Tuesday, April 30, 2013


(1) ES opened above the 1587.50-1585 WHITE ZONE indicating buyers are in control  The market tested into the white zone off the open & triggered a buy signal.  Aggressive entry  was from the front of the zone + the highest odds entry was from the back of the zone.  While both entries rotated higher; neither achieved a 2 point rotation and I considered the trade a loser with any reasonable loss. (hypothetically calculated at 3 points)

(2) The second trade was triggered when ES traded back up into the 1587.50-1585 WHITE ZONE with only the most aggressive shorts getting filled.  The WHITE ZONE was broken to the down side control had switched to the sellers.  The trading rules for this strategy calls for passing on long set ups when sellers are in control.  the rotation down to the 1582.50-1580.50 provided the opportunity to cover for 2+ points. 
While this strategy calls for trading in the direction of control I tweeted that bears really needed to make a push here or that they would lose the advantage.  I also noted the higher low on a five minute chart and the lack of a negative tick greater than -400.  ES then rotated back up the the WHITE ZONE.  This was the second touch of the zone from below so no trade was triggered per the rules.  

(3) At 10.15 ES closed above the 1587.50 indicating buyers back in control which would trigger a long on the first test back into the zone.  ES  rotated up to the 1590.75-1592.75 which was also Initial Resistance.  I expect to find sellers at Initial Resistance. The rotation up provided a 2+ rotation for the 2nd successful trade of the day.  ES balanced in a tight range for the balance of the afternoon.  While sellers did appear at Initial Resistance a small rotation down was the best they could do.

Heading into the last hour I warned that we are trading near the highs of the day and above the 1st hour high; shorts are just a low odds opportunity.  Think about it,  what would cause the market to cascade in the last hour?  Today, nothing.  Shorts were pressed right into the 3.15 close.  I can not emphasize enough if you are a day trader that consistent high quality wins are the only way to make money.  6 out of 10, even 7 out of 10 does not cut it.  Its this lack of understanding that kills small traders.  Make sure you actually have an edge.  Consistency is achievable.  Anyone can do it with preparation.   


“Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win” 
― Sun TzuThe Art of War

Monday, April 29, 2013



ES opened the day  just above the 1579.50-1581.50 WHITE ZONE.  The WHITE ZONE delineates control between buyers & sellers.  Buyers are in control above and sellers are in control below.  Opening just above the WHITE ZONE a trade was triggered on first touch down into the zone. (1)  Depending on your risk tolerances and aggressiveness there were two valid entries on the long side. Front of the zone is most aggressive and back of the zone is the highest odds. The back of the WHITE ZONE printed the low of the RTH session to the tick and for those wanting to swing trade or use a trailer, you had an 11 point + rotation to the high of the day with no heat.  Per the strategy discussed here buyers at the front and the back of the zone had easy 2 point rotations for a nice trade.

(2) Per the highest odds strategy I am discussing on this blog,  shorts are to be avoided in general  when buyers are in control  instead using zones above to scale if a trader has the ability to carry a trailer from lower levels.  The approach to the 1583.25-85.25 highlights why.  Had you shorted the front of the zone you had to cover for a loss-small or big was the only question.  Even the back of the zone proved to be a challenging short.  2 points would be hard to come by.  The easier trade and higher odds trade was to simply wait for the zone to be penetrated on a 5 minute bar and long the first test back.  That exact opportunity presented itself again & the long gave a nice rotation up to the 1587.25-89.25 zone for a 2 to 4 point rotation.  Again,  the most basic strategy calls for an exit at 2 points.  Anything more is just gravy as far as i am concerned.

(3) The third & final trade of the day set up when ES traded above the 1589.25-1591.25.  The close above the zone on the five minute triggered a long trade on first trade back in for a rotation up to the 1591.50-93.50 which was also noted as the days initial resistance. The 3rd and last trade was good for a 2pt rotation.   I would normally expect to find sellers at initial resistance and am at least going to close out a long there and look for shorts.

