(UN)SHOCKINGLY boring trading day, acceptance & Python: Friday's Trading Plan
Fireworks tomorrow?
Yes, I’ll admit, this might be a slight clickbait title, but I must keep my open rates above 45%. As my former boss used to say, “it’s a win-win.” Plus, it wasn’t a boring trading day at all… until lunch!
Before we start, I’d like to thank those who reached out to me via email over the last few days; I will answer each of you by the end of the weekend. I love building this community, and I work hard to provide as much help as possible. I’m off to Mexico next week for the holidays, so there won’t be any Daily Market Updates, but I scheduled “One year of writing with you”, which summarizes the last year (financial performance, Substack, and life) and goals for 2023.
Writing on Substack is one of my favorite parts of the day. Trading is a lonely discipline, and I love having the flexibility to be independent in my job and also being able to connect with you. Thank you, it wouldn’t be possible if you wouldn’t read it.
Yesterday, we discussed statistics and distribution to get some insights about today. We had less than a 30% chance to have a day with a close below/above -/+1.5%. In other words, we had a 70% chance to close between -1 and +1%. Now, imagine holding your shorts since yesterday, or even worse, since November 10, 2022. If you pull up a 4h/daily $NQ chart, you’ll notice that we exactly retraced 50% of the previous leg up, starting at 10,808. From a technical perspective, we had a very nice retest of the breakout zone, followed by a sharp move up yesterday.
If we summarize the current HTF structure, we have the following:
Double bottom at 10,700 on the daily chart
Break of the 11,600ish resistance
Retest of the resistance followed by a second leg up
Catalyst
The (myth?) Christmas rally is around the corner
I view today as acceptance. Prices spent some time below the resistance, building volume. Guns to my head, 12,500 comes before 11,500.
So, what happened today?
It was actually one of the funniest days to trade in a long time. We had some type of double tops before London opened, followed by a timid 90pts drop, creating the OVN low at 11,992.5. At 8:30 am, we had almost a 1% move following the news, just shy of 7 points from the September 21, 2022, highs. I had a bit of FOMO, entered short slightly too late, and booked a small loss at NY open. My day would have been perfect if I had been more patient and kept my limit order. At 9:55 am, there was an engulfing on the 5-min chart, again, just shy of the September 21 highs. I took it for a second loss, this time slightly bigger, as we (finally) went above the 12,140 before dropping by 200 points, easily taking away the 30min OR low that held during the first half-hour of the day.
At this point, 12,030 was my pivot for the day, and I was looking to take advantage of it. We spent some time under the OVN lows before seeing another strong succession of green candlesticks. It was clear that we would probably not go lower from this time. We had a perfect re-test of the OVN lows at 12:05 pm, and prices spent most of their time below the 30min OR lows and mid. In summary, an interesting first half of the day, with the technical rejection of the September 21 highs followed by a bounce off the OVN lows.
My execution could have been much better, and I guess I was still euphoric after yesterday. It’s a good time to take a few days off. As said earlier, I will not be trading tomorrow or next week. I’m still amazed at how I get lured by the market, FOMOing into positions that do not follow my plan. Every time you get cocky, you pay it cash. I wrote that many times, yet, here I am. No shame; it’s a long journey.
Now, something quite interesting. Yesterday, I showed you the distribution of daily returns following a return greater than 3%. Now, let’s see the conditional expectancy of the returns following a consolidation day (absolute value of the daily return lower than 1%), knowing that the previous day had a return greater than 3%.
Ready?
Go!
Fascinating, isn’t it? Do you see the difference from yesterday? The market revealed his hand a bit more today. It’s your job to see how it impacts your cards. Seriously though, there has been a material difference since yesterday. The fact that today was a consolidation day impacts the distribution of tomorrow’s possible outcomes. Give it a try.
I want to write a piece on the Christmas rally I mentioned earlier during the Christmas break. I feel like I programmed hundreds of hours this year, yet I’m nowhere near where I’d like to be. I love trading so much!
Be careful at 8:30 am tomorrow.
For scalping, I’ll be looking at the following levels:
11,861.25
11,943.25
11,992.50
12,150
12,250
We don't know how much time we'll spend consolidating below the current resistance. We spent the last 2.5 weeks in a 5% range to let the market breathe after its crazy +7.7% day on November 10, 2022. I believe the consolidation will be much shorter, and my system indicates more chances for green candles to follow on HTF.
I added below my HTF levels. I like having them next to me to avoid forgetting the current context/market structure.
I received over a dozen emails recently on Python. The common theme is “where do I start?”. I have some time during my Christmas break, and I wouldn’t mind doing a video to cover some concrete examples. Please answer the below polls to help me decide whether I do it.
If there are more than 50 votes, I might do it. If you vote yes, help me help you by telling me in the comment section what would be the ideal video about getting started with Python.
Thank you.
- Retail
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Twitter: @itsonlymoney12
📩 retailcapital9@gmail.com
Love your articles. Have you ever thought of adding a 'buy me a coffee' option to your substack? Not sure if that's possible.
Would love to see a video on how to write a python program to automate my trades based on some simple strategies for both futures and options and back test them. Not sure if you already have one .. I am a new subscriber. Loving your content. Thanks!