Friday was simply a fantastic trading day. The morning session was full of opportunity & the close was breathtaking. There was so much going on that I am simply going to cover the key areas in today's review.
ES opened above the WHITE ZONE placing buyers in control. When we open above the WHITE ZONE my least aggressive strategy calls for going long the top of the WHITE ZONE on first touch & targeting an exit at 2 points. Its a very high odds trade & dramatically highlights that all you need to build an account is 1 high odds trade Wash rinse repeat. For traders who left a trailer there was a potential 6 points of profit as responsive buyers pushed ES to Initial Resistance of 1652.50-1654.550.
I expect responsive sellers at Initial Resistance. Once Initial Resistance zone is hit, it is a good idea to consider closing out any remaining longs. I tweeted that I would need supporting evidence to take any longs after we hit Initial Resistance. For very aggressive traders, Initial Resistance is often a good location to initiate shorts as I expect a larger than normal rotation out of Initial Resistance That is exactly what occurred as Responsive Sellers pushed ES back toward the WHITE ZONE fora potential 6+ point trades on the short side.
Responsive buyers stepped back in again just in-front of the second test of the WHITE ZONE and pushed ES back up to INITIAL RESISTANCE & through to the back of the 1656-1658 resistance zone; where Responsive Sellers stepped in again. The back of the zone market the high of the day. The sellers were able to push ES back down & through Initial Resistance and we into balance/chop over NY lunch. NY Lunch is one of the hardest times of day to be consistent in. I generally avoid opening positions this time of day.
My entire focus is on taking only the highest odds trades and leaving everything else alone. I enjoy the markets by my sole purpose here is to take money out of the market. You dont get paid more because the trade is harder. Actually, its usually the inverse.
After chopping in a tight range for two hours sellers finally prevailed and pushed ES down into the WHITE ZONE for the second test of the day. For those who follow my blog you know that I emphasize the the 1st test is the highest odds of providing a tradeable counter rotation & that I need supporting evidence to take the trade. The sharp move through the WHITE ZONE on the second test is exactly why I look for additional evidence before taking a second push into a zone. in this case, there was no meaningful rotation higher. I noted on twitter heading towards the last hour that sellers were now in control & that contra trades are not something i am interested in in this period of the day. Why? because I hate getting run over, as many who tried to pick a low did. One of the principals of my trading philosophy is that a rule that keeps me out of a losing trade is as valuable as a rule that gets me into a winning trade. Perhaps more valuable.
The push back up into the back of the WHITE ZONE after we closed below was a fantastic risk reward location for a push to the downside. I noted on twitter that bonds were exploding to the upside going into the top of the hour. I also noted that even though we were at Initial Support I do not take contra trades last hour, low of the day, below the White Zone etc. The trade out if Initial Support actually paid nicely but it was paramount to juggling grenades It can be done but the misses can be painful!. To sum up the last hour, strait down. Once we closed below the WHITE ZONE the market peeled off 17 points to the down side in an hour.
Takeaways. 1) LOCATION MATTERS! 2) don't get ahead of the market mentally, 1 step at a time 3) Knowing who has control is a HUGE EDGE. Just knowing not to take the contra trade for the average trader can save your trading account! 3) You dont have to figure out every move, YOU ONLY NEED ONE OR TWO HIGH ODDS TRADES to build a trading career. 4) Last hour moves like today are rare. If you made alot of money in the last hour enjoy, but don't get drunk. the last hour is usually a no win affair for the average trader. Be grateful for the payday but don't try to reproduce it everyday, stick with the high odds play. 5) The WHITE ZONE makes trading so much easier from a mental perspective & makes shifting perspectives from long focus to short focus strait forward.
I hope everyone crushed it. I will have the first trade performance spread sheet since inception of the blog up today. It is positive 51 POINTS PER CONTRACT since April 19th (date blog started) with no one trade accounting for more than 2 points in gains & no more than 3 points in losses. That is what focus on high odds trades can do for a trader. I will post shortly.
If you would like to learn how to trade with the consistency and accuracy of a professional click on the COACHING tab at the top of the page. There is a great discount on the first 3 one to one sessions.
Next week should be awesome Really looking forward to it!
We all have dreams. But in order to make dreams come into reality, it takes an awful lot of determination, dedication, self-discipline, and effort.
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.