Selling into strength

We often mention 'selling into strength', so I thought I would upload our trades today, one on the 6E, one on the ES, and which are good examples of this technique. As it happens, the technique was employed on both trades concurrently.

As you'll see, the gap is being closed on the ES, and whenever this happens, we can reasonably expect a bounce as traders start to cover their shorts. We know that but we also want to squeeze the last tick out this trade, so we cover our position by buying the bid, instead of just getting out with a market order. That one (or more) tick can add up nicely in the long run, plus it covers our commission. But note: timing is crucial, you have to apply this technique before the tide turns. (Obviously, you could just place your target at the price you want, and wait to see if it gets hit. That's fine, too. The technique described here offers a more dynamic, 'go-with-the-flow' approach.)

Same thing on the other trade, the 6E. We sold our remaining position at the ask price (instead of market) going into our target of 1.1130. Others were still buying. (And note, on markets other than the ES, the spread can be more than just one tick!) Admittedly, sometimes you will leave money on the table, but that's easy to see in hindsight. When you manage the trade in real time, there is no 'hindsight' yet. Just a few extra ticks in your pocket and the good feeling of 'being in control' that goes with it.

And to build up and maintain that emotional capital is just as crucial to our success as the financial, as we all know. Mindful trading, folks! 

Remek! trades 2015 09 03