The Importance of Truth in the Markets

A lot of places say what they think you like to hear… or more aptly what you need to hear for their sake. I want you to hear the truth as I know it at any given moment in time.

That addresses the past & present… now let’s have a look at our near-term future…

1/23/2012

TF futures went absolutely nowhere at all inside the past two sessions. Pretty much a 5-point trading range, both days combined. That type of behavior always means one thing and one thing only.

1/23/2012

Ditto the ES. Attribute it to options expiry, lack of “news” from Europe, earnings drivel, next week’s two-day FOMC event, whatever. Truth is no one really knows, and no one should actually care why markets do or don’t do. Knowing doesn’t matter. It wouldn’t help anyways. Our job as individual trader is simple: position ourselves on the correct side of directional market action, to a greater degree of success than we are positioned inside sideways inaction. Net result is greater gain than loss overall. Very simple.

Next week is essentially a 4.5 day trading week, with Wednesday before 2 pm EST tossed out ahead of Bernanke’s FOMC news Q&A stint. We can expect high probability of a sharp, straight and elongated directional move for all markets before then… and quite possibly to follow. Monday and/or Tuesday have high odds of a straight-line swing that covers distance. Which way and from where exactly is always the great unknown. My objective will be to aggressively seek and catch that move, ride it for distance and exploit known statistical odds of probability.

After all is said & done… that’s trading.

1/23/2012

The euro made a jagged ascent from start to finish last week. We are currently working with the 6E in team-room fashion for the next week or so targeting modest gains, intraday type trades. That is apart from my own personal approach to spot FX, where I’m balancing four symbol pairs (eurusd, gbpusd, usdchf and eurjpy) in swing = trend fashion.

Our team room objective is to profile smaller trades of anywhere from +20 to +50 pips using -10 pip initial stops. At $12.50 per pip value, it only takes a couple of those trades per week to make the entire week. Considering 6E is perhaps the second-most liquid futures symbol behind ES (apart from bonds) popular with individual traders, position size is not a real problem.

So I’ve settled into two distinct modes: intraday trades profiled in the team room and personally managed swing trades as well. There will come a time in my personal future where I no longer trade intraday at all. But that’s the future, and this is the present. Current market conditions are primed for large-range breakout / breakdown moves next week. Currently active traders should be focused on capturing some of those.

Straight talk, straight-line market moves pending soon. That is all we need to know from there.

For more daily updates from Austin, visit his blog at Coiled Markets.