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lovetotrade's YM Breakout Journal

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  #101 (permalink)
 lovetotrade 
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Ok, so today is my first attempt at a reversion to the mean trade. This has been something I struggled with for a long time, but now that I am seeing the markets more clearly it is making a big impact on my trading and thought processes. In auction market theory you have periods of balance and imbalance, and I believe to be successful over the long haul in trading you must be able to identify these periods, and you also must trade them accordingly. The Achilles heel of my previous trading was over-leverage, and trying to seek trades of imbalance every day, and in all market conditions. This did not bode well for consistency.

The hardest part I believe is identifying the transition from balance to imbalance and vice versa. For me this is where trading becomes art vs. science. I also believe as with most aspects of trading this is where it is important to have systems and processes to help you identify when those changes occur, and what to do when they happen.

So fortunately today is providing another one of those awesome market lessons I love so much(sarcasm here as I enjoy much more that my theories prove to be correct on the first try). I would say that I executed this failed reversion to the mean trade pretty flawlessly. I scaled in down to the lows and the VWAP 2nd SD band, and then after we got a good bounce we consolidated near the lows I scaled back out to exit fully with very little damage.


So here comes the lesson. I should not fight the market if price action is telling me loud and clear that it wants to go higher, or in this case lower. There were a few things going on structurally that should have given me indication of a break to the downside if we didn't reverse at the extreme. Basically I didn't have a plan B. And that is a problem. What if this move had been larger or even much larger? Or I guess even worse, what if this is the only decent trade for today? It is Monday with no news and I was already expecting limited movement.

So there are some positive remarks for execution, and also a valuable lesson to take away. As long as I am journaling correctly and applying what I have learned, I expect my trading development to soar to new heights relatively quickly.

"We are what we repeatably do. Excellence, then, is not an act, but a habit." -Aristotle

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Thxo
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Hi,

dont know if this useful or not. for mean reversion strategy, i found that for me its really helpful to include session highs and lows into my trading, like in the pic below ...

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 macgwrite 
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lovetotrade View Post
Ok, so today is my first attempt at a reversion to the mean trade. This has been something I struggled with for a long time, but now that I am seeing the markets more clearly it is making a big impact on my trading and thought processes. In auction market theory you have periods of balance and imbalance, and I believe to be successful over the long haul in trading you must be able to identify these periods, and you also must trade them accordingly. The Achilles heel of my previous trading was over-leverage, and trying to seek trades of imbalance every day, and in all market conditions. This did not bode well for consistency.

The hardest part I believe is identifying the transition from balance to imbalance and vice versa. For me this is where trading becomes art vs. science. I also believe as with most aspects of trading this is where it is important to have systems and processes to help you identify when those changes occur, and what to do when they happen.

So fortunately today is providing another one of those awesome market lessons I love so much(sarcasm here as I enjoy much more that my theories prove to be correct on the first try). I would say that I executed this failed reversion to the mean trade pretty flawlessly. I scaled in down to the lows and the VWAP 2nd SD band, and then after we got a good bounce we consolidated near the lows I scaled back out to exit fully with very little damage.


So here comes the lesson. I should not fight the market if price action is telling me loud and clear that it wants to go higher, or in this case lower. There were a few things going on structurally that should have given me indication of a break to the downside if we didn't reverse at the extreme. Basically I didn't have a plan B. And that is a problem. What if this move had been larger or even much larger? Or I guess even worse, what if this is the only decent trade for today? It is Monday with no news and I was already expecting limited movement.

So there are some positive remarks for execution, and also a valuable lesson to take away. As long as I am journaling correctly and applying what I have learned, I expect my trading development to soar to new heights relatively quickly.

"We are what we repeatably do. Excellence, then, is not an act, but a habit." -Aristotle

Nice job man! Relying on your scaling plan is pretty hard when the market decides to show strength opposite your position. Props to you for trusting yourself and not bailing early.

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  #104 (permalink)
 lovetotrade 
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Thxo View Post
Hi,

dont know if this useful or not. for mean reversion strategy, i found that for me its really helpful to include session highs and lows into my trading, like in the pic below ...

Feel free to elaborate further as I am not getting a whole lot of explanation from the picture. I am always interested in a different perspective. Thanks!

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  #105 (permalink)
 lovetotrade 
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macgwrite View Post
Nice job man! Relying on your scaling plan is pretty hard when the market decides to show strength opposite your position. Props to you for trusting yourself and not bailing early.

Haha yea that was interesting to say the least. Keeping my size a tad bit smaller and scaling in against the position helped reduce the risk, and made me feel better about the trade. If it had blown right through there I would not have felt so good about it lol.

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 lovetotrade 
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First I want to give a shout out to Bruce Bower of SMB Capital. I never get tired of reading his material which is awesome and is also a huge free resource. Here is his blog. The How Of Trading - Trading Meets Psychology and Self-Development

Ok so yesterday and today I spent a little more time on getting positioned better for intraday swings in the market that line up with the intermediate trend(for me this is 60 minutes). My failed squeeze setup that happens against this trend helps with entry into the trend as the counter trend momentum dies.

My first trade today was an attempted entry into the trend about a half hour before the building permit report that came out at 8:30 this morning. From what I have seen if it is a stand alone report then the market will stay in its current trend sometimes right up until report time. So I was thinking I might be able to get a little cushion. Not this time. So I started to scale out as it moved closer to my stop and we got into the last few minutes of report time. I was able to capture some nice profits as the report pushed the Euro quickly lower.


