Monthly Recap: October 2024

October 2024 was a much busier month in comparison to last. I completed four sessions which produced a combined total of +0.42R. Although I finished the month slightly up I definitely think there was some room for improvement. Here are this month's trades:

• 7 October 2024
  • Trade 1: +0.79R
  • Trade 2: +0.86R
• 14 October 2024
  • Trade 3: +0.22R
• 21 October 2024
  • Trade 4: -1R
• 28 October 2024
  • Trade 5: -0.45R

Below are the trades for the first session of October. It was a welcome come-back session after the quietness of September:

I started the session after the S&P 500 had been ranging sideways. Price was trying to re-test the highs of the day but struggling to gain some traction. It had been consolidating sideways for a few candles near the top of the range. After a big bear candle formed – showing some weakness and potential for a downward move – I began to look for a trade back down to the bottom of the range. I opened a trade short at Position 1 after the break of the low of signal Candle A and targeted the bottom of the range. After a few candles, price hit my target and I exited my position – a quick and clean trade.

Price then pushed past my target and rejected the new lows of the day with a long-tailed reversal candle. The next two candles pushed higher and shrank in size before beginning to stall at the 20 EMA. Candle B, a bearish signal, followed these moves. After Candle B's low was broken I opened another trade short at Position 2, and set my target around the lows of the day and bottom channel trendline. Price originally moved in my direction before turning back up to retest the 20 EMA. This re-test also coincided with tests of the 20 EMA on the 15 minute and 1 hour chart. Bears eventually won and the market moved lower until it came within 1 tick of my target and reversed up. This was really frustrating as it came so close but did not cross my target line. As price moved higher I moved my stop loss to break even. I wasn't going to come this far only to take a losing position. I was very tempted to close the trade but I held on given the trade was risk free and after three more candles my target was hit.

After Trades 1 and 2 were complete I was at the end of my trading session so I left my desk and carried on with my evening. I returned later on to find that price fell through the bottom of the channel and made a very large impulse move downward. Had Trade 2 still been open and left to run I could have made a substantially larger profit but I was not phased. The session had been in a channel trading range since its open so the move was unexpected. Trade 2's target was in a logical position given the preceding price action. The trade was risk free at that point so I could have left it to run but we were not trending so that would not have been the higher probability move.

The trades for the session of 14 October are detailed below:

Starting with an impulse move up from the open of the market, price was consolidating sideways during the start of my trading session. I watched a few candles form and decided that given the prevailing direction for the day we were likely going to see another leg of price moving higher above the highs of the day. This would mean new all time highs for the S&P 500. It was Columbus Day in the USA which meant it was a bank holiday. The market was still open for trading, though, so I was curious about whether this was going to impact the day and exert upwards pressure in terms of volume and volatility.

After the highs of signal Candle A were broken I opened a trade long at Position 3 given we were respecting the 20 EMA as well as the bottom of the sideways range for the third time. From the start of the trade prices moved higher and I scaled in with an additional trade with half the risk at Position 3.1 as I thought we would continue trending. Price continued higher but it began to run into some overhead resistance. I was looking for a second scale-in order but I was hesitant. I cancelled it and put it in the market multiple times but eventually decided to leave it in. Soon after my order was tagged in at Position 3.2 price began to retrace immediately with the big bearish Candle B. I had realised I had just made a mistake and maybe my hesitation was a sign. The reason I left the order in was that the candle which tagged in the order had just broken out of the range of the previous few candles and I thought that, given the trending direction, we would continue higher.

The overall risk of my trade had decreased by now, given my trailing stop loss. But I was spooked by Candle B's formation and its downward momentum in comparison to the size of the previous candles. Price moved lower and it looked like bearish pressure was taking over. I didn't get a good feeling so I cut the trade and ended my session for the night.

I came back later to find that the Candle C came within two points of my stop loss level and eventually reversed. Price then proceeded to move higher for the evening and my original target would have been hit if had I left my trade open. With one full position and two half positions open I would have made a good return on the day. Had I still been trading Candle C would have been a textbook continuation signal after price moved back above the 20 EMA and broke the highs of the previous candles.

