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This low volume, low volatility melt up continues unabated. This morning, buy programs kicked in pretty early in the session, which confirms 1182.5 as accepted value. However, in my mind, I think we still have some unfinished business to take care of, namely, the unfilled gap and naked VPOC 1173.5. The market has made a good run in the past 3 or 4 days, so I will on the lookout for some profit taking sequences tomorrow. This week's weekly pivot 1170.75 hasn't been tagged either, though I'm not sure if it will be done tomorrow.
In addition to staying out of trouble, I will be working on holding profitable trades longer.
Areas to do business: 1165, 1167, 1173.5, 1176, 1181, 1184.5, 1188, 1192, 1196
Trade1: Overnight bias was down, but reversed up in the pre-Market. I waited for the 5IB to complete. It was flat initially, but then started to drift down. So I decided to short 1181.75. Very soon after I entered, I saw that price stalled. I then realized it was the "extend reverse up", only that the reversal took a little bit longer than 5min. this time. At that point, I knew I had to get out. exited 1182.75, -1pt loss.
Trade2: So now I knew that it wanted to probe resistance. I waited for it to reach my area to do business. It was tagged, and then stalled, so I entered short 1183.75. It looked like it wanted to drop, but then it came back up. Market was undecided so I decided to get out 1183.50, not interested in the random coin flip.
Trade3: I continued to watch the market, and finally saw the setup: We had a cluster of +ve TICKs which could not push the market higher than the previous high (1185). So I decided to go short again this time 1184 (time was just after 712am PST).
I took some heat (-0.75pt), but price eventually went in my favour. Price dropped to 1179, then double bottomed out 1179 and came back up. I exited at 1183. Only later did I realize that NQ made a higher low when ES dropped briefly below 1179.
Last night, after looking at the charts, I knew that there was going to be a profit taking sequence. My analysis was correct, but to put it mildly, I grossly underestimated the strong bullish nature of current market structure - this was the 3rd day post-NFP now where price could not pullback to 1173.5. I thought sellers would make one more attempt with a wave 2 sequence, but they gave up and the market double bottomed 1179.
Started feeling frustrated at my performance, so i called it a day.
Staying out of trouble: B (exited early from losing position in first trade)
Pattern recognition: C- (recognized the market's rhythm early on; however, on the last trade, my judgement was clouded and as a result, I failed to recognize the double bottom 1179)
Discipline (following rules/plan): C (followed my plan, but unfortunately, my plan did not account for today's behaviour)
Patience: C+ (waited +1hr on the 3rd trade)
Instead of getting caught up in a hopeless fantasy about a +10pt drop, I should have instead been focussing on the chart, and listening to the message of the markets. However, it's hard to think objectively when you have a position on; now I understand why traders take partials or trail the stop. It's imperative for me to quickly learn how to trail a stop.
Trade1: overnight bias was down, but pre-Mkt was sideways neutral. Opening 5IB was showing new behaviour that I did not recognize before, so I waited the 5 min. before I saw it show signs of reversing. Once I did, i went Long 1173.25. But it was not the usual "extend reverse up" that I have seen so many times, so I got out 1173.50 at the first sign of trouble. +0.25pts
Trade2: I saw the weak attempt to break below o/n low. NYAD was reading -1680, so unless we had a complete meltdown, further downside should be limited. So I went long 1173. Price went against me by 1pt, I was ready to bail, but then it finally broke back above yesterday's low. It stalled at VWAP, so I bailed first 1174 and asked questions later.
There was a third setup (pullback test which could not violate 1171.25, TICK trending higher lows), but I could not spot it in time because I did not have a good night's sleep (only 3hrs sleep). So given my tired state, I called it a day.
Staying out of trouble: B (exited at the stall of VWAP, stayed out of the early morning chop)
Pattern recognition: C (failed to recognize the higher low 1171.50 with higher -ve TICK low due to lack of good night's rest)
Discipline (following rules/plan): B (followed my plan only took trades in my areas to do business, tried trailing stop briefly before I bailed on 2nd trade)
Patience: C+ (couldn't wait thru the chop to spot the 3rd setup)
Morning was pretty choppy, low range, and hard to get a good read, probably due to my 3hrs of sleep. I'm almost tempted to put in something about a good night's rest as part of my trading plan .......
Trade1: went long 1185.75. I had read on the 'net just prior to open that some trader that I respected was going to go long near the open because he was confident that we would rotate up before we rotate down. punished -0.75pts for listening to outside influence
Trade2: opening 5IB was an extend reverse up, so I went long 1185.75 again. But this time, it double topped 1186.5 and stalled. It was a reverse of the extend reverse up !! As price came back to my entry, I realized at that point that price wanted to fill the gap, so I exited for another 0.75pt loss
Trade3: so now i knew price wanted to fill gap. I went short 1184.75. Price did fill gap, but certainly did not want to stay down there at all. Buyers stepped in pretty quickly, so I exited 1184. +0.75pts profit
Trade4: price filled the gap, then immediately ran up so fast, that I could not get filled on a long 1184.5. So I waited. Price stalled after breaking above o/n hi. TICK stalled, NYAD stalled, there was no real setup to go short yet, but I remembered it was MATD, and we would see rotation. So with that in mind, i went short 1186.75. It dipped, but came back up, looked like it was threatening to break o/n hi again, so I scratched.