My second trade I used the failed squeeze setup as the market tried to break out counter trend into a nice low volume area. Never got a nice pullback to scale in higher but the trade worked out decently.


The boxes are the areas of trade from the previous two charts. Another day that puts a smile on my face.

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 lovetotrade 
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So my first trade today had some kinks in it, well I guess I should say a kink. While I did enter this trade close to the highs of the consolidation area, my thoughts were that the move looked like it had conviction, and if it went any higher I wanted to be in it. Basically I would regret getting left behind more than I would being stopped out. I don't know if this is good psychology or not, but I knew my risk of failure was a little higher here as well so I entered at about a third of my risk.

Well we got a good rejection from a test of the recent high, and in my experience if it looks like it was a strong test and it doesn't break the immediate trend, then conviction should ramp up as we are taking off when we break the highs or lows. And just as I was deciding that I needed to place another buy order at the highs it blew through them by 15 points. Leaving me in the dust with a small position. Bummer.

So just trying once again to utilize this as a learning experience. The first question I ask in every trade is "where is my stop?" The next question needs to be(if a partial position is entered) "where do I plan to add?"

The result was a stop out, but a cheap lesson. The trade may ultimately end up working out, but I have pretty specific criteria I am looking for as I like to keep things simple. Super complex pullbacks are not one of them.

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  #108 (permalink)
 lovetotrade 
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So things look good for today's developing trade so far, let's dive in. (Well was developing, for the last few days I have been writing in my online journal instead of paper notes as the trade happens, and plan to continue)

There is something I have noticed that's pretty interesting regarding news events. It's a pretty simple concept really. So obviously depending on where these economic forecasts end up(along with how much in the spotlight they are), impacts the dollar higher or lower. So for example, this morning's unemployment claims beat the forecast just slightly. This is slightly negative for the dollar, and therefore positive for the Euro.

Well the Euro was in a short term downtrend and just outside of some good support. So with a report in the mix this is a critical juncture for me to base a trade idea on. So after the report we immediately jumped back above support as expected, but then we started to sell off pretty hard. So this information is very important. That positive news did not give us a large enough kick to restart the uptrend, so this gives us confirmation for our downside bias. New lows along with any pullbacks should be shorted as the Euro will be searching for value to the downside.

Simple concept but fairly complex to execute.

So I put an entry order at the new lows, and because of the vertical nature of the downside move I expected a bounce shortly thereafter. So as we bounced I layered in at my original entry and just above with another 1/6th of my full position at the new lows. I got lucky and nailed the high as I was trying to trade against the momentum higher.

The only regret I have, is in trying to reduce emotion and trade error, I do not watch the trade development on my one minute entry chart. I could have done a much better job saving some of my profits as the market moved against me if I had been. First target(s) at lower VWAP bands.

Context chart:


Entry chart:


Just enough scale out to reduce risk average closer to entry.

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  #109 (permalink)
 lovetotrade 
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Well this morning's lesson is on entry and execution.

I seem to start every day with one small trade in a fairly random location, as if I need to be in the market to get a feel for the day. This doesn't make sense and needs to stop. I have been making an effort to focus only on specific market action that lines up with my specific setups and kind of ignore the rest. Or at least zoom out enough so that I only focus on how it relates to the overall picture.

Like this morning's first entry should have been earlier and larger. I let the 5 minute chart break down to new lows, and then randomly got in a small position on a new low on the one minute chart. I have added some new specific entry rules that should help me trade my setups a lot more consistently. Trying not to add too many rules but I must make a positive impact every day.

So I got great entry on the next pullback(which should have been my add on to the initial position. And this time I still got in too small, so no chance to scale out meaningfully. So my new entry rules specify position sizing depending on location as well so there is no confusion there either. Captured decent profits, but definitely got out early too.

My next entry into the trend was quickly blown out as the Greek news blasted the market higher. Hadn't set a stop yet as I was waiting for price action to develop, so I quickly got out. Overall lots of work to do on execution, but I am focused and driven. It will all work out in time.


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  #110 (permalink)
 lovetotrade 
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Doing much better with execution today. I had conviction in my trade ideas, and entered the market in correct size. Emotions were very much in check, and even though the trades didn't work out I felt good about the process.

Done for the day already as it is pretty clear we don't have much conviction in the market this morning, and I don't look for any real moves on Friday afternoon.(And now that I am posting this the wedge is breaking out to the upside it looks like)

Looks like it is not worthwhile to put any trades before news reports, the 8:30 a.m. one anyway. Unless I started trading another hour earlier. These have been pretty consistent losing trades. I missed the first scale out today by 1 pip, but that's all I would have gotten.

I have chosen to use a 44% fib retracement as my pullback entry for use in my directional trade setup. It's the middle point between the popular 38.2 and 50%, and gives me confidence of entry into most pullbacks during a trend.

My second trade today was after the news report. We tested the hourly support and resistance area during the first couple of minutes. The hourly/ 15m/ 5m trends were up, and we started consolidating above the VWAP. So I took a long above the previous highs as it looked like value was developing higher. Once we pulled back into the value area, and price was rejected lower away from the first SD bands I got out. This confirmed everything I needed to see to get completely out, and that my long trade was no longer valid.

