Today we are faced with what I call a Holiday bar. This is just a bar where all we have is the electronic session only, with the pits all closed. The odd thing about this now is that not all markets have a bar on these days, so we wind up with different numbers of bars for each market for a full year.
The question is how to handle these? There is not a simple answer to this. First, one of the biggest mistakes people make, and my infamous friend makes this one, is that they fail to take into account small bars with light volume that adversely effect their indicators values. If you are using a 60 minute chart to trade with, all the bars carry the same weight in any indicators you are using. This includes the bars that look like dots that occur overnight, when there is no volume. Do you really want to be counting Elliott Waves on bars that have 3 trades the same as those that have hundreds? Of course not. I tell people this all the time, they ignore me and just keep losing money as a result of this. At this point I just don't care any more. They want to lose. Ed Seykota's most famous quote in my opinion is "people get what they want out of the markets." What he meant by that is that those who lose subconsciously want to lose, which is why they keep doing things that don't work.
There are two answers to the above dilemma, use tick charts when day trading, or just trade the day session only. I don't know how many times I have told my friend this and yet there I was last week again looking at 60 minute charts with those little dot bars being counted the same. Of course the problem with tick charts is that you don't know when they are going to end, so you have to death stare the screen all day long. That is a sure fire way to lose money. The problem with just trading the day session only is that often very large moves happen over night that you will miss. It is not a perfect world is it?
However, the daily electronic bars are different. These need to be taken as regular bars. In the chart above I was looking to buy Heating Oil based on a pattern in any indicator I use that was set up by the small range bar. You can see the breakout of it was powerful and who cares whether or not it was an electronic bar or not. Most importantly, the market does not know that. One thing I do even as long as I have been doing this, is once I see a setup certain wierd thoughts creep into my head. At times it is almost like I am trying to talk myself out of something. "Well it is a holiday bar so....." "Yesterday the DOW did ..... so ......" "We are down big and the PPT should show up soon so ...." Those voices never ever lead to good decisions. The fact is when you get a setup that meets your criteria, go. If it is a holiday bar or not, it does not matter.
The Bond long from Friday was exited on the opening for 4/32's profit. This was another clunker but again a system is what it is. Here is the summary of the trades that have been done since I went public with this here.
The 5/21 long you will recall is a trade I filtered out due to the Regression Channel, so that one does not count. Net we have 5 out of 6 wins so far, a good percentage. This table just shows every one the problem spits out. The net profit is not much thus far, $533. I suppose it could be worse it is a green number. After watching someone have that terrible streak I mentioned, I am still not sure I ever want to offer this as a service, but I will keep posting the trades in here and we will see how we do. I do know there is a revenue stream for me here if this works, so that may be enough. The Bond Market is so big that the number of users on this would not likely effect the net results.
By the way I measure trends the trend turned down in the ES at Friday's close, so it is now sell the rallies.
There is no precise price, just that zone marked with the word Sell. Any rallies stall up here are sells now.
Good luck this week