A Disturbing Trend

No trades this morning as the 6E has lost it's freaking mind! A vertical drop at the US session open followed by a vertical ascent to test the early highs that led to consolidation with 10-12 tick candles. Another vertical drop and another 10 tick candle consolidation. Yikes! I'll pass on that action.

I have noticed a disturbing trend with the 6E. It moves and reacts well overnight during the Asian/European sessions. The pullbacks and breakouts fit well within my risk profile. But get closer to the US session open and the proverbial poo hits the fan! The bots take over and slam it one way then the other. I would assume it's playing off the dollar, equities, and oil. It's a different game after the US session opens. As I've been documenting, if you don't take your profits quickly they might just vanish into thin air.

It has recently struck me that sitting down to the ultimate poker table with the best traders and bots in the world may not be the wisest decision. Maybe it's time to move my game to the overnight session. They play for less. Their tells are easier to spot. Their reactions more consistent. Don't get me wrong, I'm not saying trading is any easier during the overnight sessions. I'm just saying it might be a tad bit easier than trading against computers and professional thieves.

There's a Thin Line...

...between winning and losing some days.

Two trades today. +13 ticks and +8 ticks. +21 ticks in total. I'll take it.

But back to that thin line...

Slap an eyeball on this chart. I exited both trades more or less under the "I'm not giving this back" thought that was bouncing around in my head. Notice the almost immediate reversals that would have taken my profits had I not exited? Yes. I know this is not sound trading. But hey, it's a winning day. (don't rain on my parade!)

The blue arrow is a trade I passed on. Actually I was trying to get a BUY STOP order in as it was taking off. The ES and the QM were pushing higher moments before but I was a little slow.

My stats are telling me that the 8-16 tickers are out there for the taking. The 16-32 tick trades seem to involve sitting through retraces and losses.

Ah, trading futures. Damned if you do. Damned if you don't.

Bad Day

Two full stop-outs and a half for good measure. That minus 20 ticks for my math challenged visitors.

The 6E absolutely refused to participate in the ES (equities) and QM (oil) rally this morning. Or perhaps I should say, it was done doing what it was going to do. It had done all it's moving and shaking in the Asian/European sessions. Overhead resistance kept it bottled up in a tight range while the ES and QM ran, ran, and ran some more.

Following the ES/QM/6E correlation has been good idea recently. If they are all moving in the same direction then it's likely they will continue to do so. Until today. Phooey!

I look at the QM chart and can't help but think that Solfest must own half of Alberta today!

What Type of Trader Am I?

Honestly when I ask myself this question I have a hard time coming up with an answer.

Within the realm of day trading the futures markets, at least in my world, I have a couple options. I can scalp for ticks. My definition? Scalping is 8-16 ticks. I can hold a little longer for 16-32 ticks and I'd define that as short-term swing trading. Beyond these 2 options is a world that I am unfamiliar with. Holding for beyond 32 ticks involves a different mindset. One that doesn't allow the harrowing thoughts of giving back too much profit.

Now that we are on the same page let me get back to my original question. What type of trader am I? I know what type I'd like to be. The short-term swing trader that is able to capture 2R - 4R and be happy as a hog in s**t. But some of my recent trades make me wonder if scalping isn't such a bad gig.

I have a knack for catching many 8-12 tick trades with little initial draw down. But then, as with the case this morning, I watch helplessly as the profits vanish into thin air. A break even stop eliminates all but the broker's fee but +12 ticks seems like a lot of money to be handing back to someone.

I know this is a tough game to master. And I know that the best traders hold their winners. And I know this is just another trade amongst many trades and that the next one "could" run for a 4R winner. And I know that my limited screen time means less chances to catch the "big ones". And I know that I must constantly remind myself of these things.

But just for once I'd like to catch a 4R winner to remind myself that it can be done.


**Lest anyone be misled: I am still sim-trading.

Missed Opportunity

Chart show it all. +11 ticks on 2 trades.

