Wow NoDoji... I'm honored to have you reading my journal! I haven't seen you post in so long so I was wondering what you were up to. What you say is absolutely true, and I fully understand it mentally, but over the past few days I really was having trouble taking action. I know I was worried about the outcome of any one particular trade, but at the same time, I know that sticking with SLA and taking the trades as I should will lead to a positive outcome, regardless of that one trade. I have seen in the past few weeks that I am generally only taking one trade or two a day, if that, and so my worry isn't over trading, its under-trading, and then it almost made it more important to make sure the first trade was a good one. Its absolutely incredible this crutch I would put on myself, but I nevertheless think that this is exactly what I am doing. I can clearly see in the very near future being in that zone you describe. I also know that, as per your quote, it is of utmost importance to do the right thing, regardless of the outcome, and hence trading well. I already see that my exits can always be better than where my emotion would get me out of a trade, and hence a scratch of 2 points or so is always possible. As long as I'm ready for the next duck that comes along by not being phased by this scratch, I do think I won't be far away from attaining my goals. Thanks so much for your post!
Hmm.. that's rough. $500 would be 25 points... so are you just trading one contract or more? If its more... why are you trading more if you haven't really tested your method out too well? (I know I'm still testing things out, but I know that SLA has been backtested to work, and I also know that I have no problem with scratching) I do feel I'm making progress, but the inaction has been my biggest problem. I do know that I have no problem exiting a trade, but are you holding on too long? Is it a case of hoping and wishing price comes back to you? A good rule really is that if price isn't doing what you thought it would do, just get out. I also have a profit stop and a stop loss automatically set by my platform, simply to cover internet related issues. Currently its at 4 points, but you should be taking yourself out of a trade manually.
Hi Kp, Yes i am defently wishing and hoping alot when I am trading. And oposite to you fast on the tricker for a trade. But still The SLA methodologi is how I want to trade. It actually incorporate ny general view and feeling for the market. I trade the Es one lot, but got tempted trading trading 2 lot. The market moved away 10 points.... Thanks for your thoughts....
Looks like yesterday, as many days, there was more money to be made on the way back up as it came all the way back to the starting level. It wasn't as smooth and quick on the way up, but hey, another 30 points if you know what you're looking for. I was quite pleased with seeing Db's chart after and having the exact same entry for a short (although stupid me exited for no good reason after only 2 points, and more importantly, also outlining that bottom level at 3789 where price turned around.) I even think taking the first short just before the open was a solid trade which would have gotten me away from the jitters at the open and also added a few points. PREP FOR JUNE 27 Overnight, a range of 3803 to 3820 with a mean of 3814. For some reason, my charts fine didn't want to load up, so I had to start from scratch today, adding all my charts into the work window, and drawing in all of the levels from before. But you know what? Since I built them all myself to begin with, I know exactly how to do it all over again, and this right here is the beauty of doing it all yourself.... you understand it intimately! Anyway, will be looking for SLA trades at the open. In the macro sense, the past 3 days all have slightly higher lows, and we are trading very near ultimate highs which makes me think the LOLR is down, but we shall see. We have had a few good trending days, so a day of chop or a tight range has to always be in the back of your head.
