After a few nice swings today I think it’s time to go short on the Dow at 10,850 at 16:35. The idea is that after disappointing confidence report this bounce is a great selling possibility.

At the same time oil looks great to go short as well and I placed an order to go short at 79.70, not sure if this order will hit today as it stopped going up at 79.50… I guess it’s not ready to test $80.00 level today… only time will tell.

Update: Sold Dow at 10,850 and was sitting most of the time in plus about 20-30 points. Unfortunately, I didn’t close the position and now 5 points down.

Lesson of the day: Don’t be greedy. If you run profit make sure you collect at least some of it. Don’t get greedy like me today and end up with a small loss. My position is still open and I’m looking to close it ASAP as I don’t like to carry positions overnight.

8:23 I am in with Glaxo but something hold me form entering Barclays. So I will give up this one.

7:40

Looking into the News Calendar it seems that all eyes are looking for tomorrow Nonfarm payrolls. Good results can send the Dow around 11k bad one and we can see it back to 10300 level.

So I don’t expect big movements today but here is my orders for Thursday:

1) Barclays Buy 346 stop loss 331 target 376 or Sell at 331 with stop at 346 with 301 as a target. Reason: Triangle & outside bar on the daily chart.

2) Glaxo. Buy 1139 stop 1121 target 1175. Reason inside bar on the daily chart near support level. MACD & Elder ray are rising.

Good luck

Have a look on today Dow Jones chart before 14:30

You can see that in 12:30 the high was 10451 and low of 10420. The next bar the high was lower and the low was higher which gives me some indication that a strong move is on the way. Nothing is really happening on the next two bars.

So how do you trade this? there are two options:

1) Go with the trend.

2) Ignore the trend.

In option one we switch to a different time frame to check the trend. I just multiply the current time frame by 4 or 5. So if I am using 30 minutes chart I will switch to 2 hours chart and if I am using daily chart I will check the weekly. Now that I know the trend (in this case it is up) I will put a buy order a bit above the recent high. In this case it is 10451 so I will put my order level at 10455. Because the trend is up I will ignore the down side.

In option two I don’t really care about the trend. This is more for quick trades where you try to catch a small movement and you don’t care if it is correction or changing of direction. In this case I will put an order to sell at 10415.

Target & Stop loss? it is 30 minutes chart so the target should be quite small and so the stop loss. But the stop loss shouldn’t be very tight because you can stopped out and miss the move. In this case I would put 30 points stop and target of 40.

and look what happened at 14:30:

You can see that in 14:30 there was sharp movement down which broke the 10420 level. This trade would have been successful if you were using option 2 and ignore the trend. If you were using option 1 and stick to the trend nothing would have happen for you today.

The index is way above the 22 ema so in my opinion we should see the Dow back to 8550.

On the other hand the MACD is still rising which gives us mixed signals. So I think it is a smart idea to use a tight stop loss.

Bought a PUT option 4700 on the DAX for at 7, £10 a point. A day after the Dax lost 3% and the option was 40. 33 points = £330.

Last Friday he open a short position (£4 a point) on the Dow with 100 points stop loss and 50 points profit target. The Dow almost touched his stop but changed direction and he got the 50 points or £200 profit.

Yesterday again on the Dow he went short with £5 per point and got 120 points or £600 profit.

All together £1030 profit and with the £70 the balance is £1100.1471% profit in 10 days. Amazing but…

I don’t think this is the right way to trade. In fact I think my friend did all the mistake he could… but he has a lot of luck. The way he trade is more like gambling when you may have a good strike but in the end the Casino most of the time wins.

Mistake number 1:

Trade on all the money in the account. It is ok when you have only £70 in your account to trade on all. But when you account is more than £1000 it is not wise. One bad trade and you are out.

Mistake number 2:

Thinking that only the £70 is his money. He always says I don’t mind losing – it is only £70. What I try to explain him is that was £70. Now it is £1100 and it is belong to him. He can take it and put it in his bank account.

Mistake number 3:

No strategy. He opens positions according to guts feelings. He follow the market quite long and he has the experience, but he is not using technical analysis to back up his instincts.

Today he opened a new position on the Dow. This time it is £15 a point with 75 stop loss and 100 points profit target. Again this is a mistake because the ratio between potential loss and profit is to low. You should always aim for 2:1 at least.

I do hope for him that it will go well for him but I don’t recommend you to follow this method. Although with 1471% profit some will be tempted