I decided to try trading DAX futures for a period of two weeks. Should this period be profitable (let's say EUR 1500, trading 1 contract), I will consider a go live. I hope this journal will bring some discipline into my trading. I regularly suffer from overtrading, taking profits too soon / too late, moving a stop too soon. I also hope to exchange ideas and get some inspiring critique with/from the readers of this journal. I'm using the 5 min chart to trade from. Although IB's charts are ugly, I find they have the advantage of being able to display the last two days on one screen. My trading is price-action based. I will draw some horizontal lines for S/R, sometimes a trendline; another thing I use is daily pivots. Thats about it. Rules? Maximum stop between 5 and 8 points. No more than 3 trades per day. R/R at least 2:1. At the end of every day, I will post trades. Here you go, Phill. Good luck!
I find in my own trading to have a "Firm Set" amount of rules, so when price does certain movements, I do the same thing over and over again. Am a firm believer that I must know the answer to price question before it is presented, time loss equates to money loss. How much to risk and why? How many tics profitable to move your protective stop to breakeven? How many bars does it take if price stays at or near your entry price to get out? Are you using a set target? What can change a set target? If not using a set target, what must happen to get out? If you are doing retracements, are your protective stops the same? Are there any times when it is prudent to risk less than normal on a trade? Do you change targets if market goes against your trade from the start? Are your targets the same all day long or less at lunch time? As price goes deeper in trend, is risk lowered? What would negate a signal? All of the above deal with risk management which I believe a trader must know before entering to become consistent. I wish you well.
Actually, I have more risk management rules, been trading S&P/ES for over two decades, it has become rote. Just too old, lack of patience to do all that coding.
I'll give some of these questions a try: How many tics profitable to move your protective stop to breakeven? Formation of a higher high / lower low How many bars does it take if price stays at or near your entry price to get out? I have tought about this more than once, but I have no clear answer. There are cases where you can sit for hours in a position (Look at yesterday's DAX chart in my next post). There are cases where you get stopped out - and can retake the trade. Are you using a set target? Targets are mostly points of resistance/support: previous close, previous high/low. Intraday R/S levels. Pivot levels. If you are doing retracements, are your protective stops the same? At this moment, I would say no. I don't feel comfortable with it. I know: lots of questions are left unanswered. I started this thread to learn, I don't have years of experience. But I can program, we should stick the heads together! Thanks for wishing me well. Phill.
A rather disappointing start for my thread. My son was ill today and we had to visit the doctor, so there was no trading. Any way, after the facts, the "shoulda woulda coulda thing ..." See attachment. The European markets did not follow the late rally in the American markets, and did not close above yesterday's high. The DAX formed a double top today (yesterday's and today's high), and it looks like the price is in a range at the moment. Phill
My son woke up feeling a lot better than yesterday, and I decided to start for real with the journal... and at this moment I'm actually done for today: no more trades left. See the chart marked with "A, B, C, D, E" Trade 1 (A, B): DAX tested yesterdays high and bounced off of it, forming a triple top. I took a short entry on bar A (5945, stop 4952). After completion of the bar between A and B, I realized it was going to revert to the upside. I was able to cover at 5947.5 before my stop was hit for a loss of 2.5 points. (I've been trading the Eurostoxx the last few weeks, but I never really succeeded there in covering before the stop was hit. The range is sometimes tight there and there are no half-points. So for me, this an advantage of the DAX, it's also more dynamic) One mistake I made this morning: when I opened up TWS before 08:00, there were no pivot lines on my screen. Had I noticed this on time, I would never have made this trade. Trade2 (B, C). Long trade (buy 5950, stop 5944, target unknown). DAX broke trough the triple top, reaching R1, where I sold. + 17 points. Trade 3 (D, E). DAX made a new high, I bought at support (buy 5973.5, stop 68.5, target unknown - but the 6000 level was within an armlength) During the trade I noticed that ESTX and CAC40 were not following the DAX. We didn't really make a move, so I decided to sell, for a profit of 3.5 points As I'm writing this, the DAX is at R2, after a significant retracement... wrong timing. Net virtual profit for today: EUR +438. I never expected this, it's probably beginners luck. While trading, I was wondering how to determine R/R, when the target in unknown ... Phill
Very poor trading today. Took 5 trades. I know that 3 is the limit, but I'm going to change that rule. I will think about it. I was short from the first trade, and never changed direction. That's a good point for today. (was watching the american/european markets and figured that they were heading for a correction, or at least retest support) I did not take timely profits on established S/R. Bad point. I had set a fixed target for my trades and refused to adapt my target to market conditions. Bad point. (I set that fixed target to find out about Risk/Reward, but it doesn't work that way) I was too rigid with that target. Whenever the high bar was taken out or a new low was formed, I changed my stop to BE. Good point. Slippage was the only reason for losses today. I let the price retrace too far instead of taking profits. Bad point. At the moment I could've entered a short with highest probability, I did not take the trade. Bad point. After every trade, I re-evaluated if reasons for entering a short were still valid. Good point. This could easily have been a 700-1000 day. (Maybe my goal of 1.500 in 2 weeks is a little conservative...) Net virtual result today: EUR 142.5 Total virtual result: EUR 580.5 4 bad points 3 good points no losses Hoping for a better day tomorrow... Phill.