I have now had enough consecutive months of hitting or surpassing my goal where I feel strongly that my current system works in a variety of different market conditions. It's very easy to have a few good weeks and be deluded into thinking you have now "mastered" trading.
When most people have "good" weeks, it's often because the market was moving in a strong, directional manner. Throw in several days of choppiness..and then it becomes evident if they can navigate such conditions. Almost any decent system will work in a strongly trending market..even the auto/robot traders. I won't get into the wasted years I spent on "Auto trading". It can be a treacherous adventure filled with euphoria over a "Holy Grail" system that seems to work so well..until the market conditions change...Then suddenly the robot doesn't work so well..and it's back to the drawing board. This process can go on for years. This is not to discount the ultra sophisticated HFT programs that scalp a couple of ticks a 1000 times a day. Obviously those work, but are beyond what we see most retail traders creating. I do like the idea of a system that generates trade signals..but leaves the personal discretion whether to take the trade or not. That way you don't get caught in the mayhem of a sudden news release or choppy markets.
Now having said that, maybe there are retail traders out there that have auto traders that consistently make them profits. I just have never heard of anyone that has.(except for people who sell them..and we all know if they really worked ..that person wouldn't have to ever sell anything..again.) There are plenty of people who will say they have this amazing backtested system...etc.., but I never see any long term live results. It would be nice, of course, to switch one on and watch your account fill up with cash.
Speaking of cash, I notice if you read a lot of trading forums..you will often read people writing, "I don't do trading to make money. That's not what it's about for me. I never think about making money when I trade"..and lots of similar comments. I don't feel the same way. After all the money I have lost and also spent on software, seminars, books, commission etc..I better damned well make some money at this!
Yes, I do appreciate the personal growth, discipline and impulse control I have gained from this endeavor, but this is not just some glorified video game to me. My goal has been to have several months where I can achieve a certain tick level consistently each week and have the metrics to prove it. In other words, I know I have the positive expectancy to achieve that number of ticks each week. Now, the next step is to increase contract size slowly..as not to create too much stress..and just keep doing the same thing.
Strangely enough, I have seen several trade journals of people that seemed to be making at least 100 ticks a week..but they were still unhappy with the results. There was a guy, (I won't mention his name) that had a fantastic oil trading system a while back. He would routinely make 50 ticks or more..on almost a daily basis. He had a good risk/reward ratio..took good entries. Then he decided he needed to make at least 100 ticks a trade or he was somehow a failure as a trader. Then he had a day where he could not bring himself to exit a losing trade and virtually wiped out his entire account. He closed down his journal...then eventually came back with a whole new system..using different charts and market profile..Then he disappeared from the forum again. I wrote him a message and suggested he returned to his original system where he showed months of good results each week. His reply didn't seem to suggest that he would . For all I know, though, he might be doing well now.
My point is that if you have a consistently profitable system, maybe it's just a matter of leveraging more contracts..instead of unrealistically trying to make 500 ticks a week.
As I mentioned in earlier posts, I am getting much better results on my CL trades by setting a target and stop..and allowing most trades to just play out. The exception is when I am taking trades that have to penetrate an area of support or resistance. If I see price double fail at some of these areas and orderflow is showing a strong reversal possibility, then I will move my stop to breakeven. If it doesn't hit my breakeven stop and works it's way through the area to my target, then fine. But if I have a trade without any serious obstacles in the way of my target, I will most likely not interfere with the trade..even if it goes against me. I have had many trades almost hit my stop and then go on to win.
I don't know if there's much more for me to say on this thread. If anyone has any questions or wants to discuss some aspect of CL trading on here, I am willing to participate. But after all the videos I've made and posts, I think I've explained my system pretty well. I will probably check in here from time to time to show results as I up my contract size. Sometimes I wish I could go back in time and tell my old self how to trade properly..and save myself all the money I blew. lol
Failure is not an option
Last edited by lancelottrader; December 5th, 2014 at 04:19 PM.
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Lance, I have been reading your thread for some time...I have started live trading now...and have benefited from the work you have done here...probably because it is a real as it gets...with this post I hope to say thanks by sharing what I am doing...with my futures trading...(ES, ZB, CL, EC and a little less with some other agriculture and grain futures...)
Happy to have anyone's constructive criticism...
