Market thoughts for 8/10/03 The market is once again pushing against the important resistance level of 9670. Despite the downward gap yesterday, the index was able to reverse, indicating important strength. It close near the high just below resistance. Oscillators are bullish but overbought, but could remain overbought if the market has enough buying energy to rally. For today's session, I'm expecting to test the resistance level at 9670. Then there's two scenarios I'm playing with: a) The index breaks above, consolidates and then rallies upwards at the end of the session. b) The index tests and breaks above, but cannot hold itself above the support (previous resistance). There is a strong reversal, with a downward rally as all the traders that entered long rush to liquidate. For entry, I will use 10m HH or LL. For plan (b), my trigger will be if we enter back through the resistance at 9670 after breaking above it. T
I'm not trying to be critical of your efforts, but I do have a simple observation that would probably be obvious to anyone reading your posts. You say you are a trend-follower, trading intraday, but only breaking even. But since July, when you began this system, we have been in one of the strongest trends in the history of the S&P. So, isn't that possibly saying that your opinion of bias isn't working? And if your system is reliant on your opinion of trend, isn't there a basic flaw in your approach? If you appear to be struggling now, how can you expect to profit when the overall market itself stops trending? IMHO, you have bitten off a very tough strategy, which is buying strength and selling weakness in a very short timeframe. You are living at the level of market noise, and expecting to be able to project a continuing trend. Extremely difficult.
Have you tried a shorter time-frame (ie: 5m or 1m)? It might help by looking at various timeframes...IMO
Hey Lindq, I appreciate your input and honest effort to help. Don't get me wrong, I may sound "defensive" of my method but I'm only just trying to explain how I go about the trading day. You are right. The fact is that I'm more comfortable with the short side, and maybe even biased. Which of course hasn't helped me in the last few months of breaking one high after the other. Once again right. The idea, so far, has been to lose small in my losing trades, and make it up and more (3x-5x more) in the winning trades. I guess that's why my results are inconsistent. What is it that you recommend? A counter trend method of selling near resistance and buying near support? Or maybe a trend following method, but also selling near resistance and buying near support - maybe close to a moving average or something .. Give me some ideas we can discuss. Back to the drawing board? Maybe. The sure thing is that this journal is serving its purpose so far. It's always much easier for people "on the outside" to see potential flaws of a strategy, and help find ways to improve it. aremakaya I do my analysis on the 15m and 60m timeframes, and look at 10m (and sometimes 5m) to enter. I've tried timeframes below that, but find that I become part of the noise and overtrade... something like a videogame. My goal is to capture 2 nice moves (50pts) per day. Anything below 5m is too short for me, I believe. Thanks. T PS: Today is the kind of day that gets me creamed. Lots of false breakouts on either direction, with no real trend... Not so far at least.
2 things (1) The fact is that I'm more comfortable with the short side, and maybe even biased. Which of course hasn't helped me in the last few months of breaking one high after the other. Thinking about it, actually, the sentence above might be my biggest problem. The fact is that I don't have a clear definition of direction of trend for my trading. I've experimented with a few things, but didn't find something I liked, to keep. Peter, I've been going through your posts and liked the idea of the 285period MA on 5m. I'll put it on my 10m chart as 144periods, only long above, only short below. Will have to test it first of course, but on first view (already put it on my chart) it seems to give a good idea of trend. Any other ideas on how to improve on this? (2) The reason I am not trading pullbacks to the MA, even though I've thought about it, is because I am afraid (not a good word for trading) of missing out on the "big" move, once it comes. This is usually the move that comes as a strong breakout and parabolic - 40-50 pts straight down without looking back. Of course, this move comes once a week, maybe once every two weeks. And for the sake of this move I keep getting whipsawed. I do have some thinking to do. Nothing like a whipsawy day with lots of small losses and loss of discipline to get you thinking. It's true what they say that improvement and refinement on your trading comes from your losses, and not your wins. T More to come later...
