Micro: Uptrend
Intraday: Downtrend then reversal to Uptrend
- Bounced perfectly off the 30m channel bottom. This is why you do not "hold" shorts in micro uptrends.
Sectors:
- Sectors seemed mostly green at the open. If you see the defensives and the offensives were moving higher off the open and they also were above their previous day close. This is pretty significant. Like friday though, they died soon after and started to experience slight selling. It is all still relatively weak in terms of selling and you can know that by seeing what happened at EOD on the SPY. That EOD breakout is what actual momentum looks like.
Depth:
- VOLD was neutral nearly the entire day until the close. ADD was also neutral moving nearly none off the opening price. TICK again neutral until EOD.
Trade Ideas: A+
- For all of these reasons above I knew that today was going to be mostly neutral. When VOLD ADD and TICK are all neutral and sectors are rotational/weak then its time to look for the real reason why the Market is trying to sell down. (see below)
Macro:
- THIS was the real reason the market was selling off. We had big down moves on treasuries led by USD strength. I am not sure why this happened and I really dont care why it did, all I care about is, "What kind of impact does this have on the indexes. This has a MAJOR impact on them!!! When we get moves like this in the macro the market listens very closely and since we had these macro movements I was willing to go for a short trade because if the market is mostly neutral like I stated above, then we will probably range and the range will be skewed mostly to the downside. Since I understood this I think for Trade Ideas I get an A+. I had a clear neutral position in terms of market strength which led me to expect a range type of movement which then led me to be comfortable taking a short at lower highs and helped me take my profits where I needed to take them.
Trades:
1st & 2nd: Micro Reversal Intraday Continuation
Execution: A+
- So I have a few reasons why this trade was specifically very good. Firstly, I identified the range and realized that the macro environment was going to push us lower. Secondly, I knew that since range is likely and reversion to mean will occur often then I was taking my profits at key intraday levels (pm low) so that I was not subjected to the big swings in PnL. I got my entry and was risking the premarket previous lower high at 4170. I had my stop at 4171 and I got in at 4165. I then added again at 4166 because I saw that we had just made our 5th intraday lower high. This clearly indicated that selling pressure was much stronger than buying pressure and I added perfectly before the big drop. I then took profits at pm low because in a ranging scenario I am willing to take profits at any key intraday level that could cause a reversion to the mean. I had clear Reason2sell and I took it.
Mindset: C
- I am happy I got the win but I think I left a ton of money on the table. I couldve taken the same exact setup albeit was a little bit sketchier cuz the market was so neutral but I couldve used only 1 contract and risked about $30 from the top of my profit. I think that is totally okay to do if you have a good read on the market. I shouldve taken that 2nd intraday lower high for that huge 15 point breakdown but instead I was sitting here happy that I made 9 points with 2 contracts finally. I am grateful to be able to learn everyday and get better at trading but I dont want to just start to win and get scared of the market because I am green. If I want to really go exponential in my PnL then I have to stay here and watch for the next trade.
If I can win a lot or lose a lot and not care one bit about the outcome of those trades but instead my sole focus was, "What is the next opportunity?" I would be a much better off trader.
Problem: Stop thinking about the money. The more you care about it the more it will flee or cloud your judgement in the next opportunity.
Solution: You have to only focus on your ability to identify the next opportunity. If you are confident in your ability to do that then there is no reason to care about what your PnL is. That number means absolutely nothing. It is there as a mechanism to invoke emotional response to a game that requires you to not do so.
