When you do your post market analysis, log all your numbers and review how you traded that day...... do you form an opinion on what you expect market direction to be tomorrow? If so, lets say your analysis indicates to you, the immediate trend is down (as the hourly and 15minutes charts were for the bulk of this week), do you ONLY look to trade short until otherwise or do you trade from both sides regardless.? Recently I have noticed that my bottom line take home has improved only trading one side, as well as not having to sweat out too many trades. Does anyone not do homework and just come to the market and let it unfold, then trade?
Funny, I had one losing day last week (tuesday), so I took a good look at what made that day different then the rest. First, I did a lot of reversing. In other words, if I was long and it starting to go against me, I found a reason to go short (there's always one or two if you look hard enough), closed my pos., and went short right there. And vice versa. This is what I call reactive trading. It's very very bad. I wrote "the good trades today were ambushes. I thought about what might happen in advance. When it started to happen I was right in there. Bad trades today were all reactive." Also, when I woke up that morning, I felt very very uncomfortable about trading, I almost didn't trade. So I believe the important thing is to make all of your trades ambushes. One way to do this is a pre-open bias and trade only one way. What I usually do pre-open is look to see if there are any longer term s/r levels. Then i'm on the lookout for a reversal pattern at that level, or a break through that level, throughout the trading day. Sometimes there is a great signal on the daily charts, then I'll bias in one direction only. For example, a downtrend then a hammer-- I'll aggressively seek long positions. Another time I do this is on gap days. Before the gap is filled I aggressively take positions towards the gap. Once it's filled I do the opposite.
This has been a basic technique of mine for a long time and I strongly recommend it. I use a simple trend indicator on the 60 minute and also watch a breadth oscillator on the daily SPX. I generally trade with the prevailing trend. I don't make it a hard and fast rule, however, and I will sometimes try to catch a trend reversal. Usually those trades don't work out but they can be huge when they do. I concur with the previous post about trading gaps, but I prefer to be able to enter those trades too in the direction of the prevailing trend.
In my case the after hours work is about anticipation, not prediction. In my after hours work I run some models and when they trigger trades for the next day I prepare my worksheet so I know where I need to get long/short. Since I trade against the models, if I see something that indicates the trade won't likely work, then I skip, delay entry, or fade the trade. If the morning market looks like it's going to enter the trade early, I try to front run the analysis. For instance for tomorrow my stuff is indicating the range is likely to be narrow (8-12 pts), the main move for the day is likely to be down, and the high of the day is likely to be made in the first 45 min. of the day. It's also telling me the opportunity is likely to be small. Naturally, if the market gaps open above Friday's SP high of 993.20 or starts showing signs of breaking that high early, then I may fade the systems trades. As is, I made notes to be prepared to short the market around 10-10:15 am ET. If the market opens near Fridays close and makes a half-hearted attempt to break Fridays's high, then I'll probably short it fairly early. As always, the market has the final say.
Yes, I anticipate probable market action in both directions and look for a setup accordingly. One can only predict possibilities, the market will show you which road it will take.