It is getting very difficult to do this journal. I will see if I can continue. It has helped a lot so far.
The purpose of this journal was to tighten up my discipline. The journal has helped and taught me something. It has taught me that my overall discipline was not the problem. I realized that the only time that I questioned my discipline was when I was in a trade that just wasn't the most obvious 'clear signal' type of trade. The one where the signal/chart pattern jumped out of the screen. So, I worked on what qualifies a signal. From this clarification I now have the same discipline no matter what trade I am in : The 'jump out of the screen' or regular signal trade. I will discontinue this journal.
Trend days suck ! (for my system at least) If it weren't for a high win % over time, today could rattle my cofidence. Attached is the 1m chart from daytrades. I also trade this system on a 5m chart for my retirement accounts and it had a big loser today too. I am posting this just because I'm pissed. Oh well, there's always tomorrow and/or next week.
Well, I am trading fulltime now for income. I started last Wednesday. Tomorrow will be the only day that I will not be able to trade this week. This is not good because the system makes money over time if every trade is taken. Also, the system is currently on a losing/flat streak so by tomorrow the winners will probably start rolling in and I'll miss them. This losing/flat streak is sure hard on the psyche being that I am now trading to produce income. I just keep looking at the track record of trades for the system and think, there's a winning streak around the corner. Stick to every trade and follow the rules perfectly. I am -45 YM points since last Wednesday. This is not the worst that this system has had for a drawdown. -79 is the worst drawdown in points so far. So, I am hopeful that market conditions will turn around soon.
Hi Saavy I took a look at your charts and entry/exit methods and think I have a decent understanding of what you're doing. Counter trend trading is appealing and does work within the right context. I'm not so sure however, of its value as the sole entry setup if you're going to trade for an income. As you've noticed, trend days produce bulky moves. Why not try and devise a method to exploit those with low risk like you do with the divergence trades? I think the odds of that smoothing out your returns are quite high. As you may have noticed, a momentum divergence can be misleading if one is not aware of what the dynamics on the higher time frames are. Today for ex, if you were shorting the market on divergence, you got killed. Some traders, actually use new momentum highs as a signal to get long, when their other trend indicators kick in. SO I guess, as long as you have a good understanding of what the real "trend" is, you should be okay. I personally believe that the most money to be made in trading, is by trading with and not against the trend. And this is applicable to all time frames, since the market is fractal in nature. When you trade with the trend, you're risk reward can get to as high as 5:1 with decent win loss ratios. Trading counter trend is to some degree, pissing against the wind. Not very pleasant when it's blowing against you. You CAN get risk reward of 3:1 or higher countertrend but you have to be very good at exiting and are facing momentum the wrong way, most of the time. Judging by the charts you have, you're risk reward is likely no better than 2:1. I may be wrong here. At any rate, My 2c Good Luck
Hello Maverick. Sorry I took so long to reply to your post. I did not know your reply existed until I stumbled upon it tonight. I would like to have a "with the trend" play in addition to my counter trend plays. I have spent much, much time trying to develop a system but have not come up with one yet. I believe that I spent so many years looking at reversal patterns that I naturally gravitate towards them even when I am trying to find the "with the trend" method. Regarding risk to reward: The system that was in this thread was actually more like 1:1. I know it sounds crazy but it had a very high win rate. I do think that a "with the trend" system would need a minimum of 2:1 and yes, you would probably find those 5:1 winners when the system stays with a trend that just keeps going.
Well, I am going to kick this journal back into gear. I am trading a slightly new system, still countertrend, but the system is all or nothing. That is, I either get my 15 YM points that is targeted on every trade or I am stopped out. Sometimes I will get more that 15 points which is a totally discretionary decision which I will note in upcoming trades in this journal. The old system worked, but it just did not make enough. It produced from 50 to 150 YM points per month. I would have to be trading with a lot more capital to produce the income needed with only 50 to 150 YM points per month. The purpose of the journal once again is for me to document my trading which I have found assists me with my discipline and psychology. I do not know how interesting this journal was or is going to be for others but comments are welcome. I will make the trades in real time. I will also attach charts for every trade as I have in the past. I will go into the trade methodology as much as possible.
For explanatory purposes: The trades are from a 1m chart and are on YM. The system does work on ES too. (and probably NQ) Double divergence needs to exist. Double divergence is defined by me as divergence inside a larger divergence. The purpose of double divergence is that there is a larger timeframe divergence going on to support the 1m timeframe. A chart is attached as an example. The trade is entered upon a trendline break. The trendline break is discretionary. Stop is above/below last high/low. Stops range from 20 to 10 points which averages at 15. Target is 15 points or better. If price stops just shy of the 15 points and looks like it is consolidating to move more I will move the target over 15 points to the next minor/major discretionary support/resistance.
I have already discovered something from starting this journal back up. I am continually looking to add additional methods to my existing method. This is done during the trading day. I would, like most traders, like to have an arsenal of trade possibilities. I realize now that all I need on my screen for my current method is price action and my indicator. That's it. What happens is while I am in a trade I will be looking at other timeframes or volume or another instrument (ES) and I start seeing different signals which just add noise to my original signal. Resolution: have my 1m YM chart up with price action and indicator only. Do studying after hours or in another room.