I've observed this many many times. I was just thinking about it before you posted this as I was watching the chart today. The difficult part when trying to catch the big moves is that there are usually numerous reasons to exit throughout the move. How do you convince yourself to stay in? How do you know which "reasons to exit" are valid & which are nothing more than traps for the counter-trend traders? Some days those counter-trend signals are all valid & lead to reversals. Other days they are all invalid & price just shoots back up.
I have a well-defined plan and I'm a scalper looking for 20 ticks on each trade. Here are my thought processes and trades during the move up (times are PST): 7:05/7:10 This is what my friend and I call the ATM setup. Price closes above the 5-min 20EMA following some downside action below it. During the 7:15 bar price breaks the low of the last bar to close above the 20EMA by only a few ticks. The bear trap is set IF price breaks back to the upside. I buy a break of 94.42 looking for a test of .72 with an upper channel right around .80 and I take profit around that level following the break of the high. Because price is at an upper channel I wait for signs of a deeper pullback, but price simply consolidates, and I buy a break of 94.75 during the 7:40 1-min bar and I target 20 ticks because there's a 60-min high at .94 and wide range extremes tend to break by a few ticks and fail on the first approach. The little 7:44 inside bar indicates that this particular range extreme attracted no anxious sellers and I simply buy the break of that inside bar during the 7:45 bar and target 20 ticks because I'm not sure of any other target at that point. I get right back in on the break of the 7:47 little inside bar (still no weakness) and target 20 ticks because I feel that it's run too far (lol) to go straight to yesterday's high without a breather. Before another long setup triggers, there's a break of a 5-min bar low, which tells me to take my foot off the gas and wait for clarity. Sometimes there's a 1-min continuation setup that fails and I take the loss. That's my signal a deeper pullback may be coming and I decide whether to take the counter-trend scalp or wait for the next with-trend setup. Traders who "milk" a trend by adding to the winners (SteveH) would be simply adding contracts at similar areas where I was re-entering the trend. Counter-trend traders have no clean signal yet today. There are scalping opportunities, but the easy and fast money has been on the side of the trend. I'm not concerned about what happens some days. I'm prepared to switch sides as soon as the supply/demand zones shift and I've studied at great length to determine how best to do that with CL.
1st: SHORT (8) Chop. Target a stop run below swing low. 2nd: LONG (1) Thought a congestion area would result in a bounce, but it blew right thru it. Probably not the best idea for a trade entry. 3rd: LONG (-8) Pullback after BO. Exit because it shot down seconds after entry. 4th: LONG (4) Try again. Looks like I just got shook out as it's turning back up. Formed a DT, so I exited. 5th: LONG (54) Turned back up, looks like it may break the double top. 15-Min chart looks obviously up. 6th: SHORT (7) Was waiting for this level to get hit. Climax bar at this level indicates to me liquidation & exhaustion of the current upmove. Got in a little too early. Barely missed my target of 20 ticks & reversed, so I got out. 7th: SHORT (10) Price broke trendline/demand line. Still looking for target just below swing lows for a scalp. SIM TRADING TOTAL 76 Ticks (minus commissions) 5 Winners 1 Losers 1 Breakeven NOTES Better than yesterday. I wish the 4 Longs were just 1 Long. That would be so much simpler, but it's hard to stay in when price doesn't do what you anticipated it would do after you enter. So I enter & it goes against me & I get out breakeven luckily. Then I enter again & it immediately goes against me so I exit. Then I enter again. It finally goes my way, but then stalls with a double top. Better get out. Then finally I catch the big one (big for me anyway even though it was worth more). How much simpler it would be if I could just say I went long here & then exited way up here. I guess that would require much better timing, or a willingness to just stay in & watch it wiggle with a bit wider protective stop. It's confusing because you may decide to stay in & watch it wiggle because you are confident it's going up. But then perhaps you are trying to predict the future. Just because you "think" it'll go up has nothing to do with what price is "actually" doing. So do you hold on & watch it wiggle with a potential large stop out, or do you react to what is happening & exit when price goes against you, and then re-enter?
