Sooooooo, what do we get today? Trend. With apologies to Forrest Gump, "Market is as Market does.".Thankfully, I was more on my game today, and while I initially started off the day with the simple goal of being positive after yesterday's disappointing performance, as well as finding my internal rhythm again by trading small sizes, things began falling into place nicely as the day unfolded and the oscillations became more predictable, and I picked up my trading accordingly. The result was a decent $21K chip gain, but more importantly, a restored confidence.
Both the 5- and 15-minute trends were horses today, with the market never breaking its 15-minute downtrend.
Tomorrow could be the day of all days, with a sky-high VIX, employment report, and House bailout vote all converging into the Perfect Storm.
I had damn well be on my game.
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Some things that help me identify a potential trend day:
-Large gap open, especially beyond the previous day's whole range.
-A strong directional drive right off the open, usually blowing through support/resistance levels as if they were nothing.
-Previous day(s) were small in range (i.e. volatility expansion is more likely).
-Indices moving together in synchronization without any major divergences lingering.
-Most sectors moving together and confirming new highs/lows.
-The advance decline line trending to extreme levels above or below +-1000.
-NYSE tick being consistently tilted to one side with most extremes to the other side being unsustainable and quickly reversing.
The more you have these factors lining up, the more likely you are to trend, and especially if you have above average volume. And in the certain occasions when you get these factors ALL lined up and in emphatic fashion, you can expect the trend to continue into the last hour and close near the highs/lows as chances for a reversal become very low if you go on to set new highs/lows after the first hour or so of trading.
The ability to identify potential trend days early can be a huge asset, and it makes up most of my profits in any given month as I am able to time entry with relatively tight stops and then hold for large reward/risk multiples. It's definitely a skill worth building, but you gotta be ok not having a high accuracy as you can make great money even while being accurate less than 50% of the time. And the more you practice, the more you get a feel for what the tape behaves like during trends too.
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