ORB Green Light for Monday, April 20, 2009

Friday is a NR7 day per MyPivots.com so we have a green light for the ORB (opening range breakout) today. I got a backlog of paperwork for journal entries from last week still will catch up later.

April 15, 2009 Wednesday Short EUR/USD and Short AUD/USD

Forex Trade 3 of Month of April 2009 - Shorted 10 microlots of the EUR/USD on failure of the daily pivot point, was faked out we had a buying spike (follow-through from bullish US session to the Asian session probably). Stopped out -43 pips.

Forex Trade 4 of Month of April 2009 - Shorted 10 microlots of the AUD/USD on a breakout failure of the yesterday's high level. Noticed that the MACD on several timeframes formed nice divergences with price was waiting for some sort of confirmation to get short. Failure of the magenta line (yesterday's high) was my trigger to get in. I scaled out 5 microlots at 28 pips and tried to trail the remaining 5 microlots for yesterday's low but saw the daily pivot point (yellow line) holding so just got out. Short AUD/USD 10 microlots +28 pips on 5, +36 pips on 5.

Trade 3 (Short 10 microlots EUR/USD Stopped Out -43 pips):
Trade 4 (Short 10 microlots AUD/USD +28 pips on 5, +36 pips on 5):
Trade 3,4 of Month of April 2009 Screenshot

Treading water today in Fx tonight, down...$10.55 USD :(

April 15, 2009 Wednesday Day's Trading Analysis

I had mostly the right trading ideas today, although too early on entries without waiting for good bid/ask volume confirmation. The VWAP was an excellent indicator, not because it acted as great S/R but because it was NOT respected, showing us the market's character was that of a Z-day (range-bound choppy day where fading extremes in price is the best way to trade).

On trend days the VWAP is well-respected. If you are lucky to get a pullback/throwback to the VWAP, that might be one of your few retracement opportunities to ride a strong trend.

The second trade was really the only one that didn't make much sense and didn't meet any of my criteria.

April 15, 2009 Wednesday Trade 4 Long 2 Contracts Stopped Out -2.25 Points

This setup was a bullish Gartley (it is basically a pattern where you have one big push up, two pullback waves back to the 61.8 or 78.6 Fibonacci retracement of the first big wave, then the upmove continues from there) fade the extremes, reversion to the mean trade. The setup idea was sound, but the entry was too soon to get in after a broken trendline support level (e.g. going long too near resistance) without very good volume confirmation to get in to the trade, therefore I was stopped out.

Trade 4 (Long 2 Contracts Stopped Out -2.25 points):
Trade 4 Screenshot

Following is a screengrab I did showing a better entry for the same setup idea and why it is better. Basically waiting for 3 minute bid/ask indicator to show several bars where buyers are control (green part of bar on top showing more big trades at ask), allowed you to take the same setup idea with a stop 2 ticks below 834 that would not have been hit (even though there was a pretty scary down bar after the volume confirmed):
Better long entry point screenshot

Note: Trade idea OK but entry too soon after a trendline break, so fighting really strong resistance in addition to not waiting for at least one 3 minute bar showing buyers in control. The price needed time to correct sideways and get away from that up-sloping resistance level where there are still tons of people selling.

This will be my last trade of the day. It has been a very tough options expiration week for me I think I will take the rest of the week off.

April 15, 2009 Wednesday Trade 3 Long 2 Contracts +1.75, +.5 points

Went long 1 contract on oversold 3 minute stochastics and price showing VWAP level holding, and added another contract on volume confirmation. We got a good buying spike from beige book at 2 PM Eastern time showing overall improving economic conditions but this didn't last.

Trade 2 (Long 2 Contracts +1.75, +.5 points):
Trade 3 Screenshot

April 15, 2009 Wednesday Trade 2 Long 1 Contract Stopped Out -2.25 Points

Went long too soon, there was a huge large bar of selling when the daily pivot was rejected (largest big volume trades at the bid of the day), got hit by the sellers one 233 tick bar after I entered quick stop-out.

Trade 2 (Long 1 Contract Stopped Out -2.25 points):
Trade 2 Screenshot

April 15, 2009 Wednesday Trade 1 Short 2 Contracts Stopped Out -2. -2.25 points

Saw that the VWAP was not respected today, and crossed through both sides so shorted an extreme resistance area. The volume the whole time though showed more bidders with large trades mostly at the ask, so eventually the longs won and cracked the trading range.

Trade 1 (Short 2 contracts stopped out -2, -2.25 points):
Trade 1 Screenshot

Note: Market still extremely strong on the daily timeframe, it probably faked out a lot of swing shorts.

Found Resource for FXCM Micro Trading Station II(TM) Indicator Development

For those of you who use FXCM Micro Trading Station II(TM) to trade your FXCM Micro accounts, I found a blog site dedicated to .lua indicator development for the platform. The URL is as follows fxlua.livejournal.com

April 14, 2009 Tuesday Trade 3 Short 2 Contracts

Observed the VWAP was not respected today, making me suspect we were due for a Z-day (rangebound chop day where price oscillates between extremes of price). Saw that the daily pivot level was rejected with good selling volume (bid/ask volume indicator on both the 3 min chart and 233 tick charts showing big trades mostly at the bid) so shorted retracement back up with volume and price confirmation on 233 tick chart.

Trade 3 (Short 2 Contracts +1.5, +3.5 points):
Trade 3 Screenshot

April 14, 2009 Tuesday Trade 1 and 2

Trade 1 - Waited for overbought condition on 3 min chart to short near the VWAP (volume weighted average price) expecting a nice push down due to the topping formation (potential head and shoulders) shown on the hourly chart. I scratched the trade because the price action was too strong. Short 2 Contracts Scratched Trade +0, -.25 points

Trade 2 - Same setup, saw VWAP had tailing piercing through it and we were overbought shorted 2 contracts. Here shorts were actually trapped there was a really strong ramp up. Short 2 Contracts Stopped Out -2.5, -3 points

Trade 1 (Short 2 Contracts Scratch +0, -.25 points):
Trade 2 (Short 2 Contracts Stopped Out -2.5 -3 points):
Trade 1, 2 Screenshot

Note: The VWAP did contain the price but only for a short time. Basically the price followed slightly below the VWAP sideways, which is more of a bullish flag-like pattern, a lot of shorts were trapped it fueled an extremely fast short squeeze.

April 13, 2009 Monday Short GBP/USD 10 microlots

I actually shorted the GBP/USD here which was failing the yesterday's high and yesterday's close levels, because it was lagging behind the EUR/USD in terms of breaking down. I first noticed that the EUR/USD had started breaking down first from similar levels but didn't want to short EUR/USD directly because it was extended and the stop might have been a bit big... Unfortunately, although GBP/USD did lag in following the EUR/USD down, it was too strong to produce a significant downmove so instead I took a small stop. I should have picked another pair the GBP/USD was far too strong.

Second Forex trade of April 2009 (Short 10 microlots GBP/USD Stopped Out 28 pips):
Second Forex Trade of April 2009 Screenshot

Tough day for me, I feel like I need another vacation already.

April 13, 2009 Monday Trade 8 Short 2 Contracts

Since the price was drifting up without being able to make new highs and some 10 minute candle tails showed rejection of resistance I tried another short here. The first target was hit but the trail stop was hit on the second contract. Here the price action was very strange, I got filled on the very low tick of the first down wave, but immediately the upper edge of the bull flag (a 60 minute flag) found support and the price ramped up to make new highs.

Trade 8 (Short 2 Contracts +2 -.75 points):
Trade 8 Screenshot

April 13, 2009 Monday Trade 7 Short 2 Contracts

The rejection of the yesterday's high level showed some extremely good down volume (on the bid/ask volume indicator there was a lot of trading at the bid taking the majority of volume on many 3 minute and 233 tick bars). Shorted retracement of initial downmove. I scratched the trade due to strong price action and support holding.

Trade 7 (Short 2 Contracts Scratch +.25 +0 points):
Trade 7 Screenshot

April 13, 2009 Monday Trade 6 Short 2 Contracts

Shorted slightly below yesterday's close level, but this entry was going against a recent trendline break (a somewhat large 60 minute bull flag breakout) so was a bad idea. Also, the yesterday's close resistance is not as strong as the yesterday's high (since Friday was a trading Holiday, Thursday's close) level so I should have waited for yesterday's high to be tested.

Trade 6 (Short 2 Contracts Stopped Out -2 points):
Trade 6 Screenshot

April 13, 2009 Monday Trade 5 Long 2 Contracts

Went long 2 contracts on 50% fib pullback and multiple layers of moving average support and VWAP (volume weighted average price, thick black line) support. This trade entry was not bad and had good volume confirmation but I did not take my first target soon enough (perhaps was a little greedy?). I was looking for a bigger first target near the highs. The trade went about 2 points in my favor but shorts took control and the longs could not hold the VWAP level, which told me to expect chop for the rest of the morning.

