Well, it has been quite some time since my last post.  I haven’t dropped off the face of the planet, I’ve just been busy with school, work, family, golf, trading and working out.

This market has been really, really tough.  There have been times that my account has been a rocket ship, moving up with reckless abandon and then of course other times getting just flat out crushed.  I’ve really had to make some tweaks to how I trade in order to manage this market.

I’ve moved away from options, and exclusively to futures. I’m trading mainly on tick charts, very, very short term in and out scalps.  I have about 5 markets that I’m watching and I am trading one setup.  If I don’t find the setup when I scan the markets, I don’t trade them.  It takes mes about 30 seconds to scan the markets, and then I’m back to whatever I was doing before.

If I find my setup, I put in the limit order (or stop sell/buy) with an OCO bracket and go back to what I was doing.  My profitability has gone way up. The setups are clean, and trading these way keeps me out of the markets when they are not trending.  I had been trying to scalp channels, and choppy markets.  It was profitable, but also very costly when I was wrong.

Simple setups, difficult markets = profits.

The best part about these setups is that I can do the market scan so quickly that I am able to scan often with basically zero interuption to the rest of my day.

A poorly timed entry was very costly today

The little things are very important

I’ve been working hard over the past few weeks to get better use of fibs and the $TICK while trading the /ES futures contract.  Part of the system that I’ve been developing is an indicator that shows market strength and divergences as a part of my trade entry pattern.

Well, today was a perfect example of how the system works, and why I am a trading retard sometimes.

The setup

If you’ve ever been over to E-Mini Addict you’ve heard over and over about the ambush trade.  Long and short of it, markets tend to retrace to the 50% level of a move before continuing in a trend.  They generally do not move in a straight line.

I drew a quick fib from the highs of Thursday to the morning lows today and had a trade target entry of 820.5.  This is based on a continuation of the move down and my continued belief that we are oversold and due for a retracement.

Based on the fibs that I had drawn, this trade should get to about 807, and I would have it setup to begin trailing at the 0% line – 811.

Trading while stupid

Maybe that is a bit harsh… maybe not.  After dropping in my orders to get into the trade – entry 820.5, stop 823.5, trailing (+2.5) triggerd at 810, I went back to minding my own business, happily burried in some new projects at work.  I took a quick glance at the trade screen and for some reason (impatiance coupled with stupidity) decided to get into the trade early.  I did not let it setup fully.

A proper setup was to enter at the retracement price level, with confirmation of the continued strength divergence (the indicator on the bottom).  I was keeping an eye on the internals indicator to ensure the market was still exhibiting waning strength. All of these things were happening, the downward channel was holding and the $TICK was confirming an upcoming drop.

Everything said that the trade was setting up perfectly.  All I needed to do was nothing. Just get back to work.  Don’t touch the keyboard, don’t adjust the order, don’t do anything.

Early entry = premature exit

After jumping the gun on the entry for this trade, I pulled down my stop to 817.75.  I was happy that the market was moving down, and wanted to lock in my “free trade.”  With the crazy manipulations that have been happening, I didn’t really want to be exposed all the way to 823.5 (the correct stop) so I figured it was appropriate to lock in a freebie.

My stop, and entry, were both in the middle of the markets wiggle zone, and of course got nailed.  As soon as my horribly low stop got nailed, you can see on the chart that the /ES dropped like a rock, would have quickly triggered my trailing stop and locked in a nice profit.

Let the trade come to you

As you can see on the chart, the trade was a great setup.  I spotted it quickly, had the orders in place and should have left it alone.  Done properly, this would have captured a quick 10.5 points. Instead, I locked in a measly 1.75 points.

Just be patient.  Don’t jump the gun on your trades.  Let them come to you.  I think I’ve mentioned giving away iPods before on goofy trades, well this one was 8.75 points – $437.5, or two iPods per contract.  I really like my music, and I hate giving away iPods.

Take a look at the channel and the fibs... /ES

Yee-fricking-haw.  The majors all moved just under 7% today.  What a run up!  54.38 points on the SPX(1105.36 -0.77) alone.  How many of those points did I capture… oh about 10.  Today wasn’t the best trading day for me.  For starters, I was a bit gunshy after last weeks never ending bull brigade, and my uncanny ability to short into it for a loss, to get into the market.  My analysis said a long position with a reasonable (5 point or so) trailing stop would be a good place to go overnight.

