I had two main trading ideas today:

1. Retest Globex low at 1321.
2. Test the top of yesterday’s balance

I didn’t know which would occur first but I thought the Globex low was more likely.  That’s always the tricky part.  When we gained acceptance in yesterday’s range, I got long.  I had a side support zone so I entered 1/2 size and planned to enter the other half, which I didn’t get to do.  So I got a quick win on that one.

Then I re-entered on the pullback and got my first target but stopped out on the second.  I was a bit bummed about that, but it gave me the idea that scenario 2 may play out.  I looked for a short at 36 but the market stopped at 35.25 and turned down.  The next short area was around 32.  That’s right after some major news came out and the market was going nuts.  I had a 3 pt stop on this one and decided with the volatility I risked getting stopped out and so I scratched it.  That trade would have worked.  An even better idea would have been to be patient and wait for a short signal which had perfect timing before the big drop.

This short week ended up being great for me.  I feel like I’ve made some positive changes in my trading.  A week ago Wednesday I had 22 pts in one day.  The next day I had given most of that back.  So this week I was focusing on big picture setups and working on keeping the gains.  My goal was 3.33 pts/day trading 2 contracts net of commissions.  This week I averaged just under 8 pts/day net.  Yikes!  Now I must see if I can continue that next week.

A few days ago I noted the signals had been less reliable.  It seems the past few days the signals have been working better.  Tuesday each set of signals resulted in at least a rotation, some much more.

My biggest trade was when ES peeked below IB Low and was rejected.  I got long for the high.  This trade erased many small losses and put me positive for the day.

The histogram on the bottom is the signal level (the higher the more reliable).  Users can select the minimum level.   These signals are available real time for Ninjatrader.  If you’d like a free one week trial, let me know via the contact page.

Bulls had their chance to blast it up and put in a bottom.  And they fumbled.  37 is a key area below and I think we’ll see that (I’m writing this on Monday during Globex and ES is at 41).  And I have a hunch that we don’t put in a major low but that we keep going down.

I also want to show the balance area for last week (profile on the left), which explains why the trading wasn’t been very good.  ES is in a pretty big balance area.  Last week I tweeted a few times that 45-55 needed repair.  I believe that is still the case.  So we may rotate more in this balance area before moving on, or we may probe lower and come back for the repair later.  But while ES is in this large balance area, I expect a lot of chop.  My best day of the week was on Wednesday when ES put in a bottom and had a strong buying tail.  Thursday and Friday were inside this balance area.  I think it’s not a coincidence that I did well on Wednesday and poorly on Thursday.  And I think this is a key part of trading – knowing when your setups work and when they’re less reliable.  This takes a long time and I’m still trying to figure it out.

The core algorithm I use for the signals has not changed in over 9 months.  Some weeks they work great.  Most weeks they work well.  And a few weeks they seem to have a lot of failures*.  I think the failures cannot be avoided.  For example in the chart above the first set of short signals was at a very valid resistance area.  I’m not surprised that shorts gave it a shot there.  It just didn’t work out.  But lately there have been more of these.  I think most of them can be avoided by avoiding fading (especially open drives like we had Friday (OTD actually)), looking for good trade location, and using the composite profiles.

*One addition I made was to have 5 levels of signal strength, with strength 3 being “normal”.  In the charts I’ve posted lately, I’ve included lower strength signals which are less reliable and should be used mainly for quick pullbacks.  The higher the strength the more reliable.  The real time indicator (now available) has a setting for the minimum level.

I’m thinking on how and what to post for charts.  Lately I’ve been using my own levels instead of the EMP zones, but my own levels come from several different charts (Market Profile, Daily with Composite, Intraday, etc.).   So it’s not easy to post a single chart showing everything.  I could put all my levels into text files and have them displayed in my zones indicator.  That will be a lot of extra work but I’m thinking it’ll be worth it.  So I’m going to think on that one.

A word on the signals..  They didn’t work work well today.   The highs and lows were caught by signals but unfortunately there were some failed signals in between.  I think several of these failures signal failures were due to news.  Overall today was just a weird day.  I could have handled it better so I made this this was a learning experience.  The good news is the losses were small, but the bad news is I had quite a few.

• Accept risk and the fact that I don’t need to win on every trade or even half my trades
• Use smaller stops to make stopping out less painful
• Hold on to winners longer
• Take more trades (valid ones!)

Today I felt I made a lot of progress and I had one of my best days in a very long time.  But that could just be luck so I have to see if I can keep repeating it.  The next few trading days will be very interesting.

These trades are not optimal.. there are quite a few that I cut short (you can’t really see the scaling out because they’re grouped together), so definitely room to improve.  I just hope I continue doing well as I continue working on my “areas to improve”.

So the annotations are done in hindsight where everything is much more clear.

Remember tomorrow is a major European holiday.

I had one week off of trading and that did me a lot of good.  In Arizona I was waking up at 6am due to jet-lag so I traded the US morning session but didn’t get anything to show for it.  I finished minus 5 pts.  I think it was a tough week but I think not doing homework was probably the main reason for not doing so well.

I had a lot of time to think about trading:  on the plane, while running on the beach or in the mountains, during our long drives, etc.  I took a couple pages of notes and came back with lots of new ideas.  I think taking a week off is very beneficial and I think we should do it, even if there isn’t a vacation requiring it.  I did very well since I got back, making 15 pts in 2 days.  Homework & preparation were a key part of that.

On Friday RTH I only took one trade, which was a short at OSL.  I had a bearish bias and thought the gap fill at 70ish made a good target. With only 1 contract I couldn’t scale and so I took +4 when some buy signals came up.  That ended up being premature but I never regret taking +4 because when I don’t I often give it back.

The sell-off on Friday was more severe than I expected, but tonight when François Holland was elected the first socialist president in over 20 years, it suddenly made sense.  I think Greece may have similar results and that puts the Eurozone in jeopardy.  Friday’s selll-off could have been in anticipation of this kind of outcome.  This is all just useless speculation, I’ll just trade my plan and it doesn’t really matter which way the market goes.

Finally, this weekend was the first weekend where I was home and did not do a single trading related thing.  I was enjoying my weekends while on vacation and I want to continue enjoying them now that I’m back.

I made several mistakes today and paid the price.  I’ll have a 20+ hour travel day tomorrow to study my mistakes, rewrite my trading plan and begin anew.  I’ll be offline without internet for 1 week starting tomorrow and if I can get up that early (6am!) will be trading the first couple hours of the US RTH session starting April 23.    10 days off will do me some good.  I realize my mistakes and I will come up with a plan to eliminate them and I’ll be back better than ever.