I don't think I played very well today. My timing seemed to be off, plus after my first 3 trades, I noticed that the trade prices didn't match up with the chart. Mirus tech support got me on the right track, but I think I was a little rattled by it. This was my first contract rollover with NT, and there was a setting that was wrong. Trade #1 I was just looking for a quick 15 tick scalp here. In hindsight, this was too close to the EMA. +1 tick. After trade #1, price failed to go below the rising EMA. The trend was up and I was looking to join it. Trade #2 The 05:50 bar bounced off the previous pivot high, but the next bar closed above it. The 06:05 bar pushed higher still, then retraced (too much maybe?). I waited for the downward momentum to carry price below the 06:05 close, then put a stop order in 2 ticks above the close. The 06:10 bar then came back and filled me before stopping me out. -11 ticks. The trend was still up, but what I see now that I wished I saw then was the overlapping of the bars. This was barbed wire and I shouldn't have been trading. However... Trade #3 I viewed the EMA as still holding up the line, and the previous bars being part of a pullback to the EMA. This trade went exactly like the last trade. I waited for some room to place a long stop order, except this time I place the order at the high of the 06:30 bar instead of giving it some room. The 06:35 bar came back to exactly my stop, filled and killed me. The only positive is I tightened up my stop. -9 ticks. Down 19 ticks. At this point I switched to sim. Trade #4 Still looking to get back in the trend. The 07:00 and 07:05 bars were part of the pullback, and I put a stop order in at 1 tick above the higher of the recent swing highs. Got filled on the 07:10 bar, got about 10 ticks and moved my stop to BE +1 where I was taken out. +1 tick. When the 07:40 bar topped out at the previous high, I drew the trend line. Trade #5 The 07:45 bar stopped exactly at 83.20 where the previous 2 candles stopped, then started to head down. I looked nice and snug in that triangle and before waiting for that bar to close, I put a stop order in 5 ticks above the high at 83.25 and the bar turned around, and hit my stop order. It was the high of the bar, then dropped back and stopped me out. -9 ticks. I really played this triangle wrong. I'm not upset about being stopped out of Trade #5 although I did place the order too soon, but the next trade was pure revenge. Trade #6 No real excuse for this trade. After 07:45 bar failed to break out, I put a sell stop 1 tick under its low. The 07:50 bar dropped out of the triangle long enough to fill me at the bar low. The next bar was the upside breakout I was initially expecting from a triangle on a trending day. -9 ticks. After the perfect down leg off the HOD, and getting 3 bars failing to push higher, I was looking for the short. The 08:35 bar made a lower low. Entered a stop 3 ticks below the low. The next bar filled me, then the trend resumed. Trade #8 The trend was still up, and with a nice bounce off the EMA, AND a push past that 3 bar pivot at 83.29, I was looking for the long entry. The 08:50 closed above that 3 bar top, and I entered long on the next bar at 83.36. +15 ticks. What I think I did right: Over all showed a little patience. Didn't jump it at bar closes. Mostly traded with-trend. What I think I did wrong: Trade #1 - trying to counter trend trade too close to the EMA Trade #2 - The wick was longer than the body. Perhaps too much downward momentum for a long trade. Trade #5 - should have been expecting a phone break out. Too anxious to get in early. Trade # 6. Just stupid. Trade # 7 - See Trade #1
Frank, While it was not great trading, it was not bad trading either, no major mistakes. If I may point out a couple of things: 1) The first direction that CL picks at 9:00 EST tends to be the good one till lunch, barring major developments and/or news reports. Today we had Citi earnings before the open, TICS at 9:00 and Industrial Production at 9:15 which is why you had some chop at the open. Some people don't care whether is going to be choppy or trending, but keep in mind that breakout trading (which I understand is what you're doing at some level) works better in trends, whereas in chop you'll want to fade strength/weakness (Edit: or simply stay out). 2) If you're going to counter-trend (trades 6 and 7), make sure you fade the trend entering at with-trend extremes; trying to enter counter-trade with against-the-trend momentum is IMHO a losing proposition. 3) When volatility is relatively high and the trend is strong, try to be a bit more generous with your stop and don't be in a hurry to trail it (trade 4 was a runner). As a record-breakevener I realize this is easier said than done But I think the advice is good even if it comes from me: more generous with high volatility, trend and "golden hours" (9:00-12:00), tighter with lower volatility, counter-trend, mid-day doldrums & lotto-close. Keep up the good work!
