It was another interesting day. We captured the early weakness with Put options and quickly moved to the sidelines. Well, at least with options that is. Being prepared is always better than trying to predict what the market may or may not do. In other words, instead of focusing on what is going to happen next, try to uncover what could occur and see if a low risk opportunity exists. That's exactly what I do each and every day.
The ES futures did quite well today, especially considering it's 100% mechanical and all the trade parameters were available within the first 5-minutes of trading. In review, I mentioned earlier that sometimes an experienced trader is able to intervene and get a better result than a static trading system can. Today's 3rd ES signal was a good example of such.
The mechanical system, whose parameters were 'written in stone' several hours ago, has no way of knowing that a buy program is fueling the market. But you can easily identify these situations by watching the charts. I wouldn't normally suggest changing the static parameters of the signal. However, on a signal that's targeting over 6 points, and comes within ½ point of the target, you can certainly be proactive and not let those profits evaporate.
For example, we saw the S&P futures explode to the upside. On paper, that trade had profits of 6.25 points before the buy program kicked in. That trade was also stopped out for 6.75 points. That means the S&P bounced 13 points from that low. That's the kind of situation that an experienced trader can, and should, recognize and by being proactive you preserve much of those gains or at least reduce the risk but considering a move of the stop to breakeven.
Overall, we still netted 4.25 points for the day because the official system result doesn't include any subjective moves of targets or stops but you can certainly increase your reward with a little extra work from time to time.
Have a good evening and see you tomorrow morning.
 
posted by OEX : 2:58 PM
 

  
Update 
Nice buy program kicked in about 45-minutes ago. You can tell it was a buy program because it was accross the board and it was large as measured by the distance the S&P futures traveled in just a few minutes.
For those of you who trade the ES CTS. The 3rd trade today came within 2 ticks of the target before the buy program kicked in. Normally I say it's best to not change your parameters when trading a mechanical system. But, when you've already locked in 11 points from the prior 2 trades and you see such a bounce taking place it is wise to intervene at times. I have my software programmed to move the stop to lock in about 3 or 4 ticks of profits once the system reaches 90% of the target. This way, you avoid these type of moves. That's just something for you to consider.
Stay tune
posted by OEX : 1:33 PM
 

  
OEX Profits Reached 
OEX Profits Reached!!
http://www.oexstreet.com/secure/archives/uploaded_images/4th-748618-748731.png
It plowed through the entire target range on one swift drop so no need to trail a position there :-)
That didn't take long did it?
Please save this message:
I don't try to predict what the market is going to do. Rather, I make preparations for what it may do. If a move does occur then we are prepared and know exactly what to do and we know the odds are in our favor.
This Put trade was text book.
Stay tuned.
posted by OEX : 10:26 AM