Thursday, May 9, 2013

ES TRADE REVIEW 05/09/2013

ES gapped above the 1627.50-1625.50 WHITE ZONE off the open.  The WHITE ZONE determines who has control. My trade plan calls for a long the first touch into the zone. (1)  ES Traded into the WHITE ZONE in the first few minutes of the market.  A long at the top of the zone took only 2 ticks of heat before rotating up to the 1630-1632 Initial Resistance- to the tick. (2) In my highest odds trade it calls to pass on shorts when buyers are in control.  I do however expect some type of rotation at each of the zones & have strategies that take advantage of that opportunity. 

ES found responsive sellers at Initial Resistance & they were able to push back down & through the 1625.50-1627-50 WHITE ZONE. With the close below the WHITE ZONE on a five minutes bar triggered a sell signal on the first rotation back up to the white zone. (3)  ES subsequently rotated back down 7 ticks.  The trade plan calls for a 8 tick target.  This created a issue for me. Watching price action one could see that ES just stopped & normally i would just cover for what ever i could get. I do not intend to start trade calling my strategies, its no the point. In addition, over the next hour & change there were 4 more opportunities to cover flat or break even.  So there is a new rule,  1) If you get 6 ticks on the trade move your stop to BE.  Looking at my stats the majority of trades would survive to target.  2) If your in the trade for more the 45 min without a 8 tick rotation in favor of the trade cover the best possible.  simple, strait forward.   In fairness,  I am going to count the trade as a 3 point loss - which puts the strategy down 1 point for the day.  No problem.  

ES was able to work its way back up into the WHITE ZONE. Remember each subsequent move back into the WHITE ZONE has roduced odds that there will be a counter rotation.  ES chopped in the WHITE ZONE for an hour and change before resolving back to the upside of the WHITE ZONE.  While the close of a 5 min bar above the zone did trigger a potential long trigger, but it did not trigger before continuing back upto and into the 1630-1632 Initial Resistance Zone. (4)  I expect to see responsive sellers at Initial Resistance & they were found at the back of the zone, almost to the tick, surpassed the zone by only one tick. 

Responsive sellers were then quickly able to push ES down into the WHITE ZONE.  Normally this would trigger a buy as  it was the first push down after buyers had established control in the afternoon.  This is where recognizing change in behavior and PA comes in.  I immediately tweeted that I am not taking the long set up & that I was considering a short trade. Sure enough  ES continued down to break the bottom of the WHITE ZONE (5)   I also tweeted that I had gone short and tweeted scales at 23 & 22 & that gave room to work the trade in case it snapped all the way back-- which it did.  All the way back to the WHITE ZONE where again responsive sellers pushed in back down into the back of the INITIAL SUPPORT 1620.50-1622.50.  Both pushes down  into Initial Support were met by responsive buyers.  I expect responsive buyers at Initial Support. 

This is the 3rd time a new behavior has been shown by the market where there is a fast vicious liquidation followed by sharp snap backs.  I always believe what the market tells me & right now it is telling me that these sharp sell-offs are going to be met with responsive buyers.  I will look for these opportunities at high odds trade locations highlighted by the zones.  It is important to realize the the zones themselves are high odds trade locations.  I do not need a lagging indicator to tell me that I should get long or short 5 minutes ago.  I want to buy & sell where everyone else is afraid to so. 

Net net a very interesting day.  Tomorrow will have more surprises  Do your homework,  keep detailed journals on your trades and your emotions.  It not just about the market its about your mental state as much if not more. 

There are no secrets to success. It is the result of preparation, hard work, and learning from failure.
Colin Powell 

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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