Jay's Journal

[dbphoenix]

Ordinarily I wouldn't post this here, but Jason's post above goes beyond reflection and is directed toward whatever newbies might be reading this journal. So.....

Biology and neurology and chemistry aside, these posts generally leave out the primary difference between those who can't trade rationally and those who do: a consistently profitable trading strategy. If one has such a strategy, he needn't even have to concentrate all that much. And by "consistently profitable trading strategy", I don't mean a mechanical system. I mean that he has defined at least one setup, he's tested it, he knows whether or not he can trust it, he knows what to look for, he knows what to do when he sees it, and he knows how to manage the trade thereafter. I have yet to encounter anyone who's accomplished this work who also trades "emotionally".

Therefore, when someones complains about how he gets so emotional when he's faced with a trading decision, my response is not to conduct a neurological exam but to ask him what his trading plan is. 10 times out of 10, he doesn't have one, or at least one which goes beyond "go with the flow" or some variation thereof. This is what separates those who trade objectively and rationally from those who trade emotionally.

 

[jasont]

Nine thanks for adding that great piece of info. It is valuable to traders understanding how the mind works and that if they get emotional during trading, it isn't something to frown upon, just learn how to recognize and get past it.

Db, I am in agreement with you when it comes to the trading plan. I was going to mention that all of the above information is useless if you don't have a tried and tested plan but forgot. Thanks for adding that very important element. I guess I had the people who already had their plan and occasionally felt fearful in the face of a string of losses or felt elated after a really good day of trading in mind.

There are many profitable traders I know of who have had a string of losses even though they have been trading for years, after the string of losses they second guess themselves and their plan because their confidence has been hit. Their plan is still valid, they just had a rough patch due to whatever reason. It's ok to feel that way, but once you have recognized and dealt with it like Nine mentioned with the ANNA system, bring the focus back to the market.

Thanks for the replies and valuable input guys.

 

[dbphoenix]

There are many profitable traders I know of who have had a string of losses even though they have been trading for years, after the string of losses they second guess themselves and their plan because their confidence has been hit. Their plan is still valid, they just had a rough patch due to whatever reason. It's ok to feel that way, but once you have recognized and dealt with it like Nine mentioned with the ANNA system, bring the focus back to the market.

While I may seem like a dog worrying a bone, this subject comes up regularly, almost continuously, and the extent to which traders will rationalize their behavior is impressive.

If a trader loses his confidence because he has a string of losses and concludes that his plan is no longer working as it did (assuming that it was working for some significant period of time and assuming that the plan addressed those variables related to loss and assuming that the losses went beyond the limits established by his testing), then whatever angst he sinks into likely has little or nothing to do with trading, any more than the individual who goes into trading in order to prove to his father that he's not such a loser after all. In other words, it wouldn't matter if the individual were selling vacuum cleaners door to door.

Trading is not therapy, though many people use it as a vehicle for such. It will not solve whatever problems one had before he ever began trading. Nor will a consistently profitable trading strategy transform an ass into a warm and fuzzy stand-up guy.

Therefore, if a trader whose plan is no longer working gets all tormented about it rather than think Hmm, my plan isn't working as it should; guess I need to re-examine it and see if I can fix it, then his problems most likely go way beyond trading.

 

[jasont]

Db you have valid points though I'm not sure what you are referring to as I mentioned the traders I know of have plans that are still valid.

Brett Steenbarger has been working with traders in proprietary firms for a number of years and came across an interesting scenario. He had two traders, one was consistently following his plan and when he took a loss he would take it as part of the plan and get right back to it. Another trader would trade and when he took a loss he would go nuts and yell expletives at the screen. Whenever he deviated from his plan he would get angry and frustrated. You would think the first trader would still be trading today and doing very well whilst the second trader would be out of the game.

Well it was quite the opposite, the emotion the second guy showed during trading resulted in him spending his lunch breaks looking over where he went wrong in his trading. He would take every loss to heart and want to know what he missed and why. He is in fact now far more profitable than the first guy because his emotion drove him to perform better.

It's not my style to go nuts and get extremely emotional about the market. However there is large numbers of reports of the greatest athletes, musicians, artists etc that are extremely emotional. In fact they are as good as they are because of their emotions. I'm not saying their emotions helped their performance but the emotions drove them to improve their performance. My point with this whole thing is not to debate whether or not emotions should or shouldn't be a part of trading.

What my point is that people say emotions have no place in trading but in every peak performance activity, emotions play an important part in development.

 

[dbphoenix]

If the plan were still valid, it would be working. If for some reason the trader is no longer following the plan, the plan is irrelevant.

As to the two examples from Steenbarger, assuming that they're reported correctly, it is unlikely that the only uncontrolled variable is the traders' reactions to their trades. Plus you are drawing conclusions based on a common but generally overlooked bias, i.e., that the population under consideration is going to a therapist, and there is a large percentage of the population that doesn't.

Finally, playing football, playing the violin, painting a landscape are not trading.

