ES Journal Archive (2006 - 2008)
- Thread starter Buy1Sell2
- Start date
- Status
yes, the short term trades against the larger frame needs to be exercised with extreme caution. The first divergences don't necessarily work. I also like to see the angle of the 20 moving average begin to flatten out as well. Moves are generally created from the flatter periods. For example, I am trading the 240 chart and I was wrong today, but the 5 minute chart had clear bullish written on it from the opening bar 8:30 to 8:35. There has been only BRD on the 5 minute chart so far with the histogram and so far that has failed. It may take a second or third to make a reversal happen. --Or not at all.
One thing to bear in mind as well. I have been reviewing charts showing morning vs afternoon. There are quite a few times when the afternoon session is exactly the opposite of the morning session and to a larger degree. No stats to back it up, but I would guess it's about 35 to 40 percent of the time.
I think as I mentioned the other day, that divergences against a strong predominant day trend need to be reviewed more closely and perhaps tighter stops used. The 1 minute divergence I mentioned earlier was tradeable for 2 points. You just can't be too greedy when it's against the grain, however it still works.
One thing I try not to do (or trade) is expect repetition of the most recent action. This would be for today to follow yesterday or the current move to be equal in magnitude to the prior. Unless I get undeniable evidence it is so. Psychologists have a name for this that I cannot remember and I think Mark Douglas discusses it in his book. I am sure Professional traders and trading super computers are programmed to exploit this human tendency.
The way I might apply it in a scalp is if I see a spike to short I will not take the following spike that is similar, I wait until people have been caught by this second carrot, easier said than done
- Status