Wednesday 19 June 2013
Lost Today
Today I lost 11 points. The chart below is a 10 minute chart of the Dow Jones. At Point A we see what looks like a test - down-bar, low volume, closing near the high. The test failed, as you will see by the down-bar following, and as I saw weakness in the lower timeframes I got out at a loss. In hindsight you can see that at Point A we've reached an area of possible resistance - a previous level. This is probably why the test failed. Plus, following the failed test the market has literally gone sideways - a warning that this is not a good day to trade, not so far anyway.
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Hello Rita,
ReplyDeleteYesterday was FOMC meeting day, so people were waiting for market moving news. Also, my chart on ES was showing no demand the day before, so that might have caused the failed test yesterday.
I hope you don't mind these comments. They are made in hindsight, of course, and the charts could have gone anywhere, but I wasn't bullish when preparing for yesterday. Similarly I just made a losing trade by getting in prematurely, wasn't happy about it, but it has gone down further since. And of course, today's looking pretty omnious as well. (Look at gold and silver futures.)
I totally agree Edmond. I should have taken notice of the weakness. Another lesson learnt. I'm afraid in this game it seems just when we think we've made all the mistakes to be made, we find another one!
DeleteI am conflicted with the idea of "setup", versus buying a stock that is as strong or stronger than the index. One of the examples that was referenced often is BP. If BP is able to provide a set-up, its price action have to be weaker than the index at the time, to go through an accumulation process. Would appreciate for your explanation.
ReplyDeleteI can see, however, it does not apply to your trading approach, because you are already trading the index, and your timeframe is intraday.
I would also like to inform you Sebastian has a blog that makes an interesting read.
http://sebmanby.blogspot.ca/
Hi Edmond,
DeleteI think this is a question best put to Tom Williams in the VSA Club forum as I think he will answer it much better than me. I don't follow stocks, but am thinking of making a start soon. All I know is that he says we must first look for stocks that are acting stronger than the Index, and when the Index turns around they will rise with it. But you must see a set-up/VSA principle before taking a trade.
Also, yes, I read Seb's blog. We are good friends and are in regular contact. He is a very experienced VSA user.
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