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Trading Momentum Waves


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Trading Momentum Waves

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  #1 (permalink)
Pune, India
 
Experience: Advanced
Platform: TradeTiger
Trading: Silver
 
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Posts: 37 since Mar 2011
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More than 3 years back i started trading. It wasn't based on any quantitative analysis rather it was just some stupid random things which my broker would suggest or i would read online. With this haphazard way i did make money for a while but then two trades did not just wipe out most of those "profits" but rather took out a huge chunk of my initial capital as well. I got scared , stopped trading. After a lot of soul searching and re-thinking my career choice as a full time trader i decided to hold on to my dreams and vision just a little more longer. As luck would have it i read an article on volume analysis and its importance. At that time it didn't make any sense and could hardly understand it but the curiosity made me dig deeper and i came across a thread called "Volume Spread Analysis".

So one thins things led to another and i became obsessed with VSA and the work of Wyckoff. I even started trading in RT but the consistency was missing. I wanted to do something about it but there was a missing piece of element in my trading. That missing piece was momentum. That is where technical indicators came in handy and became a part of my charts.

Now instead of focusing solely on trading turning points i like to look at price in terms of momentum as well. So two trading plans are in place.

1. Trading Turning Points
2. Trading After Turning Points

I only trade commodities as of now. By default i always have Silver , Crude Oil , Copper , Nickel And Natural Gas in my list. Any other commodity which shows periods of increased volatility becomes a part of my watchlist. Whether i trade it or not depends on my intra-day criteria is in line with the market.

This particular phase of my trading career is where i do not fear the markets , i am not scared of losing money , i respect stops , i have become comfortable being uncomfortable most of the times (if that makes any sense) , i book profits too early , i do not care about any news or economic events taking place when i'm trading and i hardly read any new books on trading.

The one big challenging as of now is booking profits early because my initial stops are wide and when i open a position i do not calculate or make an attempt to find a profit target. The only data i have at that time is where my initial stop would be. So out of eagerness i book profits too early thinking that book now and call it a day. The reason for that is there have been times when i booked profits while deviating from my game plan and after a couple of hours price hit my stops and there have been times when i stuck to my trading plans when the trade was in the money and then my stops have got taken out and there have been times when i stuck to my game plan and saw some things materialize which had so far been only in my mind. Those three scenario's have all been meaningful and taught me a lot of things about my own behavior.

So i have been re-working on my exit points and have come to terms with times when the setup will emerge but there will be little or now follow through.

I have literally been living off my savings for the past three years and have lived very cheaply. In my mind things have changed and i am withdrawing money and spending lavishly. The reason i am creating this journal is to have a record of my activities which will help me materialize my dreams and notice my improvement and also the speed of my improvement. The reason i am making an open public thread is because i am too close to the situation and there will be times when an outsider will see things more clearly about me and my trading then i can.

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  #3 (permalink)
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Your new approach sounds interesting but risky.

If I were you I would find or buy a copy of a seminar by Mark Douglas called "Mental Toughness".
It addresses some of the issues you will face and will change the way you are looking at the market.
It is an inexpensive way to save your capital and if followed will turn your trading around.

One issue I noticed is your comment quoted below:
"i do not calculate or make an attempt to find a profit target."

How many times have you gone on a long trip and not had a destination?
Would you even attempt to go on a month vacation and not know where you are going?
Although it is possible to do, it means you never arrive and you wander aimlessly.
I think at least an 'idea' of the target is necessary and possibly you should take partial profits along the way to 'pay yourself' for the journey as you go.

WTFDIK.

Good Luck.


Placebo View Post
The one big challenging as of now is booking profits early because my initial stops are wide and when i open a position i do not calculate or make an attempt to find a profit target. The only data i have at that time is where my initial stop would be. So out of eagerness i book profits too early thinking that book now and call it a day.


