Forgive me if I missed the answer to the following question on an earlier page in the thread.
Have you discussed how you identify the trend to determine if the market is in an uptrend or a downtrend?
I know you added a filter pertaining to avoiding reversals in steep trends, but I don't recall any discussion about identifying a trend or a steep trend, for that matter?
Additionally, I would like to ask you to share your confidence/comfort with this set up? You have been posting here in this journal for a few months and I was hoping you might be able to offer a more substantive assessment of your feelings about the experience you have had with it to date.
Not sure what you feel comfortable sharing or what kind of questions would be appropriate/fair for me to ask, either.
I am not sure if I answered already or not. If not, then please accept my apologies.
I identify a trend by looking at the bars. I am looking for higher highs and higher lows for an uptrend and I am looking at lower lows and lower highs for a downtrend. I am looking back 3 or more bars.
To determine a steep trend, I am looking at the movement of the bars compared to prior movements in the context of the day and overnight activity. If it looks steep, then I won't trade it. I don't have an indicator that I use, it's just a judgment call.
I am very confident with the setup. I would like to see more setups occur per day and per week but they don't. I sometimes won't even look at some of the markets based on the activity the day prior or overnight. There just isn't enough volatility. That leaves me with having to trade more contracts to make up for less opportunity. Otherwise +20-40 ticks per month doesn't yield a lot of money. The limiting factor on the markets that I trade is the number of contracts that can be filled. On the ES, raising contracts is not an issue, but with GC, CL and TF, over 20 contracts and there is slippage and lack of fills. Unfortunately, I have not had much success on the ES with this setup.
I am open to any question or comment that you have. I may not know the answer but I will do my best to respond.
I would never have guessed that you were using the previous three (to five?) bars to determine trend in a subjective fashion. When you say you are looking for higher high and higher lows in an uptrend, do you literally mean that each bar in succession must have a high high and higher low than the previous bar? Or is there some subjectivity to this as well?
In looking back over the trades you have posted, it appears you are using a variety of different time frames. Do you have specific time frames you are exclusively using/scanning?
Also, have you ever considered transferring this setup to a daily chart? The reason I ask is that one of the axioms we have all read in the books on trading is that the larger the time frame the greater the potential for larger moves (for and against us).
While your current set up leads to infrequent trading, it is tough to sneeze at 41 ticks ($410) per contract.
Why do you think your set up hasn't been fruitful with the ES?
Yes each bar in succession must have a higher low in an uptrend or a lower low in a downtrend. There is some subjectivity, such as inside bars and measuring bars, but for the most part the definition holds.
I use different timeframes based on volatility. Usually I look at 3 - 5 timeframes for the 3 markets.
Trading on the daily requires more risk. The setup works great on the daily and weekly charts but the risk is like 60 ticks for a 120 tick winner. I can stomach 10 - 20 ticks risk for 15 - 30 ticks of profit.
It is a solid setup but I would like to see more setups per week / month.
Can you provide greater detail on the manner in which your winning and losing trades behave after you put them on.
I am curious to know if your winning trades generally go into the green immediately and reach your profit target with minimal time spent in the red. Or if it is a struggle or grind at first with the market inching its way toward your profit target?
How do the losers act?
In my head it would seem that since you are basically getting stopped into a trade with the market sweeping you into your position (long or short) and that these are reversal trades that most of these entries move pretty quickly and without much stress.
And if this is true, I wonder if the losers sort of bounce around and exhibit different tendencies before getting stopped out.