+50 Saw a trade, couldn't resist. My goal today is to continue working on my trading plan. As of right now, I have several pieces of the puzzle for SPY. I trade this because even though it doesn't have large moves as AMZN or CF does, it has volume. And if I learn how to trade SPY, eventually I'll be better equipped to move into ES. Anyway, the puzzle pieces are as follows: I am a price action trader. Or at least that's what I'm working to be. For SPY specifically, I trade in 500 share lots. This is the equivalent to 1 ES contract and, it allows me to scale out. I use 10 cent stops, and set an initial profit target at 10 cents for 200 hundred shares. Once that's hit, I move my stop to break-even and set another target at 20 cents to exit another 200 shares. At this point, I have no more puzzle pieces, and the ones just written may not even be the best pieces, but that's what I have right now. What I did this morning was, once my 10 cent profit target was hit and I sold 200 shares, I sold another 200 shares at 20 cents and moved my stop up to the 10 cent target. And also, before I get into any trade, I need two reasons to enter. So this morning, the first two candles showed bull strength. The closes were above the open, they both had higher lows, and their highs were identical showing resistance at 129.21. I set a buy stop at 129.22 and was filled as soon as resistance broke. This trade was nice because it moved in my direction quickly by at least 4 or 5 cents. I immediately set my stop-loss to 129.11 and my initial target to 129.31. In hindsight, I should have set my targets to 10 cents above the price I was filled at, not the resistance price. Anyway, first target was hit, so I moved my stop to b/e and set another target for 129.41. That was hit as well, and I moved my stop to 129.31. I was stopped out, but let me just say I forgot to adjust my shares haha, so I was now short 400 instead of just exiting my 100 shares! Nevertheless, I covered right away and still kept a decent profit at 50 bucks. I'm really not trying to trade anymore until I have my plan, but if I see what seems like a super-obvious setup, I might.
06.21.2011 Trade: +25 Day: +75 Took another quick trade. Was watching SPY again, and noticed what seemed to be a range. The 11:10 and 11:15 candles largely overlapped, something which I've learned can be indicative of a trading range. I switched down to the 1 minute chart, just for extra clarity, and saw that it was. Resistance seemed to be around 129.67ish and support looked to be found at 129.57ish. So my first reason for taking a trade was that all signs pointed to range. My second reason was there was a very bullish 11:15 candle that drove price to the top of the range. I hesitated for a moment, so by the time I shorted 500 shares, I was only filled at 129.64 instead of higher. Immediately set a stop at 129.68. I covered towards the bottom near support at 129.59 for a 25 dollar profit.
+0 Great day so far! Monetarily, I'm up nothing because I took no trades today. But in the grand scheme of things, I think I just got one step closer to being a success. Last night I got so fed up with trying to find setups that I had a breakthrough. I was so busy analyzing each bar that I couldn't find any way to take trades. It's as if I was analyzing 1-minute moves on a 5 minute chart. So I took a step back and looked at the big picture, the picture that makes sense no matter which way you slice it and, wouldn't you know, I found the holy grail! It's the grail that everyone has heard of at some point. And it's the grail that I blew off in the beginning because I thought nothing could be that simple! Surely trading has to be the most complex thing I've ever attempted! It isn't. It's just got to be realistic, which is something I never understood before. I was so focused on not losing money, or taking 20 trades a day that netted me little profit. I was looking at the trees, not the forest. So now I've got setups for my trading plan, and I will be writing it all out tonight.
Okay ET, thanks for hanging in! Haha I'm sure my journal must be quite boring lately, as there aren't any trades being taken or losses being accumulated. Good news though, I've now got what I believe to be a finished (albeit crude) trading plan. And I wouldn't have done it without certain people on these forums. Assuming nothing changes, I'll begin trading on Monday, trying my best to follow the rules in my trading plan! And I suppose another reward I've received from writing this plan (besides the plan itself!), is that I feel much more focused on the process of executing my trades, rather than making money or my P&L statements. Who knows, I guess we'll all see come Monday.
