In this mornings pre market video (sent to coaching clients) the them was simply that every gap down has found responsive buyers, trade accordingly. The first hour was a chop fest as traders waited for news to emerge from Washington. The difficulty with random news is that is random. I don't enjoy having leveraged risk on in an environment where the wrong word from a politicians mouth can send my position to a stop. So, that being said, I have shifted more towards a quick scalping mode and leaving trailers to see if they catch a friendly wind. Hard to tweet that out. So instead lets put the elements in place that we do have and see if we can not leverage them.
1. All gap downs have consistently been bought up in the day session in the past weeks.
2. The market has absorbed every piece of negative news that has been thrown at it and we are at or neat all time highs in every US based equity markets. Not good or bad, right or wrong. Just is.
3. The long side has been the easy side in the day session.
4. Tick divergence has been the best entry to the short side, though big rotations down have been hard to come buy.
5. Its been a one way market, meaning once the market has picked a direction the counter rotations have been minimal to none.
6. Noe of this is the norm, just the result of a very heavy news influenced environment. It wont last forever, probably much shorter. Its not the first time and it always passes. The key is to adapt. How you do that is up to you. Trade less, trade long only with long entries after decent rotations down, trade smaller size. The key is if your not thriving to survive with your equity in tact along with your confidence.
Thats the facts as I see them. Would I like it to be a more favorable trading environment for my preferred style of trading? Yes. Does it matter what I want? No. Its just a machine (the market) and is not for me or against me. It just is. I have seen this before and it passes. We will return to out 2 sided trade and all will be well. Its just the nature of the ES. In the mean time, I will take what I can and avoid being overly digressive on the short side.
Remember, not matter what you hear in internet land, most traders lose. Period. Just the nature of the beast. My goal is to survive the challenges and excel when the market makes it easy; I assure you-- I will. In the mean time, I will just grind it out. Remember, anyone can trade consistently and profitably. Anyone. Email me if you would like to learn how.
Simon
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
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