My Futures Trading Plan Chart Setup
Using 4 Hour, 30 Minute, 5 Minute and 1 Minute Candle Stick Charts
Using 75pma with 21 2SD BB supported by ADX (DM)
Establish trend with 4 hour chart and if move is up or down…
Use 30 minute chart to identity trade setup
Use 1 and/or 5 minute to enter trade
Use double bottom/top into support/resistance with breached trendline
Use continuation (second wave) with falling price into rising average / rising price into falling average
Use areas of congestion and BB where price breaks through or rejects congestion area (false breaks)
Use low ADX for trade entry and high ADX for trade exit
Try not to trade short on a strong up day and long on a strong down down
In other words, try not to trade corrections (easy to recognise with price movement and ADX)
Look for entry at price leves where failure would incurr a loss of 20-30% of the target profit
Use trendline line to establish a moving and warn of failure
Look for price moves that will provide $300 to $500 return
Use an entry with a stop level no more than 20-30% of target profit
Set limit orders for targets based on areas of congestion
Hi there. Your setups and charting sound pretty good. I think a lot of that is an individual thing and whatever configuration that helps you process what the market is doing should be used. I think once you find what type of charting, indicators..etc..that work best for you, then you should try to stick with them..for the most part. There's nothing wrong with tweaking and evolving. But once you have something that produces consistent results..and I mean the kind where you can week in and week out, achieve a minimum tick goal..then you should keep the basics of what you are doing.
So many traders find themselves on the endless quest for the Holy Grail and constantly change their setups and charting radically. It's becomes one eternal experiment. There's nothing wrong with that, if the goal is merely entertainment and self discovery (or whatever). But if one is serious about being able to produce income from this, then the key is to find something that works and stick to it.
One suggestion I would make is to not get bogged down watching too many instruments at once. I would pick your 2 favorites (mine are now Cl and NQ) and become an expert on both of them. Learn all their nuances and study the market conditions where they move best. Find the two or three price action setups that give the most consistent results. Once you find your two favorite instruments, trade and watch only them.
I would also possibly invest in some sort of order flow tools that can help confirm some moves. I like Tick Strike..but I've read a lot of good things about Jigsaw..and there are probably some others. At the very least look at a few volume charts..I watch a 1 minute and a 10 second volume chart. The 10 second chart can show some very fast volume accumulation coming in .
Another advantage to watching only two instruments is that it becomes easier to anticipate setups before they happen and be more prepared to act if they do. For example, I record my sessions and I continuously do a verbal commentary (almost like I'm in my own trade room.) I will state things like, " Crude is about to hit a small pocket of resistance..if it fails..moves down with some momentum and penetrates my EMA..do i want to enter ?..probably not because price action has been choppy..lots of congestion immediately below my entry..will probably pass. Ok, NQ looks like there's a ton of momentum, tick strike is going crazy..price is accelerating..about to break through a small range..should I enter..where will my stop go..what's the target..Ok going to take it."
I think you can get the idea. This technique keeps me incredibly focused and insures I am never caught off guard. These are the type of things I do to insure my success. To be a retail trader and have any chance at this, you must be willing to do things other people won't do.
Anyhow, good luck with your trading and thanks for your post.
Failure is not an option
The following 3 users say Thank You to lancelottrader for this post:
Lance, Thanks for you comments. I agree with your comments about the holy grail...price action is king...also talk to myself following your trade commentary suggestions...you are right it keeps you focused and engaged...I trade only a couple of the instruments that I listed each day but tend to select which two before the day starts...have not followed volume or order flow and I will explore this idea...finished the week with 3500 my best to date...I want to refine my setups as you have pointed out...lots of work still to do...
Lance, Hope your trading is going well...slow week for me up only $1300. Last night I was exploring my software and found I could setup range charts. I have never see these before and they are new to me...It looks like a new bar is created after the number of ticks for the nominated range is achieved rather than it being time based. I found this quite interesting. I was wondering if there is any rationale to how many ticks you should select for your range? Also, wondering what advantages or disadvantages you have found using a range based chart? thanks in Advance Blueroo...
To be perfectly honest, I never logically analyzed the benefits of using a range chart. I originally got interested in scalping Forex and tried something called Cyrox scalping. It used very fast charts like a 10 second chart etc. Then I discovered something called Logical Forex, which used a 1 range chart for the euro/usd currency pair.
