows how to recover old posts from Blogger, please let me know.
Monday, September 24, 2007
Got Gas?
I am bullish on Natural Gas
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I am told that the October contract will expire on Sept. 26/07, so any swing trades in Natural Gas should use the November contract. That's a bit unfortunate because the lower volume in the November contract means wider spreads which means it is much harder to get into a long position at the right price. Oh well, it just means more opportunities to practice patience.
First, another look at the daily chart:
First order of business is to see if it can stay above the $7 level. If it can do that (and so far, things are looking pretty good), then I will look for a long position to play a move up to the Sept. 18 swing high @7.35.
And here's a look at the hourly chart:
I really like the series of higher lows made after what looks like exhaustion selling on Sept 20/07.
Thursday, September 20, 2007
Plan for Quad Witching Day, Sept 21, 2007
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ES Resistance @1540-1542, 1546-1550
ES support @1505-1509, 1485-1489
VAH=1541
POC=1537.5 (2-day up trend)
VAL=1433.5
Open gap @1490 (9/17)
Open gap @1467 (9/10)
Open gap @1450 (8/28)
I think I just missed out on a good opportunity to hold ES for an overnite trade. ES triple topped today at around 1541, and then dropped for the remainder of the session. I think we will open tomorrow with another gap down, and likely end the day in the red. The FOMC breakout from Tuesday is looking like a magnet right now; I think we will see a retest of that breakout level, if not tomorrow, then sometime next week. The plan for tomorrow is to sell at resistance.
The one possible problem is that we could see a 50% retrace of the down move before going for the re-test. Also, ES chopped around in a 4pt range for much of the morning session before dropping in the afternoon session. With tomorrow being Quad Witching day, we could see more swings and false breakouts.
Here are charts of some other markets that I am watching now:
Natural Gas
Corn
Cable
Trading Results for Thursday
Summary
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I haven't been actively trading the stock index futures this past week, and today was no exception.
I made one trade in ES for one point, and a couple of small scalps in NQ for 2 points.
For some reason, I just wasn't focused on trading the indicies today, and it worsened in the afternoon. There was one setup in the afternoon which I stared at as the opportunity to trade came and went in a matter of seconds.
I'm not quite sure why I have been apathetic about trading the indices this week. It could be the lack of a decent setup, the small range, too much retracing, risk aversion, I don't know. Hopefully I can get past whatever it is and get back to the regular routine by next week.
The other thing that I noticed was during the afternoon session, my performance is not as good as during the morning session. In the morning, I am alert, focused, and ready to make the various trading decisions. In the afternoon, my attention starts to wane, and I lose focus. Perhaps I am not taking a long enough lunch hour break, or that the break that I am taking is not of good quality. This is yet another item to add to the list of things to work on.
On a more positive note, I traded natural gas today for a quick hit and run profit. I also scalped corn and Cable a couple of times in the early morning but with less success. The volatility in Cable makes it an interesting forex futures market to trade, and hopefully with some more research and knowledge, I will use that to increase my success with trading it.
Historic Event
A historic and significant event took place today. Something significant and paradigm shifting could be taking place here.
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The above picture is worth at least one thousand words.
Within a span of a month, Gold ran up over $80 to new 28-year highs.
Crude Oil yesterday broke to new All time Highs.
Euro broke to new all time highs.
The Loonie broke to 30year highs in reaching parity with the USD$.
This confluence of historic events represents something significant, I believe. Not sure what that significance is, but I don't think it is just some random coincidence either.
Wednesday, September 19, 2007
Notes on Forex Futures
Summary
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Here is an interesting chart:
AUD.JPY crossed above the 10week moving average, which sounds like a good time to go long. What makes this currency pair special is that the Australian Federal interest rate is 6.5%, while the Bank of Japan interest rate is 0.5%. So, going long AUD.JPY will pay 6.0% interest as a carry trade.
