ESU9

What an interesting and entertaining day to trade.  We had a surprise with existing home sales and the market fretted about Boeing’s 787 test flight delay and potential set backs in delivery of the airplane.  In the end, the market saw more bad cues than good and settled in for a loss.

As you can see, there were several nice set-ups for the day, though the exhaustion signals were not at all easy to trust, at least for me.  So I missed the front end of some profitable trades but managed to pick up the tail end for decent gains.  I stayed biased to the short side (which may or may not have been a good strategy) and focused on short trades.

Often times I run an 89 period SMA and when the price action stays below the 89 period average I take only short trades and when the price is above the average I take only long trades.  This is a great strategy to keep you on the right side of the trend.  Of course, you stand to miss the trend reversals to the upside, but I can live with staying in the trend and picking up the easier, more sure trades on the short side.

As a scalper I try to not EVER let the news of the day influence my trading, which is to say I focus on trading the chart in front of me.  Today I was working the 1 minute chart on the YM.  Yes, I know the chart I have posted is a 5 minute chart, it’s the only way I could squeeze the entire day one chart.  I think the posted chart gives you a good idea of the market action for the day.  Anyway, one of the toughest aspects of the scalp trade is to ignore what the news is saying, or the latest default (Red Roof defaulted on their bonds today) and just trade what I see.  I know that because I THINK the market should react to the downside, it may not necessarily be the case.

I have resigned myself to the notion that the market is ALWAYS right, and I am wrong when I enter a losing trade.  It took me years to accept this proposition, but it has made me a considerable amount of money.