Trades for 1-16-04 Today i got ripped apart by the chop, although I was able to stay out of very small ranges that were occuring, I did not have realistic profit targets for the type of trading day that today ended up being. Trade #1 Long 1136.5, cover @ 1135.00 -1.5 pts 10:25 This trade was taken looking for a pretty good sized profit target after several bars I realized that the trend was not going to assert itself here. I eventually got stopped out for a 1.5 pt loss, although I took a loss here I still feel this was a pretty good trade as I was able to get out and stay out of the chop once I realized what I had gotten myself into. Trade #2 Short 1136.00, cover @ 1137.00 -1 pt 11:40 I was waiting for a break of 1137, however knowing this I should have put a limit order in here, instead of doing so the market ran quite a bit away from me before I was finally able to catch up to it, this was my first mistake in this trade. My second mistake was that I overestimated my profit target, I was looking for 1133.5 on this trade, which at the time felt very realistic because of the enormous break we had just had in price, however it turns out the market did not agree, a trailing stop kept me from losing too much on this trade. Trade #3 Long @ 1137.5, sell @ 1137.00 -.5 pts 12:05 Almost a stop and reverse from the previous trade, I hesitated here and lost some points to slippage. In this trade I was looking for 1138.5, and although price got there by this point I had very little confidence left in me as a result I was trailing a stop far too close and got stopped out again for a small loss. Gave up trading after this point. -3 pts today Today the market taught me a few things, - My system has a latency time, as a result I must be prepared to act precisely when I am given a signal, either take the signal or dont take the signal at all, my lack of ability to react caused me to lose some money that I could have just as easily have taken. Trade 2 was looking for 1136.75, but with no limit order in place by the time I had clicked the sell at bid button price had moved two ticks past that point. Trade 3 the lag in my decision making process caused me to lose two ticks on the trade. -avoid expiration days until I have some way to deal with the chop - Choppy days such as today are not going to have very much follow through on the trends, therefore shooting for big profit targets is a very difficult prospect to be achieved, instead quick entry and exit are key on these days, any lag whatsoever will be punished by the markets. This weekend I plan on reviewing the morning trading versus the afternoon trading to see what can be learned about how a day is going to work based on how price has been moving.
Thousands of hours of studying your hundreds of charts you will accumulate {if you want it bad enough} will get you where you want to go. Please don't trade real money until: Your system entries are extremely low risk, high probability, highly repetitve, with safe stops, almost never losing points with breakeven being the worst case scenario, can show the good entry points in choppy or trending markets, and never, ever revenge trade when you lose. If you can't emotionally tolerate some losses, then work until confidence in the system and yourself is there. There is always a trend....Up, down or sideways...the system that trades all three equally well is possible, but it won't be handed to you on a platter...It will come from you, if you want it bad enough. Sincerest Wishes
I read your first page, are you trading for real now or still simulating with Jtrader? How is it going?
Hi Kserra, At what point in the trading day on Friday did you realize the trading day was choppy? Also, besides using the weighted moving averages to help determine if prices are choppy or not...do you use anything else... price action itself, another indicator or market breadth index? Another question...is there a reason why your only using the MACD Histogram and not also the MACD Signal lines? NihabaAshi
I am currently live trading, you can see how I am doing by going back to 1-5-04 which was the first day of my live trading.
NihabaAshi, As soon as I saw the price action when I opened my charts on friday at 12:00 eastern I knew that price was chopping around. I also knew this from talking to you, members of the chat room and other resources I had been reading throughout the week that this would be a choppy day. Therefore many would likely ask why I did not adjust my profit targets accordingly or just not trade at all ? Well at first I was patient and was waiting for a trade, I took my first short at the first signal my system had given me, likely out of boredom instead of out of true belief in the signal. I also delayed taking this signal, therefore missing out on a better fill. In addition to all of this I violated the one of the rules of my system which is to stay out of the chop, especially the type of chop it was in this first trade. There were a lot of signals to tell me this however I was likely running off of some confidence from the day before from finally turning my account from negative to positive. The best way to fix this I suppose would be to add some sort of rule to my trading regimen that would keep me from making the same mistakes I made on friday, like I said I have been looking at charts all weekend deciding how to remedy these errors. Mainly looking at using the morning price action as some sort of guideline for my afternoon trading. The only other two things I look at besides price action in multiple time frames (1,3,5 and sometimes 7 minute charts) are the TICK and TRIN. Originally I planned on using some other major indexes in addition to some major sectors of the S&P but found these to be more a distraction than helpful. As far as the MACD histogram that I use, I have actually begun to phase that out of my trading. I find that it is not very helpful to me, the original reason i started using it was for confirmation of the move but I find that it lags slightly too much for this. I have also found with this indicator that I am constantly looking for divergences in the direction of the trend to help signal at turn in prices and thereby giving me the green light to begin looking for a reversal using my system. I have begun looking at indicators to replace this, mainly a stochastic, however at this point I have committed to nothing and have mainly just gotten rid of the MACD histogram altogether. I use no other indicators at this time other than the ones named here. I understand that you are a big user of the VIX, however I am not very familiar with this instrument at all, I have been watching it in the last week but have not seen any recognizable patterns as of yet.
kserra, I respect you for keeping this journal. With that said, I think you should re-read what you said in your last post. First you point out that you broke one of your own rules in your system... Then you say that you should add another rule to your system to prevent the mistakes from taking place... What good does it do to add another rule if you do not follow them? Please don't take this as an attack, it is only my observation. I wish you the best with your trading. Take care, -John
JohnM4402, No offense taken, you are definetly posting a legitmate question here. While I certainly broke one of my rules on Friday trading, I only broke one of them, this would be out of about 20 of them. The reasons these rules are in place is to guide my trading so when a situation comes up I know how to handle it, the rules also serve as a discipline guide to keep me from doing stupid things. Adding rules in my opinion has only helped my trading so far. For example I have added to help me with my problems from jumping out of good trades too early, as a result I have not experienced this problem recently. Also I have added rules to keep myself from trading in the morning, as a result I have only been executing trades in the afternoon. I find that the more negative that comes from breaking a rule, the more I am able to learn from it. For example, let's say Im looking at a really choppy market, however I am bored and looking for a trade, and then I see a setup. I may immediately think to myself "Oh this one looks really good, but we are still in a choppy environment" this is where the temptation to break the rule comes into play. By remembering and associating the loss of the last time I broke my rules I am able to remind myself why it is I should not be taking the trade at hand. All this talk of trading Rules is reminding me about the research I have done this weekend and how to adjust my trading accordingly. Basically I observed the obvious that on days where there is a large range, trending market, or lots of follow through the profit potential is large. On the other side when the price action is choppy, slow or has little follow through, the potential for profiting is often on both sides of the market however the majority of the trades hold little follow through. This brings me to the newest rule I am adding to my trading: On days with large ranges, trending markets, and lots of follow through on moves look for the profit target predicted by the candlesticks method I use, on days where the range is small, choppy (think day before fed announcement etc....) look to take quick profits (50-70% of predicted move by candlesticks, also watch s/r on these days).
Was not able to trade today, looks like I did not miss too much as far as action goes. Will resume trading tomorrow.