Monday, 15 November 2010

Manic Monday?

Not very manic at all but Friday's S and P action deserves special attention.

I started with the Gap trade, buying the 1202s against the buying tail of 11/11. The key was having seen the Profile split, giving a VAL of the split at around 1209. This became my first major target rather than the actual close. I scaled out all the way there.

Next, I saw the trend change on the range bar chart and anticipated the range extension down, so was able to get short at around 1204.50 on one of my favourite pictures. After that it was easy. The market range extended down and I started scaling out just above the Keltner low. Meanwhile, the Euro was breaking down too. As a mere male, it was hard for me to watch both, although I did, but cut the Euro trade too early.

Then we have today's DAX (German stock index on Eurex). This is a big contract (25 Euro/point) and it takes no prisoners. It is known for making people a small fortune (out of a large one). Once tamed, it's a great beast to trade but most of us have paid for our lessons dearly, so caveat emptor and sellers too.

Anyway, the trade in the pic is a good example of positioning yourself for the move. Whether you call it the Gap trade or anything else, you had to be long already to make money out of the move. I was positioned at about 6707 and waited for the sweep which came a few minutes later. I had exit orders waiting, beginning at 6718 and going up to 28. The pop came and it was over in a blink. That's the DAX.


  1. I traded the DAX and ES in a similar (although not identical) fashion yesterday.

    Today I am much obliged to you. Your post made me a lot more cautious which probably saved me a lot of money today since the slide on the DAX was a bit bigger than i previously expected. I didn´t try to catch the falling knife this time, insted my profit for the day remains safely tucked away in my pocket.

    And btw thanks for the best investing blog on the internet.

  2. jenrique42

    en el 6e encuentro q a veces las barras son de 5 o de 9 ticks, ¿cual es la causa de la eleccion, depende del dia, de la volatilidad o cualquier otra circustancia?

    in 6e sometimes find that the bars are 5 or 9 ticks, what is the cause of the election depends on the day, volatility or any other circumstance?

  3. jenrique42, it depends whose workstation I took the screenshot with. Both work well for us but it depends on the speed you want and the stops you want to use.