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Price Action GC trading
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Price Action GC trading

  #21 (permalink)
Elite Member
London + UK
 
Futures Experience: Advanced
Platform: Proprietary Analytics
Broker/Data: Multiple broker + Multiple feed
Favorite Futures: Currently European and US equities
 
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Posts: 432 since Dec 2013
Thanks: 223 given, 205 received


isaacsu View Post
My name is Isaac. I am a software developer in Australia. I've dabbled around with trading/investing as a curiosity for over 2 years now. I hope to be able to trade as a full-time job sometime in the not so distant future.

Here's is a rough timeline of my journey so far.

2011, I started out buying some mining shares on the ASX with a couple of thousand dollars in the account. Discovered that I was severely undercapitalized and the the underlaying would have to move a ridiculous amount for me to even break-even with brokerage.

In 2012, I started looking for ways to get in on price action without the account size. Obviously there was a greater chance of breaking even and making a profit, but also a greater chance of losing it all. At the time, the only other instrument I was aware of, and mildly attracted to were options.

It was super confusing at first, but I committed myself to learning all about the instrument (mind you, "all" at the time meant wrapping my head around the simplest concepts - writing/buying, call/put, intrinsic value/premium). I would keep an eye on the underlaying security, and simulate trade positions by buying either calls or puts.

There were a couple of boundaries that made it a relatively risk-limited learning experience - I never wrote options, only bought, which meant I always confronted my maximum exposure upfront. I spent most of the year doing that. Almost 6 months in, I was down around $900 which managed to make back and break-even within a couple of weeks after.

At that point, I took stock of what had happened so far - a few things dawned upon me:

1. I'd spent thousands in brokerage fees on that trip to Drawdown Valley and back to the surface.
2. Options in Australia are not very liquid, and hence the bid/ask spreads tend to be wide.
3. The combination of fees and wide spreads made it a rather expensive learning experience.

Early 2013, I discovered CFDs through one of the popular online CFD brokers that had an Australian presence. Opened an account with a couple hundred bucks on a credit card - no sweat. "No Commissions" was a dream come through for me. I thought "now I can trade like the big boys, in and out, long and short all day". I never made a profit, just a long drawn-out decline to $4.95 in the account. So I made a pact with myself - trade a demo account, recover the $300 and another $700 on top of that, and I'll start over with a $1000 account.

Never happened. Last I traded a CFD, which was less than a month ago, I was focused on two currency pairs - AUDUSD and USDJPY. The AUDUSD because I was in Australia, USDJPY because it seemed interesting.

Along the way, a few lessons I learned:

1. CFD brokers make money from the spread, and it is a significant spread.
2. I wasn't actually trading on the "open market", rather just against the broker.
3. Trading with the real $300 at the start made pain of loss and the euphoria of profit very real - feelings that I was later able to transfer on to when I traded demo.
4. Taken seriously and for real, trading demo/sim and is unbeatable value as far as cost per learning experience goes.

Supplimenting my trading experience was a steady diet of somewhat relevant literature like "Antifragile" by Nassim Taleb, Alexander Elder's "Come Into My Trading Room", "Misbehavior of Markets" by Mandelbrot, a couple of Turtle Trader books, One Good Trade by Mike Bellafiore, a blur of other stuff around indicators and patterns. Babypips.com was a huge resource where I learned a lot too.

Which brings us to today. I'm about a month into my discovery of futures, I stumbled upon futures.io (formerly BMT) less than a week ago, I'm about 3/4 way through Mark Douglas' "The Disciplined Trader". While I'm still a long way off my goal of consistantly profitable trading, I feel like I'm closer than ever.

So far, I've been play-trading on a demo futures account - no plan, no strategy, just single contract GC trades, and going on "feel" (fail) and "intuition" (double fail), noticing patterns, taking punts etc. I want to take it to the next level, so I'm going to try and journal my trades, and hopefully accelerate my learning.

Here's my plan, feel free to question me or give suggestions.

Instrument: GC
No particularly strong reason. If anyone has a suggestion on a good "beginner" instrument to learn to trade that can offer a good learning experiences, I'm all ears.

Approach: Technical + Price Action (are they the same?)
I think I'm more comfortable thinking, learning and reasoning in those terms.

Timeframe: 5min, 30min, 60min charts
Because it's generally a good idea to trade with context in mind?

Tools: I'd like to learn to trade with naked candlestick charts, key S/R levels and the DOM.

Like I said, this journal thing is me taking a next step in learning. I welcome all comments, advice and suggestions.

Thanks.


