Here is a chart of Natural Gas that displays orders I have in for this market today. As you can see we have a valid long setup in place. First, the seasonal shows we are at the time of year where prices typically rise, BLUE LINE. Next we have both of the momentum indicators rising indicating an uptrend that price has not quite caught onto yet. Then we have what would be a higher low than the lowest low on the chart forming if we were to move up from here. We do not know if in fact this is a higher low yet. A rally needs to occur, so that is why I have buy orders above.
I was talking with a good friend again yesterday who loves to trade, yet constantly loses money doing so. I constantly harp on him to get away from the inraday charts, and wait for daily highs and lows to go before entering trades. He is just so impulsive he can't do it. I even constructed a custom indicator for him that gives him very specific patterns to trade with. ( Not what I use but in the same general spirit of it ) I then showed him what they were and he was very excited. Now that he is trading them, he is trading against those patterns, and on top of that anticipating intraday high and low penetrations that wind up never happening. As a result, the ultimate outcome is the same. He is a highly intelligent person and very successful in other walks of life. However, and I have told him this, the swashbuckler approach to things may work in other industries but it is does not work in trading. You really have to stay disciplined or you will get your butt kicked!
I am staying disciplined here in a market I want to get long in, by waiting for my pattern to trigger. Maybe it won't, I have no idea. I do know that if I just blindly buy here that I would have no idea what my odds on success would be. If for some reason it turns out that discipline is a negative in trading, I will walk away and dig ditches. It is what I know and how I am wired. I know of no other way to approach life. The caddyshack trading approach does not work for me and for that matter, not for anyone else either.
I have mentioned before that Natural Gas is like that crazy uncle that some people have. This market beats to it's own drum and is very volatile. It can be asleep like this then all of the sudden fly $3000 per contract in 5 minutes. I am not assuming this order will not be filled even though this market is not moving much at all so far today. You just never know with this one. As they say, the force is strong with this one.
I have been mentioning for a month or so maybe more, that I was bearish on BONDS. Below is the trade I just entered this morning in that market.
Of course I always take the chance of being made to look like an idiot posting trades live in here but what the hell, it is what I do. In all honesty I placed the orders last night and did not expect them to be filled so just discovered I was in this trade a few minutes ago. Pretty much the standard MO here. Downtrends in the momentum and a bounce in price against it. There was a dreaded reversal bar as you can see yesterday. These damn things just give me so much trouble. My logic as to why I took this trade was as follows. I know I have a reversal bar here which means this entry could very well be a trap. However, if it took yesterdays low then reversed back up and closed positive, it would be a reversal bar back in the opposite direction. If that were to occur which is the worst case scenario, I would then have a valid sell below todays low which would be a lower entry than I already had, so I just went ahead with it. As per the usual, I have no idea if this is any good or not, but I am stuck with it now.
I traded Notes instead of Bonds because the accumulation/distribution indicators were a little weaker there than for the 30 year, but it is basically the same trade. I got more contracts on with the Notes than I would of with the Bonds due to the stop difference by a 3 to 1 margin and the markets normally have about a 2 to 1 ratio. As a result, if the trade works in theory I should get a little better bang for my buck.
Just remember, what we have all learned in the "teachable moment" the last year and a half is this, if the trade does not work don't worry, just blame it on George W Bush!