Awash's Journal

Sorry about the typos fellow traders….I’ll try and proof read more carefully next time.

 

Awash:

Just curious, what order type did you use to enter that 986 trade at 10:16 EST (market, stop, limit)? From reading your “Primary Trading System Rules” sheet, you mentioned that you would “Enter the market (BUY) on first higher low of an up trend and/or (SELL) on first lower high of a downtrend”, I take it that you would, in principle, place a market order to sell If-And-When you detected that first lower high of the downtrend (as in this morning). That first “lower high” can only be determined upon the completion of that 3-minute bar. Sometimes, that bar, prior to its completion, could have moved substantially lower before it is done; thereby causing you to “miss the opportunity” of a down movement. Is that what may be happening? Correct me if I’m wrong or off base.

I think your consideration to use entry stop to pull into the market is what you need. The question is: when do you initiate your working stop order upon perception of your setup/signal so you don’t miss out. Try thinking ahead with “what-if”, i.e. what if this current price movement were to lead to my signal for entry? Then get your stop (or stop-limit) order ticket ready –but don’t submit it yet. When your signal ACTUALLY does appear, then hit the button and stand back to wait for the market to pull you in when price moves through your stop in your direction. This might help cut down on the number of missed opportunities you’re experiencing.

Kermit

 

Excellent post stockfrosty! Are you a Mark Douglas believer? I am going to print out your post and read it every morning before I trade. Well done.

regards,

Bruce Hawkins

 

don't feel to badly today...An early big bar move is tricky...the long "box" @ noon indicated big move coming...it looked somewhat up but the earlier BIG thrust down indicated down was probably over..indicators mixed...create 10 minute system...at least look at it and see the difference...by the time the run came u were emotionally drained and had lead paws. ..LOOK AT THE POPULAR SMA'S....4, 9, 18....COMPARE 10 MINUTE TO SHORTER TIME FRAME CHARTS.... NEVER ANTICIPATE THE MARKET...CREATE A SYSTEM THAT INDICATES WHEN TO TAKE THE TRADE...WHAT CAN IT COST U???

 

Ya I'm a big fan of Douglas'. At the moment I'm mentoring with an experienced trader and since the mentorship began one of the things that has stuck me is how the guy thinks. Without even knowing it he has a frame of mind that Douglas describes so well in his book. And of course he makes allot of cash consistently. Just one more reason why I spend way more time analyzing my head then I do analyzing charts.

To make a living speculating you need 2 things and 2 things only.

1) An edge = these days edges are based to a large extent on the technology you are using. Just my opinion.

2) The ability to apply your edge consistently = this factor rides on your mental state.

 

Stockfrosty,

You offered a lot of helpful pointers. I truly need to train myself to accept the uncertainty of every trade, hopefully that'll be the key to me entering the market in a timely fashion. This time around I didn't set the entry stops accordingly nor did I walk myself through a hypothetical setup. I'll focus on both tomorrow prior to any potential signal.

Kermit, as to the trade at 10:16, I used a limit order because of my lateness. At that point I wanted to negotiate a better price. Price broke support at 989.50 and I was suppose to enter around 988.50, but didn't!

I have 3 major market entry rules. No entry rule carries more weight than another. Usually when price starts to trend it will break a s/r level.

Now, before the completion of the 3-min bar, price was through my support level. I should be entering the market upon the break of support, and not even waiting for a lower high to form. Does this make since?

Tomorrow, I'll just start thinking ahead; and start anticipating price action. I know I can do this without freezing up or convincing myself to wait because the order will be prepared before the move even takes place. That'll at least get me into the market. Once I'm in the market I'm good at defending a position.

 

Yes. Then it seems that the area around that S/R that you’ve identified is where you’ll want to mark your stop entry. The only other thing then is to focus on executing your entire process from beginning to end of the trade as flawlessly as you can for each setup/signal you see. Good Luck!

Kermit

 

Again the market lacked any form of a trend and stayed in a tight trading range throughout the session. I focused heavily on not missing any opportunities. I actually practiced using a stop to enter the market. Because I have limited experience, over the next two weeks I’ll use trial and error. However, I think it would be to my advantage to enter before a s/r level is broken as this will be a good test to see if it will hold (reference trade#1 for explicit understanding).

Trade#1 – [Short 993.25 10:00 EST & Cover 994 10:32 EST] Early on price was trickling down slowly toward my 992 pivot level. Since the overall direction was down I didn’t want to miss a potential break but I did want to get in before something happened. I set a sell limit stop at 993.25 around 9:55 and it got hit at 10:00. That’s all I was looking for was to get in the market. This trade turned out slowly and didn’t continue down. Price and indicator divergence arose around 10:14. At that time I should have closed the trade but I waited a bit more to see if it was a strong reversal and I covered the position once the reversal was confirmed. Stops won’t always be profitable but my rationale for using them is to boost my confidence; decrease my late entries and missed opportunities. I won’t bleed to death on a few unprofitable stop entries.

Trade#2 – [Short 995.50 14:28 EST & Cover 995.25 14:53 EST] I was late entering the market on this trade but I got filled at 995.50. Price moved down but wasn’t going to make a strong move and price/indicator divergence arose around 14:45. At that point I should have covered my short because divergence confirmed reversal in trade#1 and it was happening all over again. I could have made money on this trade but didn’t cover it in time.

Stopped trading at 16:00 EST

Tomorrow I’ll focus on the same thing, hopefully it’ll be a better trading day.

 

I don't understand your second trade?? Did you decide to enter when the sto turned down on the 3M pullback? Why didn't you enter on the divergence in the DT?

I would only enter on this pullback if a trend of 5 or more points preceded it or maybe it was going to bounce off an MA.

Just curious?

We will send you a "Divergence Dude" t-shirt. Club is growing here at ET. Nice job on your journal.

 

Would be nice if you could share some thoughts/methods of your mentor.