Keeping Pace With Momentum

Until recently, I had software installed on my computer that would ring with a siren every few minutes. It uses a literal siren sound like a fire engine. The purpose of this timer was to remind me to check all my charts so that I could stay on top of changing market conditions as they evolve throughout the day. One way that I ensure consistent earnings is by constantly scanning for emerging signs of new momentum. This is, after all, a profession, not a hobby!

As a trader, existing positions can often become a distraction from other emerging trade opportunities elsewhere. It seems that as traders, we often miss good opportunities because we are so absorbed with a different one. This alarm helps me to be mentally alert and to quickly locate new opportunities as they emerge. I have written elsewhere on this blog of the danger of opportunity cost/loss.

Recently, Tradestation updated its software and added some timer alarms, so I no longer need the separate software. I have a timer set in Tradstation that activates an alarm at regular intervals to remind me to quickly scan all my charts. I follow about 20 futures instruments, so even if I have a position in one instrument, I frequently scan all of them so that when a breakout occurs, I can quickly find and assess each one. It is mentally exhausting, but is necessary to keep skin in the game. Who ever said this business was easy?

Tradestation 8.4 Issued

Tradestation has just released the newest version of their software. It has a great new feature called a Scanner that allows me to enter a very diverse list of criteria, including volume, price, indicators, etc., and the software will scan at programmed intervals for those criteria. I haven't installed the new software yet, but will install it and play with it over the weekend. It looks like a great new feature that will save me a lot of time!

First Few Trades Most Profitable

Over the past several days or weeks, I have noticed that the first few trades of the day are often the most profitable, especially in a period of uncertainty. I believe that prices for all commodities will remain well supported, even if the markets consolidate, because Fed easing in the shadow of the ECB holding their rates higher to stave off inflation, is bound to reignite inflation for which America will pay a very dear price in the not-too-distant future. I have marked these early trades with arcs. Tradesation, unfortunately, doesn't have better methods of marking these trades without obstructing the view of the charts themselves.

Wednesday Trading

Wednesday was an average trading day. It was average in the sense that I have various trades, but nothing spectacular. It was NOT average in the sense that I took 8 trades. This is quite high; 4-6 trades are more typical. Pictured in the next few posts are the various trades I took. I haven't taken the time to mark entry and exit points due to lack of time. Tradestation does this for me, but I have to turn that feature off. I have turned it off for two reasons: 1) it makes the charts for difficult to see when its on, and 2) I tend to get too caught up in the profits/losses rather than concentrating on the indicators and prices (ie., they are a distraction). When I do that, emotions take over. It is easier to control my emotions when I turn that feature off.

For entry, I require the Klinger indicator to be moving in the same direction as prices, and it must also be above the trigger line (yellow) for a long position, and below the trigger line for a short position. Also, prices must have just crossed the EMA and at least one more MA (either the Hull MA or Guassian).

Due to the difficulties of blogging, I must post the trades in the opposite order from the way I placed them. It is difficult to do it this way, because it is counter-intuitive. I must post all the trades in reverse order so that when the blog is posted, they appear to the reader in proper sequential order.

Daily Soybeans losing momentum, volatility

I am posting here a daily chart for soybeans. It is showing all the signs of an imminent reversal. Note in the last candle, prices have crossed convincingly through the EMA. Prices tried, but failed, yesterday. I have programmed my EMA so that it changes from blue to red when this occurs. (By the way, I use Tradestation, both for my charts and as my futures broker).

At the same time, notice in the 2nd panel that the Klinger Volume indicator has already turned down days before, and has now also crossed below its yellow trigger line, which is also moving lower.

On the same candle, BOTH the Hull Moving Average (magenta and blue in the 2nd panel), and the Gaussian filter (not pictured in this graphic, but typically shown as green and red in the 3rd panel of my other chart examples), also turned DOWN on the same candle. Thus, all 3 moving averages turned down at the same time. I should also note that the slow stochastic and MACD have also turned down, as has Open Interest.

Will soybeans turn down in price? Only time will tell, but this is a good hint of lower prices to come, or at the very least, fading upside energy and momentum. If I had to guess, I would bet that prices will rise again until the longer Bollinger Moving Average in the top panel draws closer to prices. A sideways movement may be more likely until more long-term traders realize that the big soybean move of the past year is finally coming to an end. I'll be ready, however, for a new move up and amplification of the bullish trend, as has happened in the past. Be ready for anything the market gives you.

One last thing: Since hedge fund traders and hedgers (not the same thing) often use them, I have added the 50-day (light blue) and 200-day (magenta) Simple Moving Averages to my daily chart. Since so many people consider them to be important, I wanted to be able to see them. They represent important potential support.