I understand the point you're trying to make. But you're attempting to make it by using as a foundation a series of faulty assumptions. None of this is any skin off my nose, but I at least want newbies to consider that being emotional about trading is not necessary nor desirable, though it certainly is commmon.

 

[bracke]

jasont

The Brett Steenbarger example you cite might be considered to be 'positive' emotion in that it prompted the trader to analyse and improve his trading plan; in short it brought about a positive outcome.

Unfortunately most of the emotion I see on trading threads is 'negative'. The trader blames others for their failure and goes on to repeat the same mistake over and over again without stopping and considering their own trading plan. Some of the emotion leads to lunatic actions or inactions with disastrous results.

 

[jasont]

Trading for 27th March

Here is the journal for 27th March:

OK so it seems the GDP and Jobless Reports were taken in good stride. The market rose pretty well after they were released, which one caused it... who knows or cares. The fact that it did it is important. Looks like we will gap up on the open so it will be interesting to see what the market does from there.

9:36 Ok we had a gap open at 1345.50 and from there we seem to be coming down a bit. The 1344 resistance turned support didn't seem to provide much of an impact. The Tick is pretty nuetral right now and not moving far away from the 0 line. This indicates that the stocks have no bias for the moment. Time should sort that out though. Right now I can't see whether we are beginning a down trend day or if we are taking positions to move higher. As seems to be the case lately, I'll wait for the market to tip it's hand. Nothing major in the reports section is left for today.

9:50 A lot of back and forth motion right now without clear direction. Hard to say right now where the market is headed. We move up a few points and then move back a few points on the next candle. The Tick is beginning to look like it has a selling bias but that is pretty early on to be an accurate factor. Right now it's a sit and wait market to see what happens. NQ didn't seem to open as optomistically as the ES and YM, in fact it's in the negative.

10:01 Wicked this market rocks! It is boring me right now. No doubt there are some good opportunities for the scalpers looking to profit from bids and asks but for me it may as well look like a flat line. We have a slight downward direction but at this rate we might end the day at 1339 from the 1345 open. I'm guessing there is some accumulation going on right now but not sure if we are loading up on the long or short side. I wouldn't even want to speculate right now. The Tick is still showing it's slight bearish bias, maybe that is the hint to the direction we are loading up for.

10:14 The market looks like it is slowly starting to loosen up a bit. It is starting to flow a bit better although I believe my concentration has been broken with the slow start. Unless I can pick it back up, today is best left as a learning and watching day. I don't mind taking those every now and then just to keep myself content with deliberately not trading some days. The Tick is making narrow moves at the moment without showing a strong contrast in the buying and selling demands. The 2 minute chart is showing some consistency with the bounces off the SMA.

10:31 Well we have had a decent move down with only small pullbacks to possibly trade from. Pretty heavy move down, I'm guessing that is what the opening back and forth was all about. This looks like it may turn out to be a decent trend down day. Well I guess the Tick was showing me the signs. Doesn't seem like a day that is trading my S&R zones, not uncommon in strong moving days like today.

10:49 We have done similar to yesterday where it looks like we are rolling over but we don't seem convincing. After such a fast move down, rolling over after a bounce tends to be quicker than what we are seeing. The Tick didn't support the move down with conviction either.

11:07 Time to call it a night. I saw the current rollover develop but decided to leave it go. My concentration isn't entirely in the game tonight. Hit the EMA with the Tick showing some over excited selling and thinning out of the action.

Daily Wrap Up

I had a watching day today. My concentration was not 100% and occasionally I like to have days like that to enforce some discipline on myself. I have found it also helps me keep focus on the markets at times. I did see the opportunity to trade the move down from 1336.50 but deliberately left it as I determined the day only to watch. It turns out the rest of the day had some good moves.

I'm not going to grade myself on my performance however I did keep note of the 5 minute chart and Tick. My concentration did pick up towards the end of my time on the market which was good.

 

[jasont]

Trade Set Up for 28th March

Here are the zones I have for on 28th March:

Resistance

1332.75-1333.50
1339.25-1339.50
1342.50-1343.25
1348.75-1349.50
1351-1351.75

Support

1327.25-1326.50
1323.50-1322.75
1317-1316.25
1308-1307.25

My outlook for tomorrow is that we could see further decline from today. We took a move down yesterday with the VIX remaining pretty stable so the messages are a bit mixed. Especially with Gold and Oil hesitating to reach the previous highs. The USD appears to be gaining a bit of stability even in the face of potential further rate cuts. The GDP data yesterday indicates a stability coming to consumers.

We have been building up over the past few months in this range so longer term I think we may break this range to the upside. I'm just not sure I see it happening tomorrow. I'm open to be wrong and as always ready to take whichever side the market dictates. That being said, I won't be trading tomorrow as I have other commitments I need to tend to and will be back for Monday's trading.

I still get my S&R zones on days that I won't be trading because I record them for looking back at should we move away from this area. I also keep the high volume areas recorded in regards to prices through the order bar so I know the important areas traders are using.

