[jasont]

Trading For 10th September

Does yesterdays price action change everything or is it an accumulation period? Volume reached levels that have previously coincided with market reversals. Still yet to pass July lows and even if we do it will be interesting to see how far beyond there we move. Right now fundamentals seem to be getting better. Credit Crisis is becoming last years news, housing is improving and commodities are less of an inflationary problem. To me that seems like the big players who moved to commodities for growth whilst we had the problems in equities might have moved their funds back into equities again.

Day's Trading Goals

Spend 60% Or More Of My Time Watching The 5 Minute Chart

Make 5 Or Less Trades

Make At Least One Trade In The Direction Of Established Trend

9:16 Market currently at a gain of 5 points in the overnight market. Was pretty choppy action overnight. Current trend up is holding. Only news today is the Crude Oil at 10:35am. Actually looking for a rise right from the open today. Should we hit the 1240 area and fail to continue strength I would be looking for us to break yesterdays low.

On another note, I do feel like I am coming down with the Flu so I may not actually trade today. It depends on how with it I feel.

9:36 Moved down from the open, volume increasing on the decline.Tick is showing early negativity.

9:53 A bit of undisciplined trading here. Entered long originally at 1233.25 and got spooked out at 1232. Reason being a retracement after a reversal with declining volume on the pullback. Entered again as I saw the move take off as an impulse at 1235.25 with profit target at 1236.75. Target was taken.

10:13 Not feeling great so calling it a night. Flu is taking it out of me and feel as though it's altering my decision making.

Daily Wrap Up

Unfortunately my day was cut short due to the Flu getting the better of me. I felt like my analysis was working for me but my decision making concentration was being hit with lethargy. I took two trades, both were good trade ideas according to my analysis. The first one was a touch too early and the second one was an impulse trade in late off the same idea that really acted as a revenge trade to get back what I lost.

I ended up a 0.25 point ahead at the end of the day but it was pretty much a non event. The past two days has really seen my analysis pick up again. Keeping my focus on the 5 minute chart has me feeling like I am back in touch with the market action. I feel like a little more confidence is needed in my analysis though.

Today, prior to entering my first long I mentally had 1231.25 as our point to reach on the retracement according to the 1 minute chart. I feared we would move before reaching there and jumped in prematurely only to take an unnecessary 1.25 point loss. All great in hindsight but these sorts of things are where my strengths lie so I would like to place more emphasis on that. Something to work on I think.

I'm not sure how I'll go for tomorrow. I will still act as though I will trade and if I get to the open not feeling 100% I will make the decision then. I am hoping the worst of the flu is behind me but I have my doubts.

[jasont]

Today's Trading Goals:

Spend 60% Or More Of My Time Watching The 5 Minute Chart

Make 5 Or Less Trades

Make At Least One Trade In The Direction Of Established Trend

9:02 Well we certainly are in an interesting position here. I'll keep my idea of possible accumulation going on down here until we break July's lows. Beneath there and things are likely to get messy. We are currently trading at 1217.50 which is the previous low point. It could prove to be pivotal right now but for the moment I'd say 1200 is a more important level to watch. Such a substantial gap down has me looking for some early strength. It may be short lived though as I suspect many traders may be looking to exit longs bought in hope of further upside momentum at 1222. If we breach 1230 we may get the buying side moving. Today we don't have any major news during market hours.

9:35 Going with the premarket uptrend fixed support and my initial analysis in long at 1217.50 going for a move to 1220 where I have my profit target. Only a half position to what I ordinarily have as it is a reasonably risky trade for my plan. Stop is at 1215.50.

9:39 Market took my stop as we moved down heavily, loss of 2.5 points, 0.5 points slippage it would appear. Interesting that we have such a big Tick move lower so early into the day.

9:45 Volume seen to be declining on the 1 minute chart on the move lower. Hitting Tick extreme levels. No divergences as yet though.

9:51 Missed opportunity for a retracement entry on the long side. Didn't appear to hang around long at the 1214 area before taking off.

10:09 Went long in the market at 1217.50 for a retracement entry. Market came back so I got out at 1217.25 for a 0.25 Loss. I then made a mistake by shorting against that move and not paying attention to my analysis. Entered short at 1218 and stop taken at 1220. Lessons learnt.

