Trading Tips and Best Practices

Beginning July 7th, I will be including in my posts a daily trading tip. There are so many different things a trader needs to be aware of and to remember when considering a trade. An edge must be identified before entering a trade. Remembering to consider certain criteria before pulling the trigger will help improve the odds for success.

The trading tips I will post will be designed to act as reminders and re-enforcement of best practices and notes I’ve accumulated from seminars, webinars, books and other traders. The tips might be simple, obvious or just something to consider. If the tips benefit others that peer into this blog from time to time, then all the better!

Trade Well !

Friday Log – Trades, Weekend, Baseball and the 4th!

Began the trading day pre-market with “The Hot-Box” trade. Overnight price action was narrow. HH was 917.25. Weekly HH and daily HH were also in this area. Set sell order @ 918.75 and was filled right near top once eco report announced @ 0830. Identified first support area at 15.25, scaled out with next target just above overnight LL and target hit. Result: +8.0

Near the open I attempted an early CO trade but failed. Got in long 1 point earlier than previous day close but was stopped out below my support area. Maybe should have waited for confirmation? Result: -4.0
Next trade, I was still thinking long but forgot about consumer sentiment report announcement and got caught. Took opposite side when realized but not before taking net loss on the two trade cycle. I always have the eco reports written down but maybe I should set eco alerts on Outlook? I’ll consider. Result: -3.0

Went into scalp mode short and captured a bit of lunch money after first pullback after eco report. Felt choppy and uncertain so did not give it much room. Result: +1.5

Still looking long since I saw heavy support area in the 908-910 area from yesterday. I initially entered too early and price continued down to test the PP area. Once that area held and was retested, I got in long again and added to position. I was planning to take ½ off at 13.75 (bull trap area) but missed by two ticks. I was going to leave the rest on in anticipation of retest of HH area of 16 but I reset stop once price began to weaken after the spike up to 913 area. Within the hour, price ultimately hit my first target. In hindsight I guess I could have either held stop at BE or taken ½ off and let the rest work? I continue to see many of my trade ideas workout the way I planned but not before being impatient and/or insecure with letting the trade work. An ongoing issue I need to work on and improve. At least I’m aware of the issue and not in denial?

Starting the weekend early so I did not trade the afternoon session as I did not want to get caught up in anticipated end of week volatility and wanted to insure a profitable week. Next week will be a short trade week as it’s time to go see family and see a couple ball games in PIT as the Cubs and Bucs play at PNC. Outside of Wrigley Field, it’s one of the nicest parks in all of MLB to see a game. Friends coming in from Chi-town so looking forward to baseball and “The Strip”.

Friday July 3rd will be the 4th of July holiday observed by the market so there will be limited postings next week.

Trade Well !

Thursday Log – Be Nimble While In Battle

One aspect of trading that is very important and will help a trader realize long-term success is learning to be flexible of their opinion in regards to market direction. This is one of the more difficult disciplines to be conscience of and act on while in the heat of the trade battle. A trader needs to be nimble and flexible once they are in a position. While in the position and the market proves the trader wrong, one must have a plan ‘B’ to fall back on. Planning what might go wrong and what you will do is more important than planning what “will” go right. My execution of this discipline was done well today but definitely need to improve on this awareness and having confidence to execute when necessary.

At pre-market I was set up for another “Hot-Box” trade to take advantage of the 0830 eco reports. No big emotional reaction so no trade entered and LAL positions cancelled.

At market open, I was anticipating a test of the overnight low and possible test of S1 area (888.6) so I went short around 994.25. Market never retested and came back through the open HH and pre-market resistance area. I lowered my stop to one tick above the HH, added 2 C’s thus reversing my bias on the market from short to long. First target was just below PP and PO2 was 2 points above CO. Fairly well executed. After being stopped out with loss of 3.25 points, the opinion reversal play washed out the loss with +8.75. After both trades cycles the net Result: +5.5.

As indicators (TICK, A/D, ETF’s, TRIN) were still finding direction, I was looking to go long on first pullback after strong opening slope with EURP. PB came at 1046 when TC set-up occurred. Got in @ 902.25 but was looking for 900.75 as better wholesale level. Went conservative with the 902.25 and only entered ½ of position. 900.75 would have been full position but never filled. Target was yesterday HH / ON HH and was hit nicely. Too bad it was a ½ position but…that’s the way it goes sometimes. Result: +5.0.