Trade 5 Long 2 Contracts (Stopped Out -1.5, -1.75 Points):
Trade 5 Screenshot

Note: VWAP worked well to show that the market was directionless/choppy because price went through it from both sides. Good entry but greed turned a winning trade in to a loser.

April 13, 2009 Monday Trade 4 Short 1 Contract

Should have picked my levels better this area had good resistance but it would have been better to wait to short yesterday's (last Thursday's) high.

Trade 4 Short 1 Contract (Stopped out -1.5 points):
Trade 4 Screenshot

Note: Didn't pick a significant resistance level to short.

April 13, 2009 Monday Trade 2 and Trade 3

Trade 2 - Went long two contracts for another gap fill attempt. Here we had a good hook up in price from the strong daily pivot point support level but the sellers flushed it down with a selling spike. This entry was not too bad but the morning today was kind of tricky. Long 2 Contracts Stopped Out -1.5, -1.75 points.

Trade 3 - This was sort of an impulsive short of two contracts. I figured because the daily pivot had snapped (we did get 2 points below) there was a good chance of an opening range breakdown to the downside of working. Unfortunately I only succeeded in trapped myself short at nearly the low tick of the push down with my oscillators oversold... Future rule, no impulsive range breakouts/breakdowns allowed. Only pre-planned ORB are allowed. Short 2 Contracts Stopped Out -3.25 points.

Trade 2 (Long 2 Contracts Stopped Out -1.5, -1.75 points):
Trade 3 (Short 2 Contracts Stopped Out -3.25 points):
Trade 2,3 Screenshot

So what ended up happening is, the price was able to get 2 points below the daily pivot point, then proceeded to rally for a gap fill...Very wicked and tricky.

April 13, 2009 Monday Trade 1 Long 2 Contracts

Long 2 contracts on open for gap fill. A bit too soon sellers were in control in the morning for a while, should have waited for a better support level to go long. All we had as support was the premarket lows which was not strong enough.

Trade 1 (Long 2 Contracts Stopped Out -2, -1.75 points):
Trade 1 Screenshot

VWAP, Trend Days and Rangebound Chop Days

Thursday April 9, 2009 which saw a huge 22 point gap-up and rally illustrates a low volume trend day before the Good Friday Holiday (U.S. equity markets closed) where the VWAP (volume weighted average price) served as the ideal first pullback entry point for a decent up-move that lasted through the afternoon. I saved a chart on Thursday highlighting all the good points with the intention of later posting a blog entry. The only thing missing to buy the pullback was a lack of volume confirmation:
VWAP and R2 pivot ideal pullback buy area

On trend-less, range-bound chop days (what famed trader and fund manager Linda B. Raschke calls a "Z-day"), where the VWAP is not well respected (e.g. price will just go right through from both directions) it is still useful because it can give you a clue as to the day's nature. If the VWAP slope is flat and the price crosses through several times that is sort of a big clue. In these sorts of days, some experts (reference to Dr. Brett Steenbarger's article on identifying trend and rangebound days) will fade the VWAP extremes for "reversion to the mean" trades. I am currently using the free NinjaTrader(TM) VWAP indicator available from their support forums (just search the NinjaTrader(TM) Indicator forum for VWAP) that plots the VWAP and is configurable to show up to 3 standard deviations. The thick black solid line on my 10 and 3 minute charts is the VWAP and the thin black dotted bands around it are 1 and 2 standard deviations. I now use these as additional S/R levels and guidelines.

So basically the theory is, on strongly trending days the VWAP itself is used as a retracement area to buy/sell on pullbacks/throwbacks and on rangebound days, the standard deviation bands are used as the buy/sell areas with the VWAP as the profit target area. I'll try to post future blog entries with a link back to this article to see how well this works.

For more on VWAP refer to the popular blog and video series by Brian Shannon alphatrends.net.

April 10, 2009 Saturday Key Reversal Times

Here is a good summary of the key reversal periods to look for intraday while day trading. I will make it a permalink on my blog links for future reference. If the time period coincides with your trade setup, it gives more confirmation, confidence and confluence for the trade entry.



Image Source: Toni Hansen's "Building a Successful Forex Futures Trading System" Webinar for CME Group Thursday April 9, 2009

April 9, 2009 Thursday Trade 3 Short 2 Contracts

A long upward-sloping bear flag breakdown on 3 minute chart with angle of ascent less steep than the initial steeper-angled topping pattern. This is what Toni Hansen calls an Avalanche(TM). Took target at minor support because this is still a very strong uptrend. This will be my last trade of the day due to shortened Holiday trading session.

Trade 3 (Short 2 Contracts +1 points):
Trade 3 Screenshot

April 9, 2009 Thursday Trade 2 Short 2 Contracts

With the 3 minute chart remaining overbought and having formed a lower peak in its stochastics to confirm the price lower high, saw evidence in the bid/ask volume indicator that sellers were stepping in again with a good hook down from high bands on the 233 tick chart (price confirmation). When I saw my uptrend line on the 233 tick chart tagged and the lower bollinger band on the 3 minute chart also tagged just got out the second contract due to this very strong gap/uptrend.

Trade 2 (Short 2 Contracts +1.25 +1.75 points):
Trade 2 Screenshot

Note: The ORB (opening range breakout) did work this morning for 4.25 points profit but if you for example had placed your stop 2 ticks below the low of the 15 minute opening range, you would be risking about 4.75 points to get 4.25 points. 15 minutes is just one way to bracket the range but that is a common one. I did the opposite of what I did yesterday, did not take the ORB instead faded the extended move. I think lately the abnormal trending of the market has been messing with my psychology and normal trading habits. I feel ORB is good only under special conditions. Yesterday I took it haphazardly without considering whether or not the special conditions are met, so I lost. Normally if you buy a breakout with high bands on your oscillator it will fail.

April 9, 2009 Thursday Trade 1 Short 1 Contract

We had a huge 22 point gap-up due to positive Wells Fargo news and better than expected jobless claims. This setup was straightforwards, short against the strong daily swing high of 848 which should have a strong first rejection, on an overbought condition with the bid/ask volume indicator showing good down volume (more big trades at the bid). I got out early because I saw buyers stepping in and no follow through.

Trade 1 (Short 1 Contract +.5 Points):
Trade 1 Screenshot

April 8, 2009 Wednesday Trade 4

My last trade of the day. This is a case of negative psychology having a bad influence on my decision making. I had three previous losing trades in a row which conditioned me to think the fourth trade was likely to fail. This was actually a good entry that was worth a big move but I let myself get shaken out of the trade with a small loss. No risk, no reward.

Trade 4 (Short 2 Contracts Scratch -.5 -.75 points):
Trade 4 Screenshot

April 8, 2009 Wednesday Trades 1-3

Bad morning for me. The first two trades were simply bad trades, the third was an OK entry but too soon to go long against the morning's selling pressure.

Trade 1 - Tried to go long to catch the opening range breakout, which do not work well under normal circumstances (take them, for example in the direction of gap fill right after a NR7 day). Basically I trapped myself long on an overbought condition near resistance, sort of dumb. Stopped out -2.25, -2.5 points

Trade 2 - Tried to go long again on pullback, but here we were not oversold enough or near any strong support area. There was bid/ask buying volume temporarily on our side and an oversold condition hooking up on the small 233 tick timeframe, but these positive items only produced a 3 tick pop before sellers overwhelmed the buyers. Stopped out -2 points

Trade 3 - At least this entry was oversold on the 3 minute chart and also had the 3 minute bid/ask volume bars green on top. The positive items going for the trade allowed the trade to go 1.25 points in our favor. However the momentum was such to the downside that some intraday support levels were overshot including the 10 min 200 sma, VWAP and 50 sma on 3 min chart. Finally support was found a tick above yesterday's low. Stopped out -2.25 points

Trade 1 (Long 2 Contracts Stopped Out -2.25, 2.5 points):
Trade 2 (Long 2 Contracts Stopped Out -2 points):
Trade 3 (Long 2 Contracts Stopped Out -2.25 points):
Trade 1,2,3 Screenshot

Note: These first three trades were all taken against the direction of the gap fill, there was a gap up this morning of 7.75 points at the highest level since the open. The gap was filled to the downside.

April 7, 2009 Trade 4 Long 1 Contract

This was nearly the same identical trading setup to trade 3. The 60 minute (dark green) trendline/50 percent fib retracement (812) showed price-wise it was holding support. The confirmation to pull the trigger was waiting for the bid/ask volume bars to show me big traders are jumping in (green on top and not just one 233 tick bar). I went with the big traders but waited for extra good confirmation this time (more green 233 tick bars) because it was not the very first test of the 60 minute trendline.