10:26 Went short in the market too early. In at 1220.75 and had stop at 1223. Market came up to 1223 and then went back down. Rather irritated me but I got back in short again at 1222.25. First target taken at 1220, stop moved up to 1223 on second position. Reason for the trades was 1-2-3 top with Tick showing decreasing strength. Will try to ride this one.

10:29 Moved stop down to 1222 as it gives me plus 0.25. Shouldn't reach back there if we are heading lower in my opinion.

10:32 Volume declining, does this move mean downward shove is not favored? Hit extreme Tick reading on selling side, if it's not after an extended move I ordinarily take it as some strong selling as opposed to exhausted selling.

10:40 Pet hate, having the market come up and take out a stop for just over break even when it was previously good gains. Ah well, stop hit at 1222.

10:51 Took a short trade earlier at 1222.50 again for a second chance at the drop. Took 1 point on half and breakeven on the rest. Ended up long 1 half accidentally but took a 0.25 gain on that also. I'm in a hole profit wise right now so time to work my way out of it.

11:11 I just had a messy period of scaling into the market way above my risk. Not even worth dwelling on at this point.

11:30 Calling it a night. Ended the day ahead but it was only due to my scaling into a position much larger than I should. Will need to work on that.

Daily Wrap Up

Today brought in a mixed bag. My analysis of the market again was good, that is a positive sign. It means I have my usual way of looking at the market back after it ran into difficulty during August. Each day since Tuesday now I have felt I am in touch with what the market is telling me. I attribute that to my focus remaining on the 5 minute chart for most of the time.

There was two good trades that stood out for me today. One was at 10:06am and the reason I liked it was because the entry was following my plan. In a day where following the plan became difficult, I noticed that we had established an uptrend on the 1 minute chart, we were pulling back on lower volume and were showing continued tick strength. I actually liked the entry point too.

The next trade I liked was of a similar fashion to the previous one. It was an entry at 11:26 where I saw volume decline again on the pullback and the Tick was still making higher lows. Plus we were near a new support area around 1223 so it was a good demonstration of following the plan. The other aspect of the trade I liked was that it was with the established trend on the 5 minute chart.

Things that can be improved upon from today is my trade management and my discipline. During trades I can pay closer attention to the Tick chart to see where the underlying stocks are gaining or losing strength. I have guides in my plan to follow that utilize the Tick for managing trades so that would improve both my discipline and trade management by following it. For following my plan today I give myself a 3 out of 10. I did watch the 5 minute chart for the majority of the time which was good and took a trade in the direction of the established trend.

[jasont]

Friday I didn't trade due to the flu getting the better of me. I tried to fight it as much as possible but it kicked my ass in the end.

Weekly Wrap Up

I was sitting here for some time wondering what I would write about for this week's wrap up. I made a gain for the week which was positive. How I got there was not so positive and honestly a little unrealistic. I had moments in the market where I became so frustrated that I scaled into positions that were going against me. Number one amateur mistake I know. However doing so allowed me to see some things about my trading I didn't pick up on earlier.

I do enter the market a touch too early on numerous occasions. It does become frustrating when I see a big move coming, I get on and then it moves just enough to suck me out of the market before making that move I saw coming. I could let that remain the way I trade which would not be of benefit or I could work in expectation of that.

Often I see points in the market where we are likely to cause a reaction. As an example let's take Friday's open. At 9:46 on the ES we began to move down pretty hard immediately following what looked like a strong rebound from testing lower prices. At 9:50 we make a lower low on the 1 minute chart which would suck breakout traders in. However we bounce at 9:52 and make a new high on the 1 minute chart. We then come back down to the 1237-1236 area at 10:02.

Now this area is a reaction area once we made the new highs at 9:56. The reason being that the guys who entered on a short position and either didn't have a hard stop in place or had a larger stop than the move higher we made are now being tested. Their threshold for loss was tested as we moved against their breakout position and are now near their break even point. Many jump ship as they are thankful not to take much of a loss, at the same time we have the bigger trades loading up. That is the sort of thing I look for in places that are likely to cause a reaction.

Now the whole point of the above explanation was to point out that I see these areas but don't use them as best I could. Let's take the failed chance to move higher at 9:58. That sort of action gets me in early as I guess I don't want to miss out on a move should we take off. However then we come back down to the original area I was waiting for. Often in this process I get taken out.

