Feb 22nd ES Trading Recap: 8.5 Points – Avoiding The Trap
Sometimes I feel bad for the traders who just can't keep themselves out of the market, but usually not for long. Patience is an important part of trading and if you can't wait until the market is offering high quality opportunities then you're going to run into trouble quite regularly. Using our zones we knew to back off the market until it started to behave and were able to avoid the area I've labelled The Zone of Trading Death. Money risked in there is extremely likely to disappear without a trace.
Now, on to the trading. We had some earlier highs that price was moving into when the market opened so the first order of business was observing the reaction there. What followed gave us a strong signal that bears were in control and trading short was the way to go for the time being. The market obliged with some opportunities and a couple shorts into support (also an important area from yesterday) paid 4 points in total before we saw our first major reaction against the market bears.
The prior moves were compelling enough though that after a small delay to see the reaction in price I was able to get a very conservative position for another try lower. I was hoping to actually catch a breakout move here but after giving the trade some time it simply refused to make the move I had hoped for.
If the market isn't doing what you expect it's time to re-evaluate and adapt to the current conditions.
We then entered the dreaded "Zone" and it became clear that it was time to sit on our hands until told otherwise. Why would we want to take anything in here when the price action looks so ugly and the potential reward is so low? The interesting thing about this is that as clear as it seems in retrospect these are the areas that kill most traders when trading live. They just can't stop themselves from trying to anticipate the breakout move and they see their positions fail again and again. Even if the losses are kept small they do add up and often crush accounts over time.
Once we actually did get some movement it was time to look for a continuation setup. By reading the market here we know that this is a situation that needs to move in our favour quickly or it will probably fail. Because of this it made sense to be quite aggressive in terms of management which ended up turning what would have been a 5 tick loss into just 2.
I was willing to try a similar play in the other direction from 1504.75 but I didn't get filled. The lack of downside momentum after that miss meant it was time to cancel my order because a false break of the area was now so likely. Even if I had been filled on this trade the management would have been similar to the last one and I doubt I would have accepted a loss of more than 2 or 3 ticks.
The market then clearly gave us our direction and it was off to the races with a couple no-brainer longs. Unfortunately the final trade had more profit in it than what I captured but I made the safe play here as things were moving too slowly for my liking to adjust my target. I could have had a couple more points on this one but really, why be greedy?
There's no harm in taking money off the table if you no longer have full confidence in a trade.
Just a heads up that I am working on a lot of new content here at Samurai Trading Academy and I hope to share it with you soon. If you want to be updated we've added an area to subscribe on the sidebar so you won't miss a thing. Hope you all had a great day in the markets!
- Strike While The Iron is Hot - March 1, 2021
- The Path to Becoming a Full Time Trader - February 22, 2021
- Looking to 2021 and Beyond - January 20, 2021
