Feb 262012
 

I’m going to try a new format here and see how it goes.  I’m winging it and don’t have anything planned out.  I want to make this as quick and unobtrusive as possible.  Quite honestly I haven’t been doing the preparation I really need to do and so I want this blog to help me get in the habit of doing it like I’m supposed to.  But at the same time I don’t want the blog updates to be so cumbersome that I skip them.  So for example, I’m not sure if I’ll be able to post charts.  I imagine everyone has their own charts anyway and it’s best if you are looking at your charts.  So basically I plan to just post my trading notes for each day here, without any extra effort for the blog.  I hope that makes sense and is understandable.  I can’t commit to more than that right now, let’s see how it goes.

My general rules:

  1. I trade only one side, the side of my bias.  If we are making higher value my bias is for longs and if we’re making lower value then my bias is bearish.  This keeps me out of trouble because I found when I trade counter-trend I end up missing out on the good with trend setups.
  2. I’m looking to buy pullbacks to support and sell pullbacks to resistance.  If balanced I’m looking to buy unfair lows and sell unfair highs.  But only in the direction of my bias.
  3. I identify S/R levels based on volume profile, market profile, and price levels.  I look at both daily & micro-composite profiles.  I do not use “FT71 Composite” very much.
  4. I sell a level when it is resistance and I buy a level when it is support.  For example if I say I will sell 50 and we’re at 60, that means if we drop below 50 and then 50 becomes resistance I will look to sell at 50.
  5. I set audio alerts at my nearest levels and let the market come to me.
  6. All entries must be confirmed with order flow.  I plan to write more on this later.  I have tools that I’ve developed to help me with this and I’d like to make them available publicly at some point.
  7. Some entries happen very fast and I miss them.  That’s ok.
  8. Stops are 10-15 ticks and tightened when possible but for the most part I give the market room and let the market prove me wrong.
  9. Targets are at least 2:1 or I skip the trade.  The first target is the next S/R level.
  10. I trade ES slightly differently, looking for finer grained levels.

Bund:

The bund is in a multi-month trading range, slightly above the middle.  It has made a few days of higher value and so my bias is bullish.

  1. If we establish value higher I will buy pullback to 139.10 and 139.10.
  2. If we stay balanced I’ll buy 138.74.
  3. If we probe down I’ll buy 138.44-48 and 138.32.
  4. Below 138.24 my bias will switch to bearish and I’ll look to sell 138.24, 32, 12.

Stoxx:

Stoxx has established lower value however lower prices were rejected and so my bias is bullish.  This bias will change to bearish below 2506.

  1. If we probe up: I will look to buy 2525,28,33,50.
  2. If we probe down below 2506, I will sell 2506,2486.

Euro:

Euro broke out of a large trading range to the upside.  Bias is strongly bullish but a retest of the breakout would not be unexpected.

  1. I’ll look to buy 1.3414,24,56,64,74
  2. If we drop below 1.3406 then my bias will change to cautiously bearish until 1.3325.  I will look for shorts at 1.3406,02,3386.
  3. At 1.3325 look for longs again, including at the resistance levels in #2.

Gold:

Gold broke above 1765.9 and has established higher value so my bias is bullish.  A retest of this level is expected.

  1. Look to buy 1774.4,78.8,82.4.
  2. If we test 1765.9 look for long there.
  3. Also look for longs at 1758.8,56.8.
  4. Below 1754.0 my bias switches to bearish and look to short 1754, 1750.

Crude:

Crude is in a runaway market.  This makes shorts impossible and longs are dangerous.  I haven’t taken many trades on crude lately.

  1. If it probes down, for longs at 108.68, 44.
  2. If it continues up, buy 109.68,88.
  3. If it breaks below 108.12, sell 108.12, 107.92.

ES:

Bias is bullish (obviously).  I have only traded a couple shorts and have been burnt each time.  No more.

  1. If we probe up, buy 1367, 1364.
  2. If we probe down, buy 1360.25, 59.25.
  3. If we break below 1354.50 my bias will change to bearish however the mistake I made last time was we just poked below and was rejected and I shorted 54 and took a stop.  so this time I will require us to spend some time below before trading short.

I will post my trades and write a review later.  I’m not sure if I’ll do that in between the European & US sessions or after the US session.  I typically do a review & update my plan in between but not sure if I will update.

If you find this helpful please leave a comment and let me know.  Only takes a sec which is a lot less time than it took me to write this.

 

 

  4 Responses to “Trading Plan General Rules & Plan For 2012-02-27”

  1. I really like your bias of trading with the trend. I too often fade the trend and take small profits instead of catching the wave for a more profitable result. Thanks for the post

  2. Exactly, I think that is a perfect plan for the ES. I also like your idea of posting your plan here on the blog.

    Good luck tomorrow.

  3. Way to go, Michael !
    My long term bias for FESX on the Comp is bullish, too, cause we have 3 MCs as a flight of stairs upwards. CompVPOC 2683 is like a magnet and the area of MC#1 (starts 7/22/11 till now) upwards is very thin and might get filled. And the buyers on the current MC with VPOC 2523 have been more active. Therefore my longer bias on the Composite is upwards.
    But I trade both sides cause we are currently in the wide balance area of the MC. Trades which use regression to the mean scenarios have imao better chances then continuation trades if we are auctioning in balance.

    Cheers,
    Markus

  4. Thanks for the post. Great stuff. Can’t wait for your posts about orderflow!

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