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Swing Trading Futures

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  #1 (permalink)
karoshiman
Munich, Germany
 
 
Posts: 285 since Apr 2012
Thanks: 121 given, 117 received

Watch out: TLDR material


Hi,

After being around for a while on this forum without any major contribution I thought I could share a little bit of my
journey as a trader and exchange some information with other traders about swing trade ideas for the futures markets.

Your own ideas are more than welcome in this thread as I'm always interested to see further potential opportunities.

But let's first give briefly some background info on my path as a discretionary trader.

After losing a lot of money through intra-day trading (winning periods of 2-3 months interrupted by major blow outs), I
came to the conclusion that intra-day trading is not the right way to go as a retail trader. You might think that my
psychology was the issue here, but I'm sure it's the method which led to my emotional response every 2-3 months - proof
for that is that I do not have that problem when swing trading. Anyway, I believe that intra-day price movements are
largely random; hence, the edge - if one is able to develop one - is very small in my opinion for retail traders (now, that
will provoke one or two traders here, I guess... ;-) ).

Just to be clear, there are for sure excellent traders out there making good amounts of money by trading short-term order flow
or similar. However, those who are able to do that year after year after year - and especially when they approach their
late thirties or fourties - are for sure one in a million.

If you are one of them, good for you! If not, maybe you should try something different...

In contrast to intra-day trading, I am certain that most people can learn and master swing trading strategies - i.e. trading
higher time frames for larger movements - as this is a totally different animal. It is a lot less stressful than intra-day
trading and requires a different skill set. Also, it is possible to have a day job and earn extra money on the side with
swing trading, something that is impossible with intra-day trading. That way, you can reach your financial goals much faster,
than with only one income stream.

Anyway, before elaborating more on the pro's and con's of intra-day versus swing trading, let's get down to business.

My discretionary swing trading strategy is based on classical chart patterns and I look only at price development (sometimes
I take some clues from volume development as well, but that is more secondary), no fundamentals, no fancy stuff.
I hold positions from one day to several months, depending on the situation.

I try to look at various futures markets to generate trade ideas with no preference for any particular contract.

I use fairly wide stops. In order to be able to do this, you have to be well capitalized. There is no way this
strategy will work for you, if you have only USD 5,000 in you account and plan to hold a position requiring USD 3,000 overnight
margin. This would kill you very soon. If you do not have enough money for this, paper trade, earn money somewhere else
in the meantime and come back later to trade with real money if you have enough available.

Furthermore, please note that I might change my mind on a scenario (and my position!) fairly quickly. So, if you plan to follow
any of these ideas, please be aware of that. I try to post any changes of my position in time, but can not guarantee that.

Finally, I do not know whether exposing myself and my trade ideas in such forum will harm my performance. But we will see.

In the next posts I will explain my current trade ideas. The first two are ideas where I already have a position in, the
third one is a breakout I'm waiting for to occur.

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  #3 (permalink)
karoshiman
Munich, Germany
 
 
Posts: 285 since Apr 2012
Thanks: 121 given, 117 received


The trades I am currently in are:

- LONG silver from USD 33.14 (mini-sized December contract)

- LONG crude oil from USD 87.50 (mini-sized January contract)


Note: Sorry, for the "cheap" charts, but currently I have only access to my tradestation platform every 2-3 weeks (I'm on a project
outside my home town). As I do not use any fancy indicators or automated system, I use barchart.com for my analysis, which is fully sufficient, and
place my trades through the webtrading application of tradestation. This is all very rudimentary, but it works. I choose to post my ideas
now with these charts instead of waiting and posting the nicer looking charts, as timing is critical in this business. Will try to post
tradestation (TS) charts whenever possible. I take screenshots of my TS charts with me for reference during the weeks when I have no access to TS.
Hence, my reference below to the TS charts.



Here is the rationale and the parameters for the LONG silver position:

After developing a major pennant in 2011 and until the summer of 2012, the breakout out of the pennant occurred in September at about $31.
Usually the price move leading to the pennant is copied from the breakout point. This would lead to a target of about $60.

After a move to about $35 price retraced to around $31 where it was "defended". I entered slightly above that level and
plan to sell 50% of my position at around $38-40 and keep the rest until $60 is reached or a reversal pattern occurs.

My stop is at $33.13. I will flip my position with 50% of my original position if that level is reached - with the new target
being $30.

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  #4 (permalink)
karoshiman
Munich, Germany
 
 
Posts: 285 since Apr 2012
Thanks: 121 given, 117 received

Here is the rationale and the parameters for the LONG crude oil position:


That trade is a bit unusual for me, as it is somewhat "experimental". I could not find anything really helpful in the monthly
or weekly charts - which I like to do first before moving to the daily charts. However, I saw this small rounding bottom on
the daily chart which got my attention.

Price tried to break to the upside twice in that pattern but moved back to continue with the rounding pattern. I took my
chance at $87.50 with a LONG position and expect a breakout of this pattern on "short notice" with a move to around $95.
I will sell 50% of my position there and keep the rest until $105 is reached or I'm stopped out (will adjust my stop level
when $95 is reached). The $105 is derived from the trend line shown in the weekly chart.

My current stop is at $86.275 and I will flip my position, when that stop is hit -> new target then: $80.


Note: Beware of the back-adjustment of the continuous contract. This one looks different when I apply my standard back-
adjustment procedure on my tradestation platform (i.e. no rectangle there, but declining upper trend line). Hence, the $105
target, instead of $110.

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  #5 (permalink)
karoshiman
Munich, Germany
 
 
Posts: 285 since Apr 2012
Thanks: 121 given, 117 received

What I'm currently watching:

BREAKOUT out of the trend channel in Wheat

Burned my fingers already a few times on this one, as I've incurred some losses earlier due to fake breakouts (or premature activity by me ). Now waiting for a clear move outside of the trend channel before taking any trade.

Upside target: $1,200

Downside target: $600

Note: Beware of the back-adjustment of the continuous contract. This one looks different when I apply my standard back-adjustment procedure on my tradestation platform (i.e. no rounding bottom there, but declining lower trend line). Hence, the $600 target for the short setup, instead of something like $700. I will provide my respective TS charts on this one later.

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  #6 (permalink)
karoshiman
Munich, Germany
 
 
Posts: 285 since Apr 2012
Thanks: 121 given, 117 received

New trade:

LONG Soybean (mini-sized Jan 2013) @ 1446.44


Price broke out of a huge triangle - which started in 2008 - in 2012 and retraced to the upper boundary of that triangle (see notes in previous posts on back-adjustment - ascending triangle on TS charts instead of symmetrical one). Now, on the weekly the picture looks a bit different - and that's why this is a risky trade. On the weekly, a small Head & Shoulder has been formed with a break of the neckline (disregard the "potential" in the text box of the pic - was too lazy to change it ). However, the neckline of that H&S was pierced yesterday again from the downside. Hence, my bet on a continuation of the move upward.

Interestingly, a further bigger H&S formation could form in my LONG scenario. The left shoulder and the head are visible, but the right shoulder has yet to be formed.