Trade 4 (Long 1 Contract +1.25 points):
Trade 4 Screenshot

April 7, 2009 Tuesday Trade 3

Saw that the previous low of the day was being tested (a double bottom test with slightly lower right leg) and also that this would be the first test of a massive 60 minute trendline that was also overlapping on the 50 percent fibonnaci retracement from the 775.5 swing low to the most recent daily high (812 area). I waited for the bid/ask volume to confirm for me big traders were stepping up to the plate and scalped out for +1 points.

Trade 3 (Long 1 Contract +1 points):
Trade 3 Screenshot

April 7, 2009 Tuesday Trade 1 and 2

Trade 1 - Spotted 3 minute chart divergences of MACD to price showing the sell-off from premarket was getting weaker, as well as oversold. The trigger to get in was to see support holding and for the bid/ask volume indicator to show that buyers were taking control (e.g. more big contract trades at ask than bid).

Trade 2 - Overbought and saw the 822 area strong resistance (prior broken support) rejected. Trigger to get in was the bid/ask indicator showing sellers taking control. Notice how both the 3 minute chart and 233 tick chart showed big contract trades mostly at the ask (red on top side of volume bar).

Trade 1 (Long 1 Contract +.5 points):
Trade 2 (Short 1 Contract +1.25 points):
Trade 1,2 Screenshot

I traded smaller size because noticed it was very choppy in the morning.

April 6, 2009 FXCM Trading Station II(TM) Pivots Indicator

Disclaimer: Use at your own risk, I make no warranties on effectiveness and assume no responsibilities on any damages or trading losses resulting from use of this indicator.

Here is the pivot point drawing indicator I made for FXCM Micro Trading Station II(TM):
BTStandardPivots.zip

Instructions:
1. Download and unzip the .zip file to a folder, which you should verify contains BTStandardPivots.lua and BTStandardPivots.lua.rc (the source code and language description resource file respectively).

2. From within FXCM Micro Trading Station II(TM), navigate to the Chart menu and choose "Manage Custom Indicators".

3. Click the "Load" button and navigate to the BTStandardPivots.lua file to import the indicator. The indicator should produce no error messages. If there is an error message make sure first that the BTStandardPivots.lua and BTStandardPivots.lua.rc files are both in the same place.

4. Add the indicator to your chart and set the High, Low and Close parameters according to the previous day's High, Low, Close (or week's data if you want weekly pivots).
Hint: Click on the "Chart Elements" button at the rightmost side of the tool bar to navigate to the pivots indicator, because the default values 1, 1, 1 might cause the indicator to appear far off your chart area. I circled the Chart Elements toolbar button in the following screenshot:


The pivot point formula matches will produce the same standard pivots as shown on the following site:
Pivot Points Site

What I do each day is key in the High, Low and Close from the Daily Pivot Point area of the above site for my currency pairs in to the BTStandardPivots indicator which I have on the 5 minute charts for each currency pair I watch.

If you need to tweak the formulas to your tastes, you can modify the BTStandardPivots.lua indicator source code file to change the local variables R3,R2,R1,PP,S1,S2,S3 as needed and then re-import the indicator per the instructions steps 2,3 above.

The following Web site has a pivot points calculator you can check your modifications against:
Pivot Point Calculator

Disclaimer: Use at your own risk, I make no warranties on effectiveness and assume no responsibilities on any damages or trading losses resulting from use of this indicator.

April 6, 2009 Monday Trade 6 Short 2 Contracts

The VWAP had shown itself to be good resistance, saw a double test of it and failure, with momentum confirmation of the bid/ask volume indicator on 233 tick chart showing sellers piling in and also price confirms.

Trade 6 (Short 2 Contracts +2 +2.75 points):
Trade 6 Screenshot

April 6, 2009 Monday Trade 5 Long 2 Contracts

Lunchtime trade, but noticed longs taking control on the bid/ask volume indicator with a higher low being formed on a basing formation. Also, previously it was shown the weekly pivot point 820.17 was a very good support area. VWAP slope also flattening, figured we were due for a turn.

Trade 5 (Long 2 Contracts +1.75 +3 points):
Trade 5 Screenshot

April 6, 2009 Monday Trade 4 Long 1 Contract

Counter trend so lighter size, went long at yesterday's high support level. The problem with this trade is it was at the beginning of deadzone (lunch time light volume trading period) and we still had the 3 minute bid/ask volume indicator showing shorts still in control.

Trade 4 (Long 1 Contract Stopped Out -1.5 points):
Trade 4 Screenshot

April 6, 2009 Monday Trade 3 Short 1 Contract

Saw the VWAP (thick black line) being rejected and the bid/ask volume indicator showing sellers taking control plus overbought on 3 minute chart, so shorted 1 contract. I did light size because the retracement was only about 23.6 percent since the premarket highs.

Trade 3 (Short 1 Contract +1.25 points):
Trade 3 Screenshot

This actually turned out to be the best entry of the day (making note).

April 6, 2009 Monday Trade 2

Saw big sellers, went with them on opening range breakdown. They couldn't break below 825 this first attempt and we were oversold so a lot of shorts trapped, just enforced stop.

Trade 2 (Short 2 Contracts Stopped out -2.25 -3 points):
Trade 2 Screenshot

April 6, 2009 Monday Trades 1

Big buyers in control (bid/ask volume indicator) and support shown at S1 daily floor trader pivot level, only went long 1 contract due to early morning and counter trend.

Trade 1 (Long 1 Contract +1 points):
Trade 1 Screenshot

April 5, 2009 Sunday Short 10 Microlots EUR/USD

Here is my first Forex trade of April, 2009.

The daily EUR/USD R2 pivot level (maroon line, hard to see on leftmost chart of my layout) was rejected, which also coincided with a 2 touch 60 minute trendline rejection and some MACD divergences on some of the timeframes with price. I was looking for the R1 daily pivot level (teal line on leftmost chart) or better to cover.

Short EUR/USD 10 microlots, scaled out 5 and 5 near R1 pivot for average gain of 22 pips:
First April, 2009 Trade Screenshot

As a side note, notice how in my trade screenshot the USD/JPY chart (rightmost) how the R1 to R2 pivot play in reverse also worked (e.g. R1 teal pivot was broken, got retracement found support, rally to R2 (light maroon line).

As a futures trader I am used to using pivot points as S/R. The pivot points are also well-respected in Forex. Following is a good site which has the daily and other pivot levels (put the daily pivots on your minute charts works well as S/R):
Pivot Points Site

It is sort of a pain to manually draw in the pivot lines so I made an indicator for FXCM Micro Trading Station II which will draw in the R1,R2,R3,PP,S1,S2,S3 levels automatically based on entering the previous day's high, low and close. I will post the indicator later on some time with instructions for anyone using FXCM Micro Trading Station II.

April 4, 2009 Saturday Adversity is a Catalyst for Change

Due to the beating I took Friday in my day trading, it prompted me to reflect on what went wrong and what I could do to improve my trading method. I have now tweaked my trading to try to stay on the right side of the market and go with the smart money (or at least don't go against them) and stay away from over-active trading. Here is what I did. A while back I had placed the VWAP (volume weighted average price) on my 10 minute chart to use as a bias line in terms of what direction I wanted to trade in (e.g. if the price is above the VWAP and VWAP is sloping up, try to trade from the long side, and vice versa for the short side), but made it a light gold dotted line which is hard to see so I basically ignored it. Now I have VWAP on both my 10 and 3 minute charts as a double strength black line, impossible to miss. I also adding a slight coding modification to my bid/ask volume indicator (NinjaTrader(TM) has a good free indicator on its forums called BuySellVolumeTop), which shows you for each bar if there are more trades at the bid or ask and therefore if buyers or sellers are in control for any given bar, to filter out smaller lot sized trades. In other words, I changed the indicator to throw away counting up trades for lot sizes less than 50 contracts for the ES. This way when I do my volume analysis I can see when the smart money (big traders) are taking control and go with them if my other criteria are met. I tested the new tweaks to my method by hand-trading an old tick-by-tick replay I had recorded in NinjaTrader(TM) (5/8/2008) with good results. I think this should work, at least I will not do something stupid like try to short when there are big traders trading mostly at the ask and we are above the VWAP line :D

April 3, 2009 Trades 6-10

Bad end to the week for me, at lunch I was stopped out 4 times in the row trying to short and my last trade of the day I was stopped out as well.