I decided I preferred Oil futures over Forex and I modified the Logical Forex setup and created an entirely different system . I changed it to a 2 range chart and found some setups that I really liked. On that chart I have a line chart instead of candle bars. I use 1 minute, 2 minute and 5 minute charts for additional confirmation. The 2 range allows me to enter moves much faster than waiting for the time based charts. This of course allows a smaller stop loss as well. I have learned to really tune in to the pulse of the market with this chart ..and I am used to spending years looking at these charts. I can also easily glance at them and see if the market conditions are favorable..or if they are choppy or consolidated. A disadvantage is if you pay too much attention to the 2 range chart without looking at higher time frames, you can get sucked into a lot of false reversals.
I have used 4 range and 6 range charts with candle bars as well..along with the 2 range. I think 6 range isn't a bad setting either and I have seen other Cl traders use that setting too.
Now, when you say you are only up $1300 so far..how many contracts are you trading ? If you are only trading 1 contract, then you are up 130 ticks. That's great. Do that every week and work yourself up to 5 contracts and you are making $20,000 a month. I can live with that...then bump up to 10 contracts...Serious $$$$$. Even if you only average 60 ticks a week, you can still make great money if you build up your account and trade size.
Failure is not an option
The following user says Thank You to lancelottrader for this post:
Lance, Thanks for your thoughts on range charts. I will see how I go...from a quick observation between a 6 range and a 1 minute chart it maybe that the range chart is a little more orderly...taking time away you see the structure of the price move or at least it seems more clear...will have to do the screen time to really know....
Yeah, Monday I was too tired to trade and Tuesday night OEC server was down...so the 1300 is one night and 2 trades...CL and NG...It was one contract...not bad I guess...I aim for 500 to 1000 each session I trade...I do trade 2 contracts some times...(both straight up and when I have &*%$ up and need to claw back a loss) but at this time I am happy with 1...and keep working on my discipline...
My biggest jump in trading progress came when I finally identified my trading mistakes and made an all out effort to eliminate them.
I was able to do this by doing a few things that provided the feedback I needed. The first was keeping a written journal of all my trades. I would list the type of setup and how I managed the trade. Of course whatever mistakes I made were clearly detailed.
At the end of the week, I would make an audio recording that would state what I did right and what I did wrong. I would then burn it onto a CD and listen to it in my car. And as I have mentioned many times on this thread , I record all my sessions with screen recording software and review my trades.
Here are some of the the mistakes I made on a frequent basis:
1. Failed to identify, early in the session, what type of market conditions were unfolding. Cl can be very tricky in this regard. It can suddenly move and spike with lots of speed and volume. Then after you are lured in, it can quickly move in the opposite direction. I call this "Spikefoolery". Price will jump a fast 20 or 30 ticks..in a matter of seconds. .. the volume chart shows thousands of contracts have just come in..I wait for a slight pullback ..enter..only to have it reverse a fast 20 plus ticks. It happens again and again. There are other times where chop shows up and you can lose basically every trade.
Generally now, after a couple of losses in a row..I make an assessment of the current conditions and plan to only trade when a significant support or resistance level is hit. I skip the journey to that level since the odds are the chop will be too bouncey for a small stop loss. So I wait for the "Destination" to the price area I want to do business at (In choppy conditions) rather than keep trying to navigate through tumultuous price movement.
2. Getting thrown off mentally after a few consecutive losses: Usually when I am trading properly, I identify a setup, check what obstacles or problems are present.and calculate an approximate target and stop. However, after a few losses, I would get more impulsive and less cautious. The steps I normally would take would often be skipped. Before I knew it, I would be taking multiple foolish entries and rack up large losses. Watching my trades on my recorded replay made this very clear..so I adopted some rules to prevent this. I made it imperative to verbally announce the type of setup on each trade (I have names for my various setup types), and what reasons that I should or shouldn't take the trade. This prevented the impulsive nonsensical entries that I would take. Plus, when I watched back the session I didn't have to try and remember what I was thinking, I could hear the reasons I took the trade.
End of part 1
Failure is not an option
Last edited by lancelottrader; March 3rd, 2015 at 06:53 PM.
Reason: Grammar error
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