No wonder Blotto is getting nervous..... I think he has money riding on me blowing up and quitting! LOL... I really am amazed at how a good trending day almost always starts from a tight overnight trading range, or is a continuation of the overnight trend, or price takes off in the exact opposite direction. What I mean to say is that the price action is just so "clean". If I did nothing but wait to take a trade on the very best days and go all in, this might be the way to make serious cash as opposed to trying to extract 5 or 10 points every day. One of the things I absolutely have to do is plot where these easy days happen. I think I said it a while back... where I used the example of a map from a crime show that shows with pushpins where all the action happens to see if a pattern can be seen. I bet these good trending days happen at the extreme levels!
Times: are EST, your annotations correct. Backtesting, edges: http://en.wikipedia.org/wiki/Data_dredging How do you gain half a tick: = sum of ticks / total RTs = realised expectancy per RT Of course you are right that I am not a very good trader, that 8-12 ticks on profit trades is too small, that 20 minutes is far too long to wait to close a "scalp", and so on. I was going to write more and answer your questions but was afraid of seeming closed minded. Instead of arguing from an obviously inferior position I've decided to follow your good advice and stop "messing around" with small profits - holding for bigger moves instead. This is my first attempt today: I'm still obviously doing something wrong though. The market went higher after I sold my position. Can you help?
Another quick update... this time even quicker! A - Going into the open, here was the overnight high, which was to the tick the previous day high. 10 minutes of being unable to break through. O - At the open, you see this bar also reject 14.75. B - Short placed 1 point below the low of the bar, treating this like a RET. C - Exit here for only 3 points. I'll be honest, I just wanted the account to reach a whole number... so 3 points accomplished this. This is the worst reason I know, but once again, its the truth! Attaching the details of the time stamp. This one is for Blotto... 3 points in 1 minute... beat that! LOL (granted you might be going in for many more contracts... but I sure hope you reply to my questions about your trades yesterday becaue holding for 20 minutes and getting only 3 points I don't understand, and getting only 3 points after being down over 6 on that first trade is also terrible risk:reward. But I would like to remain open minded, so I'm eager for your explanation) D - Here is techincally a RET for another short, but I wasn't feeling this one. Not sure if it was to protect my 3 points profit, or the fact that this up wave from hitting the low was quite large (ie. we retraced more than 50% of the down move). At any rate, it would have filled, on the lowest tick, perhaps it wouldn't even fill for me mind you, but price clearly takes off to the up side) E - This is an absolutely solid RET for a long, having broken the R level, but same thing, not feeling it, and price is moving sluggishly. It would fill and also be a loser. F - Having broken below, here is a juicy RET for a short. Whats nice about this here is that the next bar goes a little higher, but visually it looks to stop at exactly the 50% level of this down move. On the way down on this next bar, the short would fill. It was placed in real time, way before it filled, in fact, it even had to be moved up from below the low of the previous bar. I just didn't feel like taking it. Shame.... G - This short here was tricky. We had a fairly good rejection of the OL, but hey, if the short triggers, price is coming down. We are also below the DL I have drawn in. It would go about 3.5 points against my entry on the way up to the spike 3 bars later, but this too is a good short. SUMMARY If I followed all the rules, mechanically, I would have taken a short at D and long at E for a loss. These losses could have been made up by taking the short of F or G, which would have both more than made up for the losses, but ah, being human, I'm not sure if I would have been emotionally able to, nor do I know how long I would hold for. So the hard work continues. So I'm up $56. Oh... I see Blotto just replied to me... lets hope its something good!
I don't doubt that you know what you are doing for you, but this doesn't mean its the only way to trade. I don't have the ability to analyze the data like you do. If it works for you, this is good. 1. Can you answer why on that first trade you held through a much deeper loss than what your profit was? 2. If you want to not answer the questions that is your prerogative, but if all you do is come here, to my journal and criticize me without adding anything helpful, exactly why should I be on the defensive? 3. Its funny how you show this trade because according to SLA, the long triggers pretty much at exactly the same place. Granted a couple of points higher, but its still there. Notice how we have a break of the Supply Line and this is now the first RET to go long? Blotto, you haven't offered any proof for why price action doesn't work. You've shown some decent trades, sure, but I am sure that if Db was the type to come show off, he would have trades in the 20 to 30 point range because this is what is possible on some days like Monday where the daily range was just that big. So if you wanted to get into a fight as to who has a better system, who makes more money over all, I think you know which way I'm leaning based on what both of you have shown me. So what exactly are you trying to accomplish? If you want to teach me something, I'm all eyes. If you want to say why why trading via price action doesn't work, then you can make a case. But all you're doing so far is criticizing me and showing how good you are for posting trades in the 3 to 5 point range. I personally think 3-5 points consistently is excellent, and if I could do this trading 5 to 10 contracts then I'm ready to retire! But once again, either add something constructive here or sit quietly in amazement as I learn to trade!
