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Market Commentary: October 4, 2005: Today was one of those days that, if you were in my position, was as fascinating as it was profitable. If you look at the two charts above, you can see what I posted to the seminar forum before the markets opened. And as I spoke to the traders before the opening, I reminded them that price has been in a very tight energy coil since Friday [from 1230 to 1235], except for one quick spike higher on an opening that failed miserably. And one thing is always true: If you put 20 or 30 traders in a trading room and let them trade in a range, you will see a variety of ideas and positions, all within the range. Some of them will decide it IS a range and they'll trade it as a range, from one side or the other--or if they are really convinced it is a range, they'll buy near what they think is the low end of the Energy Coil with a solid money management stop and then try to reverse to short once price tests the top area of the Energy Coil. And some of them will be certain there will be a breakout coming--and amongst this group, some will be sure it is coming to the upside and some will be sure it is coming to the downside. And last, a few will think it is too dead to bother to trade on a day like today [at least, the first 75 percent of the day was dead...].
So after I pointed out the solid Energy Coil we have been trading in, with a top of roughly 1235 and a bottom of roughly 1230, I also pointed out two areas where lines of opposing force gave important confluence: 1234-35 and 1229-30. Frankly, I teach traders how to take advantage of Energy Coils, as well as areas of confluence, so it doesn't bother me to see diverse opinions. In fact, I often see that ten or more traders look at the same pre-opening chart and hear the same pre-opening comments from me and then as the day unfolds, some will find an area to get long and some will find an area to get short. And odd as it sounds, since they both started with the same material and went through the same seminars, both often make money. There are many ways to skin the cat, as they say...and the markets often give you many different opportunities, no matter what your view point IF you have a solid game plan and solid money management in place.
Today, I saw traders getting long at 1230 1/2, with a stop 3 ticks below the 1229 3/4 prior lows at 1229, ride their positions up to the 1234 1/2 area and take profit. And I saw another group of traders getting short at 1234-1235, with stops placed above the 1235 1/2 high of the day made in the first hour of trading ride their shorts down to the confluence at 1230 1/2, where they took partial profits...and then as time was running out [around 3 pm], take their profits at the 1218 area. I was one of the traders playing it from the short side [because I was also looking at a longer-term down sloping Upper Median Line Parallel that had caught the prior swing high at 1242 1/2 and we were testing that same Upper MLH again today, so I was bearish coming in...] but there were plenty of traders that made nice money being long. And several that got long, then short, then long again, and then finally reversed to short to catch the ride lower... |
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The above chart marks what I was looking at and doing as the day unfolded, but as I said above, you could have skinned this cat many different ways. I often get asked if there's going to be a problem if I teach my methodology to too many traders, especially now that I am teaching it to some very experienced traders that can take sizable positions. And my honest answer is that because each trader is SO different, and we all approach markets in our own way, in different time frames, with different risk tolerances...It just won't matter. So many times, when I am taking profits, someone looking at a similar chart is entering in the opposite direction. That's just the nature of the markets. And although the last 25 percent of today was a sizable move, the first 75 percent of the day was the same five point day in the S&Ps we'd been seeing since Friday, so money management and a solid plan was crucial. If you had gotten chopped to death trading an Energy Coil BACKWARDS [meaning selling the lows and buying the highs] for the first 3/4's of the day, you wouldn't have the emotion or clarity left to catch the huge run down that came later in the day and was the "frosting on the cake."
For those of you still reading...the key to catching the big move today was being aware of the longer-term charts. I did not give them to the seminar group today, because I have been stressing that it's important for each of them to do their own homework and so, even though I do give them settings for Autoforks and pre-opening charts, as well as some solid commentary on what I expect are key areas we'll likely see, I expect them to learn from experience the value of also knowing the "big picture" IF they are the type of trader that wants to hit all the bases when the ball is there to be hit.
For those of you that have asked...seminars are now available to off-floor traders--you no longer have to be a clearing member of either the CME or the CBOT. You can take the first level seminar at the CME generally each Wednesday and within the next few weeks, we'll be offering them live via the internet over secure software at the same time we do the regular seminars--meaning you can attend from home or your trading office if you wish, instead of travelling to downtown Chicago. We'll then be adding advanced seminars and mentoring. And if you think you'd like to trade in a large trading room, alongside a group of professional traders that trade everything from stocks to bonds to cash currencies to stock index futures to live hogs...Spike has already added about fifteen people to their trading floor after they took the seminar, so that option is open as well, if it sounds appealing. Those that choose that route get to interact with a large group of traders all day long, a few with only a year or two experience, but many with well over twenty years of experience as professional traders. And I'm there trading and talking to the other traders all day long as well.
Last, I mentioned on the forum [which may be slow or may be down again...I am checking it as I write this] that I'll announce a mini-webinar--I'll probably make the announcement of the date and time sometime tomorrow--and that will be to test the software we've chosen to use for the on-line seminars and mentoring. And so that anyone that attends the test will get something for their time, I'll do a small webinar with some nice content, both as a "thank you" and so that I get more practice using the new multimedia software. All of you are invited...I'll post the date and time tomorrow.
I wish you all good trading!
Tim Morge |
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