Tuesday, May 7, 2013

ES TRADE REVIEW 05/07/2013

ES Opened the day above the 1614-1616.25 WHITE ZONE.  The WHITE ZONE determines who has control; buyers above & sellers below.  ES opened at 1616.50 and the first dip into the WHITE ZONE  provided good location to put on a long. (1)  ES quickly rotated up to 1619-1621 zone where sell supply was found.  On the rotation back down to the 1614-1616.25 WHITE ZONE sellers picked up some momentum.  The odds of a counter rotation out of a zone is reduced each time the market goes into any given zone.   This is why the highest odds trade is always the highest odds for a successful counter rotation.

ES flushed through the 1614-1616.25 zone on second touch and rotated down to the 1609.75-1611.75 to the tick.  I expect buyers to show up first time into initial support & they did. (2) My trade plan calls for a short into a zone on first touch after the zone has been broken-designated by a close below the zone on a 5 min bar.  The rotation up from the 1609.75-1611.75 to the 1614-1616.25 triggered that trade. For the purpose of this blog I use a 3 point stop on trades.  This is not a trade recommendation, its simply a number that works for this particular trade.  You as a trader need to figure out what size stop works best for you based on your risk reward profile and trade style.  The rotation I expected to develop on first touch never came & ES continued to rotate up to 1617 & triggered a stop- to the tick.  The close above the zone on a 5 min bar also placed buyers back in control.  I noted as much on twitter.

The close also started the trade sequence over again and the first dip back into the WHITE ZONE would trigger a long entry per the trade rules.(5)   ES rotated up from the WHITE ZONE back to 1619 to 1621 zone.  (6) The close above the 1619-1621 zone set up another long but as has been the case for several weeks now, the last hour has been totally worthless.  The long was never able to make an extension but no damage was done either.

Larger picture buyers are in control.  I would expect buyers to continue to step in on larger rotations down.  take note of the larger two way rotations.  This may be a new market behavior & if so would set up a nice environment to leave trailers on if that is in your trade plan.  The blog will continue to focus on two point rotations and only the highest odds trades.

Net net the strategy had 3 trades, 1 winner, 1 loser & 1 break even.  Ended the day down 1 ES point.  Had I not passed on the long after buyers established control the day would have been profitable. Noted. Hope everyone traded well.

I don't believe in team motivation. I believe in getting a team prepared so it knows it will have the necessary confidence when it steps on a field and be prepared to play a good game.
Tom Landry 

Notice: This Blog & its contents are intended to be for educational purposes only & not to be construed as trading recommendations  in any way.  You should not follow anyone blindly.  Trading Futures & Options on Futures involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions are subject to change at any time.

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