 

[jasont]

Trade Setup For 31st March

Here are the zones I'm watching for 31st March:

Resistance

1319.75-1320.50
1323.50-1324
1327.50-1328
1334-1334.75
1336.75

Support

1313.75
1308-1307.25
1295.50-1294.25
1289.25-1289.75

Recently the volatility seems to be calming down a bit. If we are going to continue the volatility we have seen for the past 9 months or so, I tend to think we may see some big moves in the coming week. Recently when we have had a period of low volatility it has been followed by periods of high volatility. On the other hand it has to calm down at some stage, yet I'm not convinced that is now.

We aren't far off the mid range area on the DJIA, SP & NQ. We look like we are hitting decision time. Is it too premature to have a decent rally? If we are going to kick out of this range any time soon I would think it would be in the next few days and we would bounce near the mid area of the range. Otherwise it would seem we are heading to the bottom of hit and possibly test the January lows again.

The VIX is rounding off which signals some more selling could be coming into the market. However this is in contradiction with what we are seeing amongst Gold and Oil which were not able to reach their previous highs and are selling pretty strongly right now. This indicates the money is being moved out of Gold and Oil, the question is, will it be heading into Equities? Right now if companies keep the same dividend payouts that were previously projected it provides a good yield for those in early enough. This could cause a temporary buy up.

With Oil easing a bit it will put some extra cash in the hands of the consumer and ease the pressure on the financial sector which could do with some TLC right about now. Consumer Staples have been the best performers of recent indicating a possibly preparation for a realized recession.

So after all of this, I'm not swaying to either side too strongly right now. We are at a decision point and I will need the next couple of days to play out before I can form a bias. So for now it's neutral and wait and see.

My Focus For The Week

I was pleased with my consistency last week. Not so much in the trading but in the watching of the market. My attention was fixated on the 5 minute chart and the Tick chart. These are the charts I watch most when I am best assessing the market.

So the focus for this week is to continue watching these charts especially when in trades. I have found that panicked decisions arrive when I turn my attention from the 5 minute chart to the order bar when I am in a position. I see the move of 2-4 ticks on the order bar it looks greater than it truly is when the market flickers back and forth. However if I look at the 5 minute bars it has hardly moved.

Glancing at the order bar is necessary to see if orders are being added or reduced but my best analysis comes through looking at the back and forth action on the 5 minute chart. Also paying attention to the Tick chart to see follow through from the stocks is important.

My risk and money management stays the same and so does the time focus on my journal entries. Trades as always are entered according to my plan of major market patterns, trapped traders and Tick action. Stops placed behind key areas and profit targets placed in easily reached areas. One major thing for me to remember, adapt to what the market is telling me, not what I want the market to do.

 

[jasont]

Trading for 31st March

Here is what happened on 31st March:

Ok no real major news is coming out today so the market is left to it's own devices. There has been a bit of action during the premarket however it now looks like we are about to open pretty close to the previous close. I am feeling a bit strange at the moment, maybe because it has been 3 days since I last watched the market. Just a build up of nerves, I'll watch the market until I feel comfortable and won't place any trades until I do.

9:33 Pretty indecisive market at this point. Opened a couple of points lower but the Tick was neutral. Prior to the market open we bounced from Friday's low at 1313.75 however it may not hold should we test it during market hours. We may continue the downtrend from Friday for a while.

9:43 Ok so we have a decent rejection down at 1314 area and a strong push up to boot. This could set the precedent for the early morning trade. Volatility has picked up and the Tick is showing the stocks openend pretty positively. Too early to say whether which way we are headed from here although right now buying the dips presents the better opportunity unless the market retraces just as strongly as it rose.

9:56 Tick seems to be holding above the zero line indicating some strength in the market. Had a pause where the market had trouble pushing prices lower. NQ is looking pretty good on the rise though ES and YM have both stalled. Pause or turnaround? I don't think this rise is over just yet.

10:11 Looks like I may be wrong thinking the rise was still going. Right now I'm having trouble deciphering the market action. I don't feel right, my concentration is lacking and I'm not thinking straight. I'll try to get my head back in the game otherwise trades may be left alone today. The Tick is currently in decision area. Slight bias to the long side but holding the neutral area.

10:24 We have what may be a 1-2-3 top in place should we drop below the 1318 area. The Tick had one of those candles that indicate a change in trend which could mark the beginning of a trend down day type move. NQ has already confirmed the 1-2-3 pattern so it could be substantial.

10:44 Data stream was lagging so I restarted it and now the Tick chart is playing up. This is quite frustrating as the previous data is not showing to make a comparisson of the market... There we go finally it's back up and running. Ok the selling looks like it is running out of steam here. Market is struggling to continue lower from Friday's move. Tick shows the stocks aren't willing to continue orders at the bid.

