Today is Friday, March 13th and the major indexes are closing at their highs again.
On Monday of this week, I posted a bold prediction that the market was going to rally big the next day and that we were going to close at the high of the day as opposed to what we have been doing, selling off at the end of the day. In fact my head line post was, “That’s it, tomorrow we Rally”. Yesterday I made a short 5 minute video showing exactly how I came up with that market call and what it was that I was looking at – days before that market bottom. If you go to yesterday’s post and look at the bottom, you will see the link. It may be helpful for some to see how the market seems to have a predictable pattern, in the midst of all the ups and downs.
Technical Analysis is the study of price movements and their patterns. You can take data from the past and come up with probabilities for the future. By studying these moves of the past, you can take a reasonable amount of risk, for an acceptable reward. That is what I try to do when I trade. You cannot expect to get them all right – losses are a part of it, but you will expect to get your fair share which should put you into the green.
This week, the futures contract month of June for symbolESM09 has started trading. I switched over to it today. The volume has been split in the old contract and the new contract and by next week it should all be rolled over to the new month. These contracts are set for 3 months and then a new contract will come out called the “FRONT MONTH”.
I had a little trouble with the low volume today, because I started trading during the slowest time of the day, in addition to split contract volume. It did throw me off a little, since I trade on tick charts, which are all tied to volume. As the time started to get closer to 11:00 am, though, I got my footing. That is when traders come back from their long lunches on the east coast and get back to business. It is hard to trade on light volume, but if that is all I had, I feel I could easily adjust my style, which really would not be much of an adjustment, to capture my few points per day. Short targets with short stops, would do the trick nicely.
I know a lot of traders always look for the home run. It’s nice when you get one, but during their quest for it, they strike out repeatedly, hurting their batting average. They only have one game, “Home Run”. I feel you have to be diversified in your approach, but if I had to pick only one, I would choose the very short stuff, singles and an occasional double. Your batting average would increase, but you may not get the notoriety of a Barry Bonds. Ask yourself what it is that you want – to be famous, or consistently hit singles and doubles?
The comparison is related to pulling out a few points per day and depending on how many contracts you trade, that can easily mean $500 to $1,000 dollars per day. Most people could comfortably live on that, but the key is “per day”. With the occasional daily loss as an aberration, daily profits are the norm. That is what I strive for each day. I expect to come out posting solid gains each day and have been doing it now for going on 7 weeks straight without a losing day.
If my daily goal is $1,000, then my daily loss limit is $2,000. It all depends on how many contracts you’re trading. When I am trading up to 5 contracts, my daily loss limit should not go over $1,000 dollars because my minimum daily goal is $ 500 dollars. Two points per day x $250 dollars per point when trading 5 contracts, (each point for a single contract is $50 dollars, so 5 contracts is $250 per point) which is $500. That is before commission so I always have in my mind to hit a little over the two point mark. During the past 7 weeks, I have averaged about 3 times daily goal (that is a rough estimate), so $1,500 per day. I may go back and add them up and divide by the number of trading days to see the actual numbers, but I think it’s close.
In today’s trading, I hit 75% profitable trades for about $ 1,500 dollars profit and in fact have 3 contracts still working with 4 1/2 points of unrealized gains in that trade. I rarely hold a position over night, much less over the weekend, but I had a small glitch in my Internet connection. I had planned to get out just before the close, but now have to wait until Sunday afternoon to place my stop.
Since I am in it, I will place a stop and give it a little room to see if we get follow through on Monday. Since we closed near the high again today, there is a real good chance the market is going to run come the start of the week. I did say in yesterday’s video recap of the Dow and S&P that we were going to get to the outside trend line that I drew on the chart video, which is about another 20 points on the S&P. That still holds and now it is more likely we will pull up to it, with today’s market action leaning bullish for Monday’s open, we shall see.
That all for today, I hope everyone has a great week end. If anyone has questions, please feel free to email me at vinnie@sniperdaytrading.com
http://www.screencast.com/t/P3kAllia Some of today’s trades 5 minute video
http://www.screencast.com/t/tTFIJnlTsGc Today’s Equity Chart
http://www.screencast.com/t/j9ftesjC Screen Shot of last trade
Related posts:
- Called the Bottom to the Tick
- Called Live, Short Term Top In Today’s market.
- Stock Index Support Comes In As Called !
- S&P 500 bounces off double bottom & Trading Lesson
- Market Moves Right to Called Targeted Resistance Area
Tags: acceptable reward, called stock market bottom, contract volume, e-mini esm09, front month, patterns, price movements, probabilities, rally, Technical Analysis, video recap
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