That would have been a fantastic play.  Earlier this morning, I rode the /ES up a bit, then shorted into it about 4 or 5 times.  Needless to say, that wasn’t very profitable.  I hoped in later on in the afternoon and rode the /ES up to about 816.  Currently, I’m short.

You can see my chart on the right side of the screen. Basically, I’m seeing a retracement towards 800 (801 or 795), followed by another bounce up. This could be the start of the next wave to the upside.  Mole has some great wave count analysis at Evil Speculator that you should take a look at.

That is it for the night.  My plan is to stay short with a tight trailing stop, then take a look when I wake up and decide a direction (long, short or flat) based upon the price movement.

Thanks Big Ben - I enjoyed riding my /ES contracts up

My Goodness

That was quite a run up!  Gentle Ben provided the United States with a future dose of inflation today by stating that the treasury will be buying the long bond.  The dollar collapsed, gold shot up like a rocket ship and billionaires where minted in the treasury market.

I was long /ES

Anyhow, the volume during this session was monsterous.  In fact, I had a market order that took about 2 minutes to fill.  A market order… Those things are supposed to be almost instant.

Well, I was jumping around like a fish today in the market.  I’m working on a new system at the office and it is a bunch of click and wait right now.  I was able to keep an eyeball on the price action and be a little active.  Anyhow, rather than try to put arrows all over the place, I simply put a red->green->red->green arrow on the chart.  The arrow represents when I was making, or losing money.  Overall, the day turned out sharply positive for me.

But really, who cares about my trades?  Lets talk about the future here.

I see a drop in the cards.  If we can pierce 805 or so on the /ES, my tune changes pretty quickly.  But right now, 767 is my next short term target.  We’ve been jumping in this channel, and actually stayed in it with the fed moves (highlighted on the chart).  If we can breach 767, then 730 or so is next.  Tomorrow will tell.

I am very pissed at myself for my poor execution today. Click in the picture to fully understand why.

My execution today was horrible.  Not because I made bad trades; because I made a horrible decision overnight and let it fester all day.

The Setup

Last night, I ditched my stops on my short /ES and /NQ trades. Normally, I don’t ever trade futures without stops.  I’ve just been getting frustrated with the overnight action that appears to gun down stops.

Lets just say that I won’t do that again.  I may loosen them up, or set them with triggers and other monkey business, but mark my words.  I won’t go to sleep without a stop ever again.

The Morning

So I woke up this morning, got ready for work and headed down to my trading setup.  What I saw really pissed me off.  The /ES futures had rocketed up all the way to the 765 level.  At this point, I’m now upside down about 16 /ES points, for no good reason.  Had I not moved my stops, I’d have realized a 6 point /ES loss, then gotten back in at 765 short.

I walked out of the house telling my wife that I’d done something stupid, and rather than having to ride it back down – I should have been locking in profits.

During the day

Well, here you go:

• Short @ 764 ~ 7:30am
• Cover / Go Long @ 759 ~ 9:30am
• Sell / Go Short @ 770 ~ 12:30am
• Stay short w/ Stop at 758
• Total points: 5+11+12 (locked in profit) = 28 /ES points…

Rather than locking that in, I had a little emotional / mental whining session and stayed short all day.  Net, I’m still down a a few /ES points.

How to play it going forward

While it is painful to realize a nasty loss, sometimes that is what is required.  I still feel strongly that we are going down from here.  I still remain short this evening.  My stops are in place, and they are ready to get me out should the goofy after hours market makers decide to run the tape.  I’ll get back in tomorrow.

Going forward, as soon as the conditions change I’m going to roll the position.  Today, I held on because I “didn’t want to recognize the loss.”  That is completely foolish.  Lets just take the 28 Points that I would have banked today, subtract my losses of 16 points and I’d have walked out with a net gain of 12.  Go figure.

Granted, not every day will be a big moving day like this.  As soon as my indicators rolled over to get long, I should have done it.

Let this be a lesson to you - Don’t remove your stops...

