Post Mortem on a Non-Winning Day

Two Mistakes

I’ve had a real good first month of the year, but I screw up sometimes too. Before I talk about my ES Trade Plan for tomorrow, I want to review my mistakes yesterday. I made two mistakes trading the ES yesterday.

  1. The first was getting short at the very end of the day and allowing my order tobe filled during settlement. The trend was actually against me at that point – even though it had stalled – and I should know better than to get an order opened during settlement. The good news is that my stop loss worked fairly well, and I lost just one tick more than my planned risk. But again – I should know better than to get into a trade at that time of day.
  2. My second mistake was when I saw the late evening push to 1800, I did NOT open an order. I had planned to try to get short at that point, but I simply didn’t do it. Then at 1:30 this morning, it spiked to 1800, then plummeted almost 25 points. That is exactly the kind of trade I look for, but I simply didn’t even enter an order.

Review of Today

Once again, all the action was overnight. I had no trades today, thanks to missing the entry last night at 1798.

We opened today back inside yesterday’s range, traded up to the low 80s and down to my previously identified support at 1767. We actually tested a little lower than that, but – for my purposes – 1767 was honored. I like it a lot when I get that sort of confirmation. 1767 will be a good launching point for a long trade tomorrow.

The range during regular trading hours was more in line with the average day for this month, but the 5D ATR now stands at almost 27 thanks to three big range days in the last 4. That will likely settle down back into the mid teens soon, and my expectations for any individual day will continue to be for a range in the mid- to high-teens. If that proves wrong, I will have to adjust my expectations. (That’s actually a positive. I need to average 16 points a day, and that would be easier with an average range in the mid 20s.)

We are stuck between the 50Day SMA and the 100Day SMA at the moment.  I expect the 100 to provide pretty good support for the next few days, even though I will make a Short plan just in case.

VIX is below 16 still. It was affected by these three big range days I am sure. I don’t really trade much on the VIX, but I do pay attention to it. It’s mildly useful to me to have a normalized measure of market volatility.

ES Trade Plan for Thursday Jan 30 2014

Long (assuming confirmation) at 1767 with a target of 1788. However, I will likely take half the contract off at 1777. Since the trade will be worth a total of 20 points, I will risk 1/3rd of that, or just under 7 points.

Long (assuming confirmation) at 1788.50 with a target of 1800. Risk will be 4 points.

Short (assuming confirmation) at 1767 with a target of the mid 1740s. Like the long trade, I will take half off after 10 points and will risk just under 7 points. The fly in this particular soup is that the 100 is below us at 1757.50 and I expect that to provide support. If we can get through that and stay through it, then the mid 40s have a good chance.

Short (assuming confirmation) at 1788.50 with a target of 1767. I will take half off after 10 points and will risk 7 points.

I’ll give each of these trades about 24 hours to work.

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