20 on 20
Today was an interesting day.
There was a pattern that I felt might play out (LL 123), and intuition is all you can use, along with money management to help you stay out of trouble.
My tongue in cheek play was “$20 says we get 20 points from the 23 low”.
(You do remember “fingers and toes?”)
How can we make these calls reasonably accurately and with tight stops?
In all humility, I am going to suggest a few reasons:
- The emini sp is the ONLY thing I trade, so I am focused
- I have studied the giants in the business and learned from all of them
- Flexibility in seeing both sides keeps me “somewhat” unbiased
- Risk and reward is always considered (How can I take the safest trade?)
- No TV, no cnbc distractions
- I have developed my own proprietary methods that put the odds on my side
Am I perfect? Absolutely not. Do I get the direction right all the time? Nope, 50% and I am thrilled.
A four letter word is also helpful: math. Sorry, it just helps me.
Here is an example: the 872 high and the 665.75 low has a 50% retracement of 823.75
Remember 873 stop? 50 point target is?
The 872 high and the 823 low is approximately 50 points; so a retracement today from an opening near the low had a better risk/reward. It’s as simple as that.
Market pros Hubert Senters and John Carter have suggested that the half gap fills 82% of the time. If you are going to risk 2 ponts, doesn’t it make sense to go long after 50 points down, with those odds?
If 22 broke, then 18, 15, 11 were all potential targets.
38 wanted testing unless the first hr low tanked; so the targets become Angel support for the resolution of 27.5, then the progressively higher targets.
If we are 50 points down and bouncing, what is half of 50? And that plus 23 =?
If the market takes out the first hour high, I consider the ss as scalps only.
The 49.75 EOD resistance? Check out the 61.8% rt from yesterday’s high.
And the 35.25 support for the scalp trade from 43 Res?
Come study, I can show you.
“Stubborn shorts” were the problem today; don’t get caught with them. Double tops yes, triple tops not as likely. Late to the party is always vulnerable.
Just keep things as simple as possible and feel the pulse of the market.
The $20 trade: 40% of 50 is how much?
Fingers and toes.