I Missed the Memo

Who forgot to send me the "SELL @ 10:30 am" memo?

Cuz I bought at 10:25 am.

Oh well, these things happen.

Minus 8 ticks today.

Why Trading Will Kill You

My focus has shifted towards stalking high probability setups during the first two hours following the US market open at 9:30am EST. I will be waiting patiently for 1-2 setups per day with a 16+ tick goal and then shutting it down.

Today's goal was reached at +16 ticks. The 6E was down in the premarket along with ES and QM. But all quickly reversed at the 9:30 open. With all being on the same wavelength I simply waited for a 6E setup to reveal itself. At 9:48 I got filled on a pullback and off we went. My execution report tells me that I had to wait roughly 23 minutes to "cash in" on this sweet little entry.

And thus the topic of today's post. The chart below shows my entry and exit. But what happens in between those two events, and soon after, is what will kill you, and most likely me, as a trader. I have numbered each 5 minute candle for easy reference.

So lets start at candle #1. Entry. 8 tick stop loss at entry was never threatened. As a matter of fact I only had a 1 tick draw down. :-) The trade goes green quickly around +5-6 ticks before candle #2 prints at 9:50. Within 2 minutes the trade is +12 ticks. Big smiles. Happy feelings. Yes! I am the master trader. I move my stop loss to 1 tick below the swing low of candle #1. I'm confident that a strong break out to the upside towards my 25 tick target (1.4999) will happen any second now. Oh, it's good to be alive. Live trading here I come! :-)

But as we all know, for every surge higher there is usually a drop in response. So candle #2's 12 tick profit slips to 10, then 8, then 6 as it closes. Candle #3 opens and holds the line on the 6 ticks. It even pokes and prods higher showing 11 ticks of green at one point. But alas the buyers turn to sellers and by the top of the 10:00 hour I see +4 ticks on the screen and the ES and QM are getting tired and pulling back.

As candle #4 opens I think that I should probably move that stop loss to break even. But then I figure the hell with it, if it takes me out for a 2 tick loss at least it will be telling me that it wants to press lower thereby negating the setup. Luckily, candle #4 holds a low of +2 ticks. But by now I'm churning inside. I mean "Come on!", "I had 12 ticks!" "Let's go!" "That was a premium setup!" "If that doesn't work, then what does?" "That damn ES and QM had better hold their up trends!" "This sucks! Why are my trades the ones that die on the vine?"

As candle #5 opens I see the ES and QM are testing their ema's and I'm hoping everyone comes to their senses and starts buying. Soon after +5 turns to +8 then +10 then +13 then back to +10 then back to +8. Aaarrrgh! But the press higher continues and by the close of candle #5 I'm seeing +12 ticks. Just need a breakout of those previous highs.

Candle #6 opens and blows through those previous highs and soon passes my +16 daily goal. One more pop higher and my 25 tick target is punched. But, as we all know, it's rarely that easy. At +20 ticks price stalls and reverses. I move my stop to +16 and get my ticket punched soon after. Candle #6 closes with a whimper and lower than my exit point. Phew! What a ride. Got my daily goal. It's all good. I am a trader! :-)

I start thinking about the trade and everything that I went through to pull out 16 ticks profit. And then I notice that candle #7 is closing strong. And the ES and QM are still climbing. And that a lower 5m candle has yet to print. And that it just blew by my 16 tick exit point. And that it's hunting my original target! Damnit!

Candle #8 opens and sure enough it touches 1.4999. My original 25 tick target. I doubt that I would have gotten a fill with just a touch but within the next 2 candles it blew through for a sure fill if I had still been in. Damn. I just lost 9 ticks profit by not holding or trailing my stop correctly. I suck. This trading thing is hard.

So, my friends, this is why trading will kill you and me. The emotions involved can eat us alive. 16 ticks profits is awesome. But I can't stop thinking about the 9 I left out there.