This is going to be my another attempt to keep a journal. Have tried few times but was unable to follow through. The reason is entirely selfish. I have a workable system but have taken profits too soon and I have traded my opinions several times which have hurt my P&L. There are no technical indicators used. It is based entirely on price action, S/R and momentum patterns. The patterns are V-bottom upside reversal, late-day upside price surges, extereme momentum days, Friday to Monday momentum, momentum break patterns and 1% true selling days (For more info on these patterns, please see Ch. 12---- How I Trade for a Living By Gary Smith). I will monitor S/R for entry, exits and stops.. My trading instrument is E-mini. I will hold overnight and use EOD price. I will go both long and short. (I beleive Gary was a long only trader). The day after the London bombing was an extreme momentum day. The E-mini was down about 22 pts after hours but staged a comeback by the time the market opened. Next day I went long at 1201 and sold for a gain of about 14 pts. 14 pts is not bad at all but it went up another 35 pts after that. The right thing to do was to hold on to it and maybe add more to it. Instead I looked at my other technical indicators which was overbought, so I shorted at around 1220. I was stopped out in that trade with a loss of 6 pts. My stop was at 1226, 1 pt. above the recent high. I shorted few more times and was stopped out again and again and again. I shorted again on July 28 at around 1245 with a stop loss at 1251. The next day Friday market opened at around 1248 and closed at 1237. It was a 1% true selling day, and I shorted another contract at 1236.75 with a stop at 1243 on both contracts. I was looking for Friday to Monday momentum and was looking for a week Monday. When there was no follow through on the downside, I should have just closed my position for a profit but I did not and left my positions open with stop at 1243. The next day I was stopped out with a loss. Gary mentioned in the book that 1% true selling days are the least reliable indicators, but it protects you at times and ocassional false signals is just a cost of doing business. Thursday August 4th was another 1% true selling day. I went short at 1236.75 on Thurday close. The reason being that we had two 1% -true selling days in 6 days. Friday the market closed at 1229.75. I'm still short. I do not have a specific price target, although my stop is at 1245. The next support levels are 1225 and 1200. On this trade I do not intend to take profits prematurely. I will move my stop as the market moves in my favor. For example if the market closes at 1220 on Monday, I will move my stop loss to 1225 (current support) +1 or 2 pts. We'll see how this goes.
I willl use market orders only. If I'm bullish and think the market will go up 20 pts. I do not see the need to save a quarter pt and I'm not trading a large numbers of contracts where my buy/sell will move the market. Although the trading is based entirely off of price action. I will monitor Daily High/Daily Low, Bullish/Bearish Advisors, Put-Call ratio and Advancing/Decling Issues. These will provide the road map but I will not execute a trade unless I get confirmation from the momentum patterns and price itself. Other indexes that I will monitor are $INDU, $NDX, Utilities, Transportaion, Russell 2000 and the big daddy US Bonds.
Plan for Monday!!! I will add another short position tomorrow morning looking for a follow through on the downside. I will cover the position EOD tomorrow but will still keep my current short intact. Although I initiate a postion based on the momentum patterns and price action itself. I do other types of analysis to get a macro view of the market. One of my analysis has been to find a relationship between Bonds and stocks. I believe I have discovered something here. The bond market and the S&P has been acting very similar to the way it did in 87. I'm NOT predicting a crash, but I will certainly be alert here.
Today's analysis and plan for tomorrow. Current position: Short 2 ES. One was opened at 1236.75 and the other one was opened at 1232.75 (this morning). My stop loss on 1st one is 1245 and on the 2nd one is 1237. I'm moving my stop loss on the 1st one to 1237 too. I beleive tomorrow is going to be another down day. The market opened higher than previous days close and stayed there for about 2 hours, then after that it was down for the rest of the day and every rally was sold into. I have noticed that when the S&P is up 3 days in a row or down 3 days in a row, it usually keeps going in the direction. It did go below the 1225 support but was able to rebound. If it does not break 1225 in the first few hours tomorrow, I might close half my position. The bonds are tanking, oil is at new high and my favourite indicators are oversold which give me even more reason to stay short.
Although my initial plan was to cover one contact at EOD today, I did not. The reason being that the low today was lower than the low yesterday and the low of the day (1224.25) was less than the support(1225). We'll see what tomorrow brings.
Today's Recap and plan for tomorrow. I'm still short 2 ES. Today's high was 1236.25. I guess I was lucky it did not get to 1237 where I had my stops.
Wednesday's Recap What a day!!!! I guess I was lucky today. I had a stop on my 2 ES at 1237. When I looked at the price in the morning, it was around 1240. I opened my IB account at around 6.30am thinking that I must have been stopped out sometime in the early morning. When I saw my account, I couldn't beleive it. I was down $500 and I my positions were still on. I do not know if what I did after that is sound but since I was still short 2 contracts, I moved my stop to 1251. Then I left for work. I cannot trade from work but I can check my positions every once in a while. I saw the market at 1243 then 1244 and so on. I was kinda mad at myself for not taking the loss in the morning at 1240, and I was even madder for not taking profits 2 days ago. As you can see from my earlier posts, my goal was to take profit on 1 contract at EOD. I could have covered at 1225---1227. But around 11 when the ES went from 1245 to 1237, I sure did feel good. I wasn't making any money but I wasn't loosing much either. Around 2 when it went down to 1229, I felt even better. Right now it is at 1233.75 which is a point below my average price of 1234.75. So basically I went from up $1000 to down $1700 and now to breakeven in the last 2 days. Lesson learnt: When I add to a position I will do it on pull-backs only. Especially with futures if I sell on a weak day and if there is any type of pull back, it hurts my P&L significantly. This is exactly what happened to me on my last trade. i have been bearish for the last 10 days. The timing was perfect, I was short but then I added another position on a weak day. There was a pullback the next day and I was stopped out--- the very next day market was down again. Plan for tomorrow. This is one of the momentum patterns that I like to trade (Please see the 1st post for the patterns). This is the exact opposie of V-bottom upside reversal. I am hoping for a down day tomorrow. We should break the support at 1225 tomorrow. The next support is at 1200. On side notes: The Bond market and the S&P have been acting very similar to the way it did in 1987. Thursday and Friday could be very very nasty. Any one who has been hurt by the midnight rally, tonite is the night to fade it, but it is hard to say if there will be a rally. We'll see what tomorrow brings!!!
You seem to be a knowledgeable trader but i can't understand how you can be comfortable going off with positions on & not be able to act on them during the trading day
perturbing.... about walking off with a stop that is rather large. are you a swing trader in position trading clothes? or a postion trader in swing trading clothes?
During the day I have my stop to protect me. I look at the daily price action but execute at the close of or after the market is closed. That is one of the reasons why I trade ES than NQ or ER2. ES is very liquid compared to the other two even when the regular market is not open. I guess my system looks into daily market movement and EOD numbers. I trade 1 or 2 contracts and go for the big move.