Wednesday, September 12, 2007

Trade Review: ES


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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.

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