Okay. I feel like the boy who cried wolf, but instead of a boy it's a trader, and instead of a wolf it's trading. Every time I say I'm going to begin trading again, I stop trading. It's for good reason though! Various ET members keep halting me and providing useful ways to improve my trading plan. Right, so I'm off to work on my trading plan again. This time though, instead of disappearing from ET for a couple weeks, I'm going to stay on here and post in my journal what improvements I'm making to my plan. That way, maybe someone else who lacks a trading plan can benefit as well. As I write this, my plan is open, and I'm writing down my goals. Annual, monthly, weekly, daily. I just finished some improvements to the Mental puzzle pieces. That is, the psychological game. How to stay out of my head, how to remain calm and collected, what to do when a losing trade gets me emotional, stuff like that. After goals, I'll be working on the details of what i'm trading, and how I'll trade it. Not strategy, but tools. Just like in the template Asterix provided.
Sorry for the delay, my dad has a health concern that earlier this week seemed a lot worse than it actually is. Anyway, I finished the trading tools and instruments section in the T2W template Asterix provided. My next section will be my daily routines. Things such as pre-trading prep, when to take lunch, and other small details that help me with structure. According to my daily goals, I need to work on my plan at least a little bit every day. I hope to finish the routine section by the end of today so I can tackle the risk and money management sections. I will be spending nearly as much time on these sections as I did with te trading mindset section. If there's time, I'd like to get it done by this weekend, but more likely it will be complete by early next week. If you're reading this, enjoy your weekend!
This week is risk management! I feel there's only so much I can do until I've got my setups and edge defined, so I'm messing around with simulated trading until I can gain a better feel for crude oil and how it operates, what works and what doesn't. I'm trying to tweak and refine some trend-following ideas that I have. Speaking of trends, today is a crazy day for that! And just because I can, here's my P&L for today so far: +530!
Been a while since I updated this thing... I've learned two major things since I last wrote this: 1. I don't know as much as I think I do. and 2. Candles and bars are just a way of providing the information to the trader. They mean nothing else (at least to me), and they don't form picture perfect patterns (Holy Grails...?) that work every time. A couple more things I've learned (branching from the two points above): 1. I need to keep things simple and focus on just 1 setup right now. I'm choosing trends, because they tend to operate the same way over and over for extended periods of time. (Dare I say predictable?) 2. I am learning that <i>price action</i> is where it's at. 3. I now see a world of trading opportunities that consists mainly of failed break-outs and failed break-outs that fail. 4. In trends, price acts a certain way more often than not. Assuming a trend is already under way, it seems that the up or down swings (or trend legs) are when price breaks through a level successfully. The pullback starts when a new level holds (failed break-out, or Higher High/Lower Low). The pullback ends when the old level holds (failed break-out that fails, or Higher Low/Lower High), and the next up/down swing starts leading to a successful break-out and new high or low. The process repeats. What I'm working on now is accurately defining a trend so I know <i>precisely</i> what I'm looking for, as well as defining how to enter, exit, and take profits. The execution aspects of a trade. Also, possible filters, like when to refrain from entering, or when to scratch a trade, etc. Be back soon!
Hey Chris, Have you been trading as of late? Ironically I am looking at some of the same things you are albeit I give them different names. The way I have been viewing markets is either they are consolidating, Trending, or Reversing. Notice when something is consolidating, price can be very random inside the range! You'll get chopped up trying to trade it unless you fade it at the extremes. I haven't found a great way of trading this so I don't. When I make bad trades it is almost always because I am trading in chop and getting chopped up lol! In a trend pullbacks will happen to varying degrees. Shallow pullbacks will be bought and sold when a trend is fresh or very strong. Strong buying and or selling. As a move progresses, there will be deeper pullbacks and more profit-taking. Price will pullback enough to where selling pressure(up-trend) and buying pressure(down-trend) are exhausted and buyers or sellers come back in! I've notice Volume is very important in this regard. Volume should decrease on a pullback. Also if a fast move happens and ends in a big volume blowoff there will generally not be any further move in that direction and bots/people chased price and now they are trapped and have to cover or sell out! A Reversal will almost always coincide with a show of strength from the opposing side. A level or trendline will break...this time with volume increasing! If there is a test of the extreme on low volume...this can be a high probability setup for a reversal!
