TREND, AND COUNTER TREND

The markets are always changing.  There will be times that going long is easy, and shorting is difficult.  Then we flip and shorting is gold and longs are a test of patience.  We are developing the BO targets to help identify the daily market preference.  These targets have worked well.  The short target today was 1350 for the ES, and price spent the day meandering to the 1335 support.  Super!  Another great day where the target worked.


TEN HOURS AGO:


click to enlarge

[08:20] <Chartmaster> gm all
01[08:21] <Chartmaster> 56 nice sh es
[08:21] <omitted> trade report at 8:30
[09:27] <Chartmaster> I know many of you use rth charts, but the glob has a well defined channel ema shorts 6e
[09:30] <Chartmaster> ES in channel from upper resist glob 1350 key level again (and) ema shorts

So far so good.  First trade was an ES short then a 6E short.  Market was heading lower, short trades were working.  It's going to be a super day.

Now read the introduction again.


Notice I say the markets change.  Traders must change too.  Here was the key for the day.

09:43] <Chartmaster> thinking we see the pull down into news, digest and turn bullish for us.. 6e and es

That comment set the mental tone, the trader bias; and the day was filled with counter trend longs.  Counter Trend Trading has a cost:  the opportunity to trade the trend.  1350 to 1335.  Do you know how many traders would love to have a trade like that?  OK, it was not a straight line.  More a drive through the countryside with twist and turns.  But I have no doubt that there are professionals sitting somewhere reflecting on that very trade.

Your mental tone or trade bias is very important.  It will carry you through some fantastic trades, or it can take you into a trade destined to fail.  If the market is shorting (today) and your trade bias is still long, then you have two choices:

1. You develop an ability to counter trend trade.
2. You take a break.  Take the day off.

I do not include change your bias, as I think it requires more than some simple statement "OK let's change."  Most traders can not change as fast as the market.  A trader see five bull days, they bull trade day six!  Then get killed when day six tanks.  Your bias, your psyche, your depth at reading the charts, your ability to take some heat, how you handle greed and fear, and your trade executions all make you the trader you are, or want to be.

Taking a break is hard.  We want to be in the game, compete.  If that is you, then learn how to CT.  "Trend is your friend" is nice, but traders can get into trouble trading the trend too.  CT has received some negative press, but a complete trader, a total trader must be able to trade, effectively, trends, CT, wide range days, and narrow range days.

Find your trade techniques.  Improve them.  Then see if you can develop trades for any market, and try a few CT's.  They are trades.  But they carry an opportunity cost if your a "trendie".

ES:

We began with a strong bear channel #1  and out Target short BO #2.  A pre-open trade worked perfectly.  Then #3:  a CT bull trend that turned micro. Find the blog that discusses the rising-declining TL.  This bull was fading and a second long failed.  The loss was limited,and really not important. What is important:  failing TL. ema resistance, narrow bear channel.  Easy now; but saw something, or wanted to see, in real time.  Bear continued to support at 1335.  The next setup is where we play a 50% break of a prior control bar.  # 4 and  #5  were bull CT TL's.  The higher low was a natural long.


6E:

6E started with a steep bear channel.  The first trade was a short.  Then CT became the favor. It is what it is.