Thursday, August 22, 2013


Today was a trend day up and I pretty much miss rerad it out of the gate.  Today was also the re-introduction of the WHITE ZONE.  I had pulled it for the last two weeks because the rotations off the zones had become so small it was not worth taking.  The last few days have seen a return of the rotations so the zone returns.  

The WHITE ZONE is simply a divider of control between buyers & sellers.  Above the buyers have control- below sellers have control.  We opened just below the WHITE ZONE & i normally will take a contra trade the first move into the WHITE ZONE.  As there was only a brief rotation down before launching through the zone I ended up taking a full stop on the trade.  That is the risk of taking the trade right off the open.  As it is a very high percentage trade for me it is a risk I am more than comfortable with each & every time & will take it as long as my numbers support it. Today the trade cost me 4 points.  

The failure on my part to read the trend day up pretty much cost me the balance of the day.  The first zero $TICK reading is normally a very good entry point on trend day up.  Again,  since i was off on the trend day read I missed the entry.  I had take a short in the purple zone above the WHITE ZONE but was unable to cover for 8 ticks (went bid but was not able to fill) and I moved the stop to be & the trade was taken out.  

My rules call for me to halt trading if I have two losing trades back to back.  As I did not lose on the second trade I continued to take risk as the market moved higher.  I placed a trade at the very back of the purple zone & was stopped for a 2.5 loser; putting me down 6.5 for the day.  I finally took a trade on an extreme tick reading right at initial resistance and was able to take 7 ticks on the first half & approximately 4 on the second half.  I expect responsive sellers at Initial Resistance & they were found there,  eventually rotating the market down 6+ points.   That left me down 3.5 points for the day & I had enough.

Takeaways from the day.  1) Trend days up can be very profitable if Identified early but for those who do not recognize it early and who do not have tight stop controls-they can be very damaging.  The rotations tend to be very small & the tendency is to close at the high of the day.  Fighting it all day can kill an account.

2) Trend days are rare,  so if you missed today hopefully you had good money management and will live to trade another day.  

3) Notice how my loss today is smaller than my average up day.  I should get plenty of opportunity tomorrow & be bale to close out the day strongly. 

4) If trading close to the open is difficult because of the speed involved it is always ok to simply to opt for the zones 6-10 points or more away.  As the market moves away from the WHITE ZONE the influence of the WHITE ZONE is less & less.  Contra trades can have bigger moves and the speed of the moves can be a bit slower than what we experience near the open.  Today's Initial Resistance Zone is an excellent example of this. 

5) When the markets ranges expand significantly it can be very intimidating, which inturn can entice you to leave your trade plan or increase fear responses.  It is ok to skip a day or two to make sure ranges return to normal or to reduce trading size in this environment   Fear can wreak havoc on the mind and a trade plan.

I hope this review helped.  Remember,  this is a game of stacking chips and minimizing down days.  ANYONE can trade consistently and grow a trading account.  Simply have an edge and a plan to exploit it.  I hope everyone did well,  we get to do it all over again in the morning. 

Good night & good luck.  See you in the AM.  

I am currently offering 3 coaching session for an introductory price of $200 for traders who are new/struggling/or simply looking to increase current performnce.  I am serious about helping traders move from struggling to consistent. I have done this for many traders. I can help you do it too.  You can email me at TRADENPERFORM@GMAIL.COM Testimonials can be found here:

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

No comments:

Post a Comment