My third trade was half size, and after a failed attempt higher I was giving the downside a chance to hopefully be tested which did not happen until after I was stopped out go figure.



So like I said, happy with my trading today. I feel like I was reading the market correctly, and executed my trades well according to those convictions.

Just to add a note to my last trade, I really need to try not to take trades close to the VPOC which is basically an area of randomness. I need to wait for price action closer to the extremes to give me a signal when we are in a trading range.

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  #111 (permalink)
 lovetotrade 
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So I have had some more good thoughts over the weekend as I continue to think through my plan and trading process. One thing I did of significance on Friday was to print out checklists for each of my strategies. I got the idea from Steenbarger's traderfeed blog as a great way to simplify the process, which reduces decision fatigue, and keeps me consistent in my approach. So I have a morning prep checklist that gets me in tune with what happened overnight, and where we are when I first log on, and then checklists for my setups as the day progresses. So far so good.

Another idea I had was to use the direction of my shorter term VWAP in regards to the hourly rolling VWAP, to help target trade location and my general approach. For example: If we are in a nice uptrend on the hourly chart, but price is pulling back, then more than likely I will have a downward moving daily VWAP, and I should be targeting trades to go long somewhere below the VWAP depending on price action. But I am basically looking to establish a new position between the bottom 1st and 2nd VWAP SD bands. But if both VWAP are pointed higher, then I need to be more aggressive in looking for entries, and anything below the daily VWAP is a gift and should be quickly rejected higher. I can then use price action and my system to get entry and feel a little more confident of a much better than average trade location.

I am also using the area between the hourly 44%-62% retracement to target trades within the VWAP bands. So if something is not looking right at the upper end of those levels then I know we might be looking at a reversal in trend.

I used all of this information to structure my trade this morning and it worked very well. Plus I was able to wrap my head around the price action of overnight very quickly and effectively.

------------------------------------------------------------------------------------------------------------------

So now I will break down this morning's trade which was almost great.

The dollar is an area of previous congestion so trying to pick any kind of longer term direction right now is pretty futile in my opinion. So just letting the hourly chart lead my decision making. So the first chart is my hourly chart, and you can see we made a new lower low and was in the middle of a pretty good retracement when I first logged on. As a matter of fact we were at the upper end of 62% retracement indicated by the blue box on the 5 minute chart. The hourly VWAP has rolled over, and my first thoughts are looking for signs of failure on the 5 minute chart to continue the downtrend.


The hourly squeeze had fired short, but usually this is accompanied by strong momentum and so the pull back is a little suspicious. So my other line of thinking was that since we were consolidating above the developing VAH, any breakouts to the upside would probably result in a strong reversal.

Well we tested the previous 5 minute high, and I was watching the 1 minute chart for sign of continuation or failure and ended up setting a buy order at the highs. I was filled and we continued to cruise higher and then consolidate for fifteen minutes or so. I considered this very bullish and so I started to add into my full position in this area. The volume profile had built out a pretty obvious mini value area(not pictured as it got filled in) and so I was trying to determine where to draw a line in the sand as the market started a deeper pullback into the breakout area.

Well after I got stopped out at the lows, I realized that I should have placed much more emphasis on the fact that the market action of focus was all happening well above the DVAH AND the 1st SD VWAP band. Which was obviously screaming hold. I decided I would stick to my convictions and not re-enter in fear of a double loss. We had also moved below the black and yellow line which were hourly resistance and previous day low(which wasn't helping with my stop placement decision). If I had just held my stop at the previous lows I would have gotten a couple of scale outs and a profitable trade.



Now I am happy with the fact that my emotion and gut stayed in check, and I was very objective throughout the entire process. I am going to create another checklist for trade management as soon as I publish this post. Overall things came together very well for me this morning, and I am happy with the way things are progressing even though the money isn't rolling in yet Staying focused on the process and hopefully profits will follow.

@Private Banker I was hoping you could read over this post(and any others if you wish) if you have the time, and give me an outsiders perspective, and anything of value you might be able to add to my processes. It would mean a lot. Thanks in advance.

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  #112 (permalink)
 lovetotrade 
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Still struggling with execution, the last two days have given huge opportunities that I did not take advantage of. Both were with the larger trend. Yesterday was a simple setup execution error with not pulling the trigger, and then the momentum of the move allowed no second entry. Today the volatility was very big, and I did not have a gameplan to adjust to those circumstances.

So Yesterday I dealt with the psychology aspect and my failure to put on the trade. I realized that I didn't like my rules, and that limiting my specific squeeze trades to only the direction of the larger trend, along with reducing size to make up for increased volatility put me back in the drivers seat. This will provide me less signals, but a higher risk/reward.

Today I looked back over the last year's worth of charts for similar situations and factored that into my gameplan, again with reduced size for larger swings, and specific entry criteria for explosive moves.

I am reading The New Market Wizards by Jack Swager right now, and I see myself in a lot of the traders(some more than others) and particularly one trader mentioned something that I believe applies to my struggle recently.

He said that when the market seems the most chaotic to most participants, that this is where the greatest inefficiencies in the market come from. And I believe keeping the big picture in perspective helps you exploit those inefficiencies the best. Also the most prepared trader I believe has the best chance for success. Another trader mentioned how hard it is for most to pull the trigger on a runaway market, but often times these offer great reward, as I have seen exactly that during these last two huge up days get away from me.

