Day Trading Base Hits (by Vittorio)

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This article is based on trading 4 contracts of the ES mini from a 5 minute interval chart- Additionally, all trade executions under these notions are based only when entering long positions with stop entries above price or entering short positions with stop orders below price.

It could, (just), be treating each day as though it’s tight and range bound is the safest bet all around. The brokerage fee of $4.00 round trip on 2 lots that yield a plus .25 Target 1, (T1), stop to entry, leaves you plus $17.00. Consider your trade base camp there. We could talk and dream about the second and running targets but T1 is what is most important. Simply, you bank T1 60 out of 100 times and T2 and running targets become a subsequent conversation brimming in all sorts of creativity.

Shorting opportunity

Friday, Sept. 4th was a great shorting opportunity trade day. Thursday was too, yet, perhaps a little less recognizable as many traders were likely looking to buy at support levels as had worked well during the past 24 weeks…and beyond – Simply, and perhaps less fortunately, lots of folks are wired only as buy the dip traders.

Since March, there has only been a few days with large drops like Thursday and Friday, and two of those days were blurred in the news of the life threatening virus. Simply, if short term memory means anything, it should be no surprise to have missed all the profitable ‘short’ opportunities during Thursday or even Friday for that matter. Days like those are simply unexpected, less familiar and perhaps quite deniable.

Most recent market moments are frozen snap shots related to what occurs next. It’s totally bizarre how we live for moments like Thursday and Friday yet when they come we miss it via our psychology. I, personally had more long than short positions Thursday. I don’t know exactly why yet it could be reviewed as a mistake- I just wasn’t reacting correctly to what I was seeing.

Fun Memory

Yet, I am reminded of Fat Finger Flash Crash of 2010 when you could literally load up the max ES contracts, (20 at the time), on the futures order page – I was using Trade Station and I simply was tapping the sell market repeatedly as fast as possible. It only took a few minutes before I was able to watch my ‘simulation account’ grow a couple hundred thousand dollars. Man it was fun! Just tapping away. Ben, (the auctioneer), at the open outcry pit was calling the moves in 10 handle increment terms as fast as his auction lips could move…A true mind bender!

Yet, that day and the past two days aside, I can only suggest hitting it with small targets in mind and affordable stop losses. With low energy tight range days what could possibly be wrong with a few trades that treats you to a T1 at .5 or .75, stop to break even? And back to .25 T1. Again that is $8.50 banked money. Do you see anything wrong with these three modest targets? No, you don’t. If the market gives you one stinking point a day that is one stinking point greater than none at all- or worse, negative on the day.

Most importantly an understanding of Support and Resistance in anticipation of Price Volatility should make it possible to hit it for plus T1s regularly. Just hit the singles and let the market decide the doubles and triples via your T2 and Runner.

Eventually, with confidence in past consistent results, size of trade will influence profit income results via the same conservative target and stops measures.

I’m sure I’m not telling anyone something new but support from the past 16 days was taken out in just two days. The term eviscerated comes to mind. And many ‘buy the dip’ folks took on heavy buy and hold losses, (long positions), that they are holding over the weekend. Many could be staring at 30 to 80 point deficits- many could have had their accounts frozen by their broker.

A buy at the end of the day into the weekend is pretty risky stuff considering how delicate and fragile the world we live in is. There is no management but your stops and targets entering the weekend and you will not ever be rewarded positive slippage. Perhaps the only stop loss managed overnight positions should be to the short side. Simply weigh heavy any overnight long positions. The potential for adverse global events compared to whatever modest gap up might occur is simply a risk to reward choice worth thinking through. Simply, measure the potential for large drops verse typical modest gains that occur during the overnight.

To be able to( just) get on base, get that 1st target, in advance of the invisible future is all you need to prevent losing the day trading game.