papa's got a brand new bag

Ive been pouring over the data and retooling things. Check out the past 5 days and look at the pattern that emerges:

Certain things are happening everyday based on what the premarkets are indicating before open. Above, I made some annotations. A is when the market opens. It almost always fades the gap as buy or sell orders are built up from the early morning and from the night before. B is my new entry point almost everyday 1/2 hour after market open. After a half hour past open, all the buy and sell orders from before open are executed, and now the market should go in the direction indicated by the premarkets being up or down 15 minutes before market open. 
So: everyday I will look at the markets 15 minutes before market open and find out if the premarkets are positive or negative. Then when the markets open I will sit out for 30 minutes. 

If: The market during the first 30 minutes goes the opposite way of the premarkets direction at 30 minutes into the trading day I will buy a put or call (matching the premarkets indicated direction positive or negative) and hold that position until 11:15-11:30 Chicago time. I will then exit that position and reverse it until 2:00pm chicago time and then sit out for the rest of the day.

If: The Market during the first 30 minutes goes the same way as the direction indicated by the premarkets, as in if 15 minutes before open the premarkets say positive and then the market goes positive and the inverse if negative premarkets and the market goes neg for the first 30 minutes, I will then purchase a put or call going the same direction as the markets. I will check back at 1030-45 and if that put or call went against me, I will SHORE IT UP with another put or call of the same direction, essentially making it a DD. I will then exit my position at 1:15-11:30 and reverse it with a put or call going the other way and exit THAT at about 2pm Chicago time.

Again adjust the times for where you are in the country (or the world for that matter).

If you are in L.A., minus two hours off all the times I gave. If in Mountain time, minus 1 hour off my times and if in NY add one hour.

I was thinking. Here in Chicago the markets open at 8:30am. Thats cool. In NY they open at 9:30. Thats cool too. But in L.A? The markets open at 6:30 in the morning? Thats harsh. Traders that work out there have to get up at what, 4 in the morning? Brutal.

So I am all hype on this new deal. I saw where I was going wrong and for now I will not be buying at the end of the day. It used to be several months ago I could call it using technical analysis at the end of the day, but we are now in a heavy news cycle. Even with Asian markets crashing last night and reversal candles in the market yesterday, all it took was positive news on oil this morning and the market rocketed up leaving technical analysis in the dust. So be it. In order to be a good trader, you have to constantly back-test and reevaluate your strategies. No opponent in the ring is going to keep doing the same thing, they will adapt, and I have to as well.

Now what about technical analysis? Can I still use it? Yes, but with a bigger picture not on a day to day thing. Ill show you what I mean.

Now for my longer game that I can still use technical analysis on a couple of things:

1. Evident tops or bottoms as signaled by candles.On the candle chart itself, you can see 3 circles where there were bottoms. The candle has a long bottom tail. Also the upper left arrow I drew is also a top candle with a big top tail.
2. Now for the arrows, these are Engulfing Candles. They are bigger than the entire candle and engulf it from the day before. This means the market will go the same direction that the engulfing candle is colored. If the candle is white, the market is going up and if the candle is red as an engulfing candle, then the market is dropping.
3. Here is a big indicator. The Aroon indicator on the bottom. Note what happens over 90% of the time where there is a green/red crossover...a HUGE corresponding move in the price movement of the QQQ. (Just follow any point straight up into the candlestick price chart...all these indicators are alligned with the time pricing at any given part of the indicator chart.) If I get no clear signal? i stick to my aforementioned day game. 

We start tomorrow. 

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