Trade 6 - I shorted the daily pivot failure the problem was that I was really shorting a base that had formed below the daily pivot (double bottom with slightly higher right leg 823 on 3 min chart). If you short a shallow 23.6% retracement the downtrend had better be really strong (refer to 10 min chart, I am including the premarket trading). Stopped out -1.75, -1.5 points

Trade 7 - Shorted retracement also, but this one didn't make much sense because the stochastics were still embedded in the high bands (bear trap) and we were not near any major resistance. Stopped out -2, -2.25 points

Trade 8 - Shorted retracement also, the 830 premarket level was resistance but the stochastics on the 3 min chart were still embedded in the high bands this was not a good entry either. Stopped out -2, -1.75 points

Trade 9 - This time an OK entry because I waited for the 3 minute stochastics to cross down below 80 and we had a double layer of resistance with the 10 minute 200 sma and 50 sma converging, and also the 200 sma on the 3 minute chart as resistance. As happens often the moving averages are overshot a bit. The upswing was stopped right at the daily midline 833.63 (50% fib retracement of the high and low of the day which includes the premarket trading). The stop would have needed to be about 2 ticks wider for this trade to work with the entry I got. Stopped out -2.5, -2.25 points

Trade 10 - Went long at lower edge of big uptrending channel. I initially was considering shorting the upper edge of this channel (a .618 rejection on 10 min chart and bearish Gartley) but decided against it because I didn't see a divergence to confirm. Instead I waited for the price to get to the lower edge of the upchannel. This entry was not bad, had oversold 3 minute stochastics and strong support, but sellers won. Stopped out -1.5, -1.75 points

Trade 6-10 Screenshot:
Trade 6-10 Screenshot

April 3, 2009 Trades 1-5

I am doing all of my morning trades in one screen grab and blog since I was active this morning and didn't have time to do individual blogs.

Trade 1 and 2 are trying to get long on pullback of initial buying spike from the NFP (non-farm payrolls report). The first try was dumb didn't wait for a good enough pullback so took a stop, trade 2 worked but eventually the failure to retake yesterday's high and hold showed a failure.

Trade 3 was a long for the gap fill after seeing some support but this was stopped out as the gap close level was unable to be filled this morning due to the sellers being in control of the market on failure of key level.

Trade 4 was a short to go with a opening range breakdown.

Trade 5 was shorting a retracement to go with the downtrend.

Trade 1 (Long 1 Contract stopped out -2.5 points):
Trade 2 (Long 1 Contract +1.5 points):
Trade 3 (Long 1 Contract stopped out -2.75 points):
Trade 4 (Short 2 Contracts +2 +.25 points):
Trade 5 (Short 1 Contract +3 points):
Trades 1-5 Screenshot

Something noteworthy to mention is the 15 minute opening range breakout or breakdown trade is working like a charm lately due to trends not wanting to end. Usually it does not work so well in the ES.

April 2, 2009 Trade 7 Short 2 Contracts

ES failed to make new highs, simple setup just short retracement in to initial selling spike from the lower high on good confirmation such as bid volume overwhelming ask volume and 233 tick chart hooking down from high bands on stochastics. The 3 minute stochastics were also in a downtrend.

Trade 7 (Short 2 Contracts +1.25 +3.5 points):
Trade 7 Screenshot

Haha, I am down $-7 today. Fishing for the bull flag continuation in deadzone was a mistake I caught a small move on the third try (which happened to be in line with the 2 pm Eastern reversal period and no longer in deadzone) but got worn out and didn't try to attempt the fourth try which would have been a home run. The psychology of such things is insidious.

April 2, 2009 Trade 6 Long 2 Contracts

The oversold condition finally took hold a bit better here, but the trail stop was again hit. Was hoping for a rally to test the highs.

Trade 6 (Long 2 Contracts +2, -.5 points):
Trade 6 Screenshot

April 2, 2009 Trade 5 Long 2 Contracts

There was better confirmation on the 3 minute stochastics which crossed 20 but shorts were still in control here took the stop.

Trade 5 (Long 2 Contracts Stopped Out -2.5 Points):
Trade 5 Screenshot

April 2, 2009 Trade 4 Long 2 Contracts

I should have reallized a divergence had formed on the latest push up and that the selloff was a bit steep to be thinking about buying pullbacks. Also the 3 minute stochastics was starting to become embedded in the low bands. Took my stop for -2 points.

Trade 4 (Long 2 Contracts Stopped Out -2 points):
Trade 4 Screenshot

April 2, 2009 Trade 2 Long 2 Contracts

Did long scalp on pullback to almost oversold on 3 minute chart and good confirmation on 233 tick chart. Only trusted it for a scalp as it was lunchtime and volume declining.

Trade 3 (Long 2 Contracts +1.25 +1 points):
Trade 3 Screenshot

April 2, 2009 Trade 2 Long 1 Contract

I bought another pullback which had a very good 233 tick chart oversold condition and confirmation but the 3 minute stochastics was still overbought so I only went long 1 contract. Since mark to market positive news was announced I gave this one a lot of room to run. Trail stop hit for 1 point profit.

Trade 2 (Long 1 Contract +1 points):
Trade 2 Screenshot

April 2, 2009 Trade 1 Long 1 Contract

I waited for the 15 minute opening range to develop, bought the breakout but only with 1 contract because the stop was wider than normal. Only got 2 ticks as my trail stop was hit.

Trade 1 (Long 1 Contract +.5 points):
Trade 1 Screenshot

April 1, 2009 Trade 2 Short 4 Contracts

I saw a huge volume selloff bar on the 3 minute chart, where the trades at the bid overwhelmed the ask trades showing the sellers took control. Just shorted a retracement in to the initial downthrust, with bigger size than normal because this looked like a convincing move failing some strong resistance.

Trade 2 (Short 4 Contracts +1.25 +1.25 +1 +.75 points):
Trade 2 Screenshot

This will be my last trade today, it is good to get the new Month/Quarter started with an up-day.

April 1, 2009 Trade 1 Short 2 Contracts

Haha, I was super careful on this counter-trend waited for really good confirmation at this double layer of resistance (Yesterday's high plus the Daily R1 floor trader pivot) but was only able to get a wimpy scalp due to this abnormally trendy market. I gave the trail a nice wide BE-2 ticks stop, no go.

Trade 1 (Short 2 Contracts +1.25 -.5 points):
Trade 1 Screenshot

March 31, 2009 Monthly Results Summary

Here is a summary of all of my trades this month via the NinjaTrader(TM) statistics report(s). My minimum trade size is 1 contract, maximum 4 contracts with an average trade size about 2 contracts, assuming a $4.80 round turn commission rate (my actual commission is slightly less).

Daily PNL Summary:
March 2009 End of day PNL

Total PNL Summary:
March 2009 Month End PNL

Equity Curve (As you can see recent difficult/bad trading caused my equity curve to run in to resistance):
March 2009 Equity Curve

March 31, 2009 Trade 5 Long 3 Contracts

I caught the very last push up before the longs gave up. The setup was just to buy a pullback based on oversold condition. I tried to trail the third contract for two ticks below the highs but the trail stop was hit. This is my last trade of the day.

Trade 3 (Long 3 Contracts +1.25 +1.25 -.5):
Trade 5 Screenshot

March 31, 2009 Tuesday Trade 4 Short 2 Contracts

I saw more confirmation for the 800 (200 sma) rejection (also in-line with the 2PM New York time reversal period) but the trade only went 1.25 in my favor before buyers too control again.

Trade 4 (Short 2 Contracts
Trade 4 Screenshot

March 31, 2009 Tuesday Trade 3 Short 1 Contract

Looking for rejection of 800 area (200 period sma on 60 min chart) stopped out on 1 contract.

Trade 3 (Short 1 Contract Stopped Out -1.75 points):
Trade 3 Screenshot

March 31, 2009 Tuesday Trade 2

Overbought and at upper edge of 10 minute ascending wedge (bear flag) but buyers very stubborn.

Trade 1 (Short 2 Contracts stopped out -2.5, -2.25 points):
Trade 2 Screenshot

March 31, 2009 Tuesday Trade 1

Shorted daily (floor trader) pivot for gap fill down (gap up this morning). 60 minute bear flag also.

Trade 1 (Short 2 Contracts +2 +.75 points):
Trade 1 Screenshot

March 30, 2009 Monday Reflections on the Day

So far this was my worst losing day this month of 4 losing days. I got off to a bad start and stayed on the wrong side of the market for most of the day (e.g. tried to counter-trend a lot). There was actually only one good multi-layer support level that had good buyers (the 50 day sma, overlapping on the S1 weekly (floor trader) pivot, overlapping on the S3 daily pivot level) which happened around 3 PM New York time (there was some volume on the 3:09-3:12 PM 3 minute bar to confirm) and I missed that one. All other more minor support areas were like a creeping blob seeping through the cracks eventually to consume my stops :( I would just advise myself to observe more closely those days where there is say a big 24 point gap and see if the second 10 minute bar closes above or below the first ten minute bar, that would have made me reallize that this day was likely to be one of those trending days where opening range breakouts work well and there would not be a gap fill. OK back to taxes :(

March 30, 2009 Monday Trade 6 Long 2 Contracts

Saw some divergences, hopped aboard retracement of a possible double bottom with lower right let. Unfortunately I was stopped out again. All 5 of my long trades were stopped out today, only did one short which worked at lunch. No buyers.

