Friday, July 24, 2009

Why I got in and then out

Here is a five minute bar chart today's e-mini day session. In the up trend from the 865 low there had been two previous breaks of about 15 points. A third break of that size from yesterday's high at 976.50 would have carried to the dotted green line you see on the chart. When the market is strong is tends to stop before it gets to an exact resistance level. So when the e-minis made new day session lows I got long at 963.00.

I was prepared to buy the second unit near the low of my range estimate for today of 960-75 (blue rectangle). Instead, the market rallied immediately. I sold my long unit after I saw what I thought would turn out to be a volume climax bar (red arrows).

I am generally a pretty aggressive profit taker. My aim as a trader is to take advantage of fluctuations around an underlying trend. But I get even more aggressive taking profits after an 8 day, uncorrected up trend such as the one that began from 865. I have found that people tend to place way to much emphasis on how they get in to a market position. It is my view that learning to accept profits at the right time (which will depend on the position of the market relative to its underlying trend) is of equal or greater importance.


TradingNuggets said...

Excellent Commentary and Excellent entry!


gur said...

Hi Carl,
You have great forecasts.
But I have a big question, why havent you bought the e-minis at 865 and wait till it goes to 1000 and sell then? Why to trade daily on a 5 minute chart?



Naso said...

as they say amateurs go broke taking big losses. Pros go broke taking small profits. :))

Carl Futia said...


Don't be a jerk.

Kishore said...

Carl, the script is being played as per your yesterday's posting under "Midpoint support and resistance"!

As per the script, the next corrective wave should be down and larger than the last one down. It seems most likely, but may require holding a short position over the weekend, something I am not fond of doing.

yrichter said...

I think Gur asks a legitimate question and while I can't answer for Carl, trading timeframes are certainly an interesting topic for discussion. Personally, I appreciate the flexibility that shorter timeframe trading provides. I don't trade any indexes, rather I use a basket of stocks whose ranges I have become comfortable with over time and I use the index ranges as a general guide to help find entry and exit points for individual stocks in the context of the market overall. One downside to longer term trend trades is the opportunity cost waiting for the asset while it cycles up and down within your predermined entry and exit. For example, an active trader like Carl might capture 150 points in the 100 point move from 865-965 by taking advantage of the short term reactions in the market while the longer term move plays out.

Carl: this is my first comment after following your posts for several months. You are certainly a skillful trader and your open honest approach is refreshing. I have benefitted tremendously from your guidance and truly appreciate your efforts.

Isaac Richter

Kishore said...

Today, even though the total volume on ES is low, the volume per tick is high. This means that only computers are trading with each other. Maybe, traders are afraid to go short because of an unexpected kick in of buy programs by the computers. These HFT computers are a pain in the ....!

janet said...

Kudos to Carl...didn't a previous poster call Carl balzy for his bullish posture?? I don't know of anyone who can sniff out a new bull market like Carl. Like a market bloodhound, congrats Carl, you should get your sniffer insured by Lolyds of London...LOL

angel* said...

Carl, you saved my life. My broker was recommending shorts 2 weeks ago saying Head and Shoulder pattern breakdown. Some of his clients almost died broke. You are simply amazing!

Btw,is oil still bearish? It broke thru $67.50 resistance already.

Thank you.

E said...


What is your favorite set up?

Also, Do you add to winning positions? (On a breakout day like yesterday)

Thank you

Speculator Ed said...

I'll take a shot in answering Gur's question.

Because there's a big difference between being right and being profitable.
There are daily/weekend open gap risks, and margin interest.
There is math involved around $15,000 capital. Question back to you Gur is where would you place the stop if you long 865 for target of 1000. The smaller the stop, the more math/statistics are going to stop you out. The higher the stop, the more math/statistics are going to blow out your account.
Then there is problem with faith in a long term system because of little practice, and little statistical data to prove its worth.

vito said...

Hello Carl
Fess up :-) the real reason you got out early was because it was Friday.
Hope you had a Good Weekend.