David Knight -Journal

[David Knight]

TRADING JOURNAL

I do my analysis on the SPX cash chart. I trade futures but all calls will be based on the cash price to save confusion.

I also trade overnight The same conditions apply.

All entries/exits are in round numbers e.g. I might say I’m looking to buy at 2400 and actually get in at 2400.3 or 2399.7.

I use TA to figure out the probabilities and the likely price levels. TA is used for analysis but I judge the market on what I see. I don’t rely on a tool to tell me where to buy where to sell.

I wait for the market to move to a zone I want to trade in, then buy/sell accordingly. I do often use limit orders but I’ll only call trades that actually get triggered or it will get confusing.

I don’t want to have to post boring stuff about how I removed/added a limit order etc If a price level I said I was interested in gets touched overnight I’ll let you know my position pre market.

I'll keep a running total of point gain/loss

My initial position is small and I add to winners if I can. I will average down as long as the trading idea is still valid. That’s another reason I start small, I try to build a position.

Market action decides how long I hold/wait to enter. Once the day starts you get a feel for what sort of day it will be.

I will try to post everything I do, but my trading is more important than this journal. The trading idea is the most important thing. It doesn’t matter if you didn’t get every detail of what I did on any given trade since no 2 traders will trade the same anyway. There should be enough here over time to get some value.

I will certainly post what I’m thinking out of market hours. The bottom line on this journal is broad strokes, simplicity.

Can I Save You Time?

You won’t like this journal if you’ve been brainwashed by ‘the voice of trading’ with all it’s rules and boring cliches.

You won’t like it if you’re the type that has a set of cast iron rules for trading and you like to trade mechanically.

On the other hand, it doesn’t hurt to see how others trade...

Trading is a combination of skills and there are a lot of different ways of doing it.


Please save any questions you might have for out of cash market hours.

 

[David Knight]

Pre Market Analysis

The market is trying to rally after a 74 point drop from all time high 2491. This is sell the rally mode until there is a change in behaviour.

Yesterday made a lower low= bearish
Market breadth is weaker=bearish

Often when a correction is over we see impulsive price moves. That has not happened yet. My instinct is we’ll get moves designed to confuse traders as to where we are in the cycle.

The most obvious support is 2400 and there’s a gap at 2410. I think we’ll break both at some point. The question is which comes first?

A weak rally up to 2444/54 next or lower lows (below 2417 Mon low)

Since I don’t know (always), the initial plan is to sell 2444/54 or buy a close above support after it’s been broken or buy a lower low if I see exhaustion.

Chart

This version of the daily shows the bigger rallies/ decline because we’re already into correction mode. I actually record each sequential swing to gauge strength/weakness It’s trying to judge which side is in control.

There are 2 rallies of 134 and 132 points (symmetry) and the last rally was only 85, 74 of which have been retraced .

Short Term

Aug 18 rally 2420.6- 2440.2=19.6

Aug 19 decl 2440.2-2417.3= 22.9
rally 2417.3-2430.5=13.2

Nothing suggests buyers are in control until the next rally exceeds the previous decline in points. The market needs to close above 2440 to reverse this decline.

Could we have seen this correction coming in advance? There were some clues. I’ll talk about them in another post.

 

[David Knight]

SHORT 2436 Target GAP
ADD 2440

ILL BE OUT AT 43 IF IT GOES THERE

out -5

adv vol is against my play and I cant risk holding against a pssible gap and go day.

Should have waited for 2444 to go short but we could see that broken if strength increases and it is indeed a gap and go. If I see weakness come in I'll re assesses otherwise done for day.

 

[David Knight]

Short 2441

If it makes new high here I'm out

Keep me.... hangin' on the telephone...

out 2444 -3

running -8

 

[David Knight]

It's at a level I wanted to short but

A - I jumped in early

B- the adv/ decl is in favour of the bulls

C- If I was right it should have turned quicker

D- If a trade idea doesn't work pretty quick I'm usually wrong

E- never let your ego get in the way there'll be plenty of chances later.

