Yet another example of Murphy's Law. I write extensively about something and feel as though I have it nailed down. And then the next day, I get burned by what I had thought I learned so well and told the world about.
Yes, I traded the ES...against the trend.
Here's a snapshot of today's market with my notes.
SH = Swing High (that preceded the critical swing low or LOD)
SL = Swing Low (that preceded the critical swing high or HOD)
This is one of those days where I'm glad I'm trading on SIM.
* * * * *
Wednesday, November 16
Total gross profits: -$300.00 -6.00 ES points
[SIM adjusted gross profits: -$687.50]
Total trades: 22 [1 scratch, 14 losses]
Contracts per trade: 1
NOTES: Volatile overnight session leading to a gap down opening with a
little over an hour of range trading. The gap eventually filled before
lunch, and then the markets went choppy during the lunch hour. After a
run to new highs, the ES stair stepped down, and finally dropped sharply
into the close (hey, just like my cumulative P&L chart!).
I had a late start today, so I took a little longer than usual to get caught up. And up until about 3:00 PM, I was only down slightly for the day, which was OK
since I thought today was one of the more difficult days to trade. Even though
I had identified the trend to be up, for some reason, it didn't help much.
As shown in the trend chart example earlier, after 3:00 PM, there were multiple signs that
the trend had changed, including the break key trendlines, vwap, support
levels, in addition to a 1-2-3 top formation. And when I began taking multiple stop losses in a row trying to scalp +2s as the volatility
increased with the market drop late in the afternoon, I became impatient and started looking
to get back and recover my losses, trying to BUY in order to prove to the markets that I was right (red flags are waving here). The 33% accuracy rate clearly indicates that my trade selection was poor.
the volatility of the markets become unusually high and various support
and resistance levels are being broken like hot knife through butter,
then take extra steps to identify the trend and to WAIT PATIENTLY for
a high probability setup in the direction of the trend.
Or better yet...
realize when markets are volatile, I DO NOT have to trade. It feels like 22 trades is a bit too much for a (shorter than usual for me) day like today. I need to keep a clear mind, and reenter only if the odds are strongly in my favor. Otherwise, wait until the markets return to normal conditions where I know I have an
Next time, I'll be much better prepared.