Friday 02/27/09 - Short the pops

Still trading on the Sim, and ended up with a +13 point net gain by shorting the pops. I took one long position in the 739 area for a couple of points, but the other 11 points were from taking short positions on the unsustainable up-swings, and covering for quick 2-4 point profits. I left a lot on the table, but given my schedule, the quick hits seemed to be the only way to lock in some gains. Yes, I could have moved my stop to break-even and left to attend a meeting, but given the choppy nature of the market, I probably would have been stopped out for break-even.

The gap went unfilled today, and this was something I was anticipating since we saw same-day gap fills on the last 7 trading days.

Unfilled/Open Gap at 752.00


ES/TICK (3-min)


ES Market Balance (5-min Day Session)


TF Market Balance (5-min Day Session)


TF/TICK (3-min)

Thursday 02/26/09 - Order among chaos

Finally; some order among chaos. It was a trend down day with plenty of opportunity for the counter-trend traders as well. On this side, I started the morning up +3.25, leaving a ton on the table. I was short from 773.75 but covered for +2 pts even though I was expecting a gap-fill and should've just held the trade for more profits. After the gap fill, I took a long around the 761 level expecting the double bottom at 760.25 to hold; which it didn't. I averaged down with 1 additional contract on that trade, so the stop-loss hit brought my P&L down to -1.25 on the day. After that, I still didn't get it ("it" being the down-trend), and made back the loss, and then some playing counter-trend bounces to the Long side. I ended the day up +5 pts. I could've traded much better and am not at all satisfied with today's performance, but again, the actual screen time looking at charts was very low. I would glance at the charts and put on a trade. This is no way to trade, but I really have no other choice.

Regarding tomorrow; be wary of GDP and Consumer Sentiment reports; which should produce some good swings in the market. At this point, we've developed a 30-point range (750-780) and I'm hoping the 750s hold; or I think we could be making fresh lows. Aside from that, we've had same-day gap fills for 7 days now, so a run-away gap day is probably right around the corner. I just have to continue to tell myself to trade in the now moment and disregard any biases.

New people reading the Blog, please introduce yourselves in the ROLL CALL post. Thanks for reading. On to the charts...

Gap filled by 12:15 PM (Central)


ES/TICK (3-min)


ES Market Balance (5-min Day Session)


TF Market Balance (5-min Day Session)


TF/TICK (3-min)

Wed. 02/25/09 - Govt/News Driven Market

I was too busy at work to even sim trade today, but it's probably a good thing I'm not trading this jittery market. The market rallies and drops at the whim of comments by govt officials. In hindsight, it may look like a great trading day since we had several 15 point swings throughout the day. Drop in home sales threw the market down in the morning, but then the bad banks getting more funding lifted the market later in the day. I know it's not my job to analyze WHY the market is moving the way it is; but it's getting kinda ridiculous. Anyway, I don't really have much more to share on today. It was a hectic and frustrating day at work, and I wish some time down the road I'll be able to try my hand at trading full-time. On to the charts...

Gap filled by 1:00 PM (central)


ES/TICK (3-min)


ES Market Balance (5-min Day Session)


TF Market Balance (5-min Day Session)


TF/TICK (3-min)

Tuesday 02/24/09 - Fighting The Tape

Today was full of mistakes. I fought the tape/trend all day, shorting into most of the up swings, and looking back, I don't know why I did it. Two other critical mistakes I made were increasing size to 3-ES contracts, and widening my stop in the middle of a trade showing a clear loss of discipline! I could blame my work environment and the fact that I was in meetings for 3 hours, but screw that; I messed up, plain and simple. I was on the wrong side of the market. Now, even with all those mistakes, I was down a net 7.75 points by early afternoon, and was able to make back most of it, ending the day on a -1.50 point net loss. Not too bad considering the lack of discipline and the # of stupid mistakes. But wait, I made the mistake of being on the wrong side of the market yesterday, and still managed a 10+ pt gain; so this begs the question, what was different today? The difference was, yesterday, I was very quick to move my stop-loss to break-even, and I took quick single point gains on a few trades, which add up over time. Today, I had a strong bearish bias when price stretched out above 765, and my belief on reversion to mean was so strong that I refused to take only 1.5 or 2 pt profits. I was waiting for the big drop to cover my position for 4-6 points or more. Almost every trade I took today went 1-2 points in my favor before it reversed and stopped me out. So, the outcome for today could have been different if I eliminated my personal bias, and realized that I was taking counter-trend trades into a strong up-trend, so I should cover for quick profits and limit my risk. Today I was too "sure" that my trades were winners, and that's exactly why I ended up losing. Normally I trade from the perspective that I don't know what the market will do next; which helps me minimize risk. Today, I was so sure the market was gonna drop in the afternoon, that minimizing risk didn't even cross my mind. As a matter of fact, I added to my losing positions thinking it was just more cash to take to the bank. I'm going to take lesson from this and the next time I develop an overly confident and strong belief that the market is going to go a certain direction, I hope I'll be able to keep myself in check and simply stay out or correct my thought process.