Anyways, I've read a little bit on Forex, and since there is no AUDJPY forex futures market, I went directly to the cash market and bought 30000 AUDJPY. Just a small starter position to help me learn about forex. Can't wait to collect that 6.0% ...!
On another note, here is another snapshot of the forex futures that I was watching just now:
upper left is the Aussie dollar, lower left is Cable, upper right is the Euro, and lower right is the Loonie.
Somewhere between 11pm and 1130pm(PST) seems to be the magic time when the forex futures markets come to life. I've read that this corresponds to the opening of the forex markets in London time.
The more interesting thing that I get from the above chart is that when a move happens, it happens to all of the currency pairs. All of the currencies in the above chart started moving some time between 11pm and midnight. Even AUD.JPY started moving within that timeframe, so it might not be just the USD$ movements that is driving the moves here. But regardless of the "why's" of this phenomenon, I believe this can be exploited, and will do some further research on this.
Plan for Thursday, Sept 20, 2007
Summary
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ES Resistance @1545-1550
ES support @1505-1509, 1485-1489
VAH=1547.25
POC=1544.25 (2-day up trend)
VAL=1440.25
Weekly Pivot = 1485.25 (touched on Monday)
Open gap @1533 (9/19)
Open gap @1490 (9/17)
Open gap @1467 (9/10)
Open gap @1450 (8/28)
Now that we have FOMC out of the way, the path is clear for new contract highs.
First question is whether we will test the breakout from Tuesday. We had a selloff today which still couldn't fill the gap, so the sellers are not really strong here, at least not yet.
In looking at the charts, I have a bit of a bearish bias for tomorrow. I will look to sell resistance and also look for a gap fill play, and if there is further downside, I will re-enter on a pullback.
But just in case the bulls are strong and resilient, I will watch the 1533 level. If that level is not touched, and there is a push for the mid 1540's, then I will flip to a bullish bias and start looking for long plays.
I have also started studying British Pound Futures. It looks like one of the more interesting Forex Futures markets, and certainly one of the more volatile markets. I might start adding some support resistance numbers for Cable, we'll have to see how things go.
Natural Gas
Boogster:
"....I applaud your bravery for swing trading Natural Gas. It’s one of the most volatile markets in the industry…good luck with that."
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Ok, so Natural Gas went from a smooth, serene, orderly uptrend:
.... to a chaotic, disorderly, rabid dog :
I'm just glad I got out of the way of those wild swings up and down, it would have been hard to figure out.
The volatility in Natty Gas makes it interesting to daytrade (which I may attempt again to do so in the near future), but it is too wild for swing trading. I think it was out of character for Natural Gas to show us that orderly uptrend of the past few days.
Anyways, I need to find a futures market that at least gives me the illusion of following basic TA rules in order to swing trade it. My quest continues......
Tuesday, September 18, 2007
Plan for Wednesday, Sep.19, 2007
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ES Resistance @1540
ES support @1505-1509, 1485-1489
VAH=1521.5
POC=1501 (no trend)
VAL=1494
Weekly Pivot = 1485.25 (touched on Monday)
Open gap @1490 (9/17)
Open gap @1467 (9/10)
Open gap @1450 (8/28)
The last time that the markets broke out on an FOMC day was back near the end of March/07. Here is what that session looked like:
And here is what happened the next day after that massive, sentiment changing breakout:
Quite anti-climactic if I do say so myself. When the market goes through a massive, wide ranging, breakout day like today, it tends to require a couple days to rest and recover.
The real trend does not begin in earnest until after we get the FTD. And the FTD does not usually happen on the very next day.
Will history repeat itself? Who knows, but I know that I'm not going to expect much in tomorrow's action in any case. Probably a good day to stick to my scalping for 2 points at a time.
Update on my Natty Gas swing trade
Summary
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well, I woke up today to find out that I got stopped out on my Natural Gas futures position. I left my stop at 6.54, and that is where I got stopped out. Blecchhh.