10:51 Touch too late on the buy order at 1317.50 for a double bottom with Tick Divergence. Market looks exhausted on the selling to me but I could be wrong. SMA on the Tick is bouncing from the zero area after the market seems to want to keep buying up. NQ has flattened out over the past 30 mins as well.

11:01 Shame I missed that move as it has turned out to be a pretty good one and looks as though it may continue as well. I think I hesitated too long before placing the order in, possibly because I know I'm not in the best frame of mind to be trading right now. It was probably best I did miss the trade as I'm not sure my management of trades right now would be up to par. I'm getting distracted by my own thoughts and it is taking focus away from the market. The Tick still seems to be remaining neutral with a slight bullish bias but will be interesting to see how it plays out towards the afternoon.

11:07 Time to call it a night. I do look forward to next week when the daylight savings changes here in Australia. I feel like I am a bit worn out by the time the market opens unless I have a great nights sleep. The open being an hour earlier will make a big difference and I can hopefully use it to extend the time I am on the market. Right now though I'm a bit disappointed I wasn't up to standard mentally today and will get some good rest before tomorrow's trading.

Wrap Up

Hehe I am just seeing the move that followed on from the trade I missed. I am disappointed I missed it but on the other hand I think it was best. I am happy I interpreted the market well which is good but think some work needs to be done on my conditioning. Right now I tend to lose concentration unless I am in the ideal state of mind. I know more time watching the market will improve that but starting at 12.30am at night does make it harder.

I'm not looking to change markets or find a better time to trade. I need to make sure I get sufficient sleep and next week things will improve when the open starts an hour earlier out here. The past two trading days have taken me some time getting the concentration right and has been kicking in after an hour and a bit of watching the market. The start of today was a bit sloppy in regards to my interpretation but after that hour period I got back into the swing of things. I need to find a way to consistently get that going right from the start.

In regards to how well I followed my focus, I give myself a 'B'. I was watching the charts like I should be and keeping my attention on the Tick but I did try to enter a trade when my mind wasn't 100%. Sometimes I feel as though I have been watching the market for nothing if I don't place a trade and even though this was a solid opportunity, I wasn't at 100%. I think my hesitation was a signal to refrain from getting into positions today due to my mind state.

 

[jasont]

Trade Setup for 1st April

Here are the zones I'm watching:

Resistance

1328.25-1329
1330.5
1334-1334.75
1336.75

Support

1319.50-1319
1317-1316.50
1313.75
1308-1307.25

My outlook for tomorrow is similar to yesterday. We are still in the decision area and right now I think it could go either way. We are still rolling in the VIX but the DJIA, NQ and SP all appear to be hesitating to go lower. It is a mixed signal from that standpoint.

There was further decline from Gold and Oil which further indicates the exchange of money to somewhere. The USD has paused it's recent declines which tells me either the US is getting stronger or all the other major economies are beginning to feel the pinch from the Credit blowout to a similar degree the US has. In global markets these days we seem to be so intertwined that if one major economy hiccups the rest feel the pain.

So I'm staying open to either direction right now with a neutral point of view. We could either break out of this range in the next few days or plunge to the range lows which are at the Jan lows. Either way I'm keeping an open mind and running with the market whichever way it decides to pull.

My Focus

The focus remains the same as yesterday and I am looking to build on my conditioning. Today I am going to spend less time in front of my PC to give my eyes a rest. The focus is on the 5 minute chart and the Tick whilst assessing the market and during trades. Money and Risk management remain the same. The journal entries are working for me by being spaced further apart, they are giving me more time watching the market instead of writing about it.

 

[jasont]

Here is what happened for the 1st April:

Feck me. I just opened up my platform and it would seem that I had apparently bought a position earlier today when I was setting up my charts. I know I didn't place the order deliberately myself, I just am concerned that I may have hit something on the keyboard that triggered a buy at market order. Actually I think it was possibly an order left in my order bar, one which was a buy stop. That is not cool. That is an extremely sloppy mistake.

It has ended up being a profitable trade by 6 points or something but it could just have easily been a losing trade. Man I can't believe I did that. It seems that when I was setting up I must have put the order in some how and the order was taken a few hours ago as the market reached the price. I am now confirming with my Broker that I am not in any open positions right now. Fark from now on I switch to Sim mode to do my daily order bar analysis.

Ok the market seems to be climbing pretty rapidly in pre market so we will be opening up with about a 20 point gap gain. Had the Redbook at 8.55am which didn't seem to make much difference to the climb and we will see the construction spending at 10am.

9:35 We have a gap open and we seem to be climbing higher at this point, right now we are 20 points up. The Tick has shown stocks are optimistic right from the open. It would seem we are seeing that volatility the market has been anticipating. Hitting the 42-43 resistance area right now, things are pretty hectic at the moment.

9:48 Resistance zone at 42-43 held but the pullback was far from convincing. If we follow the 2 minute chart it looks like we are about to have a bounce from the SMA. I'm not too trusting of buying a market that opened 18 points up. This could be me counting myself out of the game but I'd like to see a decent pullback before jumping on the buying bandwagon. The Tick is still giving positive signals from the stocks showing that as of right now they aren't interested in selling at the bids. NQ has shown a decline, the YM and ES are yet to follow as they stall sideways. The more obvious move would be down from here but it would be too much of a guess right now.