There were several clues that buyers were in control today.  These are important clues one should look for daily.  1)  No gap fill, sellers weak out of the gate.  2) small rotations lower and big rotations higher-always measure the size of the rotations for the clues. 3) TICK never registered greater that -200 until late in the afternoon.  If you know what to look for the market will tip its hand.

So there were 3 opportunities for long trades and 3 wins.  I followed my trade plan and my focus was on execution.  This is the essence of growing your capital and building wealth.  Its not a trick.  Its just focus and disciplin   Anyone can do it.  If you would like help, contact me.


“You can be sure of succeeding in your attacks if you only attack places which are undefended.” 
― Sun TzuThe Art of War

Sunday, April 28, 2013


ES opened above the 1576.50 -78.50 WHITE ZONE. The WHITE ZONE determines who is in control. Above the WHITE ZONE buyers are in control & below sellers are in control. Since above the WHITE ZONE my trading rules call for me to assume buyers are in control. The first trip into the zone offered trade location at two points. (1) The front of the zone is the most aggressive point to place a trade and the back of the zone is the highest odds point to place a trade. Again, this strategy calls for only trading the 1st trip into the zone. While there may be subsequent trades into the zone that have nice rotations out of the zone for a counter rotation; the odds of a successful trade drop with each subsequent trade & call for a more advanced trading strategy. Weather a trade was placed in the front of the zone or the back of the zone traders were rewarded with a move up towards the 1581.75-73.75 resistance zone worth 2-4 points depending on trade placement.

The 2nd trip into the zone did not yield a successful rotation upward and eventually broke to the down side. This set up a potential short on the first trip back up into the zone. (3) Per my trading rules, a short was triggered and again depending on risk parameter there was good trade location at the front & towards the back of the zone.(4) The trade yielded a potential 3-5 point trade as ES moved towards the 1570-72 support zone. Remember a zone is support until it is broken on a five minute bar that closes outside the zone. The zone then becomes resistance.

 (5) The 3rd valid trade of the day per my trading rules came when ES moved back into the WHITE ZONE & subsequently broke to the upside on a five minute bar. The move back into the zone after the break set up a long. The long had a potential for up to 2.5 points as the market attempted to rotate back up to the 1581.75-83.75 zone. As most who follow me know, I scale my trades rather quickly. I am not trying for a home run. I leave trailers most of the time but I dont have targets. I simply assume I do not know what the market is going to do and all I do have control over is where I place my open orders and my stop losses. Each of the traders that where set up per my trading rules yielded a minimum of two points from the front of the zone. There were no losers.

 Ask yourself, how many points do you need a day to be successful. For me, 2 trades a day for 2 points is all I need. I am a day trader and I only want the highest odds trades and I want to play for the highest odds outcome. As you can see, the trader who tries to hold for more than 2 points at the end of the day was stopped break even at best. IMHO, for most traders, the hope of catching a 5-10 point move is just that-a dream. I want to set myself up for success and my trade plan and rules provide me with that opportunity.

 I welcome any questions or feedback. Hope everyone traded well. Looking forward to the next week.

 “We are not fit to lead an army on the march unless we are familiar with the face of the country -- its mountains and forests, its pitfalls and precipices, its marshes and swamps.” ― Sun Tzu, The Art of War

Thursday, April 25, 2013


ES opened the day just below today's White Zone of 1578.50-1580.50.   My trade rules call for a short on the first move into a zone.  The zone itself is a high odds location to place a trade.  The highest odds location is the back of the zone.  If I short the front of a zone, which I often do,  I assume that the ES may travel to the back of the zone before reversing.  Where one places a trade must be based on ones risk profile.  (1) Regardless of where I placed the trade,  I was offered excellent profitable scales.  From the back of the zone  you had a potential of 4 points and from the front of the zone you had a potential 2 point trade.  As I have tweeted several times; my trade rules call for scales starting at 5 ticks, 8 ticks, 12 ticks and 16 ticks and then a trailer.  As I have tweeted many times,  If one were to trade only 1 contract,  I would target 2 points for each trade.