How about just some simple, no nonsense trend lines as a means of obtaining the âdirectionâ? Kermit
Trades 08/10 6 trades 0 wins 6 losses (-5$, -30$, -10$, -50$, -50$, -50$) Daily balance: -195$ YTD balance: -400$ This probably what it must feel like, being in a washing machine and spinned around... A bad day for me, not so much $$$ wise but more discipline wise. Overtraded, did not follow my rules, lacked discipline. (see chart below for visual on trades) Trade 1: -5$ Was immediately bearish as soon as I saw that the markets gapped up but werent able to keep their gains. This has been a very reliable sell short signal. Indeed, SPX and Nasdaq never managed to recover their losses. Entered short at 9611 (09:34), but was taken out at breakeven almost as the market turned around at 9612 (09:56) Trade 2: -30$ Market turned around and rallied at the highs. I should've disregarded that and probably shorted near resistance, but got scared of missing out on the big one (continuation to the upside) and entered long near the high at 9631 (10:02). Again, moved my S/L up and exited on small loss at 9625 (10:05). Lack of discipline. Trade 3: -10$ As soon as I realized that the highs weren't going to be taken out (Dow was testing its highs whereas Naz and S&P were much lower --> divergence) entered short as close to resistance as I could at 9625 (10:12). Took 2nd position 20pts lower as per my system at 9603 (10:14), unfortunately the market did not follow through as we were stuck within the chop. Moved my S/L to breakeven and was taken out at 9615 (10:19) with 1 pt slippage. I should've stopped trading here, as per my rule of 3 trades max per day. But since my losses were pretty small so far, I decided to at least try to make it back. Classic revenge trading, with the classic consequences. I know I should've known better, it's always easy after the market close... Notice how the losses get bigger from here. Trade 4: -50$ Still try to catch that downside breakout. By mistake entered on 2 positions instead of 1, at 9600 (10:42). As soon as I realized mistake, I exited (I always do this when I make a mistake, to limit risk), but not fast enough as the market moved against me. Exit at 9605 (10:43) Trade 5: -50$ Here's the comment I wrote on my journal for the trade: "Market broke low once again. Enter Short." What was I thinking? Entered short at 9588 (10:57). Of course the market reversed, taking me out on my S/L at 9598 (11:05). Trade 6: -50$ I decided to take one last stab at catching the break from the consolidation. The market broke its intraday consolidation trendline, made a Lower Low. Entered Short at 9595 (13:24) but the rally didn't follow through and I was stopped out at my S/L at 9605(13:47). ===================================== The irony is that the market took me out and then broke down as I was expecting all along. I was not in the rally though, as I closed the computer (finally!) to avoid being tempted to take any other trades. I'm not regretting closing the computer, since this is one of the things I do after a string of losses to stop myself from overtrading. What I do regret, is that I didn't close it after the 2nd (max 3rd) trade as is my plan! I was initially reluctant to write about today's trading. Nobody likes to admit he/she was dead wrong. But since the purpose of this journal is educational, I decided to go ahead and write everything in detail. Afterall, one of the goals is to identify and limit destructive behavior, and the first part is to admit to it... I want you to keep in mind that the amount lost in each of these trades is very small %-wise, compared to my account. (Less than 0.3%) And I consider this learning capital of some sort, that's why I'm keeping my risk to that minimum level. Once I have the strategy figured out I plan to increase the risk - to produce more rewards. That is not the point though, of course. The point is that I didn't follow my strategy, or that the strategy was not adequate in dealing with days like this. As I said in previous postings (written during the day, after the string of losses) I probably have to sit down and rethink things through. By writing this journal and through your comments things are starting to become more clear, especially the fact that I still have a lot of work ahead of me to become consistently profitable. But there's no way I'm giving up. I'm already considering to implement part of Peter's strategy of waiting for a pullback to an MA before entering. Further, the idea of using a longer term MA and only trading long above it or short below it is also very appealing. Your comments are always welcome, especially constructive criticism. No "I told you so's" ... T PS: If you didn't figure out yet, I'm ending my day early today.
Trader1234: I think you made the right decision to write about your trading today despite your reluctance to do so. You learn from it and then move on. Kermit
I also applaud your courage for posting some tough trades. Take a look at a 5 minute chart of the day. You will probably see that most of the day the market was in a very nice trading range. Super for buying support and selling resistance. I was able to clock 4 for 4, no sweat. Because personally, I hate trends. Trading ranges is where the market spends most of its time. I don't trade intraday everyday - it isn't my speciality - but if I see the market start to trend heavily, I stay on the sidelines. Also, just my two cents, you mentioned pullbacks to an MA. It often works in an uptrend, but falls apart when the market pulls back hard. You might want to look at using an MA to establish trend (long term MA), and an osscilator like CCI to help you pick tops and bottoms within that trend. Buying bottoms in an uptrend, and selling tops in a downtrend, has often worked well, as you will be trading in the direction of the trend after a pullback. It takes a lot of patience to wait for the setup, but sitting on your hands is part of the game
good call. it's very easy to become a liar like *, *, *, *, *, (I wont name names but there's so many on ET). once you lie once to others, you start falling into a bottomless pit. it's a self-perpetuating process.