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I made a new video on how to analyze your trades and find your optimal daily stop loss.
Part 1 - I show the results of my analysis using CL Part 2 - I show how to use the excel file to analyze your own trades
I kept both to about 5 minutes each.
My results were surprising. Using a daily stop loss of $200 for CL would have doubled my profits. On the dax it was even better, it would have taken me from negative to positive with an extra 1000 euros. I'll be adding this to my trading plan.
Let me know if you analyze your trades. Only one instrument is supported at a time.
This is what I think happened. It's not unusual to see professional activity at the extremes of the range, because there's usually liquidity there to eat up, if they want it. Between that and a gap begging to be filled, I'd be nervous about getting short just yet. Of course ES is my playground but I don't see why the dax would be different in this regard. It always comes back to the context, no matter how reliable an indicator tends to be!
Good catch on the gap fill, I hadn't thought of that. that gap is like a magnet.
There was news a few minutes after that professional activity there at the top of the range. I think they have may have taken some profits before the news, or they may have known the news would be positive and so there was some accumulation. Or someone who can move the market (dax is easy to move) gave it a little push to close the gap, knowing they could cover at the top.
Lots of reasons and we will never know exactly why but for me what's important is to think it over and come up with some ideas and then look for evidence to support the idea.
Bad day on the dax. I hit my loss limit of 150 euros right away. But I actually forgot to switch to another sim account. I don't want to stop trading because I need all the practice I can get, so I plan to keep the trades separately by switching to a 2nd sim account. If I were trading real money I'd switch to a sim account after hitting my goal.
I'm missing something, probably something simple, but I need to figure it out. I'm not consistent, I have good days and then some bad days. i have to find out why. So I'm working on that.
I'll also be switching from CL to ES for a few days. With ES I have access to breadth data, which I believe gives a slight advantage over CL. In fact I have a few advantages:
- I swing trade ES so it's easy to focus on one market. And swing trading research can help day trading and vice versa. CL is too volatile to trade, I like to scale out and I can't swing 3 CL contracts.
- Breadth data is useful for ES.
- ES is slower so more time to think. Several times I have missed big moves on CL & DAX just because I was a tick late clicking the DOM.
- I believe the volume analysis that I use works better for ES. But that's just a hunch.
If you have a preference for ES (or any of the indices) or CL, please share your thoughts on the matter.
It's hard to have consistent back end/net results when the process you are using on the "front end" is not consistent.
I mean it with all the best intentions... but changing instruments, stop sizes, platforms, adding/removing indicators, etc... you've got a lot of change going on and little consistency going on. It is not surprising to me that your results are not consistent.
You're a really smart person, I think you are so eager to find the right thing that you are getting carried away from the important things in trading. Do you really feel that you cannot make money unless you have these three separate platforms? Do you really feel that your indicators are reliably telling you when to and not to trade? Do you really think that a 3 tick stop is going to work?
I'm not saying they won't, you can't, or it doesn't... how would I know, I am not you. I'm just saying that, if it were me, I know I couldn't handle this "information overload" you've got going on and I would no doubt blow up and trade poorly if I tried. And with regards to stops, 3 ticks might work on a slow moving ES of six months ago, but on the DAX and CL? And even on today's ES? I think thats nuts. No offense. It's just my opinion. I am of the mindset that the money is made by getting into a trade and either being right or wrong, then cutting losers and letting winners run. There is no way I can time my entry so perfectly that I can be wrong within a 3 tick margin of error on every trade. Sure, some trades where there is particular price action and DT/DB etc, sure, but on the vast majority of trades no way.
I'm also of the belief that while Market Delta is a nice whiz bang platform, and I'll be the first to admit I know little about it, I don't think it's necessary to make money. Sure, it's hard to dismiss something you don't even know about, and I could be completely wrong. But I am of the mind set that simpler is almost always better. I like high-end gizmos and techie things as hobbies, like being able to load up millions of bars of ticks and backtest from here to the Dinosaur era, but it's just a hobby. It's not needed to make money.
Also, I've been reading "Evidence Based Technical Analysis", which I've talked about in my advice thread, and the author who is a dude way smarter than me lays out things in such a way that I am a true believer, now more than ever, that the power to make money trading is all about psychology and risk/money management. Everything else, especially indicators, but even "order flow" is just not a deciding factor in who makes or losses money. I really think you should check the book out if you can
Hope I've not offended you, it was only my wish to splash some water on the burning fire
I love your input. Overall I agree with everything you said especially that I am complicating things.
