If you want to trade a volatile instrument like CL live, you have to learn to trade with an edge, with strong risk management, and learn to let winners run so the chop days are meaningless in the larger scheme of things. You can't trade based on what "seems" to be so. You need hard statistics so you can have enough confidence to trade comfortably in an environment of pure chaos and uncertainty, knowing you will come out net profitable if you follow the rules you know give you a statistical edge. I do meticulous bar-by-bar post-market analysis of every valid setup I could've traded and enter the information into Excel manually. I use a 5-min chart for setups, a 5-min or 3-min chart for entries, and a 1-min chart to determine the inner details of price action such as whether a non-survivable stop survived, how much profit showed initially, how much heat taken on the trade, whether the market easily offered more than target on a trade, and ways I could manage my trade to take advantage of that. I posted a sample on this thread a while back: http://www.elitetrader.com/vb/showthread.php?s=&postid=3037344 Nothing I've ever done has been as valuable as this. This is how I learned to have confidence in my edge, what my max stop loss could be, how to target profits, when to stop-and-reverse, when to wait patiently for a confirmed setup, and so on. This is how I learned to have an "edge" in trading and how I learned to trust it, because the hard right edge of the chart in real time appears a lot scarier than it does when you review a chart later on and can see what price actually did. T, do you have an edge in your trading? If so, can you describe it clearly enough that a a 10-year-old with a set of rules could trade your edge effectively? Do you have strict rules for when to enter, when it's OK to chase an entry late and when it's not, where to place stops, when to move stops in your favor (such as to b/e), how to set profit targets, when to stop and reverse? This is what keeping good stats will help you do. If you haven't done this, you'll struggle whether trading live or sim. The way I got ready for live trading was to call my trades on the CL Redux thread. This ensured that I didn't trade random setups just because I was in sim, and also ensured that I didn't cheat by averaging down or trading without a stop (which I'd done a lot of in sim as a counter-trend trader). I recommend that you do that for a week or two before going live. After you determine your edge and your rules, of course.
To answer a few of your questions/comments: Chop days...I agree in the long run, chop days should be meaningless...but Im still struggling on "walking away" during those chops days. I recognized the chop day early (i usually do ok on seeing this)...but i want to sit in front of the computer. I think I need to just walk away b/c my set-ups aren't very good on chop days. I agree I can't trade on what's in my head and what "seems so" That is where the stats come in. My current spreadsheet is set-up very similar to the one in the link you gave me under that thread. I've done some backtesting/reevaluting my trading over Xmas and I definitely have a statstical edge when rules are followed and I don't make mistakes with regard to my set-ups. The whole "human" factor is where I run into trouble. That leads to the next point of more detail in my stats...a good example is the 20 tick or so moves on some of the trades the past few days...I don't have anything in the stats about saying...did it hit my first target and head further or bounce?...what was the set-up still valid/change once it hit that inital target... Did it hit a micro s/r level to allow me to stay in the trade...maybe im being too detailed... Trying to evaluate my SIM trading objectively...I would say once I enter a trade Im pretty good about sticking to some basic rules, such as not moving my stop, max stop of 15-17 ticks, not adding contracts/averaging in, when to move to B/E, etc, etc...the problems arise when at the start when I enter because, "Oh Ill try this" or well, "this kinda falls into this set-up" that is the attitude I really don't like and don't want to see in my trading. Basically, it all starts with the set-up and whether or not it was valid. I believe I could explain my set-ups to a 10 year old. One thing I thought of doing awhile ago but never followed thru on was making a simple checklist for all the set-ups..before each trade, does the set-up adhere to all the rules...if ok then go for it...hopefully forcing more displine in taking/not taking a set-up.
