The Wallace Trading Method

Discussion in 'Journals' started by Wallace, Apr 30, 2012.

  1. the previous journal I wrote was for the euro and I stopped updating it on May 23/2011

    writing the journal completely destroyed my 'intuitive' trading system, and caused me
    to stop using the Elliott Wave theory, the main TA method I used for over 30 years

    but the journal also led to several original discoveries; made me for the first time write
    down how my new trading method works, detailing the individual components and
    how they work; splitting my trading method into Analysis and Trading; and to write an
    analysis of all timeframes prior to trading, noting any price and time targets

    the above would never have occurred without me starting the euro journal, and like
    many others have done, I recommend writing a daily journal, public or private
  2. I've done very little trading this year and haven't followed the ES at all till Friday, so I'm
    jumping into the void by starting this journal and trading my method without a period
    of demo trading

    the idea is to 'double' and make $1M in 12 weeks:
    6E contract day trading margin: $500.00 = 40 pips at $12.50 per pip - 4 points
    doubling weekly: 8 pips per day = $100.00 x 5 days = $500.00 per week, rt extra
    . . . or
    ES contract day trading margin: $400.00 = 32 ticks at $12.50 per tick - 8 points
    doubling weekly: 7 ticks per day = $87.50 x 5 days = $437.50 per week, less rt
    include Sunday, 5.33 ticks rounded to 6 = $75 x 6 days = $450 per week, less rt
    week: . . . . . 1 . . . 2 . . . 3 . . . . 4 . . . 5 . . . . 6 . . . . 7 . . . . . 8 . . . . 9 . . . . 10 . . . . 11 . . . . . 12
    contracts: . . 1 . . . 2 . . . 4 . . . . 8 . . . 16 . . . 32 . . . 64 . . . 128 . . . 256 . . . . 512 . . . 1024 . . 2048
    6E margin $:500 . 1000 . 2000 . 4000 . 8000 . 16000 . 32000 . 64000 . 128000 . 256000 . 512000 . . . . $1,240,000
    ES margin $:400 . . 800 . 1600 . 3200 . 6400 . 12800 . 25600 . 51200 . 102400 . 204800 . 409600 . . . . $819,200

    now the above is very simplistic, but my opinion is, in theory, a good - master trader
    could hit 2000 contracts in 12 trading days rather than 12 weeks, however . . .

    broker is AMP Global Clearing, Chicago
    minimum account $500 using NinjaTrader with the CQG feed
    start time, in front of monitor 4:30am arrrrrrrrrrrrrrrrgh PST

    I have NinjaTrader with 1min and 15sec charts displayed plus the Basic Entry utility
    and MetaTrader 4. I have Broco and FXPro demos, each display the ES, but, there's a
    difference in the price data between them and NT. the Alpari MT demo works well for
    the eurusd/6E NT combo, but I might have to rent an additional charting program and
    data feed since my analysis is thrown off by the difference between the NT-CQG data
    and what's coming off the MT demos. currently using the FXPro demo

    have 1 5 15 60 4H plus 15sec NT charts loaded, 1m on the left side of the screen and
    switch between the others on the right side, full screen for MT 15/5 60 4H D 1 loaded

    one thing I was thinking was that large 6E trades - 1K and plus can cause a spread
    of 20 to 50 pips/ticks, and if when I get into trading the hundreds and thousands of
    contracts, I was concerned about trading those quantities and getting a profit, thinking
    I should switch to the ES now
    I've had a few wows watching 15sec ES bars shoot up when multi K trades hit the
    market, realized I was looking at a half sheet chart and the giant bars weren't giant
    amounts of ticks. examining the high volume trades later found the spread was often
    only 3 ticks, sometimes 5, a world of difference from the 6E
    don't think there's any logic with ES trades volume and spread, sometimes there's a
    small spread, sometimes it's larger, but if always that narrow a range, nothing to be
    concerned about. eg: 33,407 vol trade on one 15s bar, spread 5 ticks, 3 tick dip
  3. Monday session Apr 30

    no trades

    I've spent a lot of time yesterday afternoon-evening setting up charts and loading and
    setting up the MTs, then crashed in the early hours, woke late and continued to setup
    the NT charts