Here is a picture of one of the charts I actually look at during the course of a day.  I woke up this morning to find out that the /ES has taken a nice hike upwards into the 765 zone, and I remained short through the entire hike.

Now, don’t get me wrong here.  I’m still in the /ES short play, and I’ll remain in this play for a while.  However, I removed my stops at 655 last night, because I was afraid of getting “stopped out” by the little bots that seem to sweep the /ES overnight.

That was just foolish.

It was foolish because the charts clearly show that the 664 range would be another point of consolidation if we break out.  The highs from this past week were right around the 655 range and that was a nice easy stop.  Rather than having another 9 points or so to knock down gains on the /ES, I’ll instead be recovering from the overnight swing throughout the day.

Overall, it isn’t a big deal.  I was just an example of poor position management.  I foolishly pulled my stops, and now rather than enjoy a profitable short position during the trading day today, I’ll watch the losses shrink.

Of course, this all depends on your time frame as well.  There are plenty of folks out there with very, very wide stops.  A particular blogger comes to mind who holds positiions into losses that I simply will not tolerate.  My futures trades are pretty much short term swing plays.  A day or two at the most, infact most are closed in a matter of hours lately.  As a result, my stop mangement must be appropraite for my style.

A bit of a "bigger picture" look at the /ES

Well… I guess this post is a little late.  I did twitter my shorts into the weekend on Friday – so if you’re following me there – you already know that I’m short.  It’s been a long weekend,  I’ve been busy with finals and have been buried in think script.  Anyhow, as you can see form the title, I’m short both the /NQ and the /ES right now.

If you look at the chart on the left, We have some reasoable support around the 710 level or so on the /ES chart.  After tweaking my chart a bit more to get a better fit on the fibonochi lines, the 710 level sets up as a very solid retracement.  Not only is it a 50%, it has served as support over the past few days.

Also, the 23.6% line from my bigger fib has also been acting as resistance, now possibly support again.

My target is still in the 710 level for the /ES, quite frankly my /NQ short is along for the ride.  I’ll get out of them as a pair.  My stops will start to get very tight when we hit that 23.6% line at about 728 or so.

You can see that the 770/780 level is hightled on my chart as well, somewhere just above that level will is my stop out exit point.  Given that we’ve had 4 consceutive days up, the odds of another one are becoming very, very small.  Once we get down to the 710ish level, I’ll likely flip around and be a big raging (near term) bull.  Of course, market conditions will dictate what actually happens.

Recap of my /ES Trades Today

Today was a pretty darn profitable day for me.  I had a bit of a pre-mature exit on my SKF puts, however they were closed for a nice fat profit.  I can’t complain too much about that.

Recap of the overnight – Stop bot trade

I have no idea if stop bots actually exist, however the evidence appears pretty overwhelming that they do in thin markets.  On Tuesday, Tim Knight posted about an overnight position he had that appeared to be gunned down by a market maker.

Last night, the same thing appeared to happen to my short.  I had my target exit order set to kick in at 708 (perfect in hindsight), and a stop at 715.  The futures ran right up to my stop, kicked me out, then dropped down hard again.

Color me frustrated with that.  Oh well, nothing I can do about it.

Missed that one

See those three lines pointed up in the image above?  Yeah, I should have gone long, long and long.  I was busy at the office and didn’t have a chance to eyeball the market.  Once I had a moment to see what was happening, I jumped in long.

This is the setup for tonights overnight short trade

Flip Flop, lets get short

Very busy day today at the office.  I had an offsite meeting so I dropped in a trailing stop to cover my downside risk on the long position.  I expected pretty strong resistance around 744-749.  Sure enough, the market stopped, I was stopped out and that was that.

I checked on my iPhone when I had a moment, saw the price action and quickly went short /ES with a stop above the 750 area.

This trade should ride down to the 23.6% retracement right around 730.  Again, I’ll be putting down a trailing stop right around 730.  If we can bust through, I’ll take the extra profits.  If not, I’m willing to give up a point or two for the opportunity.

My trades on the ES today, good, bad and stupid

The good, the bad and the stupid

Mostly today was a loser for me.  It was mainly because I has two absolutely goofy trades.  I think I need more sleep, these were horrible decisions.

