wonkietonk's trading journal

Discussion in 'Journals' started by wonkietonk, Apr 1, 2011.

  1. The goal of this journal is to force myself to spend more time to study my trades, and to keep me more focused and disciplined on a day-to-day basis. I'll do what I can in terms of posting charts and answering questions, but in general, I will not be doing much in terms of educating others on the specifics and the intricacies of my trading method. I will outline it below, but to teach someone how to read the tape/price action is beyond my schedule and beyond the scope of what I want to achieve here.

    My trading method is inspired by and based on some of the ideas and concepts presented in bolter's Market Profile thread from 2006: http://www.elitetrader.com/vb/showthread.php?threadid=63202. They include the following:

    1) I follow all of the major futures indices (ES, YM, NQ and TF). My primary trading instrument is the TF.

    2) Prior to the market open, I map out a trading plan by identifying the areas of support and resistance where I will look to buy and short the market.

    3) I use volume peaks (from volume profiling) as a primary indicator of S/R.

    4) I watch TICK for TICK/price divergences and TICK extremes (to fade).

    5) I don't trade often: once or twice a day, sometimes none. I use a reward:risk ratio of 1.5:1 or 2:1, with a target of 3 to 5 points per trade.

    6) I use Fixed Fraction position sizing as my money management strategy. I risk 1-2% of my trading account on each and every trade.

    Unlike bolter in his thread, I do not use MP to figure out prior-day value areas/POC. I do, however, use MP to obtain information for analyzing the current market structure. These MP concepts include:

    1) Identify buying/selling tails as a secondary indicator of support/resistance.

    2) Identify minus development as gap areas that need to be eventually covered.

    3) Instead of prior-day POC/value areas, I identify rotations and the rotation's POC. Rotations may happen over the course of one market session, but they usually take place over multiple days. In this case, I'll merge the market profile data of those days and use the value areas/POC of the rotation instead.

    4) Identify initial balance (wide vs. tight) during trading hours.

    <b>Putting It All Together:</b> I am a support-and-resistance trader; simply put, I buy at support and I short at resistance. To identify key S/R levels, I use the combination of 1) the aforementioned volume peaks, 2) recent breakout/breakdown areas and swing points, and 3) buying/selling tails, . Prior to the market open, I determine these levels. During trading hours, I read the price action, the tape, and the current market structure (based on MP) at the S/R levels. If I feel the market structure and the forces of supply/demand support a favorable reward:risk ratio, I will make a trade, set my stop, and wait for price to hit my target. I very rarely will exit a trade early; I prefer to let it either hit my target or my stop. Only after the trade has significantly moved in favor will I move my initial stop to breakeven.

    That's pretty much everything in a nutshell. I plan to post and analyze my trades (feelings, strengths, weaknesses, improvements) after market hours, starting Monday, April 4th.

    Good luck and good trading!
  2. Off to a bad start this week :(


    Stop: 848.30 848.30
    Exit: 851.30 849.40
  3. 4/6/11:

    Time: 12:02 PM
    Entry: 849.60
    Stop: 848.30 (Moved to 849.50 B/E stop)
    Exit: 849.40

    Strengths: Entered long w/ VP Support on TF, B/O support on MC, and appropriate market structure (exhausted range extension out of IB). Maintained my initial & breakeven stops.

    Weaknesses: None.

    Analysis: Actually hit my initial 1.5x target (851.30), but I was looking for more than 1.5x and 2x. I was looking for the TF to cover the minus development in the 853.30 area, but it hit my b/e stop. All of the juice was in the YM and MC today.
  4. 4/7/11:

    Time: 10:22 AM
    Entry: 849.60
    Stop: 848.30
    Exit: 848.30

    Strengths: Maintained initial stop.

    Weaknesses: Entered long with VP support on NQ, and b/o support on NQ, but in the face of negative market structure (strong lower high put in on short- and long-term timeframes on all indices. My initial idea was to look for a push and b/o to new highs after the open drive and yesterday's swing point off YM's and TF's rotational POC (12338 & 848.10). However, in the face of the opposing market structure, the market ended up collapsing.

    Feelings: Off to a bad start this week, now with a weekly record of:

    0-1-1 -1.9 PTS