Goal for tomorrow is to re-focus on discipline; maintain tight 6-tick stops (2 pts max), not move the stop-loss in the middle of a trade, and limit size to 1-contract.

Gap filled within first 40 minutes


ES/TICK (3-min) Note how TICK spent the early morning hovering above the zero-line, and then broke-out to higher ground. I should have noted this and stayed out of short positions.


ES Market Balance (5-min Day Session)


TF Market Balance (5-min Day Session)


TF/TICK (3-min)

Monday 02/23/09 - Nov. Lows Broken

Well, my slightly bullish bias didn't hold but that's not a concern since it proves an important point that I've been reiterating on the blog: put the bias aside and trade what you see; trade in the now moment opportunity flow. Easier said than done though. Looking at my trades today, over half were placed on the Long side, and I completely missed the shorting opportunities. Could this have been due to my slightly bullish bias? I don't know but it sure looks like it. Here's a screen shot of today's trades:



I wish it had time stamps next to each trade, but unfortunately the Trades window in the AT platform doesn't store that level of detail. At the end of the day, I was up +10.25 points which isn't bad but it could have been much better. I was using a single 1-min ES/TICK chart all day, and the only positive finding is that I was able to stay out of trouble even while taking counter-trend setups based on the TICK. The TICK continues to perform day in and day out, and is an excellent indicator.

Gap filled within first 30 minutes


ES/TICK (3-min) Note where TICK spent most of its time: Below Zero-Line. Price stayed below mid-point all day. ES couldn't even retrace back up to its 1st hour low indicating major weakness.


ES Market Balance (5-min Day Session)


TF Market Balance (5-min Day Session)


TF/TICK (3-min) Same deal with the TF. Price remained below mid-point all day. It got within 1 tick of its 1st hour low, but couldn't reach it. Major weakness signal.

Friday 02/20/09 - Options X-Day

It was a volatile trading day, but that also means opportunity so long as there's some order amidst the volatility. On my end, I logged in pretty late this morning, but was able to make a few points shorting the 763 area around 11:30 AM. I then started testing the market to the long side in the 755-757 area around 11:50 till noon. This resulted in a couple of stop-outs, but they were washed with a couple of profitable trades in that area. I then had to step out for lunch, and left an open buy order at 755 with a 6 tick stop. Of course, the buy order got hit at 755 and the trade was quickly stopped out 6 ticks lower. So I missed the low of day by 2.5 points. I had a meeting immediately after lunch from 1:00-1:45 PM, and by the time I returned to my desk, the ES was trading at 773. I was aware of the open gap above at 779, and wanted to short closer to the gap fill. I got a little excited and began shorting the market a little early around the 774 area and took some quick profits and some quick stop-outs. Market was moving around this time; up and down 2-4 points in a matter of seconds. It was pretty cool actually. Thanks to the signals I was getting from my handy ES/TICK chart, I stuck with my short bias and nailed a short at 777, and rode it down for 5+ points wiping out the tiny 6-tick stop-losses and then some.

ES missed the gap fill by a tick, but the market isn't perfect, and I'm gonna count that as a gap fill; it's close enough. Just a reminder, I am updating the Gap Tracker post every evening, and so far we've seen over 76% of gaps filled on the same day!

I know we've seen continued down-side price action, but for some reason, I feel we're gonna fill that open gap above and I am still slightly bullish. As always, biases must be put aside and we must trade in the now moment. Lets see what next week brings. Have a nice weekend!

Gap filled by 2 PM (technically, missed it by a tick)


ES/TICK (3-min)


ES Market Balance (5-min Day Session)


TF Market Balance (5-min Day Session)


TF/TICK (3-min)

Thursday 02/19/09 - Clockwork

The setups I look for are turning up like clockwork everyday. I'm actually tired of posting the TICK divergence setup on here since I've already posted about it numerous times, and have successfully traded it in real-time. I think it's a solid setup, and it works in the current market conditions. Of course markets change over time, and what works this week may not work next week, but I'll continue until I see a change. On this end, I managed a +$250 gain by shorting 2 contracts at 788.50 around 10:25 AM. I exited 1 contact at 785.50 for +3 pts, and the other at 786.50 for +2 pts. I was expecting a gap fill, which happened later in the afternoon. Overall, I think it was a relatively easy day to trade (with emphasis on the word relative since trading is never easy, but compare today to the chop fest of Tuesday, and you'll see my point).

