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"Has Joe Biden stopped promising free money to any mammal that has a pulse?"
And the only conclusion I can come too is it might be better to be patient and sit on my hands (SOH) and look for confirmation of a bottom, and then look for LONGS off the bottom.
And it worked beautifully today:
After commissions, it is about $1,500.
I saw some really great setups, and I even pushed myself a bit outside my comfort zone and went for some of them with the full E-mini ES contract.
The market has been REALLY choppy lately, and I haven't gotten much traction for many days, so today was a great shot in the arm for me.
How low was low enough on price?
(Daily ES chart)
Notice the huge uptrend line, and notice the OPEN from last Thursday at 4053.50. To me, chances were good that where those two levels came together we would probably find some buyers. Today's low was 4055.50 on the ES -- just 8 ticks from my hypothetical low level. Watch the levels!
I have a friend who is probably one of the very best traders in the world on trending days. He loves to use automated fibs, moving averages, and MACD divergences and usually gets 5X the profits that I do on a daily basis. His winning ratio is about 85%, just like mine, but his entries are even better than mine and he is superb about letting his trades run. He is amazing. I am still trying to figure out how he does so well.
BUT he struggles with range conditions. This post is for him.
But everyone else can tag along too.
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Master the 70%: Range Trading Profits
I previously discussed [B]Scalping in Ranges[/B]. The market is ranging 70% of the time, so it is great to learn how to trade in ranges. At a minimum, everyone needs some "Anti-Chop" methods. But even better is to get to the next level, which is to acquire some "Kill it in the Ranges" skills.
1) So what if your broker makes a bunch of cash because you took 10 trades in a day instead of your normal 2 or 3? Don't be afraid to take extra trades in ranges.
2) The true VALUE of the market doesn't change as fast as the price is changing. Price is just an advertising mechanism. In general, if it is way up, it is saying, "Prices are high. Maybe you want to sell some and pick it up lower?" If price is way down, the market is saying "Prices are low. Time for a bargain?" And thus a range is born!
3) Yes, a range will eventually break out, but until it does, there are literally hundreds of dollars just lying around inside that range, waiting for you to pick them up. So do it!
4) Once you identify a range, then try to get two or three good trades. After that, keep going, but be on high alert for the breakout. Don't be greedy.
5) Most people who try to trade in ranges are expecting the price to revert back to the opposite side of the range. This is a big mistake. Only go for 1 to 4 ticks at a time on small ranges, and about 25% of the range on big ranges (half way to the midpoint). "Reversion to the mean" (RTM) trades are back to the mean, or middle of the range. But once you get to the middle, the chances drop significantly of a continuation. Why? Because the mid point is a magnet for price. Instead, wait patiently for "edge trades" near the bottom of the range (go long) and near the top of the range (go short).
6) Don't blindly fade the edges at the top and bottom of the range. WAIT until your fastest entry chart is showing a turn.
7) Carefully determine when a true breakout has happened. Until that time, scalping RTM is the best bet. (see #11)
8) I love to trade ranges as tight as 9 ticks on the ES. But the market is fractal in nature, and on a different chart, the exact same look may come from a 20 tick ES chart, or a 5 min or 15 min chart. I used to have very specific rules about 9 tick ranges, but now I can trade ranges of any size. The key is "range determination." Once a range is declared, then the same rules apply to all ranges, and this represents 70% of the market.
9) This method is not perfect, but is the best I have found. You must do a LOT of practicing on sim (or with one micro) before you turn your inner Trading Animal loose on the markets! Practice, practice!
10) I don't want to repeat everything from the [B]previous post[/B] on trading in a range, so please review it carefully.
11) The key to success in ranges is to know the threshold between a "false breakout" and a "true breakout." My best guess for ANY range condition is that the threshold is a line 1/2 of the size of the range above the upper border or 1/2 the size of the range below the lower border. See the following picture from the prior post.
12) My favorite big range is the area between the +1SD and the -1SD on the VWAP bands, with the VWAP being the biggest magnet of the day. Between these two bands we have an RTM market most of the time.
13) If the OBV shows a strong potential for big up or big down, I would wait and not fade the edges any more, but instead wait for the breakout.
