Warrior Trading Blog

Case of the Mondays -$1,800 | Steve’s Futures Pulse 166


Hey, what’s up everyone? Trader Steve here in the ugly Hawaiian shirt in the top right of your screen. Well, what can I say? Today felt every bit like a Monday. What do I mean? We went to battle, as you’ll soon see in the E-mini S & P, and came up empty-handed. Let me show you today’s futures polls, how I got faked out, but then I went into damage control to live to trade another day. Check out today’s futures polls.

All right. Let’s talk through the E-mini S & P trade today. It was a fairly complex trade, and a challenging session. Today’s word of the day that I talked about in the chat room was range-bound volatility. Which means the market was volatile, but it was virtually directional. It was very lack of follow-through, and so forth. I’m not making excuses because I’m gonna show you exactly what we did, why we did it, when we did it of course, and then why we needed to go into damage control mode so we lived to trade another day.

So early this morning we started seeing the market make the break above some key supply areas that came in, in that 2958 zone. This is right here, and where I’ve circled also on the 30 minute time horizon. The supply area 2958 at that time, simultaneous breaks to the upside, most often, most of the time, but not always obviously, is a good sign that the market on short-term time horizons, at least these horizons, will have some upside. But it wasn’t meant to be.

Just a couple ticks after entering our six units at 2959-3/4, you could see the market topped out right here. Right here we needed to move our stock relatively quickly on, in this trade. We started with a stop initially on this one with eight points, a liberal stop, I was encouraging the use of Micro E-mini’s at that time. The stop was at 2951-3/4. What happened here was this, the market came down, okay? Watch this, we’re grinding down lower, and obviously at that point we didn’t really have a clear market direction. Then guess what? Market started giving us a pop in its head, right back above that 2958 zone again. It actually looked like it was gonna be a trade that was gonna work itself out after a little pull-back opportunity into the congestion zone.

So we added, on two occasions, at 2958-1/4. On two separate occasions we added six units. So that’s 18 units on the long side. So I knew at that moment, given the market exposure with the wider stop initially, it was time to start mitigating our risk. So I’m gonna draw a line here where we started with our stop at 51-3/4, then we moved it up here to 53-3/4 right there. Then we went 54-3/4, and right about here when we moved the stop to 55-3/4, that’s when the market kind of grinded lower here. We ended up getting stopped out at that 55-3/4. So we were down about $2,700 on that unit, given the size of the trade. It wasn’t meant to be. So we ended up, obviously at that point, losing three points per contract. If you’re trading just a single unit of the S & P, by the way that’s $150, so you’ve got to kind of keep things relative to the amount of risk that you’re taking on.

So at that point we were flat to market, and we spent a little time in the market. We were watching, we were waiting, we were talking an awful lot about how there was very little volume, late part of the morning and early afternoon. Then we did actually get on the short side of the trade, because we saw in juxtaposed fashion, the market actually, after the early fake-out to the upside, was starting to establish itself down below all the congestion and what we call master points of control. That’s these lines up here, the yellow ones in color.

Why that’s a big deal, and why as day traders we can’t ignore when the market technically changes. Because remember that’s called marrying a trade. We never want to marry our perspective just because it happens to be bullish to start the day. We were wrong. That’s all there is to it. We were wrong, and think I was happy? No, no, no. I wasn’t happy, but my temperament was still opportunistic and we did find a little opportunity as you’ll soon see.

So we did start to see the market establish itself down below, so we put on a short position at 55-1/2. That’s 2955-1/2 which is right about where I drew right there on the board. I’ll draw it right over here, as well. Because it was as the market was starting to work its way down below some of that volume. We put a stop initially at 60-1/2, and then we were able to quickly move that down to 58-1/2, so it looked like this. This was the risk path on the stop. But look what we had. We had the market actually kind of grind its way lower, and at one point it looked like we were gonna get the break we were looking for. I was actually pretty excited about this. It came all the way down on the low here. Where did this bottom out? It was 48-3/4 back then.

What we were looking for, is for this market to get down below what I call S1. Support level one is this right here. See how the market goes sideways on that? This is an indicator I use called Tas, static PCLs, or price compression levels. What it does, is it gives you basically support resistance levels that you can really, really come to rely upon. Look at how the market went sideways here. But the market just couldn’t have any consistency to close down below there. So as the market started coming back up, I end up covering on this thing at 52-3/4. So we grabbed three points back. So we grabbed $900 off that $2,700 initial red. That’s how we ended up down $1,800 for the day.

That was only a six unit trade. So in theory, I guess, if we had been the same size going on the short side, we would actually worked our way all the way back to break even, at least. But it was a smaller size trade on that breakdown trade in the afternoon.

So it is what it is. $1,800 in the red. Boo hoo hoo. Sometimes in trading, it’s two steps forward and one step back. Sometimes it’s ten steps forwards and two steps back. Today was about three steps back, but nothing insurmountable for us to still go on and have a great rest of the week.

So keep your head up, your chin out, chest out. Or however it goes. You know what I’m trying to say. It’s just one day. We live to trade another day, and meet you back at the markets tomorrow. Until then, trade well and be well. Bye bye.

I told you there’s always a valuable trading lesson inside these videos, and that’s why now is the time to subscribe; so you keep getting alerts every time I post a new video, as well as the other Warrior Trading mentors. Until the next video. Happy learning!