(2) Es then traded back into the zone for the second time in the morning.  The second trip into the zone is a lower odds trade even though the zone is resistance until it is broken, at which time it becomes support.  My rules define a zone as broken when ES closes out of the zone on a 5 minute bar.  In addition to the second touch of the zone we had several clues that shorting was not a high odds affair.  First,  traders were unable to push down to gap close, 2  we did not have a tick reading great than -200 on the first rotation back down.  Once the trade broke above the 1580.50 level, control shifted to the buyers.  For me this means several things.  First,  if I am short I need to cover quickly. Secondly, I need to get long at the first test into the zone if I get an opportunity   I do not chase.  I execute at the zone or I let the trade go. Once the zone was broken we had a quick retest of the top of the zone & then rotated up to the 1583.50.  If one had not scaled by the time we got to the next zone the front of the zone provides a logical place to either scale or exit the trade.  Since buyers are in control my rules for this strategy call for passing on taking the short.  As you can see, taking a short here or anywhere in the zone would prove very challenging. ES then chopped in a tight range into NY lunch.  I noted on twitter that the rotations down were very small and that the tick had still barley been negative.  These are signs that shorts will be difficult and favor longs.

(3) ES proceeded to break the top of the 1583.50 to 1585.50 triggering a buy signal per my rules on first trip back into the zone.  The test down did not get to the zone and I was unable to get long.  Even with that being the case,  I was not short and not having a losing trade is as valuable to me as having a winning trade.
I mentioned on twitter that all indicators pointed to buyers wanting to take ES to the 1588 to 1590.  This zone was market as initial resistance.  This is often where I will begin to look for shorts.  ES traded to 1588.25 and marked the high of the day. (4)  The move into the zone was also market by tick divergance giving further indication that initial resistance would hold.  Again, this strategy I am featuring calls not taking short as long as buyers are in control.

The market then proceeded to rollover and trade back down to the White Zone.  This highlights several things in my trading approach.  ANYTHING can happen. Managing risk is everything.  Oppertunities are constantly offered by the market.  I cant miss a trade, I simply learn something new and move on.  The afternoon trade is harder than the morning trade.  My goal in this strategy is to find 2 to 3  trades a day.  I have already accomplished this.  My goal is to grow my equity in a consistent manner.  Most small traders try to capture every trade.  Its just hard to make multiple trades in a row and get it all right.

(5) ES rotated down to 1585.50-83.50 zone.  This is the first rotation down from a zone above since buyers took control and we have had tick divergence the zone above. ES could not even muster a 5 tick rotation up from the top of the zone after sitting there for 20 min.  Another clue that buyers hands had weekend.  We then rotated down to the bottom of the zone and broke below.  At this point,  we now have the biggest rotation down since buyers have taken control.  Another big clue that taking longs would be challenging.

(6) As we trade back down to the WHITE ZONE  for the second time of the day, my strategy called for passing on the long.  Again, I am only seeking the highest odds trades in this strategy. As is clear to see the zone did hold and had 2 nice rotations up from the back of the zone.  Trading here required a more advanced and higher risk strategy that I teach my clients to trade.  Lots of ways to take advantage of the market.

Remember,  your job as a trader is not to catch all the trades or even trade all day.  The only thing that matters is day to day consistency and growing your bottom line.  Most traders fail miserably here.  Most retail traders lose.  Make sure you have an edge and a trade plan you can follow.  Wiping out an account is not necessary.  Hope everyone had a great day.

ES Mid morning trade review w notes 04-25-13

Wednesday, April 24, 2013


I am running behind tonight and a bit tired so this review is going to be on the short side.  ES opened under the 1574.25-76.25 WHITE ZONE.

