ES TRADE REVIEW 04/26/13

ES opened above the 1576.50 -78.50 WHITE ZONE. The WHITE ZONE determines who is in control. Above the WHITE ZONE buyers are in control & below sellers are in control. Since above the WHITE ZONE my trading rules call for me to assume buyers are in control. The first trip into the zone offered trade location at two points. (1) The front of the zone is the most aggressive point to place a trade and the back of the zone is the highest odds point to place a trade. Again, this strategy calls for only trading the 1st trip into the zone. While there may be subsequent trades into the zone that have nice rotations out of the zone for a counter rotation; the odds of a successful trade drop with each subsequent trade & call for a more advanced trading strategy. Weather a trade was placed in the front of the zone or the back of the zone traders were rewarded with a move up towards the 1581.75-73.75 resistance zone worth 2-4 points depending on trade placement.

The 2nd trip into the zone did not yield a successful rotation upward and eventually broke to the down side. This set up a potential short on the first trip back up into the zone. (3) Per my trading rules, a short was triggered and again depending on risk parameter there was good trade location at the front & towards the back of the zone.(4) The trade yielded a potential 3-5 point trade as ES moved towards the 1570-72 support zone. Remember a zone is support until it is broken on a five minute bar that closes outside the zone. The zone then becomes resistance.

 (5) The 3rd valid trade of the day per my trading rules came when ES moved back into the WHITE ZONE & subsequently broke to the upside on a five minute bar. The move back into the zone after the break set up a long. The long had a potential for up to 2.5 points as the market attempted to rotate back up to the 1581.75-83.75 zone. As most who follow me know, I scale my trades rather quickly. I am not trying for a home run. I leave trailers most of the time but I dont have targets. I simply assume I do not know what the market is going to do and all I do have control over is where I place my open orders and my stop losses. Each of the traders that where set up per my trading rules yielded a minimum of two points from the front of the zone. There were no losers.

 Ask yourself, how many points do you need a day to be successful. For me, 2 trades a day for 2 points is all I need. I am a day trader and I only want the highest odds trades and I want to play for the highest odds outcome. As you can see, the trader who tries to hold for more than 2 points at the end of the day was stopped break even at best. IMHO, for most traders, the hope of catching a 5-10 point move is just that-a dream. I want to set myself up for success and my trade plan and rules provide me with that opportunity.

 I welcome any questions or feedback. Hope everyone traded well. Looking forward to the next week.

 “We are not fit to lead an army on the march unless we are familiar with the face of the country -- its mountains and forests, its pitfalls and precipices, its marshes and swamps.” ― Sun Tzu, The Art of War