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Hi John,
I join the #S&P channel occasionally and I notice the same thing all the
time. Most of those guys just don't get it.
As far as option expiration Fridays are concerned, they are normally my
LEAST favorite days to trade since recently they have been quiet to say the
least. Plus they usually have a neutral to bullish bias. I still can't
believe Friday happened and am still pondering what significance that may
have if any.
I am just glad that I was able to toss my OPINION aside and trade what I
saw. There was a time where that was not the case.
Bob
-----Original Message-----
From: John <jyim@xxxxxxxx>
To: Omega List <omega-list@xxxxxxxxxx>
Date: Sunday, February 20, 2000 3:49 AM
Subject: Re: Trend Days
>I was in an irc channel (#s&p on irc.othernet.org) and almost all the
>regular bears suddenly decided to go long as the spoos came down and they
>all got killed. I suppose none of them expected Friday to keep selling off
>in a steady straight line like it did and they all were expecting "some
>bounce" intraday that never came. Do you think options expiration had
>something to do with Friday's phenonmenon? Are option expiration days
>usually trend days?
>
>
>----- Original Message -----
>From: "Bob Heisler" <bheisler@xxxxxxxxxx>
>To: "Omega List" <omega-list@xxxxxxxxxx>
>Sent: Sunday, February 20, 2000 11:04 AM
>Subject: Trend Days
>
>
>This post is fairly long so I thought I would warn you upfront. But I
>thought I would provide some thoughts on Trend Days like we had on Friday
as
>those used to be just a nightmare for me. Nothing was more frustrating
then
>seeing the market up or down 30+ points at the end of the day only to see
>that my net for the day was only a few points. Or worse as I may have
>actually been down because I kept trying to sell an uptrend or buy a
>downtrend...ugh! Talk about frustration. But then again, maybe this has
>only happened to me......
>
>We all know that price compression/contraction leads to price/range
>expansion and vice versa. And we also know that when a market does break
>out of a range that it tends to run quite aways. Then why is it that I
>always seemed to fight the trend and focus on looking for the reversal
>rather than looking for places to enter the trend and enjoy the ride? How
>come as soon as the market began to rise I was looking for a sell and vice
>versa? And how come this normally resulted in losses and further
>frustration? But then again, maybe this has only happened to me.....
>
>Why was it that I was always thinking that it has already gone too far and
>it just couldn't go any higher or lower? And my trusty state-of-the-art
>indicator said it was overbought/oversold so I just couldn't buy it because
>I was sure to buy the high or sell the low? Why was it that I still hadn't
>bought or sold and the market was now 12+ points higher or lower? And my
>favorite indicator/oscillator was still saying it was overbought/oversold?
>But then again, maybe this has only happened to me.....
>
>Then finally I couldn't take it any more and jumped in. But I was right,
as
>soon I got in it reversed. Another loser and another emotional hit. I
just
>caused my worst fears to come true but that's not the message I got - all I
>remembered was that when I got into the trade it reversed. I didn't
>remember all the prior chances I had to enter that would have resulted in a
>nice profit. But then again, maybe this has only happened to me.....
>
>What I painfully discovered was that it was my OPINION preventing me from
>trading this environment successfully.
>
>WHAT IF you had a trading plan that had no bias to market direction or an
>opinion of what you think MIGHT happen. AND what if that plan was based on
>things you could really see - PRICE progression or tape/internals or ND/DJ
>confirmation.
>
>WHAT IF you managed this plan based on what you could see continuing
>(PRICE). It is OK to be aware that moves can (and will) reverse, but it is
>NOT OK to expect or assume that this will happen. Highs can go higher AND
>lows can go lower. There is a reason for price movement that once in
motion
>can remain in motion = Momentum. AND if you are always focused on the
>reversal, you will never see or understand this reason and find yourself
>with the above mentioned OPINION. And these OPINIONS almost always lead to
>missed opportunities at best and losses at worse.
>
>AND WHAT IF you accept the fact that there is no such thing as Overbought
or
>Oversold and that there is NO PRICE TOO HIGH OR TOO LOW.
>
>We need to be able to determine if a trade is "progressing" - I.e. if we
are
>long then we want to see Higher Lows and Higher/equal Highs. If we are
>short we want to see Lower Highs and Lower/equal lows. We want to see the
>market break through Resistance and then hold that level as Support or vice
>versa, and we want to see this progression throughout the trade. And we
>SHOULD hold part of that position as long as the market is moving in this
>manner regardless of how long the process takes. But how could I do that
>when I was a 1-lot S&P trader?
>
>When the market trends like it did on Friday we have an absolutely great
>opportunity to profit. Quite frankly we can have a good month on a day
like
>this if we can recognize the environment, throw our opinion out the window
>and employ the proper money management techniques. Ideally we want to
enter
>at the beginning of the trend and keep part of our original position
>throughout the whole progression - which is why I always hold at least 1
>contract because you never know how far it will go - or when.
>
>Yesterday was one of those days that just confirms everything that I
believe
>trading is about (not to mention 2/15). IF we can just take our setups
>without OPINION or BIAS as mechanically as possible - Then manage the trade
>progression for small loses when it doesn't work - We can then be in a
>position where GREAT things can happen.
>
>Truth is that most times we don't have to do very much, we just have to be
>there.
>
>Hope some of you find this post useful.
>
>Bob
>WWW.PRICE-RULES.COM (no URL exists)
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