Target: around $1,600

Stop: $1,370

Overall, watching different markets now in the last few weeks I saw some correlation between different instruments. From my perspective the next 2-3 weeks are crucial for the general market direction. This relates for instance to this trade but also for the S&P or Nasdaq. Do we get the next strong upmove or the final break down? The next few weeks will probably give an answer to that.

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  #7 (permalink)
karoshiman
Munich, Germany
 
 
Posts: 285 since Apr 2012
Thanks: 121 given, 117 received

UPDATE:

Not yet out of Crude Oil. Moved my stop to $85.70 (yes, I do that sometimes). But it's still possible that I get out before that level, if overall market does not look healthy.

Today might be the day of the breakout either way...

UPDATE 2:

Out of Crude Oil at $86.10. Short now from $85.65 but not yet sure whether this is going to turn up again. Stop for the short at $86.30. Going long again, if $87 is hit.

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  #8 (permalink)
karoshiman
Munich, Germany
 
 
Posts: 285 since Apr 2012
Thanks: 121 given, 117 received

Stopped out of my Silver position at the pre-determined level.

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  #9 (permalink)
karoshiman
Munich, Germany
 
 
Posts: 285 since Apr 2012
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What a day...

Out of my Crude Oil short with a loss. Now long from 86.30. Will add if price breaches 87.

Re-entered silver long at 33.41.

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  #10 (permalink)
karoshiman
Munich, Germany
 
 
Posts: 285 since Apr 2012
Thanks: 121 given, 117 received


My long scenarios are still intact. Price tested previous resistance levels and bounced back. Should have had my stops below that levels. Learning point for next time.

Summary of current positions:

QM (mini-sized Crude Oil, Jan. contract):
LONG from 86.30 (will add if price breaches 87.60)
Stop: below 85


YI (mini-sized Silver, Dec. contract):
LONG from 33.52
Stop: below 32.90


YK (mini-sized Soybeans, Jan. contract):
Long from 1446.44
Stop: 1370

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  #11 (permalink)
 djkiwi 
Mercer Island WA
 
Experience: Advanced
Platform: Ninjatrader/Strategy Desk
Broker: Various
Trading: TF/NQ/ES/Stocks
 
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Posts: 561 since May 2010
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@karoshiman. Nice journal


karoshiman View Post
Watch out: TLDR material
I came to the conclusion that intra-day trading is not the right way to go as a retail trader. Anyway, I believe that intra-day price movements are
largely random; hence, the edge - if one is able to develop one - is very small in my opinion for retail traders (now, that
will provoke one or two traders here, I guess... ;-) ).

Agree 100% with this statement. There are other points as well. Firstly, there are 20 year + veterans who will wipe the floor with even advanced retail traders. Secondly, algos are increasing their presence on the day trading time frame. Thirdly, transactions costs can quickly remove that small edge you mention. Put all these together and the retail trader has a very difficult challenge particularly trading instruments with a high level of commercial participation like the ES.


Quoting 
In contrast to intra-day trading, I am certain that most people can learn and master swing trading strategies - i.e. trading
higher time frames for larger movements - as this is a totally different animal. It is a lot less stressful than intra-day
trading and requires a different skill set. Also, it is possible to have a day job and earn extra money on the side with
swing trading, something that is impossible with intra-day trading. That way, you can reach your financial goals much faster,
than with only one income stream.

Agree 100% with these statements.



Quoting 
I try to look at various futures markets to generate trade ideas with no preference for any particular contract.

Agree 100% with this approach and can provide a fairly good edge. What I've come to realize is all instruments move to the same destination. The only difference is some get there faster than others.


Quoting 
I use fairly wide stops. In order to be able to do this, you have to be well capitalized. There is no way this
strategy will work for you, if you have only USD 5,000 in you account and plan to hold a position requiring USD 3,000 overnight
margin. This would kill you very soon. If you do not have enough money for this, paper trade, earn money somewhere else
in the meantime and come back later to trade with real money if you have enough available.

Agree 100% with these points as well. My opinion is futures are less risky than stocks provided leverage is removed from the equation. Why? Because there is very limited gap risk on futures.

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karoshiman
Munich, Germany
 
 
Posts: 285 since Apr 2012
Thanks: 121 given, 117 received


djkiwi View Post
@karoshiman. Nice journal



Thanks!



djkiwi View Post

...

Agree 100% with this approach and can provide a fairly good edge. What I've come to realize is all instruments move to the same destination. The only difference is some get there faster than others.


Are you referring to correlation between instruments? I've observed this as well. Although, the last days/weeks wheat futures behaved in the exact opposite way than the rest of the markets I'm looking at.



djkiwi View Post

Agree 100% with these points as well. My opinion is futures are less risky than stocks provided leverage is removed from the equation. Why? Because there is very limited gap risk on futures.


Exactly! I've read now several times about the "unlimited" risk of futures trading. Of course, there is the risk of a major crash which happens over the weekend, so that your stops don't take you out at the right level. But even then, if you are well capitalized this should not wipe you out completely. In case of crashes during the week your stops should still take you out at the right level. Even the "flash crash" took 15 minutes or so. I was not involved in the markets back then, but I would assume that you could still get out without major slippage in such situation as a retail trader (might be different, if you have 50,000 ES contracts on your books).

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  #13 (permalink)
karoshiman
Munich, Germany
 
 
Posts: 285 since Apr 2012
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Added to my positions:

QM now LONG from 87.18

YI now LONG from 33.56

No change in YK
(still LONG from 1446.44)

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  #14 (permalink)
 Silvester17 
Market Wizard
Columbus, OH
 
Experience: None
Platform: NT 8, TOS
Trading: ES
 
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karoshiman View Post

I've read now several times about the "unlimited" risk of futures trading. Of course, there is the risk of a major crash which happens over the weekend, so that your stops don't take you out at the right level. But even then, if you are well capitalized this should not wipe you out completely. In case of crashes during the week your stops should still take you out at the right level. Even the "flash crash" took 15 minutes or so. I was not involved in the markets back then, but I would assume that you could still get out without major slippage in such situation as a retail trader (might be different, if you have 50,000 ES contracts on your books).

first thank you for your journal. and second this is not a critique. just some thoughts.

depending what kind of crash there's while the market is closed, even if you're well capitalized, it can hurt you very badly. so at least be aware of the size you're trading. I wasn't in a trade during the flash crash, but there's no doubt in my mind you would have suffered major slippage. of course that would apply to day trading as well.

my point is if you're not hedging, it's not justified for a retail trader to swing trade futures (especially for newer traders), because of the risk. there's plenty of other instruments like options, etf etc which are more suited for swing trading.

of course this is just imho, and I do realize many will disagree.

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 djkiwi 
Mercer Island WA
 
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Quoting 

Are you referring to correlation between instruments? I've observed this as well. Although, the last days/weeks wheat futures behaved in the exact opposite way than the rest of the markets I'm looking at.

