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Okay, folks. Here we go. I am committing to a futures.io (formerly BMT) journal with daily updates. Thanks for the forum, Mike. I’ve only been here a little while but have already learned a lot from many members and have followed every post on the EUR/USD thread.
Background
I made the first trade in my brand new $10,000 futures account on May 28th, 2012. Today, about 5 months later, I made my 115th trade in the account. Gross, I am up $705 but have paid $808.86 in fees so my account equity now sits at $9,896.14. This includes a really dumb $800 dollar order entry mistake as well. I would have loved to show a modest return at this point, however, I have learned a lot about the 6E market, trading, and myself over this time and am optimistic despite being essentially right where I started equity wise.
Even so, I find myself at a crossroads where I have gotten decent at not losing money but struggle to accumulate equity. After introspection and reviewing my trades and notes over the past five months, this journal marks the beginning of a renewed trading journey.
Purpose
It is my primary hope that this journal will hold me accountable to examine and document the reasons for every action I take so that I can learn and get better from my trades. If anyone is interested enough to follow along, welcome! I am excited about sharing under the comfort of internet anonymity and as a newbie only trading one contract have decided to also disclose my account equity. I hope that this is not in bad taste on futures.io (formerly BMT). Another hope I have for this journal is to provide myself with a sanity check by exposing my trading to a public audience. In that regard, I welcome any and all comments from what I have seen to be a very constructive and supportive group of traders.
Trading
I am going to trade the 6E from 3-7AM EST. I trade one contract and limit myself to one trade per day. As you will see, my approach is mostly discretionary. Though there are specific set ups and technical methodologies that I use, I am not going to define them here partly because I am allowing them to evolve over time and also because of the element of “feel”. There are no “if this happens, I enter 100% of the time” rules in my trading TODAY. Perhaps that will be the next phase of my journey after I get a handle on my personality issues and can examine what is actually working without having to wade through all the randomness. For now, I am working on improving patience and trade management.
You are way ahead of most prospective traders because it`s a substantial achievement not losing money after 115 trades. Believe me, if you are able to keep this behavior, you will be successful over some period of time as you get more experience.
The market sold off from R1 directly to the pivot without a pullback. The market has been consolidating and I figured that the probability of a bounce off the pivot was high. I just wasn’t sure how much of a bounce I would see. It could just bounce 6-10 ticks and sell through the pivot. Or it could retrace half way to R1 or farther.
I entered long right at the pivot (1.3044) and took 4 ticks of heat on the same move that I was filled on. Quickly my position bounced up and hovered in the +2 to +5 range for a few bars. I wanted to give it a chance to retrace the proceeding down move a little more, but the bounce had stalled and I started looking for an exit. I ended up getting filled a couple ticks off the recent high.
Evaluation:
Entry was questionable – I took the first thing that came along in the morning and although I had good reason to expect support at that level, the market could have easily just paused there and sold through my stop. Especially since London just opened and had been selling off hard, I kinda got lucky that I entered very close to the pull back.
Management of the trade was pretty good. I gave it a chance to run 15-20 ticks but took what I could get once my opinion on the trade changed.
The 6E traded in a 20 tick range from 3 to 6:30 and I sat patiently waiting for a compelling trade. I had it in my mind that the market was range bound and was looking for a move to an extreme resistance/support level (pivot/S1) so that I could fade the move. The low since Friday was 1.3019, equal to the daily S1. The break from the trading ranged happened to the downside and my buy order was triggered. I was looking to maybe take a little initial heat and then ride a move back to the prior trading range locking in profits around 1.35-1.40. Well, after a brief pause, the market blew through the s1/Friday’s low and stopped me out.
It’s disheartening to wait 3.5 hours for your entry price only to be out 12 ticks seven minutes later. But, time to learn from it and give it another go tomorrow. Looking back, I could have anticipated a stronger move after such prolonged consolidation and changed my opinion on the possible market action. At the least, I could have waited for price to react to the resistance level a little bit before fading the move. I have a FEAR of the market moving to the area I’m targeting and then quickly taking off without me. Of course in reality, the market usually gives me at least a couple chances to get in. To add further frustration, after getting stopped out a beautiful short set up as price pulled back right to the area of resistance/support that I had targeted for my long before selling off again. THAT is the trade I want.
LESSONS LEARNED
1) If fading the market, wait for price to confirm support/resistance
2) Constantly evaluate what market is telling you and be ready to change your view.
I forgot to screen cap the chart but will add it later tonight.
SteveH gave me a good book recommendation yesterday, but I was afraid to check into it because I KNOW that I am very susceptible to new ideas. I seem to trade like the last thing I read and feel that I need to develop my OWN approach instead of changing what I'm doing all the time.
