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Strategies & Market Trends : Systems, Strategies and Resources for Trading Futures
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To: Robert Graham who wrote (1322)6/30/1998 11:09:00 AM
From: Patrick Slevin  Read Replies (1) of 44573
 
The Open

That's all pretty straight-forward stuff. Another key to watch is INTER day direction. If the market has been opening strong and closing weak it is in some trouble and of course the converse is true.

The Morning Trade

The scenario for the Morning Trade can be a little mixed depending on perception. The idea that it is immediately profitable or not is not necessarily so. If I am marginally unprofitable I give it a bit of room but rarely more than 15 or 20 minutes.

As far as being on the "correct" side but then allowing it to eat into profits and adding to the position ----of this I would be wary. The 15 to 20 minute time frame that you are waiting can be an eternity. One exit strategy I use when a trade is moving in my direction and stalls is to take partial profits and go back 4 5-minute ticks. As each 5-minute tick bar goes by I look drop the mental stop to the opposite end of the next 5-minute tick.

You can see that as the market starts to stall my stop gets tighter and tighter. After all, I'm here for a day-trade. I'm not going to add to the position. It should not be in my plan. After all, we're throwing more decisions into the plan in the thick of the battle. The fewer decisions the better and more seamless the trade is executed from entry to exit.

Again, however, all this is a matter of perception. Once I have a trade on it stands on it's own merits. I rarely add to the position in mid-stream. Another day trader may not have a problem with increasing the mix. If you DO increase the mix, one caveat would be never to build an inverted pyramid. Always keep the base of the pyramid the widest part of the trade.

For example. If you start out buying 4 contracts and the market advances and pulls back part of the way.....don't add 6 contracts, add just two. Inverted pyramids have a nasty habit of tipping over.
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