I'm looking at the chart of NGV7, and it looks like the drop overnight went from 6.7 down to 6.2, which makes that drop more profitable than the long trade. But there was no way of knowing ahead of time that 6.7 would be a resistance level, because it just wasn't in the charts - not on the daily, not on the hourly.
So, while I'm not happy with the points that I left on the table, I have to accept the fact that I made the right decision to leave my stop @6.54.
Overall, if I had the opportunity to make this trade again, I would do so, so that means that I did make the right trading decisions. It was the market that decided to give me what it gave me, it is what it is.
Well, as I type this, Natty gas has jumped from 6.35 up to 6.6 in a span of 5 minutes. Looks like some crude oil shorts got real scared, and the short covering in crude is dragging Natty gas up with it. I will take another look at Natty gas tonight.
Monday, September 17, 2007
How I am Swing Trading Futures
Natural Gas is my vehicle for taking a stab at swing trading futures.
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I had been monitoring Natural Gas (NGV7) for much of last week, and when it busted out of its mini-resistance level @6.4 earlier this morning, I entered a long position on a pullback.
I went long QGV7 @6.465, and got stopped out @6.43.
So, after that I got a bit frustrated. I stepped back to take a look at what I was doing wrong. I took a look at the chart from different time frames (daily, 60min., 15min.). I think what happened was that I had the right idea to buy on a pullback, but I was using too tight a stop. Natural gas swings around wilder than a gorilla in heat.
I knew Natural Gas was going to make a move sooner or later, so I devised a plan to best prepare for that move.
First I did some research to prepare for the big trade.
Planning and Preparation
I went to the seasonalCharts website to confirm that indeed, Natural Gas is bullish during the months of September. In fact, both Natty Gas and Crude are bullish for all of September.
Then I went to check the daily chart of the Crude Oil to Natty Gas ratio. This ratio just touched the high end of its 1 year range yesterday, so there would be a bias for a reversion back down to the average ratio at around 10.
Then I went back to the daily chart to ascertain support and resistance levels. I noticed that the 50d EMA was sitting at around 6.40, but NG never made it down to that level today !
Another thing that I noticed on the daily chart was the Mirror Image Formation.
So the daily chart was looking encouraging. But what about the hourly chart?
The hourly was looking pretty sweet as well. One thing that I noticed was a double bottom @6.28 that was put in near the end of last week. That just reinforces the uptrend.
So, it is easy to see that there were actually a lot of things working in favour of an run-up in natural gas. The time of year, the daily, and the hourly were all lined up for a run-up. It broke above the 50d EMA, and had a Mirror Image Formation to back it up. I took a second look at the Natty Gas volume chart and noticed a box play formation setting up.
This was starting to look like real sweet, juicy, and compelling low hanging fruit to me. The only question was to plan out how much I was willing to risk in order to let the trade work out.
Trade Psychology
There is a bit of a mind game at work here (inside my head, that is). I have always dreamed about swing trading futures, but never had the courage to do so. Probably I was scared off by the high leverage - a couple of 10pt stop outs and your account will be hurting. And it has been a while since I have swing traded anything, let alone a futures contract. Am I scared? You bet. So that is why I had to do all this research to overcome my own fears. I had to convince myself that this is a good risk-reward scenario, and worth the risk of the wider stops that I would have to employ for swing trading. I tried to imagine getting stopped out on a 10pt stop and tried to imagine how I would feel about that loss. I had to become comfortable with the idea of losing that much money.
Trading Plan
So once I convinced myself of the opportunity, it was just a matter of waiting for a setup. The setup came with a box play pattern that was shaping up. In retrospect, it wasn't really a true box play pattern (since there wasn't at least two distinct rejections the same defined resistance level). But there was also a descending triangle pattern, which kept testing the 6.42 level. Each time, it would find buyers who pushed it back up. I then realized that I could use that level as my stop loss point. Now it was just waiting for an impulse push up. As luck would have it, my impulse push up occurred 5 or 10 min. after I had identified the 6.42 stop loss point. Everything was set, so when I saw the whoosh up, I went to market with a long position. I got a bad fill @6.47, but I did not care, since I was planning to hold this position overnite.