Actually, I'm referring to specific swing analyses. For example, the following post discusses ES. The analysis is virtually the same for oil in that the swing sizes are virtually the same. The difference being oil has many more swings. Basically what this means is I'm setting the same swing targets for oil and ES but I expect oil to get there much faster.




Quoting 
Exactly! I've read now several times about the "unlimited" risk of futures trading. Of course, there is the risk of a major crash which happens over the weekend, so that your stops don't take you out at the right level. But even then, if you are well capitalized this should not wipe you out completely. In case of crashes during the week your stops should still take you out at the right level. Even the "flash crash" took 15 minutes or so. I was not involved in the markets back then, but I would assume that you could still get out without major slippage in such situation as a retail trader (might be different, if you have 50,000 ES contracts on your books).

The "unlimited risk" relates simply to money management. Anyone who continues to defy even the most basic position size logic deserves to have their heads handed to them in my opinion.

The other big mistake traders make is scalping for 5 or so ticks with tiny stops because that's all they can afford. Often what ends up happening is they blow through $5k, lose that, save another $5k, lose that and rinse repeat. What happens is they lose $50k in quick succession. The alternative would have been to papertrade for 12 months, then they would have $50k, more experienced and better capitalized.

Cheers
DJ

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  #16 (permalink)
 djkiwi 
Mercer Island WA
 
Experience: Advanced
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Quoting 
depending what kind of crash there's while the market is closed, even if you're well capitalized, it can hurt you very badly. so at least be aware of the size you're trading. I wasn't in a trade during the flash crash, but there's no doubt in my mind you would have suffered major slippage. of course that would apply to day trading as well.

@Silvester17

Actually, I think this is only partially true. If you were in a stock position with a crash overnight you are screwed because your stop is at market and you are stopped out on open. I've suffered some horrific losses over the years due to overnight gap events.

With futures your major gap event is really the weekend. So even though you may incur slippage overnight at least you can get out of the trade if you wish. One thing I enjoy about futures is waking up in the morning and looking to see whether overnight I've been stopped out of a position or preferably my targets reached. This gives me much more control and much less risk over the trade than individual swing stock plays.

The point you make is size/leverage. Remove leverage from the equation and futures risk reduces considerably. My personal view is an account size of a minimum of $250,000 is required to trade futures. Futures trading, like any business, if you are under-capitalized and hit a rough patch you will probably go under. People trading with $10k or less really have no hope in this game.

This means the trader can fully collateralize his positions effectively removing leverage from the equation. For example if you trade the TF with a $250k account you can trade 3 contracts (~$80k per contract x 3) = $240,000. Use the minimum amount of cash to fulfill margin requirements and then use the rest of the $250k in your equities portfolio. As your equities portfolio increases or decreases then the number of contracts increases or decreases.

If the futures account increases then transfer the cash profits to the equities account. So this means you are only ever trading with what you own.

Cheers
DJ

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karoshiman
Munich, Germany
 
 
Posts: 285 since Apr 2012
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Got stopped out of my YI position. Think silver will consolidate first before moving up (see chart).

New trade: Natural Gas

Price broke upward trendline & last swing low on Friday. Got short at 3.600. Target below 3.200.

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karoshiman
Munich, Germany
 
 
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Stopped out of QM as well. Trying a short from 87.80. The long scenario is not valid anymore. Price needs to go above 90 in order for the long scenario to play out.

Various markets are taking a dive today.

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karoshiman
Munich, Germany
 
 
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Shorted NQ at 2669 (March contract). Break of upward trend line yesterday.

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karoshiman
Munich, Germany
 
 
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karoshiman View Post
Shorted NQ at 2669 (March contract). Break of upward trend line yesterday.

Took part of my profits at 2634.

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  #21 (permalink)
karoshiman
Munich, Germany
 
 
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Out of my short NG position at 3.65. Watching closely whether to re-short or go long. Went long at 3.65... risky business.

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karoshiman
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Took part of my profits at 2634.

Sold remaining at 2652.

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karoshiman
Munich, Germany
 
 
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Reduced short exposure in QM at 88.225.

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karoshiman
Munich, Germany
 
 
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Covered my NG long with a profit of 0.041, wait for further signal. Difficult market environment these days... cannot tell whether its a bull or bear market...

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karoshiman
Munich, Germany
 
 
Posts: 285 since Apr 2012
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Shorted ES at 1398.50. Similar trade as with NQ yesterday. Will be a quick trade only.

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karoshiman
Munich, Germany
 
 
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Went LONG again in NG at 3.742. The long scenario seems to play out (see chart). Will add on pull back.

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karoshiman
Munich, Germany
 
 
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Shorted ES at 1398.50. Similar trade as with NQ yesterday. Will be a quick trade only.

Out of my ES at 1403, trade was premature.

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karoshiman
Munich, Germany
 
 
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I don't watch news - let alone trade it - just saw the jump in NG up and the break down of QM... natural gas storage change with a downward surprise... good to be long NG and short QM ... but we'll have to see whether this is only a short spike...

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SteveH
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As your journal develops, I think it will show that trading results are just as fractal as the price patterns/action between the various timeframes are. While your perception that multi-day trading of futures is far more plausible (by you) vs your opinion that intraday trading of them is virtually impractical for the at-homer, that perception cannot hold because there is nothing "there" in a longer timeframe which has any added benefit from a risk/reward ratio and winning pct relationship.

Your results are only magnified in the interday. Your wins are typically larger as well as your stops having to be wider to compensate. As your reward to risk taken increases so must your winning pct decrease and vice verse. This mathematical relationship is inescapable in trading (i.e., timeframe independent).

The KEY to success in intraday or interday futures trading is having the ability to first get the context of the trade right (up, down, sideways) and the degree of volatility in which this occurs relative to experience of what is considered "typical/normall" for the contract. When you get that right, only then can any edge play out "like a casino".

This is a very long-winded way of saying you have far more time on your hands with interday trading to make a correct guess at the context part of the trade (before risk is even taken). It instills confidence in your decisions and resolve. If your trading techniques have an edge to begin with, THIS is why you perceive that intraday trading is the road to ruin while interday trading is the road to riches (for you).

Whichever timeframe one chooses, I would submit that once the context picking skills are good, it's easier to win with lower winning pcts (40%-55%) in the long-term because that is closer to the game under which institutions play. When a game drops below 50/50, it sparks emotions in at-homers that the game is possibly failing. It leads to wider stops which ruins the edge (lower winning pct trading methodologies require *tighter* stops!).

Good luck in your trading!

[Just observations of 9.5 years at intraday futues trading. I don't think I could have lasted this long if these opinions were way off-base as I am 100% confident I have no special trading talents. Because I don't consider cutting losses short a "talent". It's only common sense.]

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karoshiman
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SteveH View Post

....


Hi Steve,

Very good points you mention there and very well written!

I agree 100% that context picking skills are the key to success in this game, irrespective of the time frame.