This is why I start small. Often the obvious trade is just too obvious

By the the slow progress here there is maybe a lot of shorts to remove. here

 

[David Knight]

Short here at 2448 will add at 54 zone

 

[David Knight]

Short 2455

av 2451.5

BTW thanks to those who have shown some support

 

[mike.]

Hi David, please feel free to join us bunch of professional spx analysts :whistling on the s&p competition thread.

http://www.trade2win.com/boards/indices/221156-s-p-500-cash-weekly-competition-2017-prizes.html

 

[David Knight]

Hi David, please feel free to join us bunch of professional spx analysts :whistling on the s&p competition thread.

http://www.trade2win.com/boards/indices/221156-s-p-500-cash-weekly-competition-2017-prizes.html

Thank you for the invite

 

[David Knight]

Short av 12451.5

Closed this trade at 2445

+6.5

Running -1.5

Will look to re short

 

[David Knight]

Pre Market

over night range has not really broken the cash eqv high. The market should (in my estimation) pull back.

I still believe that at this particular point in the cycle,the aim is to confuse traders as to whether the correction is done or not. I think not.

But in that context, the problem is that we could get up to 2470 again (last week high) on the back of yesterdays rally which looked strong, but could just be deception.

I got out for now because there are gaps above over night so we could go to 2455 easily and it would be stupid to give back what I gained over night.

The plan last night was damage limitation since i was 8 points in the hole with 2 contracts. I have achieved that.

I am not happy with the trading I did yesterday. It was not a good example of patience and discipline.

IT's Always Tough To Be A Bear

At least I didn't compound the mistake by adding to what I suspected would be, and actually was, a gap and go day.. To be honest I hate going short. Always struggle more on the short side. Even in a correction it's tough to be a bear

If an early gap up shows no sign of weakness don't be bearish. Gap and go's happen . Do research on the probabilities to create your own worthwhile TA

 

[dbphoenix]

Trying to short what can be assumed to be a short-covering rally is always problematic. However, if yesterday's "rally" was in fact a short-covering rally, then there is little to no support below yesterday evening's high. For some, the best opportunity to short was at 0300 NYT today, but there may be other opportunities today depending on one's trading plan. Whether or not one goes long will depend on his assessment of where institutions see value here. And given that this cycle has been largely news-driven for months, notions of value have been and are difficult to determine.

 

[David Knight]

When you look at where the gaps are on the chart and where price is it's difficult to predict short term.

Internal breadth is too balanced so there is no clue there (for me) .None of this is exactly a trading signal or is it? Is it TA? I think it is.. The signal is 'no position'.

My instinct is that this wants to edge up for a while maybe trap some shorts. And possibly stay in a range frustrating everyone except HFT

When I don't have a position I ask myself if I would prefer one right now? I wouldn't because there is no edge at this point.

I marked my trade on the chart to put it in visual context. I don't regret covering. at this point..

Just have to be patient

 

[dbphoenix]

Since you trade futures (no gaps), why are you concerned about gaps on the cash chart?

 

[David Knight]

Since you trade futures (no gaps), why are you concerned about gaps on the cash chart?

Have to be concerned during cash hours about cash gaps. The futures will go to the eqv level. What am I missing in your question?

 

[David Knight]

Entered an order to go short 2443 (it's currently around 39)

I think the next leg down may be starting..

 

[David Knight]

Added SHORT at 2448

AV 2445.5

 

[David Knight]

Pre Market

The market has stayed in a range trapped between gaps above and below.

The context that I outlined so far is continuing. There is uncertainty as to which gap fills come first. But My read is that there is further downside to come. The question is when.

It could easily stay in this range or we could drift higher today and fill the nearest gap at 2452.5

My Plan
I'm still prepared to add until I'm obviously wrong. But I will rotate contracts until I see real commitment

 

[David Knight]

There appears to be some confusion over my integrity. See screen shot- price was in that range for 20 minutes so I don't see what the issue is here.

 

[David Knight]

Closed at 1441 +4.5

Running +3