Well today wasn't the nicest of days, but as I mentioned in prep, this is to be expected. My charts today won't make all that much sense for the first 15 minutes. The data feed kept cutting out for a couple of seconds, so I reloaded the data, and then everything changed. What was a solid setup for a trade or to draw in a line now looked different, but hey, I can only trade what I saw at the time. A - Prior to the open, we had this tight range of 09 to 13. Just before the open, I could finally draw in a DL as well. We breakout the top of this range but hesitate for a couple of minutes, but nevertheless, its showing strength, not weakness. O - The opening looks funny because its in the middle of the bar, but an opening should of course be at 09:30.00, which should be between the close of one bar and the opening of the next. I placed the "O" in real time, so after the charts reloaded, I'm not sure why it looks like this now, in the middle of a one minute bar. B - Of greater importance, the two bars before this with the same height is an excuse to go long. It would be just before the open, but we broke out of the range and have a trigger for a long. It didn't look like this before reloading the data... perhaps I might have gone long. Its funny to decide to enter long or short just because of a tick, the retracement is after all still there, and depending on how the ticks are packaged, the bars can throw you off. With enough practice, I'm sure using the tick chart or using the right tick bar will be all I need! C - I really had trouble drawing in the next DL. The one from within the range doesn't work since price is too far up now, but we didn't have a swing low yet to connect/fan. Below this bar, I note a long and short because I could see it both ways depending on where price went after this bar, and since I didn't have a firm DL yet I didn't know if it would have broken or not. It went up, so I could draw in the DL. D - Here, with my original data, I had two bars the same height, hence a RET, and it was over a point above yesterday's high, and hence a good reason to go long, which I did. It goes against me pretty much right away. Shame the entry is quite far away from the DL, so I had to take a loss of 3.25 points on the next bar as I wanted to at least break the DL. Had I held on a bit longer, the exit for sure could have been better, but the next bar also went much lower, so perhaps the exit could have been much worse. E - So no problem, just gotta keep at it. I see this next short op here (once again the lines a bit messed up because of the data feed), but this short doesn't trigger. And after this, I knew we would be in a chop/tight range environment. I was looking for trading the range perhaps, seeing that going above 3823 keeps getting rejected, but just not enough confidence. I was also now thinking to scalp to make a point here or there. Not so much because I'm desperate to make back my loss, but simply for the reason that its not a trending day, hence SLA isn't going to be working out too well around this price range, and I was therefore thinking of shifting gears. F - What follows is just messy price action. I drew in some lines, they all get broken quite quickly, and although the highs just above 23 can't seem to break, I'm not ready to take the reversals. The bottom is less defined, perhaps around 19.25, perhaps around 18, but if I am to play with a tight stop of 1 point, this "lose" bottom definition is not good. G - Looks like we are breaking out the bottom here, so I just want to track this short.. turns out good enough for a scalp. H - This short doesn't go far at all, but an exit could be very low cost. I - I mark in a possible short right here, playing off the fact that 23 cannot be penetrated, and seeing the entry in a 15 sec charts. I do think these ranges can be traded successfully, but I need a few things. I need to develop firm rules about the limits. I need to have firm stops in place. And most importantly, I need to keep hammering away at a trading range I think. There might be quite a few scratches, and a trading range will only be successful with the power of numbers. What I mean by this is that 2 or 3 trades might go nowhere, hence a loss of 1 or 1.5 points per trade, but if you have at least just as many winners as losers, but your winners are of the order of 4 or 5 points (given a wide enough range), then this is a mathematically valid strategy. This short I mark at "I" goes against me 0.75 points, twice, but there is also an opportunity to exit for a 2 point profit several times as well. This is a bad example of a trading a range mind you. The range should have at least 5 points profit I would say to even make it worthwhile. But I am clearly not ready emotionally to keep taking trades after a few scratches, although I see opportunity in it, especially after SLA gives you two scratches and points to a range type of day rather than a trending day. SUMMARY Down -$(69). I was calm today, followed the rules mostly, and the only reason I didn't keep at it was that nothing looked really good. Perhaps that short at G could be justified as it would have been leaving the bottom of the range, and this would be a good scalp, perhaps having made 3 points to bring me back to break even today, but I didn't take it, so it doesn't matter much now. The weekend is here, and I will hopefully hammer out something more solid after two days of solid testing. Here is what I will be looking for: 1. Identify the overnight range, and especially the hour leading up to the open. If its tight, does a break in either direction lead to a profitable trade if taken in the direction of the break. 2. What does the opening range, the first 5 minutes lets say look like, especially in relation to where the overnight range was, and more so, in relation to the opening price. Often I see the opening range shoot in one direction, come back to test the opening price, and then shoot off again if it can't penetrate in the opposite direction. 3. Find most instances of my little wedges, and see what happens if I just took each one, breaking in the direction of where the price is getting squeezed for a potential breakthrough. 4. Trading ranges... once I see them (the way I see them), what happens if I just take the REV trade when price is at what looks to be the limit. As I'm finishing writing this, I see we are bumping up against 23 again, but our lows keep getting higher. On a higher time frame chart, this certainly looks to be a wedge.. so will a break of 23 go anywhere if it breaks through? Hmm....
