Dow Down 300 – What did ZoneTraderPro Do?

Dow Down 300

After the 10 o’clock news event we saw successful  exhaustion and trend exhaustion long trades.   A long trend trade pattern was detected next, however immediately after the pattern printed, the tick filter was hit indicating sellers were present. This was then followed by a tick divergence trade that was good for 4.75 points. As we saw in the tick divergence trades from Friday this was again a trade that went from a blue counter trend zone to the opposite blue counter trend zone.

2/03/14 Trades
2/03/14 Trades

Forty-five minutes later there was again an exhaustion trade with tick divergence followed by an exhaustion trend trade.  It is important to look at the exhaustion trade and understand the trade management here.  The exhaustion trade with the divergence was only good for 9 ticks from the peak to the trough.  As noted in the previous tick divergence examples, the tick divergence trade is usually good for more than 2 S&P points.  So what do you do?  From a trade management perspective if you are still in the trade, it might be a good idea to consider moving your stop to the previous high plus a tick.  The risk in the following trend exhaustion trade is a mere one tick, with the potential profit of 4 S&P points.  The only thing I do not like about the trend exhaustion trade is that the tick filter was hit as the pattern emerged.

2/03/14 Trades
2/03/14 Trades

An hour later there was a 3rd and 4th tick divergence trades.  The 1st was a long tick divergence exhaustion trade, followed immediately by a tick divergence short trade which was good for 5 S&P points.

2/03/14 Trades
2/03/14 Trades

At about 1:50 EST we saw another tick divergence long trade.  This was followed by a successful reversal long trade.  What is important to note about these 2 trades is that if you were simply looking at the big Dow don move and only wanted to take a short trade you would’ve missed two winning long trades with perfect setups.  The market itself will tell you when a trade is not going to work, as we see in the following trend long trade.  Going into the trend long trade we see the tick filter being hit, followed by a significantly lower tick high as the market reached the red intermediate resistance zone.

2/03/14 Trades
2/03/14 Trades

Dow Down – More long Trades?

15 minutes later this is followed by a successful reversal long trade leading into a tick divergence short trade.  As noted in the trade above where the market did not immediately move to the blue counter trend support zone, if you had a trade management plan that moved your stop to reduce risk, and an exit strategy using the blue counter trend zone as the exit, you had an additional point of profit.

2/03/14 Trades
2/03/14 Trades

 

Leave a Reply