Grade: C

Goals: Be more selective and raise winning %

Reminders/Aphorisms: 

  • Don't fight the trend;
  • Be patient, take good set-ups
  • Respect at least 2:1 R/R

Overview: Yesterday we had a grinding green day where we ended the day just shy of $400. Overnight we stayed at around this level, reaching 401.09 in the premarket high and since then came down. Unemployment numbers were better than expected. If we don't break 400 and then 403 this may be a lower high on the daily and we could reject and go down. We could also see another grinding green day. However we have heavy resistance at 400 and then 402-403. We are opening just below the 400 level which was the previous day close as well. Potential scenarios:

1) We could get a quick pop to 400 and then a strong rejection, moving back down to 395-396, with the only potential level of resistance at premarket low of 399.2. I believe this is the most likely scenario. If we do break 400 we could meet resistance at 402-403 and reject there.

2) We could quickly move through 400 and then come down and use 400 as support and grind green all day to the 402-403 level. We could easily bounce between 400 and 402-403 all day.

Trade Analysis:

  • Trade 1 was a poor anticipation trade with smaller size. The price rejected at 400 so I was looking for continuation down even though there was no setup. Cut this for risk.
  • Trade 2 was a trend continuation long. PMI service numbers came out causing a $1 spike and then we came back down in the same candle. I was able to get a decent entry long to recover the wick that was made. Took the whole trade at 50c, could have probably help for me but in these market conditions I'm taking profits.
  • Trade 3 was a trend reversal short trade. Not the best trade but we had a big spiking topping tail on big volume followed by a further move down. We were entering a consolidation zone and decreased volume around the 402 level. I was only looking for a 50c move as the SPY has not been moving much. I took this with smaller size also since it's a reversal trade. I got stopped out for risk on this.
  • NOTES: The SPY has not been providing many opportunities lately. I need to stop taking boredom trades. If the trade is not there I should just let it go. Also - don't take reversal trades! They are low quality set-ups and a low win percentage trade!

Lesson moving forward: Trade to risk or reward, stop letting emotions get you out of trades.