So, I am currently long QGV7, entry @6.47, initial stop @6.42, target = 7.0. I have since raised that stop to 6.54
Thursday, September 13, 2007
Discovering the Forex Futures
Summary
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The SnP eMini had real low volume today, but I tried to trade it anyways, and got real small profits, a lot of wasted effort, and ended up with a loss for the day.
In a low volume environment, pullbacks can look like reversals, only one or two big trades is needed to drop the bid/ask spread by a few ticks, and it becomes easier for the locals to gun for stops. Tomorrow, I am anticipating more low volume action, so I am leaning towards not trading the SnP500 eMini altogether.
In the meantime, I have discovered some interest in the currency Futures. In particular, I have noticed some interesting behaviour as illustrated by the chart below:
In the above chart, the Australian Dollar is in the upper left hand side, the Loonie is in the lower left hand side, the Euro is in the upper right hand side, and the Cable is in the lower right hand side.
The first interesting thing that I noticed is that the same general trend persists in all 4 currencies, and that is up. The second interesting thing that I noticed is that volume started to appear more or less around 11pm (PST) for all four markets. It does make me wonder whether it is the same participants that are trading all four currency markets, although the price action seems to suggest different market participants.
The currency futures are currently more interesting to watch and even trade than the SnP500 eMini. I will start researching some more into the currency futures markets, especially the 4 currencies in the above chart.
UPDATE: I traded the Euro for a 15tick profit. I will have to start thinking about creating a second trading journal to track my trades in the other futures markets.
Wednesday, September 12, 2007
Some More Interesting Charts
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The Loonie has proven in the past that it can run for 4 consecutive days, so if it does have one more up day left in its tank, contract highs @0.97 would be the target.
Given the bullish sentiment in Crude Oil, Natural Gas looks primed to continue its run-up. Target 6.80
Gold looks ready to pull back a little. Possible downside target would be a 23.6% Fib RT @710-ish.
Plan for Rollover Thursday, Sept 13, 2007
Summary
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ES Resistance @1493-1497, 1505-1510
ES support @1481-1485, 1448-1452
VAH=1490.5
POC=1487 (2nd day uptrend)
VAL=1485.5
Open gap @1505
Open gap @1466
Open gap @1451
Contract rollover has screwed up my resistance/support numbers. I've tried to extrapolate them based on the Sept. contract and the chart for the Dec. contract. This kind of tells me that I should take it easy tomorrow and not try to push as hard for a winning trade.
Anyways, for the bullish scenario, I will need to see volume and a sustained move above 1495 in order for me to consider going long.
Otherwise, I could see a potential double top scenario near today's Highs. Sell resistance, buy support.
Trading Results for Wednesday
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Green=Long
Red=Short
Yellow=trade signals not identified in real time.
Trade execution details are in my trading journal under the system tab.
Today I performed well in the morning, but my performance degraded as the afternoon session wore on.
I went through my morning routine again, and this time I was mindful of controlling risk, and was fully aware of how I can screw up trades. So I was cautious, and yet focused on getting my first win. Once I got my first win under the belt, I felt much more relaxed, calm and collected.
Then I got bored. So I turned my attention to other things, like posting a review of my previous trade made yesterday.
But I was still bored. Maybe I should have quit at 11a, since I collected my points and was satisfied with everything up to that point. But of course, I did not call it quits and continued to monitor the market looking for a trade.
My last two trades were the result of boredom and a lack of attention. The second to last trade, I should have kept my homework up on a separate browser tab, but forgot to do so when I entered the trade. Had I referred to my homework, I would have known to exit anywhere above 1480, since 1481-1485 was a resistance zone that I had identified.
