Plenty Of Trading Styles Out There; Have You Found One That’s Right For You?
Both major
markets ended an extremely twitchy week
by holding their daily downtrends amidst this week’s FOMC noise, multiple bomb
scares, and on-again off-again rumors of the capture of Osama, his deputy,
and/or his pet fish. For the week, both the S&P and Nasdaq again suffered losses
with the S&P losing 11 and the Nasdaq giving back 30 (on the heels of last
week’s 43).
At this end, I chose to keep this week’s business fairly close to the vest this
week primarily via two-way scalps, and while I had planned on closing early on
Friday given the rampant rumors, expirations, and less-than-stellar midday
setups, the late day break did provide reason for firing the charts back up one
last time before calling it a week. Ever notice that sometimes such trades
turn out to be the best opportunities as you’re typically not pressing to find a
trade as it simply shows up? Not a bad mindset objective throughout the week!
With respect to current trends in play, the daily and sub-13 trends have been
the most insightful over recent days, as the hourly charts for both major
indices have settled into a range. Yet this too shall pass, once the dailies
finish testing first pullbacks and either the weekly kicks in for a bit of an
updraft or we see the next daily down leg.
The daily trend angle has thus far provided a nice visual of new downtrend
support, and thus our “TUB” mode (“Trust Until Broken” for newer folks)
continues to work well. Friday’s late-day downdraft may have set up a 13-minute
turn to break the daily bear flag and put the 13 itself back in play, and
Monday’s early trade should provide additional confirmation clues, including a
possible early retracement short on the 13.
Let’s hit the charts and then briefly follow up on last week’s discussion on
timeframes.
S&P 500
Nasdaq
Moving Avg
Legend: 15MA
Larger Timeframe 15MA
See https://www.donmillertrading.com
for Setups and Methodologies
Charts © 2003 Tradestation
Timeframes
Continued
Last week, we discussed the significance of “timeframe perspective” in
trading. In briefly following up, I wanted to expand a bit on the style I’ve
chosen to adapt, which is discussed in detail in the
E-Mini video and
course.
At this end, I try to identify key intraday trends in play and use them as a
backdrop for trade setups. Some days, the hourly may play lead dog, as it did
in spades during the week of March 8, while other times — the last two days
come to mind — it may frankly be a timeframe as small as the three. It’s a
style reflective of my own personality, which includes the desire to run a
trading business much like I ran prior businesses, which is to attempt to
generate a fairly consistent income source regardless of specific market
rhythm. And as is the case with life, some days provide better reads than
others in terms of trading focus, and thus long run is the only relevant
timeframe from a business perspective, but I digress
As trading style is highly personal and there are many effective styles,
(remember Rick Barry was one of the world’s best free-throw shooters, and he
shot underhanded!), we all have to eventually find that one style that is both
comfortable and profitable. For me, it happens to be timeframe
adaptation with the intent of — using baseball as an analogy — quietly hitting
singles and doubles, mixed in with the fouls, fielder’s choices, and ground
outs. Call it a contact game, and it of course took several years before
fine-tuning it to a point where glove fits hand.
For some, it may be waiting for that once-a-week ideal setup and going for the
home run or strong drive off the tee. It’s just not me. Barry Bonds’ style
simply won’t work for Nomar (we’ll omit the steroid option for now), nor would
John Daly’s style work for Tom Kite.
There is of course no “right” way in terms of a one-size-fits-all holy grail
style which too many continue to spend countless hours seeking. Yet there is
a right style for you. You just have to find it and then play your game.
Good Trading and Have a
Great Weekend!