So to tackle something like this I have a few options. One is wait for the move to reach my area of potential reaction. I will miss a few trades that take off without reaction that point though which is a downfall. The other option is to enter on a partial position here and allow my stop to be further past the potential reaction point. I get exposure should we take off but I also will be at a fair loss before I actually get to see whether we are reacting where I thought we may.

In all honesty the better option for my risk tolerance and trading style is to wait for the area to be hit. I am actually trying to get a data feed up and running for a new platform I am using which will enable me to use a 3 second chart I have been experimenting with. It will help with the better timing and reduced stop placement. Until then though I have to deal with what I have. Identify my reaction points and wait for what happens at them.

So that is one thing I picked up on my trading, entering early on trade ideas that were correct. The second thing I picked up on was increasing my risk unrealistically. This came about from entering these above mentioned trades early and adding to positions as the market went against me knowing that I was probably too early. It paid off but that is the problem, it breeds bad habits. It only takes one time for that not to work to wipe out a good portion of an account.

The biggest positive for this week was my analysis. For the majority of the time I was in touch with what the market was telling me and I could pick up on the changes in direction. Sounding like a record player, it was due to switching my attention to the 5 minute chart. It is what I have the biggest understanding of and using that for my analysis and then switching to the 1 minute chart for my entries made a big difference.

Another positive was the introduction of the retracement trade which I have been having difficulty understanding till this point. When things were going well prior to August I had trouble entering the market in the direction of the trend with retracements. This week saw me picking up on retracement entries according to the 1 minute chart, Volume, the Tick and trends. This at an early stage appears to be helping compliment my reversal trades quite well. Once I am confident in the pair working together I can possibly look into adding positions according to initial entry with reversal and adding at the retracement.

So for following my focus this week I am giving myself a 4 out of 10. I stuck to the 5 minute chart for majority of my trading which was good and achieved numerous goals I set myself for the days. It sets the pace to improve upon now so I have things to work with which is good.

[jasont]

This Week's Outlook

From what I am seeing the recent week appears to be failing to push the SP lower on big volume. Such big volume as we saw in the past has appeared prior to a turn of trend. At this stage the things it has going for it is, large volume failing to push it lower, possible double bottom or 1-2-3 pattern. Thursday's low really sets the point for me at which we should not fall below if we are seeing some strong buying coming into the market.

The VIX is still on the rise but does appear to be waning in put option interest. Gold appears to have made a solid move over the weekend, I'm guessing it is due to the concern over Lehman's possible bankruptcy. Though I suspect this recent buy up of gold is not as much an investment in gold as it is an avoidance of banks. It does certainly stir the pot on if your money is really safe with banks right now. Oil is still currently sitting under the $100 mark. A healthy bounce here would be nice.

The USD is seeing some easing of strength after its pretty much uninterrupted run from July.

All of this information has me on the side of the buyers but think the area we are in is rather touchy. Monday is going to see the Lehman trouble hit the market. If that manages to push us beneath Thursdays lows then I would reassess my buyers position at the time. However after such a volatile week last week I do suspect we may tone it down a touch and make a run for higher prices possibly mid to late week. It is very likely we will see some downward testing prior to moving higher. This Lehman news will really show the strength of the market I believe.

[ochie]

Originally Posted by jasont »

So to tackle something like this I have a few options. One is wait for the move to reach my area of potential reaction. I will miss a few trades that take off without reaction that point though which is a downfall.

I prefer this option and it should show improvement with the smaller TF chart you are working on implementing (I have found a tick chart in the area 20 ticks for NQ) does a pretty good job. Since you are familiar with 1-2-3 patterns, I would consider looking for these as entry patterns on your small TF chart. They do show some S/R level holding strength before retest. These patterns should appear often (instead of the PA bouncing up and down on a single 1 minute bar) and provide better definition of your entry/stop placement imo.


P.S. Good Work!

[jasont]

Thanks for that Ochie. What you have suggested is pretty much what I have been looking at with the 3 second chart. On a 5 minute chart a reversal is pretty obvious but sometimes difficult to catch. After seeing the reversal I monitor the 1 minute chart for the first pullback from the reversal.

Currently I am relying on exactly what you mentioned, the "PA bouncing up and down on a single 1 minute bar" as we reach my expected reaction point. In a way I find it becomes more intuition work than solid plan work when relying on the 1 minute time frame in comparison to the 3 second chart. I have noticed the action becomes a fair bit clearer in the 3 second chart with the further breakdown of volume and action showing clear signs of build up.