Hi first thing you need before anything is a trading plan and to pick a clearly defined strategy to follow and stick to. This will include the set ups you're looking for and the conditions for entry and exit. Then go into journaling your success in sticking to your plan. There are some good examples on the forum have a browse.

Thanks

Sand.

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  #22 (permalink)
Elite Member
London + UK
 
Futures Experience: Advanced
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Broker/Data: Multiple broker + Multiple feed
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Thanks: 223 given, 205 received

Just to be clear the more specific the better, when you search look for the topic of mechanical trading. I hope this helps you some.

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  #23 (permalink)
Elite Member
Austin, TX
 
Futures Experience: Intermediate
Platform: F-16CM-50
Favorite Futures: JDAM
 
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Posts: 5,782 since Sep 2013
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I would suggest M6E or M6A, micro currencies where you can trade live but trade really small. Each tick is $1-$1.25 and the margins are $200-$300.

I see you are looking at price action so good start. I suggest looking into money/risk management and trader psychology to learn more about trading.

I would trade demo for a few months to get the ins and outs of your trading method down, learn how the platform works, and work on a daily routine of following a trading plan. Then I would look to trade the micros live.

Also always use money that you can afford to lose and its loss will not affect your life. I call it burn money, money you could light on fire on your desk and it not matter.

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  #24 (permalink)
Trading Apprentice
Frankfurt Germany
 
Futures Experience: Intermediate
Platform: NinjaTrader
Favorite Futures: es
 
Posts: 10 since Sep 2013
Thanks: 1 given, 8 received

Price Action Trading System

Hi Isaac,

I started my futures price action day trading learning process on the ES - the most liquid market thus no slippage with your orders. I recommend a 2000 tick chart, only one chart to trade the ES. I use only one indicator, 21 EMA.

The daily task is to construct the support/resistance (S/R) structure based on the price action. I actively adjust the S/R structure accordingly on a "bar-by-bar" basis. There are 5 market conditions that that I identify: 1) UP CHANNEL; 2) DOWN CHANNEL; 3) TRADEABLE TRADING RANGE - horizontal channel; 4) CONGESTION - very narrow, non-tradeable trading range; and 5) TREND LINE BREAK. Each of these conditions have their set of rules that are applied to trade these conditions. As a start, I trade 2 contracts and employ 2 exits. The first exit for the ES is fixed at 4 ticks. The second exit is classified as a runner. The protective stop is place 2 ticks below what is termed "the signal bar". Most of the time the signal bar is the prior pivot level. I call this strategy, "Scalping with runner". The runner does not always occur. As soon as I get filled on the first exit, I move the protective stop to break even - roughly 50% of the time the runner gets stopped out. If the runner is established, then the exit target will be some S/R level identified in the S/R structure.

Price action is a simple methodology, but not so simple that it can be explained in this forum. If this sounds interesting, then you must learn from the expert, Mack, at: priceactiontradingsystem.com

Hope this helps,

Steve

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  #25 (permalink)
Trading Apprentice
Toronto Canada
 
Futures Experience: Advanced
Platform: E-signal
Favorite Futures: All US Exchanges
 
Posts: 32 since Jan 2017
Thanks: 0 given, 59 received

Some suggestions

1. I have been trading gold for many years and I agree it's a tough contract for a beginner. It's a large contract and can move sharply due to mine producer hedging, plus it trades like a currency, so it can trade off of other currencies. ES and Crude are also large, I would recommend YM (mini-Dow), it has a $5 tick and is of course very liquid.

2. Continue with simulation until you get it right and you have a good plan. There is no point in wasting money and feeling emotional pain when you don't need to. Yes, it will be different once you start, but you to have the basics.

3. As for your trading I see problems.
Stops: The tight stop loss for gold was incorrect and not incorrect. Yes, it was too close, but when dealing with a volatile market you might want it close, but then you will have to plan for multiple re-entry. Psychologically this is difficult for some to do. The correct stop is just beyond the range of the recent consolidation or top or bottom. In other words, the stop should be at the point when you say "when has the market turned against me", independent of your entry point.
Entry: The real problem was your entry. Ideally you want to enter when there is a top or bottom. The short trade that you didn't chase, is the one you want. It was good discipline not to chase, but that doesn't mean you have to take another trade to make up for it. It's not the trades you miss that count, but the ones you enter...the great thing about trading is there is always another opportunity. In this case, you don't want to enter on a pull-back into the middle of a range unless there is a clear definitive trend, and I see no trend here just a price range, so this was a typical beginner error to me, although others may disagree.

Good luck and keep going!

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