9:55 Missed a buy order at 1341.50 to take advantage of the bounce on the SMA in the 2 minute chart and the Tick Divergence. Just missed it by 10 seconds. Not to worry.

10:01 Market certainly just took off then and must have hit a pocket of short coverings. It pretty much jumped from 1346 to 1350. The Tick is showing we are over excited on the buying but when the action is like what we are seeing now, it's not a great gauge for picking turns in the market. Not exactly sure what is fueling this market right now but whatever it is, it's doing a good job of it.

10:18 Market has pulled back a little bit but not much. I was looking at an entry around 1345.25 but pulled it. Not sure what it was that prompted me not to enter but I am thinking we could be seeing a 1-2-3 top forming here which could provide a nice trade on the short side. Will have to wait and see though. Tick is still creeping on the bullish side but not showing as much enthusiasm now.

10:28 Entered trade at 1346.50 with a stop at 1348.50 for the rollover on a 1-2-3 pattern but the market took too long to roll. Took an exit at 1347.25 for a small loss. Still think this market could roll over. Tick was staying around the zero line and not pushing further down. Was a bit risky goign against the SMA on the 2 minute chart as it seems to be in full force but just after the recent rise the market looked as though the buying was temporarily exhausted.

10:39 Second attempt at shorting this move and it resulted in a scratch trade. In at 1349 with 1351 stop. Had profit target at 1346.75 and market made it as low as 1347.50 and reversed. Managed to get out at break even. Possibly got out too early but the market wasn't dropping like I'd be comfortable with. Seems I am trying to short a buyers market, definitely on the wrong end of the stick at the moment. I just can't seem to trust this market enough on the long side. It's the contrarian in me.

10:49 Okay I just took a 10 minute break as per my daily focus. Trying to short the same move twice resulted in some much needed break from the screen. I was getting too caught up in wanting to see this market drop. The market is currently riding that SMA on the 2 minute chart like a strippers pole. The Tick is coming down a bit now however is still not quite showing the stocks are turning to selling. In a market like this, someone who trades similar to myself can die a slow death trying to short a market that is strongly trending. There is a rule on that SMA when I trail with a 2 lot, trust until broken, looks like I should be listening to myself right about now.

10:59 Feeling like a sucker right now. Beginning to think that this market isn't going to stop trending upward. No doubt others are feeling the same way right about now. I am tempted to jump on a long position but that is usually a good indication people are getting too comfortable with the current move. The Tick has began moving strongly again indicating a second wave of buying in the stocks. Right now I'm just going to keep a close eye out for anything that is out of the ordinary.

11:07 Well I am just about to call it a night, the market has been a big snooze since about 10:20am. Slow moving uptrend which even though it's not the case, I am having trouble picturing it changing any time soon. It would seem I'm not too good at picking up on these days and will need further development on them and to trust the 2 minute chart more. Calling it a night, pretty happy with the two trades I made. They weren't profitable but I managed them well by recognizing the lack of market follow through. Would have been nice to be on some long trades though.

Daily Wrap Up

Well what an interesting day with many lessons learnt. First to address the accidental trade. I have done some more thinking on the issue and am very lucky it wasn't a trade that lost me cash. I guess if I'm going to learn a lesson about doing that sort of thing, I'm glad it wasn't detrimental to my account. I believe it occurred during my next day setup when I assess the volume on the order bar. I must have clicked a price by accident and created a buy stop order. That order was taken a few hours before the open and I didn't realize until I got on to see the pre market action.

It may have been a good idea to leave the order go considering the state of the market but I don't believe in holding on to accidental trades. Even though it was a profit I am not happy with it as it is not a profit created from my abilities. Trading to me isn't about luck trades which this purely was, it's about the game. Working towards consistency and improvement.

So now that I have discussed that, what a day the market had. Maybe this shows my youth in trading futures but I haven't seen a day like that before. No major pullbacks on the day, the perfect trending market. Unfortunately I spent my time looking for the turn around instead of going with the broader market sentiment. Something I am still yet to conquer in my trading. Learning to see when a market will continue trending as opposed to giving more back and forth movement.

In regards to my trading I was happy with my management of my trades. The first trade I got out pretty well with a 0.75 point loss and the second one I got out for break even. I was a bit too optimistic on the profit target in a strongly trending market but it is good that I can learn from that. Disappointing I missed the base of the day's move by a few seconds but that is the nature of the game. I was feeling good with my orders being placed and had no hesitation due to anything more than curiosity.

Watching the market I felt good, I would have liked to have taken advantage of the strong trending market through the use of the 2 minute chart though. The Tick was giving signs that the market was strong but I became a bit too one sided looking for the pullback. The pullbacks were there, they just weren't as prominent on the 5 minute chart. During trades I was calm and relaxed and watching the market to see changes in sentiment which helped me assess when my edge was no longer present. For the day I give myself a 'B' based on my focus.