In the last trade, I was just careless, and thought that the market would bounce after the tick extreme was made. Sometimes it does and sometimes it doesn't but the bigger problem was that I did not wait for confirmation. So when that premise did not turn out correct, I should have exited right away. Instead, I stuck around to eat the 1.5 pt loss.
I was pretty disappointed after that, because I felt I had worked hard and done well up to that point.
But at the end of the day, I did not lose money today, so I guess it wasn't quite the horrendous failure of a day for me. I am learning now to fully accept responsibility for my mistakes. Today is another day and another opportunity for me to redeem myself.
Trade Review: ES
Summary
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Markets are slow, so I thought I would review one of the more interesting trades that I made yesterday.
Details of the trade execution are documented here.
1. Why did I take this trade?
ES gapped up, and had two opportunities to fill the gap, but instead, buyers came out of nowhere to lend support at the 1461 level. I interpret unfilled gaps as a sign of strength.
During the lunch hour dead zone, markets came down to re-test 1461, and when the sellers couldn't break below that level, then that was a sign of a possible reversal. What confirmed it for me was the pullback that reversed at around 1030a - this was a higher low. I got long @1466.5 at around 1033a.
2. What was the initial stop?
Right around the pullback reversal area, @1463. If the reversal failed, I should see it just before it dropped down to this level.
3. Why did you exit where you did?
In my homework, I had previously identified 1467-1471 as a resistance zone. When momentum stalled out just above 1472, I decided it was time book my profits.
4. Is there anything you would do differently?
Instead of waiting for it to break above previous high point @1467, I should have gotten in as soon as the pullback reversed, between 1464-1465. That would have minimized my amount at risk.
Tuesday, September 11, 2007
Plan for Wednesday, Sept 12, 2007
"The general who wins a battle makes many calculations in his temple before the battle is fought."
- Sun Tzu
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ES Resistance @1481-1485, 1496-1500
ES support @1467-1471, 1436-1439
VAH=1472
POC=1466.5 (3 day downtrend reversed, 1st day up)
VAL=1464
Weekly pivotPoint= 1469.75
Open gap @1490
Open gap @1480
Open gap @1455
Open gap @1437
Suffice it to say that ES/SPY has been behaving unusually out of character lately. In today's session there was a below average size range (15points), the creation of a 4th unfilled gap, and no 10pt run. And I really thought that the bears would be able to take it down to test the 1435-ish level, but the bulls have responded once again. As I see things, we are back to the standoff, in the neutral zone between 1470-1480. The theme for the past two weeks (as indicated by the chart) is mean reversion - breakouts and breakdowns that are unsustained, and as a result fail.
Since there are no market moving economic reports coming out in tomorrow's session, I am anticipating more of the same mean reversion theme. Granted, today there was a continuation of yesterday's uptrend, but I don't see how it will be strong enough to overcome two gap downs - I have not noticed any significant shift in market sentiment to cause a major run-up tomorrow.
That said however, if it can sustain a move above 1485 for more than 15min, it may have enough momentum to fill the gap @1490 as well.
But if the theme of mean reversion continues to persist for tomorrow's session, then I plan to buy support and sell resistance.
Right now, in the overnight session, it seems to be drifting down towards the low end of the support zone, so if it gaps down below support to open tomorrow's session, then all bets are off and I will have to come up with a new plan.
Trading Results for Turnaround Tuesday
Summary
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Today I performed much better.
I did not chase, I did not force trades. I might have made a couple mistakes early on in the session, but I did not let that get me frustrated. I certainly did not rush into any trades this time around, so that was one of the big differences today.
It would seem that the keys to my success lie in figuring out how to overcome my bad trading habits (which seems to pop up at the most inopportune moment). Sounds pretty simple and obvious, doesn't it? I need to start thinking more about risk, and being more consciously and mentally and constantly aware/mindful of the many different ways that I can screw up a trade. Most of it has been documented here anyways.
