Today is Tuesday, May 8th and the markets were on the move today yet again with good price action through out the day.
I took two trades for a healthy daily goal + with the first being a short which set up the second trade, a long with a bit of legs under it. Everything within the method said the trade probabilities were to the upside on that second trade.
With the market coming under extreme heat earlier in the session, by the time I came rolling in, things had already shaken out and the market was on the mend. Much of the price action itself told the story onto its next moves.
Like chess, you need to think through your opponents past moves so you can see his futures moves and get positioned for the “take down”. Trading has some similar traits in that waiting for your opponent to show his hand and pick up on his strategy, you are buying time to let the market reveal its hand to you.
One of the things we traders need to remember is, not to get ahead of the game. What I mean is, do not allow our knowing of the opponents hand create an over exuberance to participate in what has just been revealed in the games next move. As in chess, if you react to soon, you will loose that advantage of “knowing” and put yourself at risk.
My second trade had just a touch of that in it. I entered like I knew where that next move was going and I was right, but coming in to soon, sometimes is not always the best move. When it is going to just run right after entry, you may feel great, but if you come under a little fire, you have to sweat it out and may even be tempted to move your stop, all things you want to avoid. The first mistake can cause you to make a second and then even a third and then, you have a mess to clean up. Some don’t get it cleaned up and add to the mess, all what I call “destructive trading behavior”. It happens to just about everyone, but traders need to learn to maintain control and trade only what they know. Leave the speculation behind. High probability trading is what is sought after and can be achieved with the proper trading method and the discipline to execute it.
These are some of the hardest things to learn as you are dealing with human emotions at this point. If your trading method says, the market is going to go higher, then you want to just get in at the lowest price and ride it higher. It makes sense, but if you consider what you have to go through to get to the point of where it actually does take off, you may think the early entry is not really worth it.
What I mean is, you may get a good price, but you may also have to suffer some draw down before you see those higher prices you are waiting for. That can cause anxiety and it may even cause you to second guess your original decision, which then puts your position at risk. Indecision is not what we strive for, but solid well thought out plays that clearly has the odds in our favor.
In the chart above, you can see the turning points and some continuation points with the indicators I use confirming. The indicators are only reflecting what the price is doing and so is a reflection of price. I teach traders to focus on the price action and those things that make that up.
This is where the chess analysis comes in again. The market will many times need to move here and then there, before it can make its next move. Those moves are essential for proper positioning which creates the needed energy for price to then expand. If you don’t have the energy, you are only going to see small moves as it gets into position.
The trading “turning points” that I talk about are so very often the sweat spot within the charts to get things moving with little draw down. You can also clearly know where to place your stops in an identifiable way so as not to get hit, 4-5 ticks for the T-2 screen above. All of this is repeatable price behavior educated traders can come to learn.
Getting to that point where you think you know is sometimes a little harder than most traders what to admit, as most give themselves to much credit. Staying humble with a teachable spirit, is apart of the journey and what is needed. Becoming a good day trader is a life long journey and continual learning is all apart of it. Stay open minded, observe and live your trading dream with high probability trading.
I wish you all the best. Vince
About Vince Tarantino
I am the owner of SniperDayTrading. I live in a small town in Northern California in a valley surrounded by mountains on all sides. Reach me by email or Google+.