So every day for the past 7 weeks, I printed out 3min charts for 6 stocks. Covered up and went stock by stock, bar by bar. That gave me 35 trading days and 210 charts. I felt like it was a good learning experience, and helped me see the price action in each stock.
The headline numbers for the 7 weeks are attached. Net profit of $19,948 from $26,067 of gains offset by $6,119 of losses; profit factor 4.3x. The capital risked to make the $19k was $16,878 - so R:R ~1.2.
The average win was $114.83 vs the average loss of $28.86 on risk per trade that was $38.45. W/L was 4.0x. Win rate was 52% of 439 trades.
This version of paper trading has its obvious shortcomings:
Commissions. Commissions would likely trim the net gain to $19,070 from $19,948.
Slippage. I don't have a good estimate for slippage yet. If i guess $0.10/round trip (about the bid/ask on these names), then that would cut another $4,390 dollars off the gain, ugh...
Context. Having the day printed out on paper lets you know 1) a rough estimate of the day's trading range, 2) a premonition of volatility for the day, 3) an unfair advantage looking for reversal signals when you are at the top or bottom of the page. I tried hard to focus on the price action and not the location on the paper. However even having clues on those things ahead of time, it is still very possible to lose money - amazing.
I need to get a little closer the the hard right edge. So I am going to focus on 1 chart during the day real time. Take entries as they come along. I think one of the short comings of my trading in Feb/Mar was trying to look at too many names.
I am still missing states on MAE, efficiency, etc. and I don't have a journal to capture trades in. Need to fix that.
I also wish I had stats per set up. My "set ups" are not well defined at all, even for a discretionary trader. I have come up with a better definition of set ups so I can track them.
I should come up with stats on the stock I will focus on (VFC), so I can tell how my sim trades compare to my recent paper success.
Comparing my Feb/Mar results to the paper trades, the one number that stands out first is average winner: ~$50 real time, $114 on paper. "Let the winners run". The losers were cut short about the same: ~$44 live vs $38 on paper.
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The notations on this first one are not very good. 1 winner for $200, 4 losers of $160. Net $40. A 29th percentile performance compared to the paper trades of the last few weeks.
5 trades is overtrading. Looking back at my paper trades 3% of the days had 0 trades, 9% had 1 trade, 56% had 2 trades, 24% had 3 trades, and 9% had 4 trades. Never did I make 5 trades.
First trade was on a small pullback. Price failed up 3 times and took a bar down. Set a sell stop after two more failed pushes up. Got direction right, but magnitude was off.
The second trade obviously worked. Caught it on a pull back after a strong move up. Simple set up with stop behind the 21 moving average. A little anxious with my stops. In paper trading i moved my stop about once every 30 minutes, but market was moving up fast.
Third trade was a little anxious to catch a continuation of the trend. Probably blinded me to the blue resistance line from prior day.
Fourth trade was unnecessary. After a $3.50 move up and a sell of, I had no business getting short this quick afterwards. Being short blinded me to the channel break and move up.
Fifth trade was ok. Moved in my direction. Perhaps should ahve been more defensive on my stop after taking heat half an hour into the trade. If it was coming back, it was going to take my stop, which it did.
I was too focused on the downtrend to see the second channel break and a reverse up.
Took Tuesday off work to teach daughters preschool. So nothing for May 22.
3 trades Wednesday: 1 winner for $185, 2 losers for $80 total ($40 each), net $145. 58th percentile day compared to my paper trades.
First trade was supposed to be a pull back bounce off the 21 SMA for continuation of up trend. Ended up being a trap. Stopped out in about 6 minutes, so not much could be done.
Second trade was admittedly a bit of a chase on my part. Late after the pause down, and pretty far away from the 21 SMA. It did go in my favor for 1 bar, but was stopped out in about 15 minutes.
Third trade was a more pronounced pull back and bounce off the 21 SMA. Was in the trade for about 2 hours. Only moved my stop 5 times, so moving my stop about once every 24 minutes - patient enough. I did tighten my stop more than usual as price approached the blue resistance line from the prior day, which helped capture a little more of the move.
