Trading to win using the Secret Code of the Illuminati

A Mountain of Pain

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Money Management

Yesterday’s river of rain turned into a mountain of pain for the short side.

The jam session was a good opportunity for us to explore a few key ideas later in the day.

I will share some of these key ideas.

Just my opinion, nothing more.

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Trader X asked me: “The conservative trade was hold long, why didn’t you just do that?”

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That as they say, is the $64,000 question, and can be best answered in hindsight.

Better, however, to already have framed our “rules” ahead of time.

LOL. Shoulda, coulda, woulda.

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When we entered today’s arena, we made certain assumptions about the daily range.

07:54  E: 13:08 (Yesterday)  E: new lows for week = 32 test, 31.25  , 29.5
07:55  E: 14:31  E: lets go 28 xxxxxxx
07:55  E: so if u are up early and playing short
07:55  E: and a report is coming out
07:56  E: dont overstay the 28/29
07:56  E: $$ taken b4 the reports normally
07:56  E: this is retest of yest lows

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My Big idea for today was do not be overzealous short side. We had a huge down day yesterday, so test for support, since today was MATD. That meant hitting bounces was a viable thought until proven wrong. On the flip side, bullish argument was why not half gap and gap as a high odds trade?

My suggestion: why not do both?

So 07:56  E:dont overstay the 28/29

08:35  E: 37 my resist for now

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I thought range, consolidation, with a possible head fake to the long side to bust stops into the 42+ zone.

I thought today’s high was possible , but not high odds, until momo begins (actually 50 was t2).

Back to the question why not hold?: Simple, I cannot do it all.

My preference :

Find logical, conservative  trades.

First do no harm.

Accept reasonable risk (no more than two points.)

Become protective of profits, and not need to always be in the market.

There were several beautiful contra trades some of us played today, in addition to long side trades.

I don’t assume I will ever capture the entire day’s range… but often we can make more than that by being right about the majority of the swings.

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After a day like yesterday, who needed to trade at all today?

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Reality is that we need to plan for the range, guess right, execute the trade, and then manage it.

Accept stop outs when wrong, and avoid averaging in as losses continue to mount.

  • Jump to another level and try there…or
  • realign with the flow when appropriate, or
  • stand aside, especially if we have lost our maximum daily allowable uncle point.

Every one’s style is different. Some position trade, some swing, some day trade, some scalp.

Some trade a number of vehicles, some focus.

Sometimes we are up by 6 am and trading, have already done a portion of the day’s work before RTH and can be conservative. Sometimes a trade is of higher quality and we choose to play more heavily at an area with higher odds. A one contract player wants to milk every last ounce out of his trade… and not all traders play that way : buying and holding all day.

Sometimes we need to take a phone call, need a bathroom break.. or get up and walk around and clear our heads.

We miss trades that we want, we get trades we don’t want.

That’s all I know.

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One other thing I almost forgot… conservative traders find it easier to survive.

08:38  E: if bears cant defend 37
08:38  E: then not serious
08:39  E: today the key is scalp bounces
08:40  E: and always take stop outs then play new level

Once the IB broke…the primary trade was now long… suggesting pullbacks were for buying. The question then becomes: Do I want to buy during lunch, a normally sluggish time of day?

So gunslingers: congrats if you got it right today from stem to stern.

I rarely do… just a humble student and still learning.

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Take the trade:

If you could take only one RTH trade, which did you like today (and why) ?

  • Short the open
  • Buy 29
  • Fade the dt near 37
  • Buy Angel at 31.5
  • Short The Ib Breakout
  • Buy the test of IB high
  • Fade the 40.75 breakout
  • Fade the 48+
  • Buy 43.5

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No right answer… just perhaps some helpful insights we may discover about ourselves.

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Awareness and things  to ponder:

Interestingly today could be classified under a number of categories. Many appropriate ideas, and locate those under tags.

I noticed a pattern that diverged from normal yesterday…and again today it became apparent.

Mirror day.

Normally, range for lunch is what, maybe 5 points?

Yesterday11.75, today 11. Most unusual.

I saw the triangle,building…warned shorts be conservative. Then it breaks out when I am munching…so what’s to do? Chase it after lunch? Remind traders the market is trying to get the money we stole yesterday?

Let it play out and take the high odds contra trade…when price and time agree, and a heavier bet can be placed  is my preference all day long.

Trader X, hope that explains it.

From one professional to another…thanks for making me stretch my thinking.

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Great interaction with Diogo, and we gave away a few ideas…to a smart trader who has been kind enough to share his work with us before.

Yeeron : @eminiwizard Good morning E

Maven : ROFL // RT @eminiwizard: RT @Maven__: Hold on tight #EMWS / lol what’s her name?

RT @Maven__: Decision point seems imminent #EMWS / 09:13 E: if 37 cant stall it MATD

angel at 31.5 needs to go #EMWS

@Maven__ plan is hit bounces til it doesnt work 37 resistance #EMWS

09:17 E: 28 support still til broken :) 09:29 E: scalping both sides was the suggestion #EMWS

big range yest so need time for consolidation … trend traders hit bounces #EMWS

ovn demon is 38.75 #EMWS

half gap is 37.25 #EMWS

The LastDoji : RT E 11:20 E: be conserv 11:20 E: sharp rallies out of nowhere are characteristic of corrective markets #EMWS

@TheLastDoji thank u …. when that 31.5 angel held… we felt the boyz would have their jam session #EMWS

George V Hume : RT @eminiwizard: 11:20 E: be conserv 11:20 E: sharp rallies out of nowhere are characteristic of corrective markets #EMWS

RT @eminiplayer: 1337.75 NVPOC and 1338.75 Previous Close still open as potential upside targets /// wtg player #EMWS

Player: @eminiwizard Thx

Tall Red : RT @eminiwizard: RT @tallred: #EMWS Thats hilarious E! Thanks! Maybe I could be CG to sing for me later! / rofl tmi LOL!

Brasil61 : RT @eminiwizard: RT @TraderSmarts: 5 day free trial to Live Intraday Trade Alerts ends tonight – link: http://bit.ly/kGESdq / do it #EMWS

Vytis : RT @Maven__: What a wild day, huh? / Wouldn’t want it any other way. #EMWS

M:  Flirtwits flirtin’ around another sand box, eh #EMWS

CG : #EMWS ole! Magnum… And flirting is all they will get.

(LOL)

11:27 E: so be patient 11:27 E: use the 42 idea 11:27 E: as key stop #EMWS 11:42 E: dt 40.75 from the xxx #EMWS

Diogo Mottoso : @eminiwizard Boys really want an inside week??? http://twitpic.com/4woutf #EMWS

Wtamtru : RT E : 12:07 E: ib hi 36.75 gotta capture something

Trader Smarts : @eminiwizard Thanks E for the RT and kinds words :)

Diogo M : Great talk today at @eminiwizard’s room. You should check it out. #mkt #trading #EMWS

RT @DiogoMattoso: Great talk today at @eminiwizard’s room. You should check it out. #mkt #trading #EMWS / thank you :) EMWS

The Last Doji : @eminiwizard always great chatting with you

That was not nice of the Boyz lol… bounce yes… kill shorty at lunch no.Mirror day suggested be patient shorts after IB retest held #EMWS

RT @Wfamtru: 12:07 E: ib hi 36.75 gotta capture something // thanks for rt #EMWS

@yeeron @Maven__ @TheLastDoji @eminiplayer @tallred @brasil61 @DiogoMattoso @Wfamtru @TraderSmarts thanks all for rt and comments #EMWS

@trader_trend @GeorgeVHulme thanks for rt and help in the stream today #EMWS

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