Tuesday, August 11, 2009

Normal reaction

Here is a 60 minute bar chart of e-mini day session trading.

I thought that the market would not drop more than two points below midpoint support at 997 (higher dotted purple line) so I bought one unit at 999.50. That support level did not hold so I am now in my "plan B" mode. I think today's day session range won't be any bigger than Friday's (16 points) which would put the day session low today near 887 (first and third blue rectangles). There is midpoint support at 887 also (lower purple dotted line). While today's range is bigger than yesterday's (second blue rectangle) volume on this morning's early break was lower than on the two previous first hour breaks that started from nearly the same price twice last week (red arrows). I think this shows that whoever is hitting the market at the 1003 level is running out of ammunition. All in all the picture is one consistent with a brief reaction of 25-30 points which should be followed by a move to 1035.

With this in mind I bought a second unit at 991.25. I expect to see a rally of 6-8 points from whatever today's low turns out to be and I will try to get out of my position then and try again tomorrow.


filip said...

It would be interesting knowing how you stop a bad trade. You had 995 as first support and 987 as main. At what time do you exit a losing trade? Mechanical at 987 or discretionary?

Author said...

Carl - enjoy the blog. Some of my worst days have been trend days, when I did not identify them early on. Today I contemplated going long at 990, but I opted not to - Not sure in retrospect, why I didn't , but it didn't hit my sweet spot during periods of high volume. I like to stay out of the market during 11:30am-2:30pm. I've missed a lot of good trades as a result - any thoughts ? Do you usually trade during the noon hours or do you stay away.....Thanks,

D. Spurr

Unknown said...

I enjoy your blog so much. I was just wondering why you got out of your long this morning if you are looking for 1035 next? Thanks for all your hard work and charts.