boru's price action journal

Thanks for the post Db , maybe it's starting to sink in after all. No, not maybe, it is starting to open up, just not as fast as I had hoped.

 

This is what I see on the 60 min chart for today. There was some talk yesterday in chat about the backtesting process and the scientific method. I have begun this in earnest so may not be posting as often. I will post as the process unfolds. Thanks

 

Well this journey back to the beginning is hitting some potholes, ruts and not to be to hard on myself, a few glimmers of hope.

I have come to understand what I have been doing is not really a journal but a log, and not a very good one. Posting one chart in the early morning is not getting me anywhere. I will start posting charts after the trading day to see if what I saw at 7:00 am was close to how the day turned out.

I have done a few things that I've never done before, one was opening a journal. A second was to actually write down a trading plan. I don't mean scribble down a few notes (like I've done over the years) I mean I sat down read Db's post on the five phases and started to do them, in order with focus and intent, foregoing any thought of trading in the foreseeable future. this has been the best of times and the worst of times.

The best, because I've come to understand that this does work, if I am willing to do the work. The worst of times, because this could, no, this is going to be a lot of work.

I started out having a rough idea that I want to trade the SLA . So I started by defining the behaviors I was going to be using ie retracements, breaks, trade management. I mean I wanted to really drill down so I knew what I was talking about. Lol after filling a couple pages of paper I dug out an old dictionary my wife had laying around and found the definitions to retracement, breaks nothing in there on trade management but I also looked up "the scientific method" because I didn't know what it was. Lol thanks Db for the five phases. Anyway I'm starting to babble and my hands are cramped I need a break.

Back, here's where I'm at. I figured to start I need 1. an entry. 2. to be able to scratch a trade. Db advocates not exiting on a stop . 3. trade management , if entry is successful, where do I get out?

I decided to use a break of a SL/DL followed by a retracement for entry. This sounds simple and went fairly well.

Scratching a trade did not (is not) going quite as smoothly, there are so many different ways to look at this, To tight you choke off a good trade to loose and you're giving away money. This is still a work in progress.

Trade management, there could be a number of different ways to do this, but like entry and scratching I can only test one thing at a time , I will be entering with two contracts so to make things simple a break of a SL/DL will be my exit for the first contract and a break of the LSH/LSL will be my 2nd exit.

For the traders who have done this I do have a few questions. Would it be better to concentrate on one thing at a time , for instance take an entry and do replay until I'm satisfied its viable, then do the same with scratching a trade, finishing with management. Or should I put everything together and just trade it and see how it turns out?

There were a number of revelations that came from just this first attempt at backtesting. Am looking forward to doing more but I wanted to make sure I was being as efficient as I could. Any and all comments and suggestions are welcome Thank you

 

Sorry to do this to you but you're also going to have to define "viable". What's "viable"? A point? Five? If you're talking about rets, you may want to define "viable" as price getting out of the retracement and making a higher swing high, even if that doesn't last (largely because if it doesn't get there, you may be looking at a reversal, which is another skill you're going to have to have ready to go). Of course, if it doesn't go, that would be a scratch, so I don't know that it would be useful to separate the two in that case. Scratches that take place outside the retracement such as the break of a line are a different matter. And scratching, of course, is essential to management, though if the trade has had a little traction it's not really scratching but exiting.

Concentrating on just one thing in this case, then, is probably not realistic because the elements help to define each other. However, if you find yourself choking off trades too soon after entry for some psychological reason or other, then you're be better off just leaving it alone until you've calmed that impulse. Then you'll be able to determine what you ought to do about the trade more calmly and rationally.

This isn't therapy, so some of this stuff you're just going to have to play with and monitor until it all settles.

 

It sounds like you are on your way Boru.

It is a work in progress for sure, and I've never worked so hard or at something so hard... guess we all hope the easy times will come out of the hard times.

