Why did I start off with a misstep? That leads to the question, is having a bias, bad?
@RenaTrader had the following Diamond Setups alert for ES just before the NY cash open:
(Feb 27-09:29) RenaTrader: SUP 1354-52
Paralyzed by my bias
|$ES_F 5min 2/27/2012|
There's a general rule that when the market gaps down and stays below the S2 pivot level, especially during the first hour, there's a greater chance that the gap to the prior close will not fill. Therefore, shorts will generally work better than longs, assuming price is trading below 1358.00.
That particular short bias got stuck in my head, and paralyzed me from taking any long trades as the opening range developed.
HOD/LOD in first hour of trading
There's also another general finding that about 50% of the HOD or LOD for the ES takes place within the first hour of trading. Unfortunately, that bit of knowledge was lost from my head.
With such a great level identified by Renato so early in the morning, I should have realized that the opening drive down will eventually bounce creating a leg up, and that the LOD would potentially be established.
Wait a minute, didn't that also just happen a few days ago? Deja vu!
Renato and his Diamond Setups does it again!
So Renato ended up identifying a trade that picked the low of the day...again. Many members of the DS room ended up buying within a few ticks of the low. But I'm still at the bus station, waiting for the next ride out. I'll have to sleep here overnight on the hard and cold benches, but that's OK, because at least I didn't get on the wrong bus.
What's the lesson learned?
Regardless of what my short/long bias is, it should not interfere with a entering a trade based on a good signal. Once I start to enter with a few contracts, my first priority will be to reduce risk as quickly as possible (i.e. scale out partially), and then if the trade is continues to move in my direction, let the runner run as far as the market allows.
Therefore, I believe having a bias isn't necessarily bad -- assuming good trade setups are acted upon properly, and then managed properly. Following my trading plan will allow the market pay whatever it will allow, regardless of my bias.