I can follow your point that trading results are fractal from a mathematical standpoint. However, commissions and the spread you pay for each trade are a big issue in intraday trading. Or to put it differently, your risk/reward and/or win percentage have to be relatively higher in intraday trading to compensate for the higher costs per trade. This is often overlooked but a major factor IMO. Of course, it is possible that this could be compensated by more opportunities for profitable trades compared to swing trading, if you are able to take all these opportunities (without overtrading!). As far as I understood you, the latter is what you mean by having "more time on your hands with interday trading". Maybe this evens out the two games - if you take all opportunities in intraday trading. In swing trading it's a lot easier to take every opportunity as you are not dependent on sitting in front of the screen all the time. But at the end it's difficult "to prove" which one is superior to the other as other aspects play an important role as well.

From my point of view, the decision whether to trade intraday or swing trade is less a matter of mathematics, but more a matter of personality.

For me personally, it's a lot easier to operate in the context of higher time frames, as I like to take my time to think about a situation. I get also distracted by price "moving so fast" when I watch anything less than 4h time frames. So, at the end one has to consider these soft facts as well in their search for a trading methodology.

One other aspect a beginning trader should think about is, that it's potentially easier for some people to develop the context picking skill on larger time frames first before moving to smaller time frames (like learning to drive the car on a calm street first before trying the express highway (or car racing ;-) )).

How did you start your career in intraday trading and in particular your training? Did you do it for an institution first or as an at-homer right from the start?

Regards,
k

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 djkiwi 
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SteveH View Post
Whichever timeframe one chooses, I would submit that once the context picking skills are good, it's easier to win with lower winning pcts (40%-55%) in the long-term because that is closer to the game under which institutions play. When a game drops below 50/50, it sparks emotions in at-homers that the game is possibly failing. It leads to wider stops which ruins the edge (lower winning pct trading methodologies require *tighter* stops!).

@SteveH. Great post. I entirely agree with the part above. As K rightly pointed out transaction costs dramatically affect intraday trader bottom lines to a point that the edge must be significant to turn a profit. My estimate is on average intraday traders need their winning % to be 60% to cover these transaction costs. Intraday scalpers can be upward of 70%. As a swing trader I'm sitting at 1-2% which straight off the bat gives me an advantage.

The other point is the smaller the timeframe the fiercer the competition. It's easier to be gamed, statistical probabilities become within the reach of advanced algos and you are playing in the pool with sharks who have been trading professionally in the intraday timeframe for 20+ years.

Cheers
DJ

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karoshiman
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Been out of my QMF short at 86.40 with a profit and wait now for the big move. So far (i.e. since the beginning of this thread) my QM trades are about breakeven due to the stupid flipping at the beginning. Waiting for the big move to overcompensate that.

I am flat NGH too and not so sure anymore about my long scenario. The next two weeks will be crucial for the mid-term direction. Had my largest losses so far in NG and wait for the big move here as well similar to QM.

By the way, my Soybean trade is my best one so far (and the only one where I have been right, right from the start). Still long here. Will add on pull-backs.

On Silver waiting for consolidation to finish. No position currently.

EDIT: Trying a short in NGH at 3.508. Looks like my original scenario (break of trend line) is playing out.

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karoshiman
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Short now again QM (QMH) at 86.625.

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karoshiman
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Shorted Wheat at 813.5 (March contract). Breakout of channel occurred.

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karoshiman
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Went long NQ March ctrct at 2690.50 based on reverse H&S. Same on ES, but trade more attract. on NQ

Target on ES March ctrct is 1505

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karoshiman
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Out of my QM short with a loss at 88.15 (March ctrct). Wait for further development.

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karoshiman
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Out of my NQ longs from earlier today with a loss at 2675 (March). Did not feel right. Will re-enter if high of week is pierced again.

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karoshiman
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Went short in Sugar at 18.46. Breakout of pennant on weekly chart.

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karoshiman
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Long silver at 32.32 (March) near upward trend line on weekly chart

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karoshiman
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Took part of my profits in NG (March) at 3.357. Let the rest run. Will see lower prices in the next weeks.

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karoshiman
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Long in ED March at 99.715. Breakout of rectangle

Out of my ED position at breakeven. Will get more bang for my $ in my other existing positions by adding to them, probably today.

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 Fourwedge 
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karoshiman View Post
Shorted Wheat at 813.5 (March contract). Breakout of channel occurred.

I have recently switched from day trading stocks to swing trading them instead. In the last 10 days I have gained back all the money I lost in the previous 2 months. And yes it is much less stressful for me.

I trade channel breakouts similar to the one you have posted here. I have yet to try futures. I believe I am under funded with just shy of 100k. And I don't really want to use margin.

Thanks, I'll be following your thread
Fourwedge

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karoshiman
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Fourwedge View Post
I have recently switched from day trading stocks to swing trading them instead. In the last 10 days I have gained back all the money I lost in the previous 2 months. And yes it is much less stressful for me.

I trade channel breakouts similar to the one you have posted here. I have yet to try futures. I believe I am under funded with just shy of 100k. And I don't really want to use margin.

Thanks, I'll be following your thread
Fourwedge


Hi Fourwedge,

Thank you! I appreciate your message a lot. Actually, I was just asking myself this week how many of those visiting this thread are "repeat customers". Glad, that there is some interest in my short comments on my positions

I like your conservative view re. margin, although I am not as conservative. With about 100k in your account you could start trading 1-2 contracts depending on what you want to trade (e.g. 1 ES contract with appr. 70k in market value). However, you would not be able to trade multiple positions at the same time with the 100k without any leverage.

Congrats to your gains in the last 10 days! That's a good start!

BR,
k

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SteveH
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How did you start your career in intraday trading and in particular your training? Did you do it for an institution first or as an at-homer right from the start?

VERY typical start. No clue what to do. Read a lot of books on trading, thinking that more knowledge keeps one from repeating most of the warnings of the authors of what not to do (hah!)

First 6 months:

Looked for a mentor. Paid mentor money to trade alongside his entries and exits. Mentor wouldn't give his edge so, eventually, I didn't trust his calls as I couldn't independently research his edge. Too many perfect entries I didn't catch with limit orders which HE did (getting buys on bids and sells on ask far too often) and stop-outs which I experienced but HE didn't. Occam's Razor "told" me to end this quickly. Only positives learned were not to chase and always cut losses quicky (so, not a total loss for the experience).

Next 6 months:

Looked for a group of traders online for support using a free method and well-defined edges which I could test. Next problem learned....crowd mentality of following a well-liked leader leads to emotional biases. That is, EVERYONE was blaming themselves for inconsistent results yet avoiding the obvious: there was no edge to begin with! (Occam's Razor strikes again!)

Both experiences were the same in that I had no idea what anyone elses real brokerage statement looked like but mine. The mentor ran a service and posted every entry / exit he made, right down to the transaction fees. Funny how he acted offended if you ever wanted to "see the blotter".

Afterward:

Went into hermit mode. Traded alone. Learned from my mistakes. Do the OPPOSITE of what the majority of at-home traders want to do:

1. Have higher winning pcts AND higher reward to risk ratios (No! Inverse relationship in trading). The edges are found by accepting the correct relationship first and foremost.