Ran some errands during the lunch time lull and came back in time for the final 45 minutes. Was looking for a CE set-up but never came as ETF’s, VIX and TRIN making new highs / lows. But I was able to spot a SS and TICK divergence around 1524 and entered short after double-top failure. Again, only ½ position entered. Target was previous support of 909-910 area. I was set-up for a possible break thru 909 and trailed stop down. Entered 914.75 and exited 910.75 as price began to strengthen. Result: +4.0

Tried a couple more very low risk tight stop short trades but lost 1.5 total. Not a wise trade going back to the well after getting the 4 at end of day and particularly when the indicators were all pegging their extremes of the day. In future set-ups like this one, I will be more conservative, take the one trade and if successful, end the trading day with a winning trade.

Being nimble while in the heat of battle is important and I was conscience of it today and executed. Just another one of many aspects of what a trader needs to always be aware of.

Trade Well !

Wednesday Log – Early Trade Then Go Away

With the FOMC freight train scheduled to depart at 1415 today, I wanted to get a couple trades in prior to 1100. I generally do not trade the afternoon session on FOMC day due to expected high volatility, long candles and unpredictability. Only if you want to take emotional trades (which in the long term won’t and don’t work to improve P/L) should you be attempting to throw these dice. I made lunch plans for the afternoon with fellow traders and took the afternoon off. Great BBQ!

I took two trades today. First one was the pre-market “Hot-Box” trade in anticipation of the durable goods eco report. ES was trading about in the middle of the overnight range (R1) with R2 just above overnight high and overnight low near the PP. This was a strong set-up for the fade on possible pop and flop. I set sell stops at 898.25, approx. 1.5 points above overnight high and buy stops 1.75 points below overnight low / PP. Price came up nicely at the announcement and picked up my sell order. Added one contract @ 899.25. Exit plan was take 2/3 off just above R1 @ 895.75. Missed fill by 1 tick. Stop was initially just above key resistance of 902.25. Moved stop to B/E once price was hovering around 897 area. Maybe I was too ambitious? Moved stop down once price did not move past 896 but not before only getting a fraction of what I planned. Result: .075 point.

One observation, generally, on emotional spikes pre-market, price does not hang near the high for very long. Today, price was stuck in a 2 point range for several minutes which may be an indicator of strength in future trades. Market later went up after open. I will be observant of the emotional “hang-time” on future “Hot-Box” set-ups.

The last trade of the day was a 4 tick scalp after the open. Went long from 898.25 and targeted 4 ticks (899.25) with two C’s, just below R2 and overnight high. Result: 2.0.

At the end of the day, the plan was executed well…Early Trade and Go Away, albeit some good points left on the table. Planned to trade eco report “Hot-Box” trade and first hour – hour and half of morning session and then call it a day. Prior to leaving for lunch, I anticipated that the range of 900-907 would be the trading channel until the FOMC train left the station at 1415. Upon my return, my trade range area was confirmed. Good planning and/or seeing the TA better? Not sure but I am realizing that planning and identifying key ranges and areas of support and resistance help take the guess work out of the trade. Following ES traders on Stocktwits and Twitter is a blessing.

GDP and Jobless eco reports tomorrow @ 0830. Start planning the “Hot-Box”.

Trade Well !

Tuesday Log – SOH

This was a SOH (sit on hands) type day. A real chop fest. Another day where we need to minimize risk, fade the channel and look for 4-6 ticks profit rather than points, which I must do a better job with. I was trying to force trades today, which was foolish. I got caught-up in the meat grinder after two hours of trading. Not a smart day and had a similar day a couple weeks ago after two days of low volume choppy market. Sometimes the need to trade over-rides my better judgment and only results in a losing cause. Result: -8.25

Days following a trending day are generally just like we experienced today. This was an observation I became aware of approx. 6-8 weeks ago. In the future I need to prepare myself better for days after trend days by identifying and planning my trades by either SOH or just take small bites out of the market.

An abbreviated day tomorrow as I have lunch date with my trading partners. There will likely be trade opportunities in the first 1-2 hours of the open and then a narrow channel until the 1415 FOMC announcement. I’ll be finishing off some BBQ and a couple beers as the afternoon session gets wild without me.

Trade Well !

Monday Log – Back in the Saddle

I’m back after a week hiatus to Bermuda. I had been considering trading the AM sessions but decided against it and to enjoy the time away from the market and screens. Felt good to get away and recharge the batteries. I continued to think about the market, kept up with the daily close and caught up on some TA reading. Otherwise I had very limited exposure to the market.

Trying to get my rhythm back today and played conservatively. At the open I was waiting for pullback to 907 area with order set for 906.75 but never hit. Looked for TC set-ups after I missed the move down but nothing came until 1445 timeframe and did not like the set-up. Result: No trades.

Expecting a slow day tomorrow as market anticipates FOMC announcement on Wednesday. The Wednesday session, particularly the PM session after 1415 is expected to be volatile. I generally don’t trade during that event and instead meet my trading partners for lunch which is on the schedule.

Trade Well !