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First of all, I was FLAT going into the news at 2:00 pm ET. I have learned the hard way that I must not trade the news, but just the REACTION to the news. And even then, I must wait longer...
Secondly, if you notice A and B, those are the first highs and lows after the release. Once A was broken again to the upside, I knew to "let 'er run."
Third, you can't see it on this chart, but point C was at the VWAP, which can be good resistance. I thought we might get a pause or reversal here I was thinking about shorting, but I waited...
Fourth, I did not even consider this short until I saw the OBV line (point D). Once I saw the OBV was NOT climbing along with price, I decided to enter short. The OBV being weaker than the price said "The guys with the money are NOT participating in the run up. It's all retail traders. It's all amateurs. It is okay to fade the move"
So I did. With the smallest possible position size = 1 micro.
And it dropped FAST.
I stayed in the trade until I saw a strong reversal was happening.
And this is the result: 34 ticks on the MYM
Yes, I could have had $34 with 2 micros, or $68 with 4 micros. But news trading can wipe you out fast if you are not careful.
Yes, Going forward, I will post losses too.
But they are not as fun...
------------------------------------------------
Final tally on the day
27 trades
85% profitable
Average Trade $4.62 (win & loss)
Average winner $5.87
Average loser -$2.87
Largest winner $17.00
Largest loser -$9.00
Today we had another very tight range, and I am happy with my $100 (after commissions). Again, I want to be hitting $250+ per day soon.
Check out the tight ranges of the past three days. Wow. Feels like we are prepping for either a big run up to 4250 to 4500 or a break down to the 20 EMA at 4120.
As always, I try hard not to predict anything, but just be nimble and go with the flow in the moment. The trend is still UP, UP, UP. It has been up for the past year! And momentum is alive and well in the markets. BUT.... we must still be on our toes.
Yesterday we had some crazy fast down action followed by some crazy up action.
(5 min ES chart with 20/50 emas)
Yesterday was a break-even (B/E) day for me as I tried to be prudent amidst the craziness.
-----------
It feels like the market is about to drop significantly, BUT I have been saying this for about 15 years.
And I have been WRONG:
May 1, 1981 the SPX gets going at 132.72
April 29, 2021 the SPX keeps going at 4211
Only perma-bulls have it right on the big picture, thanks to inflation and institutional buying and everything else that will keep the big-picture market on a trajectory to Mars and beyond.
HOWEVER, this does not mean that we don't get pullbacks.
I have said here before that I used to be a perma-bear and 80% of my trades were short.
I have finally figured out that if the market is always going UP I probably should be flipping that ratio to 80% LONGS!!!
I am doing my best, and I think I have inched my way up from about 20% longs to 50%.
But I still love to short, and the faster trades are great. The market falls 4 to 7 times faster than it rises.
Clearly, as a day-trader, the best solution is to be looking for both sides of the market, and be equally adept at being profitable both directions.
I feel the same way... then I get my face ripped off over and over. Then I throw in towel and get face ripped the other way.
When everyone including permabears says thats it im thowing in the towel and going long... That SENTIMENT is telling you this IS THE TOP very soon... for now at least.
Especially with the idiots on TV lining up day after day to say the markets going to the moon cause thats what they all start convincing each other of.
I doubt it highly. They are just looking for a good dip to buy. That is what they do!
Been super busy today with my real estate stuff, but I have taken some long scalps off the lows and am up on the day.
Yahoo!
After commissions it should be about $150.
The trendline shown on the chart will be key today. If we break above it, then we could reach the overnight highs again easily.
Why were most of my scalps long and not short today? Because ...
(1) As mentioned previously, I have finally learned that LONG is the better default direction.
(2) Once the market is down significantly on the day, the chances of continued strong moves down is reduced (not eliminated!). As such, the higher probability trade is to the upside.
(3) If we are below the VWAP, then my default position is long. I consider the VWAP the magnet of the day. If we are above the -1 Standard Deviation band on the VWAP bands will I consider longs, or if we are near the -2 band and it looks like a reversal is happening.
(7 tick Range Bar chart, VWAP yellow, blue +/-1 stand dev, purple +/-2)
The above green arrows represent several long scalps I took on several instruments.
I know the ripping off of the face feeling well. I am doing all I can to avoid that from now on.
There are 5 ways to handle a big move up that you think is going the wrong way. Only the first two are acceptable:
1) Regardless of your opinion on the which way the market "should" go, the BEST solution is always to go with the trend! Study your charts, do market replay, learn all you can and get your entries to be in the 70%+ winners ratio. It IS possible.
2) The second best solution is to be flat. The moment you see that YOU ARE WRONG, then get out. Get out. Go flat. Get out. Breath. You survived. Congrats. Now you can join my friend who laughingly says on good days, "I just failed to blow up my account!"
3) BAD. Constantly fight the trend, but use a tight stop to limit the damage.
4) SUPERBAD. Do what I used to do, and let your trade go negative big time, building sweat and ulcers and hatred for all of humanity...
