Key Takeaways from Trading Notes

The Swing Trade Worked Perfectly.

1. Overnight Gap and Moving Average Deception:

   • The market gapped up overnight, misleading traders who were short from the prior close below the moving average.
   • This created a deceptive trading environment with a close test of the moving average, but it fell short, leading to a cautious stance on taking long trades.

2. Pre-Market Liquidity and Bias:

   • The daily liquidity draw was swept in the premarket, but the continuation to higher levels was unexpected.
   • Short bias was maintained due to this premarket activity, though it was evident that the market was pushing higher.

3. Impact of Economic Data Releases:

   • Data points released at 6 AM and 8:30 AM influenced market movements significantly.
   • The 6 AM data led to a dip to the moving average, presenting a potential long opportunity that was missed.
   • Anticipation of 8:30 AM data led to a preemptive rally, indicating potential insider trading or pre-planned moves.

4. Mistake in Trade Execution:

   • The decision to short at the 5D 5M Month VWAP was based on incorrect signals and missed the optimal long entry opportunity.
   • The market moved against the short position, which was contrary to the signals indicating a bullish trend.

5. Trend Analysis and Signal Alignment:

   • The H6 and H12 candles were trending higher, but a macro reversal attempt was made against the trend.
   • Multiple bullish signals (moving average cross, data point holds, premarket strength, etc.) were ignored in favor of a reversal play.

6. Timeframe and VWAP Bands:

   • Trading the 5D 5M Month VWAP upper band proved to be an inaccurate choice.
   • With 9 trading days from the Month VWAP, a higher timeframe (10D 30M chart) should have been used for better alignment with macro deviations.
   • Future trades should adjust to the appropriate timeframe based on the number of trading days.

7. Lesson and Adaptation:

   • Mistakes were made, but understanding and adapting to these errors is crucial for improving the trading system.
   • Focus should be on refining strategies to avoid similar losing trades and aligning better with market signals.

Summary

The trading session revealed several key lessons, including the importance of aligning trades with prevailing trends and macro signals, adapting to appropriate timeframes, and adjusting strategies based on economic data and market behavior. Future trading should incorporate these insights to minimize mistakes and capitalize on clearer signals.

Today I got faked out short, against the overnight gap above the moving average, which decieved short into the close on the prior day, because it actually closed below the moving average. So it was a very sneaky gap up, with a very close test of the moving average on overnight open, but it came up just short, and still had some liquidity left, so I didnt want to take the long at that moment. I was also short biased because the daily draw on liquidity was swept in the premarket, I was unaware at this point that it would continue to reach higher. 

Then we had 2 data points drop, one at 6AM, and PPI at 8:30. From the 6AM data, it flushed down to the moving average which presented the long opportunity of the day. But at this point, we were still trending below the open of the 6AM data, so I didnt want to rush.

I found it quite interesting that the market started ripping higher in anticipation to the 8:30 data. It did feel quite sketchy, almost as if insiders already had the move pre planned. But, both data openings held from the release of PPI. This is why I should not have shorted at the 5D 5M Month VWAP. It gave me the complete wrong signal, and I only took the trade because it was the trade presented to me, since I missed the trade of the day opportunity in the premarket. It was very difficult to have got in an entry on the 9:30 open. At that moment, it felt like you were chasing the market. So the real players got this market long in the premarket before the data release. This goes to show why its importnat to wake up and catch every data piece so that you dont miss any macro moves.

Also, the H6 and H12 candles were clearly trending higher, yet I didnt follow the trend, I attempted to play a macro reversal in the market off of the 5D 5M Month VWAP Upperband. And todays price action absolutely blew right through. 

I basically went against every signal that was clearly giving me a long entry. Between the overnight gap above the moving average, the long moving average cross over signal with a bullish bias. A bullish H12 LIS and H6 trend, the hold of 2 data points which opening prints were never even retested, a bullish premarket and a 9:30 open hold to clear right through the upside liquidity, I think its safe to say that these were many signals in opposition to me, when I was simply just playing an upperband reversal. 

I guess that the moving average bias, line in the sand, and overall flow of the market holds more weight than the macro bands.

ALSO, this may have been the complete innacurate band to have even traded. So far we have traded a total of 9 days from the opening of the Month VWAP, so I really should have been on the 10D 30M chart instead. So now we know in the future, that we have to play the macro deviational VWAP bands when trading outside of the multi day range. More trading days than the timeframe im watching, means I have to go to the next greatest timeframe deviation. 

Mistakes were made on the session. But as long as we adapt to them and refine out trading system, we should be able to slowly chip away at pointless losing trades. 

I was just able to locate todays top on the market, and market reversal. I forgot to mark the fibonacci levels from swing points, and todays market reversal in the morning and mid day, both came from the 50% retracement level from the 30D high to low. I have to keep these macro levels in mind when trading.