We Wait

The market made us wait today with an inside range check mark type of session.

So we see what the 1st of the month money does tomorrow with Europe closed.

Lowest Volume Of The Year

Here we are testing highs and it's the lowest volume day of the year for the NYSE.  Who would have thunk?

Unless some programs get busy to punch us out tomorrow, today is going to be an obvious laggard long day, where the few who got long did so to their peril.

But all of the micro analysis in the world is only really the game of we day traders because the central banks throw money at this market every day.

But what a pretty double top print today.

Tomorrow just might be fun.

Intra-day screenshots:

Checklist Manifesto

I'm currently reading a book "The Checklist Manifesto".  Most every example so far relates to the medical field and flying yet trading is a perfect candidate for checklist work too.  Trading is simple, yet, complex in many, many ways.

Here are a few of quotes from the book:

In a complex environment, experts are up against two main difficulties. The first is the fallibility of human memory and attention, especially when it comes to mundane, routine matters that are easily overlooked under the strain of more pressing events.

Gawande, Atul (2009-12-15). The Checklist Manifesto: How to Get Things Right (pp. 35-36). Picador. Kindle Edition.

The key there is "more pressing events".  In trading, it's not just an explosive move that can cause things to be overlooked, but being hungry, tired or emailing are just as effective at ensuring fallibility.

Faulty memory and distraction are a particular danger in what engineers call all-or-none processes: whether running to the store to buy ingredients for a cake, preparing an airplane for takeoff, or evaluating a sick person in the hospital, if you miss just one key thing, you might as well not have made the effort at all.

Entering a trade is our "all-or-none" process.  Miss one key thing and your trade idea will be toast. And here is where "psychology" can so important.  I am hearing now that many trading circles poo-poo psychology.  They have their plan and it's all mechanical.  I wish them luck, as my studies in self observation and emotional management have saved my ass.  I don't care if your decision to put on a trade is a result of 5,000 hours of back testing,  the fact is that you are human fallible   And if you are having a bad hair day, and don't understand that this is an issue, you are going to make mistakes -- no matter how mechanical you perceive yourself to be.

Checklists seem to provide protection against such failures. They remind us of the minimum necessary steps and make them explicit. They not only offer the possibility of verification but also instill a kind of discipline of higher performance.

And that's what we strive for as traders.  We have to have a firm foundational process in which to frame our trade ideas.

So, here is my latest checklist re-done this morning.  I didn't add much but cut out plenty.  I'm trying to make it as simple as possible with much emphasis on the 1st hour of trade (IB).

Checklist: Update on 4-27-13

The checklist has shrunk again.  At my current skill level, these are the crucial things to note.

1) What is the daily and weekly trend? (Yep, I forget this all of the time)

2) Opening in or out of balance out of yesterday's range? Multi-day range? (Yep, I lose track of this simple metric constantly)

3) IB volume is key. (I can't count the times I've forgotten to check)

4) IB volatility and range. (At least half the time I forget to check)

5) TICK extremes and structure. (I'm lucky if I am consistent with this at all)

6) A/D, Up/Down, Cumulative volume readings and most importantly trend. (I fail to notice trends constantly)

7) Sector, inter-market, major indexes themes and lead/lag characteristics. (I"m probably the best at this one)

8) Always be conscious of what time it is, especially at 7:30, 9:00 and 11:00. (Getting there, but need to read this checklist as a reminder)

9) From here you handicap reference zones and transitional structures for high probability trade ideas. (That's the goal!)

10) What is your mood like?  Angry, frustrated, revengeful, bored and looking for action?

Please comment if you have good checklist suggestions.

Nice Friday Trading

There is so much to appreciate about today, despite the totally non-glamorous nature of the day -- which was low volume balance.

The morning low at 9:00, right at S1 and minor low of the overnight, was a reversal trade -- magnificently confirmed with a multi-day low IB volume print and a momentum transitional structure.  In this grinder higher, if any downwards inventory adjustments don't have any volume support, then they are clearly suspect.  And like clock work, the programs bought the minor lows at the reference zone and took it back to range highs.

And a straight shot from lows to range highs like today with mostly neutral sediment and low volume was a spectacular late session reversal short.

IT'S NEVER GOING DOWN -- EVER!

True Balance Day

Noting This Absurdity

May must be close at hand... Just noting this again, so I don't forget it.

Flash Crash

Not as exciting as other long-winded flash crashes, but we got one today.  Just a news-driven push lower and instant rebound.  What I find astounding, is that the market could whoosh lower 15 points in just over 5 minutes and not even print a -1000 TICK reading.  That's just "impossible" and reflects structural deficiencies.  Not a good thing for the really big-sized trader.

Hello Check mark Grinder