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  #4 (permalink)
Pune, India
 
Experience: Advanced
Platform: TradeTiger
Trading: Silver
 
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Posts: 37 since Mar 2011
Thanks: 38 given, 35 received


DavidHP View Post
Your new approach sounds interesting but risky.

If I were you I would find or buy a copy of a seminar by Mark Douglas called "Mental Toughness".
It addresses some of the issues you will face and will change the way you are looking at the market.
It is an inexpensive way to save your capital and if followed will turn your trading around.

One issue I noticed is your comment quoted below:
"i do not calculate or make an attempt to find a profit target."

How many times have you gone on a long trip and not had a destination?
Would you even attempt to go on a month vacation and not know where you are going?
Although it is possible to do, it means you never arrive and you wander aimlessly.
I think at least an 'idea' of the target is necessary and possibly you should take partial profits along the way to 'pay yourself' for the journey as you go.

WTFDIK.

Good Luck.

Thanks for the advice David. What you say makes a lot of sense.I do have an exit strategy in place but i just don't know at what price or price area it will occur. What i do know is that it will occur. I was thinking about learning Fibonacci Price Targets and also entering a trade with even sized lots so that i can book partial profits and let 50% of the lots ride the wave. But that would increase my initial risk massively. I'm going to figure a way out around this and update my progress. Thanks again for the help , i really appreciate it.

Cheers

If you can visualize, it will materialize
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  #5 (permalink)
Pune, India
 
Experience: Advanced
Platform: TradeTiger
Trading: Silver
 
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Posts: 37 since Mar 2011
Thanks: 38 given, 35 received

Update

I was looking to sell Silver and Nickel today since the bigger waves were pointing towards the downside. Price did eventually move down but my criteria's were not satisfied so kept out the trade.



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  #6 (permalink)
Pune, India
 
Experience: Advanced
Platform: TradeTiger
Trading: Silver
 
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Posts: 37 since Mar 2011
Thanks: 38 given, 35 received

Without getting into specifics or details the following assets are in play today.

Silver - Sell
Crude Oil - Buy
Copper - Sell
Nickel - Sell
Natural Gas - Sell

Now all i need to do is wait for my intra-day criteria's to get fulfilled so that i can open a trade.

EDIT : So far my criteria's have been fulfilled on Silver @ 56490. Now waiting for price to either make a directional move downside with increase in volatility or hit my initial stop.

Cheers

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  #7 (permalink)
Pune, India
 
Experience: Advanced
Platform: TradeTiger
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Posts: 37 since Mar 2011
Thanks: 38 given, 35 received

Silver position closed at a profit of 197 pips. Now waiting for Nickel to re-test the resistance area and enter a short position either on a No Demand Bar or UpThrust .



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  #8 (permalink)
Pune, India
 
Experience: Advanced
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Posts: 37 since Mar 2011
Thanks: 38 given, 35 received

Assets In Play

Silver - Sell
Crude Oil - Buy
Copper - Buy
Nickel - Sell
Natural Gas - Sell

Except for copper most of the assets are losing steam and if price moves directionally the intensity should not be very high. As of now i'm waiting for my intra-day criteria's to get fulfilled.

Cheers

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  #9 (permalink)
Pune, India
 
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Posts: 37 since Mar 2011
Thanks: 38 given, 35 received

Been waiting 6-7 hours for a setup to develop. Was out till 2am last night and lack of sleep is taking a toll. Price is moving laterally without any entry points which fit into my criteria list. I think i'm gonna call it a day and go outside and get the haircut that i really need.

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  #10 (permalink)
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Congrats on the journal, looking forward to it.

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  #11 (permalink)
Pune, India
 
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Posts: 37 since Mar 2011
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Assets in play today

Silver - Sell
Crude Oil - Buy
Copper - Buy
Nickel - Sell
Natural Gas - Sell

Already opened a short position in Natural Gas @ 120.8 Ideally this should have been opened at 121.3 but woke up late again but i'm happy with the price that i got considering the circumstances. Stop is @ 121.7



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  #12 (permalink)
Pune, India
 
Experience: Advanced
Platform: TradeTiger
Trading: Silver
 
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Posts: 37 since Mar 2011
Thanks: 38 given, 35 received

Stop triggered in Natural Gas @ 121.7 and the price immediately moved down to 121.5 which became my exit point.

