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Catching Big Waves - a trader's journal of surfing the the markets
FYI - this is not necessarily a "high probability" trade. The risk to reward is acceptable, but the odds are probably below 50% due to the prior momentum. I am just getting acclimated.
But for effect, here is the story;
6B is in a major symmetrical triangle. It came out of the gate in a gap up and raced to it's minor upper trendline, consolidated, reversed back down to it's prior breakout pivot (which also happened to be a 618 retracement zone and a 262 external, plus a prior LSP area). Then we saw support catch in that zone prior to the US close. A midnight EST, a volume spike took price back down, volume supported, and we had a microscopic DB on a 15 minute. I will most likely bail early, win or lose.
EDIT: FRIDAY 9:59AM
Profit target moved down after entry. Target hit around 4am. +20 ticks .
Can you help answer these questions from other members on NexusFi?
I had an interesting realization tonight as I drove home from south Florida. I spent the entire week trying to spot a long trade opportunity in a market that seemed to want to go nowhere but down, with the exception of Tuesday. I spent hours in analysis of potential support zones, stared at motion and volume for days, only to have one possible base after another nearly ignored as the market fell right through time after time.
Had I been set on going short, this might have been an incredible week for me, and as I drove I was questioning why I never once considered switching to a short-side bias. I never really came up with an answer over the 3 hour plus ride home.
And then it dawned on me; I did not have a single losing trade this week. I only took 4 trades, and only one of those was anything to consider a good one, but I ended the week 4 wins, zero losses, and with a net gain of 107 ticks.
Somehow I understood enough in this still somewhat unfamliar 6B market to stay out of trouble, even when I was aiming for the wrong side of the market the whole time. And as weak as it may sound, the more I thought about it, I felt pretty good about that.
When the market did not move as I wanted, I stayed out. The few times I got in, and then it looked weak, I got back out again without regret. And the one trade that did move in my direction, I stayed in. I never let the market convince me to change my thought, and I never let it bother me that what I wanted did not occur. I felt no push to participate, but was always ready to.
I know somewhere when I started this thread, I don't recall the actual wording and don't feel like reading back through right now as it's not that important to get the quote accurate, I said something about "relax and believe". And tonight's mental review of my trading week seems to have ended with that as the main lesson re-learned.
I have had a belief for some time now, that if trader sets their mind on what they expect to happen, and then simply monitors the progress and the feedback that the market gives, with no attachment to the outcome, holding on when the market suggests they are right, and getting out when it suggests they are wrong, that alone might be enough to succeed.
I looked into ATW, but it was too expensive for me. I've heared the term DALT, but I don't know the meaning. My experience with fibs is pretty much limited to Carolyn Boroden, who was supposedly mentored by Robert Minor. I found her stuff to be fairly straight forward because she just uses retracements, extensions and projections. She also tends to focus on the 127.2 and 161.8 extensions and the 261.8 and 4.?? If needed. For projections I think she only uses 100% for symmetry. I know in EW waves can have other projections, but she didn't use EW. I liked her book a lot.
ATW was certainly more costly than a small library of books, but it was a good experience to see theories in action, it instilled some level of confidence to have someone else saying when and where the market should turn, it helped make sense of how to try to put all the pieces together. My favorite part of the entire training was just listening to Jerry Simmons describe the market structure.
It was after ATW that I discovered Robert Miner. His book felt so technical initially that I had a hard time just finishing an entire chapter. But, after I made it to the end I stil occasionally go back to certain sections, and now enjoy the reading. His book is on my end table now.
Tha ATW approach could have a lot more lines going on if you pulled every obvious wave on multiple timeframes, where the Robert Miner approach seemed to reduce those line some. From what little I know, Carolyn Boroden's approach may seem simpler due to that. Sometimes having too many lines on a chart can make it hard to believe in any of them.
I received an email from a trader, who shall remain anonymous, mentioning that they were fairly new to trading and had already experienced blowing up an account. I sent back an email that included some comments that I thought might be useful here;
Trading futures vs. trading stocks is similar to playing Jai Alai vs. playing badminton. If you have a small account , and are not yet a well-skilled trader, your chances are slim to none of making it long term. That is not suggesting that you can't be a succesful trader, or that there is not a lot of money that can be made. And the biggest rewards out there may be in the futures market.
If you want to improve your chances;
1) Study. Buy some books on technical analysis. Books like "Market Wizards" or "Millionaire Traders" are better to avoid as a beginning trader. They might suggest that trading is easy. Books like "Getting Started in Chart Patterns" by Thomas Bulkowski, or "High Probability Trading Strategies" by Robert Miner will give you a much better understanding. If you can't stand reading technical studies and prefer to search for a quick fix, that might be telling you something.
2) Practice. Don't be in a rush to get into to live trading. Trading sim is, in my mind, the only way to become a succesful trader. Not that trading live is not also a requirement, but not as the majority of your time, particularly when you are learning. If you had to compete against a world champion fighter, would you be better off jumping in the ring tomorrow morning, or training for it for 5 years? Would you be better fighting every day of the week, or should you keep going back to training more than fighting?
3) Protect Capital. To trade correctly, you need sufficient capital. Trading is a game of survival, and that does not allow for having to risk 10% or more of your account every time you take a trade. You will lose. If you jump in before you know you are ready, you're most likely going to have some major setbacks. Save your money, add to it over time, until you have a decent sized account. While you are doing that, spend the time to become a good trader. That way, by the time you are really ready to trade you will have the money to do so.
Trading is the biggest business in the world, and it attracts the best of the best. The only way one trader can make money is another trader has to lose money. Are you ready to go up against the best in the world?
I took 2 trades today in the 6B. I really shouldn't have as I was busy with other things at the same time, but I believe since this is a new market for me I am finding my obsession stronger than usual. The 6B has been running on at least one computer non-stop recently.
The major trendline held on Friday, and overnight action pushed the market up. It eventually found resistance at it's prior breakout pivot (11:00am EST on 1/5/12). Those points are shown in the 10 minute chart below.
I had an 11 tick loss this morning, trying to catch a long for continuation above the area I feel has collected stops (dashed horizontal green line), then got out when it turned against me, and had to leave for a meeting so was not able to monitor it any further.
Then this afternoon when I returned from my meeting, I saw that a triple bottom had set up, with high volume coming in on the 3rd touch, pushing the market up slightly.
I felt I had a good chance of getting my money back from this morning as shorts were looking trapped.
I entered long again at 1.5443 and exitted at 1.5453, gaining 10 ticks (If this had been the start of the day I would hold, but volume is drying up, and I won't hold through an electronic close.)
Summary
-11
+10
Net for the day is negative 1 tick (and commissions).
BTW - just noticed I am now 6 for 6 regarding long entries in a possibly collapsing market. lol! But have been profitable 5 of 6, so, I'm staying with up. Possibly my lateet strategy will be that by staying with one direction I have to be right at least some of the time...
Being a little more serious, if the 6B;
1) halts it's upward march here around 1.5460, and;
2) breaks again below 1.5410
then I'll consider changing direction for a retest or a break below the prior low.
But, without that, that recent major trendline hit said bullish to me, as of this second anyway. And, if that will prove to be the near-term direction, 1.5520 most likely has a target on it's back.
