A few posts ago I decided to concentrate on currencies to free up some time for myself.

Focus on one thing and hit the setups as they appear.

Guess what, that completely went out the window and I have been trading everything.

The Dax, ES, Hang Seng, SPI, stocks and currencies.

It was just too boring for me.

Over the last 10 years I traded hundreds of times a day and to just trade in the single figures was like watching paint dry.

The good thing for me is that my style has tightened up and the results have been consistent over the various instruments.

January results were positive $47,000 which was reasonable considering I spent a few weeks away from the market.

I feel I am finding my footing on the Dax with some consistent results and I feel very relaxed with my trade style and risk.

Today I traded the Dax with an initial long trade that failed.

Instead of just closing out the trade for a loss, I reversed the position as the structure looked like it had changed to favour a downside bias.

In trader development this is one of the most difficult things to do in an objective manner while trading real time.

There is a fine line between reversing for a new setup versus reversing because you're revenge trading.

Revenge trading has been a specialty of mine which has provided some of my biggest losses over the years.

The only way for me to stop this mental problem has been to have a consistent structure for every trade I take with pre-planned what if scenarios.

I know I am trading well when I can adapt to new information quickly and act decisively.

Below is the Dax trades for the first 2hrs of trade.

Dax1min.jpg (93.52 kb)

Trade results.jpg (75.43 kb)

I've had a few questions on the prior blog on dax setups.

I didn't explain the entry criteria for the setup I showed on the previous blog exhaustion trade.
I was trying to get across the structure of the market needed before the trade setup.
The higher low area is the entry area on the long side trades.
I need to see a failed retracement at this point.
This is where sellers are forced to cover with the previous price structure exhausting selling strength.
My entry is 2 bar high then an entry on the next higher tick.
I find my risk is small compared to potential reward.
This is a setup on the Dax I traded today.

Dax extrade.jpg (138.38 kb)

Monday trading on the Dax and I have had a whopping 4 contracts traded for the morning session.

One important area to watch is the stock market opening one hour after the futures open.

This is where we often get fast moves and shakeouts as occurred today.

I took an initial position on a retracement of price to 5720. (Minor support)

Then I anticipated a shakeout as the underlying stock market opened and took a 2nd position after price pushed up from its lows.

The shakeout pushed price just below the first pullback setting up a pump fake with trend.

I scalped out the first and let the second position move to initial resistance at 5745.

I left some on the table and should of had an extra contract on but was happy with the 20+ pt move.

I also managed a larger position long on the evening session of the Aussie SPI which helped my equity return.

(sometimes the SPI price movement can lag trending moves which provides opportunity)

Dax shake.jpg (95.03 kb)

I find the best trading setups are where traps catch out one side of the market forcing covering of positions.

One setup that I find very useful is best shown on a one minute chart with volume setting up conditions.

I am looking for a low on an expansion bar and with high volume. I have marked it - Exhaustion 1.

The second exhaustion has slightly less volume and forms after a retracement.

This exhaustion bar is usually at new lows but can be at a slightly higher low.

The theory is that these exhaustion bars get rid of the majority of sellers leaving the potential for a reversal to the upside.

The entry is based on a failed move to the downside which traps sellers forcing them to cover.

I expect a fast move to the upside, so if price doesn't move quickly I will close out.

There is a few potential entry areas that I have marked.

The reverse is applicable for downside trades. (The entry area for the short should read Lower High)

Dax setup.jpg (180.34 kb)