I went thru my normal morning preparation routine - make a note of anything interesting that might have happened in the overnite session, drawing out the overnite range, reviewing my plan, and of course, reviewing my trading rules.
The change in risk tolerance occurred again today. After I got the nice 5pt winner (see my Trading Journal in spreadhseet form under the system tab), I suddenly turned risk averse. There were at least two setups following that winning trade that I spotted which would have been nice winners, and I only took one of them. And even in the one that I did take, I exited quickly for a 2 tick profit, whereas if I had let the trade bake for just a couple minutes longer, I would have bagged a couple points at least.
I think I mentally eased the foot off the gas pedal, and was no longer actively focused in my search for more winning trades. Not sure if that is good or bad.
Monday, September 10, 2007
Trading Results for Monday
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Today I performed poorly.
I did not go thru my morning preparation routine, I did not take a few minutes to survey what was going on in the various markets - at the very least I should have taken the time to see where the other markets had gapped up or down. Instead I just jumped right into trading without thinking.
The second problem was that when I saw price was below my projected resistance zone, I started to trade counter to the trend on the rationale that it would actually rise to my resistance zone before reversing. In fact, I thought I would go to 1470, and was trying to play that move. That bias led me to ignore what the chart was telling me.
Lost most of what I worked hard to earn last week, so that really sucks.
I must take a break to regroup the next time that I make a couple of bad trading decisions.
Sunday, September 09, 2007
Plan for Monday, Sept. 10/07
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ES Resistance @1467-1471, 1481-1485, 1496-1500
ES support @1436-1439
VAH=1463
POC=1458.25
VAL=1455.25
Weekly pivotPoint= 1469.75
Open gap @1490
Open gap @1480
Open gap @1437
In theory, the plan for tomorrow should be simple and straightforward. Wait for a move up to resistance and then go short. There might even a gap down that might be playable in the first half hour.
In reality, the market will not make it easy to execute this plan. There might be some fake breakouts above resistance. After all, it was totally unexpected that ES could even move up as far as 1467 on Friday. If that is the case, it is probably best to play it safe and wait for confirmation of a reversal before going short, even if that means sacrificing the first few points of the move just to be sure.
The Loonie (D6U7) has also broken below support @0.9465 in the overnight session. I don't understand why it is behaving so weak, but have learned not to question the chart. If there is resistance @0.948 - 0.949, and some volume on another break below 0.946 in tomorrow's session, I might consider going short.
Some Interesting Charts
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I mentioned previously that Gold touched new 52week highs on Friday. As further evidence of something happening in the gold sector, check out the ratio of HUI to Gold. Also, Gold in terms of every major currency is in an uptrend.
All of the major currencies (Yen, British Pound, Euro, Loonie) are in healthy uptrends. The Yen looks like one of the stronger ones.
The Loonie looks interesting because of the range bound action looks sort of like a box play patttern, with the 10d and 50d EMA trending up.
The biotech sector also seems to be picking up some bids:
And last but not least, here is one intended more for entertainment purposes, but is interesting nonetheless.
Friday, September 07, 2007
Trading Results for Friday
Do not predict, nor prognosticate, but rather, WAIT for the chart to tell you what it is doing !
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The green arrows represent long trades that I made, while the red arrows represent short trades that I made.
Ok, I did much better today.
I was patient, and waited for the low hanging fruit. I did not chase, and did not force any trades. At least not until late, late in the afternoon session, where I tried to front run some short covering ahead of the weekend. My premise was correct, but I should have WAITED FOR THE CHART TO TELL ME WHAT IT WAS DOING. That has been my mantra ever since I started this, but sometimes, I ignore this time tested piece of advice in the heat of battle, when you fear missing out on the trade. Fortunately, that slip up late in the day did not cost me too much.