Looking at the 15-min ES/VIX chart, I'm still slightly bullish. Lets see how tomorrow goes. On to the charts...

Gap filled by 2:15 PM (central)


ES/TICK (3-min)
Where is TICK spending most of its time? Below zero-line. Where is ES spending most of its time? Below mid-point. Bears are in control below mid-point, Bulls are in control above!


ES Market Balance (5-min Day Session)


TF Market Balance (5-min Day Session)


TF/TICK (3-min)

Wed. 02/18/09 - Better than yesterday

Today was definitely better than yesterday. It was clearly a sell day (look at where TICK spent most of its time today), and for the most part, I tried to stay out of longs. I was out of the office in the morning but managed to glance over at the charts in the afternoon for a few trades. Since Matt called me out on using bigger size to make up for a loss yesterday, I took the opposite approach today. Lost money on a 2-lot ES trade and was down -$150, but made it all back and then some (+$100) trading 1 contract.

I have a slightly bullish bias for tomorrow. I think we're gonna be range bound for a few days though. But again, it's a thought, and that's it! Doesn't mean I will trade with a bullish bias. I will trade it as it comes. Every moment in the market is unique, and I don't know sh*t! Trading with that mindset helps manage expectations (as in, I have none). No expectations means little or no disappointment.

I'm sure these TICK trade setups are sounding repetitive by now, but that's the point! Check it out. Here's why you should have sold here: Price couldn't make it back to 1st hour high (weakness), higher high on price, lower high on TICK (divergence) and zero-line reject.


Gap filled by 9:00 AM


ES/TICK (3-min) Look at where TICK is all day. BELOW Zero!


ES Market Balance (5-min Day Session Only)


TF Market Balance (5-min Day Session Only)


TF/TICK (3-min)

Tuesday 02/17/09 - Tough day to trade

Just one more thing to note here: gaps have filled on every day this week. We could get a run-away gap and go day soon.

That's what I posted in my Gap Tracker update on Friday, and sure enough, no gap fill today. The Gap Tracker post has proven to be a useful asset more than a few times now, and I will continue updating it every evening.

Aside from that, it was a very tough day to trade filled with fake outs and stop-runs! I stuck with Sim, and managed +$250 or so on the day. I have other more important business issues that I need to deal with this week, so I probably won't be trading on the real $ account. Simply put, my attention and focus is divided among too many tasks and issues, and I'd rather be disciplined and stick to Sim for another week or two than lose money in the real $ account. I will still be updating the Blog every evening. Lastly, I'm expecting more down-side tomorrow, but as always, just trade what you see and manage risk/reward and you'll be fine.

Gap Unfilled from 820


ES/TICK (3-min)


ES Market Balance (5-min Day Session Only)


TF Market Balance (5-min Day Session Only)


TF/TICK (3-min)

Friday 02/13/09 - It's a Trader's Market

Just a reminder that I am updating the Gap Tracker post on a daily basis, and as of now, gaps have been filled on the same day 75% of the time!

This is a great market to be trading in. I personally love trading range-bound days, as long as the range is over 15 points. The ATR over the past 10 trading days has been around 27 points! Beautiful. If, as a day trader, you can't extract a few points from a 27-point day, you need to reassess your trading setups because there are plenty of opportunities on the long and short side in this market. On this end, I stayed on the Sim again and managed to eek out a $600 gain with a few trades. I can't emphasize enough the importantance of having a positive risk/reward ratio, with the minimum being 1:2 (risk:reward). I started the day with a gain, but gave it all back over the next 2 trades. But then on the 4th trade, I made 5 points which made up for the prior 2 losses, and then some. When I looked back at my prior 2 losses, I realized both of the setups did not have 1:2 risk/reward potential so I shouldn't have taken those to begin with, but I got caught up in the momentum and put on those losing trades. The important thing is they didn't do much damage since I was using a 7-tick stop-loss.

The TICK continues to be an excellent indicator. With proper money management (1:2 risk/reward), I'm confident you could make money with just a 1 and 3 min ES/TICK chart. Here's a 1-min chart with a short setup that appeared towards the close. We have negative TICK divergence with a double-top on price (excellent, high-probability setup). I entered short at 830.75 on the spinning top candle.



Gap filled in the morning session (5-min)


ES/TICK (3-min)


ES Market Balance (5-min Day Session Only)


TF Market Balance (5-min Day Session Only)


TF/TICK (3-min)