Sioux warriors going into battle used to tell each other, "It's a great day to die." A trader can learn from an attitude like that. It's an attitude that says, "Don't worry. Focus on the battle. Accept the result."
That is much easier if one is prepared for the battle. This page shows you how I and my clients prepared for the "Battle of the S&P500" on November 12, 1998. It was a day the market died.
Preparation for battle started the evening before, when I sent out my Tomorrow's Market Email. This is the message and the chart that clients got.
Tomorrow could be very exciting if the MoonTide ZD is accurate. It predicts a one-way market. See the attached MTZD6 chart.
The strategy looks like "sell the open, cover on close." So how do we do that?
The normal chart is attached as amhot.gif. This shows the +MoonTide down sharply early, a rally, then down up down in the afternoon. But the -MTZD6 accelerates to the downside in the afternoon. So here is what I think will work.
1. On the open, trail a sell stop 3 points under price.
2. When elected short, trail a buy stop 5 points above price until lock in a 1 point gain. Then hold.
3. If get a steady downtrend in the afternoon, and you have not been stopped out, move the buy stop 2 points above each swing high.
4. Cover on close.
With that information, it was easy to go to sleep and get a good night's rest. The battle plan was set.
The next day, here's how the market opened. All we had to do was FOCUS ON EXECUTION. We got a good entry, selling at 1139.
At this point, my chart scaling was done using MTZD6, and it looked like the answer was, "A Bunch."
That sort of DAY DREAMING can cost a lot. When in a trade, FOCUS just on execution. Here is why.
A drop when you are short WILL MAKE YOU FEEL GIDDY. I have measured the energy of declines and rallies using the methods explained in my book, "Your Electric Life." Declines are POSITIVE ENERGY, rallies negative. At Full Moon we feel giddy because the Moon has reflected ions back into the ionosphere. This increases the voltage on the ionosphere, which increases the current flow through us, and we feel happy, giddy, excited.
At this point it would have been easy to forget about EXECUTING the battle plan.
Take periodic breaks and refresh yourself. Come back and take a fresh look at your screen. In this case, I saw several signs that the drop might not be as extreme as forecast. The 36 and 55 minute exponential moving agerages were turning up. I had to rescale my screen to fit REALITY to the MTZD6 line. It moved the forecast low up. Then the MoonTides were weaker than in the morning, with the +Tide turning UP. Time to ACT, MOVE THAT STOP.
The plan called for lowering the stop if there was good movement in the afternoon. The proper action here was to lower the stop to something like 1135. Now 4 points locked in.
So far, so good. Just wait for the BIG MONEY. But look what happened.
No! NO! NOOOO!
Focus on execution. That last high is a swing high. Move the stop down to 1129. Lock in 10. If the BIG DROP is here, you won't be able to move the stop fast enough, so wake up and get busy!
I was particularly aggressive in moving my stop because of a couple things I saw. I shifted the +MoonTide back a bit, and it showed a sharp rally. Also, the kink in the MTZD6 looked like some high frequency energy to me. So I paused a few minutes with my stop at 1129 to look for signs of danger, then RE-FOCUSED ON MY EXECTUION.
I love it when a plan comes together. That trade made about $3000+ on the S&P, and $600 on the E-Mini.
Yes, it was a great day to die. So it was also a GREAT DAY TO LIVE when the S&P died!
MoonTides give a forecast. From that a plan is developed. Then the plan is traded, with a focus on execution. That's how you Cash In On Chaos and make some MOoNey.