My stop should have been placed at 122.7 but in a hurry to open a position and compensate for the 2 hour late start i made another mistake and miscalculated the stop. After exiting the position i was doing a hindsight analysis and realized my mistakes. I need to work on some key variables as of now.

1. Stop staying outside till late night and wake up early.
2. Enter only at desired entry points and not improvise in real time
3. Next time use a calculator/excel sheet for doing the most basic calculations and not do it mentally.



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  #13 (permalink)
Pune, India
 
Experience: Advanced
Platform: TradeTiger
Trading: Silver
 
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Posts: 37 since Mar 2011
Thanks: 38 given, 35 received

Hi. Its been a while since i have updated the journal. In the last 30-40 days i have made some changes to my trading. I still take aggressive trades with wide initial stops and still do not calculate potential reward. The reason i had stopped writing here for a while was because my trading was showing little nominal profits and it seemed too much of work to update that little detail. For the majority part of it , i was breaking even. This has been going on for a couple of months prior to i started this journal. With some renewed energy and enthusiasm i will try to keep this journal updated.

During one of the weekends i had decided to go through some of the losing trades that i had made. And luckily i found something common in most of the losing trades. 75% of my losing trades were attributed to one single setup. So i have made some changes to my entry criteria's and have decided to be very cautious while trading it.

On the flip side i also reviewed my winning trades and have learnt to identify setups where my intial lot size should be twice the size of my normal lots.

So far i had read about stop hunting and drastic price movement. Last week for the first time in my trading career i experienced it. It wasn't particularly the best of feelings that one should experience but i was proud of the fact that i stuck to my game plan and did not do anything erratic. Price exactly touched my level of SL and then reversed 45 pips in favor. Overall an intial loss of 18 pips including all costs.

As i said earlier i will update this journal as often as possible.

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Congratulations on your journal!



In the spirit of our March Trading Journal contest, I am asking everyone to spend a few minutes and share their journaling experience.

A) What are the top five benefits you have seen as a result of regularly posting in this journal?

B) What are the top five problem areas you have identified as a result of regularly posting in this journal?

C) Were you initially reluctant to start this trading journal? If yes, why?

D) How do you feel, overall, about your journaling experience?

E) Would you recommend to others that they should also start a trading journal?

Thank you for taking the time to answer my questions. I appreciate your posts, and I hope you have benefited from your journal. I also know that others will benefit as well, just by reading about your own experiences.

Enjoy your weekend,
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  #15 (permalink)
Pune, India
 
Experience: Advanced
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Trading: Silver
 
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Posts: 37 since Mar 2011
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Assets in Play

Silver - I am quite bullish and expect price to move high in this week

Crude Oil - This is one of the assets which has lately been making a lot of noise on TV and financial news. I don't see any upside yet. I expect price to move down on high volatility since all the signs of weakness are present.

Copper - This is another asset where i do not see any upside in the near future. Price seems to be moving in a zone of resistance and price should move down

Nickel - I am a little confused about this asset. In isolation if i only look at my parameters then this asset is turning Bullish and gathering momentum. But since Copper and Nickel have a tendency to move in tandem it is creating some doubt. However if the opportunity presents itself i am going to Buy this asset and refrain from short selling it since co-relations often change and maybe i did not pay attention to it when it changed.

Now all i have to do is sit and wait for my criteria's to meet.

Cheers

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  #16 (permalink)
Pune, India
 
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Took a long position in Silver at 56239. For a while the trade was in profit of around 50 pips . My stop was placed at 56170 and didn't get a fill so i closed the position at the next best place at 56165. A loss of 74 pips.



