bondtrader's Blog

Futures Trading, Musings, and Random Thoughts

Thursday, June 24, 2004

Taking A Break

I haven't traded full-time since yesterday as I have family visiting, so I will take a few days off from trading.

I made a small trade yesterday, but had to leave early before the trading day was over.

I'll be back again next week. See you then.

Tuesday, June 22, 2004

Low Volume.... Like watching paint dry

Okay, that's it for the day for me. No sense trying to trade a market when there's nobody there to trade with. As I'm writing this, the last 55-tick bar took 19 minutes 42 seconds to complete! C'mon! That's 55 trades in the last 20 minutes. That's ridiculous. Everybody's probably on vacation.

With this kind of a market, you're lucky if you can get 2 tics on a trade setup. The price action indicates only a handful of people are in the market. You don't get a trade setup until somebody runs it up 3 tics in one direction. By the time you get in, they're going to turn it back around to run your stops. Pure market manipulation by the big boys, due to thin market volume.

I'm done for the day.

Here's today's results:
Tradelog 20040622

Update: As of 9:30 PDT

Markets are in chop mode again.

Choppy


Note the trend is weak, as denoted by my chop indicator (first indicator panel). Now it has coloured the chart background grey again.

Also very noticeable is how long it takes for one 55-tick bar to complete. Each bar averages about 8 minutes(!) to complete. It used to be from 1 1/2 - 3 minutes. (Where the heck is everybody?)

Stay out for now.



It's all about Patterns

Chart reading is very visual; it's all about the patterns.

In the beginning stages of a new directional trend, sometimes it's difficult to determine if it's a real trend, or just another fake-out. Or sometimes, we leave our computers for a while to take a break, and when we get back it looks like something has already started.

How do we know there's more to go in the trend? We look for divergence in the pattern.

For example, here's a move that already started. When I got back to my computer, how do I know that there is more to go?

No Divergence

There was no divergence yet between price and indicator. Price made a higher high, and the indicator also made a higher high.

Convergence.

The trend will continue.












And it did. Now, here's the same chart a few bars later:


Divergence

Price made a higher high, but the indicator did not.


Divergence.

A sign that momentum has weakened, and the trend is probably near its end. Time to take off your positions.









Monday, June 21, 2004

Recap of Trading Day: 2004-06-21

Today's results:
Tradelog 20040621

For much of today, my charts were coloured grey (indicating a choppy period), and so I didn't take any trades until the grey background disappeared. After that I only took 1 tic, which was fine because the market reversed soon after.

I'm now focusing on the next trade, and just take it one trade at a time.