Grade: C

Goals: Be more selective and raise winning %

Reminders/Aphorisms: 

  • Don't fight the trend;
  • Be patient, take good set-ups
  • Respect at least 2:1 R/R

Overview: Yesterday we spiked on the PPI numbers and then grinded down all morning before we took a big dive around 1:00 p.m. before recovering back to around VWAP and right below 400. It was strange price action for sure, but we knew when we spiked above 400 in premarket that the big players probably did not have to properly position their large positions at that level. As such, the 400 level was really the focus on the day. While I thought that we would likely move higher off the 400, we actually crashed below. This could have been because of the news that released that Russia hit Poland with a missle but ultimately who knows. We're starting the day below the 200 EMA (401.5) on the daily, which we kind of used as resistance yesterday as well. We are opening above the 395-396 zone that was previously working as a demand zone and below the key 400 level with a premarket high of 400.03. We created a supply zone around 402.5-403.5. It's clear that big money and big positions are still shuffling around the 400 level. Potential scenarios:

1) We continue the downtrend to 395-396. If we find buyers at this level it may be a good area to take a long and hold for the retest of 400, however I would take profits around there as I mentioned before there is too many outstanding orders/money around this level.

2) We could recover to 400 at open. If we keep moving higher at open, I will look at the 400 level to enter a potential short down to 395-396. If we start consolidating around the 400 level I will look to volume and price action to determine whether to potentially take the short, or a breakout long trade. Recently we've been having a lot of consolidation on low volume before a break of key levels.

Trade Analysis:

  • Trade 1 was a trendbreak long trade after we bounced on the 395-396 zone.  As this was a trendbreak trade I took it with smaller size. I got nervous when we flashed down down quickly off the premarket low and sold for flat even though it never tested my entry. Same thing happened yesterday. If I had held I would have hit my target and made money on this. TAKE REWARD OR RISK ON SCALPS! STOP LETTING EMOTIONS TAKE OVER.
  • Trade 2 was a trend continuation short on the 5 minute chart. We approached premarket low and rejected so I got in for the break down off the bottom of the wedge that had been forming. This wasn't a great trade but I held to my risk on this and cut appropriately. I shouldn't have entered this trade as it was somewhat a boredom trade. It's a stretch to categorize this trade which means it's not a good setup.
  • Trades 3 was a trend continuation short on the 5 minute after we had been consolidating all morning right above the demand zone of 395-396. I took this with smaller size and even reduced my exposure on this as this wasn't a great trade and was anticipating a breakdown on the demand zone. With the reduced size I was able to treat this more like a Trade to Hold rather than a scalp or Move to Move. I started peeling off shares on the way down. Once I was even on the day I set an OCO bracket to either breakeven on the day or for a bigger target. However ultimately it moved back up and hit my stop so I ended up scratch on the day.
  • NOTES: On longer Trade to Holds I need to set my risk higher than break even after the move had moved in my direction and give it more room to trade. I also need to stop taking boredom trades. The market has not been providing opportunities lately so just don't force it.

Lesson moving forward: Trade to risk or reward, stop letting emotions get you out of trades.