I couldn't help myself, and traded the afternoon session today.
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I went into today's afternoon session with a model/hypothesis in my head. Many stocks have a nice little run-up ahead of earnings, and then sell off once the earnings report is released. Well, the S&P500 eMini Futures market seemed to be following the same pattern in my mind - for the past week, it trended up towards resistance, and once today's "earnings" report (via the FOMC interest rate announcement) was released, there was a knee-jerk sell off in response to the news. But this was a selloff amidst an uptrend with bullish bias intact, so I thought it would be just a temporary pullback, and not a real bearish, sentiment-changing selloff. I watched the tape for confirmation of my hypothesis, and saw the First-Thrust-Pullback pattern unfold before my eyes. The initial reversal from 1534 occurred very quick. It took just over 5minutes to drop from 1542 down to 1535, and just under 5minutes to run from 1536 up to 1542, which doesn't sound very fast, but I perceived time to pass by very quickly while I was watching the tape. The trade rate must have been five or six thousand contracts per minute, some institution was dumping their positions at a furious rate, and another institution must have been just waiting for that dumping to finish so that they could kick off their buy programs. In any case, when the trade rate spikes up like that, it must be a pivotal moment. When it ran up to 1542, I tried to enter a long trade. I had thought that the pullback was from 1543 down to 1540, but it turns out I was obviously too early, and the pullback was deeper than I expected. I estimated a 50% retrace from 1534 to 1542 would be somewhere around 1538, so that was where I placed my initial stop. I did a double take and shook my head in disbelief to see the market come down to the EXACT tick just to take my stop out. But I've had this happen to me so many times now (watching the market take my stop out before continuing on in my expected direction), that I was unfazed by my initial 3pt loss. I knew it was just a pullback. I continued to watch the tape chop around at 1539-1540. When it tried to challenge previous mini-resistance @1542, I knew that this was "it." I immediately entered a limit buy @1540. I didn't have time to setup a bracket order, so I entered my stop after I was filled. I then proceeded to do some other "stuff", and only checked in on the markets every 5min. to move up my stop as per the 20bar EMA trendline. When the market peaked @1558 and started coming back down, I had a decision to make - should I play for a possible second leg up, or take profits now? Since we were nearing the last hour of the session, and thoughts of a last hour reversal popped into my head, I decided to play for a possible second leg up, and moved my stop up to 1551.25, and left it there. If the market dropped down to 1551, I thought there would be a low probability of a second leg up.
Anyways, the key to success for today's trading was being able to recognize the First-Thrust-Pullback pattern in real-time. Though my initial attempt to play this pattern was not successful, that did not imply that the pattern had failed, rather it just meant that I had to re-adjust my trading and use better stop placement.
The funny thing was that the market again retraced 50% of the move up before reversing to end up @1552-ish for the day.
Wednesday, October 31, 2007
Trading Results for Wednesday
Tuesday, October 02, 2007
Trading Results for Turnaround Tuesday
Summary
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One of my best performances in the past 3 weeks.
The above results were all accomplished with one contract in every trade. Now does that mean I am ready to bump up my size? Heck no. My account equity will tell me when I am ready to double my size.
As I discussed previously, I am still making mistakes and lacking patience in holding my trades long enough to let it develop. But fortunately, today at least, the market forgave my mistakes.
Volatility in the stock index futures (ES, NQ) has dried up. The only trading opp. availabe was a short in the first half hour of the session. I missed out on that, and as a result did not trade ES. But I did make a couple 2 and 3 tick scalps of NQ, for a measly profit as you can see.
The trade in CAD futures was an impulse trade, and I deservedly got burned for it. 
I shorted at pretty close to the bottom of the move in CAD. Price was dropping all morning, and I ignored the signs of capitulation (price action got real jumpy and choppy right around the time that I shorted it). You never want to short after price has dropped ..... 90points !!!
For some reason, CAD futures seems harder to trade. Not sure why that is, but for sure it behaves different from Cable.
I've talked about my trade in Natty Gas, British Pound Futures and Wheat, so the last one is the soybeans trade:
There were a ton of trading opportunities in soybeans today, but I got fixated with looking at those big sizes on the ask in the wheat market, which ground the wheat market down to a virtual halt (I talked about them in Wallstreak, but Wallstreak seems to be down at the time of this writing, so I cannot provide a link). And Yes, obviously I should have held onto the second short longer - the market was proving me correct (and never proved me incorrect), so there was no technical reason to exit. I'm working on it, okay???
The important thing was I got off to a good and profitable start today, and as a result, I did not push for trades, did not overtrade (which makes it easier to review the trades that I did make), and did not get frustrated at missing my setups. I was mindful of assessing risk in each scalp that I made, and documented most of the trades that I made today.
A good day all in all.
Tuesday, September 18, 2007
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.
Wednesday, September 12, 2007
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.
Friday, August 17, 2007
Results for Friday, Aug 17,2007
On the rebound.