I currently have a slight catch 22 problem right now. The new platform is good and ready for to use for trading. I just need to get my hands on live NYSE Tick Charts. It is the single tool I need. I am waiting for OpenTick to accept new subscribers and it will then cost me $1. However every other data provider charges monthly fees on top of the exchange fees which makes it rather irritating and more costly than I'd like.

[jasont]

Trading For 15th September

Goals For Today:

Spend 60% Or More Of My Time Watching The 5 Minute Chart
Make 10 Or Less Trades
Make At Least One Trade In Direction Of Established Trend

The goals are pretty similar to last week except that I have upped the amount of trades I can make. I haven't changed them much because I feel they needed more work this week.

8:54 The Lehman Brothers and Merrill Lynch news has hit the market pretty hard. We are currently trading at the 1213 area. This looks likely to blow out the recent low and take us to the July lows. What happens down there is going to be of high interest to me. I'm not sure whether to air on the side of some sort of early attempt at recovery or whether to air on the side of immediate break down. I'm actually going to rest on neutral until I see the action. Oil has taken a whack already and the USD appears to be favoring the news at this point.

No major news announcements today so the market is left to purely digest the banking news.

9:34 Market opened and moved higher from the outset. Volume on 1 minute chart has shown decline on the rise, Tick has remained negative. Currently testing the overnight market downtrend.

9:46 Recovery, false or real? Tick hasn't sustained a move above the zero area at this point. Stocks haven't shown buying strength at this point just less weakness. Volume has increased on recent up move and levels are high. Are we setting up for drop just as far as the rise or are we looking at an up trending day? Right now the angle of the rise is near 90 degrees. Not healthy. Currently s/r levels being cut through like butter.

10:23 Shorted the market up at 1225.25 as we showed Tick divergence and declining volume on the move higher. Had a hiccup with orders initially but worked it well. 1st target was taken at 1224 and stop brought down to 1227 on remainder. 22-21.50 are shows possible reaction point.

10:27 Second position closed out at 1226. Market not ready to drop here. Just yet it would seem.

10:37 Moved higher to 1234 and have now seen the heaviest volume come in we have seen for some time. Tick pulled back from higher area pretty quickly. Trend up still holding.

10:53 Something identified to work on. Saw market flattening off at 1228 with decreased volume and meeting trend line. Couldn't bring myself to trade with the trend though. Not healthy for my trading as we moved roughly ten points. Would have been a good trade. Need to assess my lack of faith in going with the broader trend.

10:57 Volume extreme coupled with Tick divergence whilst meeting the slow EMA. Could be signs of a reversal. Will stay prepared for the possibility.

11:11 I thought it was better late than never to get on this uptrend. Got in for half a position long at 1230 with my stop at 1227. Only wanted to scalp the trade as I don't trust being in this trend so late but it was in the rules and one of my goals. Volume tapered off on the move down as we hit the uptrend of the day. Placed target at 1231.25 which was hit. Small gain but had my rule based reasons behind it.

11:49 Been away from the market, was messing around with getting my new platform organized. Will leave today as it stands. Was good trading, remained patient and followed the plan. Big improvement.

Daily Wrap Up

Less trades today but a big improvement. On a day like today I could be disappointed that I didn't pull more from the market but I feel I made a bigger achievement than points today. I was able to stick to the plan and didn't make any impulse trades. I felt like I was back to my usual self.

There were a few more opportunities that presented themselves in the direction of the trend that I didn't get on board. I am happy I can see those opportunities and I do believe the 3 second chart will allow me to zone in on my entries with those better. Seeing the rising volume earlier than a 1 minute bar will give me the ability to get in without a huge stop point.

I achieved all of my goals I set for the day which was a big positive. Both of my trades were according to plan. The first one was good because I saw volume declining on higher prices from a reversal candle and a tick rejection from positive values. I also made a mistake where I entered with half a position and when we couldn't make a move higher I wanted to add the second half. However I accidentally added another full position. Remaining strong with my analysis I put an order in to get rid of the extra half at break even and it was taken. My management of the situation was good because I respected my risk tolerance.