During trades I was good but interpreting the market was a bit one sided. I wrote in the journal a few more times than I should due to making orders but think they are necessary to document. I was happy that I took the 10 minutes away from the market after attempting the same trade on the one idea twice without success. Not including the mix up of orders during pre market I think I had a pretty good day even though it was not a profitable one.

Trade 1: 0.75 Loss
Trade 2: Break Even

Daily Total: 0.75 Loss

Edit: After checking my statement it seems I got out at 1347.25 instead of 1347 on my losing trade. Loss of 0.75 instead of earlier stated 0.50.

 

[jasont]

Trade Setup for 2nd April

I forgot to post the image of yesterdays trading. I will leave it off unless someone asks to see it to see where I was trading, so if anyone wants to see it please let me know.

The areas I am watching for today are below:

Resistance

1372-1372.50
1391.50-1392.50
1400.5

Support

1368.50-1367.75
1362.75-1361.75
1357-1356.50
1351.75-1351

I don't have much in the way of resistance for the June contract beyond yesterdays move. I do have it for the March contract but I don't believe it is valid so will just be cautious when looking at shorting areas.

My outlook for today is that we could see some consolidation. After such a big move it is common to see some hesitation to follow through and occasionally we plummet just as hard as we rose lately. We are hitting the top of the range on the DJIA, NQ and SP.

The VIX is hitting the recent base of too much excitement in the buying. It could possibly be he beginning of a decent turnaround in the market for a move up. Gold and Oil have taken a bit of a beating off their highs which seems like money has been shifted into some stocks to take advantage of lower prices. I'm not willing to take too much of a bias right now and will wait to see what the market is telling me. Always remaining open is the key to my trading.

 

[jasont]

Trading for 2nd April

Here is my journal for the 2nd April:

Market looks like it will open pretty close to yesterday's close. We did have a dip in premarket but since have strongly pushed higher to where we are now. The employment report had a better result than expected but doesn't seem to be making too much of an impact on an already climbing pre market. Factory orders report is due at 10am which is something to watch for.

9:33 Ok there was a small gap open that has been filled pretty much right away. The Tick has opened on the negative however a bit more time will be needed to see if the broader market stocks agree. At this stage its a pretty volatile move down.

9:44 Bounce from 1368 area support. Tick has risen into positive territory but it may only be temporarily. We are under the SMA on the 2 minute chart right now so watching to see which is stronger for the moment, the long or short side. Pretty sideways from the ES, NQ and YM at this stage.

9:56 We have a continuation to the downside and a respecting of the SMA in the two minute chart. Pretty much similar to what we saw yesterday only in the opposite direction. Right now the Tick has struggled to stay above the zero line on a bounce.

10:00 Took a quick trade against the SMA on the 2 minute chart and the zero line on the Tick. Got an order at 1368 taken on the short side with my stop above the SMA at 1370. Profit target was in at 1366.75 and was taken pretty much straight away. I probably could have milked the target a bit better but my skill in placing targets according to the 2 minute chart isn't quite refined. I have spent much more time on the 5 minute than the 2 minute. I was happy with the trade, I didn't get much time for management as it was in and out within a minute.

10:11 Right now we have bounced a bit but it doesn't seem convincing. The stocks aren't showing they are following through with the Tick data and the buy up hasn't been impressive thus far.

10:18 I was going to put another order in to short at 1368.50 but pulled it after a few seconds. Something doesn't seem right to me. The move down should have happened already in my book. I think we could be preparing for a higher move. A lot of back and forth is going on and could possibly be the making of a temporary 1-2-3 bottom. I'm not a fortune teller but just the jist I get from the market.

10:28 Sheesh maybe I should have traded the 1-2-3 bottom. Bit of a move up here with a break into the positive area on the Tick. Coming to the day's previous high, will be interesting to see if we break through it. NQ has already broken the day's high, YM and ES are yet to follow suit. Looks like a possible continuation of yesterdays optimism may be on the cards. I'm guessing the factory orders didn't disappoint the market as we have pushed higher since the release at 10am.

10:38 Quite a decent move we are having and unfortunately hasn't been providing much in the way of an entry for myself. The Tick has gone from trading mainly below the 0 line to mainly above it right now. This is indicating to me that we are pretty strong on the buying side. It does suck to pick a major move and not be on it. Trading the one lot I wouldn't have capitalized on the full extent of the move anyhow. I do miss my two lot but trading the one lot right now is for the best whilst I build up my consistency and comfort with orders.

10:49 Well that was an awesome pullback. This market is beginning to look a lot like yesterday right now. Although as I type this we may see a better pullback now. The last half an hour has been pretty boring in my book. No doubt the trend traders out there would be telling me it's the greatest thing since sliced bread. I think it's good for those guys because no doubt the past 9 months have been hell for their trading systems. I should know, I was one of them until I turned to the dark side of contrarian.

