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Breakout Journal - a journey to full time trading


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Breakout Journal - a journey to full time trading

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  #11 (permalink)
In the heat
 
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Silver Dragon View Post
Hi Brian, (@PandaWarrior)

The highlighted area is the time frame showed on your chart. The green line is your trend line.

In short; I wouldn't have taken the trade. On the longer term view (see Chart1) the the price is in downward channel. Entering a trade in the middle of the channel on the trend line break going against the channel increases the risk dramatically of failure and being stopped out. It would be better to enter on a break of the channel line.

As you can see on the Chart1 there were 2 downward channels formed. The original which was in purple was breached and a new channel was formed.

Take a look what happens after your proposed entry on Chart2; The price goes to the first outer channel line and pulls back then to the second outer channel and pulls back.

Finally after a large pullback the price retests the outer channel one more time then breaks through with a large bar. This would have been my entry point. I placed the stop and exit points on the chart. This would have been a roughly 2 to1 risk reward with a worse case entry @ 98.91; Stop @ 98.79; Target @ 98.12 Also notice the new upward channel that is being formed. (see Chart2)

Let me know if this makes sense.

Robert

Chart2

So on the second chart, I see three potential entries then.

1. The first outer channel line short.
2. Second outer channel short.
3. Your long which I agree with which results in a BE trade since it went ten ticks and then came back to entry before making it into target zone.

Are these correct assumptions based on your though process?

I'm not trying to second guess or otherwise critique you. What I am trying to do is gather some ideas about naked charts and see how they mesh with my though process and perhaps learn something.

Thanks for the chart lesson. You saw things I didn't.

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  #12 (permalink)
Legendary Data Wizard!!!
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PandaWarrior View Post
So on the second chart, I see three potential entries then.

1. The first outer channel line short.
2. Second outer channel short.
3. Your long which I agree with which results in a BE trade since it went ten ticks and then came back to entry before making it into target zone.

Are these correct assumptions based on your though process?

I'm not trying to second guess or otherwise critique you. What I am trying to do is gather some ideas about naked charts and see how they mesh with my though process and perhaps learn something.

Thanks for the chart lesson. You saw things I didn't.

@PandaWarrior

Your Welcome!

The answers depend on your methodology. If you saying whenever it touches a trend/ channel line then take the trade in the opposite direction then #1 would have been a valid trade because it touched but #2 would have been no because it did not touch.

My methodology uses line breaks. In this case #1 would have been questionable break and #2 is not a valid break.

My definition of a valid line break is when it touches the bars at least 3 non-consecutive times. In other words the trend has pullbacks.

1. Yes it touched the outer channel line and broke through the trend line but the break of the trend line was the third touch. I would have not taken this trade. This tells me I could have invalid trend line. Even if I had taken the trade the risk reward would have not been worth it because there is a support level 8 ticks below the line break.




2. Second outer channel short. The trend line drawn from the previous support is not a valid trend line because there is not 3 non-consecutive touches. There was 4 up bars then a break.

Check out what forms from the previous bounce; There is now a upward mini channel. The break of the lower channel line is just a few ticks from the support. I would have not taken this trade either because of the support being so close to the break.




3. Worst case yes, this would have been a break even trade. Normally on a line break the bar will shoot up then come back down to test the strength of the line. So, let it break and shoot up, then let it fade back to the line and enter. This is how I try to enter these types of trades. Down side to this is if it does not fade back then you miss your entry.

I did not notice in my previous markup, but there is a support line which could have been drawn off a previous high.if I were trading I probably would have caught this and instead of placing the stop at BE it would have been placed 3 or 4 ticks below it. In which case the target would have been hit. Supports are excellent places to place stops.




This is not to say that these trades could have not been taken, but from a probability standpoint the risk is high IMO.

Robert

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  #13 (permalink)
Legendary Data Wizard!!!
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Here is my chart for the start of this week. A breakout above .3140 is a buy with a target of .3160. Breakdown below 3080 is a sell with a target of .3000

Robert

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FX Euro (-12 for the day)

Tried to place the bounce off the upper trend line channel but was stopped out -12. I got in to early and had my stop to tight.



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FX Euro -29 for the day

3 and out! Had my 3rd loss in a row today so I am done for the day. Commentary later.


nosce te ipsum

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Legendary Data Wizard!!!
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Silver Dragon View Post
FX Euro -29 for the day

3 and out! Had my 3rd loss in a row today so I am done for the day. Commentary later.


Where to start.... I did all sorts of things wrong today. First off I ignored my rule of taking a 10 minute break after a loss. Second I tried something new. Should have tried the something new on a sim account.

