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ES Monday 3-19-2012

Monday's ES trading topic is a little bit different from the usual topic. Today you stand a chance to win a copy of Pit Bull based on what you say and what your peers think of your comments as measured by the net up-votes you get in this topic only.

There's a copy of the book to win for our established members and another copy for our lower-rep and less frequent participants. Read more about it here: Win a copy of Pit Bull by Martin Schwartz.

Good luck!

Jack Schwager: When did you turn from a loser to a winner?

Martin Schwartz: When I was able to separate my ego needs from making money. When I was able to accept being wrong. Before, admitting I was wrong was more upsetting than losing the money. I used to try to will things to happen. I figured it out, therefore it can't be wrong. When I became a winner, I said, "I figured it out, but if I'm wrong, I'm getting the hell out, because I want to save my money and go on to the next trade." By living the philosophy that my winners are always in front of me, it is not so painful to take a loss. If I make a mistake, so what!
I know this is late but I'll share my simple approach with you again here. I have not been active with ES this year or I would give you my calls real time. Here are the 3 set ups according to the way I traded last year.

1-The opening sell off into a level 1395-1396 seen on the 60min lower trend line support. The VOLD stayed green and that made the set up more attractive. You then hold watching to see if the VOLD continues green and look for ADD to turn. 1400 is your target and your stop is below the swing low@1394.70. The R/R is about 1/1 so its your discretion if you took the set up or not.

2-The BO@1401.50 simply because it was a BO of a major level with vol seen on the 5min. The stop would have been below the swing low@1399 and the target would have been a generic 5 pts. If you're aggressive, you take the whole thing off at 5 pts. IF you're conservative, you scale out at 2/3/5pts. The R/R is 2/1 and IMO was the best set up of the day.

3-was when the VOLD showed a big down bar indicating the market has changed its behavior@11:55pt. It happened when the ADD was also trending down. That 5min price bar was 1405.50-1407. For me, I don't need to see that big 5min bar complete to take that trade. It can be anywhere from 1405.50-1406 and the stop would have been above that bar @1407.00 and 1408(HOD). The targets would have been 1403/VWAP and 1401.50 the BO point or close of the single. The R/R was 1/1 though a higher probability trade than the opening trade (#1)

Context: Another good clue is to watch the DAX. When the DAX BO or hit S/R, ES "often" responds. Today, the DAX did not close above last week's H but ES was moving beyond. ES was trading in new landscape so we really don't know how far up it could have went.. However, when the VOLD gave a sharp downturn, where DAX was sitting in its close made the short more attractive.

Those were the only 3 set ups I saw today according to the way I traded.
Congratulations to Big Mike and goatwig who each win a copy of Pit Bull. Private Message me your address and I'll send those to you.

(Note: BruceM got more votes than Big Mike but he already has this book. Bruce, if you want a different book let me know and we'll get it for you.)