10:58 Well it is a touch earlier than usual but I'm going to call it a night. I can see what this market is doing and feel myself searching for a short and committing the slow death trying to find a top in a strong bullish market. there was an opportunity to jump in for the long trade but I only saw it well enough after the fact. My concentration is dwindling and am bored of the current market. I know trading isn't meant to be exciting but it also shouldn't be boring. Time to call it a night, managed to get in on a quick trade which was good but missed out on buying into the 1-2-3 bottom. Pretty happy with my night's trading none the less.

Daily Wrap Up

I just realized now that I didn't place my focus for yesterday as I was flat out with things and must have forgot. Either way, I was happy with my watching of the market. I switched to the 2 minute chart when I saw we were having a slow moving day and managed to catch a nice trade against the SMA on the 2 minute chart.

From there I saw the market struggling to be pulled lower and recognized a change was coming but failed to act on it. It wasn't fear that prevented me but more so contradicting parts of my trading plan. I thought the market would go up but that's not enough to base a trade on. After this move up we began a slow grind upwards that provided a small entry based on the 2 minute chart but one I wasn't quick enough to pick up on.

My during trade management was pretty much non existent as the one trade I made hit my profit target within under a minute. All in all it was a good day from the aspect of using the 2 minute chart in a slow market. I need to have some more time watching the 2 minute to place ideal profit targets but I think that will come with time.

Trade 1: 1.25 Win

Daily Total: 1.25 Profit

 

[jasont]

Trade Set Up for 3rd April

Here are the zones I'm watching on the 3rd April:

Resistance

1370.25-1371
1379.25-1380
1391.50-1392.50
1400.5

Support

1366.25-1365.25
1362.75-1361.75
1357-1356.50
1351.75-1351

Again there isn't much in the way of Resistance at the moment so I will just have to remain conservative on the short side above 1380.

My outlook is mixed right now. Many, in fact most of my indicators are telling me we should see a drop from up here. The VIX looks as though it could be setting the market up for a drop as it is sitting right on the over bought area. If it is continuing it's current pattern it looks like a substantial push from here is likely.

The SP, NQ and DJIA all have paused at the top of the range. They couldn't follow through after the decent push on Tuesday to break the range so it is still remaining in tact. Gold and Oil are finding some stability in the recent drop but for how long is anyones guess right now.

So why is it mixed? The pattern we have formed in the charts tells me we could break through the range if we don't drop below the 12170 area on the DJIA. That coupled with the strength in the USD lately has me thinking we could be building up some upward momentum. Although the recession hasn't been realized through data produced to the market, I think the past 9 months have seen the market factor in the possibility already.

Right now the market could be over the idea of recession and now looking to growth as a result of reduced borrowing costs and low value USD. The low USD would increase money being injected into the US for cheap investments from overseas investors. Also at the same time looking to double their return by banking on a strengthening of the USD.

My Focus

The focus remains the same with the 5 minute chart, Tick and switching to the 2 minute chart if need be like I did yesterday. Money and risk management remains the same. Right now the only thing I think that needs much improvement is my ability to trade slow trending markets. They seem to be the ones I have the most difficulty with. If we experience a slow moving market tomorrow I will make journal entries according to what the 2 minute chart is telling me instead of the 5 minute chart. That should help me focus on it when the situation arises.

 

[nine]

You're doing an excellent job of the journal Jay. Well done.

 

[jasont]

Thanks for the support and feedback Nine. It's always nice to know there are people watching the thread. It helps keep me on track.

 

[firewalker99]

Although the recession hasn't been realized through data produced to the market, I think the past 9 months have seen the market factor in the possibility already.

Right now the market could be over the idea of recession and now looking to growth as a result of reduced borrowing costs and low value USD. The low USD would increase money being injected into the US for cheap investments from overseas investors. Also at the same time looking to double their return by banking on a strengthening of the USD.

Now that most of the 'economic advisors' and finally Bernanke himself have said that the economy could be finding itself in a state of recession, it's more likely the markets will go up rather than down. Just from a contrarian point of view...

 

[jasont]

Firewalker I couldn't agree more. Funny how when everyone catches on to what is happening, things usually then change. Reminds me of fashion, designers come up with new designs that are individual, then once everyone buys them in the shop, the designs are no longer fashionable. Just as it becomes popular the fashion changes.

 

[jasont]

Trading for 3rd April

Here is the journal for 3rd April:

It seems we remained relatively flat until the jobless claims showed an increase in the people claiming unemployment. From just after 8:30am we have seen a drop from 1368 down to 1360ish. It will be interesting to see if this sets the tone for the day and causes the markets to follow the direction most of my indicators had it. Down.

All the news turning out at Bloomberg is pretty negative, late payments rise in quantity for consumer loans, Jobless claims top forecast. Sometimes I wonder if there is a hidden agenda behind some of the reporting. That theory should be accompanied by me wearing a hat made of tinfoil waiting for signs to be burned into cornfields. If that occurred I'd be inclined to buy corn futures due to the decreased supply from the burnt in signs.