    Sunday trading's often but not always a great trading day and I see the o/n trade was
    where all the action was, an 11.5 points $575 drop between midnight and 7am
    and I've already got a conflict
    the low daily 6/7 tick target suggests using small timeframe charts, 15s 1 5m, but as
    well known, it's a lot of noise, and I'm only seeing one, three and five ticks on those
    charts, so I'm wondering about concentrating on the 15m which gives me a 14 points
    2 day view on full screen, a much better perspective
    it also allows gives me a lot more time to make notations on the chart which are an
    essential part of my method, and from which trading decisions are made, and also
    allows me to note my waves component that I leave off the 15 1 and 5

    my method's much simpler for Day-to-Days trading, requires only 5 minutes a day
    to check the price, and 30 minutes analysis during the weekend for the week ahead
    notations on the low tfs can be a distraction from what the price is doing and also
    whether or not a trade should be made
    DtDs trading also means one can have 24 hours or more to make a trading decision
    rather than the seconds of the low tfs, but in either case, the whole idea and purpose
    in using notations is greater accuracy in making more profitable trades. we'll see
  4. Tue session May 1

    great first trade, I lost a 7 tick $87.50 plus comm
    the chart makes it look like I was Buying the top, but I was just late out of the throne
    room. at one point I did an 'oh-oooooh' when I realized the formation was possibly
    the right leg of an H reversal. could have got out, but . . .
    the most sinful thing I did was to not do the written analysis report. in part I was thinking
    of last nights down, thinking the rally - an expected Up day would happen early. if I'd
    written the report I'd have known about the economic releases and TTed those for the
    possible start of the rally. I'll chalk this one up to 'sea trials', better to have the propeller
    fall off in trials than in battle — Friday's NFP

    the great thing about the journal is writing down thoughts and ideas, once thery're out
    of my head and on 'paper', something Has to be done about them, as follows.

    last night I ditched the 15sec chart. I'd put 2 T3s on all the charts, this was a carryover
    from last year and an attempt at a Green Buy, Red Sell system, just an MA crossover
    system, but something that's just not part of my method, so deleted them all and put
    an MA 1 C on the charts which is sop for me. I still have the 1m up, in part to use it for
    making an image of trades, not sure yet if I'll use it for analysis
    I don't use Stops and last night's trade made me think what I should be using as a
    maximum risk loss amount. for fx Day-to-Days trading I'd use the margin amount which
    is the same as the intraday margin. if I'd stayed in the trade last night it would have come
    back to me plus a 1 point profit, even tho the price dropped an additional 6 ticks. I could
    have closed the trade earlier than I did for a tick or two loss, but closing where I did was
    affirmation the price was going lower

    in theory my method is Very accurate, but . . .

    the first law of trading : The Price Time Waves Movement Is IRREGULAR

    I'll have to think-on the Stop amount
    I'd much prefer doing the analysis in MT but especially in the lower tfs there's chunks
    of time missing and differences in the formation compared to NT charts, I know the Ds
    aren't the same but think the W and M may be, but Have to write the reports
    so for the present I'm stuck with NT

    @ 1:40pm PST, es bottomed ? around 1400.0

    may or may not trade this evening, otherwise tomorrow ?
  5. Wed session May 2

    no trades

    my opinion of the es is that it topped in March and is going thru a reversal formation
    I update the SP500 index from Yahoo and looking at the 1440-1450 area for the price
    to top out. if you look at the 06-07 top you see the higher right side of the V formation
    TTs Have been hit for March and there's no reason May has to have a HH or HC for
    the price to fall. new highs are I think dependant on Friday's NFP. if the numbers are
    poor then the downside is going to accelerate over the coming days

    I've decided to switch back to trading the eurusd/6E
    IF I ever do trade hundreds, thousands of contracts I'll worry about fills then not now
    I'm also more familiar with the euro and don't have a problem working with 2 different
    data sets, the 6E and spot eurusd, and MT as far as I'm concerned is the easiest and
    most efficient charting program I've used, and of course free

    Thurs session May 3

    I need to catch up the euro charts so this is just a note. downside began last fri and
    think there's another week down at least. will do a full analysis on the weekend then
    post some info sun

    ECB announcement should be a non event
    US UCs: these have been increasing since mid feb and there was a spike in May 2011
    so, if the uc isn't down this week, it may start down next week ?
    which leads into fri's NFP. an increase ? a surprise increase ?

    generally down I think into the nfp
  6. Fri session May 4

    the UC was technically positive and I've been hearing 'them' talk down what the NFP
    numbers will be - 120K , and any number breaking the 244K . . .
    . . . . . . . . . . . . . . . . . . . . . . . Prior . . . . Consensus . . . . Consensus Range
    Nonfarm Payrolls - M/M change 120,000 . . . .165,000 . . . . . 105,000 to 244,000
    I expect the euro to continue to drop into the end of next week, numbers on sun
    this session may be a bit up, lots of sideways until 5:30am PST, then Down ?