Trade 6 (Long 2 Contracts Stopped Out -2.25, -1.75 points):
Trade 6 Screenshot

March 30, 2009 Monday Trade 5 Short 2 Contracts

Bear flag, got out when 3 minute stochastics were low because this is still in the lunch time trading zone.

Trade 5 (Short +1.5 +.75 points):
Trade 5 Screenshot

March 30, 2009 Monday Trade 4 Long 2 Contracts

Spotted divergence on 233 tick chart which looked decent. Unfortunately, the trade missed being filled on my target 1 for 1 tick, therefore I just enforced the stop. Now is a waiting game to get some better setups, I am obviously over-trading this morning and on the wrong side of the market (with bad results).

Trade 4 (Long 2 Contracts -2.5 points):
Trade 4 Screenshot

March 30, 2009 Monday Trade 1,2,3 Longs...

Bad start for me this week, my first three trades were stopped out due to going against really strong selling. We had support but the selling was such that the 3 minute stochastics produced an embedded condition (both %K and %D) both in low bands for many bars (5+) making a bull trap.

Trade 1 (Long 2 Contracts Stopped Out -1 -1.5 points)
Trade 2 (Long 2 Contracts Stopped Out -2 -2.75 points)
Trade 3 (Long 1 Contract Stopped Out -2 points):
Trade 1,2,3 Screenshot

March 27, 2009 Friday Trade 7 Long 3 Contracts

Good entry on bullish divergence play and falling 233 tick wedge reversal which was in-line with the 2PM New York time reversal period. I really need to learn how to trail better. Despite the swings back and forth this day is still confined within the range of the previous day's bar (an inside day).

Trade 7 (Long 3 Contracts +1.5, +1.25, +.25 points):
Trade 7 Screenshot

March 27, 2009 Friday Trade 6 Long 3 Contracts

Oversold on 3 minute chart, and holding support at major hourly and 10 minute trend lines in addition to having long tails on the 10 and 3 minute charts showing that the S1 daily pivot level which held previously was again support. Took 2 contracts out at first target and tried to trail the remaining third contract for a bigger move, didn't give it enough room.

Trade 6 (Long 3 Contracts +1.25 +1.25 +.25):
Trade 6 Screenshot

March 27, 2009 Friday Trade 5 Long 2 Contracts

The chop got me here at lunch, had a good oversold condition but light volume. At least the stop taken was smaller than normal.

Trade 5 (Long 2 Contracts -1.75, -1.25 points:
Trade 5 Long 2 Contracts

March 27, 2009 Friday Trade 4 Long 2 Contracts

Going with the momentum of recent V bottom here on 3 minute chart. Buyers obviously in control so tried to get long on oversold condition, the stochastics got to about 50 on my entry, not ideal but I saw that the upchannel had been expanded a little to fake out some shorts but held, so got in long on 233 tick confirmation. I thought that the daily pivot could break to run some stops but buyers ran out of gas, so trail stop hit.

Trade 4 (Long 2 Contracts +1.25 +.25):
Trade 4 Screenshot

March 27, 2009 Friday Trade 3 Short 2 Contracts

Overbought, and good short term price momentum and other confirmations on the 233 tick chart, however here we are fighting a 60 minute hammer and possible bull flag that showed support on a rising trendline and the S1 pivot. Do not ignore the macro view.

Trade 3 (Short 2 Contracts Stopped Out -2.5, -3 points):
Trade 3 Screenshot

March 27, 2009 Friday Trade 1 and Trade 2 Both Long for Gap Fill

My first two trades of the morning cancelled each other out hehe. Trade 1 was stopped out Trade 2 hit first target and the last contract trail stop was hit, so I am slightly down this morning due to comissions (-$24 USD). The setup for these two trades is simply to buy support looking for a partial gap fill to yesterday's close. We have a big gap-down today from the pre-market. The first trade was too early to enter after the close, we had the 3 minute chart divergence and oversold but too much downside momentum still on the open. Trade 2 had a better entry lower in price and an additional layer of support (the daily S1 pivot level) to protect the stop.

Trade 1 (Long 2 Contracts -2.25, -2.75 points Stopped Out):
Trade 2 (Long 3 Contracts +2, +1.75, +1.25 points):
Trade 1, 2 Screenshot

Right now the morning looks very neutral, still basically holding S1 pivot.

March 26, 2009 Thursday Trade 6 Long 2 Contracts (last trade of day)

I went long on oversold 3 minute stochastics and the smaller timeframe (233 tick) showing a double bottom formation. It was good for a scalp only as shorts are in control now and we are going against a recent double top on the 3 minute chart. I am quitting for the day here, only up $27 bucks net on the day but at least it was not a drawdown :D

Trade 6 (Long 2 Contracts +1.25, +.25 points):
Trade 6 Screenshot

March 26, 2009 Thursday Trade 5 Long 2 Contracts

On this long, got a better price with our yesterday's high level to protect our stop, but the 3 minute stochastics was not quite as oversold as I wanted. Regardless thought it was good anyways so took the trade. Decent first target was achieved but tried to trail beyond the highs which could not be broken this time. I am treading water today down about -$50 USD net PNL.

Trade 5 (Long 2 Contracts +2.75, +.5 points):
Trade 5 Screenshot

March 26, 2009 Trade 4 Long 2 Contracts

Going with recent uptrend with this long trade but it was dumb to buy an overbought 3 minute stochastics which was in high bands. Stopped out and deservedly so.

Trade 4 (Long 2 Contracts Stopped Out -2, -2.25 points):
Trade 4 Screenshot

March 26, 2009 Trade 3 Short 2 Contracts

Bearish Gartley formation on 3 minute chart and overbought on both the 3 minute and 233 tick timeframes with a good confirmation signal on the 233 tick chart. This trade was somewhat marginal though as I was about 1 tick from being stopped out with not such a great target. My stop was 820.5 (the 820 swing high plus two ticks). Chalk up the bad, choppy price action to an inside rangebound day and also the house financial services meeting with Tim Geitner.

Trade 3 (Short 2 Contracts +1.25 +.25 points):
Trade 3 Screenshot

March 26, 2009 Thursday Trade 2 Long 1 Contract

We did get oversold 3 minute stochastics with some momentum on the 233 tick chart, but the trade went only about a point in my favor before rolling over. I think the rejection of the highs started a new downtrend here, plus we have the house financial services chairman talking who the market does not like (Barney Frank).

Trade 2 (Long 1 Contract Stopped Out -2.25 points):
Trade 2 Screenshot

March 26, 2009 Thursday Trade 1 Long 1 Contract

Right after the open, I saw the first higher high and first higher low had developed (the minimum definition of an uptrend) on the open, I bought the pullback that formed a second higher low but with only 1 contract because we are going against a gap fill (which will happen on the down side today). If the price was strong enough to break yesterday's high, it could produce a big winner, but it rolled over so my trail stop was hit.

Trade 1 (Long 1 Contract +1.25 points):
Trade 1 Screenshot

March 25, 2009 Wednesday No Afternoon Trades

Due to the volatility in the afternoon I just stayed out and watched the market. I saw no retracements I wanted to hop aboard short on and didn't want to go counter-trend against a sharply falling knife. One thing I do before I enter a trade is to measure the stop that would be taken if I am wrong. If the stop taken would theoretically be too big from the entry price I don't take the trade. I like stops which are between 1-3 points, preferably closer to 1. However if your stop placement is too close (small) you usually don't have enough confirmation in either price or your indicators that the trade entry is good. Therefore a balance needs to be struck between a small stop and better confirmation to create a "reasonable" stop. When the volatility shoots up, you had better have extremely strong layers of support/resistance to protect your stop. Also, if widening the stop to compensate for volatility, you should cut back contract size so that the risk if stopped out would at least be the same as a trade in normal volatility with higher contract size.

March 25, 2009 Wednesday Trade 3 Long 2 Contracts

Bought this bull flag pullback to the strong R1 daily pivot level, on oversold condition and evidence/confirmation from 233 tick chart that R1 was holding and we have momentum to jump in. I could probably have trailed BE+2 ticks but I figured lunch time might not have great upside so trailed up more aggressively.

Trade 3 (Long 2 Contracts +2, +1 points):
Trade 3 Screenshot

March 25, 2009 Wednesday Trade 2 Long 1 Contract for Post NR7 Opening Range Breakout

I normally do not trade breakout plays, but this is a rare exception here. The previous day's trading range qualified it to be what is called a NR7 (Narrow Range Seven) daily bar. After a NR7 daily bar, there is a tendency for the next trading day to have a range expansion (it is akin to the trading range tightening and expanding as energy is built up, such as a narrowing bollinger band). Many traders (Mark Fisher, Linda Raschke, Toby Crabel, etc.) will bracket the highs and lows of a given trading range and take the breakout of that range based on their specific rules. What I did personally was observe that the 3 minute stochastics had become embedded in high bands for 5 bars (embedded means both the %K and %D lines are both either over 80 or under 20) which is an indication of extreme strength and a bear trap and fine tune a small pullback entry with the 233 tick stochastics. I only used a 2 point stop and 1 contract because the price was extended from the stronger support levels. All we had protecting us was that red downtrend lines on the highs I drew in the screen grab (symmetric triangle upper channel line) and the upper bracket of the 15 minute opening range. Usually I assume breakouts will fail and trap me so I do not trade them. For more on NR7 Google for Toby Crabel.