2. NEVER start with you largest size and peel off contracts/shares as the trade goes your way. Either go all-in/all-out or add to a winning position *within the same price leg* (e.g.,, most people think the way to add best is on pullbacks like the start of wave 1, 3 and 5 and "suffer" the wave 2 and 4 pullbacks with the already accumulated position...nope...for me, it's 3 seperate trades...add during wave 1, go all-out...add during wave 3, go all-out...add during wave 5, go all-out.) [Just a simple mental picture to get the point across. I don't use wave theory in trading]

3. Use the computer to its best advantage. It's faster and more accurate at entering a trade once you give it "permission" (correct context) to take an upcoming entry. Let the MFE / MAE research play out. [I count this as an opposite because on the intraday charts, below 5 mins, there are real-time trades to take which are not humanly possible due to slowness of reaction time.]

The "Short tern TF trading" journal here shows that frequency of trading opportunities taken in the proper context (enough of the time) does overcome the necessary added transaction fees. He is doing everything by hand so two hours of trading for him IS stressful and it shows. Also, he's a very young man and that is typical of youth (to take on more stress than is really required). However, he is clearly showing my same experience that thriving at 40%-55% winning pct levels (ranging long-term) is very doable.

I was attracted to the "Weekly Option Trader" journal this past summer because I was comparing his entries with my own for a fairly mechanical system of entry. He has gotten his charts now to be as simple as possible from then and it's an even easier compare. I, too, have a system that trades on brain-dead candle color changing entries entered automatically when I like the context and it works even on a 72 tick CL chart...exciting (to me) when you consider that accuracy by real-time buy/sell mouse clicks would most likely ruin the edge.

[Note: I was "banished" from continued posting there because I guess my "800 lb gorilla comment" hit on a final nerve after a previous reminder hit a first nerve that trading 10 PCLN weekly option contracts with a 60 cent spread can cost you $1200 of rountrip slippage. Notice how the most recent kind request by someone for "the details" of the latest pic renderings went unanswered...Lots of pretty pics though!]

I'm just an at-homer and always will be. All I care about is self-sufficency, regardless of my success, not "managing" OPM. It's still the Wild West out there. If you allow someone else to trade your money, then you had better imagine what it's like to never see it again. The older you become, the more you see and the more you will accept that Occam's Razor will save you from a LOT of very bad decisions.

My formal education is two Computer Science degrees and one undergrad degree in Statistics. I got laid off in 2003 (many jobs prior, lots of experience in my field) and, instead of finding another programming job, I decided to give trading a try. It's been an interesting experience to say the least.

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karoshiman
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SteveH View Post

....


Thanks for your post, Steve! And a very impressing story! Getting laid off, giving trading a try and now in the game for more than 9 years...



SteveH View Post

....

2. NEVER start with you largest size and peel off contracts/shares as the trade goes your way. Either go all-in/all-out or add to a winning position *within the same price leg* (e.g.,, most people think the way to add best is on pullbacks like the start of wave 1, 3 and 5 and "suffer" the wave 2 and 4 pullbacks with the already accumulated position...nope...for me, it's 3 seperate trades...add during wave 1, go all-out...add during wave 3, go all-out...add during wave 5, go all-out.) [Just a simple mental picture to get the point across. I don't use wave theory in trading]

...

I think about this from time to time when in a trade and whether I should try this. However, from my point of view it is difficult to "know", when these pullbacks are, how far they go or if they occur at all.



SteveH View Post

The "Short tern TF trading" journal here shows that frequency of trading opportunities taken in the proper context (enough of the time) does overcome the necessary added transaction fees.


LOL... yeah... I have to admit that I throw in - once in a while - some very quick trades. Guess, my style is somewhat of a mix between swing (see my soybean trade, where I'm still in) and short term (like my NQ trades recently). But the short term trades happen usually due to "unexpected" behavior of price, i.e. I see a larger than expected risk that my original scenario does not play out and I get out in order to reduce my risk. I can get in at a later point or at a worse price when I'm more certain about the scenario. Of course, "I'm giving up" on parts of the movement, but this is for me the price of reducing risk I am willing to pay.

So, all in all, the objective of my trading is to have these positions which take from several days to maybe weeks. However, the short term fluctuations can lead to premature exits (with a profit or a loss) when I am not so sure anymore about my original scenario. That's what I've meant at the beginning of this thread, with "changing my mind very quickly".



SteveH View Post

He is doing everything by hand so two hours of trading for him IS stressful and it shows.

I'm not sure where you derive this from.

Anyway, I did not say that I do not have any stress in trading the way I do it now. I said "It is a lot LESS stressful than intra-day trading". That's a difference.

I have stress, of course, when I enter a trade and prices are going nowhere for several days. I do get impatient in these cases.

And "doing everything by hand" and "two hours of trading" does not paint the right picture of my trading style, IMO. Sounds like I'm doing scalping in and out on a permanent basis for 2 hours, which is really not the case.



SteveH View Post

Also, he's a very young man and that is typical of youth (to take on more stress than is really required).

Thanks for the "young". I'm around 40, which is "old enough" to like your comment

"to take on more stress than is really required" -> To what are you referring here? Also, I am always interested to learn how I can optimize my trading further. So, any suggestions are welcome!



SteveH View Post

However, he is clearly showing my same experience that thriving at 40%-55% winning pct levels (ranging long-term) is very doable.


I'm glad I'm already winning laurels for my trading after only about 2-3 weeks. However, maybe we should take a longer-term view on this.

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karoshiman
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Went long in Frozen Orange Juice at 136.80 (March). Trend channel breakout.

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karoshiman
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Went short in Sugar at 18.46. Breakout of pennant on weekly chart.

I'm betting against Peter Brandt here

He just tweeted his long bias in Sugar (see chart).

I saw this wedge on the daily as well, but obviously weighted the longer-term view with the pennant breakout more. Gonna be interesting...

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karoshiman
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Out of my SI LONG at 32.05 and SHORT from there for a quick trade. Not really a swing trade, but a good idea, I guess.

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karoshiman
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karoshiman View Post
Went long NQ March ctrct at 2690.50 based on reverse H&S. Same on ES, but trade more attract. on NQ

Target on ES March ctrct is 1505


Went again LONG in NQ at 2698.25. Same idea as before.

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karoshiman
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Out of my Sugar Short at 19.40 with a loss. Wait for further development.

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karoshiman
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Out of SI short at 31.14 with a profit.

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karoshiman
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Out of my Soybean Longs at 1434 with a loss.

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karoshiman
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Short again in Sugar at 18.90 (March). Same idea as before. Was a mistake to cover my shorts earlier...

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karoshiman
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Trying a long in Silver at 30.85 (March), near last swing low.

Out of Silver Longs at 29.91. Did not look good.

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karoshiman
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Out of my remaining NG short at 3.515 (March) with a net profit (whole position).

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karoshiman
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Out of NQ longs at 2655 with a loss.

