January 24, 2011
- in Uncategorized by schooloftrade
Which day trade should I take? 2 Losses early but we still made our daily day trading goal
– We begin our day with the dollar index
– Dollar (DX 03-11) is still sitting on support from the sideways range from late last week and overhead resistance from the lows of the price channel above us.
– We expect 3 options for the dollar
– Price rises back up
o Looking for selling opportunities at levels of resistance
– Price goes sideways
o Buy the lows and sell the highs
– Price falls
o Look for buying opportunities at levels of support
– Let’s look into the personality of the dollar because the DX personality will translated into the market’s we trade most.
– Speed looks very slow (that can change very quickly)
– The average true range on the dollar is our ‘crystal ball’ for what’s to come today
o Higher lows = expecting something good today
o Lower highs = we may need to wait for it
900am est
– We take two trades on crude oil, both were losses, and both were a little more challenging because we had conflicting patterns that were pushing and pulling in different directions.
– We had the 34range wave short (slower timeframes are most important) which we took with good volume on the sell side, but it appears the support level on the 21-range chart never got broken and the price bounced back up in our face.
What did we see leading up to our first loss of the day?
– Slow speed
– Dollar very sluggish
– Monday without any news (careful not to overtrade)
– We had 2 trade patterns setting up on different timeframes and different directions
– Trade with the pattern on the slower timeframe (34-range short trade)
– We then notices a 13-range wave pattern LONG (opposite direction of the wave short on the 34range)
– Rules tell me always use the slower timeframe patterns as your first choice.
– So our rules tell us take the SHORT, rather than the long trade b/c the short is the slower timeframes.
– I learned some valuable lessons:
– Finish your morning routine first
– Then look for trades
– Take the trades on the slower timeframes more important than the fast timeframes.
– Following my rules would have kept me out of the 2nd trade loss and would have made me wait to get into the next short trade.
930am est
– We see crude oil futures testing the LOD but with NO buyer support.
– This tells us the sellers are in control so we look for selling opportunities.
– Everything on the short side is more challenging right now b/c the market is oversold on crude oil.
– Momentum is in oversold territory which means our rules will not be met for these trades until momentum comes off oversold.
935am est
– I can now see that I missed a very clear bearish price channel, and this miss costs me a loss, and cost me missing a few trading opportunities.
– I thought we were sideways
– The price channel says we’re dropping
– I want to sell the highs on the price channel, and I never saw it coming.
940am est
– We’re looking for patterns, but momentum is oversold, which is making it more difficult to feel confident taking the trades.
– We see the bearish price channel (FINALLY) and now we know which direction we should be trading
– The issue is that when we see the big sellers they aren’t lasting very long and the oversold momentum is snapping us back up, without filling our final target.
1030am est
– We have crude oil futures trading sideways after dropping off the highs of the price channel
– We sold the highs on crude oil, took profit at the lows (support) and now we see the market slowing down, fewer big money buyers/sellers, and we are in the middle of the sideways trading range.
1100am est
– We’ve had a tough day today
– Slow speed, less than perfect patterns, and Joe made a poor trading decision at the open of the morning which took back some much needed profits.
– Now we sit watching the speed slow down, the ranges get narrower, and we wait for the European close to show us some more volume.
