Jun 112010

God bless big moves on minor news. Exhaustion is a wonderful thing which when added as a component of any potential trade brings success probability into the stratosphere. Today was pretty straightforward all things considered. Volume rose to the occasion and volatility continues to come off a bit making things easier. The first trade was actually pre-market – the test of the day session S1 and 24 hour P. As I mentioned pre-market the 67 handle provided great support underneath and that was the best long of the day. Was it ever. Of course there was the typical market maker turn portion, but if you also have a longer term order flow based trade management scheme as we do there was a another 5 handles of profit at least on the continuation of that move. The second trade wasn’t until after 10:30 (it has been like that the last few days as NJ pointed out to me) but was equally good.  As I said having that exhaustion component in there helps make a good trade even higher probability. The trade was to short the second test and failure as the long interest failed. The move stalled after the first point of profit or so but like the first one the longer term trade management following the order flow and heeding stalls at LVN for those exits. Nice day. Have a good weekend and we will see you all on Monday…

 Posted by at 11:20 am

  2 Responses to “6/12/2010 Post Trading Analysis”

  1. Why Pre-Market? I thought you only trade the first hour. How many contracts are you willing to use before RTH?


  2. I traded it because I knew I wanted to trade that spot when it was hit and it happend to set up just before the open.

    How many contracts? Pre-market is no different than any other time for us. As many as is humanly possible basically. Our trading will always be limited in liquidity and limited to our discretionary fingers which is why we are in the ES in the first place. That said, we will take what we can get on each order. We think of our account in terms of margin, not equity so that gives us room.We limit in on the outside and chase a tick or so if needed and kill the rest.

    You would be surprised how much you can get on pre-market. Same with between 4-4:15. Volume is huge then from arbitrage trading and end of day flattening in programs. Actually, even early in the morning can be great sometimes. 6-7 AM. We prefer the first hour as each account is limited to one trade each day and we most often have the best trade of the day set up then as the market moves to its first key level almost instinctively to “establish” the day. But I have to take them when I can them. If I have to put them all on a half hour ahead of the open, so be it. I will tell you that I would much rather trade pre-market than around lunch by far. You can get stuck at lunch long or short with as little as a couple hundred sometimes and you would never see that in the morning.

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