  When the market is trading above the WHITE ZONE buyers are in control-below & sellers are in control.  In the strategy I discussing on my posts I am describing my highest odds trades.  First time into the WHITE ZONE is a high odds counter trade.  The most aggressive trade is from the front of the zone, the least aggressive trade is from the back of the zone.  Both trades gave multiple scale opportunities with a max possible gain of 6 points. (2)  ES traded down to 1 tick infront of 1570.50 zone before rotating back up to the 1574.25-76.25 zone.   Today turned out to be quiet the chop fest.  Many traders have difficulty when a market suddenly switches from making fast directional moves to slow grinding moves.   Following a trading plan and not running many trades makes navigating these days much easier.  The market chopped through a top range until just after 1 pm central.  I pointed out on stock twitts that if the market closed above 1576.25 on a five minute bar that it would generate a long trade for me on first test into the zone.(3)  I took the trade at 1576 and had two scales for +5 ticks and +8 ticks.  I was stoped on balance at break even.  It was a difficult trade to take.  Market internals were not really confirming an extended move up and it was late in the day on a choppy afternoon.  emotionally I wanted to talk myself out of  the trade.  Thats where trading rules always come into play.  There is always a reason to not take a trade, or finding reasons to take a trade.  By having clear cut rules, there is less thinking and just following the set up.  I would have missed my profitable trade and that would have been very disappointing.  ES had a pretty good bout of heavy selling into the close.  The last hour is always tricky and the market seemed off balance on whole, probably because of the ridiculous news event midday yesterday. Tomorrow a new day.  i am off to get some rest so i do a good job in the am.  Hope everyone did well today.  

Tuesday, April 23, 2013


I hear traders all the time, quietly, explain how they are struggling to break even.  Its a quiet suffering, no one gets on Stock Twitts and shouts I can not stay consistently profitable. Most make one trade and kill it followed by a series of trades that nullifies all the good work.  Before you know it,  your back at scratch or down.  Its humiliating.  I have been there- many times.   

This kind of trading can do awful things to a person, from frustration, to depression to low self esteem.  It can be so frustrating to lose one day when the previous day money seemed to be falling into your lap.  Or perhaps you first two trades were winners that had you feeling on top of the world followed by 3 trades that wiped it all out in the afternoon. 

If your like many of us, you have kids to take care of and wifes/husbands to keep happy and retirements to be concerned with.  It all adds up to alot of pressure.  Throw in the guys we see in stock twits and twitter who seem to nail every move.  Its pretty easy to feel like you do not measure up pretty quickly.  I have been there and I can personally tell you it feels like shit.   It so felt like shit that I swore that never again would I trade if I could not trade consistently   

These are the steps I followed strictly   and they took me from a looser to a winner:  
(this assumes your trading plan actually has an edge( MAKE SURE YOU HAVE AN EDGE) 
1)  I wrote a trading plan before market specifying where I would take a trade and exactly how i would scale it.  I had the exact number of contracts i would trade and exactly how i would scale them.  Pretty much no thinking.  

2) I would not enter a trade after 11am central.  Period.  

Most days I would get 2 trades,  sometimes 3.     So lets say I had a 10 k account.  I started with 1 contract and I scaled for 8 ticks each time.  There were some losers but the gross majority were winners. (see my daily postings & blog the trade is very spacific and its win rate is close to 90%).  Lets assume 8 winners a week and 2 losers on 1 contract using a 1 to 1 risk reward scenario.  Thats a total profit of $600 a week.  At the end of the month its $2400. Its a real big return and there are many weeks where the trade hits 100%- no losers. Again,  I post the work and send out the rules ahead of time, so one can watch and see that what I say is accurate. 

When I had my 2-3 trades,  I was done for the day.  Period.  