5) INSANELY BAD. You guessed it.. Keep averaging down on a trade that is going against you, adding position after position until you completely obliterate your account with a margin call. So many people still try this method. YES, they are correct 90% of the time! I get it, but it's that last 10% that delivers the nuclear bomb reality that YOU REALLY SCREWED UP! (Fortunately I don't try this option any more.)
There is a guy ("He Who Must Not Be Named") who broadcasts live each day for 90+ minutes to almost 1000 people. This week alone he had two -$2,800 losing days trading 3 NQ contracts. He didn't take his losses on one contract, but added to the losing trade two times. He finally admitted he was wrong and actually closed the positions out before the -$3,000 mark. Twice in one week! At least he didn't let the account go to ZERO.
I couldn't tell if he was on his live account or his TST evaluation account, but all those subscribers were watching and "learning" that this is an "acceptable" way to trade. (Hint: It is not!) I propose there are better ways to play this game...
I saw that video on a replay, that was brutal not taking a loss or a having a stop loss for that guy.
I believe the hardest thing for me is to recognize that we have a trend day vs a big range day. If you are not already in it, you'd miss the move or getting in late. Harder part if how big is the range.
I couldn't tell if he wa
I agree that it is one of the hardest things to know-- "Is this about to reverse big time OR are we breaking out?"
A 50 period MA can help answer that. If flat, assume we are ranging. Some people like the IDX indicator for trend/range determination.
The market is ranging 70% of the time. Therefore, my default is trading the edges of the range toward the mid line.
But sometimes the range is huge and you get some big swings inside the range. Try to follow them.
And sometimes we break out (usually to the upside).
What to do????
The market is mostly bullish, so going long at the bottoms of ranges may be the best trade of all.
However, the market seems to be trying to put in a top as of late.... Must be nimble.
You need to watch the price and your indicators for many hours and make your own determination about when we are ranging and when we are trending. How many day-traders are there? That's how many different opinions there are! But the only opinion that matters is YOURS.
Good luck.
Additional ideas: Watch the VWAP standard deviation bands. If we are above +1 or below -1, then chances are we are trending up or down.
And you might review my post on scalping in ranges:
Part 3 of 5. High-Probability Momentum Scalping: Scalping in a Range
The market is ranging about 70% of the time. So why do most traders spend all day waiting for a breakout into a new trend? Why are 90% of the traders going …
I am currently using the 50 EMA on a 5 min chart to answer the "trend" vs "range" question.
BUT as I mentioned previously, there are thousands of ways to get comparable answers to the question. What is key is that you watch and learn from your own unique set of indicators (or even naked charts!).
I am convinced that if you gave me ANY set of one or two indicators I could spend enough time with them to see how they respond 99% of the time and then use them to my advantage. You could do the same.
My purpose in sharing my journal is to NOT tell everyone how they should trade. I know there are lots of different styles. In fact I know that most people should not be trying to scalp. Trading is hard enough as it is, and scalping ratchets up the difficulty at least two-fold with the negative risk:reward.
While I have been sharing some "how to trade" posts, my purpose is much more to talk about "surviving" and the "mental game" in trading. "Money Management" and "trading psychology" with proper stops and patience, etc.
Perhaps a subtitle for my journal should be "Things I wish I'd known about trading 15 years ago." I know much less than many on FIO, but the school of hard knocks has really taught me some good stuff. And I enjoy sharing it.
I wanted to follow up on something I said at the beginning of my new journal: "25 topics." I have already posted about 11 of the main topics, and some of those (money management, scalping, levels) have received multiple posts. I wanted to post the most important ones first, so the order IS significant.
I still have several more topics pressing on me to get some journal space:
I really appreciate all those who have subscribed to my journal and those who have clicked "Thanks." I will try to continue posting topics worth your time...
And I will share trades, both good and bad.
And of course, all of this is meaningless if I can't apply the lessons I am sharing and actually take home some profits, so I will also continue to post frequently on my goal progress.
I stated I wanted to "take home" $8,000 per month, which means I need to make $4000 per week and withdraw $2000 per week. With 5 trading days per week, I want to get up to an average of $800 per day.
Right now I am consistently making about $100 after commissions, so I am about 12% of the way to my daily goal.
How will I get to $800? My average day is about 30 scalps, and my average net trade using just one micro per trade is about 7 ticks or about $3.50. I still use the MES, MYM, MNQ, and M2K (but I am using the MNQ less because it is completely nuts somedays!).
Yes, I am still attempting to "let the good trades run." (Homage to B.B. King "Let the Good Times Roll") And I am trying to keep my losses small.
But without changing anything at all, I should be able to get to $200, then $400, then $600, then $800 per day by simply increasing the number of micros I use per trade. Again, if I keep everything exactly the same except changing the number of contracts to 2 micros, I should be on the road to true wealth in no time. And you have a front-row seat. I hope show is good.
My first act was getting this journal going and not blowing up my account. LOL. Now it is time for my second act, and my main challenge: Can I break the mental barrier and trade with 2 micros per trade? (If I can do 2, then 3 and 4 should be much easier, but this first step requires a doubling of firepower...)