Ahhh, Grasshopper, you now walk upon the wire without net as you attempt to execute your plan flawlessly
+45 Ok, first two trades done. Following the plan was harder than I thought, at least to start. I have a long journey ahead, and I love it! All of you reading this get to find out my strategy and trading plan, but only a sliver at a time! First piece to the puzzle: I trade only on SPY now. I have no plan set for individual stocks, like CF or AMZN, so for now it's only SPY. So, back to the trade. The second candle of the day made a low practically the same with the 3:50pm candle on Friday, forming a signal for me. My plan says to place a buy stop 1 tick above the high of the signal bar so, I put a buy order in for 500 shares above the high of the second candle. I was filled and set my stop according to plan and then set my 1st profit target as planned. <i> So far so good!</i> My first target was hit, and then I moved my stop to a bit of profit, <i>as my plan dictates</i>. My second target was set and hit as well, and I moved my stop up again. At this point the mental game comes into play!! First, I realize that I set my targets wrong. In the excitement of my first trade "according to plan," I set each target 10 cents too soon, and moved my stop up sooner than I should have. Also, I messed up the order entry and instead of setting stop targets, I sold shares at whatever the price currently was, so my targets weren't really hit! I robbed myself of some profit. At this point, the 9:50 candle arrives, and I see it's in line with the 1:50pm candle's high from Friday. <i>In my plan,</i> I would ignore this signal until out of my current trade. Nevertheless, I take it as a signal and exit the first trade as I enter the second trade. I had 100 shares left long, so I shorted 600 shares. This act alone was not following multiple rules, which I'll explain below. Next, as soon as I realized I wasn't following my trading plan, I exited for a loss, abandoning my stop loss rules and profit targets, which were invalid anyway because I took a trade I shouldn't have! <b>Rules broken on first trade:</b> Not following targets. Moving stop up too soon. Exiting too soon. <b>Rules broken on second trade:</b> Not following targets. Moving stop too soon. Exiting too soon. <b>Rules broken in general:</b> Taking a trade while already in a trade. I think I'm going to post every rule I break for every trade, it's quite humorous seeing how I basically followed NO PLAN. So currently, I'm up 45, but at this point, I'm so determined to get these damn rules down, I could care less about the money. P.S. Had I followed my rules, I would have had another <i>dollar</i> in profit!
Total: +60 +10 Jumped the gun on a signal that was really just in a trading range. Sold again 2 pennies higher. +10 The trading range turned into what looked like a reversal wedge, so I shorted 500 shares at approximately 127.60. A slow moving trade, I covered 100 shares at 10 cents profit. That's the only discretionary rule I have. If the trade is slow to move, I'll take 100 shares off at 10 cents profit, to minimize my loss if the stop is hit. Anyway, despite wanting to take profits again, I stuck to my rules this time. At 20 cents in the green, I moved my stop to breakeven and waited for the price to hit my target. It didn't, so I was stopped out at break-even for only +10. I'll take it though, considering I followed my rules for this trade. <b>Rules broken in general:</b> Looked for setups too often (i.e. micro-analyzing the 5 minute bars, not taking a step back and looking at the forest). Over-trading.
+180 Total: +260 I do this thing called MICRO-ANALYSIS. At least that's what I call it. It's when I forget about the chart as a whole, and look at the couple bars in a small period of time. It's never good for me. Today I was lucky, after a couple scratch trades with no rules I was up +20. So I walked away, took a break, argued with my girlfriend and didn't come back to SPY until about 1:30pm. Saw a spike low at 1:30 and another at 1:40, representing my signal that I look for. I bought 500 shares 1 tick above the high of the 1:40 candle and set my stop just below the low. Entry price @ 127.72. According to the <i>plan</i>, I was to wait until 20 cents profit was reached before taking any of it off the table. That happened and I took 200 shares off @ 127.92 and moved my stop to B/E. Next target was 40 cents, not as planned. Originally the plan was to set targets at 30 and 50 cents profit for this setup, but I changed the first target to 20 cents and then kinda said f*ck it and moved my second target to 40 cents. Sold 200 shares at 40 cents, or @128.12. Finally moved my stop up to 10 cents behind, and waited until I was stopped out at 128.22. I'll attach a chart in the next post.
Chart attached. Also, rules broken: <b>Rules broken on trade:</b> Didn't stick to target rules. Grew impatient at the end.