Today is Monday May 10th and the market took investors for a ride back up.

That’s right, in a blog that I wrote but never got uploaded, (glitch), I said in that post that we had a very good chance to go yet higher as the retracement back up closed near the high of the day. That is always a good little clue as to the next move. Fridays market action settled us back into the range where today we took off. The actual number I saw us getting to initially was 1145.

Today we saw the market trade past my number by a little, which was good. As things have settled from today’s session with the S&P up close to 50 points and the Dow up over 400 points, where do we go from here?

This is only an observation as the market has with today’s run settled into a 62% retracement from top, bottom and now back to the middle at 62%.  High 1217 low of this move 1056, 62% at current price)  At 50 -62 %, a common retracement point for all trading instruments in all fractal time frames, but in the daily chart the S&P is now again looking at 62% retracement from the top.

It seems the market got excited about the prospects for a European bail out of 1 Trillion dollars. That is a lot of money. It may help in the short run, but I can’t see exactly how this is going to make all the problems in Europe go away. Many countries are in bad shape and this may just push off the “Day of Reckoning”.  I do think that day is coming when the market won’t come back but just keep going in the direction of last Thursdays market. That day may be pushed off in the future for now.

It is a good thing that as a day trader, you start each day new, with no concerns or worry’s of previous positions. I could see the market pull back off of its run up initially in tomorrows session, but we will have to see how things turn out. I would not rule out a move all the way back up to the previous high, it is possible. At that point, I think you would have to be open minded about the possibility of a new downturn? I think the market sentiment will give us a very good clue as to what is the next move. I will be looking at the new numbers coming out this week to see how much market euphoria we were able to release. It is really hard to tell right now. One thing is for sure, if you know how to day trade, you can do very well. The opposite is true just the same. Here are some things to remember.

Don’t get greedy, and don’t be controlled by fear. Both of those emotions will cause you to place trades that you wish you could take back. Place trades only if they meet your criteria. You will stand to loose a lot more than trading capital if you allow yourself to be gripped by these two emotions. Be sure to never pull your stops, ever, for any reason. If you did not enter right, don’t try and compensate your position for a wider stop. you will often times only be making a bad thing worst. If you do this and it works out, it will only cause you to do it again thinking too that this time it will work out and you will loose more than than you bargained for. Your first loss is your best. If the markets are showing a much wider trading range, you may have to move your stop to a larger position, but this will all be done ahead of time, not as the trade is getting under way. I did this last week. I usually have only a 4 tick stop while trading the S&P and with the increased volatility I moved it up to 6 ticks. That was a preset position that gets entered every time I put on a position. I feel all traders should have the same. Don’t put on a position and then go and place your stop after that. Things move to fast at times and it only takes one time for a position to move against you by several points in a blink of eye, at which time you may be shocked. That shock can cause you to freeze and before you know it, you are reeling with a huge loss.

Lastly don’t trade in fear. Fear of lose and fear of missing a big move. Both can cause you to enter the market at times that do not reflect your trading plan. It is not worth it, you need to tell yourself that now. Be disciplined. If I can’t get filled in the area that my method or plan tells me to, then I need to let it go. Don’t look at all the money you could have had. That will only cause you to enter at the top or bottom only to be stopped out. You need the trading edge, if you don’t have it over other traders, they will have it over you. Which do you want to be? If you don’t have the edge or advantage, don’t put on the position. Much of this has to do with seeing the trade ahead of time. Do not get confused with seeing what you want to see. That will hurt you as well. Being and staying objective is the name of the game. Don’t make up your mind and say that you are sure this or that is going to happen. If conditions change and you do not stay open minded, you will become blind and start forcing trades where you have no business to do so.

Be humble and trade with confidence and exercise trading discipline. If you don’t have confidence, build on it, then it will come.

Below is a video of some of today’s trades, I called the last trade pretty nicely but I did not trade it. Overall a rough start with three small losses then some nice trades to end the day in the green.