I've been a member since 2011 but have never posted anything until today. Like many of you, I've been through it all over the last 2 years. When I first found Big Mike's I was heavy into technical analysis and used a lot of the indicators I found here. I was hoping to automate my trading using NinjaTrader's platform and take myself out of the equation all together. Prior to that, I had blown an account up in the Forex and was about done with trading. After a year fruitless efforts with indicators and algorithms, I came to the conclusion that either my programming skills were not good enough of there was just no set of indicators that could help me find a reliable edge that I could automate.
For the past 12 months, I've haven't been actively trading. I bought some stocks and etf's over the year but it was a buy and hold strategy using daily trendlines with support and resistance. I've had some success, and it's this same success I want to work on improving on an intra-day basis. I feel at times that there's an obvious edge I'm staring at yet I have not been able to define it in any coherent mathematical model.
Since signing up, I've enjoyed, found strength, gained new ideas, and can relate to about everyone who has a journal here. In my own journal, I'm hoping I can continue to progress and along with that give back a little to the community that's kept me going.
I'll get more into my trading rules, style, approach and setups in my trade updates. For now, I just want to thank Mike for hosting this forum, for all the other traders posting updates and going to battle everyday, and let's rock 2014 out with some solid gains.
The following 8 users say Thank You to NathanExplosion for this post:
I finally had some time today to work on my trading in real time. For the last week or so I haven't had time to practice during live trading so I've been doing market replay at 10x which isn't really the same.
A little background on my trading experience and where I'm starting my journal.
I've been trading on and off for the past 2 years and have gone through the entire gambit. I dedicated an entire year to building automated strategies on NinjaTrader and have used about every indicator in the book. During that time, I didn't have any, I mean any good luck. Every strategy I ran in Simulation / backtesting that was successful broke down in live trading. I had indicators on top of indicators with some indicators looking at other indicators. It got out of hand, but the one thing I really walked away with was that all an indicator does is translate price action into some other form. I'm referring to simple indicators, not market breath or aggregate indicators.
After spending a good amount of time troubleshooting my automated strategies in live markets, I got fed up and tried to think outside the box. That led me in the completely opposite direction, I wanted to study price action and learn more about price movement. What causes the price to move the way it does, are there patterns I can look for, etc. I only used 1 indicator, the macd, and that I rarely used it. I studied different minute charts and ended up looking into tick and renko charts. Renko immediately peeked my curiosity because it takes TIME out of the equation and simplifies price action further. I'd been reading some books on high frequency trading and when studying the 5 minute charts and the renko at the same time, I could see where price was moving in the renko but it's invisible in the minute charts. Also, for algorithmic trading, time may or may not be part of the equation, and I generally think it is probably not. There are 'edges' in the price action on the renko charts that are invisible on minute charts but they are visible in a mathematical sense. This is where I've spent the last 6 months of my trading.
So, here's how I play the markets. I try and put myself into a mental model that my trading should be liquid. Liquid adapts to it's surroundings, it follows the path of least resistance. Put liquid in a cup and it molds to the cup. Pour it down a hill and it'll find the path of least resistance. This is what I'm constantly reminding myself when I am actively trading.
When I'm trading I am constantly looking for the leading price edge where price might find support or resistance. In a very short term, this leads to many false edges, but I don't trade them all. I look for edges with some longer term support or resistance and the support and resistance lines must be parallel to one another to trade them. If I am trading a leading edge with no partner, chances are i'm going to lose. Once I have an establish support and resistance, I start looking for the middle ground, which may or may not exist. This is similar to Andrews Pitchfork, but the middle edge is not always exactly in the middle, although it is usually parallel.
I try to trade my initial trade with the trend. (The trend is your friend). In this case, TIME is on your side because every new tick bar with the trend rises the support or lowers the resistance if short. Only after taking some winning positions and seeing price break to extremes will I think about going against the trend, it's with the mentality that I will win if I am quick but TIME is running out when you go against the trend. I don't really want to catch knives, just profit from a quick trade and take my profits when they are at their highest.
That's the basic gist, I don't look at indicators anymore and I do keep a 5 min chart with the macd on it just to look for divergences in price and the indicator. I love seeing a nice divergence in the macd and price, it reminds me of a spring loading up and ready to jump. I myself am a hard core contrarian, and it's cost me a lot of money to really learn what that means. It's hard for me to run with the herd, which is why I am constantly reminding myself to BE LIQUID.
As a rule of thumb, I try and back out to a simple risk / reward ratio before entering a trade. Try being the key word because it's not always easy or opportune, but getting a 3:1 ratio helps out a lot.
Overall, I want to use this journal to trade ideas, share my strategy, get feedback and continue to progress. I would love to one day automate my strategy, maybe with a little help, and train it on lots of targets.
Cheers, let's make some money!
Last edited by NathanExplosion; February 25th, 2014 at 10:25 PM.
I finally found some time to do some live trading this morning and afternoon. Overall, my day went pretty well and I only found myself in one situation I should not have been.
My strategy is to trade shares of TNA based on trendline support and resistance. Today, I was trading a lot of 1000 shares in sim mode, which I eventually build up to with real money. With real money, my strategy will remain the same but instead of 1000 shares I'll start with a lot of either 200 or 400.
My strategy is simple, trade with the trend and exit 1/2 half way through channel and 1/4 at the resistance. Hold the remaining 1/4 lot until it feels right. I tell myself to be liquid and look for the path of least resistance for price, so to that end I sometimes will exit my remaining 1/4 at a high and even reverse my position and try to 'catch' the top for a short scalp trade. That happened once today and my quick trade paid for two small stop losses.
5 or 6 total trades, equal parts long and short. I felt really great on the first trade and after stopping out on the 2nd I decided to reverse course immediately before finding my new edges. I started adding more shares then I like to and found myself with way too much risk but I was able to take it all off the table in a short amount of time. The resulting wave was a great catch and I reversed course cents from the top. This is not always the case, but using the renko charts makes it easy to spot exits and look for the next edge.
Next trading session, I'm using 200 shares with real money and if things go well I'll scale that up to 400. My plan is not to exceed 1000 shares in play at any moment, and if I do find myself heavy I'll exit excessive risk asap.
Keep the stops tight, place my trades before price makes it's move to my target, and keep looking for the next edge.
Kimball is the man. I wish I could be more like him, he's looking at charts with decades worth of data on them. I can't manage to get a chart with more then 2 days worth of data on it! One day, but hopefully our strategies find the same success.
I haven't had any free time today to keep an eye on TNA but I took a minute to check out ES_F. I am currently holding a 180 april17 put and a 185 april17 call for a strangle trade. The way this market is ignoring bad news is making me anxious and my thought is I'm not alone. If price breaks south, it might make a big run. On the flip side, if price breaks out north then it might create a decent squeeze and rally the bulls to go wild with greed. No telling if the trade will play out yet, but that's at least my starting point.
I keep an eye on the ES_F as a result of my options spread, and the pattern a little while ago looked ripe for a short. I made my age old mistake of taking the first entry on a resistance line I knew was bad. However, I had my eyes on the next one and my average in wasn't bad. My overall risk / reward ratio was $150 risk vs $300+ in reward, not great but the market was floating sideways with a bearish trend.
So far it's playing out in my favor. Hopefully hits my target.