9:32 Decent gap down at the open, right at the 1362 resistance area. Tick is showing stocks opening pretty negatively but still too early to make a judgement from that. CNN says stocks tumble at the open, I'd hardly call a 67 point down open on the YM a tumble. Right now it seems we are fighting against the urge to go lower, will see what happens.

9:42 Stocks are showing pretty much no positivity at this point. Tick is having trouble moving beyond the zero line but we are still remaining flat. We have just respected the SMA on the 2 minute chart so it's still anyones game. Stocks say down for the moment, ES is trying to hold on. The NQ has already dropped and the YM has made a lower move, ES is running late to the party it would seem.

9:53 Market has made a new high for the day but not pushing further at this point. Hit just below the 1365.50 resistance and pulled back. The punch forward on the Tick is indicative of a bullish run. Will need some more time for it to give me more clues as to how the market it feeling.

10:03 Quite an explosive buy up just occurred pushing us as high as 1370. Have what looks like good rejection forming from there though so depending on how we play out over the next 10 minutes, we may have a turnaround to the downside. The Tick has increased in a show of volatility which has me on the sidelines for the moment. I don't want to get caught in the excitement we are seeing now so I'll wait for things to die down a bit and show some solid direction if any. Ok just found out the Index for non manufacturing was positive at 10am but sector still is deemed weak. Guess that is what caused the momentary excitement.

10:14 Not feeling in tune with the market right now. Same thing seems to keep happening when we seen a slow trend move. I'm going to switch my main focus to the 2 minute chart now as per my focus. Will change back if we break the SMA which we are currently riding. Tick is pretty neutral right now which is making it harder for me to read.

10:18 Watching the 2 minute was short lived, just broke the SMA.

10:26 I'm not sure if this is a difficult market to find opportunity in or if I'm not concentrating. Right now I can't figure out which one it is. I'm having a hard time seeing what the underlying sentiment is today. Maybe I am looking for trades instead of simply watching the market.

10:37 Market has rejected the EMA on the 5 minute chart but as it came down made a higher low than the previous. I think that is what makes this market a touch confusing to me right now. Especially with the Tick playing on the zero line without showing any clear direction. I believe any trade I place at the moment would be a guess more than an edge trade. Normally I can say where the sentiment is likely to lead us but today it needs some more time. There is a bit of accumulation going on at the moment.

10:51 Well after a long battle around 1364 we broke to the downside but only in a minor fashion so far. The Tick looks like it is slowly showing a negative bias and the SMA held its ground on the 2 minute chart. NQ seems to be making bigger moves than the ES and NQ right now. May be worth watching it for a lead against the ES.

11:02 Time to end the day for me. I just didn't feel like I was in the game today. Looking at the market was like listening to someone speak to me in a foreign language. For the past half hour it has been pretty choppy. The Tick wasn't providing me much in the way of guidance, well more so my interpretation of the Tick wasn't helping me out. One thing about my style of trading is that I need to be in the right mental state to perform well. I guess it's not that much different from any other high performance activity. You have days you're switched on and you have days you're not. I guess the key there is to recognize the days you aren't and adjust your risk accordingly or just don't trade. Take it as a learning day.

Daily Wrap Up

Well I'm not exactly sure of what to say about today. The market had opportunities but nothing solid that stood out to me. We had a grind in the beginning and then a quick push to the 1370ish resistance. That happened very quickly and looked a bit like program trades to me. After that there was a slow grind down with the mid section confusing the heck out of me for some reason. Then we came to 11am where I decided it was best for me to call it a night instead of trading in my current mental state.

Not being able to see the market sentiment clearly had thrown me off my game by that stage. It was an odd day, some days it takes me longer than others to get to the right state but today it just wasn't there. I am happy I didn't trade because it shows a growth in my trading maturity. The market will always be there and if I don't trade a day, it's not the end of the world.

I give myself an 'A' for following my focus. I was keeping an eye on the 5 minute chart and the Tick and when I saw we had a trending grind I switched to watching the 2 minute chart. Granted it only lasted 4 minutes before the SMA was broken and I switched back to the 5 minute chart. It was good to be aware of the 2 minute so I was happy with that. No trades were placed so I couldn't assess my risk and money management of trades. I kept to only posting entries at 10 minute intervals or longer, the only time that was violated was to mention the focus was shifting to the 2 minute chart which I am ok with.

Today the Tick wasn't providing me with clear signals. Or maybe it was that I wasn't interpreting the signals very well. Either way it just shows how important the Tick is to my trading to get the overall market sentiment. If I was to look at the day from a 3rd person view I'd say I had a good day. Recognizing a market that I wasn't quite in tune with was what made it good. If I had of traded and made a profit I probably wouldn't have been happy with myself because the trades would have been guesses rather than well structured trades.

No Trades Placed Today