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karoshiman
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Went short ES at 1422.25 due to breach of TL overnight. ... and it's the end of the world, of course

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 Silvester17 
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Silvester17 View Post
first thank you for your journal. and second this is not a critique. just some thoughts.

depending what kind of crash there's while the market is closed, even if you're well capitalized, it can hurt you very badly. so at least be aware of the size you're trading. I wasn't in a trade during the flash crash, but there's no doubt in my mind you would have suffered major slippage. of course that would apply to day trading as well.

my point is if you're not hedging, it's not justified for a retail trader to swing trade futures (especially for newer traders), because of the risk. there's plenty of other instruments like options, etf etc which are more suited for swing trading.

of course this is just imho, and I do realize many will disagree.

here's a good example what can happen while swing trading futures.

wonder how many swing traders were long es with a stop below 1400.


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karoshiman
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Went long CT at 76.24 (March). Breakout of pennant.

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karoshiman
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Silvester17 View Post
here's a good example what can happen while swing trading futures.

wonder how many swing traders were long es with a stop below 1400.



Yes, that's a good example, Silvester.

However, it just shows one part of the equation. If one was long yesterday and choose to set the stop just below 1400 for whatever reason, he or she should have ensured that the 30 or 40 points delta to the stop reflected only X% of their trading equity, with X being the amount of money they were willing to lose on that trade. So, looking at the move only does not tell you much.

The more interesting question is maybe, whether someone who had the stop at, for instance, 1410, was also able to get out at 1410 or whether the person experienced major slippage.

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 Silvester17 
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karoshiman View Post
Yes, that's a good example, Silvester.

However, it just shows one part of the equation. If one was long yesterday and choose to set the stop just below 1400 for whatever reason, he or she should have ensured that the 30 or 40 points delta to the stop reflected only X% of their trading equity, with X being the amount of money they were willing to lose on that trade. So, looking at the move only does not tell you much.

The more interesting question is maybe, whether someone who had the stop at, for instance, 1410, was also able to get out at 1410 or whether the person experienced major slippage.

maybe around 1410, slippage was not that bad, but overall there're lots of gaps.

also about my example, of course I could use it the other way around. someone was short es with a buy limit of 1395. that limit would have been filled and that person would be a happy camper now.

the point is, the market can be very volatile even after the close and you should be aware of that. and I'm just not willing to play those funny games.


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karoshiman
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maybe around 1410, slippage was not that bad, but overall there're lots of gaps.

also about my example, of course I could use it the other way around. someone was short es with a buy limit of 1395. that limit would have been filled and that person would be a happy camper now.

the point is, the market can be very volatile even after the close and you should be aware of that. and I'm just not willing to play those funny games.



Thank you for the chart.

As far as I can see, the largest gap is something around 4-5 points, which is within my risk tolerance given the rare occurrence of such move.

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 djkiwi 
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here's a good example what can happen while swing trading futures.

wonder how many swing traders were long es with a stop below 1400.


The 1-2% "K" and I pay on commissions and average slippage compared to an average of 10% for the day trader and 20% for the scalper easily make up for losses on these types of outliers. It can also go the other way as well.

As "K" mentioned effective money management deals with these outlier risks you identify. My risk is 0.5% per trade so I'm very comfortable with the additional outlier risk. Besides, the loss from that move you identify is really quite small for a stock swing trader. I've been in some stocks that have gapped down over 40% and taken the loss at the open.

On the other hand, I think the majority of retail traders scalping or day trading the ES day after day face a difficult task as it's littered with seasoned professionals with extensive trading experience often spanning a career of 20 years+

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karoshiman
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Getting out of my Wheat short position at 770 with a profit.

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Been kicked out of my Sugar short at 19.55, so far the high of the day My stop might have been too close...

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karoshiman
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Just a reminder: Still short in ES from 1422.25... Happy New Year everyone!

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 pawnbroker 
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The trades I am currently in are: - LONG silver from USD 33.14 (mini-sized December contract)

Here is the rationale and the parameters for the LONG silver position:

After developing a major pennant in 2011 and until the summer of 2012, the breakout out of the pennant occurred in September at about $31. Usually the price move leading to the pennant is copied from the breakout point. This would lead to a target of about $60.

This is going back a bit, but I noticed your silver trade and I looked at the volume. You mentioned that you use volume, but as a secondary and perhaps minor extent.

The chart shows huge volume, historically high in fact on the data I have, when the price went to $50. High volume on an up bar, especially after a long move up, indicates that the smart money were using the demand to unload (sell) into the unsuspecting buyers, who have come into the market when it was in a frenzied state of bullishness.

The smart money were distributing in bulk, which will be done only if they see no further upside and they want to switch from being long to short. It's easy for me to say this now, after the facts have been revealed, but the volume was telling the story in real time.

The situation will change when you start to see signs of capitulation from the longs after a move down, which is seen as high volume down bars. These are times when the smart money are accumulating in anticipation of higher prices. The market may go down more and the change in the supply and demand is signalled when the volume on down bars goes low at a price level where it was previously high, because the supply has dried up. That the time to look for the market to rise.

On the weekly silver chart, there was ultra-high volume on the down bar in the week after silver hit $50, but that is supply. The wide spread of the bar shows that the volume pushed the price down considerably. If the spread had been narrow, it would imply that someone was buying into the selling and that would explain why the spread is low. But when you get a wide spread down it can a manoeuvre to trap in the people who went long at the highs. Consider that a fast move down does not give traders mush time to get out and many will hang on with false hope. If the market went down slowly, there would be more chances for the longs to get out and that would be bad for the smart money, who do not want to buy at high prices.

You can see the volume going down on the down moves prior to be bounces up from the 26.245 level, and that indicates that supply was drying up at those times.




I recommend that you take a look at volume spread analysis (VSA) you can either learn from books or your can buy software. I have the plugin for NinjaTrader, but you don't need it to spot ultra-high volume and you can do much with the books, some of which are free.

You can get a free VSA eBook from TradeGuider. They will send you marketing e-mail, but its not excessive.

VSA analysis of Gold and Silver from 2011.


Using VSA to spot distribution.


Lastly, on charting software and you may know already, but NinjaTrader (NT) is free to use with free EOD from Kinetic. That includes the EOD data from the futures markets, which may be better than using web based charts when you don't have TradeStation. I did not find using NT immediately obvious and it took me a while to work out how to add data to a chart, but once you are past that stage it is easy to use. The Kinetic data feed is really IQ Feed data under another name.

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karoshiman
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Been kicked out of my OJ position at 126 on Friday. What happened with the markets...?

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...


Thank you for your detailed analysis!

So, what is your trading suggestion for the current price level?

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Out at 1439 with a loss. Bad start of the year...

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karoshiman
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Trying a long in Sugar now at 19.68. Breakout of Wedge on weekly.

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 pawnbroker 
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What is your trading suggestion for the current price level?



Chart layout

Price is on the top panel of this weekly chart. The blue bars are high volume bars and the yellow are low volume bars, relative to the recent, prior volume. High volume at the top of move up is a sing of weakness (SOW) as it suggests that the smart money are using the demand to sell or to go short, especially if the spread is low and the close is well below the high. High volume bars at the end of a move are a sign of strength (SOS) when the spread is low and the close is off the low of the bar, since this indicates that the smart money are accumulating.

