Monday, June 17, 2013

Today's trading

Turned out to be a nice day to be short bonds. Was kind of a boring day until some story leak about Fed tapering asset purchases leaked mid day and then equities and bonds sold off, and then equities rebounded but bonds stayed down.

Surprises often happen in the direction of the trend? Atleast it was true today for the bonds. ES longs were tested however.

Something I've been repeatedly writing about and also using in my trading now is trading with the trend. This means absolutely no counter trend trades. There are various trading systems one can use to stay on the right side of the trend. One such setup is using Ichimoku. I personally dont use Ichimoku as trade triggers, but I used to before, and I still keep this chart open during my trading hours. Look at today's 5 minute chart.



Looking at the chart, what would you say is the direction of the trend? In the morning hours, when the moving averages (tenken sen and the kijun sen), along with the cloud, were up-trending  Easy enough yes? So one would need to be long, or buy dips. You need a set of rules to do so of-course.

Second half of the day, once price broke below the cloud, the price is in a downtrend. This only means one thing, and thats you either need to be short or flat. Your stop would be above the cloud.

Anyway, one would need to come up with their own rules to trade this, and then keep track of statistics, etc. But the point is, find a trend trading system, one which helps you identify the trend, and then take all trades in the direction of the trend. 

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