Trading Day Recap - Tuesday, 4/22/25

How I discovered my Edge.

I discovered my Edge, the Cusp Trade, sometime around 2014. After experimenting with various time frames and indicators I remember stumbling on Tick Charts and being fascinated with the concept immediately. A bar that defined number of trades/transactions as opposed to a bar that defined the market with time passed. I immediately thought a tick chart surely clarified market movement much more clearly than a time chart.

Then I was not sure what number of ticks to use. I could virtually use any number of ticks so I went on a hunt to look for a number that would fit my trading. I had always known of Fibonacci numbers, a sequence where each number is the sum of the two preceding ones (e.g., 0, 1, 1, 2, 3, 5, 8), and I had read these patterns appeared in nature. These patterns include the number of petals on flowers, leaves on a stem, rabbit populations etc. If these numbers appeared in nature then certainly it would have some relation to the market which is human created, human driven, a part of nature.

Thus I started to experiment with higher Fib numbers like 1597, 2584, 4181, 6765 as individual ticks on a chart. After trading for a while I discovered markets with high volume like ES and NQ worked best with a 4181 tick chart and ones with lesser volume like CL worked best with the 1597 chart. I now was onto something and it was exciting.

Next I decided to get rid of all of the indicators I had been using like RSI, Ichimoku and many others and experimented with an EMA only. After going through the 10, 15, 20, 30 and 50, I saw the 4181 come and sit on the 50EMA and continue the trend or do the reverse while selling off. I couldn’t believe it. I had discovered an Edge in the market through curiosity and experiment.

I tell this story because my Edge works. There must be millions of traders world wide trading the same ES or NQ chart that I trade but more often times than not when the market rallies the 4181 tick bar ES will retrace, form a cusp on the 50EMA and continue the rally. How crazy is that?!?! And I found that little piece of magic in the market.

Now as I have stated many times the mechanical Edge is a small part of our trading system and our psychology - the ability to enter the market on seeing the Edge, letting trades run, cutting losers for R1, not revenge trading, not being impulsive, not feeling down because of a string of losers is the real Edge in the market.

In discretionary trading it is the trader who is the primary Edge in his trading who deliberately deploys his system in the market. You can have any mechanical Edge in your possession but if your mindset is not aligned with one of a profitable trader who makes good decisions it will be hard for you to cross the threshold of becoming a winning trader.

In any case, I took my Edge when it appeared around 11:45 a.m this morning at let it play out and let it hit the profit target of 150 points or R3. If I had removed the profit target it could easily have gone for 300 points today.

Looks like Trump saying he’s not looking to fire Powell and TSLA 0.00%↑ earnings have lit a fire in the market.