Thursday 03/12/09 - Know thyself

In several posts, I've written how I need to put my bias aside and trade what I see, and yet I was unable to do that today. I began the day by shorting the bounces, and was down -$100 in the morning. I *knew* a break-out was in the mix at the 732 level in the morning, but thanks to my short bias, my brain was unwilling to *act* upon that knowledge. This is where knowing yourself and your weaknesses comes into the picture. I knew that I was trading my bias and not the charts, and knowing that weakness helped me keep my losses very small; I was using 2-4 tick stops. In the past, I would be down $500-1000 on a day like today. Instead I ended the day with a +$175 gain with zero long positions and a little bit of luck.

We closed on strength today but I am expecting a re-test of lower levels before we move any higher. Btw, I was trading the March contract today, but have switched over to the June contract for tomorrow.

ES 133-tickbar chart (Morning Trades)


ES 133-tickbar chart (Afternoon Trades)

I got stuck in a short position in the afternoon. I wanted to exit for a +2 point gain a couple of times, but Tradestation kept throwing an error message (pictured above). This emphasizes the use of OCO bracket orders. I have my platform setup to automatically submit a bracket order (1 stop-market 6 ticks from entry and 1-limit at profit target 12 ticks from entry). I think I got lucky on this one and my profit target was hit just before price shot off to higher levels.

The following chart shows why I would short the double-top on price ($tick divergence) and why I should have reversed to a long (higher low on $tick)

ES/$TICK (1-min) at 2:30 PM central


No Gap Today


ES/$TICK (3-Min) $TICK remained above zero all day indicating a strong trend day.