Sim Trades: Still sitting on 18 contracts short from late January/early February.
Real Trades: Short NDX (via 2x-inverse QID).

PnF chart showing breakdown from a broadening pattern.

• In this pic, pattern is 8 columns across. 9th column just printed while writing this. When price finally breaks out of this pattern, the move will be dramatic due to the amount of price action in spent in the pattern (number of columns).

• Whether PnF or Volume Profile or Renko what these charts show is consolidation of buying/selling action which represents lots of potential energy - positions that will be stopped out and fuel a vertical movement out of the consolidation area.

• I will try to add short in any pullback to the pattern. I should've shorted at the 'O' print at NQ'6740, but I actually fell asleep. Trading New York market living on Taiwan time zone is not good for my health. Indexes like to retrace, so I should get a chance today.

Traditional 15-min chart of NQ, RTH only.

• Flag pattern/consolidation analogy. I'm expecting a large drop. I will add short on any retest of the price channel.

Volume Profile

• Price has tested up and down around a fairly symmetrical distribution (micro composite of the rally off the recent swing low). Lots of potential energy being stored here in the balanced distribution. There will be a huge vertical move out of here.

INDU fills its gap on the 1-hr chart. SPX, NDX, TRAN, RUT all have filled gaps on the swing high. Nothing left to fill on the upside (except ATH gaps). Lower highs and lower lows. RSI, MACD, STO all rolling over on all 1-hr index charts.


I'm interpreting all of this as an impending large vertical move. I'm guessing the move will be down. I will add short on any pullback into the consolidation area. Stop is price printing a PnF 'X' above the previous high in this broadening pattern.

Nasdaq seems to be back in a nice groove after the recent swing, this is where it continues up.........

With volume profile showing a large, balanced distribution, there was bound to be a large vertical move. Unfortunately for me, I guessed that the move would be down, but instead, it was up.

I had meant to set my stop at the previous swing high, which would've only resulted in a 2.71% loss. I got so tired that I forgot to set the stop before going to sleep Friday afternoon. Price gapped up over the weekend and I finally got out with a 5.05% loss.


While looking at my charts over the weekend and finally getting a PnF setting that works well for the current NQ, there are two high pole continuation patterns on the 20x1 PnF chart. Price then entered a consolidation/broadening pattern. The high pole pattern broke out with a semi-catapult and then broke past the swing high. Both would have been valid exit points for my short position. Price is currently rising on weak buy signals from consecutive one-back patterns.

Some things bother me about the breakout.



Larger lot buyers are not following the breakout (top pic is Monday, lower pic is Friday and Monday).



Volume, compared to 40-day average, is miserable.

15-min index charts are now all overbought with bearish divergences.
1-hour index charts all showing clear breakouts to the upside

What I need to do it concentrate on a time-frame that is suitable for the 13 hour time difference between Taipei and New York. My PnF charting seems to match well with signals on the 1-hour charts. I also have to be more strict on stops. Right now, I'm playing with amounts small enough that the difference between a 2.71% and 5.05% stop is not significant. I need to develop good risk hygiene and habits. I have a bad history of staying in losing positions too long.

I'm kicking myself in the ass for covering. Things I've learned:

1) Never listen to outside advice. I listened to someone else instead of following my own analysis. Poor volume internals (rising price on lower and lower aggressive buyer volume over two days) told me that the uptrend would likely fail.

2) Don't use arbitrary percentage stops. Use context. After failing to set a stop at a local swing high, I set an arbitrary 5% stop. Context (in this case, poor volume internals) said to give it a little more room to run. If I had let it run, I'd be back below the previous swing high now. Instead, I exited at the worst possible price point.

I've shorted throughout the day. When using PnF, I'm finding that it works well to short at the PnF signal and then short again at the rotation away from the PnF signal. The initial PnF signal is typically at a low, and then rotates back up. This ends up being some kind of cost averaging.

Use 3-box reversal and 1-box reversal charts together. The 3-box reversal gives a rough idea of the pattern and the 1-box reversal gives detail on entries.

1-box reversal chart.


Have to pick up daughter from school - will finish post later.

...Continuation of previous post...

Overnight action has been bearish.
Prices rose on small buyers without big buyers. Setting up a good sized decline.
It took me a long time to figure this out: a big decline isn't stopped by big buying. It's stopped by big selling. Price only stops falling when every single seller has been exhausted. Only then will price rise.


ON action has been pretty strong, pushing back to the 2/9-2/28 microcomposite PoC (low perfectly hits 500-day HVN) and reverses. ON volume has been high - suggesting a trend day is very likely possible.




