Today is Tuesday, March 23rd and the market is still running strong +8 points on the S&P, +102 on the Dow and +22 on the NASDAQ.
Another nice showing for those on the long side of the market. Today the market did something that it does about once per month. I call it “Search and Destroy”. That is, the market makes a slightly new high, followed by a slightly new low, then a slightly higher high, followed by a slightly lower low and yet again the same. The price is taking out players just above new highs, hitting there stops and at the same time making those who play breakouts go long and taking them down. Both players long and shorts are getting killed when this happens, thus the term “Search & Destroy”. It is searching for stops and causing breakouts players to go long only to make them both loose. This is pretty brutal if you don’t know how to handle yourself. This was just a quick easy observation.
The market in general is designed to keep you guessing or it seems like that for most players, but there is a consistent element that runs through each day and those traders who know what to look for can take advantage of this.
By getting comfortable with this new language that I was talking about yesterday, traders will know when to enter long and or short with a high degree of accuracy. Trading for one to one (1 to 1) ratio is alright as long as you are right more often than not. In addition, when you have 2 or 3 to 1 returns, it makes it nice and keeps things simple. But two or three trades for 3-4 ticks each is “A OK” in my book, always has been and always will be. I only run a 4 tick stop on 95% of my trades and my average stop out is really only about 2 or 3 ticks. This is not an accident and can be learned.
There were a lot of nice easy trades today that could have been taken by those who know where to place there buy orders and where and when to get out. It all happens at the pressure points, like an acupuncturist at work. They find the points on you body that will release the built up pressure on the nerves and muscles. As they apply pressure to a very small defined area, the toxic build up is released and body feels better by the release of energy in that area. This is exactly how to read the price action as it relates to day trading. This is best I can do without going into it further, but the most important thing I have said about this topic since I started a couple of days ago.
In today’s trading, I only put on a couple of trades and was in the market for only a few minutes. In fact, I came onto the screen, looked at few things for a minute, went to my my scalp screen and waited for just a few moments, took a trade long for a nice quick gain and walked away. I was coming up into the New York lunch time, so I just left and said that I would return for a trade in the afternoon session. I did just that, looked at my screen for just a moment to see where we were at and place a trade short for another easy trade. I had in my mind that was enough, no struggle, just a quick small scalp trade and done for the day. I definitely could have taken several more trades and could have picked up 3-5 points more at least for the session if I continued to trade the afternoon. But what I had was enough for today. If I start early and traded the morning and afternoon session, I feel I could have picked up 6-10 points net almost any day. As I said yesterday, it is not about being over confident or cocky, but knowing how to read that trading language that could do it. I definitely need to respect the markets, for sure. The day I don’t is the day I will see a stop out day for myself of -4 S&P points if I take it that far.
Trading for most people is very difficult, but it does not have to be that way. Traders need to trade the easy and obvious. If it is not easy and obvious, then you should wait until you see a trade that fits that description. Don’t underestimate that last statement. That could be the second most important thing I have said the last three days, certainly in this post anyway. To often, traders want to live up to the scenario that I laid out above and it can hurt them. I can see the charts and read the language very well, and you can do it too, but it will take you some time to learn it. If you spend your time only following indicators, then you will miss out on valuable life changing skills, where money and earning a living are not as important because you have enough from the trading markets. That is only going to come when you understand the trading language and can read the daily price action with confidence.
If anyone is interested into learning this trading language and posses within them the ability to trade any market with confidence, then I would say, send me an email and we can talk about it. I have the time to pour my knowledge into those who are willing to learn. If this is something you are interested in, this is a good place to do it. You only go around this life once, fulfill your dreams, you will be glad you did.
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Tags: Day Trading, Price Action, trading language
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