Today was a wash with 3 trades. I'm going to rededicate myself to finding a good entry to join a run away trend. Since the over night session was slightly down, I was looking for short trades. The first hour or so was flat and nothing interesting happened until the 20 tick bear bar at 06:05. That bar closed under the EMA, but stopped right at the pivot lows from the 05:05 and 05:35 bars, so I wanted to wait for additional confirmation. The 06:10 bar pushed up to the EMA, penetrated the low of the previous bar, but stopped right at its low. This caused me to wait 1 more bar, and the next bar formed a higher low and stopped right at the EMA. I wanted to wait another bar to see if price would go up past the EMA, or continue down, but there was no entry as the 06:20 bar dropped hard. Having missed a 70 tick drop, I waited for a pullback to rejoin the trend, but I didn't see the pattern I liked so I didn't make a trade. Price ran up like crazy before the news, and I just watched. After the news, there was the usual spastic gyrations. I noticed the triangle price was forming and was waiting for a breakout in some direction. Trade #1 The 08:20 bar broke out from the triangle, but stopped just above the EMA, I waited 1 more bar, and when the 08:25 bar closed under the EMA, I entered a short at 83.42, a tick above the close. I was filled on the next bar and stopped out on the retrace by 1 tick. -11 ticks. Price continued to drop without a pullback until the little bull spinner at 08:50. The 08:55 bar gave a strong break to the bear trend line, and I entered a stop order long at 83.01, figuring there would be some retracement. I was looking for a quick 15 tick scalp, but I wasn't filled. Trade #2 The 09:35 and 09:40 bars formed a double bottom that was almost to the tick of the low of the day at 06:30. After the 09:45 bar closed green, I entered long at 82.81 hoping for a 15 tick scalp, but only got to 13 ticks before stopping me out. +1 tick. Trade #3 When price finally broke above the EMA, I went long at 82.81 and was looking for a full target (25 ticks), figuring it just couldn't go down anymore. Got out on the next bar with my trailing stop. +10 ticks. I know there was a better way to handle today's action. I remember reading in Brook's book that if the trend is really strong, just get in anywhere. Psychologically, I'm nowhere near being able to do that.
The close of the 8:25 bar is a point of control. Since price close lower than it opened on that bar, the bears are in control up to that point, however price was rising at the close of that bar. If price continues to rise and breaks the high of that bar, it's a potential pivot point for a move back up to previous resistance. But if price rises, fails to break the high of that bar and instead breaks that point of control, the bears should carry price further down. So you would look to short a break of that bar's close or a break of that bar's low. You shorted a tick above that bar's close, which places you on the wrong side of the price action. The trend was down when you shorted, but since you put on the trade with price moving against you, you need to place a survivable stop, which in this case would be 83.60, just outside the bar's high. Careful about forming an opinion about a doji before price tells you who's in control I lost money doing that. I'm far more able to do that with ES than with CL. CL can reverse 30 or more ticks in less than a minute, too crazy for me to chase unless I can track the action cleanly on a 1-min chart.
Nice to see you're making progress, Frank. If I may chime in, make it easy on yourself and - provided the spread stays at one tick - simply lift the offer or hit the bid when placing trades. That way you're almost guaranteed to put on trades for all your signals. Once you have settled on a system, then you can get cute if you want, but first make sure you are comparing apples to apples.
Thanks for the kind words and encouragement Picaso. My main concern at the moment is getting stopped out on a noisy retrace, since I'm only using an 11 tick stop. At least for now, I'm somewhat happy to miss a trade than get stopped out by a tick or two before it moves in my direction. I'm still collecting data to see if 11 ticks is enough. A 15 tick stop today wouldn't have hurt me one bit and it would have gotten me a couple of winners. Among my daily tasks is working with the Ninja script to collect this info. When I was trading on the TOS platform, I had a program I wrote that gathered all the trades and analysed MFE, MAE, etc. but not just up until the trade ended like Ninja does, but for subsequent bars. That helped me greatly in deciding my stops and targets, but I was trading off a 1 minute chart, so all that data is useless now. I'm trying to rewrite that program too.
Hi Frank, Making good progress, looks like. I just wanted to add on that third trade, that is the end of a 2-legged pullback from the main trend, as well as the first bars over the ema in quite some time. Consequently, I took that short on that break (82.85ish), just after where you entered. The short imo is the more likely trade. Since you are reading Brooks, you'lll find something in there relating to this. All the best! Edit: And btw, I really like your chart--very readable... Looks like money! gov
I saw it, failed b/o, got ready to hit it @ 82.86, decided not to because too near the NYMEX close and price action can get crazy at times, and, trust me, there was whining involved If I may ask, how did you manage the exit of that trade? I would've exited @ 82.40 had I been in it.
Thanks Gov. Yes, short was the way to go, I guess I just couldn't believe that after price finally made it above the EMAm and held for a couple of bars, there wouldn't be at least 20 ticks or so to the upside. Happy to squeak out 10 ticks. I'm slowly (very slowly) digesting Brooks' babble. Maybe on my third read...