I missed a breakout above a support level which should have been my 1 and only trade today. I caught myself saying "I am not going to miss this breakout" on the second trade. This should have been my cue to stop trading. Emotion was clearly in charge at that point.

I did not use my 30 minute chart to determine the entry. If I had I would have not made any of those trades.

What I did right: At the end I put my emotions in check. After the 3rd loss I felt a bit of bitterness/ anger that I had been beaten but I acknowledged those emotions were there and moved on. Tomorrow is another day.

I did not chase the breakout that I missed. It can be demoralizing watch the price go to right where you thought it would and realize you did not profit from it. Chasing an entry is like chasing a bus; By the time you catch up to it is already at the next stop. Then it turns around and goes the other way.

Robert

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Silver Dragon View Post
Where to start.... I did all sorts of things wrong today. First off I ignored my rule of taking a 10 minute break after a loss. Second I tried something new. Should have tried the something new on a sim account.

I missed a breakout above a support level which should have been my 1 and only trade today. I caught myself saying "I am not going to miss this breakout" on the second trade. This should have been my cue to stop trading. Emotion was clearly in charge at that point.

I did not use my 30 minute chart to determine the entry. If I had I would have not made any of those trades.

What I did right: At the end I put my emotions in check. After the 3rd loss I felt a bit of bitterness/ anger that I had been beaten but I acknowledged those emotions were there and moved on. Tomorrow is another day.

I did not chase the breakout that I missed. It can be demoralizing watch the price go to right where you thought it would and realize you did not profit from it. Chasing an entry is like chasing a bus; By the time you catch up to it is already at the next stop. Then it turns around and goes the other way.

Robert

More thoughts on today:

I was unprepared for today. I had such a good week last week that my ego got the best of me. I forgot what my edge was. I went back to my old habits. Going forward I will have a daily ritual of re-reading my rules. In addition I need to remind myself what my edge is and how to use it. I will lay out a set of rules to review daily. Below is the start. I will add to it as I make more mistakes.

Rules for my edge:
  1. Use 30 minute chart to define entry.
  2. Use 5 minute chart to enter the trade.
  3. Exit trade based on support and resistance, trends and channels.
  4. Be cautious of range bound days.



Robert

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No trades today. I could not find a suitable entry. When I was looking at the 30 minute bars I realized what I didnt like about the charts; It was the long tails on the bars. These types of bars make it impossible to get a breakout without being stopped out.


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The last couple of days have been pretty much a was as far as my trading is concerned. To much other stuff going on. Had intentions of trading this morning but could not find the time to sit down and trade.

I did manage to get one trade in tonight. It was a high probability trade off a resistance. Price action was floundering around the resistance level.

Netted 6 ticks out of possible 8 at its lowest level.

Robert


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I took 4 trades today. 3 winners and 1 loser. +7 for the overnight session and today. -22 for the week.

Today I was focusing on a new entry signal which should produce more ticks. I missed 2 entries which would have netted a significant return today using the new entry signal. They are the large circles on the chart. There was some uncertainty about entering these trades. I think because this is something new.

I have been practicing in sim but there is nothing like risking real money on something your not totally sure of to cause a momentary hesitation. If you look at those 2 entries there was nearly no risk involved. Next week I am reducing my size to a mini lot to get comfortable with the entries. I did this with my previous setups to get over the hesitation of entries.

I went back over my trades over the last couple of weeks and discovered I am missing lot of movement during the day. The purpose of the new entry signal is capture some of those ticks and potentially big moves.

This weekend I am going to go download replay data from the springtime when I was not watching the markets and trade the new entry signal.

Even with a loss this week I feel very confident about my trading and my progress I am making. In the past I would have been damn near depressed about having a losing week but now I cant wait for next week to get here. I am pumped!

I also used to get a adrenaline rush during a trade but this has gone away. I am very calm while watching the trade. I am focused more on watching the bar movement and trades going through than anything else.

Its interesting to watch the bars and the trades. When trade is trying to break through a resistance or support there is little wiggle dance it does right before breaking through. Then it breaks through the line the same way someone would breakdown a door; it line gives way to the bar with a quick burst of acceleration then (most of the time) it pulls back a little to regain composure before it moves forward.

Failure to break the line has completely different move; it goes up and touches the line 3 or 4 times or more then just hangs in mid air waiting .. then under its own weight it collapses upon itself and goes the other way.

Being able to recognize these movements will give me an edge on getting more precise entries and tighter stops.


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You make your own opportunities in life.
Visit my futures io Trade Journal
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February 2, 2015


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