Wednesday, 13 April 2011

Everything Old is New Again

My trade of the day was in the last couple of hours of RTH. As I said yesterday, I was going to trade while the market continued down. But no surprise, we got near to a profile point and the down move reversed. My first trade after that was a short, which I stopped out when I realised we were getting a retracement of the down move. After all, there was still an open gap. My idea then was to look to sell the DVAH. I started selling at 1311.50, then at 1313.00 and finally on the way back down at 1313.25.

I had decided that there was enough time left for the market to take out the low. In the end it didn't but it did rotate down again to below 1308.00, which was my cover point. My logic was that the worst that could happen was that there would be a neutral day and I would sell that too. I started with a 10% position and ended up at 60%. It looks like a risky play unless you believe in the Profile, which I do. I consider trading neutral days are like money for old rope.

The key to this particular trade is to manage the risk with trade size. Added to that is that my vision was for a series of down days. It doesn't look weak this morning. As I'm writing this with the ES back up at 1317.50 and I've been trading the ES from the long side. At this moment and it's now 7.50am NY, I'm still looking for a down day, but am looking at the gap between yesterday's high and the previous day's low. I'll continue writing this later, at NY LUNCH TIME.

Well, I sold the top of the Gap - low of day before yesterday at around 1317.00 a bit before RTH and took them back all the way down to the top of yesterday's VAH. The rally back up to the top of yesterday's high was another sell spot as the order flow upwards ran out of steam. I covered down to the VAH of yesterday again and waited to sell another rally, to 1313.00 as I didn't think it would go higher if the Profile was right. There was no rally, so I sold a 50% position at 1312.00 with a view to adding at 1313.00. It didn't happen and I covered all the way down to just above the POC of yesterday at 1309.75, which happened to coincide with my fav Fib. And that's how my day ended.

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