HOLIDAY OVER: LET THE NEW YEAR BEGIN 1/13/14 AND 1/14/14

Holidays over, the new year has begun.  Yesterday and today we saw significant  price action as the sides play with the market.  Pros are eating lunches left and right as price whips turn nasty, and once your out you see the train leave the station for great runs.

So, the question should be "how do we trade this" or even better, "how to trade in any arena?"  There is a mountain of books and information on trading, but some quick notes:

1.  Start with the trend.  If your going against it (contra trading) you can do OK with the right entries/exits and toss in luck and skill.  Why fight it?  The trend will provide better trades and the opportunity to stay with the trade.

2.  Find what works for you.  There is plenty of free advice from traders, from the simple to the detailed;  hang out in a financial chat room and ask questions.  Practice, Practice, and then Practice some more.

3.  Simulated trades are not REAL.  No pun there, but the emotional twins fear and greed are not  found in sim trading.  Great for practice, but apply caution when you go live.

4.  Find a system and work it with vigor looking for failures.  Keep a log of all trading and reads on the market.  Why did you enter at x?  What was your strategy for an exit?  Your strategy for a stop to prevent excessive loss or to protect winning trade profits?

5.  When the trade is not working, and time is a personal choice but 1-3 bars should be sufficient, or as soon as new data is available to suggest a change in your trade, GET OUT.  See 1/14 chart for this suggested rule.



1/13/14

PA was floating higher to resistance from prior trading days.  The resistance held, and price moved to check the bar 4 previous higher low and the 50CB  (50% of a control bar).  Price was still inside the 50CB trend lines and considered net neutral but favoring another bull attack.

What looked bullish rapidly changed when the bull attack formed a gap to the resistance, which is regarded as a bearish signal in a bull run and vice-verse in a bear run.  The conservative short was an entry when the bear TL broke.

The resistance is seen in this compressed shot of a two point bar chart.   The bull likely would not win, and shorts were in vogue with downside targets in play.

The optimal hold for the entry is to follow the hap in price to some unit of measure.  In this case, the gap away from the bear TL and the gap to the 20EMA.  Bulls simple could not achieve an EMA pullback.

1/14/14

Price was in a bullish mode but saw opening sellers as PA hit the upper resistance denoted by the two -red resistance lines.  It force price down to the support and the 1816-17 area was seen as a buy opportunity.

Price pushed higher and developed a new 50CB for the day.  It was in this 1820 area that price stalled briefly, and at resistance, that a quick decision to short seemed valid.(see rule 5 above).

But that decision was brief.  Price was holding at the 50CB;  bears could not sell the market.

When the sell failed, it became clear that the 50CB and the bull TL were winning the battle.  The play?  GO LONG.  Additional 50CB's developed, but like yesterday's selling. the optimal hold is to follow the trend as long as the bears could not sell to the 20EMA or the 50CB trend line.  This gap is a valuable tool in staying with the trade.