Tomorrow is another day, and I am determined to grind this learning curve out.

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 lovetotrade 
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Well if you are like me, then you might be wondering how in the hell could you have so many missed trades on an obviously trending market? Well I'm out to explain that one today the best I can.

First although this chart looks pretty good now that it is completed, it is not one of my best days to trade. The slow grinder. I am a momentum trader at heart, and a day like today grinds the weaknesses of my psychology to the bone.

Talk about failure after every single breakout except for the last one I didn't/wouldn't take. Although I hate having another losing day, this chart provides so much important information to my survival, and I am glad it happened.

I have to remember that it's just another day, I didn't take any big losses today(even as a whole), I did do some things right, and I must learn from the mistakes. It's the only way to grow.

I'm gonna make this brief as I think it will help me go over previous posts more efficiently if I don't go into too much detail.



At the end of last week, the overall price action led me to be bearish in the near term. The daily chart had rolled over and the hourly chart is in a down trend. But there were some bullish developments this morning.

The yellow and purple lines indicate that we were trending above Friday's high and VWAP close. The red line is pretty strong hourly resistance, and the thin black line was the previous high. As you can see there were no significant pullbacks to try to enter with any reasonable risk:reward.

After being stopped out of a small position when the market made a lower low, I fooled myself into thinking I had enough information to take a short near the hourly resistance on pullback. Well once that failed I got long at the new highs expecting a strong trend reversal as any reason to be bearish was now gone. Well after an ugly complex pullback after the breakout, I was stopped out as the market reversed higher. Only because I was getting nervous on the position I tightened my stop even though that is not part of my plan. I took one more half position on the new breakout, and quickly got out once the market started to immediately pull back. At that point I was done for the day.

So today I am happy that execution was not the problem, and executed all trade ideas correctly.(minus moving the stop)

Today's two main problems were moving my stop which was not part of my plan, and not having a clear explanation of what constituted as a failure/reversal.

This afternoon I am out to do just that. On a day like today, patience is of the utmost importance, and it really should have been an easy day. My pullback entries got me a decent risk avg, and really should have ended today with a profit.

Tomorrow is another day....

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 lovetotrade 
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For the most part, what I have noticed is that the market does not reverse on a dime, but is a fairly obvious development that occurs over the short term price swings(absent any news events). So I need to be patient and get rid of the mindset that I need to hurry up and get in, or be anxious that I am going to miss the reversal. As long as I am patient and paying attention, I should have no problem getting entry.

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 macgwrite 
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lovetotrade View Post

Well if you are like me, then you might be wondering how in the hell could you have so many missed trades on an obviously trending market? Well I'm out to explain that one today the best I can.

First although this chart looks pretty good now that it is completed, it is not one of my best days to trade. The slow grinder. I am a momentum trader at heart, and a day like today grinds the weaknesses of my psychology to the bone.


Amen, brother. I thought the strength of move up without a larger correction was a fairly low probability event but looking back at it, it does look clearer I'm guessing it was driven by some Greece news, although I haven't actually checked.

Nice job staying away from the revenge trading and temptation to keep selling higher.

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  #116 (permalink)
 lovetotrade 
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Well what truly sucks is that I only took one short trade, and three longs! I am trying to understand and learn to let the market develop without getting too anxious, or trying to impose what I think should happen, and then make an illogical decision like moving my stop. Cause it always seems to reverse as soon as i think it shouldn't go any lower lol.

I truly believe that if I hadn't moved my stop, I would have caught the subsequent move higher and been in tune with the rest of the uptrend. Which trended beautifully for the rest of the day. It seems as though when I try to place my stop within the current swing using value areas in the volume profile, it bites me in the ass. So I will do my best to avoid that temptation in the future, and stick to market structure.

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 lovetotrade 
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macgwrite View Post
Amen, brother. I thought the strength of move up without a larger correction was a fairly low probability event but looking back at it, it does look clearer I'm guessing it was driven by some Greece news, although I haven't actually checked.

Nice job staying away from the revenge trading and temptation to keep selling higher.

It will be interesting over the next few weeks as I'm sure we will get some surprise news events during the trading day. I just hope they are surprises in our favor if we have a trade on!

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 lovetotrade 
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I have come across another important detail regarding the hourly trend and market structure. I will try to explain it the best I can simply.

So the idea is that I generally define the hourly trend by the usual HH, HL, LL, LH. And I expect the areas of HL's and LH's to be rejected in the case of trend continuation. But the truth is, besides using that and watching the larger charts for how the hourly chart falls into the bigger picture, I didn't have any way to identify possible turning points without being surprised by them. Now I think I have a fairly reliable filter.

So the idea is that if the market closes above yesterday's VWAP and today's VWAP then the trend is strong and should continue higher. The opposite is also true for the downside. Large moves result from this scenario.

Now if we close above yesterday's VWAP, but close below today's VWAP, then expect the market to test the trend support level, along with any market support levels along the way, like yesterday's high/low or VWAP. If the market test's yesterday VWAP, but doesn't break the trend, then this can be a sign of a healthy pullback, and the trend can continue higher/lower. Again same is true for the downside.