Low volume bars at the top of a move (on an up bar) demonstrates that the demand is weak, which is a SOW called "No Demand". Low volume bars at the bottom of a move (on a down bar) is a SOS, especially when the spread is low and the close is well above the low of the bar, because that indicates that the supply has dried up. Such bars are called "No Supply" bars.

The second pane is volume. The volume is blue if the price is an up bars, red if price is on a down bar and the pink bars can be up or down bars, but the volume is less than on the last two bars.

Ignore the third pane, which shows the spread of the price.

My VSA Analysis

Lets start by looking of the bars with the highest volume (A) and (B), since that shows the price levels where the largest commitments were made by traders. These bars must include activity by the smart money, since they have the largest pockets.

At (A) we see a bar that was marked up well above the last bar and then the price collapsed to the low on high volume. That price action is called an upthrust in VSA and they can occur with low volume too. With a high volume upthrust the smart money were selling. This is the first point of supply. It is a SOW, but the smart money can't exit large positions in one go and the selling was not enough to stop the up trend. However, notice that price was weak until there was a test of the low of (A) in January (that bar is not marked).

At (B) we have ultra-high volume on a down bar with ultra-high spread, but notice that the close is off the low of the bar, so there must have been some buying on the low of that bar. That inference is confirmed when the low of the bar acted as short term support, but notice that the up-bars near (C) are no demand bars and (C) is an upthrust on high volume. The market remains weak at this point and the up move is technical, because of temporary exhaustion of the sellers.

Bar (D) stops near the low of (A), which shows the usefulness of looking at price action at the key levels of high volume bars. From the low of (A) to the close of (B) we have a trading range after bar (D).

The volume on D was less than on (A) and the close was in the middle of the bar, which is a SOS. However, when price reached the close of (B) at the 35.8 level it found resistance, which is to be expected since traders locked in from bar (B) and above are looking to exit at break even or better. It would take high volume to push price higher that that level, since the smart money would need to absorb the supply (that's high volume, but not excessive). They would be most likely to do that after a period of accumulation at a lower price level, which we do not see after (A).

At (F) we have a retest of the low of (A) and (D). Volume is very low, so we have a no supply bar and the close is in the middle of the bar, so we know that there was buying. The test is not confirmed until we see that the next bar is up. That pair of bars is a SOS.

At the bar before (G) we see high volume, which is a warning that supply may be entering the market. (G) is a high volume upthrust and the close is below the top of the trading range. That is a clear SOW and the market moves down to retest the bottom of the trading range.

The bar at (H) has very low volume. The bar can be viewed as a test as the low was lower than the previous bar, but the picture is not totally clear, since a lot of the bars range is above the close of the prior bar, so it can be seen as no demand too. However, the following bars continue to show support and the low of (H) is not broken. That is a SOS and we get a retest of the top of the range. Again we see high volume creep in at the top on (I) and a low volume upthrust on (J). A low volume upthrust indicates that the smart money was not interested in buying at that time and price.

At (K) supply come in as the high is above the prior bar, the close is near the low and the volume is high. However, the range is average, so it looks like there was some buying too. The next few bars are weak bars and the weakness is confirmed when the second bar after (J) closes below the low of (J).

At (L) we have a wide spread down, but the volume is less than on (K) which shows that the supply is not as strong. The next bar is down on low volume and the next and last bar is up slightly. That looks like a SOS, but there are reasons to be cautious, because the background is weak and not strong. We need to consider the context rather than individual bars.

The close of (L) is in the middle of the trading range, which is the worst place to buy or sell based on the risk reward ratio, since the best stops will be above or below the trading range. Also, since (B) supply has come in above the 34 price level, so any moves up are likely to hit resistance and there is no obvious signs that accumulation has occurred on the prior lows. A clear sign would involve a shake out or climatic selling on high volume.

There is a zone of congestion around bar (H), but there are no clear high volume down bars in that range, so this may just be a pause in the selling to provide an opportunity to sell more at higher prices, which is what we see happening on bar (I) to (J).

The down trend from (B) appears to be intact, but there may be a move up from (L). If so, look carefully at the volume when the price comes near the close of (K). Low volume will indicate no demand. High volume will be needed to absorb supply at that level, but excessive volume would be sign of selling.

If the price comes back to the 26.335 level, it would be safer to go long after SOS at that level, since your stops would be close to your entry and the target would be the top of the trading range. However, that is the level where a shake out is possible, so look for a SOS first and be careful to select a sensible stop.

Any substantial move up is going to hit supply from locked it traders, so I would be bearish on silver unless until there is a sign of capitulation. A good move down with high volume bars that stand out clearly would show that the weak hands have given up and sold at a low price to the smart money. Clearing out the weak hands would allow the market to rise, since the smart money would not need to absorb too much selling at higher prices.

So, I see a bearish picture for silver for the time being.

It should go without saying that this is my reading of the market for academic use only and that you should not rely on my comments to make trading decisions. I could be completely wrong and it would not be the first time!

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karoshiman
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Recap: NG & W trading lower as originally expected. Covered short pos. too early. Traded too big, hence, were too nervous

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karoshiman
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Short Soybeans from 1376.75. Head & Shoulder Formation.

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karoshiman
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...


Thank you for the detailed analysis! I will follow this closely.

Cheers,
k

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karoshiman
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Out of Cotton long at 74.24 with a loss. Turnaround still possible, but choose to reduce my risk. Might re-enter long again later.

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karoshiman
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Trying a long in Nasdaq at 2718.50 after the triangle breakout and flag of the last few days.

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karoshiman
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Short in Cocoa from 2269 yesterday (sorry, forgot to post). Breakout of triangle on daily.

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Short in Cocoa from 2269 yesterday (sorry, forgot to post). Breakout of triangle on daily.

And here's the chart.

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karoshiman
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Took part of profits in Cocoa at 2227. Let the rest run.

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karoshiman
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Short Lean Hog at 88.40. Breakout of triangle.

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karoshiman
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Covered Sugar long at 18.56 with a loss. Short from here.

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karoshiman
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Short Class III Milk at 17.95. Breakout of congestion zone.

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karoshiman
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Out of my Sugar short at 18.91 with a loss. Honestly, I have no clue what Sugar is doing at the moment... should probably stay out...

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 pawnbroker 
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With regard to the silver (SI) chart, one of the signs to look for signs of strength is when the volume on the down bars is high and the market shows strength soon after. It is also necessary to qualify that I mean down bars near after a move down, as down bars near the tops can be real selling, especially if the bars high is above the previous bar (it went up and hit supply).

My reading of the weekly SI chart is bearish, but I mentioned an area of congestion, which can be a sign of accumulation. While I concluded that SI is in a bearish pattern, it is necessary to keep an open mind and to check for signs that the position is changing or if the analysis was wrong.

The attached chart shows three bars that illustrate how to use the volume on a daily chart. Notice that the bar in Sept shows high volume on an up bar and after that the market went sideways and then reversed.

