How Not to Blow Up Daytrading Index Futures

Discussion in 'Index Futures' started by smilingsynic, Oct 19, 2007.

  1. Don't trade countertrend on a trend day.

    No $hit, sherlock. How does one know it is going to be a trend day?

    Consider the following as generalizations based on my own experience. And if it helps you avoid losing half your nut (or more) on a day like this (Friday, October 19, S&P down 2 1/2%and falling), then good:

    1. Strongly trending markets tend to move in tight channels, and there is little movement away from the trend, and little movement back to the open. The stronger the trend, the smaller the pullback.

    2. When the market gaps down, and then trades up to a point that there is a swing high below the gap, there is generally at least another strong move down for the day. Gap (or strong move) plus mid-day consolidation equals late afternoon continuation.

    Likewise, when the market gaps up, and then trades down to a point that there is a swing low above the gap, there generally is at least another strong move up for the day

    In other words, there is usually a chance to get out a mid-day. If you have been fading all morning, you might want to take advantage.

    3. On a trend day, the trend tends to become stronger as the trading day becomes longer. Therefore, on a trend day, the stubborn countertrend trader risks suffering significant losses.

    4. If the market consolidates at support and does not bounce off, that support will probably not hold. The longer the market consolidates at support, the more likely it will successfully be breached. Likewise, if the market consolidates at resistance and does not back off, that resistance will probably not hold. The longer the market consolidates at resistance, the more likely it will successfully be breached.

    5. If the market breezes through S2 or R2 levels early in the day, as if they didn't exist, they probably didn't.

    Good luck to all (unless you are on the other side of my trade).
  2. okay Tech did you play today?...FIB lines, S/R lines all comeback retracement...what do you do?..seriously!
  3. On the surface with the sudden big moves, it looked easy but today was very difficult to trade. In fact, for me, the entire week was really difficult to trade. Too many headfakes on S/R that I thought would hold and false breakouts. I started the morning down $2400 but fought my way back to -$592.

    I just couldn't trust any position I had to let run so I took small profits throughout the day which is the plan for now until a clear trend with follow-throughs emerge.

    Very frustrating week and difficult week. I hope at least we start to see some kind of volatility and not a single big bar followed by 1-2 hours of chops.
  4. Honestly just stuck with the trend defined by MA's, adv/declines and common sense.

  5. I am printing this post and adding it to my folder. Golden words to live by. Thank you sir. Your pedagogical souls is shining through this post! :D :D
  6. 9, 18 day ma crossover does wonders to keep you on the right side on a trend day.
  7. thanks..what MA's do you use?
  8. what time frames for tat 9,18 MA??? 5,10,15,30 etc...thanks!!
  9. Why do you need ma's to define trend?

    It either is making lower lows and lower highs or higher highs and higher lows or it isn't.

    No MA's necessary.
  10. i lost $280 USD trading ER2 mini. didn't expect it to be this strong.
    very unusual for a drop to be more than 25 pts a day.

    anywayz, its alright. i'll jus make it back nex week. :D
    #10     Oct 19, 2007