Home > Apprentice Trader Journals, Market Set Up > Are You Giving Your Ideas Time to Play Out??

Are You Giving Your Ideas Time to Play Out??

When you go home at night and do your homework, what is your thought process?  Are you coming up with a well thought out game plan?  Are you letting that game plan play itself out during the day.  How are you adjusting that game plan based on pre-market trading and how the market is opening.  In this market environment not having a plan for the stocks you are trading and basically chasing momentum will get yourself killed, and todays trading was a perfect example of how not having a plan for the day can hurt you. 

Going into today I had two scenarios for the market.  We had closed strong so I was watching 115 in the SPY as my inflection point.  We looked like we were going to open in that area so that is where I started to develop my plan.  By doing my late night studying of charts and by being in the market day after day, I have started to lean-to the short side in my trading.  I have come to this conclusion by simple technical analysis, which has showed us trending lower, and by watching the price action in the stocks I have been trading.  The daily ranges in most stocks has increased in addition to the volatility.  Basically stocks have been moving faster and been more volatile especially to the downside. 

Now obviously we are shorter term traders so you may be asking why I’m coming into the day with a bias?  The reason for this is that many of the bigger moves you will capture are going to be based on your overall plan for the market.  I did not treat todays gap up as a long opportunity I looked at it as an area to get short.  I would have changed that bias if the SPY could have gotten above the 2-day high of  115.33 but on the open we proved that we could not get above this level.  Even though on the open we started to trade lower I still waited for the market to prove to me that we were going to trade lower so I remained patient.  I started to look at the financials and also some of the retail stocks and picked JP Morgan and Best Buy as the stocks I was looking to short. 

The last part of this scenario was the Euro/Dollar relationship.  As the euro trended lower I knew that we have generally also trended lower.  I got short JPM around 10:30 and BBY around 11, and knowing that many of the checks in my plan were in my favor, held these through lunch and they ended up working out.  I had real conviction in these trades and held out for bigger gains because I had classified these trades as high probability trades according to my game plan. 

Hopefully all of you traders out there are putting in the necessary work everyday.  The money is there to be made in this market but only to the traders who are working hard.  This market has been providing opportunity but if you have no plan and chase momentum you are going to be left on the sidelines wondering what happened.  Best of luck tomorrow and make sure you are coming into the day with a game plan. 

Kyle

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