What this does is it gives me a couple of new scenarios that I can attack with different mindsets, instead of just guessing what the market might do. Now I can see whether I should be aggressive or a little more cautious.

So I made a quick chart to show some examples.


The first arrow shows how the day closed above the previous and current day VWAP, tested the previous day VWAP and then launched higher. The next day moved even higher without pullback.

The 2nd, 3rd, and 4th arrows show how the trend support was slightly broken, closed below the current day VWAP, and then fully broke the trend. It was also rejected higher from the previous day VWAP, to the current day's. From value to value.

The 5th arrow shows rejection at the previous day VWAP considerably lower.

This happens with enough consistency to make it noteworthy. Hopefully it adds to the bottom line.

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 lovetotrade 
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Today's trade was pretty simple. Execution was good, got one scale out, just didn't quite anticipate the reaction from yesterday's VWAP. Well as I explained in the post above, next time I will. And would probably have taken off another scale right at it. But the most important thing is that I stuck to the plan.

Entered a partial position as the market broke to the downside, and then scaled in and watched it work my way. Missed the second scale out by 4 pips.




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 lovetotrade 
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Pretty happy with today's trade for what I had to work with.



Pretty good area of confluence: Yday VWAP(purple line), Hourly trend support(red line), and Yday High(dashed orange). So as we got a market squeeze(area of compression on current time frame), I anticipated it breaking out to the upside. Unfortunately I got some mixed signals pointed out by the arrows. The initial thrust shows 3 rejections at the 5 minute trend resistance, along with the 15 minute momentum rolling over in the lower panel(middle line).

Well my rules dictate that I must exit the trade when 15 minute momentum rolls over against trade direction. So with some initial hesitation I exited as the 5 minute trend had not fully reversed, and continuation to the downside was still a possibility. Well after looking over this later in the day I realized that the rule does not take into account mixed signals, and a reduced consistency when the line is flat. So after going over the last few months of data with similar situations, my best adjustment going forward is to reduce my position by half and enter again with a new breakout.

So I did re-enter but only half position as I was looking to add on a pullback. I exited half the first position at the upper 1st SD band and DVAH. So as we got a pullback to the VWAP, which also lined up with the 44% fib level I re-entered back to a full position. With the distance of the original stop I should not have gone all the way to full position size, but I was expecting continuation based on previous price action.

Ended up with a stop out and decided to be done for the day. Not having the full position on going into the breakout kept me from ending with a profit, as I would have gotten a couple of scale outs. Perhaps break even with the stop out.

Happy overall again today with reading the chart correctly and executing trade ideas well.


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 lovetotrade 
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Today I feel like I traded well. Unfortunately my PnL does not reflect that, as I got a little whipsawed today. But I was committed, read the market well, executed my setups, and have to accept that today was just not a profitable day for me.

So I will touch on what I did wrong, then what I did well:
1. A couple of my targets were off by just a couple pips. I must remember that I need to look back over prior swing points and points of S/R that come close to my profit targets, and adjust them accordingly.

2. I should not reverse my position until trend has officially ended and changed direction. I got a couple decent entries, and were possibly legit in the immediate context, but ultimately were low probability, and unnecessary losses at the end of the day. Reversing a position is not part of my plan.

So what I did right:
1. I read the market correctly based on market structure.

2. I held my stops in the right places, and trailed it correctly allowing me to take advantage of the main trend.

3. As soon as I realized I was wrong, I took my loss and moved on.

4. I kept my emotions on an even keel all day, and read the market better because of it.

Ok quickly onto my trades. Today was a little confusing because we sold off after wednesday's good move to the upside, to the point that the hourly chart was in a downtrend. The five minute downtrend had obviously slowed way down after a couple failed moves to the downside. We were also at the breakout level from Wednesday that I thought could be strong support, and even though we were in an hourly downtrend, we were merely correcting on the 4-8 hour charts.

1st trade- strong bull bar breaks above previous high, enter 1/2 position. Immediately breaks down so I reverse expecting continuation to the downside, and scale into full position. Stopped out.

2nd trade- high confidence that this next breakout is the real deal. Pullback is very strange for a breakout, but scale in and out back to full size. The market takes off. I get two scales and miss the last scale by two points. After failed low, and strong bull bar at the top of the trend I enter another small position according to my plan. Small stop on that, and then quickly stopped out on the rest of the position.

3rd trade- Reversal. The market seemed to have reversed hard at previous day low, and so I was ready to ride that short to new lows on the day! Not so fast. Market stopped at DVAH and consolidated for a move higher. Reversed back to long and exited for lunch and friday EOD right as the market made another leg higher.




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 lovetotrade 
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Slightly profitable day, much more green arrows. The beginning of the day was moving smoothly lower and I got short after the morning report. Entry wasn't great, but I had to react quickly. After the second move down we got some ugly looking candles showing bull strength coming into the market so I took more profits. Shorted the rebound into the first and second sell off and scaled off a few more gains. Thinking about scaling a bit more aggressively, but I know that as soon as volatility picks up that will not be ideal. Maybe I can set some volatility conditions for aggressive/more lenient profit taking targets. Oh yeah, missed second scale out by less than a half tick. This is beginning to get ridiculous.




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 lovetotrade 
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So after doing some more thinking, I realize that there are only two things holding me back from long term success. No revelations here, and they probably apply to most traders. I am a trend/momentum trader at heart, and so I must play to the strengths and weaknesses of my trading plan in order to fully capitalize.

