YM S - 13010 T - a ways BS - 13040 Theory - When entering a trade after a strong candle look for some confirmation; either from a candle or other. Theory - I feel more comfortable entering a trade based off the 15 min chart rather then the 5 min atm ... So perhaps use the 15 min to look for patterns and use the 5 to refine the entry/exit. If you want to use the 5 min to trade then use the 2 min for entry exit.
T - If I am trading off a particular time frame then I need to use that for my trade and use the next lowest one for entry exit ie 60 min/15 min 5 min 2 min Cant enter a trade under the guise of a 60 min trade and be staring at the 5 min chart all day and expect it to hit the target of a 60 min chart. 15 min time frame is fine to watch if playing off the 60 min. example of this would be on my last trade on 8-15-07 if the entry was 13010 then the Stop would be 13175 Target 12800~ Risk/Reward = 65 points 210 points 1/3.2 edit - need to check my math 165 points compared to 210 1/1.2 <<< this wont work for the future. Need to refine exit and entry for long trades(60 min trades). The above trade will be a Test trade (I am not ready to hold overnite to so we will simulate the above trade). So its actually a simulation of a simulation (all trades thus far have been test trades).
Since we are actually basing this trade off the 15 min and the 5 min entry then we will exit off the 5 min with not holding overnite in mind. Option to hold until 15 mins past thou hour is available. New stop is placed at 12956 (1 tick above the recent strong red candle body). Also since we are in unchartered territory we will base the stop clearly off candles instead of trendlines. Stop hit 12956 +54 Simulated trade of using the 60 min chart is still in effect.
YM ideal trades for 8-15-07 These are the trades I would of taken given the following criteria 1. Minimize the amount of trades you do in a given day to be 1-4 2. Look for trades that yield a high Reward compared to Risk. 3. Enter and exit trades near trendlines so the risk/reward is better Analysis: 1. Trade 1 I flobbed in r/t; first off I was trying to trade off the 5 min but wasnt using the 2 min to my advantage ie I should of been watching the candles on the 2 min for entry. Perfect exit would of been near my target (and I remember watching this intra-day and saw the slowdown of prices near the 13150 mark. 2. I should of been able to pick up on the small reverse h&s formation; entry would of been 1-2 ticks above the breakout candle. Best exit would of been 60 points which would of been near the real top. The confirmed trendline would of confirmed this. 3. Next best trade would of been the play off the trendline; although the chart shows a slight change in sentiment; so a tight stop would be needed. ie 2 ticks above the high of the white candle. Entry would be 1-2 ticks below the solid red candle. The preferable hold would be all the way till the end of the close. That would of catured at 250 point return. The tough part would of been to hold through the 13050 level where the bulls and bears were really fighting for control. That solid red candle was some strong resistance to the bulls. Now as to where the best place to put a trailing stop would be. I am unsure. Possible place would be just above the large red candle; or mid-way between (but this would of been hit) or have a close above midway between. T - Further evaluation is needed to determine the best course of action. My original exit was near the close with 6 mins left. 50 more points were gained if one were to have held 5 more mins. Fear and greed played my trade - I didnt play it. How many times have you seen candles like this in the past. Candles are poor trading tools - even though we had a strong downtrend followed by a indecision candle and then followed by a decent white candle we actually just made a flag and thus proceeded down again. T- Summary - its harder to change a trend then it is to stay with it. Look for more solid confirmation from the candles when changing trends. T - Another tough rule that needs to be made - how to place the trailing stop to capture the most profits. 4. If for some reason 3 was missed then I would of wanted to gotten in at 4. The breakout of a h&s top by a very strong red candle. Many times when patterns break they break hard. So rather then waiting at times its best to get in pre-break; although you are paying for this with false breakouts. If you got in pre-breakout then a stop above the high of the right shoulder. If you got in after the breakout then dropping down to the 2 min chart would be needed (you would of still missed most of the move and would of still been 'nervous' since you dont have solid trading rules as of yet. Exit would of been the same as #3 5. This would of been a gutsy play since there has been a downward sentiment in the market and we are near the 'brink' of a decline. Trendline bounce with candle support would of been the play. A trailing stop using candles and support lows would of worked well; followed all the way to the top using the reverse h&s for a launch off to the exit at 2. Overall a good trade considering. Summary of trades and observations: 1. The best trades were based off strong trendline support with candles as confirmation. Patterns were used to determine targets and to provide momentum to the trades. 2. Difficult decisions and a solid trading plan needs to be developed to harness the power of a large scale move that doesnt get stopped out. Perhaps one based on ATR(average true range).
exited 12733 + 277 (dont you love sim trades) reason for exit - was basing exit off the 15 min. Looked like it was forming a h&s bottom; and the 5 min was suggesting this (although I could be way off). Still chose to exit at this point. Need to work on better defined rules.
YM 15 min chart with 5 min entry B - 12824 T - 13,000 S - 12790 r/r - 34/176 1/5.1 Dbl bottom on the 15 min chart/ strong support at the 12600 level playing bounce look for a stall near the 12900 level also this is a sim trade so will be holding overnite. Used the 5 min for entry Will set a Stop at 12879 while I'm away from computer; need to work on best placements for stop. Theres a chance we could pull back to the breakout so setting this stop here just in case.
-note- I know that once my money hits my account I'm going to have to take it slow. Going to be hard since the nice wins I just had with the sim trading. But I have a feeling volatility is going to dry up. So working on a more solid trading plan is in order. There will be trades I just need to find them and preserve capital. And look for good r/r ratios ... I still need to sim option trades because in the past I usually got hit when it didnt move fast enough to where I called it. ie atm my INTC trade hit my target but moved too quickly and may have formed a bear trap. The KSS trade is still good thou.
T(theroy) - Best way to practice is to prepare for all sorts of circumstances so that when they really happen you move without hesitation. There is always the option to change but acting without fear and hesitation builds character. It also instills confidence. You are not trading with the dollar in mind you are testing your spirit vs. the chaos of the market... Just like the world. Everyday is a test of the spirit