Doug Green

I'm starting the new year with the idea to blog each trading day. First, a little about myself. I'm a software developer and have been day trading for about a year. I've co-developed a trading package called ZoneTrader, which runs on NinjaTrader, and is available from TraderUSA.net. I'm not a trading expert. I've learned from some pretty good traders. And I hope I'm becoming a good trader myself.

Each day I hope to comment on what I see as bias and direction. I'll document the trades I actually take. And I'll post some charts.

1. make myself a better trader by documenting my trading day
2. show others how to use (one-way of using) ZoneTrader indicators
3. increase interest and sales in ZoneTrader product

No trades today, slowly crept higher all day, breaking macd divergence with each high and each low pivot. No good ABC trades. I need to figure out how to trade macd divergence and the trending A trade.

I'm currently trading the Emini ES. I have 4 charts, two long term charts and two short term charts. The short term charts are a 233 tick and a 288 tick, and the long term charts are an 1152 tick and a 7500 volume. You can read more about why the 1152 tick chart in this blog about cme unbundling. If you have a spare two hours, you can watch my ZoneTrader Presentation.

I still have a day job, so I only trade part-time. I have charts up all of the time. But I'm mostly interested in trades from about 8:20am EST until 10:30am EST. I give charts my full-time attention from about 9:15am until about 10:00am. Generally, I follow most of the trading day recommendations from TraderUSA.net. Specifically, I'm careful, or don't trade at all, on days immediately after a major holiday, on contract rollover day, and FOMC day.

So onto todays trading analysis...

1. Yesterday Macd divergence broke long all day. I'm going to start the day cautious.
2. Little happening pre-market. Short term bias was down, based on the 233 big triggers and MX. The 288 was up early then switched to short.
3. Pre market, the 1129 level was a critical point. If you were willing to take a risk, the pullback up around 9am into the big triggers on both the 233 and 288 we're good entry points to go short. It was either going to break long or bounce short. When the 233 and 288 MX and Macd broke positive around 8:50am I was thinking long. But when they quickly came back down, I reversed back to short. I wrote down 1129 long, then I wrote down 1128.75 reverse. I didn't take either of these trades.
4. Market opens, and I'm sitting on sidelines, looking for the long term charts to show clearer direction, ideally an ABC X (extreme). The 7500 and 1152 are in an ABC S (series over) condition. And the 233 turn into an ABC S at the open. 7500 is showing long on the MX and Macd but 1152 is showing short. Waiting...
5. About 5 minutes after open, we start a move down. All charts now showing short again. Short term charts hit ABC X's but long term charts still have a ways to go. Waiting...
6. We're hitting resistance at the short term X's coupled with ZSR's at 1127. There's a fair amount of support below to break through here, but the Macd's on the 1152 have pulled away, which is showing signs of further weakness. The concern is that Macd hasn't been very reliable this year, we've had more divergence this morning on the shorter term charts. Waiting....
7. At 9:38 we appear to have bounced off the 1127 ZSR, short term charts give us an ABC A and we make a second run at 1127. Long term charts still look down. We finally break 1127, but have to get through 1126.75 ZSR, 1126.50 1:1, not to mention the lower balance lines which are just below all three of these areas [during after market review I also notice macd divergence here on 3 connecting pivots, which adds even more support], like I said above, a lot of support below to get through here.. Waiting...
8. At 9:43 we bounce up again, with Macd divergence below. It's too bad that we can't get to the lower X on the long term charts. Maybe if we get a third attempt in next couple minutes, it will be successful. Waiting...
9. At 9:45 there's a quick third try short that bounced off the 1:1 this time. Short term charts are full of divergence. I'm thinking long now after the third attempt short, after all of the short term the macd divergence short (that held), and the 1152 macd and mx are starting to trend long, but not there yet. But until the long term mx and macd actually switch, this is just thinking and not a clear bias. Waiting...
10. It's now 9:50am and a good reversal time. Since we've tried to go short for 20 minutes, and haven't made much progress, it's time to think harder long.
11. 1126.50 - 1127 has been a good area of support. Also, if you look back into the overnight on the long term charts, we now have a double bottom at 1126.50. A potential trade is long off of this area, with a 2-4 tick stop. Had you taken this you could of made a few ticks, or at least break even.
12. At 9:54 1152 mx and macd switch long and 7500 is moving in that direction.
13. News is coming out at 10am (Factory Orders and Pending Home Sales). If news can't drive the long term charts to an Extreme, I'll stop for day with no trades. It's the second trading day of New Year. Too much macd divergence, too slow (low volume), and no ABC X's on long term charts.
14. News does drive us to the lower extreme on the 1152 (barely) but doesn't do it on the 7500. I'll hang around for a few more minutes and see if I can get a B long off of the 1152 around the 1127 level.
15. We're now forming a clean ABC A, and it's slowed back down after news. So I'm DFD (that's done-for-day). No trades :(

It's risky to make predictions. I really have no clear idea of what's going to happen today (otherwise I would of traded it). But if I had to guess, I think we'll go long from this area (1125 X low and 1127 support). It appears to me that big traders are moving the market long. The news this morning was bad, but we hardly reacted to it. And we've continued to see macd divergence.

Post Market Review

I like the above trade even more in post market review. Not only was it just a few ticks shy of forming an A and a B in the right place, but the small triggers are coming through the big triggers, the bias is long, and we have lots of support now below us.

We did get that run up from 1127 that I predicted above. Had I been in that trade, the safe thing to do would of been to lay off half at either the zsr at 1130.50 or at the upper balance line at 1131. The remainder I would of targeted the 1133.25 zsr, which we never hit; so the second half would close out at either a 6-8 tick trailing stop from 1133 high, at somewhere between 1131.25 to 1131.75 when the small triggers closed down.

For the remainder of the day, the @ES behaved pretty well. Although there was really only one safe trade, and I'm not sure how much we would of gotten out of it.

The B short on the 1152 that was tick perfect to the projection of 1132 at 11:03am, however, it occurred on the wrong side of the big triggers so I would of passed. The F short occurred pretty close to the big triggers and at a zsr, and had I been trading I hope I would of gotten this for a few points. Entry would of been either the zsr at 1130.25 or wait for the small triggers on the 288 to turn, first half off at 1127 might not of filled, and second half off probably with a 6 tick trailing stop. This is too bad because the A short at 1:47pm happened right where it should of at the midband 1129.25, and it would of been nice to hold on through this, and take the remainder down to the X again.

The X at around 2pm was another trade opportunity. There was lots of other support in this area, with a zsr at 1127 and another at 1126.75 and a 1:1 at 1127. Had I targeted the 1:1 at 1125.50 to go long, as I probably would of (or at least I might of shot for 1125.25 splitting the difference), I would of missed this trade.

Overall the markets behaved relatively well today. We had our first successful ABCF series on the 1152 for the new year (two trading days). And while we had macd divergence on the short term charts, there was no divergence on the long term charts.