Trade Aptitude

Tuesday’s Best S&P Turning Points Results: The suggested short @ 4036.75 ran for 76.75 points and picked the day session high price.  

Today’s Best S&P Turning Points (consider wider stops and less size in fast moving markets): 

Short 4018.50 stop 4024.25. Buy 3932.00 stop 3927.25.

The World Sentiment Index: (+100/-100) DROPS from +43 to -21 in a world of bearish-leaning sentiment and lower volatility.  Historically price closes higher than the open 56% of the time. 

Catalysts: Retail Sales & Import/Export Prices @ 8:30. Industrial Production @ 9:15. Business Inventories & Housing Market Index @ 10:00. EIA Petroleum Status Report @ 10:30. Scattered Fed-Speak. Risk-off with geo-political and crypto negatives in the news. 

Quick Tip: Science & Art of Exit

Trade exits are critically important to master. All the money is made or lost on your choice of exit. And that means exits are where emotions peak. 

Looking at yesterday’s chart there are three examples of exits from this “perfect entry.” While we know the move ran for 76.75 points we capture that (Maximum Favorable Excursion) for documentation and research only since choosing that exit is unrealistic. 

Knowing when to exit will depend on your intraday trading style/strategy:

The 12.25-point exit pertains to our volume-at-price strategy. The expectation was a reversal from that level. This strategy will take several trades a day so catching moves between reversal levels accrues smaller but hopefully more frequent wins. 

The 56.75-point exit was a more aggressive exit strategy using price pivots looking to capture larger moves. This requires open trade management.

The end-of-day exit was for those expecting a down day and not wanting to open-manage the trade. In fact, all-star trader Larry Williams wrote in his book Long Term Secrets to Short-Term Trading his best exits overall were simply waiting for the close. 

Which should you use? Only practice and experience will help you find what resonates with your personality. Once you’ve settled on entry rules, spend all your training time on finding your exit strategy. And keep in mind they should vary based on current market conditions. 

Trade Fearlessly,

Mike Siewruk

P.S. If your strategies have proven edge and your results are spotty then you need to change your behavior. Click to learn how.