WhipItAround.com

Developing…

Excellent trading day in terms of stats.  Traded quarter sized positions today and still made $625.  I’ll post an analysis of all my trades later.

I’m closing shop for the day.  Made over $1k on two trades: long just prior to the fed announcement, long at the intraday low and short the intraday high.  I’ll explain the trades later.  I didn’t have time to post yesterday’s p&l but I was up $320.  Not terribly pissed about that profit since it was a nasty range day.

Unfortunately, I traded very small size and didn’t catch the big move down, hence my measley P&L for the day.  Today is a perfect example of why news should be ignored.  The econ data was very good, however, the market turned over mid-day.  I suppose that’s why I did not milk the move down- I was expecting the dips to be bought.  It’s unfortunate because I love raping bulls, however, I was the bull today- shame on me.  The a.m. price action and the fact that there is a lot of short interest in the market led me to believe the market would squeeze higher and retrace much of its loss from Friday. 

Bottom line, I should have made a few thousand dollars today, as there were several “mandator trades” I should have taken, including a few triangle breakdowns. 

Below is my P&L for the day since I said I would post everyday.

Close of Trading Update: I executed another long trade around 106.50 on SPY, which resulted in a nice profit, however I did have to take 25 cents of heat before the ultimate breakout.  I ended the day with about $600 of profits.

Does technical analysis work?  You tell me after looking at the chart below.  What do you see there?  I saw some excellent breakout trades on the long side.  Note, I made money shorting stocks the last few days but I was flexible enough to adjust my attitude and bank coin on the long side.  I wasn’t as aggressive as I should have been but that’s OK.  My mid-day profits are approx $450 (see below) and they would be at least double that amount if I wasn’t peeling off half my trade so quickly.  It doesn’t matter why the market is going up- it could be controlled by short covering, real buying- it doesn’t matter cause offers are getting lifted.  Many times, the most powerful moves higher are after several days of weakness.  When so many people have sold the market, good news end up catapulting the market higher, creating an excellent opportunity to take advantage of shorts that may be trapped.

Closing Profits

Mid-Day Profits

If you were reading my posts lately, I’ve been warning of a significant correction in the market and here she is.  It was another easy day of trading for me.  I executed one trade- short 2 S&P e-mini contracts and just watched them work to the tune of $1k while eating tacos and cleaning my apartment.  God I love the lifestyle of this job!  Below is my daily P&L and a chart of the day.  FYI, I am not posting my P&L to brag; I am posting it for credibility and accountability.  I find that I trade better knowing that my daily P&L will be made public at the day’s end.

Profit Statement

Today was a classic “range” day in the market where the range was set in the first couple hours of trading.  During range days, the only high reward to risk trades are at the range extremities and the vwap.  I was about breakeven today, generating only $100 of profits, however, I made several emotional trading errors today that prevented me from having a pretty good day.  It was one of those days where I got out of things too early and didn’t take good trades.  These days can be mentally exhausting as you kick yourself for being too timid. 

Tomorrow, it is my goal to take all juicy trade setups with size and identify exit levels and criteria beforehand.  Basically, I will trade like an algorithm. 

As far as the macro picture goes, today was another day that was dictated by the direction of the dollar.  I felt like I was trading the dollar rather than S&P futures. 

Hopefully, you studied my lesson on trading “Bermuda Triangles”.  I can’t stress how reliable and profitable these patterns are.  It takes experience and an understanding of the profile and structure of the market to have the confidence to trade this pattern, but anybody with common sense, objectivity, and a competitive drive can learn how to trade this pattern.    I made approximately $1,300 in one hour without risking much of my capital (see P&L attachment below).

The move lower was mostly driven by a strong rally in the U.S. dollar, which is why it is important to always follow the larger macro picture.  In the first triangle (Triangle 1), I shorted 500 shares once the price broke the lower trendline of the triangle, taking half of the position off at VWAP (volume weighted avg. price: the yellow line).  I was stopped out of the other half break-even as the mkt tried to retest its high, which was nothing but short covering.  When price broke below the lower trendline of Triangle 2, I confidently shorted 2 e-mini S&P futures contracts (equivalent to 1000 SPY).  I had a high amount of confidence in this trade because I knew a lot of longs were trapped after buying near VWAP and from earlier strength.  I also had confirmation when the sellers pushed prices below VWAP and the TICK registered several -1000 readings.  I took profits on 1/3 of my short at Friday’s closing price, 1/3 of profits at Friday’s low, and another third near the low of last week.  Prior lows tend to act as major levels of support, which is why I like to take profits around these areas.  Note, I am trading the e-mini futures but refer to price levels on SPY.

Hopefully you read my post from last week where I indicated buyers would be spooked after such violent sell-offs near resistance.

The “Bermuda Triangle” is one of my favorite trades, as breakouts and breakdowns out of the triangle tend to be fierce.  However, if you are impatient, you can get trapped in the Bermuda Triangle.  I find this set up to work approximately 9 out of 10 times, however, there is usually a false move to fake-out impatient traders.  The instructions below should allow you to make thousands of dollars trading the triangle. 

How to Execute and Time the Bermuda Triangle Trade

1) Wait for the 2 minute candle to print outside of the triangle and then execute your trade
2) Place a stop in the middle of the triangle, in case the trade doesn’t work. 
3) If you do get stopped out but the candle prints outside the triangle again and holds, execute the trade again.
4) If you get stopped out and the candle prints on the other side of the triangle, take the opposite trade.
Note: When the candle prints outside the triangle and makes higher highs or lower lows, the probability of a juicy trade is high.

The chart below is an excellent example of a successful triangle breakout.  It is easy to get excited and execute your trade when the price pops out of the triangle for a few seconds, but the key is that the price holds outside the triangle and the candle prints.

A) Dick Bove’s downgrade on Wells Fargo
B) Galyon (sp?) liquidating its positions
C) The realization that things aren’t good, banks are no good w/o govt support and oil is not good at $82
D) The United States’ transition to socialism
E) All of the above

A nostalgic flashback like this will likely make the bulls think twice about chasing this market at such lofty levels. Unfortunately, I did not participate much in this glorious move down. I had such a great trading day that I covered my small short position near the vwap. This is why it is important to continue trading normal size when you are in the zone. I was in the zone today with a 100% success rate and out of fear of messing up such a good day, I hesitated to short the mkt at the end of the day. The move lower came out of one of my favorite patterns- the “Bermuda Triangle”. Once the market broke below the lower trendline of the triangle, I should have been short in size. This is very disturbing for me because I love to short the market. I don’t know what this says about my personality, but I enjoy making money shorting stocks much more than i do buying stocks. Surprisingly, half of my daily p&l was on the long side today.

Answer: E: All of the above