Trade5: I then realized that sellers were defending o/n hi. Also, the break above 1187 was unsustainable, no buyers interested above. At this point, I saw TICK was trending down, so I went short again 1186.75. Then came an unexpected news event - something about Greece. Euro got whacked, and ES dropped 2.0pts pretty quickly. It came back to gap fill lvl again. But again, sellers did not seem interested in doing business below - this was warning sign #1. Price went up to 1185.75, then came back down to gap fill lvl again, but sellers still not interested. This was warning sign #2. Well, what about 1185.75? Sellers were active there, shouldn't that lead to a lower low? The answer came when price broke above 1186. I knew then what i needed to do, exited 1186.
After that, I lost focus, and started to think that every trade would reverse on me, so I called it a day.
Staying out of trouble: B (exited at double top on trade2, did not chase the response to gap fill)
Pattern recognition: C- (spotted double top, and MATD failed breakout, but failed to spot the fade the fill setup in time, also failed to recognize in time that buyers were defending gap fill)
Discipline (following rules/plan): F (allowed outside influence to cloud my judgement on trade1, did not set profit target on trade5)
Patience: C+ (waited for my setups)
Trades2 &3 were good, felt good about it. But trades1 and 5 clearly sucked. Given that there was 2.0pt drop in literally seconds, I was biased to some more follow thru. However, the market proved me wrong. This is the umpteenth time that I've left profits on the table. Frustrated even just talking about it, the time for a plan of action is now.
Today the opening 5IB was another extend reverse up, but I chose to ignore it, and went short 1192.75, lost 1pt.
After that I decided to just watch the markets, as I felt that I was not able to get a good read on the market rhythm.
In the afternoon, I tried to time the top and paid another 1pt. loss in the process. It also confirmed that I was not able to read the market's rhythm.
Can you elaborate specifically on what you were supposed to do vs. what you actually did? I think it's important to measure performance not based on net profit (in the beginning) but based on trading your plan, and I am unclear if your 'F' today is based on having a losing day or based on not following your rules.
Trade1: I went short 1192.75, I think what I was thinking at the time was that the price would break below the 5IB range. However, it was very close to my area to business, I should have been looking for reasons to go long instead of short. I think I had a short bias but it was unjustified, as the market did not give any reasons to go short.
Staying out of trouble: F (realized it was a bad trade but did not exit right away)
Pattern recognition: C- (ignored the 5IB pattern)
Discipline (following rules/plan): F (didn't really plan out this trade, didn't follow my rules)
Patience: F (didn't wait for price to reach my area to do business)
Trade2: I thought the top was in when it hit 1195. I went short 1193.5. That was actually the VPOC, an area of congestion. Definitely not an area to do business. There was no setup, and no reason really to go short, I was trying to raitonalize my short bias......
Yeah, my problem was for the whole session, I had a short bias, I couldn't shake it, and was actually looking to rationalize my short bias. So I read the price action trying to look for things that weren't there.
I said I wouldn't trade today, but I did.
I said I wouldn't go live until I had a track record of consistency, but I broke that self-promise as well.
Here is my one trade for today.
Trade1: The market started a sell sequence. It was broad based, as the Crude Oil mkt and Euro were selling off in unison, as well as the leadership stocks that I usually monitor. When the market embarked on what I perceived to be the selling climax, I went long 1185.5.
was I scared to buy in the face of all that selling ? heck yeah?
Do I have less integrity now that I've not only broken rules, but I'm doing what I said I would not be doing ? Perhaps....
But today, I needed to find out one thing, and one thing only: Whether I have what it takes to make it as a trader.
I did my homework the night before, and my homework said that based on current market structure there would be solid support at 1185 (highlighted by the orange line that I drew prior to mkt open). In order to make it as a trader, at the very least I have to know that my homework is trustworthy. If I can't trust my own homework, then I won't have the confidence to make it as a trader. In my mind, confidence, the capacity to trust in my own abilities, is the bedrock foundation for a successful performance.
So, I went live, and I went long. market dipped a little bit further as TICK approached -1000. I could see a sea of red on the T&S window. But I also started to notice that that sea of red could not move price below 1185.25. -ve TICK climaxed at around -1000, which is when price briefly touched 1185. The sea of red started to diminish on the T&S window. Pretty soon, a sea of green appeared. And price climbed above 1185.5.
I exited 1186.5.
Yes, there were flaws with my trade management (exited too soon again), and yes, I did not have the patience to wait for confirmation (at least wait for the buyers to step in before initiating the long trade). Those are things I need to, and will continue to work on. But for today, it was a victory to myself, because this affirmed to me, that I can succeed in this business. Given the recent string of losses (and all the -ve baggage that comes with that), this affirmation was very important for me.
No more trades for today, as I have some other things to take care of....
You can't continue this behavior and expect to be consistently profitable. There is no doubt that sometimes when you break your rules you will have a winner, and sometimes a loser. The problem is consistency, the problem is the inner workings and psychology, what is happening deep down inside when you have no plan.
I strongly encourage you to keep being honest in your journal. But I also strongly encourage you to view the breaking of the rules as a failure, no matter what the outcome or excuse to break the rules. If after days of following your rules perfectly you've realized the rules need adjusting, then adjust them and post the new rules. But deciding "on-the-fly" when to follow rules and when to break them won't work. Not long term. Not consistently.
