Today is Wednesday, January 20th and Stock Index futures sell off in the early session.

The market did manage to pull up towards the last part of the day, which was critical. A break in support took place in the early morning sell off, bringing the 9 month rally in jeopardy, only a rebound saved the day. I can imagine, when support breaks, what kind of price action we are going to see. It will pick up, that is for sure, as it did today. The volume on the S&P 500 emini futures came in at 2.3 million contracts traded. Anything over 2 million and I consider that busy and good.

Along with the volume, came some long anticipated movement in price range. After a long sell off, the market usually goes into a small trading range, trying to shore up its losses and find a bottom. That is a good time to either step aside and let the price catch up with itself. Backing and filling, is normal after a big move up or down. If you are not skilled in picking small scalp trades in between these ranges, it is better to wait and be much more selective until a clearer break is setting itself up, in either direction. But in an accelerated drop, you will often have many opportunities to add-on, in the direction of the major break, until you get to that longer resting place. The market will often start to put in a rounding bottom, as time is passing and stop orders are adjusted and placed, to show new turning points.

Today was an interesting day. I just keep missing that opening bell. I will get there, sooner or later. It just makes things harder for me to get my daily goal. When I have to fight dull price action, it does make it harder, take longer and tries my patients. If I were trading the open, there were some real fine low risk trades for several points each.

My day turned out OK, not real happy with it, but it was fine. I do put a high standard on my trading. I took 18 trades which was a lot, and picked my daily goal plus.  I traded double the size that I have usually been trading, because of the holiday and yesterday being flat. I don’t know if that is a good idea for everyone to follow that line of thinking but it worked for me. Those with less experience, should not attempt such a bold move.

Today, I have a video, of one of the indicators I have been using, but I do not say what it is or how I have constructed it. I wanted to show a couple of bad patches that I had and how this indicator confirmed that I should not be entering the trade long. I got a little stubborn and re-entered the trade a few times, which really hurt me. I saw the move I was waiting for, but they were taking it down only to push it up. I only saw the pushing it up part and took my eye off the ball.

This is one of the things I often talk about, “do not form an overly strong opinion of market direction”, let the market tell you which way it is going. Well, I did have two bad little patches where I only saw what I wanted to see. That can really kill you. This was one of my biggest problems. I was temporarily blind to the price action which said, “I am going down, not up”. Pretty simple, but at times we lose focus and concentration, only to make mistakes like this. Being able to come back and maintain composure is vital. With decent movement, following the rules will guide you to the destination.

I have usually two indicators that I look at underneath the price and a few things on top of the price to guide me through my method setups. The thing is, I have trained my eyes to see what the price is saying by itself. The price is what reflects movement of the indicators, so price is always first. If you can understand why prices move and how stop orders play a big roll in thrusting the move up or down, you will be making progress.

So, take a look at the video below and see just a touch of what I use. This is not the time frame I use, it is something in between the two smaller time frames. The smaller time frame, is a bit more sensitive to price moves and you will get a lot more of them. This is where I usually take my “Scalp Trades” from. My next higher time frame works in conjuction with still yet the smaller time frame, but it is set very differently and reflects the ability to take longer moves out of the market of several points. They are both color coded and sychronized to each other in all aspects.

My highest time frame is able to see the bigger picture, this is clasified as the dominant trend. The other time frames trade in unison with this time frame, at times it trades counter trend and often with this dominant trend to capture larger point moves. It is all structured and synergistic to each other. I use other key techniques to screen out which trades are better than others, which is not really hard to do.

Scalp trading has been classified as the hardest of all trading methods, but the way that I address it, makes it a  lot simpler to get a handle on. In a trending market, you can clean up. In a choppy market you still come out on top. What ever the market does you have the upper hand.

Stops are apart of trading and I always use them. I usually start out with a 4 tick stop on all trades, whether it is a scalp or a set up for a 3 point plus move. I almost immediately move my stop to three ticks after I enter, when I see that I entered the market correctly. One tick in my favor will get me to move my stop up and often times depending on my entry, I will be able to move it to three immediately.

When I trade my method correctly, I will be getting 80 to 90 percent winning trades. The key is, trade it correctly. Many days last year when I was trading a lot more and with more contracts, I had 20 to 30 trades in a row without a loss, in one day. The price action was a lot better than with bigger ranges.

Wow, I see I have written too much. Tomorrow I will continue on “Fear & Greed”, with the focus on greed.

Good Trading