Trade 1 (Long 1 Contract +5 Points):
Trade 2 Screenshot

March 25, 2009 Wednesday Trade 1

Riskier to go long here against the gap right at open, but there is a huge support area as well as daily pivot holding support, so went long 1 for scalp.

Trade 1 (Long 1 Contract +1.5 Points):
Trade 1 Screenshot

March 24, 2009 Tuesday Trade 5 Long 2 Contracts

The setup was wait for the 3 minute stochastics to go oversold and buy the pullback to some decent support level. I initially observed a nice bull flag breakout of the 10 minute chart (you will need a 24 hour futures chart to see the flag), was just going to hop aboard a retracement to get long since my style and trading rules do not allow me to get long on breakouts where price is too extended from support and therefore my stop placement. There was very good support at the upper channel line of the bull flag which is where approximately I entered the pullback on confirmation of my oscillators, and also seeing a 233 tick chart MACD divergence with price. My first target was 2 ticks below the yesterday's close level (gap fill) and I tried to trail the second contract for beyond the highs in case of a breakout.

Trade 5 (Long 2 Contracts +2, +1 points):
Trade 5 Screenshot

March 24, 2009 Tuesday Trade 3, 4 Shorts

I have been playing oscillations today due to range-bound behavior. Both my trades 3 and 4 were both based on shorting an overbought condition. Trade 3 entry was too early and I was stopped out for -1.75, Trade 4 I got better entry/confirmation and got between +1.25 and +1.75 on heavier size. Important to note that trade 3 I shorted while the 3 minute stochastics had been embedded in high bands for 9 bars or so, which is a condition for being a bear trap, it is better to wait for the stochastics to get under 80 and stop being embedded as I did for trade 4. Also, a 233 tick chart divergence between MACD and price had developed for my trade 4 which gave me more confidence it would work on the second try.

Trade 3 (Short 2 Contracts Stopped Out -1.75, -1.75):
Trade 4 (Short 3 Contracts +1.25, +1.75, +1.5):
Trade 3 and 4 Screenshot

March 24, 2009 Tuesday Trade 2 Long 1 Contract

A range-bound choppy day is to be expected after a huge move up, which is exactly what we have today. It is also an inside day so far. I am trading light due to that fact both Bernanke and Geitner are speaking in front of Congress which could have unexpected effects on price (perhaps weird chop or swings). Here maybe I was a bit too anxious took a small .5 point profit due to aggressive trail stop instead of allowing my conservative 2 point target to be hit. The setup was just get long on oversold conditions on the 3 minute and 233 tick charts when support showed it was holding.

Trade 2 (Long 1 Contract +.5 points):
Trade 2 Screenshot

March 24 2009 Tuesday Trade 1 Long 1 Contract for Partial Gap Fill

Due to the large gap down, I was uncertain if the entire gap could be filled today, therefore I just did 1 contract long from the 50 percent fibonnaci retracement area (806.75 on the June ES contract) of the most recent 3 minute chart swing up which was showing good support on the 233 tick chart.

Trade 1 (Long 1 Contract for Gap Fill +2 Points):
Trade 1 Screenshot

March 23, 2009 Monday Quitting Early

I had one decent long signal I missed around 1:17 PM Chicago time at the daily R2 pivot level (794.33 on the June ES contract) which had a double layer of support to protect any stops, as there was a rising trendline also, but at the time I was somewhat conflicted after seeing a heavy volume rejection of strong resistance and seeing a lot of chop, therefore I just passed. My trading rules are keeping me out of all further trades here therefore I am done for the day. Hope you other traders caught that last move up.

March 23, 2009 Monday Trade 2 Long 2 Contracts

I liked how the price stayed very strong making a nice longish 3 minute bull flag here, even throughout lunch, so I just waited for the 3 minute stochastics to get oversold and a decent pullback to get in. The 233 tick chart confirmed for me an entry with bid/ask volume indicator showing longs taking control and a cycle to green of my Heiken Ashi candle color indicator (basically just modifying the NinjaTrader(TM) indicator to only draw the color of the candle as a background color on any given panel) as well as hook up from oversold levels on my 233 tick stochastics. I had an optimistic target for my trailing contract but buyers ran out of gas so the trail stop was hit for +.25.

Trade 2 (Long 2 Contracts +2.5, +.25 points):
Trade 2 Long 2 Contracts

Rejection of the highs here with heavy volume and a fast sell-off might indicate buying pullbacks game is over watching closely here.

March 23, 2009 Monday Trade 1 Short 2 Contracts

Although this was a very strong uptrend here, saw that the daily R2 pivot was tagged and pierced by a 3 minute wick but rejected hard and no closes above showing longs had chased the move but couldn't hold the level and were therefore trapped. Also it was very overbought. I got 2 points on the first contract and scratched the second contract on my trail stop.

Trade 1 (Short 2 Contracts +2 +.25):
Trade 1 Screenshot

March 21, 2009 Saturday Thoughts for Next Week

Looking for more continuation to the downside next week, but expect possibly a lot of chop and smaller trading range on Monday due to Monday being the day right after a big trending day. It would be pretty ideal if we got a pullback to near the November 2008 lows on the June contract of the ES (736 on the S&P 500 e-mini futures) which is just about a 50% pullback from peak to trough of the recent upmove and then started to rally again. Many technical analysts are predicting a multi-month upmove based on bigger timeframe analysis. Who knows what will really happen though we will just have to wait and see.

March 20, 2009 Friday Trade 2,3 Short

I missed the morning and noon-time good entries on shorts, therefore I just waited patiently the rest of the day for my 3 minute stochastics to get overbought again (the last time was about 12:45 Chicago time a long wait). I lost about $40 dollars net in profits compared to the morning fishing for a bear flag but it was worth it because if this was to be a trend down day, then the reward would have been very high as there is a good chance of a close near the lows for trend down days. For trade 3 I was too early. I shorted 1 contract looking to add another on confirmation, but the short squeeze from the lows was still too strong so I just took the small 1.5 point stop. For trade 4 I got a better entry on 2 contracts. Initially there was very good momentum down but a stubborn support level held so I just scratched trade 4.

Trade 2 (Short 1 Contract Stopped Out -1.5 points),
Trade 3 (Short 2 Contracts Scratch +1 -.25 points):
Trade 2,3 Screenshot

I have quit trading now because there might not be enough time left for shorts to push this thing down to the lows due to it being Friday.

March 20, 2009 Friday Trade 1 Short 2 Contracts for Gap Fill

Saw double layer resistance being rejected in premarket (weekly R1 pivot and the daily pivot). Well actually it was like a point away but I saw a good enough confirmation (double top) on my 233 tick chart and shorted with a reasonable stop looking for the gap fill level (yesterday's close) as the ultimate target.

Trade 1 Short 2 Contracts (+1.75, +3.25 points):
Trade 1 Screenshot

March 19, 2009 Thursday Trade 8 Short 2 Contracts

I kept fishing for the bear flag breakdown to go for the days lows or beyond. Hint: short the upper edge of a bear flag when overlapping/strong resistance levels are encountered with your oscillators overbought. If you short the lower edge for breakdowns you are likely to get trapped short. This is the third time I think I tried to catch the bear flag move, did get a nice piece but could not trail all the way to the lows even though it looks like price is headed there now.

Trade 8 (Short 2 Contracts +1.75, +3.25 points):
Trade 8 Screenshot

March 19, 2009 Thursday Trade 6,7 Short

Both trade 6 and 7 were based on trying to get in on a bear flag breakdown. I was pretty sure eventually we would at least test the lows. Trade 6 had no follow although it went a point or two in my favor so I scratched it before it could ramp against me. Trade 7 moved about 3.5 points in my favor but lunch time ended up being very choppy and the lows held so I just trailed the stop and took a smaller target. Very tough day today (for me).

Trade 6 (Short 2 contracts, scratched trade +.5, -.25 points):
Trade 6 Screenshot

Trade 7 (Short 2 contracts, +1.75, +1.75 points):
Trade 7 Screenshot

March 19, 2009 Trade 5 Long Stopped Out

This one was kind of bone-headed, yes I bought support but I thought that eventually the topping pattern would follow through and that support would break which it did.. Took my stop.

