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.  

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