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Monday 26 February 2007

Volume Profile works, but my computer doesn't

If your read my post on saturday, you knew what I was planning for today to have happen. I initially saw the volume gap between 824-819 on Feb 20th as noted in my jorunal, and I've been keeping a close eye on it. ER2 hit 819.1 around 1pm EST. Although I predicted what the market was going to do today I was timid to short the VAH on ER2 this morning. I have to admit, it was the ideal setup for the professional traders to inflate the market this morning with a gap up, putting YM right at the 38% fib level for my planned short. The initial 30min of trading I normally avoid because I'm normally still trying to figure out the markets direction. Today I lacked confidence in my execution of trades although I kept to my trading plan of shorting the market down to 819 and remained postive. I had computer hardware problems this morning, having my IWM tick chart stop working(which is the main chart I trade off of) and my internet connection went out 4 times this morning. For some reason my computer is running super slow right now and it is popping up with the message that my virtual memory is too low. My charts kept freezing today, so I'm stopping trading and taking the profit I got until I can figure out how to make my computer work right. I'm pretty sure it's from running too many charts at once(I have about 25 charts up, I'm thinking about getting rid of A/D and Volume market internal charts to free some space, as I rarely use them) I saw that 828 was a good short, however I was timid. The first trade of the day is always hardest for me because it could be a good trade, but I will often put a stop that is too close or once I get a small profit I trail the price too close, only to be stopped out and watch the price continue my direction. Today I bought the LOD again for the 3rd day in a row(it was the LOD when I stopped trading, also I just noticed it was an AMEX -100 tick reversal setup!), I took the trade this time on YM because I wanted to take less risk; however, I did it again. Once I had a profit of 1 tick, I trailed the stop and got hit, only to see 3 minutes later 10pts in my direction(If the trade was on ER2 it would have worked better, I'm begining to think I should stop trading YM altogether). So, my plan is to keep the initial stop and give the trade 6-8 minutes to move, or use my own discretion and exit if I feel the NSYE TICK doesn't favor my position. This weekend I was thinking about trading all day and what I was going to do. Today I made 1 bad trade by shorting ER2 when the NYSE TICK was in the low range and I didn't exit the trade soon enough, instead of -0.2pts, I let the trade run -0.8pts, this is all because I got greedy and tried chasing the trade instead of waiting for shorting on a pullback. This past week I've been getting better at exiting my losers by using NYSE TICK. Also, what has been helpful for me in determining market reversals is by watching VOLUME in USO, SMH, XLB, and most importantly this past week XLF.



Here's the daily chart:

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