I think what pushed me over the edge was having experienced so many similar scenarios before where price pulls back and stops me out for nothing or a loss. I was pre-emptively anticipating the same to occur. With the added risk of the second additional position behind the trade I felt pressured to lock in what I had and move on. I've had a few similar scenarios where my second scale in positions are opened at the reversal point on the chart. Perhaps the types of trades I'm taking don't lend themselves to scaling in so easily and instead I should be more cautious with how I open additional positions. I'm going to monitor this going forward and review some of my previous results. Only one additional position based on price movement alone might be the limit until the market shows technical signs of continued momentum in the direction of the trade.

My trade for 21 October is detailed below:

The S&P 500 opened with a small rally higher before pushing lower. Successive bearish candles increased the sell side momentum as it continued further. I started my session once the downside move had completed and we were beginning to pull back. The market stopped for a small pause in the middle of the downward move. Other than that, no other retracements took place until the move reversed at its lows. In fact the highs of each successive candle on the way down were not broken until the reversal took place. I started my session just as price was beginning to move back towards the 20 EMA.

Given the sell-off and strength of the downside move I was looking for price to revisit at least the lows of the day before making any moves higher. With each bullish candle closing higher price retracted back to the 20 EMA. This level coincided with the previous pause and some resistance on higher timeframe charts. As price approached this zone it began to pause. With the momentum we had seen earlier I was eager to get in – maybe a bit too eager. After the lows of signal Candle A were broken I opened a trade short at Position 4 targeting the lows of the day. As the session progressed price moved sideways around my entry point. There were some small pushes up then larger pushes down, none taking out the lows of Candle B. After two failed moves down, buying pressure finally overcame the selling pressure. Prices moved higher with a big push until my stop loss was triggered.

I may have been a bit too quick to pull the trigger on this trade. In hindsight, and given the strength of the move from the lows, the pullback I was attempting to latch onto turned out to be more of full trend reversal. I probably should have waited for some stronger candles to form and reject the level. Once their lows were broken I could have had a higher probability trade. Of course there is no guarantee that this would have worked. If the buy side optimism was always going to dominate any sell side pessimism on the day, my stop loss would have been triggered regardless. I would, however, have felt a bit more confident and happy with the execution of my entry. These are some notes for future improvement and the importance of confirmation in context of each trade.

The final session for this month, 28 October, was completed as follows:

After a very short and busy weekend away for a friend's wedding and a tiring day at work I was rather exhausted for this session. I decided to push through and capitalise on the opportunity given my quiet September which I detailed in my previous blog post. The market gapped up at the open. It started with a move down, another move back up to re-test the daily highs (which failed), then a leg back down. Price had been moving within the range of the first 30 min of the day while travelling sideways. I started my session just as second leg back down to the bottom of the range was completing. Given the very bearish day we closed off with on Friday 25 October, I thought we would have some follow-through bearish momentum at least to close the gap between Friday's close and Monday's open.

As price began to break out below the bottom of the range I started get ready for a trade short, targeting the close of Friday' session and the filling of the price gap. After the low of signal Candle A was broken I opened a trade short as Position 5. Shortly afterward price began to re-test the range, reject it and move back down. I thought at this point price would start moving my way but the market had other plans. After a few successive bullish candles price retested the range again, travelling further inward before running out of steam. A second attempt of a breakout followed with two large bearish candles down but price paused around my entry point. After that Candle B started forming with quick buying pressure, reversing the entire attempted move down.

At this point I became very sceptical about the success of a break lower given the previous two failed attempts and the momentum behind Candle B. I decided to cut my trade and take the loss in anticipation for the continuation of prices moving higher. As if the market was waiting for me, and a few seconds after I exited my position, prices moved lower again. Classic... I was quite tired this session and after the losing trade I was rather upset and emotional, much more than I had been in my previous sessions. I decided to call it and end the session early as I didn't want to revenge trade on false signals and dig my way into a larger hole. As the evening progressed price oscillated noisily up and down. My stop would not have been triggered but price would have remained in loss making territory for me until the very last 10 min by which point I would have been in bed already.

All in all, it was a busy and tough October but onto the next month we go. November 2024 is bound to get interesting with the close of the USA elections. I'm curious to observe how the market reacts to whoever comes out on top. Let's see how things play out.

Until next time :)

~Alessandro