Today is Thursday, April 15th and the market has shown to be pretty resilient as it closed up another few points on the S&P and other index’s.

The Dow was up 21 points and the NASDAQ up about 11, putting back to back gainers together. As I had mentioned in Mondays post I believe, we needed to stay above some key spots on the charts and I clearly marked them. That was the maximum amount of room the market could move inside and still have the longer term momentum in tact. It bounced off some key support and has not yet stopped.

I did see a slight bearish pattern present late in the day today. That setup lead me to some pretty nice gains and reached my daily goal with ease and room to spare. I did not trade or post yesterday but am far ahead for the week so far with only Friday to go.

I have an equity chart of my results below. I took nine trades in total ( a few exits were scaled out) , a little more than I usually do, but that was fine, I took a few good breaks in between and traded about 90 minutes. I cut my trades off at very slight losses, -.25 and -.50 point, nothing big.

My method is very strict in order position placement. If you are placing your orders in the right place, you should get some movement right away, that movement is basically free cushion or extra room to help you insulate yourself. I very often will see one or two ticks movement right away which gives me an advantage. I take that movement and it helps insulate my position so that I don’t need to have a 6 tick stop. If I don’t get the results I am looking for and loose the edge, I don’t worry about getting out. I can always get back in, but I am only taking a one tick loss or maybe two. It is a whole lot better than my full stop of 4 ticks, which is still very small for most traders.

If a trader is taking a 6 tick stop, you have to make up a lot of ground just to break even, let alone then make a profit. If you take two of those, you are bleeding.  Trying to hard to come back from that will again only hurt you further. You need to let the trade come to you and it should be, feel and seem effortless.

So, the key is, don’t take large stops. Some will say, easier said than done and that may be true for them, but for those who know how to position the entry to get good movement right off the bat, it is not that hard. This is one of the keys to trading price action, order placement. I have talked about this before, but it bears repeating, since that is part of the topic. Order placement is grounded in understanding good price action structure as well as support and resistance.

I don’t often talk much about these things because this is all part of my trading method and course, with everything else. What I do talk about is everything else. All the other parts of trading are really just as important as knowing when to get in and out. There is a lot of good trading advise and know how buried in all the posts I have written, so, feel free to dig in a little to past posts, I believe it could help.

That is what I try to do each day, help.  If a topic or subject comes to me as I start writing, I throw it out there. In fact, before I run out of room, I have something else in mind that may help my readers.

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Traders, are faced with decisions all day, what to trade, when to trade, which direction to trade, etc. I have settled to trading the S&P emini’s so I don’t need to be concerned with what to trade. There is plenty of leverage and money to be made. When to trade is another subject, trading the early morning or late afternoon is usually best, first and last 90 minutes of the day usually provides plenty of opportunities. The direction to trade should be up to the markets to decide and not us, but that’s my opinion.

The last few days, I am sure there were many traders who just had in there mind that this market was going to go down. They have predetermined in there mind a directional market bias, that can really hurt them.

As the market makes an advance as it would have before in previous sessions, where a pull back is in order, the trader is going to look for shorting opportunities. If he does not see one clearly, he will start to make one up that matches his directional market bias. An order is placed short because that is the only trade that meets his disposition. As a bullish continuation pattern develops, he is blind to its setup and only see short opportunities. The market breaks out against him and he is in shock and he may get stopped out. With his market bias still in tact, he waits a few minutes and again does the same thing and gets stopped out again as the market is clearly in an uptrend. This leads to frustration and the next trade, he lets go by as it was good for a small gain short. This reinforces his short bias and after consolidating, he takes another short trade, only to see the market take off against him again in the direction of the dominant trend, up.  He feels now that the market is out to get him and his confidence is shot.

I know that scenario happens all the time, which is one of reasons for the rally, skepticism and doubt. That is fuel for the bull rally. When the doubters start to believe, it is time to sell.

The point to the story is, keep an open mind and read the price movements and try to keep directional opinions to a minimum. This will allow you to see both sides of the market and only then you will know what direction to trade.

I hope this helps my readers.

Good trading.