The Market is Toying with Us

Jan 16, 2008: 6:21 PM CST

Seriously, I was surprised at the rampant volatility in the market today, with large upswings and downswings, a gap impulse that was faded, and a very weak close.

All you can do is learn from it and that’s exactly what I intend to do – I am posting what I considered “idealized trades” according to my trading plan and interpretation of market action. Through categorizing as many days as possible, I will increase my recognition skills and thus improve my intraday trading.

  1. Classic “Fade the Gap Trade” which worked with amazing simplicity. Simply enter long and target yesterday’s close (purple horizontal line)
  2. Exit “Gap Fade” and then trade the impulse gap in the original direction of the gap, which would have us going short and targeting the intraday price low. This is analogous to my “Impulse Sell.
  3. Ahh, my favorite! Classic bear flag or measured move (lightning bolt down) trade. Entry as close to the 20 period MA as possible with target being the prior measured move. Perfect.
  4. Classic 10-bar divergence trade. Notice the clear momentum divergence in the price and oscillator. Initial target: 20 or 50 period MA. Divergences are only good for small targets.
  5. Ascending Triangle consolidation break. This is a more suspect trade, but it led to a large momentum impulse up, which gave the day’s highest momentum and price reading. The break also occurred at the resistance from yesterday’s close. Target: Undefined or initially the 200 period MA (which acted as resistance)
  6. Second triangle break and moving average break down, which led to a trend move down into the negative price close. Target: Undefined.

Those were the ideal trades one could have taken with 100% hindsight based on my interpretation of market action and the distinctions I make that form trades and opportunities. I’m sure you saw things differently which led to other opportunities for profit.

I hope the market was kinder to you today than it was to me. Intraday traders either love or hate rampant volatility and large price swings. Either way, they provide plenty of opportunities if you’re able to perceive and act upon them.

I offer mentorship and consulting opportunities to those who are interested in learning more. See my “About Me” page for more information.

Best of luck!

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