The next step in making this work was critical.  I DID NOT LOOK TO SEE HOW MANY WOULDA COULD SHOULDA POINTS I COULD HAVE HAD.  That is the killer in this bis.  Everyone always says I should have left the trailer or I knew it would make a huge move.  DOESNT MATTER.  All that matters is that you make you account grow.  You dont need a million trades, you just need ONE TRADE that will let you consistently grow your equity.  If you dont, you will be out of the bis.   

At the risk of sounding like i know it all,  I have sat in a dark quiet room after spending time loosing ungodly sums of money and wondering how it got this way.  How could I see so many good trades and still end up losing money at the end of the day.  So I gave up and admitted that all I had was one trade, and so should you- if you even have that.  

Work that one trade till its a bloody pulp.  Hit it again and again and grow your equity to a sizable amount, increase your trading size as you move along and increase your profits   If you want to know the secret, its the secret.   We are not all George Soros, or  Cohen or FT71's  or any other awsome trader out there.  

Most of us are every day guys with a dream.  The dream is to have the financial freedom trading can bring.  But the dream gets distracted and diluted.  We want to do everything great- and for most of us its a pipe dream.  So instead my suggestion to you is to do ONE thing GREAT.   That one thing can make you more money than you ever dreamed of.  Once you make your tons of money and you wan to see if you can pick up more trades-- go for it.    But first show yourself, your family and your sense of self worth that you can do this job on the most basic level.  You have one trade, you exploit it to your advantage and you dont look back.

You will feel like your on top of the world if you can do that.  Its late,  i hope this made some sense. 

PS -- this will not work if you don't actually have an EDGE-- critical.   


Comments Welcome.  

ES Trade review for 04/23/2013

ES opened well above today's "WHITE ZONE"  buyers 1565.50 TO 67.50. I mentioned out of the gate that I was looking for long opportunities only.   THIS IS KEY,  knowing when not to fade, even if you did not get one long off saves the mental pain and frustration, stops the trader from going into a mental spin that could wipe out days of good work.  Most traders have been there and done that.  By knowing  the bias,  you can avoid pain.  

(2) The market promptly moved up to and through the 1565.50-67.50 zone.  1567.50 offered 3 opportunities to get long each with 2 pts or more in potential profit.  Once a zone is trade through that was acting as resistance, it is now support.  We were in a clear trend day up characterized by very small counter rotations, low negative tick readings and no attempt for gap fill. 

The next rotation up brought us to the 1570.25 to 72.25 zone. (3)  Again, not looking for shorts, this offered a good point for a scale,  upon breaking the top side of the 1572.25 resistance, a good long ooppertunity was offered at 1572.25 for a 2point + trade. (4)  As we approached the 1575-1577 zone I mentioned that i was closing out the last of my longs.   I did so at 11am on the dot. Several reasons for this,  1) Heading into New York lunch and trading tends to be low odds affair. 2) I stated a few minutes after the open that: "Buyers in control out of the gate. So I am focused on looking for long set ups until we trade above the 1574 level."  If I am going to start looking for lunch I am certainly not going to press my longs.  As it turns out,  my exit was very timely.   The AP released the news that wasn't from a hacked twitter account. I am sorry for those that suffered losses on such bs.  I pretty much had no trades the rest of the day.   The market seemed off balance from the shock of the move.  I am certain small traders were blown up.  I did mention the the buy sell line at the end of the day was 1570 and we held above to close near the highs.  Last hour is very difficult time to trade.  Algos rule the roost and its hard to get an edge against them.   I think my biggest take away from today was one learned from Mark Douglass  "Anything can happen in the market"  & I dont need to know what will happen next in order to profit"  .  

I had no idea today would be a trend day up, but i did know how to handle the market relative to my game plan.   I did not feel like i missed anything nor did i feel like i needed to step in front of it. I traded my plan.  I took my $$ like I do every day.  The $$ come from consistently following a high odds strategy and game plan and sticking to it.   Anyone can do it.  If you need help,  ask-- I am happy to help.   Looking forward to more fun tomorrow.  

