So at the request of the community, I'm going to start doing a daily post on the market as I see it as well as talk about some of the trades I am in as well. I'm going to call it something really lame like "Today in Trading" or unless you guys want to have a poll for a really bad ass name to go with it, let me know! Open for ideas...
My focus primarily is on the market as a whole SPX, the VIX that goes along with it, WTI crude and contract trading, and OVX the volatility index that goes with it, and technical analysis in general. I also trade the XOP, and individual E&P stocks, bank stocks, real estate stocks, or whatever is volatile in the market at any given time. Oil has been the hot topic of the last two years, so I primarily focus solely on oil until the next whatever crisis there is.
Also I write my own indicators, I also have a working algo, and I really like to dig deep into the greater part of executing trades correctly that few content providers out there do. So whatever topics are hot or interesting to you guys, I can start to make a day a week about something outside of the normal box.
Now when it comes to how I analyze trades, I'm a day trader which means I am riding the overall intraday trend scalping as much as I can. I also know that about 0.1% of traders out there do this and the majority of you swing trade (hold something for at least a day or more) so I will approach all trading here in that 1-day to 1-2 week time frame. And with that I want you guys to remember this as this is really important to know. It's so easy for anyone out there to post a chart after the fact about a trade you would have made, justifying it, and saying "see it did this because x,y,z," and seriously try to convince you that's what they did and they were right and never lose a trade... that's a bunch of b.s.
As a trader you have to know that and be in the trade before that's going to happen, you have to build a good case for your trade, know the trade that's going against you, and have both an entry, exit, and stop loss plan in place before executing. Trading is all about risk and money management, and little to do with always being right about something. You will never be right about anything all the time, in fact it's more like baseball where if you hit the ball only 30% of the time over your career you end up in the hall of fame. So yeah, that's a good number. Expect to be wrong 70% of the time when you start, and over time strive to be wrong only 50% of the time! Being right doesn't make you rich, not losing it all in the times you were wrong is what makes you rich. So I'm going to strive for helping with the techniques of money management, risk management, trade size and entry size management, and how to actually execute trades before they look nice and dandy on a chart after the fact. From my own personal experience going on eight years of trading, anything from day trading to swing trading from an office while I worked. I will share wins, losses, mega losses, and lessons learned, things people taught me, and whatever else I can think of.
So lets get right into it shall we?
SPX is trading beautifully to TA and as predicted using very simple method. The gods of Crayon + Ruler TA will not fail to deliver. Seriously, the projected path, up days and down days, two weeks in a row, just like this. And this of course is a pattern not too dissimilar to the bear market of early 2000. The SPX is on a clear path to that 2025 resistance and at minimum there should be another up day tomorrow I'm certain with 80% confidence because of the VIX. It likes to trade in patterns too, and when it plummets like this, it's because the open interest in puts is declining. There seems to be at least a highly probable path of least resistance move lending to another up day in the SPX tomorrow, so my bet at the end of the day today was to hold my longs.
I also have my position in GUSH still from the last post, and I'm also still long XOP, OAS, and WLL as well. I'm taking a no hedge firm bull stance on this trade up to SPX 2025. And my stops for them all follow these support lines that I drew. As I am way in the green as of today, I am just going to let my winners ride. And of course in this short term rally we are seeing be careful holding any stocks for the long haul. That long haul could easily become 2-3 years to break even if wrong. So take long profits whenever you can and don't be greedy. Fundamentals are bad. And use common sense... it's very hard to believe that in the last two years the market barely topped 2100 when fundamentals were better, and somehow with worse fundamentals (many companies getting credit downgrades over this year) there will be a magic rally that goes up forev--don't be stupid. Every big fund out there is just waiting with saliva dripping off their chins to at least try to YOLO SHORT billions into everything they can at SPX 2025. Just watch what happens if we get there. Battle royale that determines the next 2-3 years of this market. Literally that day will be the most important day of Q1 2016.
Oil. Yes we love to talk oil. CLJ6 As rare as this is I am not even day trading oil, and I am not even in a position right now because oil is still in no-man's land, the region between a consolidating support and resistance (33.20). When in doubt just be out. That's a rule to live by. It's in a tight channel, I don't know, I'll keep my capital in tact thank you very much. It can rally because the beginning of the year oil companies will buy when cheap and stock up for the increased summer demand (what we are in fact seeing now). So on that note the possible upside targets are posted on the chart for a break to the upside, which I expect even in the bad fundamental environment we have. And so if we break this upper red resistance line I drew, I'm poised to enter long for a swing just as long as SPX is gracefully moving forward. This is trend country for oil, so when the trend forms just get in and ride. No day trade needed. You will know the path of oil for the next two weeks by this wednesday. And if that path is up and the small chance there is an oil rally, don't get too happy about it, barring any news about production cuts I can almost guarantee that around July it will start to trade back down like it tends to seasonally do. And like always, be on the lookout for anything someone from Saudi says about oil. It can change all of this in a matter of minutes ($1.00 move in oil in 30 seconds two weeks ago on rumors). Anyway, I am 75% confident of an up day tomorrow despite news just on the same merit of the OVX having room to fall to a support itself just like the VIX is doing. It's Tuesday, so about 11:00-11:30 am you will see the daily "Europe closes shimmy" that reveals a lot about market sentiment. If they start selling into close pretty hard, it reveals their appetite for risk going into the API report 30 minutes after our markets close. If they don't like oil, there's a chance that neither will we.
Now I could be wrong on all of this, as is what happens when you are a trader. Nobody can predict the future. No indicator, no system, nothing. But you can predict when people are done buying or selling pretty easily. And in knowing that, and because my entry on these trades were so good, and my stop management is trailing up a very solid and tested support line, when it proves to be wrong I'll walk away with my profits and start planning my short later this week or early next.
Happy Trading everyone!
Submitted February 22, 2016 at 07:33PM by gabriel87120 http://ift.tt/1QWEZ0q
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