What’s the goal, to trade to win or to trade to trade?
Okay, so let’s talk about NASDAQ.
Remember, it’s 50 cents a tick when you trade in Micro E-mini contract, and it’s about $5 a tick when you trade a full E-mini contract. So in trading, trading can be as simple and/or as challenging as we want to make it. And it’s silly as we say that, but there’s a couple of things that we can do in our trading that can make things a little bit easier on ourselves.
Don’t Over Risk
For example, don’t over risk. If you’re risking 80 to 90%, 100% of your trading count in a single trade, naturally, everything’s going to be intense. Naturally, everything’s going to be emotional, and you’re going to be very stressed out. But if you’re risking less than 1%, less than a 1/2%, less than 0.25%, then essentially, trading’s trading. If you win, you win, you lose, you lose, because it’s really not that big of a deal.
Trade the Patterns
In trading there’s patterns, and then these patterns, we monitor these patterns. We have to ask ourselves, “Well, are we going to trade the patterns? Are we not going to trade the patterns? Are we going to have fear of missing out have us break the pattern?” For example, we have this up channel, and when or if the market comes near the bottom of the channel, which is the bottom blue level, the market goes up, market goes up, market goes up, market goes up.
So some of the things in which we’ve been doing in this last handful of weeks is we’ve been focusing in on only buying the NASDAQ because we’ve noticed this channel, and then the analysis has changed a handful of times. But ultimately the direction has been up. Right? And that can be tough sometimes, and it can be tough to follow through. I think we did a pretty good job focusing only buying or focusing on the research saying only buying. Remember, I’m not a CTA. I’m not a money manager, so I can’t tell you or dictate your trades. So this is just research.
Market’s at the top of the blue level
Now, ultimately, the market’s at the top of the blue level. Right? So all the buying opportunity’s pretty much over, and you got to ask yourself, “Well, what do I do now? Do I wait for the market to come back down to buy it? Do I wait for a breakout? Do I try to sell it? What do you want to do?” I’ll give you my opinion on this. One of the things that I’ve learned that it’s always better to trade in the direction of the trend than against the trend. And we’ll draw this out.
Whenever you see the market making higher highs and higher lows, higher highs and higher lows, and you are now at the top of the trend… And here’s your channel. Right? One of two things can happen here, and don’t forget, what are we trying to do? What I like to do is I like trade with the trend. So I like to buy here, profit there, buy here, profit there, buy here profit there. So one of two things can happen here. The first thing, which will be the easiest thing would be the market hits resistance, falls back down, finds support. We look to buy the market right there, and then the market extends and you get a little piece, right, repeating success.
The other thing that the market could do is the market could basically break above so we have a breakout, come down, hit resistance, becoming support, and then U-turn on the way up; and then you’d want to buy there as well. Right? So the thing is, the challenge is, well, is this market going to break out. Right? Are we going to break out, or are we going to come back down and then bounce there? So do we buy there? Do we buy there? What do we do here?
I don’t have the answer
Well, the thing is, I don’t know. I don’t have the answer. What I do know is whenever the market comes near the top level, one of two things is going to happen. It’s either going to break out, or it’s going to fall down. And so we got to ask ourselves, “What are we trying to do here?” If the goal is to trade to trade, then, yeah. I guess make a guess, flip a coin, close your eyes, put a blindfold on, try to sell on the way down, try to buy on the way up because you’re trading to trade.
But if you’re trading to win, then essentially you’d say, “Okay, we’re in an up channel. The smartest thing to do is to repeat success, what’s working, buying low prices, near known levels of U-turn and the direction of the trend. If the trend is up, we only should be buying. So if the market were to fall back down, we’d want to buy around this area. If the market were to break above, you want to buy around this area. So remember, it breaks above, you by there. Falls back down, you buy there. So we take that information, and we go to the one-hour timeframe. It has essentially everything we just drew out. Right?
Bottom blue level you look to buy. Top blue level, take profit. Bottom blue level you look to buy. Top blue level, we’ll take profit. This is a profit-taking area, in my humble opinion, which means we should not be buying this market. I think if you try to sell this market on the way down, I think you’re asking for trouble. If you want to repeat success, then you’re going to wait for the market to fall back down to the bottom blue level and then buy on the way up.
So this week’s idea with NASDAQ is basically be patient, stay out of the market. Remember I’m not a CTA, not a money manager, so I can’t tell you what to do. But the research supports that the market’s probably going to have a dip. I don’t know if we’re going to break out bullish. If we do, I’ll look to buy, and we’ll follow up next week. Hey, everyone. It’s Joshua Martinez, and thank you so much for the opportunity.