1/18/12 Trade results: 4 trades, $85 profit. Trading with the trend

Today I had 4 trades for a profit of $85. The day started late and ended early because I've been studying for an exam most of the time. Because of this, missed a few good signals, but ended the day profitable, so I can't complain. I spent a lot of time on the analysis today, performing it real-time as the markets moved. This helped me SIGNIFICANTLY to know what's going on. I took all longs, which I'm very happy about. I did not look for reversal / tops, just traded with the trend.

Here is a chart with the trades.

1/17/12 Trade Results: 4 trades, $125 profit. How / when to manually exit a "bad" trade

I had 4 trade today for a profit of $125. The last trade I took had a great setup according to my system. I took the trade signal, and it turned into what I consider a "bad" trade. When this happens, I begin the exit process. This allows for emotionless management. When you expect something to happen because of certain things, and that does not occur, you need to exit and not leave things to chance.

Here is the chart that explains how to exit a "bad" trade. It occurs when a signal is taken, but the expectation of momentum is not present.

Institutional Number Rejection and Buyer Failuer Example

Here is a textbook buyer failure at an institutional number example.

The way I use institutional numbers is for profit targets because they act as magnets. For example, if you had a long position from early in AH, your final or farthest profit target would be the institutional number at 2400. Always expect that there will be a battle between bulls and bears at that level (Bears want to keep price below 2400 and bulls want it to breakout above), especially larger traders who hold positions longer term.

Trend Identification Methods- Trend or Range? What to do when.

The most important aspect of trading is analyzing where the market has been and where it is likely to go. The concept of trend is very simple, but psychologically the majority of traders trade against the trend and have a very difficult time buying when the market is going up and selling when its going down because they are always looking for price advantage.

People use various indicators to determine trend. They use this moving average and that bollinger band and this strength index and that pivot point, etc etc. It's ridiculous! THE TREND IS RIGHT IN FRONT OF YOUR EYES. If you look at a chart and can't determine the trend, there is none, its ranging.

In a trend you see Higher Highs / Highers Lows (Uptrend) , Lower Lows / Lower Highs (Downtrend). In a range, you will have a lot of false breakouts and weak invalidation points.

Here is a chart example from today. During a downtrend, SELL. During an uptrend, BUY. During a range, BUY and SELL. (Only range trade certain setups and have very tight stops and conservative targets. I primarily trade SF and BF trade during ranges.)

1/11/12 Trade Results: 1 trade, $100 profit. How to know when a trend ends

I have my first day of class for this semester, so I'm taking the trading day light today. I had 2 signals prior to the one that I took. There were both 5 min trend signals which would have met reasonable targets. I however only took the 3rd signal of the day which was a 123 EOT on the 50 tick that had a larger price structure agreement, Bull Channel - Price @ resistance of bull channel. The entry signal was pin pointed on the 50 tick, taking a 123 short.

The chart below shows all of my reasoning behind the position that was taken, I explain below the chart:

Price structure is a bull channel. The red triangle is the "SELL ZONE" based on the price structure. I use it for targets on longs and look for short opportunities. I entered using the 50 tick, pin pointing my entry (chart below). I take profit at either a price structure zone, significant swing, or dynamic support/resistance; whichever is closer to current price / more conservative. In this case, it was the dynamic support because the next major swing was 2354.25 and the price structure support was around that level as well.

1/10/12 Trade Results: 3 trades, $150 profit

I had 3 positions that I took today. I made it a priority to have reasonable targets in relation to current conditions after seeing situations were I was correct on the initial move but had a target that was unreasonable and eventually being stopped out for break even which is unacceptable of successful traders. I wanted to make sure today that I was picking good signals that had a high probability of a move in their favor, securing the profit quickly and building them over time. I had one HOD trade signals and 2 123 signals. The results were +60, +65, +25; ending with a profit of $150 on the day.

Here is the chart of the trades:

1/9/12 Trade Results: 1 trade, $100 profit

As I mentioned prior, I want to start the year off slow and steady, not making any big mistakes. I narrowed it down to a few setups I watch for, and try to only take those. Today, I missed the breaker entry which would have been a good position. After noticing this, I entered short on the re-entry signal. I had 1 trade for $100.

Market direction, transitions, and highest probability trades during the condition changes

The market can only be moving 3 ways: up, down, or sideways (flat). From each of these directions, it could transition into any other or continue the current direction.

When you start your day, its important to know where the market has been, where it is now, and monitor for where the highest probability is that it will go. I use a chart that I developed to help me recognize what the highest probability positions are during market condition changes and transitions.

Current market condition also means previous structure. For example, market has been up trending since 3am, its 8am now, and we just had a failed reversal to the downside, with the market continuing up; this is an UP to UP.

An UP to UP and DOWN to DOWN means that there was a failed reversal move or horizontal move and the trend is continuing; TREND CONTINUATION.

UP to DOWN is a TREND REVERSAL
FLAT to UP is a BREAKOUT / TREND FORMATION
etc

For each of these transitions there are higher probability trades that others. For example, in and uptrend followed by an uptrend, the higher probability trend is SELLER FAILURE rather than a 123 REVERSAL.

Here are the abbreviations:
BO- Breakout
PB- Pullback
SF- Seller Failure
BF- Buyer Failure
TR- Trading Range
FBO- Failed Breakout

Buyer / Seller Failure Trade Signal- High Probability, Low Risk, High Reward

Here is a video showing how and when I enter BF / SF signals. The signal occurs 0 to 4 times in a day and is very successful if a valid one is taken.

This setup is my lowest risk setup and highest reward. It's important to recognize which ones to take. I use a supporting chart to filter out the higher probability v the lower probability ones. It's all shown in the video! Let me know if you have any questions.

This was the original video on buyer / seller failure explaining the fundamentals and reasoning behind the position:



Here is the video from today, 1/5/12 showing examples of SF signals and how I take them.

1/5/12 Trade Results: 1 trade, $50 profit: New Year's Resolution

At the end of every trading day, you realize what you did wrong, what rules you didn't follow, and how to fix them. The problem is, seldom do these "solutions" become enacted quickly. At the end of the quarter or year, you recognize broader mistakes; for example being impatient or straying from your rules.

This year, I had 2 New Years Resolutions; one personal and one for trading (work). The one for trading was:

Be patient, disciplined, and smart.

Here is the solution (resolution) for each-

Be patient: Patiently wait for price to go into the "trade zones". Patiently wait for the entry signal. Never assume or anticipate anything.

Be disciplined: In 2011 I saw way too many times the situation of being in the money by $100+ and then getting stopped out at break even. I was giving back profits because of greed. For this, I developed Systematic Profit Securitization
Trade 1) +$50 target
Trade 2) +$75 target
Trade 3) +$100 target
Trade 4) 2 contracts, +$50 and +$150

This is an idea of a profit ladder. I will take $50 profit on the first trade of the day, and then progress the targets if I secure the previous target. I cannot step up to the next target level until the previous one is met. At the 4th trade, I trade 2 contracts scaled out. After consistency, I can leverage up to 2 contracts and double the levels.

Be smart: I want to start very slow this year and realize that I have all week to make my money, not just one day or 1 5 minute bar, etc. I want to be smart and put focus on price structure analysis, not firing off trades left and right in non trending environments. Today, I had 1 trade for the profit level of $50. Since the time is noon, I need to stop trading for the day no matter what, even if I had 0 trades.