    no trades

    are you a REV trader ? I keep forgetting to use it, now written down, I'll remember

    charts updated
    NT charts: 1 5 15 60 min MT charts: 5/15 60 4H D 1m
    I now make notations on all charts, a major component of my method, keeping track
    of TTs plus waves, although I only started the waves notations this week, so I'm doing
    a lot of testing before deciding whether or not to retain this. is it beneficial to use when
    live trading, or just use waves in analysis. but for all of the notations, the method still
    remains completely discretionary.

    where it's a lot simpler to use my method is Day-to-Days - dtd trading
    there's 1440 1min price bars in a day, even 24 60min bars, much simpler and less
    complex to be dealing with a single bar than many or hundreds, and of course there's
    much less analysis to do, and a much longer period of time to make trading decisions

    but my method has no absolute entry rules, and this is a problem
    with the high leverage futures trading offers for intraday trading, the temptation is to
    trade a very small tf, but is it temptation ? think I'll try a seconds chart, 15 and 60m and
    see how it goes. trying to notate a 1m or seconds chart is crazy, especially all the waves
    but there are ways around that

    when referring to the spread of high vol trades, I should have been using 'range' - the
    L-H of that price bar. there's 2 examples on 'Gotcha !', first a 5K 6E trade on a 1m bar
    where the range was 40 pips, second, an ES 12K trade on a 5s bar where the range
    was 1 tick :
  7. Fri session May 4

    no trades

    some comments

    NFP: haven't watched a lot of these but surprised as I can't recall seeing high volume
    trades going thru Before the release. both the 6E and ES had large trades entered
    about 30s prior to the release - same trader ? resulting in large ranges. see attached
    charts including an insert of a 14+K vol trade with only a 1 point range, again near the
    4pm 'Gotcha !' ES time period
    a complicated correction that started on May 2 lasting until the release was what I
    interpret as a potential base prior to a major economic release, but in this case it was
    a strictly sideways correction formation

    "Thirty-two political parties are competing in these elections. The most recent polls
    suggest that eight to 10 parties will elect deputies in the 300-seat Greek parliament.
    In the past, a five-party parliament has been the norm. The latest polls show that the
    conservative New Democracy party will likely get the most votes."
    voting between 5am-5pm GMT -5/8hrs 4/1pm E/PST exit poles are likely to update
    throughout the day into the night but many parties mean waiting until the count's complete
    althought the party in power result may give some indication of what's to come re the
    debt and austerity measures/?re-negotiations, it will be some time before the rumours
    begin and then facts start to be stated

    similar voting times to Greece, bit of a non event that shouldn't affect the euro prices
    with Hollande the likely winner

    fyi: Oanda offers 24/365 trading so their charting programs will display any trading
    that's occurring before most brokers/Globex open for the Sun/Mon session
    unlimited FXTrade and MT4 demos, FXTrade includes news
  8. Mon session May 7

    11:45am pst down 50 pips and bouncing - Oanda - Hollande's in
    a Down day 1.3050 ? 1.3000 ? - close down ? a down week ? 1.2830-00
    1.3000 level, the price has bounced off since the beginning of the decline in Feb but
    not yet closed on or below. that could happen this week but I don't expect it to hold
    it'll take a while to sort out a Greek coalition government and who knows what it'll be

    attached the NFP charts I forgot to post
  9. Tue session May 8

    Alpari NY eurusd gap: 1.3080 - 1.3032

    thinking the price may drop down below the gap to the 1.3020s area and may begin a
    rally that'll eventually close the gap starting in the 0:4H bar, looking for 1.3292 area, but
    I may be being a bit optimistic about how quickly it'll close the gap

    the LL thru the 1.30 came within 2 pips of a 61 on my MT charts, and the 76 is around
    the 1.26 level. the Greeks are looking as tho they can't form a government so they'll be
    voting again in June, and for the moment debt problems are in abeyance until a govern-
    ment can be formed

    question then is, will the 1.26 level will hold, perhaps temporarily, but it's then on to the
    June 2010 lows, or lower


    took Sunday off for an afternoon in the sun and dinner with friends in the evening
    think that may happen more often with the summer fast approaching, one day off -
    Saturday isn't enough of a break, so maybe I'll take every second Sunday as well
  10. Wed session May 9

    early post, 1pm: price could close below the 1.3000 Tuesday, at least with spot

    I'm having some difficulty deciding what the price is doing and going to do, none of the
    charts are giving me much inspiration. best I can say is a possible base in the 0:8H bar
    euro session, so we might see an Up day


    trade: 2 pips less comm. trade dissected in attached
    #10     May 8, 2012