This is a key problem, the fact that you believe you can predict a chop day vs a trend day vs a wide range day. At any time anything can happen and you take valid setups when they present themselves and manage them according to your rules. There is rarely an entire day composed of chop or an entire day that trends in one direction. There are days when the price action is so back and forth rangy (today) that you may need to resort to a smaller time frame to scalp some pay out of the action, but out of a mess may come a fantastic move. By trading all valid setups you're prepared to capture those moves. Setups are either good or they aren't. A good setup may fail under certain conditions, but that can happen at any time and we have no idea if that will happen. So we have rules and plans for managing trades. Here are a few examples from my day today illustrate the value of meticulous study and specific rules: I see a strong down trend in progress pre-market and there's a low potentially in play from yesterday of 88.90. I believe there may be more down before price pulls back and I switch to the 1-min chart to help me enter this strong trend. My trading rule (Al Brooks' actually): In a strong trend, look to enter/add using a 1-min chart. Price pulls back to the falling 20-EMA on the 1-min chart and I short @ 89.48, break of the 8:30am ET bar low, with an 11-tick stop above that bar's high. I realize I likely missed most of this move, but if price runs more than 20 ticks from my entry, I'll lock in 20 and see how much gas is left in this push. Price breaks the previous low of 89.32 and as soon as it runs through 20 ticks from my entry, I lock in 20 ticks profit via a stop order. Price established support @ 89.25, and bounces a bit. The 8:35am ET bar closes on the 5-min chart and as price breaks through its low, my sell stop is ready just below that last pivot low, just in case the trend is REALLY strong. Instead price appears to find buyers at a slightly higher low of 89.29. If buyers bid it up through the previous bar's high (89.43) off this higher low, that's a signal to me to take an early counter-trend trade for a test of the falling 20-bar EMA on the 5-min chart. My trading rule: Following a strong move that pulls far (greater than 1 inch ) from the 20-bar EMA, take a confirmed counter-trend position off the first HL/LH with a target of 20 ticks or the 20-bar EMA, whichever is greater. Confirmation is determined by a pivot in the opposite direction of the move that breaks a previous bar's high or low. I take a long position @ 89.44, break of the 8:35am ET bar's high with a soft target of 20 ticks and a possible trip to or through the 20-EMA. Price breaks through my 20-tick soft target and through the 20 EMA with conviction, pauses and makes another go at that 89.75 high and the moment it breaks I move my stop to 89.74 to lock in 30 ticks profit because it's close to a "previous support becomes resistance zone". Stopped out for 30 ticks profit. Price appears to have established resistance just below a previous support zone of 89.80 and quickly retraces nearly an entire 3-min bar at the NYMEX open. This tells me there's selling in the pit and it's driven price back below the 20 EMA. Price tries to rise back through the 20 and fails quickly. I short @ 89.52, break of the 9:00am ET 3-min bar low and it runs a few ticks in my favor right away. Placing my stop above the pivot high is too much, so my stop's at my max 15 ticks. This is a NSS, non-survivable stop, but it's with the overall down trend, so it's worth the risk to me. My profit target is a break through the previous low and a test of yesterday's 88.90 low. When price moves past 10 ticks in my favor I move my stop to b/e. My trading rules: Non survivable stops have a high probability for success in the direction of a trend, so trade them as often as possible. Wait until price moves at least 10 ticks in my favor before moving my stop to b/e. Price comes back in to test the pivot low of 89.25. There's that first higher low from earlier @ 89.29 that attracted a lot of buying interest (including my own). If price breaks that level and stalls without hitting 89.25, I'll lock in 20 ticks profit quickly because that would indicate sufficient demand to run price back up. Price breaks 89.29 by 1 tick and stops me out on a quick bounce for 20 ticks profit. My trading rule: When the break of a level should result in significant momentum follow through and price stops cold, get out and re-evaluate. If I'm playing a momentum break like this later in a move, it's the one time I'll bail before price runs 10 ticks in my favor. When expected momentum stalls, there is conflict between the bulls and the bears. I want to trade with the dominant crowd, because that's where the easy money is! So as you can see, even in a back and forth "chop day", I'm already up 70 ticks and the stock market hasn't even opened, simply because I'm trading all my valid setups and following my rules. This provides a nice profit cushion for my three scratch trades followed by me selling a low tick and taking the max loss on the trade
NoD, Thanks for the detailed analysis... a couple of comments. 1.) Maybe describing a "whole" day as chop/trend/whatever isn't the best way to describe it. I completely agree that i shouldn't just be calling it a day b/c price is chopping around a bit for 2-3 hours and that is where my problem is (I believe). I am waiting for a set-up to develop and I think that leads to impatience on my part and so I start breaking my rules. I feel, especially watching the CL, that at any time a very valid breakout can occur in the middle of the chop...news release, storm, just people moving price, whatever...and I think that is what I wait around for. Instead of waiting for a good set-up to develop that has the potential for a breakout and I start messing around. 2.)Going back and replaying the day, and go over my trades...I look at them and it is like "what was I doing" I cant even figure it out. I could really figure out 1 of the trades and I moved my entry point b/c I wanted to "get in" and that caused a loss...had a been following my rules and got in at the proper entry, the trade would've been a B/E. All of this tells me, I wasn't adhering to my rules and trading. Goes back to the disipline comments for earlier. Since Im not up at 5am...and thats not going to change anytime soon I should've only been in 3 trades during the pit hours...which would've equated to 1 win of about 40-45 ticks, 1 B/E, and 1 10 tick loss. Which makes sense since my set-ups dont usually form up during choppiness so the total number of trades should be on the light side. I don't know...maybe I started making excuses in my head as chop day after a couple of bad trades and I wasn't realizing how poorly I was trading.
