Selasa, 11 Mei 2010

Trade the Trend?

Trend days are about 2 or 3 per month. So for day traders, trading the trend is not a profitable strategy. That leaves 2 other ways to trade: fading a move or going with a move. A fundamental part of your trading plan is the identification of the type of moves you are trying to capture. If you haven't done that then you may find it hard to both work out how to enter a trade and when and how to exit.

So, the first part of my trading plan is under the heading: What's My Business. As soon as I have identified this I can go on and work out the rest. Just going into a day's work and winging it will not cut it.

I'm not saying not to trade a trend. If a trend develops on those 2 or 3 days of the month, I'll exploit it but within the parameters of my trading plan. I am a very short term trader as most of us are that come from the floor. However, my plan calls for scaling out and re-entering so I am able to benefit from the trend days while at the same time capturing the smaller average wins that the market gives me on most of the other 17 days.

There were 2 trades of the day today. One of them was at 4am this morning, London time. I usually wake up at 5am and often earlier. In the last couple of days I have gone straight to my computer to see what was happening. There was a great sell of the ES at about 4.20am London time when support broke and momentum reversed to the downside. I took about 5 handles but missed the re-entry continuation as was having coffee. The 5 points took just over an hour to get.

The second trade was the Gap trade when the RTH ES market opened. It was a clear buy at 1146.00 after resistance broke. First stop was the Fib at 1151.00. This time the 5 points took only 18 minutes. These gap trades can be your one and only trade of the day once you get the knack of them. I held the balance as the MomDots held as the Fib blue rectangle was attacked on the way through the VA. The POC did not hold and my target became 1156.00, the previous close and almost VAH. I exited the whole position just above the rectangle and then began eating the elephant one bite at a time as you can see from the green arrows. The market was nervous and gave me a series of two point trades, retreating back to support where I was buying. The last gasp to 1156.00 was finally made with a bit of tooing and froing.

There are 3 "setups" that can give you a great living trading. This is one of them. I'm going to spend a lot of time on these 3 trades during training. Lots of nuances but not hard to learn when you see it live. Kiki learned the gap plus one of the other two and got to CP. The third was next and she stayed with these 3 for quite a while. Even now, most of her trades are these same ones as they have a very high win rate and it's stress free for her. Very important.

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