Please give feedback on how I can improve the blog to help others.  Thanks. 

Monday, April 22, 2013


ES opened below the "WHITE ZONE"  (1) We are currently below the 1556-1558 WHITE ZONE -sellers in control.will start looking for signs of a long near the 1546-1544 S/R zone us know that sellers were in control.  he market was unable to reach the 1556-1558 & no trade was to be had using the most basic of strategies.  Important to note that even though no short trade was generated it is just a s big to not have a large loser right out of the gate!  Market rotated down to the 1549.50-1551.50 zone where the market paused.  Again,  sellers in control and I saw nothing that indicated reversal.  I simply passed on the long set up.  @ 8.50 am ES closed out of the 1549.50-51.50 zone and proceeded to trade back into the zone from below.  This generated a valid trade but it was in front of news.  A stop behind 1551.50 would have kept you in this trade for several very nice scales. (2)

I tweeted at 8.42 am  We are currently below the 1556-1558 WHITE ZONE -sellers in control.will start looking for signs of a long near the 1546-1544 S/R zone. ES rotated from the 1549.50-51.50 zone down to the 1544-1546 zone.  Tick divergence @ the back of the zone  (3)  ES rotated up out of the zone and choped around just above the 1546 and vwap.  You had to be careful here, the choppy action that took place chews up many traders. (4)

I tweeted @ 10.34am  ES trying to resolve here in a mini bull/bear fight. I don't see a real edge, Bulls need it back above 1552 & bears need blow 1544 ES finally resolved to the upside, this move up was the 2nd time up into the 1549.50-51.51 zone and per my trade plan, 2nd time up is a lower odds trades in all zones & particularly given the bull/bear fight that took place just below.  

ES traded above 1551.50 and this essentially became the new buy/sell line,  you had to be quick but there was a quick test down to the 1551.50 for a long which gave several nice scales. The market continued its rotation up now that it had bears trapped and they pushed all the way to 1560 going into the last hour.     I tweeted:  @1.53pm Heading into the last hour when trading above 1st hour high makes for a low odds short.  @1:54pm we have had a good move off the lows so a pullback would not surprise, just doesn't pay often enough to play.  @2pm what I try to ask myself here is what is the fuel that will run the market higher. ?? @2.01pmBulls were trapped this am and Bears were trapped mid morn. Both have had their puke time. Best guess is the best moves are done.    With that my day ended. There really was not much to do while using my highest odds strategy.  Would have been a great day if we traded into the WHITE ZONE off the open, but did not get it.  From the chats I had today this is my biggest takeaway,  sometimes even if you dont get your trade executed, but you avoid taking a losing trade because the plan was well thought out, then you still have a very strong plan.  The key is knowing you have an actual edge and consistently trading it.

It is incorrect to say its ok to take a trade and give it a shot to see if it will work because your using a tight stop.  Those small losses add up and I believe the most important thing a trader can do is to keep their equity curve heading north. Hope everyone traded well.  We get to do it all over again tomorrow.  Rest well.  


Have had several calls from friends in the past weeks about AAPL,  should I buy more, bail, hold, throw away my aapl products in disgust.  Short answer is I have no idea.  Friends that bought near the high feel stupid, those that bought well and were holding for  $1000 or whatever feel stupid for holding & then there is the friend who actually waits for stocks to correct before jumping in & wants to know if now is the time.  I personally own exactly 0 shares of AAPL.  I do own an IPAD, IPOD, &  IPHONES spread through my family.  Great products, great quality and I am generally happy to pay a premium for things that look cool & work well.

I make my money in day trading, its my bread & butter.  I simply have 0 edge in fundamental analysis and I can not compete with Warren Buffet and his ilk.  I know my limitations. So,  when I do buy something I buy it a a discount to hedge my disadvantage to those who do have the edge. I have 2 strategies in executing my long term portfolio.