Trade #5 (Long 2 Contracts, Stop taken -2.5, -2.25 points):
Trade 5 Screenshot

March 19, 2009 Thursday Trade 3,4 Short

Both trades 3 and 4 were to try to get in on a retracement to follow the morning's downmove since this looked like a topping pattern to me on the 60 minute chart. Trade 3 was too early, and was stopped out for an average of -2.25 points. Trade 4 was a better entry but the follow through on the downside was stopped so I just scratched out the trade for +.5 points. Right now we are stuck in a trading range could be a bear flag, or not. Got Vista blue screen of death while trying to post my blog, lucky I wasn't in a trade!

Trade 3 (Short 2 contracts stopped out -2 points, -2.5 points),
Trade 4 (Short 2 contracts scratch +.5 points):
Trade 3,4 Screenshot

March 19, 2009 Thursday First Two Long Trades Stopped Out

I was on the wrong side of the market this morning, aggressive sellers took control from a key resistance level, and filled the gap up. I tried to buy pullbacks, was rolled over. Here are the first two trades and charts/analysis.
Trade 1 Long 1 Contract (stop taken -2 points):
Trade 1 Screenshot

Trade 2 Long 2 Contracts (stop taken -2.75, -3 points):
Trade 2 Screenshot

March 18, 2009 Fed Day Trade 3 Long 1 Contract

Hit a home run with 1 puny contract hehe. My strategy was easy, just wait patiently for the Fed to announce, if positive wait for pullback of initial buying spike to some decent support level and fine-tune entry on 233 tick chart. I made +10 ES points and risked only...3. I only went long 1 contract due to risk management. This is my last trade for the day. Chart and analysis follows:
Trade 3 Screenshot

March 18, 2009 Fed Day Trade #1 Long 2 Contracts

Pullback trade going with this 3 minute uptrending channel. Here I scratched the trade early because I saw a lack of follow through. The original stop 2 ticks below the 769.25 level would have held and allowed a decent target, but no regrets during lunchtime. The trade took a -1 and -.75 point stop. Charts and analysis below:
Trade 2 Screenshot

March 18, 2009 Fed Day Trade #1 Long 2 Contracts for Gap Fill

I had drawn in a 3 and 10 minute downchannel which looked like a bull flag to me. I noticed the gap was a big gap down, and that there was an oversold condition on the 3 minute chart, I just waited for the open to see if support at the lower edge of the channel was holding. I saw my W forming on the 233 tick chart and went long with a stop 2 ES ticks below the 766.75 swing point (premarket low). It held by 1 tick hehe. I trailed the second contract for a much greedier target (e.g. trying for full gap fill), but the trail stop was hit. Trade got +2, +.5 points. Analysis and charts below:
Trade 1 Screenshot

March 17, 2009 Tuesday Reflections on the Day

I was looking at my PNL report for the current month and realized, I f'd up pretty bad today. My greatest winning day was only about $433 on a daily basis for the entire month but today I got a -$799 drawdown. Guess why? I mis-allocated my contract size and traded 2x or 4x normal size for counter trend that I usually do AND did that at lunchtime, when traders are away eating lunch and there is less trading volume (usually). I did two shorts during lunchtime of 2 contracts then 4 contracts (see my journal for trades #4,5 for today). That is an additional 4 contracts that should never have been traded at all according to my rules (which accounts for -$500 in the day's drawdown). I should have done 1 contract and 1 contract for the short plays (which were misguided trades to begin with hehe). Granted I was mostly trading short against a trend day (a day which opens near the lows and closes near the highs of a long daily bar) which never works well. It is obvious now what sort of day it ended up being but around noon Chicago time it was still not obvious (to me at least) yet. As you can see my performance this month is pretty consistent, with no losses until today. I think I was overdue for a losing day but only -$300 to -$500 would have been acceptable. Here is my PNL report up until now from NinjaTrader(TM) assuming a $4.80 per round turn commission rate:
March 1 - 17 PNL Report

March 17, 2009 Tuesday Trade 6 Long 2 Contracts

Saw descending wedge which had a fakeout to the downside of a 10 minute channel break but really the channel was expanded and held. Anyone shorting the trendline break to the downside on that 10 minute chart was trapped shorting low 3 minute stochastics. I saw a very well-formed W bottom on the 233 tick chart which triggered me to get long. The trade got +3.25 +3 points. I am proud of myself in that I didn't get scared, just took the good setup when I saw it despite having a 1k drawdown from before :D
Chart analysis follows:
Trade 6 Screenshot
There is a type-o on my screen grab, the 3 minute chart says Trade 6 short 2 contracts should be Trade 6 long 2 contracts.

March 17, 2009 Tuesday Trade #4, #5 Stopped Out :(

Not my day I did two more shorts at the top of this channel on an overbought condition. My big mistake here was over-allocating greater than normal size here, on a week where there are too many things going on (options expiration, Fed, weird morning strength) instead of trading lighter or not trading (also it is lunch time duh), not smart. I enforced my stops, -2.5 points on trade 4 and -2.25 points on trade 5. The day is not over yet but this will be probably be my first drawdown day in 15 days. Charts and analysis below:
Trades 4,5 Screenshot

March 17, 2009 Tuesday Trade 2,3 Short Stopped Out

My trade idea here is shorting a retracement up for a move down to continue the selling from the previous day.
Trade 2 was a short, that was too early, didn't wait for an overbought enough condition on the 3 minute stochastic. Trade 3 was a better entry with better confirmation, but good news (Fed relaxing capital requirements and good housing starts possibly?) or just price had a nice buying spike took the stop. The stops were between 1.75 and 2.5 ES points. Always enforce your stops or you will be sorry, the market is showing us it doesn't want to go down this morning, whether news driven or otherwise. Charts and analysis below:
Trade 2,3 Screenshot

March 17, 2009 Tuesday Trade 1 Long ES for Gap Fill

I saw an oversold condition on the 3 minute chart, long 10 minute chart tail and 233 tick chart showing it wanted to go up so went long 1 contract for the gap fill. The index futures market have a tendency to gravitate towards the gap fill or yesterday's close level, there is a detailed study of it on the mypivots.com Web site in their forums. The gap did fill, and the trade got ES +1.5 points. Chart and analysis below:
Trade 1 Long for Gap Fill

Last and Final Trade 4 of the Day

The M top on the 10 and 3 minute charts broke the back of the upmove. This setup was just waiting for the price to retrace back towards the midswing or some decent resistance level and get overbought again and hope that there would be an afternoon selloff. There was this time, got +1.25 and +4.5 points. Charts and analysis follows:
Trade 4 Screenshot

Trade 3 Short ES R2 Pivot Failure Stop Taken

Saw a 3 minute bearish engulfing candle, and also that the R2 daily pivot level was breached but the price fell back below showing that some people who chased were trapped. I did 1 contract short only due to being lunch time and counter trend. Unfortunately I stopped myself out of this trade for -.75 because I did not see the follow through I wanted. Charts and analysis below:
Trade 3 Snapshot

Monday Trade 2

This was a counter-trend short, I waited for the breakout of this bull flag and waited for long tails to form or something else to show me longs being trapped. All I did was short 1 contract looking for a small selloff (2 points) doing smaller size because of the possibility for a big short squeeze. Bad execution on my part only got .5 when I could easily have been filled with 2, just a little too anxious. Charts and analysis below:
Trade 2 Snapshot

Monday First Trade

Was just looking to buy some sort of pullback after the open (mindful that we have a gap-up and possible fill potential which is a negative strike against any longs). I saw a nice reversal off of the 233 tick downchannel's lower channel line, oversold stochastics hooking up and a huge tail on the 3 minute hammer as well as the bid/ask volume showing buyers taking control on the 233 tick. I got my first target and tried to trail beyond the highs for a possible runner. The reason for my bullish bias is just that the overnight Asian and European markets all had a nice rally. Now there is a trading range forming so am waiting.
Trade #1 Charts and Analysis below:
Trade 1 Screenshot

Update Took My Stop on EUR/USD Short

Enforced my approximately 30 pip stop, the trade broke a resistance level I didn't want it to, I typically put my stops about 10 pips away from a 15 minute chart swing point. Stopped out for about -28 pips on 20 microlots.

