If we don’t , who will?
Risk and Reward are all important in this business.
If we won’t capture some profits for taking risk, then we are doomed to failure.
If we don’t manage risk, we are in even more trouble.
Today’s trading was made challenging due to the Holidays this week (Labor day, Rosh Hashanah) and even more so when we throw rollover (ESz10) in the mix. The new overnight low fooled a lot of traders who didn’t see the bigger picture.
I made an observation today that the action seemed as if players were already moving to the next contract. The swings were very mechanical.
The overnight low was 86.25 and the December contract had a low of 1081.75. I told my roomies I felt 84 was support. If you were in our chat room you would have heard me say: Longs better take profits here by 1103; contra profit taking resistance before the beige book report should be between 1102 and 1104.5.
“This open will be tricky; Conservative traders wait 15 minutes for direction.” We felt good about the 97 resistance pre market; once the stops were identified we felt they were sitting ducks for the Boyz.
Hit and run was advised.
Many traders misunderstand “contra”. I like to think a contra is a profit taking move, not a reversal. We had target 96.5 to 95 as off, and assumed 94 support for the bounce. This was a function of at least three or four powerful ideas in our methodology:
- A dynamic magnet of 95
- TWM at 96.5 area
- Today’s PP of 95
- AFP of 96.14
- RTH Angel at 95
- Aqueduct Trade 96.25
- Id 50 at 95
I would say there was a lot of confluence there, wouldn’t you? Price turned at 95.25
When we get a yeehaa move on a contra, hit and run. Grab profits! Keep them!
If we have a group of trapped traders, with multiple breakouts like today… the trapped shorts are the problem if we try to scalp against it until the timing is right. We suggested to our traders that it might take several scalp attempts before gaining traction in the 02+ area.
Have a stop loss limit. If we give it several attempts and it doesn’t work, we need to do ourselves a favor:
Just say NO. Take the stop out and relax.