Emini Day Trading Lessons: 4.75 Points – Adapting Trade Management to Market Conditions
I'm going to make today's recap quick because, well, it's Friday! One thing that definitely wasn't quick was today's price action. Friday's are often a bit slower but combined with what was a fairly low energy week so far it wasn't any real surprise. What this meant was that I needed to be a bit more conservative in my approach in terms of what trades to take and when to take profits.
A key element to trading well is reading the shifting market conditions and adapting your management approach to take advantage of them.
The first trade was an excellent one early in the day that went right to my target of 2 points. It had enough momentum that I should have adjusted my target at least a few ticks higher but for this time of day I was very happy with 2 points.
After pushing down I delayed entering a trade to see what would happen with the initial chop (as per the rules) and took a trade as our trading area showed signs of holding. This was a riskier trade of course into a clear level (this was actually yesterday's high) so when it held I happily took my 3 ticks. No reason to be greedy if the market isn't telling you that you should be.
The market will give you clues on how to manage your positions if you can take your trading ego out of the equation and truly listen.
We then had the release of Prelim UoM Consumer Sentiment which caused another spike into our area. I considered the trade here too risky given the conditions so far during the morning so I passed.
It turned out to be a winning trade but profits aren't everything - managing your risk is!
After we broke out but with very little momentum I did give one last attempt to the upside. By reading the market I knew that if this didn't take off right away that it was likely to be a failed breakout, so I quickly took my exit as short term momentum shifted. There was a potential short here but again I was being very conservative and so I passed on this one.
After this is was a bit of a waiting game as I simply couldn't find a trade that fit my plan within the 1518 to 1521 area. Most traders struggle in these areas because as a trader they feel they MUST trade or they somehow aren't doing their jobs. I don't agree with this and neither did Mr. Livermore.
“It was never my thinking that made me money. It was my sitting.” -Jesse Livermore
If the market isn't offering high quality opportunities then just sit tight. Wait for the right situation where it's worth putting risk on the table. It didn't take too long for this to happen as we finally found some movement and had an absolutely perfect trade set up. I had hoped to take this down to the lows of the day but unfortunately I didn't get so lucky and had to take an exit for 2.5 points. Still, for only 1 tick of drawdown I can easily accept making 10 ticks!
I then removed my order due to the bottoming price action and simply called it a day. Days like this where the market isn't flying are not the time to stick around and aim for the stars. Better to simply take what the market offers, be thankful, and go on your way.
- 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