However, after some quick research I noticed that it was very specific to what I was trying to do and could really help my trading. I will probably order the book soon, but even reading a few posts on the book and an except posted online changed the way that I traded today.
Instead of pulling up the 512 tick chart, I pulled up the 133 tick chart (smallest on TOS) out of curiosity. Suddenly I was seeing setups that I never would have seen before and found myself in active mode getting in and out of the market much quicker than I have been. Needless to say, I still am figuring out all this shit and it's awkward time to change approaches so often. On one hand, I'm looking forward to trying to shorten the time frame and go with more concrete set ups and less feel. But, on the other hand, I'm telling myself "hear I go again"
Trade Price Quantity Time Result
B 1.3024 1 5:40:40 AM -6
S 1.3018 1 5:48:21 AM
S 1.3015 1 5:57:29 AM -4
B 1.3019 1 6:01:33 AM
S 1.3012 1 6:29:53 AM +9
B 1.3003 1 6:16:32 AM
S 1.2998 1 6:07:44 AM -5
B 1.3003 1 6:16:32 AM
S 1.2962 2 11:14:00 AM +20
B 1.2952 2 11:25:58 AM
I slept in today (booted up around 5:30) but had the morning off of work so was still able to put in some solid screen time. Had a couple sloppy scalp attempts to start the day (There is something about the first 10 minutes of trading that makes me see things that aren’t there) . Then, one of my favorite set ups - a decisive move through a pivot level and a pull back to it. It was working out and I tried to hit a home run by pyramiding into it with another contract. But, with my cost basis averaged down on the short I got pretty cheap with the stop and tightened up too much.
Ended the day with a nice break out short. I used a tighter stop that usual and went with 2 contracts instead of my normal 1. Since I started trading 5 months ago I’ve defined myself as a “1 contract trader” due to my experience level and account equity. But, I may need to develop a comfort level with multiple contracts if I do add trades with smaller stops and targets.
Trade #1
I saw a head and shoulder formation developing and when price spiked down, I went short anticipating that the most recent high would stand as the second shoulder. I used two contracts and really didn't like my emotional state during this trade. The total risk is acceptable (MAX loss), but I'm not used to watching my profit/loss fluctuate that quick and I really had to fight myself not get out of the trade early or put my stop loss too close. For the rest of the morning, I went back to one contract. +20 on this one.
Trade #2
Usually, I am not emotionally ready to get back in after a big trade. Actually, after my 20 tick profit, I was considering just closing down so I could secure a profitable week. Buuut, I noticed a set up forming before I had the chance to close the window. I had just covered my short and price froze with five consecutive bars having the same low. Price was screaming at me that it wanted to continue the down move, so when it made a new low I went in. Market didn't make me sweat this one too much and hit my target on the next move down. Aren't these emotionally easy trades, great? +10
Trade #3
The same move from trade #2 went down one tick shy of the daily S1 and bounced. Went back down to the spot and bounced again, but couldn’t make a new swing high or challenge the 20EMA. At this point, I am anticipating that price will consolidate around the daily s1 before continuing the down trend. Once price broke to new lows I entered a short. Bulls tried to battle but couldn't win against the recent high. Plus, they had to deal with round number resistance at the 0020 level and the magnetic pull of 2900. +10
Charts are attached. Sorry for the crude MS paint markings! Blue = buy. Yellow = sell.
No doubt a fantastic week for me on the P/L. Second best all time out of 22. But, the four prior weeks were all negative and my account equity is still in the same range of +/- 5% that it has always been. I've had good weeks before only to give back. Next week will be a challenge to keep going in the right direction. And, I’m glad that my “big” day came on a Friday so I get off my emotional high before trading again.
Observations from this week:
Blindly buying or selling a pivot/R1/S1 and hoping for a bounce is not a viable strategy.
Pretty excited to get Bob Volman’s book. I’ve already modified my trading based on publically available information. He has validated what I already felt and I hope it will continue to help me trust in my trading as well as help me define and identify specific trading setups.
I like having a fixed 10 tick target (like Volman). It narrows down the things I have to think about to 1)when do I take a trade? and 2) Once in a trade, at what price would my thesis be proven incorrect (placing, moving stop).
My setup going into next week is trading the 6E 133 tic chart with 7 tick stop and 10 tick target with only the 20EMA, Pivot, R1, and S1 on the chart. Default trade is 1 contact, but can trade 2 (all in, all out) if I think set up is exceptional.
Since moving to smaller chart (512 to 133), I am scrapping my one trade per day rule (if you haven’t already noticed). I put that in place to teach myself patience, but the constraint became a mental distraction when looking for trades.
Engaging the community at BTM is way way way more helpful than lurking and reading about other people’s trades. It is early in my journal, but I do recommend it to anybody reading this. Don’t be afraid to put yourself out there.
