The Long and Short

From Scratch..

2007-08-09T13:30:00.000-07:00

I'm considering the last 30 days of my trading a learning period. I made alot points and conversely lost alot. The only reason I did not hold onto my profits is because I lacked the discipline to NOT trade when my set-ups weren't presenting themselves and I was shooting from the hip on a couple trades. I consider this to be my #1 obstacle right now.

Trading should be conducted as a bussiness. Up until now, I've been treating it as a hobby. I realize now that there needs to be a control (in the scientific sense). If I cannot logically explain why I took a trade then my results will not fully reflect my strategy (bussiness plan).

From this point forward, I am only allowing myself to trade my main setups. Granted my strategy only offers a handful of set-ups a month, but they are high probability and high point gainers. If this does not work for me over the next month, then I will try something new. If I deviate from this plan, then I obviously don't have what it takes to trade and at least I will know.

This month, starting tomorrow (August 10th) will be a true test of my commitment and discipline and will be an accurate assesment of my trading strategy's real-time performance. I am also making a commitment, to document every trade I make this month on this blog. That shouldn't be too hard because it will only be a few.

The following are my set-ups:

- Long Trade : short term RSI on 60 minute chart is below the 30. The longer term RSI is ABOVE the 35. The low has NOT take out the previous low. 5 minute chart is used for timing.

- Short Trade: long term RSI on 30 minute chart breaks above the 65 and retraces. Shorter term RSI then moves to above or @ the 70 mark (on SPX or INDU). Short on bearish candle.

Weekly Review

2007-07-27T15:07:00.000-07:00

I closed about 16 points this week. High volitility allowed me to take advantage. I had two long entries today at the green arrows. The first one was stopped out. My third trade was short which could have been a major gain had I used a trailing stop.

The last chart shows support for the weekly. This looks like a good potential position trade.

2007-07-24T16:10:00.000-07:00

Went long today at the green arrow when the hammer formed at support. I closed 4 points which should have been 5 thanks to the major slippage on Xpresstrade. I got cocky and went long again when I thought price was bottoming out. It sure bottomed out and then some. I took a 2 point loss on the second trade meaning +2 points for the day.

The second chart illustrates the major support failure for the day. My next trade will be to the short side. I'm looking for the RSI(7) on the 60 minute chart to be showing weakness around the 70.

Weekly Review

2007-07-22T18:43:00.000-07:00

I currently have one long postion going into next week. I didn't record how many points I made but I made 12% on my trading account. I'm proud of my self for not making any emotionally based trades and waiting patiently for my set-ups. I only made four trades so less actually was more in this case. Happy trading!

2007-07-18T17:56:00.000-07:00

I closed about 7 points today with a long trade at the green arrow. Some other trade confirmations were that fact that the price was consolidating at major support and price was also clearly bottoming out on the 5 minute chart. Strong volume today and buying pressure on the daily candle suggest that tomorrow might be bullish.

2007-07-17T16:26:00.000-07:00

I went short today at the red arrow on the 30 minute chart. I liquidated half my contracts after gaining 5 points. A couple hours later in the after hours, the second half was up 10 so I covered them for a pretty profit. I missed a long trade prior to that when a hammer formed at 1574 and the day's open. Unfortunately I had a meeting so I couldn't put any money into that one.

The daily looks like its at major resistance and will move down a considerable amount before the current rally resumes.

2007-07-06T19:12:00.001-07:00

Today was frustrating. I could have made ten points in the after hours if I had placed a sell order and then could have locked in another 6 points this morning if I had not botched up the sell order which got filled after I canceled it. Xpresstrade labled it as a TLTC (too late to cancel). I only lost a point though. It seems I got the whole entry thing down but need to work on my exit strategy.

Anyway, I'm betting that the S&P will top out a little more before hitting major resistance. I won't get a chance to be in front of the computer all next week but am hoping some set ups present themselves in after hours.

Long @ 1532.25

2007-07-05T16:25:00.000-07:00

I got filled today @ 1532.25. I'm currently up 3.75 points in the afterhours. I entered at the green arrow on the chart. Posted is a daily chart showing where the next resistance zone may be encountered.

2007-06-28T20:56:00.000-07:00

I read a couple of books by John Hayden. I didn't find any of his strategies to be useful in my approach to trading, but he did touch on one interesting topic; that is the factor of the ego in trading.

The ego is such an important part of our personalities and our endeavors but it holds absolutely no real estate in the trading world. I should say, that it holds no place in the world of profitable traders. I believe that ego goes hand-in-hand with stubborness, meaning and unwillingness to adapt. You must adapt to the markets, because the market will sure as hell not adapt to you AND the market is ALWAYS right. This is hard for a lot of egotystical traders to accept. This is also the reason that all trading systems will not consistently make money.

A trading system abides by a set of rules. These set of rules cannot adapt to the ever changing nature of the market. Only the human mind can do so. This is why trading is an art and not a science.

This blog used to contain some very interesting charts (which I deleted) derived from my trading "system". Although it was complex and dynamic, I realized that it ultimately would not be profitable. For one, I was using complicated geometry and time frames. Luckily, I came to realize the big picture in the markets. There is a lot of truth in KISS (keep it simple stupid).

The market makers couldn't are not really concerned about 1 minute, 3 minute or 5 minute traders. Institutional traders don't care about 2 point stop losses or a 5 point stop-losses at that. Personally, I would rather take my 1 to 2 points here and there and make a humble living. That type of trading jives more with my personality. Unfortunately that is not how it works. The trader needs to "jive" with the market, not the other way around. The major market moves are made by the major players and if you want to make major points then you have to trade in a paradigm which allows you to take advantage.

Recently, I have discovered that any thing less than a 30 minute time frame gives me no real idea of what is happening in the market. There are many who would say that you cannot day trade on a 30 minute chart. That is a half-truth. You may not be able to day-trade every day on a 30 minute chart but you can do it at least once a week and still make more than the day trader who is "chasing success".

2007-06-16T17:31:00.000-07:00

The S&P made a double-top on Friday. My next entry will be short but I am expecting the price to approach the 1540 level again before retracing.