Cyclical Nature of Trading.....

The last few days have been yet another excellent example of the Cyclical Nature of Trading at work. After a few days at the end of last week when trading was tricky, we suddenly get two massive days in a row. This is why I keep saying how you must anticipate that you will have periods of small losses (but the aim is to keep these small) as well as quiet periods ( when you are uncertain of the larger degree picture), but as we have seen again and again and again and again, it is not long before the good trades come round again. This is just the natural way Profits and Loses unfold in the markets.....

Thanks, Steve

3 min ES – DP low

As we can see, right at the same time the 15min ES chart was at 15min DP support, the 3min gave us an automatic DP buy setup. This nailed the low of the day for us ! This is exactly the same as we had on the NQ the day before :-)

The ES then rallied strongly off the low. After a scary initial pullback (no 100% initial risk on this trade as the larger degree picture was clear), the ES did reach the first projected profit target, but as the STF Strength band was exceeded, we swap to the ATRStop, which held the long trade into the close for a nice +5.7R Profit (ignoring slippage and commission)

Thanks, Steve

15 min ES – DP low

For me, the larger degree trend became a little clearer when the 15min Charts put in a DP low early afternoon (this was also a TS3 buy on other minis), see chart to the right. This then gave a opportunity for long trades on the short-term 3min charts, as the 15min was now at support.

So let’s turn to the 3min ES to see what we find (next post)

Thanks, Steve

3min YM - Profits and Loses

Hi Everybody,

As the 15min trend was uncertain, in the early part of the day yesterday (more on this in the next post) you could have decided to take trades on both sides of the market. So I want to take a look at what would have happened on the 3min YM yesterday (this is only a sample of 1 day as there was a lot of trades on this chart yesterday, but may not be representative of everyday’s activity).

As you can see, we had a few trades, the first was a TS1 sell that made +4.7R Profit (ignoring slippage and commission). Note the small green triangles, these are failed trades. BUT not always filled, the first is a good example as this was invalidated (as the market went below the prior bars low “before” being filled), so the long trade was not entered. Then we had a -1R loss, then a nice +3.7R Profit, then a break-even TS3 sell later in the afternoon. So overall a possible +7R (+4.7 plus -1R Plus +3.7R Plus 0R) day yesterday.

Again, I have to stress that I do not suggest taking “all” the trades every day, but on a day when the larger degree trend is unsure and you use the 100% initial risk guideline, then Advanced Traders could consider it. But again, I stress that it is always best to trade “with” the larger degree trend and when in doubt, stay out.

Thanks, Steve