The Best Way To Figure Out What Works For You
Stock index futures opened Tuesday’s session with
downside gaps after Fed Chair Greenspan’s comments from a speech in
London that the central bank could act aggressively to raise interest rates if
its outlook for mild inflation doesn’t come to pass. Greenspan cited higher oil
prices as his prime concern and while he essentially didn’t say anything new, he
did do what he does best and that is re-kindle some old market nervousness. The
ES held a choppy range for the first few hours that was conspicuously absent of
any big players and good volume, before giving way to a slow lunchtime grind
that succeeded in finally closing the gap and going green. Also helping to buoy
the futures was an Energy Dept. report that suggested oil prices had peaked for
the time being. Despite the horrid pace, overall, the market did a nice job of
working off a lot of Monday’s excess.
The June SP
500 futures closed Tuesday’s session with a gain of +1.75 points, and finished
the week with a gain of +3.00 points. Volume in the ES was estimated at 518,000
contracts, lighter than Monday’s pace and below the daily average. Looking at
the daily chart, if we measure the last reaction move up from 3/24-4/8, it was
65 points. Measuring this last move up from 5/12, we’re right at 67 points, so
I’ll be looking for a pause here to “back and fill” or even retrace into the
1130-25 area. On an intraday basis, the 60 and 30-min charts formed triangles
as the narrow range allowed MA support to catch up to over-extended price.
               
September
bonds (ZB) posted a hammer with a close above the 20-day MA, but a move up into
the 105 area is needed to put a lid on the bears. The Semiconductor Index (SOX)
managed to hold its 200-day MA, but is still pinned below its daily downtrend
line and 100-day MA resistance. The Banking Index (BKX) posted an inside day
with a slightly lower close just below its 100-day MA at 98.40.
Are You Keeping A Journal?
There is no
better way to figure out what works for you than by keeping a journal. Include
the time you got in and out, the prices, why you took the trade, what you did
well, what you could have done better, etc. Just like a chart, your journal
will offer “patterns” that can be observed, and just like a chart reflects the
progress of a stock or futures contract, your journal is a reflection of
yourself and your progress. It will
let you know what you need to work on, and just as importantly, it lets you know
what IS WORKING FOR YOU. I think a dedicated trader’s progress can be compared
to a chart that puts in a long base of steady sideways action, and then has a
major breakout to the upside, followed by a sustained uptrend if the base was
good. It can be VERY frustrating to get nowhere but sideways for a long period
of time, yet the knowledge base is necessary to get the big uptrend that
follows. Â
I still go
back through some of my old journals and ask myself “What the hell was I
thinking??!!”. While I don’t necessarily focus on win/loss ratios, I do keep
tabs on my reward/risk ratio, especially on the narrower-range days where the
pickings can be slim. But my journal takes away the importance of each
individual trade and gives me the proverbial “bigger picture.” With literally
thousands of decisions and trades, keeping a journal may seem like a lot. But,
once you get into it, it’s very, very easy and becomes second nature. I have an
Excel spreadsheet that I use for my journal, and if any of you would like it,
I’d be happy to share it with you.
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Please feel free to email me with any questions
you might have, and have a great trading week!