I was all ready to trade yesterday morning. I woke up on time and was awake and ready at 8am (hawaii time), which is when I find conditions are normally best.. they've settled into one direction of movement and all I have to is enter the flow and hopefull ride that wave to profit! :)
The first thing I look at is this marketwatch indicator that shows the recent movement of all the companies of the stock market. (actually, don't quote me on that, I doubt its showing ALL the companies, but a good sampling of them)
I call this an Iffy market. 'Thanks for nothin' marketwatch' is what I think to myself.. no help at all in deciding what to direction to trade.. even the big companies are split between green/red.. bull/bear. I would say that there are a bit more red squares here, so maybe a short trade (in the down direction) would make good sense..
As I've said before, I only like to look at this indie as a starting point that MIGHT give me a sense of what direction to trade. However, I would never base my trading only on this indie, I would even care not if I didn't have this indie to look at. It simply is nice to see IF it agrees with what I see price doing on the charts..
First up is the 1-hour chart. It shows what is happening on a longer timeframe. (at least for the 1 day trading that I do) Here it shows that SPX has been rising over the past few days (white shaded narrow columns are the breaks between days), but has stalled and looks to be drooping down. It might be the start of a bearish trend, but nothing is clear yet. (we are not just guessing here, I want to trade ONLY in an established trend.. catch a brief ride in the direction of that trend, and get out in 1 hour or less with my little profit. ($50 pls)
Already, I am thinking PASS on trading today, but let's look at the second chart..
Oh yea. Here on the 15-minute chart I could clearly see that price had been moving up&down all morning.. NO clear direction/trend. The last two price candles (actually the last few, showing the recent 45 minutes of price action) showed a very strong downward, bearish move. Early on in my trading education I learned the term 'trying to catch a falling knife'. It doesn't work out so good in real life, and the same is super true in trading. :( I wasn't about to take the risk of price turning around right after I entered and stopping me out a minute later.
Here's what that move looked like zoomed in on the 5-minute chart..
You can see how price is already showing signs of turning UP from the current green candle.
Price DID turn up a bit, but then turned again and continued down for about 30 minutes. Perhaps my stop would not have been hit and I could've won a quick trade, but often what happens in a crazy, fast, up and down market is the system that handles the orders gets over-sensitive (I'm not exactly sure what happens behind the scenes) and even a small, but wild burst of movement can trigger a stop that should've been far away and safe. It's happened to me way too many times. :(
You see that long wick (the thin line at the end of the price candle) when price did finally turn for good shortly after 8:30am? That's what's called a reversal candle. There are people who study candle patterns and base their trading on such things. Not me, I want to see much confirmation goin on before I take a trade.
Finally, here is a snap of the 5-minuite chart after market closed. Price ranged pretty wildly the rest of the day. Again, I am looking for a for-sure established trend to enter and just ride for a bit to profit. :)
What's that? Just increase your stop or even better, trade without a stop and don't have to deal with silly volatility spikes and moves. Well, it might work 95%-99% of the time.. that 1 time, however, margin call.. u have just lost your account! :P better to take little wins than go for it and loose big..
REMEMBER, in the wise wise words of Kenny Rogers,
