1st and 2nd pullback best after that or last i run much less reliable nice momentum entries on your chart Be Properous Be Well NQoos www.nqoos.com
Oh there are definitely lots of problems with my system. I did not trade Friday (I have been down with a bad flu since thursday night) but nevertheless I have seen some big problems. I'll be re-hashing out the rules here in the journal over the next few weeks. The biggest change is I am going to just develop the system on one chart, the 300 tick. Looking back some of what I did was amateurish and even stupid. Anyway I have a lot of hard work ahead and look forward to all of your comments.
The pullback you have marked does not violate the "Golden Rule". It's a long entry after a pullback from a new high which is fine.
I've marked your chart to show you what I mean about my GRPT (Golden Rule of Pullback Trading). The pullback you marked it great because price most recently came of a new high for the day. The GRPT says don't go short here, if it happens that the rest of the method says to go short. If the New Low you marked corresponded to a place where the system said "go long", the GRPT would override and I would pass on the trade. My goal for this week is an analysis of the GRPT applied to the last two week's trades. How many of the losers are filtered out, how many of the winners are filtered out, what is the impact on the bottom line.
First I printed out 10-tick charts of all of my NQ entries in October. One chart on a sheet of paper per entry, with about 20 bars before and after the entry. I circled the entry on every trade and made a big stack of winners and unfortunately a bigger stack of losers. Then I spread out all the charts and looked for "trends" in both the winners and losers. What I found was almost all of my losers were against the trend on the 10-tick, and almost all my winners were either with the trend or entered during sideways motion after the opposite trend had ended. For example, after a decline, price moves sideways for a bit-- longs taken at that point tended to work out. So, to my entry rules I'm adding "trade must not be against the 10-tick trend". Also, after looking at these charts all week, I feel I could trade just looking at the 10-tick chart. I'm going to give that a whirl on the simulator this week.
Three signals on the 300-tick, all shorts, 1 winner two losers (entries marked on the chart). I enjoyed sticking to one chart (aside from playing around on the 10-tick). The third signal was a sneaky one and I probably wouldn't have seen it if I was on multiple charts. As a final entry signal I waited for the 10-tick to start trending my way (yes, I am really using the 10-tick, not the 10-minute). As a result the two losers looked promising at least for a little bit, I didn't have any "crash and burn trades", the kind where you are stopped out 30 seconds after entry... By the way, that first winner didn't quite reach the 18 SMA, but I entered anyway since I saw the trend turn around on the 10-tick. As for trading the 10-tick, it turned out to be b/e trading = loss after commissions. But it was definitely a good exercise in reading the current market direction.
Wow, a day like today really shows me i'm not missing out by sticking to one chart. There were two entries, both good. I bailed on the first one (took -1.0) because it didn't look like a winner after I opened it. It was down to like -2.5 about to get stopped then moved back up... I thanked God and took a disciplined -1.0. The second one was a no-brainer, up-up-and away. By the way, i'm taking +5 automatic on the first ctc and discretionary close on the second, shooting for an SMA cross on the 300-tick or 2000-tick if I want to press my luck. No SMA cross so I had it open all day. Sweet. Once I switch back to real bucks I'll have to come back and look at this day to keep morale high. By the way I've heard today's action called the "Larry Williams OOPS trade". A gap goes unfilled, and as price moves away from the gap, you get a big move as folks dump their gap-closing bets.
A plethora of signals on a narrow range day. Suprisingly the method can still eek out a profit on a day like today-- the automatic +5 ctc piles it up and the discretionary close breaks even all day. All longs today since we were well above the 285 SMA/5 min. Waiting for a trend in favor on the 10-tick is going very well. It's a fast chart so waiting for a trend change still gives a good aggressive "ambush" entry, while keeping me out of trouble. (So far, no hitting the initial stop 20-30 seconds later.)