The first one began during the evening short on the 10th.  It was a great trade.  Solid setup, correct analysis and reasonable target profits.  The problem with the trade is that I didn’t take into account the support line that was running up.  It had been a nice little bounce point from the lows on Friday.

Given that this was an overnight trade, this support line should have been a trigger point for a stop, trailing stop or possibly just a get out and take down some profits. As a result of this trade, I’m going to spend a little more time working the TOS platform to maximize the program trading capabilities of the platform.  There must be a way to enter a complex series of orders that cancel each other out when/if conditions are hit. I’m not talking about a simple OCO; rather, a sequence of events that would include multiple OCO orders that work together as a complex multi order trade.

I don’t know how reasonable that is, but I’m sure there is some sort of solution.

Ah, the stupid trades

Now that I’m steaming about my busted profitable trade that turned into a big loser, I had a moment at the office to take a look at the markets.  Not a great entry point, but I was still steaming and just put in a market order to get long.  Why long, no reason, I just felt like it.  Well, that isn’t completely true, a few indicators were pointing up, but the important ones said down.

Obviously, that is a stupid reason to get into juiced up /ES futures contracts.  Thankfully, cooler heads prevailed, I took a few moments to actually do some quick analysis and decided to flip things over and get short.  That worked out nicely as the /ES moved down towards my exit at 716.  This was based a quick analysis after a lunch meeting where noticed that we were bumping up against a retracement level and things appeared to be pointing higher. As a result, I closed out for a profit.  Solid trade, solid analysis, solid (much needed) profit.

Then I got really stupid.  After deciding that the market looked strong, and that the trend line on my chart would serve as resistance, I decided to go short again.  Exactly what I was thinking, I’m not sure.  There was a good entry on the chart already setup for a short, I was just way early.

To make matters worse, my completely arbitrary, useless, foolish, borderline retarded stop was at 725.  Why, I don’t know, it was 5 points away.  I mean come on, its only an iPod Touch w/tax per contract, that feels about right, I have a few of those in the house so lets throw a few more away.  Needless to say, my second, moronic, no technical analysis trade resulted in a stop out.  Who needs another iPod Touch anyhow.

Lets try this again… Another trade?!?

Yup.  Tonight, I’m short again, based on what apperas to be solid analysis that should result in a nice profit. I’m still a bit bitter that I should have been short from 727, rather than 717 – you see that on the chart right? … oh well.

So, before going to sleep, I will be double checking all the charts to ensure that my stops and exists are in the right place. I’m not playing this game again if I don’t need to.

Here is what I'm seeing for this /ES trade

This is going to be a quicky, I have lots to get done tonight – including the 10th week of my Marketing class.

Anyhow, I’ve just gone short the /ES.  I think we are ready for some movement down, and with the horrible losses posted by FRE this evening, I think we should see some pressure and consolidation.  My targets are highlighted on the chart.  Take a look.

I’ll update more later this evening.

Update:

Well, I think the chart speaks for itself.  We had a very nicely defined down channel for a few days, that was broken out of due to the good news from Citi.  (Exactly how an insolvent bank that is being propped up a by the government can report good news is beyond me).

That channel is likely something we will revisit soon, however I’m becoming a little more convinced that the 715 level on the March Contract for the /ES may be a turning point.  I happen to be trading the June contract which is trading at a discount to the March by roughly $3.5 points.  I trade with TOS, they rolled contracts today, I wasn’t paying attention and I don’t feel like rolling back into the March contracts.

I’m going to keep my stops loose on this one.  I’m pretty well hedge with my SKF puts right now.  If the /ES rockets up and blows my stop out, then SKF should drop nicely, and I’ll be getting out taking down my profits.  SKF is getting messed with my the greeks, today was a bad day for OTM April Puts.

Stop Update – 2:26am

Why am I still awake?

Stops have been tightened up – quite a bit.  Remember, these are the June contracts so they are triggered off of that price.  About $2.50 lower than the March.  Conditional entry (714.75) stop @ 715, trailing stop +5 entered when /ESM9 trades at or below 708.  I’m hoping the 5 point trailer allows for some wiggle.  5 points is a pretty big move.

Okay – bed – now.