Todays post is for Friday’s session, November 20th and the sell off slowed a bit, but still ended down slightly for the session. I did not trade today, traveling out-of-town and may wait until next week? We will see.
The momentum has swung to the downside, going into Thanksgiving week, where we typically see market strength. It will be interesting to see how the market handles this dichotomy. A word of caution, the volume is going to slow this week. It should be a little busy early on, say the first hour, but after that it will probably slow substantially. Each day will get slower until Wednesday’s close. Just from memory, the session during Thanksgiving week Wednesday, is usually a half day. Everyone should find out what the hours are for the week. Fridays session is usually normal hours, but you should look for yourself. If I have time tomorrow, I will look it up and post it for tomorrows session.
One more thing I will say, before I go to the next section is, the market sentiment did get more bullish by a few % and the bearishness dropped. Only 20% of professional stock market newsletter writers are bearish, that is not very many and does pose a problem for the bulls to continue higher. It had been at these lower levels but it dropped by over 5 % this week and is the lowest in recent memory. Only one in five believe the market is going to go down. Sounds like a minority position to me. All I advise is caution, be careful, keep stops on all of your long-term stock positions. You just never know what can happen with this market. Take is a day at a time. Currently the short-term momentum is down.
TRADING LESSON TODAY !
Today I will continue with a topic I touched on last week. Each day is usually different as far as price movements are concerned and the person who can feel the pulse of the market can get an edge on trading it.
Each day, the market expresses itself in different ways, those expressions come out exhibiting the struggles between both sides of the market, bullish or bearish. Usually one side will have the upper hand and prices will end the day in that direction. Along the way, the struggle will be shown when one looks into the micro moves of the market.
I feel, the best way to do this is by using tick data. Tick data is far different from using time data. With time data, the charts reveal the price movements, high, low and close for that specific amount of time. Many traders use 5 minute bar charts to trade the S&P. Far more traders use time charts over tick data. If I had to guess I would say at best it would be 80/20 but it may be more like 90/10.
If you day trade the E-Mini markets, you may want to look into using this type of data. It is different and it may take some getting used to, but it offers much more advantages than disadvantages in my opinion. If you are looking to limit your exposure and risk, tick data, if used properly can do that for you.
You will get a much better look and feel for where you get in and out of the market. As volume increases, the bars will post more often and reflect the quicker pace of the market action. With more detail and information, you have the ability to make a more informed trading decision, thus putting the odds in effect, more in your favor.
As mentioned, you have the ability to limit your risk by identifying more defined pivot points, which in a way, could be classified as decision points. This does give you an advantage by identifying where the tipping points could come in at. Not every pivot point is a decision point and you have to understand a lot more than this, but it is a start.
If you go back over some of your previous trades and look to where you placed your stops for some of those entries, you will find that you are probably in good company. I would bet that most of those stops had a significant amount of movement in the direction of your stop. The reason for that is most people place there stops in the same places and they don’t even realize that they are doing it. In some way, they know the exact spot they will through in the towel to get out along with everyone else, which causes the price to move substantially in that direction.
What if you reverse the process and do not yet place an order and look, think and ask yourself, if I was in this trade, where would I place my stop to get out? That is probably the place for you to establish an initial position and ride the wave of everyone elses stop orders going off.
Again, this is one way to help understand how price action works and how you can take advantage of it. Don’t fight it, go with it and everyone else. There loss is your gain. That is why and how, I am able to risk only 3 or 4 ticks on a trade and still have the odds about 80% on my side that the trade will produce some profit for me.
That is why and how I came up with the term, “SNIPER-DAY-TRADING”. If I can limit my risk to a very small amount and get the momentum on my side, so that the current natural rhythm of the market is to go in my direction, by stop orders and current position orders going off in my favor, that is all I can ask for.
Keeping the struggle down to a bare minimum, is what I enjoy. I don’t like fighting the market and if I lose the edge, I get out, immediately until a new edge presents itself to me.
I feel, this is hard to accomplish if not impossible with minute charts. So that is why I have built my trading models around this type of analysis. You may want to explore it further on your own to see if you can find or get the edge.
Good Trading, Vince !
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