Stayed out of the chop for the 90 minutes that followed. Was a little surprised by the run at the end of the day. Probably could have entered on the break above $138 for a $1 run, but I was away from my desk at the time.
3 Trades on Thursday. 2 winners for $210. 1 loser of $40. Net $170, which is 61st percentile of the paper trades I am trying to match.
Trade 1 was not what I was looking for. The first 18 minutes shot price up $4 from yesterday's close. I was looking for a pullback to get long, but when I saw the high volume at 6:45 and how quickly the following bar fell off in price, I went short. The trade went almost $1.00 in my favor in 6 minutes. On paper it would be easy to let the trade run out, or uncover bars faster to see what happens next sooner, but in real time, it always feels like the current bar is coiling up like a spring to jump back up and take out your stop. I was a little worried that price would bounce off my 21 SMA and take my stop out, so I moved my stop to break even. On paper, I had a rule of thumb that I would not move my stop until a swing high or low was put in that was not challenged for 3 bars (9 min). But I was getting fidgety with my stops; I moved my stops twice in 18 minutes. Too much. I got stopped out on the now lower stop for $50 of profit.
Trade 2 was only a few minutes behind my stop out. As I saw price bounce off of a resistance point from a prior day, I got short again. The in-and-out maneuver cost me $17 - $2 commission and $15 lost price. Not the end of the world. I only moved my stops 6 times or about once every 28 minutes. Much more patient than trade 1.
Trade 3 was a little premature. I was worried about the first higher low after a down trend. Not an invalid worry, but if the day is going to be V-shaped, I can wait until price bounces off the 21 SMA, rather than trying to catch the reversal. Seems like usually price chops at the bottom for a bit.
I looked for the reversal, but I already had 3 trades in, and I overtraded the two prior days. Stopped looking a little after noon. Today would have been two trades if I hadn't worried about the stop in trade 1.
Three losers: 2 full stops, 1 break even. $80 loss, which is a 1 percentile day vs the paper trading.
Trade 1 was a pullback to the 21 SMA. Trade went in my favor - took a little heat on the second bar. Perhaps the approach of resistance from the prior day should have signaled that needed to be more defensive with my stop.
Trade 2 was underwhelming. I was looking for a pullback and bounce off the SMA21; never quite got there. Stopped out in about 10 min.
Trade 3 was break even. After two loses, was a little more defensive with my stop.
Last edited by bijeremiad; May 26th, 2012 at 08:14 PM.
Reason: Forgot attachment
Three losers. Three full stops. -$120 makes for a 1 percentile trade day.
First trade was a little earlier in the day than I usually trade. I typically wait a little longer to see how price action for the opening develops. This should have been my first warning that I was harboring a bias for the day: short. Biases are great when you are right and downright miserable when wrong. Best to trade without. I should have exited at BE for this trade. I can take heat once, but there is no point taking heat a second time. Get out, and wait for the next set up. Another suggestion for being defensive on my stop was the resistance from two days prior at $141. Had I been just a few pennies higher on my stop, this trade could have run all day, which would have saved me the two trades that followed.
Second trade went immediately in my direction but only for a few bars and $0.30. Can't really take profit on those and expect to survive, so the first pullback took out my stop.
Third trade I got a little greedy and tried taking 200 shares with only a $0.20 stop and got "sticked" out 3 bars later. This probably would have been a marginally profitable trade with a stop $0.03 wider. At least a BE.
"Fourth trade" was the best trade I made all day: sitting on my hands. I thought about buying at 10:40 and thought about selling at 11:45, but neither would have done very well. The day just traded too tight. Even under ideal entries, the most I would have made on a day like this would be $30-60.
1 winner. 1 loser. $10 net. 24th percentile day vs paper trades.
I was not watching the market for the first 90 minutes. missed a nice failed break out around 7:40.
Trade 1 was an attempt to play a pull back. Stock did not go much further. Stopped out.
Trade 2 was a bounce off the 21 SMA. Was pretty patient with the stops.
Was very (too) focused on the 140 line as resistance. Probably kept me from looking for a long 11:06 or 11:36. In fact I was considering a short. The higher low at 11:30 should have clued me in more to the possibility.