In December, very high volume was seen on a down bar that closed near the low with wide spread on the price. That shows supply and it is bearish. The supply needs to be removed before the trend can reverse, but this bar may be a price level where the smaller traders are selling to larger traders. If it is bullish, to a degree, it does not look like accumulation has been completed.

Now compare the high volume bar in January to the bar in December. The price makes a new low, but the range is low compared to the December bar and the close is near the top of the bar. The reduction in volume shows that supply has reduced and the combination of the reduced spread and the close near the highs shows that demand has increased. The next few bars are up, which confirms the strength.

The VSA indicator for the December bar is "Potential Climactic Action", which means that the last sellers have sold (potentially that is - not for sure).

The Jan bar shows "Strength Coming In", which is a sign of strength where the volume is high on a down bar and the close is near the high and the spread is not too high. Again, this does not mean that the down move is over, but it may be the signs of accumulation that can be seen in the volume before a sustained rise occurs.

Notice that the bars I have highlighted are easy to spot as they are clearly much higher than the surrounding bars, so we know that they represent large commitments and that they have clear significance.

The weekly chart still looks troubling, but a retest of the lows near July 2012 at the 27 level may be a good place to watch for further signs of strength.

Ideally the weekly chart should start to show the high volume on the down bars followed by strength. The daily chart will show changes first, but the weekly chart gives a better overview.





This analysis is intended purely for educational reasons to show how volume is used in the VSA method.


Best of luck in 2013!

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karoshiman
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Long Feeder Cattle near support at 152.75 after breakout of triangle.

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Out of Feeder Cattle long at 152.05 with a loss. Should have waited for the report to come out and see how market closed.

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 djkiwi 
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@karoshiman

Nice posts. I'm interested in your selection of instruments. I've recently expanded my instrument list as well. A couple of questions.

1. Which data feed are you using?
2. What is the criteria you use to decide the basket of instruments you trade? I'm not talking about setups but more Minimum volume/liquidity etc?
3. What type of slippage do you typically incur on these lower liquidity type of instruments such as feeder cattle?
4. Which economic reports do you consider before you trade if any?

Thanks
DJ

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karoshiman
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@karoshiman

Nice posts. I'm interested in your selection of instruments. I've recently expanded my instrument list as well. A couple of questions.

1. Which data feed are you using?
2. What is the criteria you use to decide the basket of instruments you trade? I'm not talking about setups but more Minimum volume/liquidity etc?
3. What type of slippage do you typically incur on these lower liquidity type of instruments such as feeder cattle?
4. Which economic reports do you consider before you trade if any?

Thanks
DJ


Hi DJ,

Thanks.

1. Tradestation
2. As I do not trade large size, volume/liquidity is not an issue for me. I do look at the spreads, though (e.g., if I want to trade the resp. mini contracts - some of them have unfavorable spreads). I trade, when I see a setup. I started out trading ES only, but got tired once when I did not see one trade within several weeks... I thought, other markets might have opportunities when ES has none.
3. Given my small trade size (usually 1-3 contracts), I had no slippage issues so far.
4. Actually none. In this respect, my comment above is misleading. It just happened that I saw on various posts on Twitter & StockTwits that many people were waiting for this WASDE report to come out. My conclusion for the failed Feeder Cattle trade should have been only "Should have waited for the daily close in order to see how price reacted near support".

Thank you for asking these questions so that I can clarify.

Regards,
k

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 djkiwi 
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karoshiman View Post
Hi DJ,

Thanks.

1. Tradestation
2. As I do not trade large size, volume/liquidity is not an issue for me. I do look at the spreads, though (e.g., if I want to trade the resp. mini contracts - some of them have unfavorable spreads). I trade, when I see a setup. I started out trading ES only, but got tired once when I did not see one trade within several weeks... I thought, other markets might have opportunities when ES has none.
3. Given my small trade size (usually 1-3 contracts), I had no slippage issues so far.
4. Actually none. In this respect, my comment above is misleading. It just happened that I saw on various posts on Twitter & StockTwits that many people were waiting for this WASDE report to come out. My conclusion for the failed Feeder Cattle trade should have been only "Should have waited for the daily close in order to see how price reacted near support".

Thank you for asking these questions so that I can clarify.

Regards,
k

@karoshiman

Thanks K.

That has been my conclusion also and I'm in full agreement with your approach. I have been trading seven instruments; 6E, ES, TF, NQ, GC, FDAX and CL. The only difference is I'm using volume profile to define support and resistance. When analyzing losing trades on these instruments the common theme has been the setups weren't ideal. With the expanded list I'm already seeing more attractive opportunities.

I've now expanded the list as per the attached.



To qualify for the list the instrument has to have a minimum of 800k volume per month. Out of the Soft ICE agricultural products of Coffee, Sugar, Cocoa and grains only Sugar seems to satisfy the criteria which trades over 2 million a month.

I notice you are trading Feeder cattle. That only has about 120k per month. The reason I've excluded these instruments so far is spread and likely slippage, although have no stats to confirm without doing some testing. Approximately what type of spread are you experiencing on Feeder cattle?

Cheers
DJ


ps I didn't realize tradestation included ICE US in their data feed hence the question.

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karoshiman
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@karoshiman

...

I notice you are trading Feeder cattle. That only has about 120k per month. The reason I've excluded these instruments so far is spread and likely slippage, although have no stats to confirm without doing some testing. Approximately what type of spread are you experiencing on Feeder cattle?

...


@djkiwi

I get a spread of 0,025 points on Feeder Cattle.

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karoshiman
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Sold Soybean short at 1431 with a loss.

Bought Cotton at 77.38. Breakout of triangle seems to play out.

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karoshiman
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Long Soybean Oil at 50.96. Breakout of triangle.

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karoshiman
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Closed remaining short in Cocoa at 2274 with a net profit on total position.

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  #95 (permalink)
karoshiman
Munich, Germany
 
 
Posts: 285 since Apr 2012
Thanks: 121 given, 117 received

Closed Milk (DA March) short position at 17.07 with a profit.

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  #96 (permalink)
karoshiman
Munich, Germany
 
 
Posts: 285 since Apr 2012
Thanks: 121 given, 117 received

Looks like markets are about to go into trending mode.

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  #97 (permalink)
karoshiman
Munich, Germany
 
 
Posts: 285 since Apr 2012
Thanks: 121 given, 117 received

Went short Orange Juice at 114.50 (March). Retracem. near resistance after strong down move of the last weeks.

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  #98 (permalink)
karoshiman
Munich, Germany
 
 
Posts: 285 since Apr 2012
Thanks: 121 given, 117 received

Covered long position in Soybean Oil at 52.32 (March) with a profit.

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  #99 (permalink)
karoshiman
Munich, Germany
 
 
Posts: 285 since Apr 2012
Thanks: 121 given, 117 received

Went short again in Cocoa at 2214 (March). Original scenario seems to play out. Up move was just a flag.

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karoshiman
Munich, Germany
 
 
Posts: 285 since Apr 2012
Thanks: 121 given, 117 received

Short Swiss Franc Futures at 1.0763 (March). Break of trend line with large volume.

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