Over the next few days/weeks I will be adding more content on this blog. I am in the process of moving older stuff over so this is a heads up. These uploads will also have a lot of trader mindset tidbits I learned over the years.
Odds today were for the CL and NQ futures, I tweeted these out in the morning but did not have the time to place trades like I normally do.
NQ: High chance of a gap fill, and if we break previous day’s low, stats were suggesting an early morning fade and an afternoon buy the dip.
While the NQ didn’t quite close back above the lows, the bounce was large enough to produce profits. The gap filled worked out fine.
CL: CL had a good chance of closing above the open. After a slow grind lower, CL put in an afternoon bottom to make new intraday highs by the close.
Stats for crude oil was bullish today. There was an overwhelming chance of closing above the open AND closing above previous close (close green on the day). I waited for a pullback and scaled in long using the USO ETF while using CL futures as a price action guide. The stats for the day worked out pretty much immediately. I held until CL close and exited for a nice profit.
Odds for this NQ trade were bullish, however, there was a high chance of a gap fill. I waited for that minimum requirement to occur before getting long. Why get long before the gap fill if we know there is a high chance? Once it filled, and I saw the VSA, I entered. I exited before the previous highs since only 55% odds of closing above.
I could have reentered later in the day, but I didn’t. This is mostly a lack of discipline, I didn’t want to lose my profit for the day. But I need to remember: when odds are there, just take the trade. You cant predict which trade will win or lose.
Stats for the NQ on the day were bullish. I wanted to get long an a dip, and when prices started to rush lower, I entered. This was one of the biggest drops in weeks and I figured it was overdone. I was wrong. I had a big draw down and almost cut the trade, but because the odds of breaking the low were only 30% or so, I decided to just leave the stop below yesterday’s lows. Few bars later I was feeling better. I cut near the close for a pretty decent profit.
Notice how I broke the VSA intraday rule. I didn’t wait for a green bar to end the selling pressure before getting in. Too greedy.
Stats were bullish for the ES. High chance of closing above the open; high chance of closing green on the day; high chance of closing above previous high. But, the ES also had a high chance of a gap fill. I took a long entry after the gap filled because getting before that would be asking for a high probability draw down. The trade still resulted in some heat that was disproportionate from the profit, but nevertheless it was a profit.
Apple closed at a new high then proceeded to close red 3 days in a row. Chances for apple to close at a 4th day in a row are less than 35%. Also very low chance of trading below the PLOD (previous low of day). This is the trade location. This is what the the equity curve looks like if you traded AAPL based on this pattern in the past:
I basically got long AAPL midday and held until the close. Small profit, but profit nonetheless.
Stats showed a small chance of breaking out of previous day’s high for the NQ. The plan was to short rallies near the previous high in the NQ. I took the short on the first test and made money, but skipped subsequent tests that would have been in line with the stats, mostly because I did not want to lose what I already made. If the odds are there, I should just take the trade. Keep this fact in mind: if you have a system, you must take all trades. There is no way to predict which trade will be a winner or a loser. It’s hard, I know, but it’s a matter of survival. Trade well.
Odds for closing above the open today was strong. I was aiming for a long entry due to bullish momo stats and secret sauce seasonality. The trade worked, although volatility was so low that the movement that exciting. I cut a little early, but trade would not have made much more money if I held until the close. Slow grind up bull markets are like this.