Shan, Sounds like we've both been studying Al Brooks! I'll take what you say and simplify it even further. I think the market only moves sideways and up/down. When it's moving up or down, it's trending, and the trend can show up in several variations. When price is moving sideways, it's either in a trading range (small or large) or in giant swings. Think reversals or continuations. But I'm starting to see that it might be even simpler. I'm starting to see that price moves from level to level. When price is breaking through levels, it's trending. When price is getting stuck in levels, it's ranging/swinging. To explain further, imagine a trend. Better yet, take the chart image of SPY that you attached. I've noticed trends tend to break out of current resistance, hit a new resistance zone, and then pull back to the old resistance that now acts as support. I edited the chart you uploaded to show what I mean. I've labeled the higher highs and higher lows. Each HH on the chart is a price level that could not be broken as evidenced by the large upper tails. They are false break-outs. Right after there is a pull-back that ends when price can not break below support. Look at the HL's I drew on the chart. The first HL is a strong down bar followed by consolidation in the form of an inside bar immediately after. The second HL shows two strong down bars (a bit deeper pull-back this time), and then the first up/green bar immediately after has a large lower tail, which is the false break-out past support. This means support held successfully, and now price will most likely trend upwards again. The third HL is a two-legged pull-back, and I believe Brooks mentions in his book that a 2-legged pull-back is common after three legs up, which is the case here. The fourth HH and the last high, which are basically at the same price level, shows that the trend can't break through the latest resistance zone, signaling the end of the trend, and possibly a reversal. Also notice that the first HH, which hit resistance, is the same level that the second HL could not break. It's the same for the second HH and the third HL as well as the third HH and the last HL. Keep in mind, this is all just my opinion. Someone who actually trades professionally can feel free to call me out if I'm completely wrong. BTW, I like what you're mentioning about volume as I have not used it at all up to this point. In an effort to keep things simple, I've taken volume off my charts. I figure I'm trading price, and direction is all I care about. And to answer your question, I have not been trading at all over the past month or so. Instead, I was working on my trading plan and now I'm reading Al Brooks' book over and over while studying charts and trying to define and nail down a decent trend setup. It's all paid off so far, and if nothing else, I'm at least saving my money!
Don't know if I'm reviving this journal, but I wanted to post in it as a way to continue this journey as both a trader and an ET member. I have learned quite a bit about myself and trading since I put this journal down, and who knows maybe I can help someone else, or maybe not. But regardless, I'm still here working on this trading endeavor and I haven't given up. To kinda pick up where I left off, I was struggling with trading at a prop firm and didn't even know how to tell a range from a trend, let alone have a written trading plan. I now have a trading plan, or at least all the major chunks of it. I have a private journal where I write lessons learned but am thinking of just transferring it to here, and I have a private record of my simulated trades. I have several ET members I look up to and together they all make a sort of super-mentor-ish figure. I guess what I'd like to do now is post in this journal about everything I've learned regarding trading, be it a new setup, risk/money management, or other topics. My hope is that other aspiring traders will learn something, and that more experienced traders will also provide input. I realized I am no good at keeping things if I don't try to at least give it back. I hope this will speed my learning progress, and also others' too. Also, I will most likely tend to post about my progress with trading: Past, current and future. To start, I'm currently watching CL every day, and sim-trading my one solid setup: trend pull-backs. I'm testing other setups, and attempting to stick to my trading plan only. Focusing on the execution of my plan. Lastly, I won't be posting any live trades or a P&L. The ES Journal and CL Redux were created for that, as well as the P&L thread here on ET. Also, it would be terrible for my ego, not because I'm that good, but because I would think I was that good, when really I'm still learning and have a LONG way to go.