Sigh... no trades... but here is what I was seeing. Never mind the stuff before the open... just playing around. O - Going into the open, we now have an uptrend but drop below initially. The down wave is just as strong as the up wave. (thanks to emini for his explanation just a few days ago... this has helped immensely) A - By the time we get to here, we have that nice higher low below. I hesitated putting this trade on because the bars overlap so much, and because we are essentially in the middle of this overnight range, but this is where the trade should go, and it would fill 2 mins later. On the plus side, this overnight range is wide enough, and there is plenty of room to make points to test the overnight high. B - I mark this in, a tricky trade because I'm shorting an uptrend, but I do like to play the overnight levels. (there is a better explanation of this down below at J) C - I would be inclined to short here again because if it fills, this would be a lower high. My ultimate stop would be 3.5 points away, above that previous high at 23. This stop would hold and a BE exit could be made or even a couple of points. Hard to say what I would do in the moment, but the chart clearly shows what the market is doing, and the stop would hold and price would drop regardless of my reaction to it. D - So here is the thing. Coming up to here again we see traders unable to penetrate, but the lows are each higher lows below. So the game plan is to either buy the first RET above the breakthrough, or sell below on the first RET after going down, breaking the DL that I draw along the rising lows. I'm not feeling the best today... so I went back to bed, and of course I'm a little upset that I'm not taking trades, so no point in watching. Given what I see up to this point, I favor a break up, but I know that bouncing off this R level is also likely. No point in forecasting, just follow price and let the traders decide which way they want to go. E - So coming back, the rest of all of this is now hindsight, but if I just apply rules, here is what could be done. This is the first RET to sell after price rejects 4323 four times, and here is the first RET. Trade would fill 2 bars later but never run the risk of being stopped out. F - Exit could be made here based on the higher low and break of the SL. G - We have the same thing here again as above, a resistance level, along with higher lows below. H - This short here now clearly shows lower highs, dropping below the DL, so good enough for at least a few points if the short was taken. J - Once again, playing the overnight levels, and just buying above the bar that rejects. Going against the down trend is tricky, but hey, if I think in terms of a series of trades, now that I know exactly what I'm looking for, applying context, and having a firm grasp of entry and stop, I think these trades do have a positive expectancy. If it fills then we are clearly rejecting going lower, even if just momentarily. I might not even have to hold for the full stop below the low of this bar because often these trades when they work, they work instantly. Just like up above at B, when the trade fills, it never comes back up again until a profit of at least 5 points can be realized. K - First this level holds up as resistance again, but a few minutes later we have a breakthrough. Even if I would think to short again below here because I am showing shorting below resistance levels, a trade at 1 point below these bars wouldn't fill, so no harm done. But to be honest, the context of today tells me that after rejecting the OL quite strongly below, we should be heading back up to the top of the range, so the short wouldn't be on my radar. EDIT.... Actually.. I have to update this point. I would only take a REV trade below a bar like this at a key level, like an overnight high or low. Here is a just a minor resistance level and hence a short would require a RET first, and 1 point below the RET, so here a short never sets up. L - So after we break through, wait for the first RET, which is here, and buy 1 point above. Yup..... works again. SUMMARY I wasn't even going to post today since I didn't actually do anything, but perhaps if I'm forced to write it down, then I have to think about it and explain what I'm looking at in terms of rules, and if I'm explaining the rules, then there is a better chance that they will solidify for me and I will be able to act on them. So by sharing with everyone else, I could be helping myself. My problem is that I want to make sure to have a few good days. I know there will be losing days, but I also know that I will have to be able to sit through 3, 4 or even 5 bad trades and not be phased by it if I have a backtested plan that works. I'm close, but just not there yet. I know that after a few losses I would stop and therefore be unable to take the next trade that might very well end up being a good trade to ultimately make the day positive. But since I'm unable to take each trade as I should, partly because I haven't nailed down exactly what I mean by "how each trade should be taken", I think I'm only wanting to take the absolute best trades. Because today we were in a range given the overnight action, although it was wide enough, I was hesitant. I'm of course a bit pissed since every trade would have worked out, with only perhaps the trade at C causing me a sweat a little bit, but in no way would it actually be stopped out for a loss if the stop placement was correct and if I didn't do anything stupid and get emotional. Yes, I know the answer to all of this is SIM, but I'm sticking to my excuses. Tomorrow will of course be a different day, where perhaps none of what I would think to do today would have worked. But jesus, these past couple of weeks have gone really quite well, and we've had choppy days and really nice trending days. At this point I'm fairly certainly that after a week, I could squeeze out a profit, even if tiny, but this would mean I'd have to accept some losing days. And to be honest, I'm just not ready to accept this. I don't want my account to drop another $500, which would be the equivalent of 25 points, but I know that if I don't accept the loss, I will never be able to make a profit, so I've put myself in quite the pickle. I just have to test more and prove to myself that what I'm looking at, where I am placing trades based on my rules will work over a series of trades.