1. I must take full advantage of large trend days, and I absolutely must not miss any of them. My trading plan gives me the full ability to exploit a trend that runs infinitely. The reason for my current draw down is because of missing the last two or three large moves, and that does irreparable damage to my equity curve as it completely misses its next leg up and continues to draw down.

2. Winning days/losing days during lower volatility. I should be very content with days that I even make a small sum of money or scratch when the market is not moving much. This keeps me in the green, and puts me one day closer to a trend day with no draw down. On losing days I must remember that my only goal is to limit those losses, so that I do no major damage to my account. My goal therefore is not to erase the possibility of a draw down, but to embrace it as part of the system and limit it.

If I had done this back in November(would have required me to understand the concept) then I could have successfully waited out the period of low volatility that caused me to stop trading, and been around when the large moves came back. But I do not regret any decisions I have made. I am a much stronger trader today because of that decision to go back to the drawing board and ultimately de-leverage.

But one of my major weaknesses back then was that I had no plan to deal with various market cycles, and as fully leveraged, had no way to reduce size when conditions were unfavorable. Smaller targets would have gone a long way though.

So with this information I can make a couple of small adjustments that should impact my account positively.

My trade management plan currently has me taking profits over a wide range. This causes profitability issues when only half the targets are hit and the other half are stopped out. Resulting in most successful trades to be break-even while all losses continue to be full stop outs. This automatically puts my equity curve at a disadvantage.

So for now I will consolidate my targets to two levels and continue to keep a runner vs. 4 targets and a runner. I will also take profits more aggressively by setting my targets lower, automatically raising my profit for each trade. Doing this also increases the size of my runner should I end up in a nice trend, which will also have a larger impact on those days.

This will also boost my confidence as winning trades will make more money as well now. Looking forward to the changes.

Peace

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 lovetotrade 
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Alright, well off to a good start. Nothing has been a bigger boon to my current success than learning to read context and market structure correctly. It puts my mindset in gear to focus on the proper direction, and quickly becomes obvious whether things are lining up correctly for me or not. Still working on patience for better entries and I think that paid off well today. @Private Banker had mentioned in his webinar that he likes to track his progress by monitoring how many points/ticks/pips he took out of the days range, and that resonates pretty well with me. We all have limited opportunity in the market each day, and if you are pulling out more points than the whole day provided(from top to bottom that is) then I'd say you are doing pretty well. I think I did that today and it feels good.

So today things looked to head lower after a mediocre bounce overnight, and good consolidation on the hourly and 15 minute charts. Unfortunately the daily and weekly chart are in a wedge. So not sure what it's gonna take for us to break out of there, but I'm ready for it to

Simple trend trade to the downside this morning after the 8:30 report. Got one scale out, exited second third on ugly looking bull momentum, third stop at end of trend.

Second trade is my first successful RTM trade. When the trade first started the VPOC was above the VWAP, so I targeted the VWAP. Pretty obvious rejection off the low of the day and moved swiftly in my direction. Well I wasn't paying attention to the fact that the VPOC shifted lower and stopped on a dime there. Once I noticed it I was able to get half off on a rebound, and held the other half in case of any follow through to the upside. No such luck.

Minimal heat today and no losses! Today's range(from 8:30 report) 1217-1180 =37 points. Total points today =40.




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 lovetotrade 
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Today we finally got some movement! Of course most of it happened during lunch, which is usually pretty quiet for the Euro(especially on a Monday). I have been reading a really good old trade journal by indextrader7. He's not around anymore as it looks like he fell off the deep end, but man did he leave some great stuff behind. Still on his first journal:

It has given me some inspiration and a few good ideas. One of the more important things I have learned is that it pays to really focus on the immediate trend until it has clearly reversed. I realize most of my revelations are basic things, but it has really helped seeing it in action and produce positive results. A positive shift in confidence can do wonders for trading performance. I am also using a smaller 250 tick chart with a momentum oscillator to help time my entries a little better. I love the 5 minute chart, and it will probably forever be my main trading timeframe, but the 250 chart helps me see whats going on at S/R a little clearer, and gets my trade on a little faster than a 5 minute bar close, thereby reducing my risk. All while adding two extra bits of confirmation. Pretty happy with the results so far.

So besides a little chop at the beginning of the session, today was a pretty easy day to make money if you had your head on right. My last exit before lunch was the reversal at the previous day's high. I was able to squeeze out one more trade during the baby's nap at the end of the day. For missing the bulk of the move I still pulled out a decent amount of ticks which I am very happy about. Fumbled my first trade but got out quick, still struggle with my first trades some days.

Hopefully the dollar has shown it's hand today, and we have broken solidly out of this wedge. With all the crap about Greece, who would have thought that it was going to be to the upside after a large gap down? Trade what you see, not what you think. Thanks @Big Mike

Today's range: 176
Ticks taken: 107

I'll take it, and if I had been at the computer I know I would have been in at least one of the big afternoon moves, if not both.

Today's charts





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 lovetotrade 
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This morning's trades went pretty good. Nice little trading channel. I originally thought today would be an RTM day so I shorted the previous peak a couple of times, and then reversed when the market became obvious it wanted to head higher. Got out my last bit when the trend characteristic changed. You can't see this so well on the 5 minute chart, but the 250 chart it becomes pretty obvious.