The market was behaving much better today, as the retraces had follow thru, and the breakout and breakdowns also had follow thru, unlike yesterday's directionless chop.
I also felt I did well to prepare for today's session, as I followed the advice I gave to myself yesterday and drew out levels for the overnite range, and the opening range. I kept drawing manual trendlines until I saw the opportunity to enter my trade. I had a bias for a trend day today, but fortunately, drawing those manual trendlines helped to change my mind and remain open to the message of the markets.
The plan I laid out from yesterday was pretty much invalidated by the gap down. But I kept the support/resistance numbers open in another tab, and that led to my first winning trade of the session, a play of the gap fill. That felt good to have some of my homework pay me off !!
Thursday, September 06, 2007
Plan for Friday, Sept 7, 2007
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ES Resistance at 1481-1485, 1496-1500
ES support @1467-1470, 1436-1439
VA= 1479 +/- 3pts.
Open gap @1490
Open gap @1461
Open gap @1437
NR7 day today, and also the narrowest range in the past 31 trading days.
In the bullish scenario, go long on any move above 1484 that is sustained for at least 15min. or more.
In the bearish scenario, go short on any move below 1467 that is sustained for at least 15min. or more.
The way that price action has been chopping and creeping upwards in the past two sessions suggest the odds might favour a break to the upside. Watching the OR in comparison to the overnight range will be important for tomorrow's session to ascertain direction for the day.
Gold
Gold is looking good on a pullback down to the 699 area. Gaps do not seem to have as big an effect on gold as it does for ES. Playing the pullback down to support might not be a bad idea either. I will check to see if the downtrend line remains valid tomorrow.
Trading Results for Thursday
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Today, I performed poorly. I probably overtraded a bit, but I don't think it was as bad as it could have been. The afternoon session was just plain messy. Neither breakouts nor broken trends had any follow through, so it was practically range bound for the whole afternoon. You can draw a zone around 1479-1480.5 and see that this zone was touched periodically for the whole afternoon session. The other problem was that ES did actually have a sustained move above 1481 for over 25 minutes before reversing. That was a nasty head fake.
And yet, I tried to trade it, which meant I forced the situation. I think I started to lose focus when I made those bad trades in the afternoon.
I was patient until I started losing money trying to trade the afternoon mess, it was better just to walk away with what little gains I had at that point. That is something that I will have to work on, accepting little to no gains, or even small losses for the day.
The other mistake was that I tried to short near a support level. I'm not sure why I did that again. Going long on a sustained move above a resistance level was part of my plan, but shorting a move to support level that was not sustained was not part of the plan. That was just plain stupidity and lack of awareness of support zones that I had previously drawn out.
The other thing that I noticed about myself is that my risk tolerance changes depending on whether I am ahead or behind for the day. When I am in the red, then I do not hesitate to take on too much risk. However, when I am ahead in the green, then I hesitate to even take on even a little risk. This one I will have to ponder for the weekend on how to address.
Wednesday, September 05, 2007
Plan for Thursday, Sept 6, 2007
Summary
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ES Resistance at 1480-1484, 1496-1500
ES support @1467-1470, 1436-1439
Open gap @1490
Open gap @1461
Open gap @1437
ES touched support @1469 several times today, and it should have been my signal to go long, but for some reason, I was just not very inclined to do so. I think part of the reason was because I was actually anticipating more downside, and that big push down never materialized. The other problem was that I forgot to have the 15min chart on my other screen, so I simply forgot about the support level @1467-1470.
Today was a bit of a stare down between the bulls and bears. After the morning drop, any move above 1477 could not be sustained, nor could any push below 1471. The biggest and cleanest run was the 10pt drop just before the 7am reversal time this morning, and any run after that was filled with 2pt chop and 3pt retraces. It was not such a bad idea to stand aside and watch the chop from the sidelines today.
For Thursday, the main question is which gap gets filled first? It is unusual to see so many unfilled gaps in the S&P500, and could be indicative of more churning ahead.
