Tuesday, 23 November 2010

Selling into the Hole

Days like today need particularly good timing. It's very easy to sell into the hole and have the market come "right back atchya".

Price falls until it shuts off selling.

The ES today was weak on the overnight news. There were opportunities to get shorts on at a good trade location between 9.30am and 11.30am at around 1190.50ish. It doesn't often give you that much time. The thought did enter my head whether I was selling into the hole, but two things made me do it anyway:
1. The picture fit my trading plan and so I had to take the trade, and
2. I thought there were traders long from yesterday's close and that they would feel the pain and push the market lower. That was my vision.

The RTH open was another decision point. There was the Gap trade to think about. There was the "they" to think about. Would the two coincide or would there be a battle?

Those support lines you can see on both yesterday's and today's MP chart came in handy too.

Well, the Gap traders were run over. They provided yet another chance to go short (trade #4) and then the sellers stepped on the gas. I picked a couple of spots that I thought could hold: 1177.00 and 1173.50. You can see them on the MP chart.


  1. Hi EL,

    Looks like yesterday's trading....

  2. Correct chart now. Thanks for letting me know.

  3. What is your take on trading during overnight (ah, well yours morning)? how is liquidity?

  4. Good enough in ES to trade 10s, in FESX as much size as you want and 6E is a 24 hour market. Then there is the German Bund if you want interest rates that can handle any size. Great moves in something every day.

  5. Why not take the pullback 5 or 6 bars before trade1? It seems like it satisfies your criteria other than maybe being close to keltner.

  6. Anon 03:45, Because the way I trade it works for me.

  7. Anon 03:45, Because the way I trade it works for me.
    What does that mean? If you could be more specific I'd really appreciate it. Just trying to find out what makes you pass on the one I mentioned.

  8. Anon 16:20, the bar was not yet surely the top but after the second time there and closer to the ema. Looking at it now, you could have really taken it the first time too. Maybe I was just slow?? Not sure now.

  9. Thanks for the second response.