Here is a 5 minute chart showing the wedge... will a break above go somewhere? Or will breaking the DL lead to a good down move???
You know.. I have to update my summary. If I actually followed the rules, I would have taken the first long at C. That long would have prevented the loss, it might have even gotten me a point or two. I was clearly not believing that price could go higher, hesitating perhaps, and it made all the next entries riskier, as I see with my trade.
Didn't get nearly as much done over the weekend as I wanted to, but in the middle of doing stats on my trades, I decided that they were too all over the place to continue. I think the general trends that I was picking up on was that better exits could always be made, and the best trades really were when you're not quite sure yet what will happen. Once the move was well established, the RETs could easily stop you out without exactly threatening the validity of the move as price might just test the initial breakout level again before really taking off. So if the entry wasn't close to the beginning, the exit for a loss would have to be made only to see it eventually work. Still of course so much work to do, and I think I even need to simplify what I'm looking for. I am finding it very difficult to backtest as I don't have all the variables in my head that I usually do before I start each day live. But as Db says, forward testing can take a very long time, so I need to really get down to business. So as always, for today, its going to be following SLA (I find once again you gotta get into the move right away as any subsequent break of a line and RET could still just be a RET in the initial direction and not a change of direction). I will also watch closely the first 5 minutes, look for any rejections of the opening range, and also incorporate the overnight range. This I think will be the backbone of my initial trading plan. I'm fairly certain I can hammer out a strategy for a consistent 5 points, even so that I can trade a few contracts, and at least pay myself a bit of money while I dig deeper to figure out how to maximize what the market has to offer. PREP FOR JUNE 30 Overnight, price has stayed within 3828 and 3836, with a midpoint of 3832. Most of the time has been spent above 3832. Our ultimate high is 3837.75, reached just before the end of yesterday. Attached is what I have for an hourly chart and the channel. Not sure of the accuracy, but price does move around the mean quite a bit, and we have some overbought and oversold conditions, so it looks not to bad. On that note, we are above the upper channel line, and just below the ultimate top, but I remember it was just days ago where I mentioned the tops were getting lower, and then price just went through all of those levels to reach a new top just yesterday. This brings up an interesting point in that no matter how hard I try and put all this together, how much I try and see where price is going, it really doesn't matter because price will often do something else. Sure price is mean-reverting, so eventually bottom levels have to be tested. But traders could be looking for a new mean, so it might not get there, and initially, its hard to predict how and when price will even go to the bottom of the channel if it does. So following what its doing is really about all we can do, and when it happens, or as its happening, we can make an educated guess as to how low or high it can go (ie. where it might stop and reverse of settle down for a landing). But without price showing us a direction first, my "biases" are I think no better than 50/50. So closer to the open now, we have multiple instances of price turning around just below 36. The DL is broken (as shown in the compressed 1 minute chart), but I will wait for the open. My thinking is to wait to see if we break 36 and go long, or head back down, exiting the bottom of the range below 28. Every day, there really are only about one or two trades. This of course is if you get in right away and if price isn't in a tight mean reverting range.
