September 23rd, 2022

    Today was my anniversary so I took no trades today but I will look back onto the day and see what I can find in terms of potential trades I couldve taken that either wouldve worked or not. These will all be hindsight outlooks so obviously this will be best case scenario.

1yr:1d

1d:2m

    This day was a clear downtrend which continued from the day before. When we have a gap down into new lows that have not been tested, it should be known that long trades should be avoided purely from the fact that we are testing new lows and there is no clear place for buyers to step in in these zones. For that reason, they will be very scared to jump in and if there are no big money buyers in the market helping out your trades then you are 100% on the wrong side. This must be avoided at all costs. In general, gap down days should be traded in the direction of the gap and you should go for mostly continuation setups. 

Missed Opportunities: (no trades taken)

X 1: Trend Reversal

Here is the first clear trend reversal of the day that goes to the long side. This is extremely important, IF the trend is only broken by barely 50 cents then you must be very careful buying the pullback to the trendbreak zone. When you do this strategy there must be extra buyers helping you out and if they arent there it will likely cause you to be chopped up in this zone. This would be the ideal entry though right at the arrow. In the recent days many of these long trading opportunities where you take the trendbreak to the long side, have been going down a lot lower through the trendbreak zone and then popping up for a nice little move higher. Here is an example below from the thursday session.

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See how we came back down to the trendbreak zone and bounced multiple times but we went a little bit lower than we normally would want for a good entry. (its only a couple cents difference) but those mini lower entries make it just that much more difficult to take these trades. Again in general its much easier to take trend continuation trades with the direction of the gap when we have big gap up or gap down on the day. This is especially true when we are gapping down to new lows in an unprecendented bear market.

I know this is very nuanced but this is what trading is all about. Every single one of these trendlines that you see above (except the last main large trendline that gave the late day large trend continuation long trade) have broken up through the trend less than 50 cents. These are WEAK breaks to the upside. This means that the EV of a trend continuation to the upside are much lwoer than they could be. On that last late day push to the upside we broke that main downtrend (top blue dotted line) by 67 cents then pulled back and created that nice trendbreak pullback zone for a continuation trade to the long side. Again, this is very hard to justify trend reversal to the long side when we have this huge downtrending move on a gap down AND are at new lows. The trade Labeled X 3 on the bottom of this post is the clear "Best trade of the Day"

X 2: Trend Continuation

Here is a nice example of a failed move higher where we hit vwap, lost momentun and then created this breakdown for a setup where you can go for lower lows since the higher high was attempted and failed very quickly. This is a trickier trade to take but in terms of EV this is the right side of the V which means you are much more likely to make money on this compared to those previous trend reversal trades. In general that first trade labeled X1 was more of a momentum shift trade rather than trend reversal becuase the trend technically did not reverse but instead it really only changed the momentum for a very fast moment. This trade (X2) is much better and you are actually trading with the trend. This would be the smartest trade of the day so far in terms of EV and EV alone.

X 3: Trend Continuation

BEST TRADE OPPORTUNITY OF THE DAY: When me and my girlfriend were eating lunch I was watching this move happen and I was reallly trying to find a way to get in and still handle risk through my phone. I had my main TOS phone app open and then I had the options chain open on the TD app. When I went back and forth between the 2 i realized that the TD app had to refresh everytime I went back to it so there was just no way I couldve taken this with confidence so I just left it alone. This is one of my favorite mid day continuation setups that exist in the market. We have this strong consolidation that happens in the morning and we breakdown through that consolidation, find a new low then have a decent rally where we come back up to make a lower high right below the morning consolidation. This is an AWESOME setup and I love that I identified it from my phone and almost took it. If i was at home I wouldve taken this for sure, especially with that double top that failed right at that lower band of consolidation from the morning. Super awesome setup that wouldve given tons of opportunity. This is a good time to say though that I MUST remember that the goal is 50 cents. If I can nail 50 cent moves like this then on that first move lower (first top before the second which created the double top) I couldve made money on that then taken it yet again on the double top for that second leg down. If I kept my targets clean on these moves then I couldve taken 2 50 cent trades back to back and crushed this setup.

X 4: Trend Reversal

Here is just a classic example of a trend treversal to the upside where the trend actually reversed and continued much higher. We have the break of the trend where we went more than 50 cents above it (KEY METRIC THAT MUST NOT BE OVERLOOKED) then we pulled back hard right into the trendbreak zone and moved much higher for an awesome break of the high. Also very important to remember that the goal for these trades is the attempted break or the break of the previous high. If you got the perfect entry on this and then sold right at the higher high then that is a full 1.1 point move and that is fucking insane returns on a trend reversal trade on the SPY.