Took a second trade for higher, then I realized that we had fallen all the way back to value and that any extended moves to the upside were limited. Quickly got out.

Today's range- 130 ticks. Ticks captured - 55 So I actually got 55 out of the 80 ticks of the morning range I traded.

Arrows mark points of entry.







Getting back into a groove and I like it!

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 lovetotrade 
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Ok so I have a quick confession to make. I am in practice mode to try out for TST. So today I was playing around with trading one position vs. the three that I have been trading. My goal is obviously to get funded, but the first goal has to be conquering the combine requirements. From what I understand, it will require me to basically trade one contract until I have built a cushion, and then scale up to 2. By this I mean my avg stop size vs daily DD for the 30k combine will require me to start with one contract.

Today I was focusing on using trend lines along with S/R to identify trends, increasing momentum, and exit points. The market seems to have some interesting tendencies when trend lines are broken, and I'm looking to exploit those tendencies. Also accelerated momentum by a new, more vertically sloping trend line allows for a reliable exit when broken. Looking to incorporate this into a multi contract scaling trade management, but for one contract it gives an obvious area for profits.

The general idea will be to enter the trade at a structurally significant area, and let the trade develop. Ultimately exiting with momentum. So more room for movement in the beginning, with less forgiveness towards the end of the move.

-----------------------------------------------------------------------------------------------------------------------------------------------

Ok so on to today's trades. Pretty easy to see we have a downward trending market. The morning report broke things to the downside as I was looking for. Got in during the initial 5 minute bar, and exited when short term momentum died out.

A few more singles in and out of the market, trying to go with the flow. Trying to get used to slightly different execution with the one contract, so was just trying to get some live experience. Nothing ground breaking today, although I am very happy with development so far.




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 lovetotrade 
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Holy smokes! Adam Grimes on the Hero's(insert trader here) journey. Very thought provoking and awesome read.

The Trader's Journey: The Hero's Journey - Adam H Grimes

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 lovetotrade 
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So many awesome thoughts over the weekend, can't wait to get them into the notebook tomorrow. All about trend lines and momentum, don't know how I have missed these things up to this point. Game changers for me.

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 lovetotrade 
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Alright so I have some good examples today of what I'm looking for. This has put all new confidence into my trading, and truly allows me to focus on the right market cycle, direction, and price action.

Through periods of balance and imbalance(consolidation and trend), I can also use acceleration and deceleration of momentum through trend lines to help me read the market better. Like most of my trading, when I have found something that was a building block to my next level of understanding and intuition, it was not some major revelation. It was something simple that had been there all along.

So the general idea is that during trends, a sustainable trend is one that is not too steep, and has pullbacks to draw in fresh buyers and sellers. During unsustainable trends, each leg tends to accelerate more so than the last, until all participants have entered in one final blow off move. Then the market must either consolidate before continuing, or reverse. Also the market has a tendency to re-test the most recent level of support/resistance once the trend line is broken. So I feel that given all this information, the approach to the market becomes a bit clearer. So it leads me to a few theories that I have applied to my chart reading.

1. Trend line deceleration during a solid trend is a healthy observation for trend sustainability, as long as the actual trend(of HH,HL,LL,LH's) is not broken.

2. Trend line deceleration during a counter trend, accompanied with any new failed highs or lows should signify imminent trend resumption. This gives us one more thing to watch for, possibly giving us an edge over those waiting for price action to confirm the change.

3. How the market reacts with the S/R once the trend line is broken, gives us insight into whether to continue to believe in the trend, or that we should proceed with caution. And if it breaks the trend line, but never even tests previous S/R gives another indication of trend strength or weakness.

4. Once a trend line is broken, I want to see failure on the third attempt higher/lower within the previous swing. If there is continuation on that third attempt, I assume the trend to be over for the time being.

Now I am not trying to convert anyone, just trying to show and explain the best that I can how it has helped me see the market in a different way.

So the first chart is my hourly chart. I do look at larger charts and the context the hourly is in, but I never fight the flow of the hourly chart. Here you can see it looks like we have the down trend resuming after the gap lower Sunday night, and then a re-test of resistance before attempting to head lower. This sets my focus for the day until price action disproves this. I boxed in the important price action.


The next chart is my main 5 minute chart. The first three arrows point to entry options to get in with the downtrend. The three numbers label the three attempts counter trend once the trend line was broken. You can see that we had a very nice failure at point three, but the report out at 10a.m. completed the trend reversal. The bottom two arrows show price action once the trend lines were broken. The consolidation at the high of the move on the first arrow was pretty bullish in my opinion, possibly signifying the breakout to the upside in advance. The light dashed lines are the accelerated trend lines, and the heavy lines end up as the main trend lines as they are moved with the price action.


My execution still left a bit to be desired, but it wasn't because of a lack of my understanding of the market conditions. Today was the clearest my mind has been during a trading session ever. I was in when I was supposed to, let the market develop when it needed to, added when the market conditions called for it, and scaled out and exited according to my plan. I will just have to fine tune with practice.

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 lovetotrade 
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So gotta make this update brief today, the baby is up from her nap! Looks like we are starting to get some directional bias on the longer Euro charts, which make it so much easier for me to trade.