I offered private or public therapy to Mac, and he preferred that I post the session on his journal * * * * * I found that I needed a very specific framework to work with. Too much discretion caused me to believe I could outsmart my own simple (and consistently profitable) core system and I found myself falling short of the profit potential offered by my strategy each day. I conducted detailed studies of the price action surrounding my trade signals. A trade signal was nothing more than a price at which a decision to trade or not to trade would be made. I then implemented contextual filters that voided certain signals (such as inside bars, flat 20EMA, major S/R in the way, news release pending, etc.). Finally, I implemented specific rules for entry and trade management. The whole time Iâm honing this plan, Iâm conducting a study every day of the results the plan would produce if I was available to trade every valid setup. This was my benchmark and it gave me confidence. For me, a very strict set of procedures and confidence in the procedures were the recipe for success. I read Trading in the Zone at least 3 times to remind myself that my success did not hinge on the result of any individual trade. And then I had to trust and trade. To this day, most of my trades feel very uncomfortable at the hard right edge. It seems counter-intuitive to buy when price just made a serious push upward in a trend, yet that with-trend trade scenario is my A+ setup. You still seem to be figuring out how to target profits and how to work with a strong trend. An experience one day convinced me I had to get over my bias and learn to take full advantage of every trend. The inventory report was bearish and I watched a raging bull run for two hours while I waited for a short signal. After that ridiculous day, I studied Brooksâ trend chapters and found some helpful hints in there about joining a strong trend-in-progress. An experience another day convinced me to either shoot for minimum fixed targets or stick with technical targets on every trade. Iâd had three trades in a row that showed me more than 20 ticks profit and stopped me out break even. I then positioned in advance of a breakout of the LOD and when it broke by only a few ticks I immediately locked in 20 ticks profit, thinking, âThere, ha! You wonât get me this time!â About 2 seconds after booking my 20 ticks, price dropped over 2 full points (200 ticks) in just a few minutes. I wouldâve done far better either taking 20 ticks on all four trades trades or continuing to try and let a winner run and ending up with a major runner. But by mixing it up and changing my plan based on past trade results, I ended up with a very inferior result. When trading CL live, itâs very difficult to think fast and make decisions on the fly. Making a couple bad decisions this way easily leads to revenge trading. The monkey gets loose and before you know it, youâre looking at the carnage and shaking your head and wondering how it all went so wrong, so fast. One other thing I did quite a while back is remove my P/L from the screen. It was having an influence on subsequent trades. Every trade is unique and the best-looking setup can fail while the sloppiest looking setup can produce an amazing result. I donât mean best setup and sloppy setup; I mean best looking and sloppiest looking. All my setups have tested out rock solid in terms of net positive expectancy over every series of N trades. Hope this helps a bit
These entries make sense (very impressive & aggressive), but when & where do you get out if price immediately turns against you? What if the last trade didn't hit your 20-tick target...............when & where would you get out on that one?
If price immediately turns against me (and sometimes these trend continuation trades do, especially when the pullback is halfway to the middle of nowhere, lol), I get out when my initial stop loss is hit. I use a stop loss no greater than 15 ticks. Once price runs more than 10 ticks in my favor, I usually move the stop to break even. I've had these trades sometimes run immediately against me, come within a tick of my stop, and then end up hitting my target, so taking the loss is just part of the plan. I know that if I'm aggressive and don't try to pick and choose, I'll come out ahead.
But what about days when its hard to actually get 20 ticks on every trade? Are you going to let three trades in the row hit your breakeven stop. That actually happened to me.. One trade I was up 18 ticks waiting for two more ticks just see it turn into a breakeven.. This will mess with your brain a little bit lol.. How do you deal with this?
Perhaps impressive to some but considerably less so to others. And even if it were all true, can it be transferred? If any of Donna's students are putting up six figure years (and could we get just one of them to post a brokerage statement?), then that would be evidence that she has transferable trading knowledge. Otherwise, respectfully suggest that listening to advice from her or anyone else here on how to use "TA", "PA", charts etc for short term directional trading of futures will be futile. Trust me, the people who know how to do this successfully won't post the answers on ET, and you wouldn't understand if they did. So lets try an approach from an ET poster who is known to run a successful trading team and clearly has an established industry pedigree. This is what he recommends for a beginner. Mac, I hope you choose to follow this approach, as we've discussed by PM your need to get rid of the mental baggage you now have from having researched some of the nonsense which is written about markets. Get rid of your EMAs, price patterns, trends...get rid of charts entirely. I've mentioned you're influenced by this in ways you probably don't fully appreciate, and this will continue as long as you use charts. You're already trained to see in them stuff which is counter productive. Ditch them. Here is a very helpful thread by "garachen" describing how to successfully trade using the order book. No charts. They're distracting - his most consistent trader doesn't use them. Once you're profitable on sim every week, token trade 1 lot. Then invest the appropriate amount of capital, lease a seat, and start trading. Total time needed to do this less than 2 months. You'll either be consistently profitable, or should reconsider whether this business is for you. You've tried the chart and indicator route and it doesn't work. For whatever reason, it doesn't work for you. So try something else. And if you have a job, pick a contract with a regular trading session when you are home from work. Forget the nonsense peddled here that you can be a successful part time or hobby trader. Serious business, treat it as such. I have a trading friend who moved from Europe to Australia in order to have day job/consultancy and be able to trade markets during the night. Do what it takes to create the opportunity you need. Listening to those who do not understand the market, but portray that they do...will lead you down the wrong path only to have to start again. I believe that if you continue with this journal you will quit. You've all the information you need in the approach given below. Go to it and I sincerely wish you the best. (if you're in USA, I suggest you learn to get up at 3am EST and trade one of the European index futures contracts. Dax is the best value choice as far as fees go for a 1 lot retail account - you won't need to lease a seat. You should be at 200EUR per contract per day within a few months, that will scale to 10 lots no trouble at all. In three months time, you should know whether leaving work makes financial sense if you have good savings and low debt. Otherwise, you can build up a cushion trading during the night until you can afford to go full time. The downsides are that this will end up tedious and you'll be doomed to this dull scalp for ticks environment for the rest of your career. Be careful what you wish for! But at least you're no longer lost in chart and indicator land with the rest of the losers on this and other financial sites.) Try it, and if you really want, pop back to ET in 6 months with a report...and perhaps a blotter or two for the naysayers http://www.elitetrader.com/vb/showthread.php?s=&postid=3440337#post3440337
Under certain conditions I take less than 20 ticks. These are generally counter-trend trades and trades during choppy conditions. But sometimes I have a string of break even trades and it really just makes me tired and I lose focus. Yesterday I had five b/e in a row and said "Screw this". Usually the first 2-3 hours are good, though.