ER2 Trading Strategy Question

[Soultrader]

My strength as a day trader lies in the morning session. I dont have trouble finding setups during the morning and I usually have levels that I identify premarket that I focus on at the open.

Although I do not lose in the afternoon sessions, my weakness lies clearly during this timezone. I have trouble identifying setups and usually miss the nice afernoon reversals.

An interesting comment was made in the chat room today by GCB.

	Quote:
	Well, I should have anticipated that big ER breakout. The market broke down, but ER really didn't. The overall breakdown fizzled and ER went to the top of its range. Should have banked on it. I love those kind of plays.

It didnt strike me at first but I was going over my trades after the close today and this comment triggered in my mind. I realized that I need to add further method to play these reversals myself. The comment refers to the ER2 breakout from todays chart.




I would love to hear other traders thoughts on identifying afternoon turning points and strategies. How do you guys decide whether a market will reverse or continue in the initial direction of the trend?

One method I use it by using fib retracements but then I would be getting a pretty late entry on the long side. (break of 61.8% retracement)

Thanks

[wsam29]

I just avoid the afternoon all together. (That is what I did from my best month)

Give it a try, go do something else other than wanting to trade. At first, its hard to do because you have all these ideas you want to try out. That curiosity needs to be satisfied, and the end result may end up losing what you made in the morning.

If you made money in the morning, trade smaller position in the afternoon.

Now I know you use tick charts, just do a volume comparison with a time chart. More volume, more people at the party, people with BIG accounts. Heck I don't mind rubbing elbows with the rich and snub the poor. :p I snub myself all the time!

[Soultrader]

I understand that is an option. But rather than avoiding it all together I would like to gain new insights into afternoon trading so I can come up with a strategy. Trading small when in profit is an option as well but I only do so when I dont feel comfortable with the current market condition and trading setup.

[wsam29]

From what I recall hearing from someone, some of those locals are done after the morning session. Win or lose.

I figure, why not emulate what they do, and believe me, it takes a lot of self discipline to say "I am not going to trade the afternoon session." When you have a family and kids, that will come naturally because all you want to do is spend time with them. Thinking of new ways to trade would be the least of your concern. I look forward to that day myself.

Or do what JC and HS do, we did when I was there in Austin, TX. 2 hour lunch and be back for 1400h and look for plays in the last 2 hours of the session.

Tiger Woods loves to tweak his swing from what I hear, even when its fine, he ended up being in a slump one season because he kept tweaking. Like that saying goes, "Don't fix it until its broke."

[slableak]

I usually draw trend lines and when the price breaks the trend lines I am in a trade that direction. I get out on the break of the next trend line. I use a method of finding the trend line points. A to B equals C to D. THen I draw the trend line from A to C. I tried to post a picture but it would not post. It is up-loaded though. If you can post it for me soultrader it would be much appreciated.

[Soultrader]

Is this the chart you are referring to?

[slableak]

Yep, thats my trading chart. I made $400 off that chart today. 3 trades no losses.

[Soultrader]

Could you explain a little on that chart? I see alot of trendlines but how do you determine entries? How do you draw your trendlines? etc..

[walterw]

I like this thread ¡¡ it takes a great topic that I also have in common with Soul, I have a good statistical performance on the morning session... not that good on the afternoon.... Soul : I started doing this on the afternoon: Coil Breaks and believe me they work pretty good... it takes lots of patience... specially when you are used to trade on the morning energetic mood of the market, the tactic I use is taking the continuation of the break and not the break itself, because there are also a lot of false breaks... also I only pay attention to "big and long coils".... I attach concept.... cheers Walter.

[GCB]

James,

To me this kind of trade is a chart pattern and price action recognition thing, coupled with the background of the market behavior and internals. Today the market really tried to go down. There were some serious sellers today. But for whatever reason (pc ratio, liquidity) it just didn't go down like it seemed it want to. The ER has been so bouyant lately. It seems to end the day near its highs a lot. Like I said, I should have known and I did. I just missed it. I had a chance to get in. Next time I will.

The great thing about these reversals is that you can see them building up, so you have time to enter, and if you're bold and anticipatory you can get into them near the bottom of the preamble range and maybe even get your initial target before the breakout and then ride the breakout itself stress free. Either way, the great thing about them is that you can hit your initial target before you even know it. Reversals are becoming one of my favorite patterns to trade.

I don't know how long ER will continue to act this way, but these afternoon run ups are becoming semi-regular events.