Fed Chair Powell speaks at 10am. If he doesn't kiss the market's ass, I'm expecting a very bad day for the market.
1) Extremely high volume overnight.
2) Leaving a balance area.
3) Every 1-hr index chart is extremely bearish.

Leaving balance area:


My plan today is to look for short swing trade entries on a pullback into the 15x1 PnF breakout zone around NQ'6892. Stop at previous swing high, NQ'7015.

I'm 13 hours ahead of New York market time and it's really bad for my life. I think I'm going to have to switch over to something like EuroStoxx50 to get into a reasonable time zone. Or maybe just swing trade NQ and give up on daytrading the US indices.

So, because of the time differences, this post is more of a wrap up than looking forwards type of journal entry.

The 15x3 PnF chart shows a couple of things:
- Two targets depending on how I measure the topping pattern.
- The higher target is NQ'6465 which matches well with a long-term trendline and looks to be in the Fib retracement zone.
- The lower target is NQ' 5925 which matches well with the SP500 filling it's Sept. gap.
-The 15x3 PnF chart shows a breakout and retest of the 45-degree trendline established at the Feb. low. The uptrend is probably over, subject to more backing and filling.


15x1 Pnf chart gives more detail.
- What I'm finding out is that the patterns/indicators/etc. that speak to me are all basically doing the same thing: finding areas of consolidation and then playing the breakout/trend reversal from those areas.
- The 500-day HVN/balanced distribution is just a way of saying that there's been a huge amount of buyers and sellers here.
- The 15x1 PnF support line at nearly the same point is just another way of saying that a huge amount of buyers and sellers fought over this point.
- Where ever there has been a consolidation of buyers and sellers (volume) over a small area of time/price, it will show up in a charting pattern/indicator. A break out of these areas is usually a huge vertical move. It can be continuation or reversal.



Volume Profile
-At a large balanced volume distribution. Price is likely to back-and-fill here for a while before making a vertical move out.


The direction of the vertical move, I'm guessing, is likely to be down. The 1-hour index charts all rolled over and the daily charts are in the process of rolling over.

SPX


NDX


RUT


TRAN


NDX
NDX is bearish, but is laggin the other indexes. NDX hourly is very bearish.


The index charts have all rolled over hard on the hourly charts. The daily charts have started to roll over. There is lots and lots and lots of downside available given how high the indicators are.

One of the hardest things for me to grasp has been the nature of trends. Once a trend gets going, it just goes crazy and searches out maximum pain. Market Profile/Auction Theory probably describes it best. It's an auction that will go to the absolute extreme possilbe. It will go down until every single seller has sold.

On the intraday time frame, this happens pretty quickly. But I'm looking at the daily charts and they're rolling over. Maximum pain is NQ'5925.

End of Week Update 3/25/18 - 3/2/18

15x3 PnF
- Price has retested back to several important technical landmarks.


15x1 PnF
- Price has made a very strong retracement, generating a 15x1 buy signal. Buy signals in a downtrend must have multiple confirmation (it could be jus a pullback). Price still hasn't broken initial descending trendline, So I'm holding short.
- This is probably a good place to add short, price is coming up to multiple PoC's.


30-min Volume Profile
- As I expected earlier, price is taking its sweet time testing up and down inside the large volume distribution. Lots of action occurred here in the past, leaving lots of people who still want to get in or out of positions. Until these buyers and sellers are exhausted, price will explore up and down this distribution.


Trend Day
It took me since Oct. to figure this out. I tried breadth indicators and other stuff, but the most accurate way I've found of predicting a trend day is looking at relative volume and the ratio between large/small players. What are the larger aggressive players doing? How much total relative volume is there? If there are lots of large players hopping in on high relative volume, prices are likely to trend. At 2:38 pm, there were more large aggressive buyers than small aggressive buyers!



This is just one of those things where I don't have enough screen real-estate to keep track of things. Market Profile has price bounce right off a single. I really need two 32" 4k monitors. Maybe if this trade works out, I can make enough to buy some more screen space. Monitors are 2x more expensive in Taiwan than the USA. For the price of (1) 32" 4k monitor here in Taiwan, I can buy (2) in the USA!


I continue to hold short. I probably should've added more short when price pushed against the PoC's, but I had already fallen asleep by then (the 13-hour time difference is killing me). I will look for an entry on Monday. I'm guessing for a move down.

... Weekend Analysis Continued...

Part 1 - Alcoholics Anonymous

I've read a few of the journals on Futures.io and I think one of the important benefits is the soul searching necessary to identify what you're doing wrong and then improve.

Here are the results of my sim-trading since I switched from free-broker provided software to what I consider amateur level trading software. By amateur, I mean that I'm not using professional level software like X-Trader or Bloomberg. The costs of professional software and data are just too far beyond what I can afford for what is, right now, just a hobby.



