The market showed its hand this morning when it broke down below the key support of 1094 but proved it wouldn't make it easy to capitalize on the expected continuation. Maybe you can blame it on supplemental liquidity providers (computer based algorithmic trading from such organizations as Goldman Sachs and Deutsche Bank) adding support to a selling market or maybe it really is just an indecisive market. Whatever the case, it can be difficult to maintain conviction in a trading decision as the market seems to do what it can to make the average trader change his or her mind. As we have made another new low in the final hour of trading, it still proves difficult to get sustained selling. The gap from Friday has yet to be filled (officially at 1089.25 on the ES), though it will be filled.
Like Herman Hesse writes in Siddhartha, waiting, fasting and thinking are his protagonists three best skills. These skills make a successful trader as well. Waiting or patience is necessary to avoid making hasty decisions out of greed or fear. They do call it a virtue. Fasting can be applied to holding a position without rushing to take profits. Go without profits in the short term and open yourself up for greater reward in the longer term. Thinking is obviously what ties it all together. Thinking is what allows you to analyse the markets effectively and give you the sense and discipline to fast. To fast you need patience.
Be patient and wait for the gap to be filled. Most likely, not only will the gap be filled, but we should see the ES trade down into the 1086s.
Subscribe to:
Post Comments (Atom)
Just one additional comment on thinking... Of course we must admit that we never can predict how the market will move with 100% certainty, so you always need to "think" and plan for an exit strategy. In the low odds chance that we don't continue down and fill the gap, you do need to know when to exit. I think if we get any sort of confirmed move up to 1095 from here and you are still holding a short position, you would have to consider accepting your losses at that point and covering. I wouldn't argue if you held up to 1097-1098 either... depends on how much you are willing to risk. My point is always think and always have a plan for every scenario...
ReplyDeleteWell, we don't get official gap fill in the regular session and I certainly wouldn't argue with taking profits in the low 1090s, but I could also argue that selling down to the 1086s is likely in the GLOBEX session...
ReplyDeleteThe patient man wins. ES traded to 1089.25 at about 1:00am EST and then reached 1086.25 around 5:30am EST. That market has reversed from there and is now trading in the mid 1090s...
ReplyDelete