Made up this chart the first time, but used 1:1 risk to reward...silly me. Here's the chart using 1:3 risk to reward. Also, I've decided to use a 28 ticks stop loss, because with fees, it's comes out to about 30 ticks in the micro contracts. And 60 ticks for a profit will be about 58 ticks after fees, in micros, so here is a more accurate chart. Here is a chart listing the possible outcomes:
Another oops. The chart above is for 1:2 risk to reward. When I was looking over the 1:1 chart....not really sure why it took so long for me to realize I was using 30 ticks for a target instead of 60, but anyhow, I realized that I could probably have a rule of moving my stop loss to 1/2 way when the trade makes 30 ticks. This will overall reduce the amount of losses I have, while still giving a very good chance to make profit. Also, I can preset the trade for this, so that my emotions won't be a factor. The key will be finding trades that go right to 60 ticks. Just gonna try it. The worst thing that can happen is that I'll have a lot of losing days before giving up on it, but I won't know unless I try, and when I tried something similar, it seemed to work. What I like about it is that in Micro NQ I can only lose $45 a day. I think my winrate was around 40% when using 30 ticks sl and 60 tp before...this should be profitable with that winrate. With a 40% win rate, using this method, I will have lost 180 ticks, or $90 for every 232 ticks, or $116 made. Not great, but it should work. This frees me up to putting my focus on getting the best entries, rather than managing the trade. I think managing trades has got to be one of the hardest things, emotionally, for me to do.
Think I'll start of with my new plan with just 1 trade a day. And even though I'd like to have the stop loss and target set, I think for where I'm at in trading, I need to manage the stops and targets. Later I can try that plan again. So, one trade a day, but my maximum is going to be 40 ticks for a stop loss, and I plan to trail. It'll take longer to get the profits that 3 trades can make, but it will also take longer to rack up losses. I'm feeling much better about this decision. Slow and Steady won the race.
I'm also changing my rule about waiting to take a trade until 8:45 CT. One chance per day. I just need to get good at finding one and staying in the trade.
Made 5 ticks today. Wasn't sure about trading today and I certainly didn't catch anything that went anywhere, but it was a nice trade. Only went against me 1 tick. Off to a good start with taking only one trade a day. Don't think I've ever been so happy to make $2.50 in my life...except when I was kid and pennies mattered.
Lost 31 ticks. However, I waited for the set up I was looking for. It just didn't work. Now, there were clues that maybe it wasn't likely to work....we were still kind of close to the open and it hadn't seemed to have picked a side yet, so perhaps I could be more accurate with one trade a day if I watch for making sure a trend has been established, and get the pullback into the trend....which is what my trading system is suppose to be based on. However, even though it lost, I'm happy with how I did. I also felt almost zero anxiety over this trade. I placed it and knew it was either going to work or not. It was a little frustrating when it didn't go straight up as I wanted, and I really thought about closing the trade early, but I didn't, because, I have decided to stick to my rules I worked with a while ago that seemed to lead to profitability. My rules are: 28 ticks for a stop loss At 30 ticks profit the stop loss will automatically move to -14 ticks. (This rule is new.) 60 ticks for a target. And I let the trade play out. This puts all the pressure on finding one good entry. With time, I am very confident that I can become accurate with this plan. When I tried this before, I did take a lot of losses, but at 1:2 risk to reward, it was still profitable. Two changes are different from before. 1. I am using a 28 tick stop loss. That's because the spread really does weight the probabilities against the wins, and I wanted it to be a little closer to evening out the losses and profits. 2 losses should be 60 ticks after fees and 1 win should be 58 ticks after fees. One win does not bring me back to break even after 2 losses, but it will be close. The other change is to move to 14 ticks below BE when the trade has gone into profit 30 ticks. The reasoning behind this is that when I look over my trades, there are very few trades of the trades that make it to 60 ticks that ever retrace more than about 20 ticks, and most of the time, that retracement happens before the trade gets into 30 ticks profit. So, it's just one way to limit the losses, but still give the trade enough room to play out. The reason I'm not moving to BE exactly, is that I've had too many good trades stopped out right at BE. I think there's something about my entries that attracts price to retrace right to that point, probably because I sometimes take a break out, and those are obvious places to retrace too. I keep thinking I need to study these areas better, because they would make great entries....the reason I don't try harder is that if you know you want to be in a trade and it's really moving, it rarely retraces right to where you want it to to get in. In other words, the best trades rarely retrace to ideal entry points, at least with the way I trade. I have decided that if there are ever net losses of $70 below today's beginning balance, or if I ever take 5 losses 5 days in a row, 1 trade only per day, then I will take at least at least a one week break from this account and trade demo until I have the statistics I need to be profitable before going back to trading Micros again. That means the account could drop to about $85 lower than today's starting balance if a last trade is taken right at $70. This gives me a loss limit I'm OK with. The most important factor in this plan, is that I'm very comfortable with it. I like trading it. I know ways to study that should improve it. I like all of my rules. I don't plan to change my rules. There is no reason this plan should not work. If I can't do it live, then the problem is the psychological aspect of switching from demo to live, because this plan worked before on demo.
The trade that I placed earlier today that was stopped out, had price move against it by 44 ticks before going in it's direction 273 ticks. Basically, the trade direction was right, and my entry was according to my plan, but what I am trying to think through is how could I have gotten a higher probability entry? The times I wait, the retracements to get in don't happen as I want them to, and the times I get in, they often retrace.
Didn't take a live trade today. Almost did a couple of times, but with only allowing one trade a day I wanted something that was clearly aligned with my set ups and that didn't happen for long trades. There were some good places that would have worked, and if I could take several trades in a day I probably would have tried them. The nice thing about the NQ is that when it moves, it keeps going...and that's great for when you're in a trade, but not so much if you're still trying to get in. There were a lot more opportunities to the downside but I didn't want to take any short trades today, simply because I don't have a good winrate with them (yet).
I think I found my own trading secret. And it's based on what I learned as the foundational method of this journal, so I can't share it with anyone...and I know it's not nice to announce something like this and not share it, but I'm too excited to not say something. The only clue I'll give is that it's based on understanding patterns that repeat often...a simple trade set up, nothing fancy, just have to recognize that the set up is happening....and that part might be where the difficulty might come in, in the future....still seems to good to be true. There was a certain set up I traded with only being a little bit aware of an underlying principle that makes it work, yet I had traded it 7 out of 10 days that I was looking at today when studying over some trading days and it won 9 out of 10 times I had tried it during the 7 days. It would be too obvious what was working if I post charts showing the trades, so I think I'm going to have to stop posting my charts. I'll still post my wins or losses though. Also, I don't have to change any of my rules. It can work well with 30 ticks for a stop loss and 60 ticks target...at least it did the days I looked at. And I'll stick with just this one trade a day trying to get this down....unless I can't get it to work again....you never know with charts, when something that was working might stop. This could be really embarrassing if I can't make it work after all...but it did work before and if I fine tune it....well, I'll be pretty happy with 9/10 trades winning even with no improvement! This might become an even less exciting journal without charts going forward.
Let me guess...The mid-morning drop, followed by the afternoon reversal into the close? Mmmm. I call it the 10:30 AM ET reversal, because that is, on average, when it happens.