Today is Monday December 7th and the major market index’s close down slightly.

We will soon see resolve in market direction one way or another. The volume in the S&P futures was very slow today. We only had a few points of movement in both directions and it lasted 4 1/2 hours. Nothing was going on and I am sure it was killing a lot of impatient traders.

The current condition of the S&P cash market is that the hourly momentum is pointing down and the 120 minute chart as well. I do look at both for longer, bigger reads. The daily chart has turned down slightly as well, with the weekly and monthly both up. There are many variables for this market right now and it is better to trade off of what you see.

I can not say for sure at this time where the next move is coming in at, currently it looks like it is down, but that could change. A move to 1080 could come quickly, current trend-line support. On the other hand a break out above 1016 should bring in a lot of short covering and could spark a rally.

The market will make up its mind and I will listen to it. That is good advise right now. In addition, I need to leave that possibility open that the market blasts off through the solid overhead resistance, it could happen? The bullish sentiment numbers are not yet at an extreme and that is really the more important number as opposed to the extremely low bearish readings now being posted. So we what.

As far as just reading the market, that was what I did today. I am still sick, but I thought not sick enough to miss the trading day. I can see that my judgement is a little off and I am not firing on all cylinders, but with a Big V-8, if one plug or wire is bad, you still have 7 good cylinders and enough to run and get up a hill or two, but no long distance drives please.

That is what went down today. I came very close to my daily stop out target of -4 points, close but not that close. I went to -2.75 points down. That is the worst that I can remember for quite some time. I saw a big move brewing and thought it would be better to take less trades and go for the bigger move. It was going to be easier for me.

Well, I really have to work on the first trade, 1/2 point loss. I came back with a 1/2 point gain which should have been for more. Here the loss on the first trade did affect my decision to just trade back to break even. That cost me an additional 1/2 point, because I did see a solid 1 point on the trade.

The next trade was -1/2 point followed up by -1 point. The next trade was really bad, I did not like it one bit and after I placed it  knew right away I was too early. I went outside my method and did have a chance to get out at break even after taking on some heat, but I didn’t .

 My saving grace was I knew what I was trading for and it was big, to get the larger trade I did rationalize a bigger stop and placed it at the time of order entry. I still don’t like doing it, because I don’t want to set a precedent for doing it often. It is usually never a good idea to move your stops. If you do, your entry was not right and often you only make it worst.

So, I had 3 losses in a row and for me that is bad. The first -.50 second -1.00 third -1.50. That is usually my trigger point for taking a break. I was down 2.75 points so far at that point, really not that bad but I always know that if I go to -4 points on the session, I stop, period. I don’t mess around with that one. If you are off, you are off. If you are sick it can affect your trading. If you don’t have a point in the session that you stop trading, what is going to stop you from being down 8 points or more. The answer to that is, nothing and it happens all to often while trading the E-Mini’s.

I only have a limited amount of pressure on myself. The worst that can happen is, down 4 points for the day. I always ask myself, can you live with a 4 point loss for the day? My answer is always the same, yes I can, no problem. I can always make it up in the next couple of sessions. That is another good point. You don’t have to try and make up your losses all in one day, once you start again. If two points is the minimum base daily target and it is for me, then I only need 4 points for two days in a row and I have the loss covered. So there you have it.

The last part of the story is the next trade. I have been trading a little more the last couple of days and put on a double position of 4 contracts and scaled out of the first contract at +9 points, the next two at +8 points and the last one at +7.50 for a very healthy gain overall. 

I saw the trade coming in the bigger time frames and originally got excited, that is why the last loss was not cool. I needed to control my emotions and didn’t. I can try and excuse myself and say that I am sick and that is true, but I would only have myself to blame if I got stopped out for the day. I was not 100% and in reality I should be when I trade. As day traders, we can not get cocky or overly confident at anytime. If you let your guard down you will get hit, plain and simple. The market does not care who you are, it will take your money just the same.

There are some important lessons in this post, think about your own trading and compare the thought process.

Todays trades are below in the video. Tomorrow I will try and continue on from Fridays ending post.