Thursday, April 26, 2012

Focus on the Strong: and stop thinking

I didn't take these trades but I can still learn from them.

What I did notice this morning: the markets were looking weak (even though they went on to rage all day).

 But in the morning -- it wasn't clear.  /tf went red until the open... but gold?  Gold was already pumped and ready to go.

 I fear gold because gold is usually very volatile and unpredictable... but meanwhile -- it was trending very smoothly and easily in the morning and provided two clear 3 bump patterns -- and even a 3-bump descending pattern to short in between, before raging out of control and spending the rest of the afternoon kind of bumping around wildly.

 The key to success is to limit your trading to the patterns you know and understand best.  Instead, I watched /tf all day and I tried a short that did not work and it never really gave me a clear signal and then of course... it tanked wildly after hours.

 But the point of course, with futures -- if you find your pattern -- you should be in and out in a matter of just an hour or less.  The best times of day, I've found are the morning -- and the last hour.  By 11 am -- it's usually a slog and if you missed it, you missed it.

 I need to be willing to trade any market if it's acting well and setting up.   The key tip off, as I mentioned, is that gold was acting well early on and that should have attracted anyone's attention.

 The thing is - I feel - the market switches between total chaos (ripping wildly hitting stops) and setting up for a clear move (probably due to big money loading up).  So you wait and wait until you see it.

 In contrast - /cl was wild and jumpy today -- ripping very fast and I wisely avoided it although I was very close to entering what I thought was a top (it was).  I didn't enter and I would have been stopped out before it did drop.  So I was right in my thinking, and therefore wrong not to enter, but right because my stop would have been too tight which was the wrong thing to do.  Follow? :)

 Anyways - study the /gc chart.   Gold is usually the poster child of unpredictability but for a few hours - it was clear as a bell.

Lesson learned:  When there's a clear market showing strength -- let that be the market to study carefully, especially if it's setting up nicely and showing patterns you recognize.

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