I think we focus on one part at a time, but it has moving parts that all have to work together. And sometimes while we focus on one, another will suddenly make sense.

All the best!

 

Incidentally, if you want to get deeper into the scientific method than where you are presently, let me know. But if you can keep it simple, that would be best all round.

Look this over.

 

Thanks for your post Db, and don't be sorry (I' m grateful for your help). I don't feel nearly as bad as that post read in hindsight. To be honest I'm feeling better than I have in a long time. I finally got off my ass and did some work that had some value. I learned more than that post indicated, though I'm not ready to as you put it "go into therapy".

Doing the observation again over the weekend was very helpful, as was reading the zen thread. While it may not be apparent yet, just trying to backtest the RET and scratching revealed a side to PA that I wasn't fully aware of . I have no illusions, I am a work in progress but I intend to pursue this until the veil parts.

Thanks to all who post in these threads.

 

Hooti thanks for your comments, I know its only an illusion, I have much more to learn, but sometimes, I think I know enough knowledge wise, its myself I need to work on. I saw that short this morning at 9:42? I actually took it by accident (I hit the mouse) got short at 86.50, watched it for a couple of seconds then scratched the trade I was looking for a more substantial pullback. Which goes back to what Db said about defining things. What makes this stick in my mind was how calm I felt , I knew it wasn't an intentional trade and part of me was thinking theres a lot of selling pressure here but I didn't enter with intent so I felt I should just get out.

Thanks again

 

Well well well just when you think you're getting somewhere, you realize you're walking the wrong way, at least that's how today felt. I only took two trades #1 and #3 ( marked on the chart), and #2 which I didn't take but but should have . Probably because I was still looking at #1.

1. I had 3682 as an area of interest , when price dropped 14 points with no RET. I sold the first RET at 73.50 which turned out to be the low, scratched the trade at 76 not a huge deal it happens. this gets into some CWS here bear with me, instead of scratching I could have SAR, I didn't because price had made a LL at 71.75 and price did turn in the 82 area I still wanted to be a seller. Price starts to rally back toward 82
2. And I am having some work done at my home so I missed the short off the LH at 80 and the buy off the DB at 72
3. Maybe it was frustration for how the day was going combined with the way I saw the entry at #3 . I saw price BO above the 85 highs and thought a run back to 3700 wasn't out of the question, wasn't meant to be I scratched that trade fairly quickly to.

As I write this I see that price has traded as high as 3704. Not a very good day but tomorrow is another day.

comments and suggestions welcome Thank you

 

Since the futures markets run overnite, it is important that you consider the premkt context when evaluating opportunities. Here, for instance, the market DBd at 0600, which was a test of the low made yesterday. Yes, it was possible that after price fell from 82 that it might test those lows again, but, when you went short on that ret and it didn't go, what did that tell you? That buyers weren't interested in revisiting the lows? And if not, what's the other choice? Jump ship and head in the other direction. Granted you'd have to be quick to take it, and you wouldn't have made much in any case. However, you might have been more likely to buy the test of 72 that came 20m later. If you had been there. Can't beat yourself up for a trade you didn't take bec you weren't there.

As for #3, there is an issue here of how long you are willing to wait. It's fine to look back and think Oh, well, yeah, I could have bought whatever and then mowed the lawn or run errands. But it doesn't work that way. That wasn't the time to buy anyway. 0600 was. But if you're not up at that time to take the trade, then you have to make a choice based on how you manage your trades ordinarily. And if that doesn't include buying and holding just because you think there's an offchance that price might reach yesterday's high, again, then there's no CWS to fret over.

Even when price makes moves like this, they often don't occur until after 1600. So how long are you going to sit there? Or are you going to pick your spot and do the best you can within that timeframe, in this case 0930 to 1100 or thereabouts? This is a decision every trader must make for himself and live with. If he finds that most of the best trades are taking place outside the timeframe in which he can trade, then he has some re-examining to do.