Strategy 1:  When there is blood in the street,  the market has had the living day lights kicked out of it as in 07 or 01  or  97-98 (asian contagion) Or 94(tech meltdown) .  If its the market that has been killed,  I look to buy those stocks that have gone down the least while the market has gone down the most.  The idea is simple, when there are no sellers on the way down,  it will be easy to move up when the buyers come back.

Strategy 2:  If the market has not been killed,  but the stock has -like AAPL - then I want a 40-50 discount from the highs & a bis model I can somewhat understand. Examples:  IBM in 08,02-CSCO in 09 & 11, NOK in 08 (which did not work out), CAT in 2000 & 08, KO in 02 & 08,  SNY in 08, PFE in 02 & 08.  Point is,  if I think its a good company, I simply wait till its had the living crap kicked out of it and pick some up.  Usually it works out  I usually dont think i am picking the bottom.  2) I am not leveraging up as I do in day trading, again, no edge, so I am just putting cash to work.  It would take time and luck to ever get rich this way but it will  make my net worth grow nicely over time.

Thats it,  that has what has made me money over time.  I have had 1 total dud (NOK)  Everything else has shaken out nicely.  Its boring, the way long term investing should be. It even works for high flyers like DDD. I try to limit my picks to good, large companies and the occasional high flyer. I assume it could draw down against me more and I dont concentrate or leverage up.  I will usually sell puts on the positions I am entering  with the assumption that the stock will be put to me,  if not--"free money' (again-unleveraged-- I assume I will own the stock).

That brings us back to AAPL.  I went back and unscientifically looked at various corrections. It has rarely just turned and gone back up (it did once) but a quick glance reveals that it usually bases 4 to 6 months in a range before making any kind of significant move.   Gut tells me there is time to act.  I may start scaling into a  position via selling puts slowly over the next 6 months.  A little bit each month on down days. It wont be a concentrated position and I have no idea where the low will be.  Its down 40% and thats a good place to start nibbling.  I like the company's products so thats how I would handle it.

Here a a few charts of previous corrections.

Would appreciate any thoughts or feedback. 

Trading of securities, options and futures may not be suitable for everyone and involves the risk of losing part or all of your money. Commentaries are educational in nature and are designed to contribute to your general understanding of financial markets and technical analysis. Use it how you want and at your own risk. I am not a registered investment adviser. This information is a general publication that reflects my opinion and is not a specific recommendation to any one individual. You must consult your own broker or investment adviser for investment advice. Controlling risk through the use of protective stops is essential

Sunday, April 21, 2013


(1) Friday market opened and traded up into the days 1540.50-1542.75 "WHITE ZONE".  There were 2 potential entries, 1 aggressive at the front of the zone and the higher odds trade at the back of this zone.  This trade offered excellent rotation of 2 to 4 points depending on trade entry.


(2) The market rotated out of the WHITE ZONE down to the 1536-1538 support zone offering excellent opportunity to scale out of shorts placed in the WHITE ZONE.  The market tried for gap close and failed.  I tweeted that the failure to close the gap was a sign of strength and was a very good clue.  That test of the back side of the zone turned out to be the low of the day.

With rotation back up to the WHITE ZONE I did not see a short opportunity because it was a) the second touch of the zone--each time it touches, odds lower that you will get a favorable counter rotation & b) we failed to close gap--again, a sign of strength.  My anticipation was we would trade up through the WHITE ZONE  & continue higher.  I would look for a long on first test back into the WHITE ZONE.

(3) Upon the upside break of the WHITE ZONE, indicating buyers were in control I was looking to get long the first dip back into the zone.  This provided an excellent trade with a rotation up to the 1447-1449.50 resistance zone above.  (4)

That is a potential 4-7 pt trade.  While there was a rotation lower out of the 1447-1449.50,  the strategy I am discussing would call on skipping the trade as it is a lower odds trade when buyers are in control.

