aztrader9 

Theres only one cure for this issue. Define rules, follow them doggedly. Take every one. IF you have a statistical edge...( you do have a spreadsheet with ALL your trades in it that calculates your edge right?) then taking the trades regardless of the outcome of each individual trade, will lead to profit. The hard part is taking every one. Thats why its called discretionary trading and the discretion part thrrrrrrrows the statistical edge off and can create hesitancy. This is why I try to just take trades that I really like the set up on. Its not perfect and never will be but I am getting more and more comfortable with losses....not happy comfortable but comfortable in the sense that losses are part of doing business. Nothing more. Good luck

Thank you.

The discretionary part is what I have a hard time with. Perhaps my strategy is still not as clear cut as I need it to be for me to feel comfortable trading it. I know that my strategy has an edge due to my manual back-testing and real-time SIM trading. What I don't trust is myself. I fear that I will not follow my strategy the way I should.

Funny, before having a strategy and learning about trading I thought that all I needed was a good system. Any system, regardless of how it fitted my personality. I thought I would just learn the rules and follow it rigidly ...ahh if only I could find a good system. I would not make the mistakes other newbies make. Little did I know that I myself would end up being the problem in the equation.

TriggerShy 

Thank you. The discretionary part is what I have a hard time with. Perhaps my strategy is still not as clear cut as I need it to be for me to feel comfortable trading it. I know that my strategy has an edge due to my manual back-testing and real-time SIM trading. What I don't trust is myself. I fear that I will not follow my strategy the way I should. Funny, before having a strategy and learning about trading I thought that all I needed was a good system. Any system, regardless of how it fitted my personality. I thought I would just learn the rules and follow it rigidly ...ahh if only I could find a good system. I would not make the mistakes other newbies make. Little did I know that I myself would end up being the problem in the equation.

That is the problem all traders face. Go look in the mirror. There is the problem. After two years of searching for "the system". I finally realized that almost all systems work. Its the operator that is the problem. I looked into auto trading to fix the operator error issue. And found that auto traders that I could afford were curve fitted for certain types of markets and when the market changed, they bombed. So back to a method I know works and just stick with it....And keep working on the man in mirror...to borrow a Micheal Jackson song....

Spent the weekend going over S/R from a 5 min chart perspective. I dont want to trade it but I wanted to see how the levels held up in comparison with levels on the 6 range chart. I discovered the 5 min levels are much stronger than the 6 range chart...duh....and then spent some time experimenting with those levels and a keltner channel on the 5 range....

Oh boy, what an eye opener that was, The keltner channel on a 6 range bar does not expand and contract like it does on a time based chart and therefore gives you a nice price channel in which price tends to stay in as it goes up and down. It will get outside the channel on runs.....So I did some market replay on last weeks action and then sim traded last nights action using this idea of trading the S/R off the 5 min chart using the keltner channel on the 6 range. Result: Very impressive.

So decided to do it live today. Now ordinarily I would not recommend this to anyone. But I am getting better at just reading price action and just want the indicators to help filter it. And early on, there were great signals with nice follow through...but I ended up losing money due to being hesitant to take the signals with live money.

Then price dropped 100 cents in 5 minutes while I was out taking care of some personal business. I figured we'd see some consolidation and then a pull back on that drop. Which is what we got but it was kinda choppy on the 6 range. Very smooth on the 5min chart but still it was going up from where I figured it would.

I finally decided to just take the damn trades....at that point, I was down 80% of my daily stop and so I traded small size until I was back to less than 50% of my stop. Then I sized up again and the trades on the chart are the ones I won on. You will see some yellow boxes and those are the ones I passed on due to being scared.

So ended the day with my daily profit target exceeded....I like the keltner channel. It gets me in much sooner than an MA cross which is essentially what I had been trading and with the settings I am using, a ten tick or 20 tick target is possible almost all the time. The with trend set ups can be much more of course but I don't need more than 20 per trade.

Gotta run now.....taking care

AZ,

To have the confidence to stick in there and keep trading is huge. Interesting combination on both indicators and timeframe. Very interesting stuff.

bluemele 

AZ, To have the confidence to stick in there and keep trading is huge. Interesting combination on both indicators and timeframe. Very interesting stuff.

Yeah, I was looking for a way to trade the 5 min levels without the huge stops so necessary on the 5 min chart. There are probably millions of traders trading the 5 min chart so why not trust the levels? But with the huge stops required, my stomach turns to acid.....

The combination of keltner and 5 min was pure chance. I remembered something I had read about keltner channels and threw it on there to just see.....and then I noticed the channel was a bit narrow so I increased the standard deviation until it looked like it did a decent job of containing price and then just went with that.