TLOW You didâ¦â¦ Another way Frame the chop into a range â then enter a OCO buy stop on either side of itâ¦, with an attached OSO that sends a stop loss on which ever one triggers.., also set it up to alert you if triggered. THEN go do something else until it triggers Obviously some analysis is required to determine the optimal placement of these various orders ============================================================================================ Or as NOD says â lower your time frame, then trade it back and forth until it breaks outâ¦. This obviously is the way of the (voracious ) traderâ¦. ============================================================================================= Too often we want (demand) the day to be something it simply ainât â just so we can trade in a manor weâre comfortable with â That Sir will never work⦠Develop styles, methods, tools â so no matter the type of day â you simply roll with it Fact We absolutely must adapt to the PA we're dealt⦠because for damn sure PA will never adapt to us â for any length of time that isâ¦. Ever hear a trader say they make money in the morning â then give it back in the afternoon⦠Just one example, of the many, of not adapting⦠This crap ain't any harder than what we make it - seriously RN
So I wound up in pretty good positive territory today, however, Im REALLY not happy with the way I traded. I did something well and other things not so well. I didn't do anything horrendous, but days like today are when I really should clean up if I stick to my guns and trade well. Some of the high/lowlights for the day: 6:11- Short 88.63 Stop 88.71 Target 88.23 6:14- Stop to B/E 6:23- Covered at 88.25...+38 ticks So I figured the 88.23-30 level was a pretty strong support level going back a ways on a couple different time frames. So I was pretty quick to get out when price stalled just a bit at this level. I feel it was fine to get out and then look to reenter which is what I did: Reentry: 6:25- Short reentry 88.13 stop 88.23 target 87.85 then 87.62 6:28- Covered at 88.03...+10 ticks. Im really unhappy with how I handled this one...I think I felt like oh, price is coming back up...tack another 10 ticks onto the previous trade...not bad for this move...but it was total crap. Just really impatient and really no reason to exit....I felt good about my targets and there was a lot of air under that 88.25 level. While I most likely would've been out on that small bounce off .66, it still most likely cost me 20 ticks or so by being a moron. Couple trades latter: 8:45- long 87.93 stop 87.87 target 8:45- Stopped out...- 6 ticks right away I didn't have this trade set-up properly...Usually on trades like this with a tight stop I put a 2 contract stop order in to get on the other side of the trade b/c it will most likely run if it breaks and runs me to a stop out. That is exactly what happened and I missed out on a good flip b/c I didn't have the trade set-up properly. I also think I was thinking about the trade a lot and whether I should even be in it...price had gone somewhat choppy and the longer term downtrend was still intact so it made me a bit nervous to go long even though there had been a pretty good s/r line established at the 87.93ish level. Last part of the day, I wasn't doing much. Couple B/E's...but I missed out on the really good upward move. At 10:10ish I sent a limit order to go long at 87.45...well I didn't get filled by 3-4 ticks and I kinda just gave up on the trade b/c I dont know why...maybe didn't want to risk a fade trade. My initial set-up with the entry at .45 I felt really good about the way price had set-up, but when I didn't get filled i didnt really look for another place to reenter. Not sure..there was a spot at the .57-.58 level that should've been obvious to me but I didn't see it at the time. So that was a total bummer, missed out on that big move upward. Then had 1 more trade toward the end of the day for another B/E. Overall I give myself a C+ on the day. Just didn't handle the couple of good trades I had well and missed out on a couple really good ones. Stats on the day: Total Trades: 11 Winners: 4 Losers: 3 B/E: 4 Avg. Win (ticks): 25 Avg. Loss (ticks): 9 Total Ticks: 77 Total Win Rate: 36.36% I feel like my mentality has shifted a bit as well...Im thinking more along the lines of how well I traded during the day instead of how many ticks Im winding up with. Which, I think is a good thing b/c if I trade well, I believe the results will take care of themselves. I really thought I was going to end with like a 35-40 tick day, so it was a bit of a surprise to come out that far ahead given I didn't trade very well.
Trading is a process TLOW Sit on hands and observe PA, (take note of its characteristics (behavior) â¦, direction, volatility, speed, ease of movement, time of day, OR whatever you deem important) Build context (solely based on observed PA â iow sans your opinion/ external noise) Identify a set up (which includes a PA based reason for entering, an entry price, a direction, a stop loss price, a profit target) Enter Sit on your hands Exit for a profit, or loss Repeat We circumvent the process for a myriad of reasons Sir â none of which are beneficial to us â reallyâ¦.. (Iâm certain you know this already) ============================================================================================= Know throughout the day PAâs characteristics evolve â and so to must youâ¦. Know your set upsâ¦, know your contextâ¦, know the optimal stop lossâ¦, know a reasonable target â all predicated on priceâs current behavior (example; a double top short will not work when price is trending up â any more than a higher low long will work when price is ranging and about to bounce off of resistance as it made that higher low â MOST PROBABLY)⦠I say most probably as this is trading, not death⦠death is a certainty⦠trading is never a certainty (main reason we always use stops and change our minds easily ) Now all that remains is you focusing on, and following the process ================================================================================================= Look at your PnL only after youâre done for the day ==================================================================================================== Get up every day and do it all over again ============================================================================================= Please feel free to add to, delete from, or pick this post apart Sir RN
I just discovered the Elite Trader site and I find this forum intriguing. I'm trying to follow your entries and exits but dates & times don't match my ES chart or DOM. Pricing on the NQ appears to be closest to what you're trading. Please clarify what market/contract you are trading... Thanks
Got it. Thanks. I haven't trade crude oil, but after reading your posts and the replies of others, regardless of the market/contract we choose to trade, we all face the same strategy, execution, discipline challenges. I look forward to reviewing more from past posts. Thanks....