In the bullish scenario, if there is any sustained move above 1481 for more than a candlestick or two (on the 15min chart), and I will look for a long play of the gap fill @1490.
In the bearish scenario, if there is a sustained move below 1469 for more than a candlestick or two and I will look for a short play of the gap fill @1461.
In either case, since I will wait for confirmation before entering a trade, I am not expecting any big 10pt plays, more likely a 4 or 5 points.
Trading Results for Wednesday
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Yellow arrows represent setups that I was not able to spot fast enough in real time.
Ok, things relatively well for me today.
I've posted my results in a trading journal in spreadsheet form. It can be accessed under the System tab at the pulldown menu at the top of this blog.
Today's big win came courtesy of the real time chat room service that I am still subscribing to. Other than that, I basically did very little today.
I could tell with all the long wicks in most of the candles that it was very choppy trading after the 7am reversal time, so I took it easy, and did not chase, did not force any trades, and most important of all, did not overtrade.
Whether I did well in the aspect of discipline was hard to say, since I made so few trades, there wasn't enough trades to give me the opportunity to make mistakes !
I did review my rules, and reviewed what happened in the overnight session. It did not change my approach too much, which was to look for shorting opportunities. I did think about playing the gap fill attempt, but changed my mind as soon as I saw that double top on the volume chart.
One thing that I can improve upon is to take my setups when the signals present themselves. There were at least two occasions where I passed on a valid setup which would have led to a couple of points profit. It would seem that I have swung the opposite extreme - before I would not hesitate to take too many risks, and now I hesitate to take any risks at all. I think this will require a bit of focus and alertness to resolve. I do notice that my focus tends to decrease in the afternoon session, so I may need to do something during my lunch break to address this issue.
Tuesday, September 04, 2007
Plan for Wednesday, Sept 5, 2007
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ES Resistance at 1496-1500
ES support @1480-1484, 1466-1470, 1436-1439
Open gap @1461
Open gap @1437
Today would have been a nice trend day were it not for the late afternoon selloff. SPY has carved out a nice uptrending channel in the past 4 sessions. It tagged the upper end of the channel, now I believe it is time to test the bottom end of the channel. It is already nearing the lower end of the channel in the overnight session, so we will get to see how much support is at the 1480-1484 support zone.
Note that in the past 4 sessions, every gap down has been filled, but every gap up has NOT been filled. Despite the low volume, buyers are very much in control of the situation here.
If ES can sustain any movement above 1491 for more than a candlestick or two (on the 15-min. chart), then it might be time to look for a play of NQ on the long side. Failure to hold 1480 pretty much means a drop to the next support level @1466. We may even see an attempt to fill the gap @1461, although I would be surprised to see it occur tomorrow.
The more likely scenario might be some range bound consolidation between 1485 and 1495 to digest the run-up of the past 4 days.
Trading Results for Tuesday
NQ: made +6pts
ES: made +0.75pts
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Today I was patient enough. I did not force any trades, and I did not overtrade. When ES chopped its way up in the afternoon session, I did not chase, so neither did I get chopped up.
Today, I knew that NQ would lead the way on any breakout, and even stated so in WallStreak. Unfortunately, I was unable to follow through, and returned to trading ES, even though I believed that the better return would be found in NQ. Old habits die hard, perhaps?
I also did not map out a general plan and strategy for today. I think writing down the general trading plans helped to organize my thoughts, so I should continue to write them out.
I did not spend any time in the morning reviewing the overnight action, and noting the overnight ranges, and previous day's ranges. So, I was not as prepared for today's trading session as I could have been.
My trade management definitely has room for improvement, but that might become next month's objective. For this month, I know I will experience the urge to overtrade probably over the next week or so, and it always occurs when I least expect it, so I must remain aware of my thoughts and emotions as I go through the trading session. Today I think I did well, but tomorrow is another day.
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