Short signal today.

Pilot short 50 SPY @ RTH open.

Price is holding above Y-H. Hence I'm cautious. If we make new LOD, I will scale in 50 SPY short.

Relative volume is mute and hence unsure of the ATR. Likely to be low due to the pending CPI news later this week. Hence my targets are going to be conservative with ATR 40 pts.

So far a bullish day but I'm holding my pilot short. Likely to hold it till the end of the day.

Since my trade is not working so far, today is perhaps a good day to reflect on my signals, my rules and my grading system.

A. Signals

1. My signals are based purely on past statistics of 20 years and rely on 6 factors. (Momentum, trend, Gaps, Season, Vix and Overnight price action).
2. Each factor has a +2 to -2 strength grading system.
3. Today's signal was overwhelmingly bearish @ -6. Screenshot below.




B. Direction rules.

1. I MUST trade the direction of the signal if it's strong.
2. Even if the signals are weak, I must trade the same direction but allowed to reverse my bias after 1 stop loss.
3. If the signals are mixed, then I have the flexibility to choose the direction. It will be based on spotgamma's support/ resistance levels.

C Execution rules.

1. My entries must align with EMA (free indicator by ripster) crossover signal (similar to Ichymoku). I'm not allowed to fade the trend.
2. I should always enter with 50% size, ideally @ RTH open. Full position should be reached ONLY if my trade thesis is working.
3. I 'may' be allowed to add to a trade that's not working but only at pre-determined levels, decided before RTH. This 1/2 size scale will have a 'tight stop'.
4. The original entry @ RTH open must stay till the end of the day.

C. Grading

1. My results will be compared against the theoritical P&L of holding 100 SPY from RTH open to close. Baseline grade B.

2. Grade A is better than the above baseline. For instance, today I'm short 50 SPY from open. Even it turns out to be loser, I will give myself grade A as the loss is cut by 50% due to my position sizing. In a winning trade, I have to beat the above grade, either by position size or scaling in & out.

3. Grade C is when my actual P&L is worse than the theortical passive entry as above. Even if I have a winner but make less money, it will be grade C.

4. Finally, if I break any of my rules, it's grade F. In that case P&L doesn't matter.

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Since Jan 1 2023, I had 9 Grade A's compared to 5 Grade C's.

I broke my rules twice and expect this grade F to become zero soon.

It's one of those days where I am on the wrong side of the trade, all day. However, it's grade A execution because I not only followed my signal but also limited the damage by keeping the size, and hence the loss, relatively small.

I recognised the market's strength from the beginning, despite it's low volume and slow creep up. I didn't fight it and never thought of fading or scaling in. Though it's tempting to think I could/should have cut the loser sooner or even reverse to long, I know I'm not there yet. I have the tools though. i.e EMA crossover which will help me cut my losing trades quicker.

My current goal is to execute my signals flawlessly for a few months first. Once I know I have full mastery over my emotions and actions, then I can improvise my system.

My stats were mixed today. However, CPI release days have a mild negative bias (with more bearishness in the last 12 months). Hence approached the market with short bias, again.

However, I am playing in 2 different ways today.

First is SPY short till EOD. Waited for gap closure first and then short from 4140 area. May scale in later but definitely holding till EOD.

Second is day-trading mode with fading method and this one is with MES. This short worked beautifully from 4168 to 4127. 40+ Points. Flat now.

Limit order set again at 4149. i.e Y-H. Not sure whether it will be filled but due to chop, I thing it's likely. If it does, then exit will be VAL at 4120. If we make new HOD, then thesis is wrong.

I deviated from my plan slightly due to stats. Creative use of stats, I must add. Let me explain.

Instead of holding my short SPY till EOD, I covered 1/2 size just above Y-L in the 4110 area.

The reason is the following data.

In the last 20 years, we had approximately 100 data points of CPI release with a prior day higher close. Out of them, Y-H was tested 60% of the times. Y-L was tested 35% of the times. The odds of both being tested is just 8%. Hence, I became more content with booking my profit ABOVE Y-L as Y-H was already tested. Hope this makes sense.

Ofcourse, we can take out Y-L and go below 4100 but I am comfortable with the fact that I'm missing some profit potential because it's a very low probability event.

MES 'news fade' trade worked well. After a wide 70 pts CPI range was established from 4115 to 4185, I decided to fade from short side. More importantly, I patiently waited during RTH hours for price to come up to me @ 4168. End result was a sweet 40+ pts.


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On the other hand, SPY EOD trade didn't work out. It's a break-even trade but yet Grade A as my scaling out profits offset the EOD loss. I was quite happy with the data based rationale to scale out as described in my previous post.

Proud moment for me. Mission accomplished.

I wanted to minimise my fatal error of 'adding to a loser'.

I came up with tags system in tradervue and my previous post with methodology and goals are described here.

When I reviewed the results today for 2023, it was very satisfying.

I compared my trades with no scale-in and scaled -in once. The implied goal was to minimise losses by avoiding adding to losers and pressing on the winners. The true holy grail of trading.




When I looked at trades where I scaled in more than once, they were on news days like FOMC, it was breakeven and not worth the effort. Another valuable confirmation.

My signals are mixed. There is a touch of bearishness with call wall in options shifting down. Price action yesterday was also mildly bearish demonstrated by price closing down despite filling the gap.

Hence started RTH with 50 SPY short.

I had a clear plan to scale in if we see a new LOD after the 1st 15 mins and executed as per plan.

My exit plan was to hold it till EOD if we continue to drift down towards 4100. If we make a new HOD, then planned to scale it down, instead of holding till EOD. ES made a new HOD and hence I scaled out @ breakeven levels. I'm back to 50 SPY.

Still nothing changed and my bearish bias persists. But, it's a chop fest in a narrow range and I'm not going to be part of it. If we make a new LOD, I have a plan to scale in. Right now it's a coin toss but I'm leaning towards 4100 test. Will see.

-200 Monday
+200 Tuesday
-200 Wednesday


It has been a yo-yo week but growth as a trader is continuing.

Despite having a losing day, I'm happy with 2 things today.

1. Scaled in after weakness and scaled out @ breakeven after strength.

2. I'm able to hold on to my losers (& winners) till the end of the day without any emotional attachement.

I'm slowly developing 'the sixth sense' of 'likely to fail trades'. My next phase of development, as a proficient traders, is to get out of these positions early on. This may be with stop loss or time stop (similar to GFIs1). My final phase is to reverse directions from long to short at optimal points.

Most important aspect of the above plan is to device tags to track and analyse my trades.

I thought I transcended my bearish bias in 2022. Apparently, I didn't.

In 2023, I had a 'mixed' signal on 7 occasions including yesterday.

I was shorting on all those days and lost money. hmmm...

I have to review my signals during this weekend homework and reduce the subjectivity even further. I have a 5 pt grading system from bullish to bearish. Hence 20% possibility of a mixed or neutral signal. If I increase it to a 7 pt system, then the possibility reduces to 15%. That's creativity. The other 'less comfortable' option is to buy, by default, when signals are mixed and then reverse position to sell after a stop loss.