I keep thinking in terms of "how can I make my trading better". I think it was Douglas perhaps who said something like we keep thinking that if only I knew a bit more, I could have prevented my loses, if only I studied more or learned more price action, etc. So when a trade doesn't work, I'm left wondering if I should have taken it. It might sound like I'm wanting to be right, but I fully understand that some trades just don't work, and I guess I'm out to make sure I'm not making a mistake. Lets face it, getting in on a huge plunge with a market order is a mistake. But placing a trade properly above or below a RET is hardly a mistake. It might not be the best placed trade, but its a far cry different than an emotional trade. But I'm still left with the idea that I need to be more selective, look at context more, know where to stay out of trades, etc. So its not so much about being right about this trade, its about being right in terms of doing the correct thing. I want to make sure that I'm doing the correct thing. Is this the same... is it better or worse? I'm not sure. But perhaps at this point, the only thing to do is define how often these trades work out, see if there is positive expectancy, and then just put the damn trades on. Maybe I do just need to reserve a $1000, set this aside as money gone, but just trade properly with it. What's really holding me back is the money aspect. Lescor did nail it when he said that the way to get over this is to trade with an amount of money that you absolutely don't care about. For some it might be a dollar. So yes, if I was risking 1 dollar on each trade, I simply wouldn't care if I was up $10 or down $10 each day. I could still keep doing the same thing day after day as I should. But with each point being $20, and some stops perhaps needing to be almost 5 points wide, I could very well have a few losses in a row, hence easily a few hundred dollars in losses for a day and still not have this be any indication that there is something wrong with my trading plan or my trading. The emotinoal toll would be great for me, but this wouldn't be a reflection on my trading or trading plan in the slightest. I guess only more backtesting will show me how much I can be down on any given day or a series of days. Aye... these internal conflicts swirling around in my brain are just such a nuisance. I'm just kind of upset that I didn't put on any trades today.
Wish I could give you 2 thumbs down for this! You clearly still aren't ready to be putting real $$ on the line, the other day you had trades go immediately in your favor and promptly exited without waiting for the 1:1 reward you back tested. Its like you wanted a small win so badly you completely abandoned the exit method you had been testing once real $$ were on the line. I bet a loss would have been the full 1:1 - ie expected outcome of said activity = net loss over time even w 66% win rate. Why worry about what you would do after a string of losses when you can't even stick to your plan for 2 trades that fade no heat?
Yes... these are good points. The thing with the backtesting is that I have already changed a few things since then, so this means those numbers aren't accurate anymore. My exit needs a bit more testing, but often when that swing low was penetrated, price would came back up on the very same bar. Therefore, my exit shouldn't be as quick, and it needs more than just a penetration of price by a certain amount of ticks. How long price stays below the swing low is of some importance. Also, I've added a bit of context for when not to take a trade given the range I might be dealing with prior to the open. There might also be reason enough to take a trade even before those trendlines I had drawn for the testing would break. These changes might be minor, but this will hugely change the backtesting, hopefully for the better, but I don't have this new number. Now being able to hold for a profit is absolutely crucial, even if its just 1:1, so I gotta figure out a way to get past this little rut. But I do think I'm close. The fear after all just comes from not trusting the plan enough since I know its not written in stone like it should be, so a little more work with the testing and I think I'll be ready. Deep down I know that I've solved what needs to be done on the days when things are good, but its those choppy days that I need to work through to figure out how to stay out of trouble there. On good trending days right from the open you can do no wrong by buying each RET and pilling on the contracts, but these days happen less than 10% of the time, so I gotta be prepared for the tough days.
When a trade that meets the criteria of your plan doesn't "work", of course you should've taken it! Not taking it means you're the gambler, not the casino! Can the dealer at a blackjack table in Vegas step back and say, "I don't really like the looks of that guy, I'm not gonna deal this hand"? I don't think so. Here's where you are now and what needs to follow: You want to be right - Put on all valid trades. You are uncomfortable with uncertainty and you're imagining your stop loss as a potential negative outcome and most of us are conditioned to avoid potential negative outcomes - Practice visualizing your stop loss as a safety net. You have the opportunity for a profit and your stop loss "has your back". Nothing to fear. You're still studying and defining your plan - k p, get in SIMULATOR and then just put the damn trades on. Keep doing it day after day until all that discomfort you feel due to the uncertainty starts to gradually fade away and you're reaping the rewards that come when you can dance like there's nobody watching.
Ya... I hear you. There is no point in just sitting there after so many months. Either I gotta take the trade live or I gotta take it in SIM... but I gotta move forward. As a first step I will just go over these past few weeks with my new rules and see what would happen... then I will be better able to gauge if I should be in SIM tomorrow morning or in my live account, but either way, I will put on trades.