O - We open here, and the first few minutes we have a bit of overlap and rejections of both going up and down. We do go above the range just before open, and then again right after the open, but we do test lower first before eventually going higher. A - After testing lower, we break out of the range again and this one sticks. We have no trouble going above the high of yesterday either. B - Here is the initial SLA trade to go long. It takes 4 minutes to fill. Should how long it takes for price to hit the entry level be a factor? We can see a series of higher lows on the bars that lead up to my entry bar, but I certainly didn't like the sideways action. C - I initially had my sights set on an exit as below 38, below the lows of the bars in that congestion area, but I ultimately ended up exiting here, just slightly below the previous bars. My exit is at the absolute worst place. For the next 8 minutes, exiting anywhere would have been better. But hey, my DL was broken, and by a good amount, and to get to this point, I had to fan my DL already, so it just wasn't looking good. Because price took off higher, I fan my DL yet again though. D - After breaking the new DL yet again, I draw in this possible SLA short, but not about to take it since we are in that range/congestion. It would fill on the next bar, and be a terrible trade. E - This possible short at least comes as a result of a better SL, one that incorporates a swing high, but it would never fill, and the SL is broken. We end up going higher than our previous highs of 43, but DL breaks, and back into congestion. I think I will stay clear of 39 to 44 now. F - By about this point, I am noticing that price simply cannot break lower than 38.75, and hence my drawn in horizontal support line. This is of course as odds with my "wedge" that I look for, since with this type of action, the SL coming down and this ledge would favor a break lower, but instead it bounces. I need to look for instances of this type of behavior, and see if the move, either a break through the ledge or a bounce-off lead to a consistent move with enough points for profit to bother trading these. What I mean is that if price can either bounce or break through, would getting into either of these lead to a profitable enough trade most times. G - After breaking 44 here, I am drawing in my DL but it gets broken. None of this looks good an hour in, and we are barely 10 point above the opening, but hey, 10 points is still 10 points. Will discuss this in my summary. H - Here is the SLA short, but this would be going right back into that congestion area, and actually, its right at the mean of this congestion area just to the left, so not a short I am even considering. It would fill 2 minutes later, go against me by 2 points until price does go lower, but ultimately the trade goes nowhere. I - I see this hinge here, but lets face it, this will more than likely turn into a trading range just like almost this entire morning. J - Wow, bounced off the same level where price couldn't penetrate before. SUMMARY Ok.. this is going nowhere. I'm down -$(44). But hey, losing money slowly isn't that bad of a result while I learn. I'm bound to catch a good move eventually to cover a week's worth of small loses. (I messed up the one yesterday where I exited right away even though price dropped.. LOL.. I was out of practice!) So the only thing I really want to mention is that even though we barely went up 14 points from the ultimate low to the ultimate high, it is still about 10 points from the open. My one trade shows the problems of getting into a move well under way, and in this case, the move was practically over. Its a tough call, getting into a move that is at least already moving so you aren't just randomly entering many times and having to exit, versus getting in right away, before you even know, but then at least being in possibly for a better price once it takes off. The key here to me is the opening range. Two minutes into the open, we have a rejection of the mean at 32. I couldn't see it so clearly at the time (price looks like its going down), but I see it now (as a place where price reversed and went up). Buying above this REJ bar gets me in at the top of the overnight range range, so not sure how good this move is, but getting in before where I did go long with my one trade today seems like it would lead to a better day. I guess the only thing to do is to go over the charts and see what I can come up with for the opening range. By the way, I favor a break below 38.75. Although we bounced off earlier, the lower highs suggest price cannot go up, so we should come down. Update: We did break lower, and then shot back up again. Today is just messy.
So yesterday wasn't all that spectacular, but it was still a good almost 20 points from bottom to top (no way this could be captured though). In fact, just going long at the open, when price broke out the top of the overnight trading range was the way to go (could have been at least a realistic 10 points). By the time I got in, I got stopped out, and a good chunk of the move was already done, although there wasn't much move left of course. Db brought attention to the long term trend channels, but I'm not quite sure if I understood because the value mentioned, 3850 which we hit yesterday was a value of where the channels would have been back in April, which was 3 months ago. Today, the channels lines are at a completely different price levels since they go diagonally up and hence I have no idea where they are. My platform doesn't allow me to go back so far, and although I know that I can just use investing.com, at the moment, its not as important as getting into a trade that is going up or down and managing it. (a much easier way to trade though would seem to be just buying or selling at the extremes of channels mind you) PREP FOR JULY 1 So overnight, we have a steady climb from 3845 to 3854, having already broken yesterday's high and the ultimate high of 3851. If I look at the channels I have, in a long term sense, I have a slightly different view of the channel, as shown, and this would indicate that we are nowhere close to the top of the channel line. Hmmm... I really should try and cross reference the channels Db has drawn in from a year ago. But if he mentioned 3850 was the top back in April, then it certainly is higher today, and having a short bias would be dangerous since we would appear to be nowhere close to the top then. The smaller channel in the chart is the one I posted yesterday, but we are well above that now with not too much weakness in sight, and my experience thus far is that the longer term channels tend to be more accurate, the ones that are on the order of months, not days or a few weeks. So I'm starting off with a DL today, and lets see what happens at the open.