Thanks again for your advice and encouragement. On counter-trend trades #'s 6 and 7, I put the stop sell at the bottom, thinking that downward momentum would take me with it if the bottom fell out, and my hope was that I had the order low enough where I wouldn't be filled if there wasn't any downward momentum. On trade # 7 I had also tried to put an OCO stop sell at 83.27 and try to fade that last attempt to go higher, but NT said I couldn't put a stop sell order in above the market. I guess that makes sense, but there must be some order type or method I can use to sell when price rises to some threshold. In any case, it was a loser.
Easy way: just place a limit order to sell at that price. Fancy way: limit if touched - http://www.interactivebrokers.com/en/trading/orders/lit.php?ib_entity=llc
Frank, good to see you noticed the danger in taking counter-trend short signals too close to the 20 EMA. The 20 will usually act as a mobile S/R level in support of the prevailing trend, so when a counter-trend short signal appears, I'd be careful not to bite because the R:R becomes very poor near the 20. Yes, sometimes CL retraces off a new high and slices through the 20 like butter, but my rules dictate that if I'm going to counter-trend trade, it has to be when price is pulled really far from the 20 so it acts as enough of a magnet to make the R:R worth it. Or I will take a lower high that's far enough from the 20 to give a decent R:R, but I won't take the signals when that close to it.
At my age, forgetting what happened yesterday is the norm. Today, however, I remembered getting whipsawed out of trades yesterday and was a bit fearful going into this morning. The first few premarket trades had lots of overlap, so I was going to wait for cleaner bars. Suppose I still haven't taken the statistical nature of trading to heart yet. After the double bottom at 04:45 and 04:55, price tested the low 1 more time at 05:20 before moving up and sideways. The bars between 05:30 and 05:45 had no clear top or bottom and lots of overlap. The big bear bar at 05:50 caught me by surprise, and while I was waiting for that retracement back to the EMA, the bottom fell out. Price dropped over 100 ticks without me. After reassuring the people in the office next to me that the screaming and cussing was now under control, I took a deep breath and focused on future trades. Trade #1 Long after the big bar at 06:40. Got out BE+1 without enough time to take that short signal. +1 tick. There was a two bar reversal at 06:55 - 07:00 that I didn't take. With an 11 tick stop, it would have stopped me out. Price did follow through and continue to rise. Trade #2 After a poke above the EMA and that huge sell off, price was looking like it wanted to go up for awhile. Went long on the 07:70 bar after it dipped below the previous bar's close. Price came up, filled me, and continued up for a few ticks. I thought when that bar closed above the EMA I had a winner. Next bar closed below the EMA. +1 tick. Trade #3 Went short after the failed breakout and a close below the EMA. Price reversed, got 1 ticks of slip. 0 ticks. Trade #4 Not real proud of this trade because I did see that nasty shooting star forming, but I remember Brooks saying something about when a failed failure fails, it's usually a good trade. Went long after a substantial retrace of that bar at 81.94. +1 tick. Got a lot of sideways price action, then 2 drops, ending below the EMA. Placed a stop sell below the low of the bar that closed under the EMA, waiting for more downward momentum to carry me down. Got filled on the way down, but price reversed and stopped me out. +1 tick. I was feeling a little burned out, so I left to run some errands. Missed another 100 tick move. Swam with the sharks today. Didn't get bit, but didn't get dinner, either. Hope my friends here kicked butt.
Trade 4 you mentioned Brooks and his "failed failure failing." Could you explain in your words based on that bar what you mean by that? I've read the book. I don't want you to explain to me what Brooks said. I want you to put it in your own words based on this specific situation with this specific bar and the preceding action leading up to it. Thanks.
OK, I guess since you're counting, it was one failure short. Trade 2 was a long signal for me, even on a down day. Four bars up and a cross of the EMA. Maybe a little aggressive, since I should have waited for the close above the EMA. It failed (#1). Trade 2 was a short signal, continuing with the trend. A failed breakout, then a close below the EMA. It was a failed failure (#2). So technically, my trade #4 was the failed failure failing. Guess I should have gone short!! Just trying to add some levity after a frustrating day, and some of Brook's psycho-babble seemed to fit.