Midir's Stock Market Challenge: Day 1

Results For Today

Trades: 2 (one with 2 contracts)
Total Contracts: 3
Winners: 1
Scratch: 1
Losers: 0
Profit: $69.98 after commission
Gross: $87.50
Missed Profit from Taken Trades:  $62.50
Missed Trades: LOTS
Mistake of the day: Scratched trade (it would have worked if I left it alone)

 

Analysis For Today: ES

The ES was in a spike and channel down. The after-hours trading was absolutely crazy and on my chart there was even a gap down between the pre-market session and the open. I had a feeling that it was going to fill the gap and then continue lower, especially since it could fill some of the gap without even breaking the down channel. It ended up filling about 50% of the gap before heading lower which lead to our first trade. Also, as a side note, the system I use for trading did mark an entry for the gap fill, but I did NOT take it because it would have been a counter-trend trade. I ended up taking the entry after the gap fill for the with-trend trade. It worked out for +4 ticks.

What I Learned For Today: Trades Don't Feel Good

I keep having the same problem over and over.  I do not take my trades.  These types of trades work out early in the morning before the trend line has been broken later in the day.  This means that they do not feel good to take because you haven't seen the trend line being tested over and over.  By the time that it feels good, the trend line is probably going to break from being tested so many times.  Even this time it will usually turn around and test the low/high before heading in the opposite direction.  So it would still be a good trade.

It's funny, as I'm typing this the CL just demonstrated my point.  The CL is slightly different on counts than the ES when it comes to second entries; there just seems to be a lot more noise.  I've been working on a theory to help with the CL, but that still has to be tested.  That is a topic for another day, but let's get back on topic.  Don't mind the random walk index indicator at the bottom. I'm just using it for some testing.

The price broke the trend line, and it might have stopped out a few people with really tight stops (called weak hands).  It then ran up nearly vertically, only to make a new high and head lower.  The trend line failed again, went a bit lower, and then reversed again! This time it barely made it higher before going lower again.  This is where you head a pretty decent trade set-up again.  The price tried for a third time to go higher!  This time it couldn't even make it over the trend line, and as soon as prices broke lower you could have entered for a very quick scalp. You had to watch out though! While you could have easily scalped out, the lower price was rejected.

It seems like a lot of traders piled on shorts and ended up getting trapped.  This caused the price to move up rapidly as traders tried to close their losing positions. 

FULL DISCLOSURE

I did not take any CL Trades.  I did attempt to take an identical set up on the ES, and while my target was touched, I did not get filled.  I ended up scratching that trade at about +1 tick per contract.  Nothing works 100% of the time.  Funny thing is, that after some market noise it did exactly the same thing.  It just made a new low.  The picture is included below.

Late Day: Second Trade

My second trade of the day did not work out so hot!  I didn't lose any money because I ended up scratching it at + 1 tick on one contract and +2 ticks on the other.  The annoying thing is, that price actually touched my target but I didn't get filled.  Once the EMA was broken, price dropped and took out a chunk of open orders at my target.  I was fiddling with my buy order and if I left it alone I probably would have been filled.  Orders are on a first come, first served basis.  You want to put in a closing order as soon as you get in the trade, so you are higher in the queue.

This trade might look familiar, because it's the exact same thing that happened in the CL earlier, just in reverse.  This time it just happened in the ES.  It's taking a lot longer to work itself out, but I have a feeling that it will attempt to retest the low, or at least the trend line.  Actually, as I write this, it just retested the trend line, and just made a new low of the day.

The worst part of this is the trade would have worked out.  My original stop was never touched when  the price rebounded.  It would have taken some time, but eventually the trade would have worked itself out if I didn't touch anything.  Missed out on $62.50! Worst of all, if I kept my runner in place I could have made a few hundred bucks!  It just made a new low, just as I cleared my drawing for the day. 

Oh well, ended the day in the positive! +7 ticks!