I started studying market profile, auction market theory, and order a few in January and I'm convinced that there is an edge there. The volume ladder has opened my eyes to what goes on at turning points. I am learning how the smart money trades. I've swallowed the blue pill and I can't go back. These new concepts take time to learn and I'm prepared to do the time. So while learning I am exploring different ideas, different ways of analyzing, interpreting, and visualizing the data.
I mean no offense, but I do not want to be trading off 5min bars with moving averages. I want to know why price turns when it does, what's going on when we see volume spikes, why price alternates between trending and ranging, etc. I want to understand all that. And to better understand all that I'm trying different things: software, indicators, target & stop configurations, and instruments.
I feel that I made a ton of progress in March, more progress than my P&L shows. That's ok. I'm in the learning phase. When I started learning these new concepts I knew it'd take time. If I learn as much in April as I learned in March I will be very happy.
One thing I haven't written much about is intuition. I'm learning to trust my intuition. Many times I know price is going to reverse but I do not fully trust my intuition and when I finally click the DOM then it's too late. Maybe "information overload" is part of the problem causing my hesitations and making me miss entries. As I gain more experience I hope to trust my intuition more and be able to simplify my charts.
You may be right about the 3 tick stop on CL. And that's one reason why I want to try ES for a few days. In the majority of my trades, me getting out at -3 ticks has saved me money. In only a few trades have I gotten out -3 and then missed a big move. You can take a look at some of my charts with markers to see this. So I believe my problem is not the stop but simply me trading the wrong side at the wrong time. Again, information overload is probably contributing to that.
I wrote my views on psychology in your advice thread but unfortunately I didn't get any replies. My view is still that a good edge is more important than psychology. I will read your book though and maybe change my mind.
So in summary:
- I do have information overload and I need to simplify things
- I am learning every day so hopefully my results will continue improving
- My swing trading is profitable so I'm confident that my use of cycles and volume analysis is correct, I just have to adapt this to intraday trading
Cool. And I hope you check out that book, it probably deserves its own thread. I haven't finished it yet but man I am just loving it. Some books speak to people in different ways, so I hope you like it too.
It's great that you've analyzed your trades and know that the 3 tick stop has worked in your favor, and that you stand by it and feel I am wrong. A lot of people would just cave and change their stop and start second guessing themselves.
As for the edge... I still feel people are placing too much emphasis on a mechanical edge that is derived from some indicator setting or higher/lower movement, some chart pattern, some gap play, etc etc. I disagree with those things.
For instance, I can't take gap trades unless I would have taken them regardless of the gap, because it matched my other setups. I can't fade the gap unless I feel that the trend supports the move. etc.
I feel the edge is what you make it. I feel that a brilliant person could invent a brilliant method, give it to traders, and the majority of them would fail miserably. I feel this way because the method itself is not the edge. Psychology and money management are. I've said that so many times people may want to slap me, but yet the majority of people on the forum download indicators all day and spend hours on end changing their charts every day trying to find the best indicator combinations.
That book also goes into why people love to do this, why people believe their indicators work or a chart pattern works, etc. He goes into detail about Elliot Waves, and I think also Pivots and Fibs (later in the book, haven't got there yet) and why even faced with an enormous amount of scientific evidence that such things don't work consistently traders will adamantly defend their position that the method does in fact work until they are blue in the face. And I ate it up, I loved it, because he is very methodical and very scientific, and in my hobby as a strategy programmer/backtester/algo trader, I have to reduce things to scientific formulas because everything must be objective, and the fact is almost every indicator, wave, pivot, order flow, etc is not objective but in fact subjective, and you can bend each situation to fit your criteria.
In the end, there is no edge in those things. The edge is in managing your risk and trade properly so that once you are in a winning trade you exit (which is where ALL the focus should be, the EXIT not the ENTRY) at areas that have the highest probability to make you the most money. And the psychology of it all is important because you can either be caught in a never-ending loop of indicator insanity, and not even realize it, or you can develop a well thought out and very methodical trading plan but execute on that plan with such failure and misery that it doesn't matter... Psychology is being able to take three losers in a row and keep trading, psychology is know when to stop, knowing when you are wrong, controlling your fear of both losing and fear of missed opportunity.