Update scaled in 10 microlots for EUR/USD Short

The most recent trade (EUR/USD short) retraced against me about 20 pips. I feel that this nice top and resistance zone will hold so I scaled in another 10 microlots on an overbought 5 minute stochastic and some price confirmation that showed me that resistance was holding. Below is the 15 minute chart showing my new positions, stops and targets. The first 10 microlots I shorted I will still try to get profits at 10 pips above the S2 support level and the second 10 microlots I scaled in I will try to get out at 10 pips above the recent swing low which formed on the first nice reaction down after I first entered the trade. Below is my screenshot about 5-10 minutes ago:
Updated positions for EUR/USD short

Sunday March 15, 2009 Short EUR/USD

One of my FaceBook friends alerted me to a decent trade she had on over the weekend, which caused me to open my trading platform and notice there were multiple x/USD crosses which were failing resistance. Here is my trade so far, put stop over a multiple layer of resistance and shorted a slight break here only scalping it to the R2 support level on EUR/USD:
Screenshot about 5-10 minutes into the trade

Friday March 13, 2009 Trades

Trade #1: My first trade of the day, nice divergences
of MACD with price on multiple timeframes and failing upper channel line. Premarket though so only shorted 1 contract. Short was in direction of the gap fill level (yesterday's close) which is another bonus.  Analysis/chart below:
Trade 1 screenshot

Trade #2 and #3:
Here is my trade #2 and #3 of the day. It is based on the same setup of shorting resistance (was anticipating market needed to sell off from looking at hourly chart). Trade 2 was too early I was almost immediately stopped out but I thought the setup was still good so I jumped back in on more confirmation and made back the stop on the second entry.  Analysis/Chart below:
Trade #2,3 Screenshot

Here is my last and final trade for today. I spotted a mostly sound looking bearish Gartley pattern on the 3 minute chart that was in line with the downtrend on the 10 minute chart and price showing it was failing multiple layers of resistance. My analysis and charts are below:
Last trade #4 of day screenshot

Thursday March 12, ES Trades

It is strange how lately I have been doing exactly three trades a day. Is three a lucky or unlucky number? I will be quitting an hour early today,
since I expect a slow bull-market style grind up, which is not my trading style.

Trade #1: My morning trade was to go long after the gap up had been filled to the downside. I saw a very good support area with long wick on my 10 and 3
minute charts and very oversold condition. In retrospect I should have trailed my second contract as the market caught
an extremely good bid and ramped up early in the morning. Analysis below:
Trade 1 screenshot

Trade #2: My lunch time trade was just a short of the daily R1 pivot level. There was also a nice tail formed on the 10 and 3 minute charts in addition to a very overbought condition. Analysis is below:
Trade 2 Screenshot

Trade #3:  My final trade of the day was shorting the November 2009 low which is/was an expected strong resistance level other traders are watching closely. I was almost stopped out but did get a small profit. The market fooled a lot of people here, the price actually rallied through the resistance point with not much of a pullback whatsoever and killed the shorts.  Analysis below:
Trade 3 Screenshot

Thursday March 12, 2009 GBP/USD Short

I woke up at about 2 AM and watched the currency markets for about an hour. I saw a nice looking bear flag on the GBP/USD with large tails on top of the structure.  Shorted at 3 am or so.  The low of this flag is the point D of a bullish Gartley pattern on a larger timeframe (my 60 min chart, it shows up on say a 4 hour chart too).  I have seen this pattern mentioned on other blogs so I know other traders are watching this.  The point D is both a big support and panic level, I have already taken 69 pips profit on my first 10 micro lots and am trailing 10 microlots for a potential break and panic of point D.
Here is my initial screen grab about 5-10 minutes in to the trade:
Forex Trade 1, Short GBP/USD


The trade got +69 pips on the first 10 microlots and +71 pips on the second 10 microlots for an average gain of 70 pips.

Wednesday March 11, 2009 Trades

I saw an important level (730) being reject in the premarket on the S&P500
futures as well as some tails which had formed on the 60 minute chart candles.
There was also a divergence on my oscillators on the 60 min chart.
I shorted the open of the equities market which was in line with a downtrending 3 minute channel and in the direction of the gap fill.
Typically I do not trade before the first 15 minutes of trading has completed. However today I felt there was a good chance for at least a partial gap fill (e.g. anticipating that the price will at least partially retrace back to the yesterday's close level from the open of trading).

Trade 1 Analysis (Shorted 2 ES contracts):
Trade 1


I did a second long trade from a good support area, but only 1 contract since it was the beginning of the lunchtime dangerous trading zone (deadzone).

Trade #2 Analysis:
Trade #2 in deadzone


I barely survived this third trade with a profit, as there was pretty ferocious buying in the afternoon and I shorted.

Trade #3 Analysis:
Trade 3 Bearly Survived!

Tuesday March 10, 2009 Trades

Trade #1:
My first trade was just the first 3 minute chart significant (looking) pullback to the daily R2 pivot level.  Often these levels do not hold exactly but within some sort of range, it in general held.  If levels are breached but the price snaps back over support that is a good sign too.  I did not trust it to run too much as a potential double top off an extended move was possible.
Trade 1

Trade #2:
The rally hit the daily downtrend line on highs, and showed signs of topping out.  We got tails on the 10 and 60 minute chart as well as a well-defined divergence on the 3 minute chart for the MACD (price makes new highs but the MACD does not and curls over).  A failed attempt to go back to the highs and becoming very overbought on a smaller timeframe (233 tick chart) was the perfect opportunity to short with a reasonable stop.  The only big warning sign was that it was lunchtime when trading should be done with caution:
Trade 2


Trade #3:
I was debating whether or not to do any afternoon trades, as there was a big chop zone which had developed.  It looked dangerous to trade on either side, either long or short.  I saw the a significant 60 minute trendline (on highs) being rejected and figured I could squeeze in one last trade on the short side.  I took my stop.  Eventually the big congestion area turned out to be a bull flag as new highs were made late in the day.

Following is my analysis of my trade:
Final Trade 3

Monday March 9, 2009 Trades

My trades from Monday March 9, 2009.

My morning trades (four of them) for Monday March 9, 2009:
First four trades

My two trades during lunchtime, I spotted a well-formed but not perfect Gartley pattern (yes I know lunchtime trading is to be avoided, but this seemed very good):
Two lunchtime trades

I did no afternoon trades. The Gartley that was holding up nicely above eventually cracked after multiple tests of point D which was a breakdown trade opportunity. Some traders put their stops on bullish Gartleys below the point D some put their stops below point X. However since my style is normally not to play breakouts or breakdowns due to stop placement being too big, I passed on the failed pattern trade. I place my stops based on significant swing points on the 3 minute chart when there is "normal" trading activity, so falling knife shorts I need to pass on. If there is exceedingly active trading volume, like during a Fed announcement or Non Farm Payrolls report like on Friday, I will use a well-defined 233 tick chart swing point since the 3 minute chart will just show a huge wide ranging bar of some sort.

Day Traders are Misunderstood

Day traders are highly misunderstood, and have a bad reputation as being gamblers or fools (or both!) due to the high popularity of this niche field in the late '90s tech boom (and bust) where most day traders who originally were making a killing were wiped out as market conditions changed and they failed to change their trading strategies. My goal with this blog is to demonstrate that through technical analysis (analysis of market geometry, supply/demand, time and human psychology), risk/money management and discipline it is possible to generate consistent profits in any market conditions and that market movements are somewhat predictable rather than being "random" or completely unpredictable as many (most?) people believe (including certain Nobel Prize winning economists).

The growing popularity of retail electronic trading (more participants), electronic exchanges, regulation and trading technology has leveled the playing field for those of us who "screen trade" at home. Due to higher market volatility and whipsaw in recent times, day trading is actually a more lucrative method of generating income lately than the long term investment strategies held by conventional wisdom to be where smart people invest their money. Although the tech crash and changing market conditions of the late 90's wiped out many day traders, it also wiped out the vast majority of other participants. Day traders are uniquely suited to adapt to changing market conditions and keep a leg up on less nimble longer term investors because we do not hold positions overnight. Recently, it has been acknowledged on financial news networks that market conditions are such that only day traders are making money in these volatile whippy markets. A small bright spot in the public perception of day traders (or traders in general) is that technical analysis techniques which we day traders rely upon to earn our daily bread seems to be gaining wider exposure to the public and acceptance in its validity. Shows like Fast Money and Jim Cramer's Mad Money on the CNBC financial network are highly popular shows and spotlight technical analysis segments at least occassionally. Although Cramer derides technical analysis on a frequent basis he grudgingly seems to acknowledge its importance/relevance sometimes. So at least people who follow these types of shows and have some sort of enthusiasm for stocks and financial markets are more open minded to the fact that price movements are not completely random/chaotic in nature and can be anticipated/projected to a certain point.

Admittedly if you want to be a day trader the learning curve is steep (plan on taking several years to learn at least, as if you are going back to college to get a degree in an unrelated field) and the vast majority of people give up on being traders in general. I have heard anecdotal evidence that it is a 80 percent dropout rate for people who attempt trading as a living. These people of course return to their day jobs and previous mundane existence, which is perfectly understandable as I felt like quitting several times myself. I believe strongly that I have no natural genetic aptitude for trading and that day trading is a skill that can be taught and learned by anyone who has the determination to succeed at it. Follow my blog if you are in the camp that feels it can not be done or even if you are just curious. I will try to diligently post my trading results and analysis on a daily basis for a year or more's time.