One thing I have noticed is that it will probably do a better job in range bound markets than trending ones....at least that is my initial perception. For the trending ones, I'll need to do a better job of determining trend on the 5min chart and trading that direction.

Otherwise, I think I like it a lot.

How exactly are you using the Keltner channels?

worldwary 

How exactly are you using the Keltner channels?

I am using them on a 6 range chart. I suspect this is not the preferred method of using keltner channels as they do not expand and contract like on a time based chart. Instead, they give a nice smooth channel around price most of the time.

So an example might be that price is approaching a support level on the five minute chart and hopefully in the context of an established trend. Once price gets there, I wait to see how it reacts and how price interacts with the KC. Once price confirms inside the KC, I enter.

The idea being the 5 min chart gives me larger picture levels and the KC the smaller picture levels. In this way, I hope to enter much closer to the actual level but after some small amount of price based confirmation. Otherwise, I need a limit order at the level with no real way to determine stops. That seems like utter gambling to me.

This little method is in its infancy so I have no hard and fast rules, just a general idea of S/R and some price action confirmation.....As it develops, I'll notate some rules but for now, just trading it by the seat of my pants.

I see you are "advanced". If you have any suggestions to make it work well or perhaps you have some strong reasons why its a crazy idea and will never work, let me know. I am always willing to learn from others with more experience than me.

aztrader9 

I am using them on a 6 range chart. I suspect this is not the preferred method of using keltner channels as they do not expand and contract like on a time based chart. Instead, they give a nice smooth channel around price most of the time.

I use something similar in my trading. Not Keltners exactly but SMA envelopes, which on a tick chart give a smooth channel that price tends to stay within. One reason I was curious about how you were using the channels is that I use mine for countertrend setups (i.e., price might be overstretched and ready to reverse if beyond the envelope), whereas you appear to be using them for with-trend trading.

aztrader9 

So an example might be that price is approaching a support level on the five minute chart and hopefully in the context of an established trend. Once price gets there, I wait to see how it reacts and how price interacts with the KC. Once price confirms inside the KC, I enter.

You mean, by bouncing off the black center line and resuming the direction of the trend? Or are you watching how it reacts at the outer channel? Or using price's position in relation to the outer channel as a filter, like don't enter if price is already outside the channel?

aztrader9 

I see you are "advanced". If you have any suggestions to make it work well or perhaps you have some strong reasons why its a crazy idea and will never work, let me know. I am always willing to learn from others with more experience than me.

Ha, "advanced" in terms of time spent staring at charts maybe but not necessarily advanced in terms of knowing what I'm doing!

worldwary 

I use something similar in my trading. Not Keltners exactly but SMA envelopes, which on a tick chart give a smooth channel that price tends to stay within. One reason I was curious about how you were using the channels is that I use mine for countertrend setups (i.e., price might be overstretched and ready to reverse if beyond the envelope), whereas you appear to be using them for with-trend trading You mean, by bouncing off the black center line and resuming the direction of the trend? Or are you watching how it reacts at the outer channel? Or using price's position in relation to the outer channel as a filter, like don't enter if price is already outside the channel? Ha, "advanced" in terms of time spent staring at charts maybe but not necessarily advanced in terms of knowing what I'm doing!

I see the value in counter trend trading as well as trend trading. In fact, it may be easier to spot counter trend trades with this set up.

I watch how it reacts at both the center line and the outside bands. In range bound markets, the outside bands are fantastic...so far anyway, the problem is the trending market and how to play them in relation to the channel....I am leaning toward the center line as the trend continuation line.....So far the most difficulty I've had is in gauging the "breakout" trade in which price looks to break above/below the previous bar on the 5 min chart.

And yes, I think one of the rules will be something along the lines of don't enter once the price is already outside the bands. Another one I am looking at is the entry bar must not be touching any part of the band it just crossed....but then that makes the stop larger....so a further refinement of that would be, ok to take the first available bar IF major support/resistance levels have been touched and rejected. Otherwise, wait for entry bar to be inside the band. At the moment, just experimenting with this...so we will see. But there seems to be some promise there so will keep it up.

I would generally expect that with a breakout system like this, entries will typically occur near or beyond the outer channel. Pullback entries will typically occur near the midline or opposite channel, breakouts near the channel in the direction of the trend.

If it is true that price tends to stay within the channels while trending, then the opposite channel makes a logical stop point. You can determine how to size the trade, or whether to avoid it altogether, based on how far the entry would be from the opposite envelope.