It’s Wednesday, August 26, and my desktop computer froze at the open. So I made a plan to take the day off from trading and do some writing on my next book. I also worked on my ETF slide presentation for the TradeStation seminar in October. While I worked on my slides, I kept track of the market on my laptop which also has a version of my trading platform, TradeStation. I mainly watched the mini-sized Dow (YM). It is now 3:20 pm EST (12:20 PM in Las Vegas). The market has been sideways all day. I start planning my afternoon errands. Suddenly, my laptop goes “ding---ding---ding,” alerting me that ADX is above 25 (blue arrow) on the 1-minute YM chart. I see that price just made a 1-miute new high and is now pulling back. A late day trap? Maybe. It is late in the day for a trend trade, but I’m suddenly itching to trade. Maybe I’ll scalp a few points. I draw a trendline (yellow) on the 1-min pullback, and price penetrates above it. The +DMI makes a new high (red arrow) and there is momentum convergence. What about my plan to not trade? What about my discipline? I do not hesitate. I go to the market with one contract. I work the bid for another contract as price holds above my trendline. Two contracts are enough because it is late in the day, and a scalp is all the market has left in it. I put in my stop-loss, and there is nothing more to do but watch and manage the trade. I am certain that my setup is good, but anything can happen. I remember not to think. I’ll scratch out if the technical picture changes, but right now I’m in, and I want to stay focused. Price rises, then dips down. I watch to see if price takes out my stop, but it doesn’t. Soon, I have some profit, so I move my stop to breakeven. Now, I'll either make a profit or get stopped out with no loss. ADX is rising and the +DMI is still dominant. I’m itching to scalp some profits. No reason to panic.
Pretty soon, I see ADX weakening and divergent with price (blue lines). I want to get out on the way up rather than let price fall back down, and then have to market out on the bid and miss a few points of profit. I place two limit orders to sell at the offer. Filled…filled! I’m out with 63 points in twenty minutes. Now the market begins to retrace. My plan for not trading didn’t work out so well, but ADX worked just fine. I just wish I had the itch to do errands