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  #17 (permalink)
Pune, India
 
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Assets In Play :

Copper looks very bearish to me as of now. Waiting for my criteria's to meet so that i can take a short position.

On a separate note : I have increased my position size in Silver by 6 times than what i used to enter at earlier. I figured that since i am breaking even most times i might as well do it on a bigger contract. Surely the monetary costs associated with trading have increased with increase in contract size but it makes more sense since a profitable trade with volatility and momentum will help me withdraw some decent amount of money from the account and spend it. My aim is to increase it to the maximum that the exchange allows i.e 20 times more than what i am trading but like everything else its a step by step process and by the end of this financial quarter i will achieve it.

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  #18 (permalink)
Pune, India
 
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Posts: 37 since Mar 2011
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Within the last 11 trading sessions i have lost 5k. Out of which 2.1k was lost yesterday on Crude Oil. I went long at 5437 and stop was placed at 5420 but price moved quickly and my SL got triggered at 5617. A loss of 20 pips. I wanted to test a theory that i had developed over the last few months. I still think it holds a lot of validity and will put money once again if the opportunity arises as i made a fundamental mistake this time and i won't be repeating it again.



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  #19 (permalink)
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Posts: 49,753 since Jun 2009
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Money in $$ is not really useful to measure.

Better to put things in perspective by saying you risked 1% of your account on that trade, and lost. Or you risk 50% of your account on that trade and lost.

Generally accepted risk principals say not to risk more than 1-2% per trade. I hope this loss falls into that category.

Mike

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  #20 (permalink)
Pune, India
 
Experience: Advanced
Platform: TradeTiger
Trading: Silver
 
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Posts: 37 since Mar 2011
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Big Mike View Post
Money in $$ is not really useful to measure.

Better to put things in perspective by saying you risked 1% of your account on that trade, and lost. Or you risk 50% of your account on that trade and lost.

Generally accepted risk principals say not to risk more than 1-2% per trade. I hope this loss falls into that category.

Mike

Thanks Mike

I don't think of risk in terms of % of my account capital although i should since its the smart way of doing things. My last trade i had risked 1.7% of my account and the one prior to that was 2.5%.

My stop is a function of the current intraday volatility and since that keeps changing my risk per trade also varies. But if i were to come up with a money management rule , i'd allow a maximum risk of 5%

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  #21 (permalink)
Pune, India
 
Experience: Advanced
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Posts: 37 since Mar 2011
Thanks: 38 given, 35 received

Hello. Its been a while since i have been active here. I am still trading commodities and for a while had kept off trading and back to the drawing board to make some minor adjustments. What i realized during this time was that my schedule , routine and certain habits had become a barrier for me. Also i have diversified my trading assets and have started trading in the Stock and Options market. So now i trade 4 commodities , stocks and options. This gives me a lot of flexibility and peace of mind. Will try to update this journal frequently.

Cheers

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  #22 (permalink)
Site Administrator
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Posts: 49,753 since Jun 2009
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Placebo View Post
Will try to update this journal frequently.

Cheers

Welcome back.



Mike

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  #23 (permalink)
Pune, India
 
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Posts: 37 since Mar 2011
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Big Mike View Post
Welcome back.



Mike

LOL yeah i get the point. What i mean is i will update this journal frequently.

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  #24 (permalink)
Pune, India
 
Experience: Advanced
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Posts: 37 since Mar 2011
Thanks: 38 given, 35 received

Today one of my setups has triggered which i had designed recently. Since it has not been tested i will just track it this time without putting money on the line. If the test goes as planned then henceforth each time this setup comes i shall trade it in real time.

The asset is Nifty 29th Nov 5700 PE (Positional Trade) - Entry Price 127
SL - One of three conditions.

1. Color Change Of Pressure
2. Decline In Momentum
3. Price Touches Below 80.1 (Low of Prior Day)

Current Price - 124.9

Lets see how far it goes or does not go.

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