The cash market closed at the high of the day & I tweeted that shorting a market going into the last hour when the market is trading above the first hours high is a low odds affair.  The key to growing your equity curve in day trading is having the discipline to wait for the highest odds trades and the willingness to accept that you may miss a larger because of that discipline.

The biggest take away here is this,  if you had 2 high quality trades a day that had very high odds of working how long would it take you to make the money you want to make.  It is simply a matter of having an edge and focusing on exploiting that edge over and over.  Thats how you make money.  

Thursday, April 18, 2013

TRADE REVIEW 04-18-2013

This morning we opened just below the 1550-1552.25 WHITE ZONE.

 ES did not make it to the zone & I was unable to get a short off.  Again,  in this blog I am simply highlighting the highest odds setups using the most basic strategy I have.  Since sellers are in charge I am strictly looking for shorts at the first test of the zones below ONCE they have broken.  Broken means it has closed blow and moved back up as in the example below.
The move back into the 1544-1546 zone provided the 1st opportunity for a trade and this zone offered both back and front of the zone for entries and offered multiple opportunities for a scale.  ES quickly rotated to the 1538-1540 zone -the market had a quick rotation up just in front of the 1540 level.  In this strategy I am not looking for longs but it is not a bad idea to cover in front of a zone because even in a down market a rotation, even if small, is to be expected.  We then quickly flushed through 1538-40 zone & tested back up. Once again,  A short trade in either the front or the back of the zone offered excellent trade placement & a 2-4 pt trade opportunity.  Just after lunch the market rotated lower down to the 1533-35 zone where i noted in the pre-market post was initial support.  I expect buyers at initial support on first touch and the was a 2-3 point opportunity there.   

So that is it,  2 clean low stress trades.  Do the math.  Even with just one contract its a very solid strategy and it has been a consistent strategy for me.  By looking at the chart you will see that clearly there are more trade opportunities   I am simply highlighting the most direct and high odds trades on this blog.  Pease feel free to hit me with any questions you have.  tradenperform@gmail.com  


tick divergence at initial support

Wednesday, April 17, 2013

 Today's WHITE ZONE, which determines who has control  buyers or sellers was 1554.75-1557.  the market opened above and traded directly into 1557.  the first few minutes of the market can be very fast and difficult.  We did garner a pause and a small rotation from the front of the zone, but it stalled without even 5 ticks of rotation.  You had to be very quick to make this trade work.  With the selling pressure we experienced overnight, a bit of caution was warranted.  The ES quickly traded down through the white zone to 1552.  The bounce back into the WHITE ZONE offered excellent trade location, particularly the back of the zone.

The back of the zones offer the highest odds trade location; the most aggressive location is the front of the zone.   The test of 1557 was quickly sold and we traded down to the 1549-51 zone where the market paused.  There was a good rotation from the back of the zone for up to 3 points but it is very aggressive because we are below the buy/sell zone.  Sellers were clearly in charge with  no indication of significant reversal.   I did tweet that at 1549 I would start to looking at longs with supporting evidence; followed by 1544 and 1539.

Each of those areas provided good rotation, you just had to know from price action when to leave the trade on and when to stick it.  1539 turned out to be close to the low of the day and offered up a 10 point rotation.

I also warned via twitter that I had observed tick divergences and would be cautious on shorts after we hit 1539 and would not consider a short until VWAP or the 1550 area.  Both proved to be high odds entries to the short side.

Bottom line, while today looked easy in the rear view mirror you had to be really clear about where you wanted to execute.   Trade location made the difference between having a really good day and having a bunch of stops and losses.  Context makes a HUGE difference.

The easiest way to use this chart is to look for setups in the direction of the party that has control   does it give fewer set ups?  Yes.  Bad for guys who want alot of action,  but great for guys who want to build their equity curve.

trade review for 04-17-13


trade plan for 04/17/2013

This is the result from today's trade plan: