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My journal to trade by understanding market's processes and behaviors
While digesting my non profitable Friday afternoon I did start to review my rules and question myself (yes I know, did the holy grail research again last night for about 3 hours, which is not bad actually ...) and did spent some times reading Linda Bradford Raschke Professional Trading technique document. Since my trade was a flat stock for most of the PM I doubt that volatility (low) was my issue so I did read the ADX section of the said document. I also review one of the 4 principles of the market according to Linda which is a continuous variation from contraction and expansion. To make a long story short, I think I will look at the ADX in the AM when screening my stocks (I will look at a decreasing ADX in the AM and/or a low ADX around noon or turning up around noon, it might help find stocks that are ready for some movement in the PM.
I did start a replay of November 7th 2014 (replay that I did start in the past but never ended the afternoon) so I wanted to finished it before taking November 8th. I did nailed AKAM again on the retest of the high. Charts are attached (AKAM2). I did adjust my get out rule since I had a PAV reversal bar against me. But it was a bottoming tail so instead of getting out I did move my stop 1 tick below the body (some discretionary live rule adjustment !!! wow I did it !!). It did touch the SMA30H but did not closed into it. But the volume increase was so nice and strong, I had to adjust on the SMA30H rule as well. And technically, the rule was followed anyways because the rule says that price must close above the SMA30H which it did. This is the perfect example of what Palvatos talk when he says that the most important rule is the volume rules. All the other indicators are in support to the trade.
Here is the chart in question:
It is the Holy Grail setup of LBR as well (or pretty close to) which I did read last night too ...
So I am planning to replay November 8th tomorrow morning ...
Did start to use the ADX not really knowing what I was doing ... Not to sure if it is because of that, probably ... Who knows, Feeling like crap now ... It is hard, it is hard ...
Kind of same thing as 2 days ago, flat/range situation and did try to go with breakout ... At least I went on the other side after and I knew where was support .. But my risk reward ration was totally blowout on my second trade anyways ... Revenge trade with some success ...
This thing is taking so much time and effort, and the worst is that I am the issue, I change stuff, I lost focus, I change stuff, I lost focus, I change stuff, I lost focus, again and again and again and again !!!
Here is the other one I was watching :
Not able to get in GT anywhere according to my rules
Alright enough now, I am desperate today, I might have to admit that this activity which I like a lot, is not for me at some point ...
I was taking a pause to see how I would feel not working on my ultimate goal which is becoming a professional trader and I feel more crappy not having a goal in life than having to deal with losses and feeling that I am wasting time !!
Dam if you do, dam if you don't !! So the only way out is to work, work and work towards my goal and try to manage the down sides that comes with my dream ...
I did join many years ago a group called Canadian Society of Technical Analyst (CSTA). I did assist at 2 monthly meeting before being involved with my professional Trader program. Once I got into my professional program I dump the CSTA but I will go back. They actually get together once a month, there is a chapter in my region and they do receive KEVIN J. DAVEY this month, he is a professional Trader and did win some algos competitions. He specialize in strategy development process. I will do some research on him on futures.io (formerly BMT) after this post. The goal here is to see others of our breed, you know, it might help me manage my difficulties.
Also, I will address the thing that kind of knock me out here which was playing with that new indicator (ADX) without really knowing what I was doing and not really knowing what it was measuring and not really knowing what it was acutually calculating ... I took the idea quickly from Linda's document just knowing it was following contraction and expansion (this is what I remember, it might not be that at all !) but without any validation, preparation, testing, you know the pattern, just hoping that it will change your trading to success in an easy add-on ...
So yes, I will get involved with contraction and expansion of the market (kind of same thing as rotational and trend day), I think it is the most important thing to look out since it usually dictate if we are in a range or trend day and we know that a range and a trend day does not trade the same way. I will review properly that section of Linda's Professional Manual, I will make sure I understand the concept I am trying to measure, then I will review how the indicator gets its value (understanding the math formula) and after that I will try to evaluate based on the value of the indicator and based on the slope of the indicator if Linda's saying are really useful when adding this concept to my existent rules. Pavlatos also refer to that indicator in one of his video so I am confident about the result but we do have to do the work of verification and validation in order to believe and this is the step I did neglected which end up hurting me.
LBR also explain the 4 basic concepts of markets in her Prof. Trading Technique manual. This is the foundation I believe and they are simple concepts. I will make sure that I understand the mapping these concepts with Pavlatos and LBR indicators.
Ok, time to work now, I am still debating to follow only one or two stock here and dumping my screening process, this will help me focusing on determining the current environment (range or trend). This habit comes from my Day Trader school and program but here everybody seems to be following only one to three instruments, including Pavlatos, Big Mike, Linda, nobody is screening for intraday trading. I will do my contraction/expansion study on only one stock (I will use AKAM), it might help me resolve this important dilemma.
First I did play a lot with the ADX this week-end. I had a hard time finding a good utility to it directly on the 5 minute chart. What I ended up finding was to watch a lower timefame while the higher timeframe was showing an ADX above 25 and rising. For example I did liked a lot the 1 minute charts when the 5 minute chart was showing a rising and above 25 ADX. This was the conclusion of numerous hours of observations, I need to make a small official study of that observation. This might give me a better way to find trending moments and from there I can use trending techniques.
Also I went tonight at my CSTA meeting (Kevin Davey was doing a webinar). Kevin is very advanced, his edge consist of mechanically trading numerous strategies on numerous uncorellated instruments (ex, gold vs euro vs oil) which give a smooth up equity curve. I did met the organizer, great guy, they also do a study day one Saturday per month, usually one member presents its strategy and other ask questions after. I will see, I was tired tonight, I might just be searching outside (again) while my answers should be found inside ...
I did subscribe to the elite Price Action Journal thread. I will try to start looking that thread as well.
First, I did try to figure out how the ADX can help with strenght and after spending multiple hours over the week-end, I am not able to get a quick visual edge even when using 2 TF. So I dumped that study.
I try to focus and learn more on contraction and expansion and I kind of trusted myself this PM of old pattern knowledge I got from the past.
Also, I did not screen for stock this PM. I came with the idea of watching my favorite stocks and my mind was setup on X and AKAM. I was lucky, X was strong to the up side since the morning. I did watch INTC as well on the side but stick with X and AKAM for 80% of the time.
I decide to trust one of the 4 important rule LBR explained and it is that trend has usually more odds to continue than to reverse.
I also trusted the SMA10 and the SMA30 on my 5 minute and did try to pick an entry on the 1 minute using my regular rules play (I have only one play anyways but more entry when looking at 2 TF)
I did remember of the megaphone pattern that usually gets back to the middle and go from there and this is exactly what the 1 minute gave me before giving me most of my regular signals: here is the result:
I did not follow my rule for exit, I chocked, it was taking too much time, I am ok with it. But it went at exactly 1 tick above my initial target (yes, I would have been executed). Not bad
The megaphone old trick did me confidence to get into that one, which is not part of my trading plan but all the rules were there so nothing not followed either anyway ...
I did notice also the contraction on my exit (triangle) and I know something was going to happen but I was exausted of following my initial trade but I am proud of having draw these lines while it was shaping ...
It always a balance between trusting yourself and following rules and sometimes binding a little bit your rules ... not an easy task, well for me ...
Did downsize my trading plan, now a 9 pager doc. No more screening for me I will watch X and INTC only.
I did add a trading direction rule in my trading plan to give me a bias. EMA20 + SMA30 must be in same direction and that direction is the direction to go. This is on my long term chart, 1000 trades for INTC, 300 trades for X.
The short term chart is 5 time smaller, 200 trades for INTC and 60 trades for X.
I tried to mimic a 5 and 1 minute charts.
As for setup, still the Palvatos inspired setup and this will be on the short term chart to be taken.
I got my live account back officially yesterday, will trade it tomorrow PM.
Did start to look at PAT, did watch some video form Mack, actually I start to like drawing trend lines (which I rejected in the past), I totally see the flexibility of that method that zero indicator can match due to their fixed parameters
Got a small looser and a small winner which offset to the green side today. Went well with the execution platform as I was trading real money today. Actually I do calculated that my previous live trade was in 2012 ...
I did miss one entry, I stick with my direction rule but this was the one to hit ... And the worst is that the trading direction (SMA30) was wrong because of the gap this morning ... Anyways, here are the results:
INTC kind of went totally crazy fast at 3:30, the 200 trades bars went from 2 minutes to 5 seconds up to the close ... Is this what Palvatos describe as ETF funds imbalance correction at the EOD ?
First I decided to add another PM session in my week and the plan is to trade on each Tuesday and Friday. I did started today. I had 3 loosers, I was totally controlled by the fear of missing today ... I got short on X 3 times while INTC was a lot weaker ... not good. But kept my total day risk rule in control, lost exactly 57.99$ on 3 trades and my max daily loss is 60$ and my max amount of trade is 4 ...
I am all mixed up now ,did not even marked my discipline score ...
