April 19 Trade summary

Although I was only in the market for about 30min of trading, my trade executions were very good today in my opinion. I know I'm trading well when my trade is green after 20seconds and I'm exiting the trade within 1-3min. I finally got the key buy setup today at 7:19am. I went long on YM on a NYSE TICK low extreme and when the NYSE A/D was retracing during an uptrend. I got 13pts on YM in about 3min. If I had gone long ER2 (which was more bullish) at the same I would have gotten about 3 to 3.5pts. After seeing the big bullish divergence between ER2 and YM, I looked for short trades on YM and long trades on ER2 there-after, and as you can see from my trade executions, the idea had worked.

P/L= $187

YM DIVERGENCES-
Yesterday, YM acted like it had bullish divergence compared to ER2, and now it seems like the reverse today. Out of ES, NQ, ER2, and YM, I believe YM has the largest percentage of retail traders. Knowing this may provide insight to why we see these divergences or "exagerations" seen in YM. I like to look at YM as the futures index that should be faded during volatility spikes, due to the miss pricing that we frequently see from impulsive trades put on by begginer retail traders.

Market observations-
Being able to gauge NYSE TICK in conjuction with NYSE A/D, as well as looking at the volume seen in ES and ER2, is the key to trading index futures intraday in my opinion. Today we're seeing a pullback in ZN and JPY, what'ya know! And now YM is filling this mornings gap. We could get new highs on the stock indices tommorow, but my outlook for this new high is skeptical. I think ZN's pullback is being bought and the stock indices rally is being shorted. The fact that bonds and the stock market are starting to trade inversely again with greater volatility is good for us day traders. I will continue to trade small size and look to make my money 1 day at a time and avoid taking big bets on where the market is headed.

I like this post by Jeff Quinto- titled- The Homer Simpson School of Trading. He basically says, trade small, build consistency, and your account will grow. Over time your trade size will grow along with your account. Trade larger size that you are not use to, and the results could be disasterous. As a reflection on my losing days, each day was a day where I traded larger size when compared to my avg. day.

Checkout this chart of YM compared to ZN, ZG and CL. A lot of people think that money would move into commodities when the stock market sells off. But May of 2006, and this last February, we saw the opposite of that. When the stock indices sold off, so did gold, while on the other hand the bonds rallied. Checkout this article from last May by Jim Jubak titled- How Japan sank the U.S. market

March 19 Trade Summary

Well I waited 3 hours for a good setup to occur, where all my markets that I watch lined up giving me a good signal. I went short at the correct time with an average price of 795.5, looking for a downside target of 793, however, I didn't exit after the prefered time frame of 3min when the market gave me a quick 1pt, and thus saw the price reverse on me, mainly due to continued heavy selling in JPY. I should have taken partial profits, but I decided to wait through -0.5pts of heat and look for a closer target around 794, and then when the market told me to, I coverd at 794.2. As I type this right now, it turns out my target of 793 would have been hit. However I would have had to hold on through some choppy trading action. With more experience in my trade execution and timing I should be able to scalp in the direction of the trend; however, I'm not yet ready. The markets look pretty choppy now, and I've made a good trade today, so I'm leaving on a good note.

Bad things today:
1.Didn't take partial profits on 3min volatility spike.
2.Didn't scalp in the wave.
3.Should have left 1 contract open at breakeven for profit target(actually no I shouldn't have, I should have scalped in the wave, because there is more profit potential).

Good things today:
1.Was patient and took a good setup based on my trading methodology.

I traded on the simulator this morning, using more of a mean reversion technique trading the inverse relationship between bonds, JPY, and the US stock market. Bonds have been fairly quiet today, and JPY has seen more selling with the US markets posting a small rally in response. The bond market looks like it is on heavy support, and we have FOMC minutes on Wedensday. I think the trend is still bearish even with todays rally; however, I will do as I always do and just wait for my trading signals to appear.

Learning about the bond market and the forex market I believe will help me in my trading. I'm starting to pay more attention and read about the other economies of the world and how interest rates and currencies affect the markets I trade. I listen to CNBC in the background while I trade, and I like to read and watch news videos on Bloomberg.
Other economic and market related websites I like to check out are:
Bill Cara
hamzeianalytics
headlinecharts
seekingalpha