This post is really hard for me to write. I hate it when I am wrong. But I finally have given up.
For the last two years I have mixed my day trading with some sort of misguided overnight swing trading.
Near the EOD, my first mentor, Mike Reed, would sometimes announce that his conviction was really high on an overnight move and that he was about to buy some some puts (short bias) or buy some calls (long bias).
I never joined him in that effort. But once the micros came out, I tried my own version by letting just one micro go overnight in the direction of my conviction. I have been trying for two years now...
But I am no Mike Reed. My results have been abysmal. I am wrong 90% of the time. Clearly I am no swing trader.
"It's just one micro," yes. But
1) When you start the next day in the red, you are significantly disadvantaged mentally.
2) Because it is hard to take the loss, no matter how small, I am foolishly more likely to not let go of my original bias, but become more convinced still! (Idiot...)
3) My account has been smaller 9 of 10 times the next morning. My job is to grow my account, not dismember it piece by piece.
4) The ETH hours are often violent one direction or the other (those Asians and Europeans!). Of course it is mainly because the volume is lower and the big boys can move the market much further because there is less Resistance or Support. So any "prediction" I may make is fraught with peril.
Today, I was flat at the end of the day for the first time in a long time. And it feels great.
I feel a "freedom" I have not felt in a long time.
YES, of course the market may be up 2% by morning. Perhaps it will be down 3%. But...
A) Tomorrow is a new day. I can start with fresh eyes, with no baggage.
B) There will always be a new trade.
C) Now I can sleep well. I sometimes have nightmares about not being able to get out of a trade that is going against me. Imagine that.... (I am guessing I am not alone!)
D) I will be a better husband and father because I won't be tempted to look at my charts in the evening! LOL.
So today I have made an important decision:
I commit to being flat at the end of the day and leaving my charts off all evening.
I recommend the same to all traders.
There is more to life than trading, and I firmly believe you will become a better trader during the times you do trade if you get away more. Balance.
This is a great post...
I just funded MYSELF with a micros account. No more hoping... No more top step and the like.
Still waiting for the application to go through.
One of the best benefits of having your own account (besides keeping 100% of your profits) is you don't have the time pressure of the evaluations/combines. The unrealistic evaluation times and targets really twist your brain. Once you finally figure out how to win a funded account you realize the rules trained you to be super aggressive - the very thing that guarantees failure in the long run.
Instead, you can take your time and really grow it carefully and at YOUR pace.
Once again, I missed the long entry out the gate at 9:30 am ET. I need to fix this.
What to do at the highs here at 4144? Either get long asap with an appropriate stop, or wait for some weakness to consider shorts. For the moment I am SOH (sitting on hands).
Consistently getting short before seeing weakness can be significantly poverty inducing.
Looking more closely, it appears that we would need to break below the SECOND support at 4136 before even considering any shorts.
--------------
11:30 ET The market continues to power higher. It just reached 4152. There is not an ounce of FOMO in me. I will just wait patiently for a big pullback to go long or something that makes me want to try shorts. Still SOH. If we reach 4159, I may start to nibble on some shorts. That level should provide some strong resistance, as mentioned earlier.
--------------
12:30 ET We almost reached 4165. Wow. But indeed the area found some sellers. And I got some shorts out of the deal. Up about $100 so far on micros today.
(7 tick RB with VWAP bands and 20 ema)
-------------- EOD We almost reached 4170 today. But then we sold off hard back to 4150 near the close. I ended up about $200 after commissions on shorts with micros today.
My target for next week is DOWN near 3970, based on "Symmetry."
This target is really irrelevant since I am not a swing trader, but when I see a pattern like this it helps me understand some bigger forces.
In fact, it is also highly possible that the bulls will continue today's power move and get us back up to new All Time Highs above 4240 next week!
Gotta think about all major scenarios.
Each 5 min throughout the day I must ask myself, "What is the state of the market? Where does it look like we are going in the next 5 to 30 min?" And then I must be prepared to continue in a current trade or reverse, or just get flat.
7 days from now doesn't even exist.
But I still like to look at the daily chart. Notice how the 4169 line drawn early this morning was the high of the day! So there is value in looking at the daily chart.
