Aug 102010

The ES opened in our 14.25 / 16.50 and soon moved down into the 11.25 / 13 level.  No trade opportunities setup in the area before tumbling down to 9.50, just above our 8/9 level.  The ES rotated up and then pushed down into the 8/9 level, trapping a lot of sellers near the S3 pivot and providing a good long trade opportunity.  The entry was too close to the first target, so the second target of 11 was used.  The ES actually pushed past the VWAP after the trade exit.

The market will probably slow down now until after the 2:15pm EST Fed meeting report.  There might be some additional trade opportunities once the volatility from the Fed news dies down.

 Posted by at 10:48 am

  3 Responses to “8/10/2010 Post Trading Analysis”

  1. it seems like more and more lately in your posted trades, you are going long with trapped sellers off of a level but without any corresponding buying. It was my belief that this was an integral final step in your trade setup? There wasn’t any real buying delta until 10.50 on this setup.

    Yesterdays trade as well, the buying didn’t come in until above your entry.

    Now, I also took this trade above, but I cringed when I did it ’cause I was breaking my rules and getting in more based on the level and the degree of selling than on the order flow.

    Would you mind commenting in this? Am I looking at things wrong? Are you adjusting your requirements based on the lower volume summer? Is it always the case that trapped sellers are more important to you than responsive buyers?



    • There are only so many setups in the first hour and a half (or so) of trading after the S&P 500 cash open. We have to trade what’s available in the key level areas. Today’s trade opportunity actually had some positive delta institutional buying, but with all those trapped sellers; if price could get high enough, the stops would move price even higher. Net positive Buying delta is not an absolute requirement for a long trade. Maybe it’s the summer volume lull that allows price to move further without the additional buying edge we would like to have. We’re focused on trading the key level areas which to us is a more important edge than additional buying confirmation from order flow.

      • that’s a terrific explanation. thanks so much for the clarification! i very much enjoy reading your post trade analysis and comparing to my own trades for the morning. i find that I have taken the same trade as you about 70% of the time, which is very reassuring. thanks for creating this site and sharing with us.

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