Wednesday, 26 May 2010

Going with the Flow

It's important to keep your mind open to what is going on. Before the RTH open I was, of course, thinking about the Gap trade.

I looked at my support and resistance areas and put together a vision of what could happen. I thought that the open would be strong but there were a number of areas that could hold things, My first attempt got stopped out with e reversal to long as it became clear that we would probably test the 24th's VAH or extreme. There was a double top of the 21st and 24th May and that is where I decided that I would try and short again but with a tight stop.

This worked out well and I started scaling out of half very quickly as I was not sure that the buyers would not come back again. The volume DVA started shaping up and I paid attention to it.

Finally, the market decided to try and fill the gap and range extended to the downside, making a neutral day. This brought one of the things I learned from Pete Steidlmayer into play: once you have the range extension that makes a neutral day, price will usually go back to the middle of the day's range. This happened and was the end of my trading day.

Going with the flow was important as my original vision was wrong and I had to adjust my thinking as the market unfolded.


  1. The green and red line indicator second from the bottom -- what is that? It downloads for TradeStation as EMA Green-Red .... but I'm not sure what I'm looking at?


  2. Hi Kiki,
    Hi El

    May I ask you why you did not short at the red bar before 16:51? Both momentum indicators were down-sloping. Both volume indicators were also red.

    Thanks a lot, guys!

    I wish you a nice weekend!