I have to say, I find it quite disturbing how much unqualified generic advice there is on this thread. Not only that - but there's also the back-patting that goes on with people agreeing with it.
There are many ways to trade, I am sure the HFT boys will have a laugh at "Trade no more than 3 times a day". I think Paul Rotter would laugh at it too. A friend of mine that day trades a fund regularly has 20-30 positions on. Another friend only ever has 1 or 2. Horses for courses. All these generic statements are just regurgitations of what's online. Wouldn't it be nice to back this kind of thing up with a bit more detail?
"Follow the trend" is a very generic statement. Is it given as some sort of panacea? Certainly, the person that wrote it is not day trading the ES. If they were, then they would certainly be losing money. If you trade a market like the ES and you can't trade ranges, then you are going to lose your shirt. Sure - 1 out of 5/6 days is a trend day - Friday was one. More often than not - on the first move to within 5 ticks of the overnight high, you are going to be making a move down before you will move up. The 10th Jan is a lovely example. By 10:00am we were down to the overnight low, it pushed through it 1 point and reversed. From there it moved up to the overnight high and bounced off that into the close. This was the total action for the day. Just one 10 point trading range.
That's the rule, now the exception - yesterday - Friday 14th 2011 , the ES opened down from the prior days close, sold off just one point and then reversed up. I was watching this on the Tape at that point, I could see what happened but sadly, I hesitated. I'd let the market move 6 ticks up and for me, that's too much. So, I kicked myself and passed on the long entry.
There was news at 9:55 and 10:00. The 9:55 news saw a very nice sell off and at that point I got long at 1279, which was 4 ticks away from the bottom of that sell off. The market was erratic, there was a bit of slippage and I was pretty happy with that entry. The plan was to stay in through the 10:00 am news (not as high impact as the 9:55) if we got a big enough move to the upside. At 9:59, I bailed with just 1 point as I didn't think this was enough buffer.
I stayed watching the market for a while after that - but even though looking back, Friday was an 'obvious' trend day, it wasn't that obvious to me at the time. Certainly, the way it kept pushing up, then moving sideways made it less than obvious to me, so I called it a day. Had it been a range day, I'd have expected a move back down at 1284.25. There was a swing high there but nothing to convince me it was going to be significant, so I passed on shorting it.
Of course, I could sit here kicking myself for not taking that first long. In retrospect, chasing that trade would have been beneficial as I'd have been able to scale out and benefit from the trend day. As it is though, I gave myself an "A" grade in my journal for sticking to the plan.
The trend may be your friend but this is very dependent on the type of trading you do and the market you trade. I'd advise taking no generic advice on trading because in my opinion, trading is not a generic skill. You need to specialise.
, that we may partake of your secret breadcrumb indicators.