The second trade was good because it was in the direction of the trend after we saw declining volume on the pullback. I wasn't confident we would make a new high so I entered on a half position just for the scalp. It was managed well.

For following my rules today I give myself an 8 out of 10. It is a big improvement on my previous day of trading. There were more opportunities to be taken but first I want to get my trading back on a leash and under control before searching for more opportunities. I felt like I had to go back to square one after August but now I am seeing myself get back on track. I will be trading with the 3 second chart tomorrow because my platform is set up. It will take more concentration but I feel it will give me further guidance. The day ended ahead by 2 points.

[jasont]

Trading For 16th September

Today's Trading Goals:

Spend 60% Or More Of My Time Watching The 5 Minute Chart
Make 10 Or Less Trades
Make At Least One Trade In Direction Of Established Trend

9:02 Well it appears that as soon as we broke the July lows we decided to run hard. In the overnight market is has been no different. We are currently trading at 1172, a 20+ point gap down at the open, not quite as big as yesterday but still considerable. I don't have any levels down at this area so it may be a quiet period of trading for me. I will establish what side the big guys are playing and go from there. We could see another rise early on that breaks down or we could see the complete opposite. At this stage things don't look pretty and caution is needed without any s/r levels at my disposal.

9:41 Entered long at 1170.75 in direction of new trend formed in the pre market. Market moved my direction as I was stuck trying to figure out the new platform for the simulation trading. Bought and sold a few times before actually settling down. Took first profit at 1274 and took the second half off at 1281.25. Reason for taking the trade off was we were seeing some resistance to the Tick strength and lack of further upside movement in the face of large volume. Was a good trade.

9:48 Volume has been rising with the move higher, Tick passed the zero area but now pulled back beneath it. Tick has in fact been pretty quiet up until this point.

9:57 Entered long at 1273.25 after seeing declining volume on the pullback in the uptrend. Showed big volume come in on the 3 second with little movement lower. 1st Target hit at 1274.50. Stop moved to break even on the rest. Not sure I trust it but will let it go.

10:01 Stop moved up to 1174 after we bounced from there. Took rest of position off at 1278.50. Maybe a bit early... actually really early hehe.

10:06 Currently seeing a decline in the volume as we move higher, Tick back at positive ground but failing to make a good move above. Stocks resisting the urge to buy in this market. Will let this play out some more.

10:39 Market has been scraping higher but with less oompf than earlier. Volume has not been showing much for either side, become a bit choppy. Tick is struggling to stay above the zero area which indicates only modest buying on the stocks behalf yet we have seen 20+ point rise from the open.

10:53 Going to call it a night here.

Daily Wrap Up

In all honesty the 3 second chart worked better for me than expected. Today it helped me discern big volume prior to it showing up on the 1 minute and 5 minute charts which allowed me to take excellent entries. Of course this is not some magical time frame and I need to make sure it doesn't bring in overconfidence. Most of my work today was done with the 5 minute and 1 minute chart but watching the 3 second at areas I was looking for a change of direction helped get me in early.

I took two good trades today. The first one was based in the direction of the most recent trend formed during pre-market. It was good that I saw volume taper off as we moved down and that I picked up on the big volume enter on the 3 second chart down the bottom of that pullback. I was also pleased it was a trade in the direction of the trend. I did have a few hiccups trying to figure out the simulation trading system properly but it worked out in my favor.

The second trade was of similar nature, again it was good that I picked up on the declining volume as we pulled back and then the big volume entering in on the 3 second chart as we reached the bottom of the pullback. Again it was good to have another trade in the direction of the underlying trend. I did close the trade out pre-maturely and it would have been nice to scrape out the extra few points but I don't have to get every little tick out of the market.

For following my plan today I give myself a 9 out of 10. I made two trades in the direction of the trend, I followed the 5 minute chart for most of the time and I made less than 10 trades. Today I pulled in 20.25 points which is a good way to start my trading with the use of the 3 second chart as well. However during the day after my second trade I became a little cocky and had to pull my head in to make sure I didn't make impulse trades. I was happy I recognized it early and halted placing any more trades until it was under control. After some time I then decided it best to call it a night before sabotaging my work.

Something to keep in mind is that day's like yesterday are not everyday occurrences. I need to keep a realistic outlook and accept that they can occur but not expect each move I enter to rise 10+ points. Take advantage of the times we do but don't expect it.

Below is the setup with my new platform.