Inside the period in question, I traded 46 consecutive trading days with each day ending green. Mostly trading just one NQ contract, and sometimes two. Scaling this up with the same hit-rate and expectancy means I can make a living off this. But it's sim-trading and sim-trading is easy compared to live-trading. So, when I'm finally thinking that I can go live -- I BLOW UP THE ACCOUNT.

I can point to excuses:
- Fatigue from the 13 hour time zone difference.
- Trading while emotionally exhausted (flying back and forth1/2-way around the world to take care of my father, whose Alzheimer's makes it impossible for my mom to handle him).
- Financial stress due to lost work time (wife cannot run her practice when I'm 1/2-way around the world).
- Time away from my wife and daughter.

All valid excuses, but not the root cause. I blew up the account because I didn't want to lose. I took a losing position and kept doubling down. Now, during the 46 consecutive trading days of winning, I prevented myself from doing this. Took my loss when the stop was hit. But maybe I was looking for some kind of emotional pick-me-up from trading instead of looking at it as professional gambling. So I kept doubling down. 75% of the time this works. 25% of the time, you blow up the account. I blew up the account.

At this point I have to address my problems.

The excuses are valid. I really need to trade an instrument that works with the 13-hour time zone difference. I will try sim-trading EuroStoxx50. Moving from a fast-moving, shallow-depth market like the NQ to something super-liquid and slow-moving like the FESX will require me learning new software (the biggest change I see happening is moving away from volume bars and Bookmap's heatmap and towards footprint and Jigsaw DOM).

Strangely, I'm not worried or dismayed. It's all just volume and price action and I was able to sim-trade 46 consecutive days without a losing day on the NQ. That has given me the confidence that I can do it on FESX. It's all fractal. Greed, fear, momentum and mean-reversion measured in volume and price over time.

What worries me is that monkey on my back. The need to be right. To not admit that I took a loser trade and try to salvage it. It's been a life-long trading pattern with my live swing-trading. A long series of wins because I guessed right, then a huge loss because I don't get out even when every possible sign says I'm wrong.

Trading is like nothing I've ever encountered. In a normal career, job, education you take pride in being right and doing right. In trading, there is no room for pride. It's just profit and loss. The emotional drivers that helped make my work and educational career successful DO NOT work in trading. If the project falls behind, you can rebudget, refinance, reallocate manpower. If you're falling behind on the job, put in more overtime. If you can't make the grade, study more, more, more. But trading is different. More effort, more time, more dedication does not change the market trend if I'm on the wrong side of the market.

It's not about being right. It's about profit and loss.

Weekend Analysis, Part 2.
6:30 am New York, EST.

Charts:
- Price continues to chop through the volume profile best defined by the microcomposite from the Feb. low.
- Overnight, Smaller lot buyers have been chasing price up. Larger lot buyser have been selling into the price rise.
- Overnight volume very high.
- PnF 15x3 upside breakout.
- PnF 15x1 still holding initial descending trendline.

Conclusions:
- I think we're getting a reflexive bounce on the European indexes (DAX has been beaten silly lately) and NQ is following Eurex.
- The bounce has been big enough to break the 15x3 PnF downtrend, but strangely enough, the more sensitive 15x1 chart has not broken.
- Overnight volume has been really high, with small players chasing price up and larger players selling into the rise. This is usually not a bullish sign. If high volume continues into the open, NQ is likely to trend.
- I think what is happening is that NQ is still auctioning up and down this HVN distribution. Price will run back and forth across the PoC until either sellers or buyers exhaust and then there will be a large vertical move.
- I hold short, will add short if I see a nice pattern on any chart or Bookmap. There are naked POC's from 2/28 and 3/1 at 6910 and 6861 respectively.

Dead cat bounce or resumption of uptrend?

Charts:
- Volume profile char is showing that price is still searching for direction through the distribution centered at NQ'6812. Price is exploring symmetrically up and down around this PoC. At resistance and more serious resistance above.
- PnF charts show bullish break up through descending trendlines. On the other hand, clear Head and Shoulders patterns are emerging.
- Bid/Ask Delta showing that small and large aggressive players were at odds for most of the day. Large players seemed to give up and flip long into the closing hour.
- Relative Volume started out very strong, then dropped to below average in the late afternoon. Possibly a short squeeze that ran out of shorts to feed the rise. Not much involvement once the shorts were burned out.

Conclusions:
- Could go either way.
- Clear H&S patterns would make this a dead cat bounce. Bearish.
- Volume not behind this move up. Bearish.
- Clear uptrend on PnF charts. Bullish.

My Guess:
- Dead cat bounce. Daily index charts show all indexes below 50-dma, RSI, MACD, STO all bearish. Daily trend is down.