Made +5pts.
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Trade1
Trade2
Trade3
Trade4
Trade5
Trade6
Trade7
Trade8
What I did right:
- did not overstay my welcome. Most trades were held for less than 3minutes max. I was basically exploiting inefficiencies in the market, and as soon as the surge of buying/selling stopped, I was out.
- In most of my trades, I reduced and removed, and did not give a chance for the market to prove me wrong.
- market conditions changed, so my plan changed. I drew up a new plan and stuck to the plan. Waited for confirmed trend or break of trend before entering. Did not trade during the lunch hour.
- waited for my setups to ..... to setup.
Trade1 was a play of the breakdown of support @1442.50
Trade2 was a play of the first thrust-pullback pattern off the gap-fill bottom @1426
Trade3 and Trade4was a 61.8% Fib RT play
Trade5 was a play of the break above resistance @1438
Trade6 was a play of the bounce off my manually drawn trendline.
Trade7 was a trend continuation play off the 76.4% Fib RT
Trade8 was a play of the break above double top resistance @1449.
- was patient. This meant letting some additional setups that I saw come and pass without taking a trade. I don't have to trade every signal that I get.
- kept persisting in drawing my manual trendlines. Those helped me a lot with my trading.
Obviously there are a gazillion google of things that I can improve upon, such as letting my winners run just a little bit longer, or trade in the direction of the ADX trend. But it's good a good start to get some wins under the belt, and boost the confidence level a bit.
Wednesday, April 04, 2007
Khan Resources Inc.
I swing traded Khan Resources Inc. (TSX: KRI).
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1. Why did I take this trade?
Because Khan Resources (KRI) is a uranium stock, and it showed some heavy breakout volume yesterday morning.
2. What was the initial stop?
I placed the initial stop at 4.09, for a risk of 4 cents.
This morning, I moved my stop up to $4.26, then to $4.40 on the remaining half of my position too soon.
3. Why did you exit where you did?
Volume was less than yesterday, and it was stalling out at 4.70, even though there was heavy volume.
4. Is there anything you would do differently?
I should have doubled my position size. High probability, morale boosting plays like this don't come along very often in this sort of a market environment that we're in.
Tuesday, March 27, 2007
DayTrading Mega Uranium
I Day traded mega uranium (TSX: MGA) near the end of the day.
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6.25 was the resistance level on the daily chart for Mega Uranium (MGA). I had an alert level set @6.25, but I happened to be stalking it at the time, so I was able to see this breakout develop.
Once MGA crossed the $6.20 level, the price action started to come alive. I saw 65K shares on the ask @6.24. The bid started @6.20, then went up to 6.21, then 6.22. When the ask @6.24 went down to 45K shares, I decided to put in a limit bid @6.23. I lucked out and got filled (I was prepared to buy @market), and soon afterwards, I saw that the ask went down to 20K shares. Once all 65K was consumed, away we went. I watched the tape closely for any signs of stalling. No sign of momentum waning until I saw 50K shares on the ask @6.40. Immediately I sent my limit sell @6.39 and got filled within seconds. Again, if there was any delay, I was prepared to sell @market.
Fastest and smoothest $0.16 I've made in weeks.
Monday, March 12, 2007
Base and Break Works
Only required ingredient for the base and break pattern is a little bit of patience.
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If a stock really, truly wants to run, it will provide a second chance. I caught FD on the second chance. The only problem I had with FD was that I couldn't press my advantage with bigger position size because I still have other positions open.
UPDATE: sold FD @45.34 just after 1130A (PST)
Thursday, March 01, 2007
DayTrading Research In Motion
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I daytraded Research In Motion (RIMM) this morning. It felt good to have this small victory. The thesis (see next post) was that there would be a second wave of selling to test the crash lows, then a vacuum of sellers in which the buyers step in and bring the stock back up.
There were no group of buyers to take RIMM above 142 today, hence the resistance level. What's also intersting is that the 142 level also happens to be very near the HoD from the week of Feb20. RIMM will be re-visiting the 140-ish level soon, but I have no clue what it will do once that happens.
Thursday, February 08, 2007
MasterCard Incorporated
Dear Trading Journal,
It felt remarkably good to know that I can daytrade US Equities.
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I daytraded MasterCard Incorporated (NYSE:MA) today. First two was pullback setup - volume came in to push it above the previous bar to confirm buy signal. I exited the second trade without hesitation because I saw the momentum dying out on the tape. In the third trade, where i bought @113.79. That was not a valid setup, as I did not buy above the high of the previous bar. I redeemed myself by waiting patiently for the fourth trade. Buy volume came in off the natural number @114. I bought @114.05, target was 114.50.
I could have squeezed way more profits by daytrading the options for MasterCard Incorporated (NYSE: MA). However, I didn't have the option symbol that I wanted pre-selected and all ready to go on my watchlist. Fortune favours the prepared, will remember that for next time.
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