Today we had some consolidation through the Europe session which means decent market movement for the U.S. session(finally!). After a short term weak uptrend, we rolled nicely back into the hourly downtrend. I got out early on the first trade as I didn't like how long it was taking, expecting it to break lower quickly. Well that was a mistake and got a much worse entry on the next move lower. It is now part of my plan that only a non-directional squeeze should work out immediately, and the directional trade gets much more time to work out.

Used the accelerated trend lines and S/R to move in and out of the markets although there was no reason to ever exit fully. Something psychological going on there. Either way I was much more agile today and pretty happy with performance.






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 lovetotrade 
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Pretty good day today, I feel like my intuition is starting to increase. Very calm and collected today.

I was almost tempted to chase the breakout this morning but caught myself. No exit plan I realized and I wasn't interested anymore. I saw that it was pretty obvious rejection off of the previous hourly swing, and once it started to roll over I got in. I thought about taking profits early, but then I thought to myself, "if this is what I think it is, things are just getting started". And so I sat tight.

I never did get another decent area to add to my initial position, so I took the single I had off at the 1st VWAP SD band. Although it's obvious that a break of the trend line would have been better in hindsight, I am happy with the trade.

Put another trade on when I thought it might roll back over. Traded in and out for a small loss until I gave up on the trade. Didn't feel right anymore. Getting into a groove, and being more selective of my trades.




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 lovetotrade 
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Just wanted to give a shout out to @AdamHGrimes for his amazing contributions to the trading community. I am currently undergoing his course right now, and it is phenomenal. I recommend it to any and all traders. It is a great refresher, offers new ideas and perspectives, statistical and quantitative research, and best part of all it is enjoyable! The fact that you are giving it away truly blows my mind, and speaks to the kind of person you are. Thanks so much.

And to all interested in the course, here is the link.

The Course - The Art and Science of Trading

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 lovetotrade 
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Ah I love trends. So unfortunately my first trade got cut short by a few things, but it was the best breakout trade entries I ever managed! I was thinking clearly, didn't hesitate, and got in at great locations with minimal heat.

Got out of the first at the initial risk, and then really didn't like the twin bounces off of the previous hourly support and so I closed the trade. We had to leave for a doctors appointment at 9:30, so I thought it was a good place to cut ties. Well of course that was the exact top of that pullback. Oh yeah I also didn't like that it was struggling to accept value at lower levels, but I realize it was just chewing its way through the support area. So of course the market ran a bit while I was gone. In the first chart you can see where I used the stall outs at the VP shelfs to enter.







Opened up the next trade as the market was moving higher out of value. Didn't get scaled into my second position, so I decided to wait for at least one good thrust before pulling out(wow that sounds bad lol). Waiting for a trendline break would have yielded a few more points, and I should be waiting for a break of momentum at a minimum before getting out of any position.




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Just wanted to give a shout out to @AdamHGrimes for his amazing contributions to the trading community. I am currently undergoing his course right now, and it is phenomenal. I recommend it to any and all traders. It is a great refresher, offers new ideas and perspectives, statistical and quantitative research, and best part of all it is enjoyable! The fact that you are giving it away truly blows my mind, and speaks to the kind of person you are. Thanks so much.

And to all interested in the course, here is the link.

The Course - The Art and Science of Trading

You can share reviews in the vendor thread:



Mike

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 lovetotrade 
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You can share reviews in the vendor thread:



Mike

Thanks BM will do.

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  #137 (permalink)
 lovetotrade 
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Hi all, been busy going over months of data gathering stats, and trying to do proper back testing for the trend/breakout method I will be using for the TST Combine. Overall things are looking great, and it looks like I will be giving the 50k continuous combine a shot.

I actually developed the idea from the Adam Grimes' course, and have been crunching numbers intensely for system optimization(while carefully avoiding over-fitting). My goal has been to combine processes that I am already experienced and comfortable with, and test the system as close as I possibly can to how I would trade the system live. My longer term goals are to add a couple more markets, and to develop another system that focuses on different market action to make my overall approach more robust.

I plan to start the combine on Monday, and will post my stats daily if there are any trades. The system usually only gives one signal a day, so I will have to focus pretty good, trying to develop an alert so I don't have to stare at the chart all day but I will do what I have to!

Take care,
Chris

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 lovetotrade 
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For some reason it is not letting me screenshot the combine page, but this was the trade I took. The system had a 4 day winning streak before I started, so the possibility of a couple of losers to start the combine was very possible. The system has around a 73% win ratio, so it should be ready to crank out some wins after the first couple of losses.

This was for 7/3. I will be trying to post a day behind so that I can get the combine page up as well as the trade.


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  #139 (permalink)
 lovetotrade 
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Hope to post a solid update of how things are going over the weekend. Still don't know how to post the TST screenshots so I will look some more into that. Unfortunately with the low volatility I have not gotten any solid moves and am in drawdown with my system. I may have to reset it next week if I can't get a string of winners to dig me out of the hole. This performance is fairly common when the market is not moving much, which is why I chose to do the continuous vs. the 10 day combine. Trying to tilt all odds of success in my favor. Still very hopeful.

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  #140 (permalink)
 lovetotrade 
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​SO TWICE NOW A LOSS FIRST THING IN THE MORNING HAS DISTRACTED ME ENOUGH FROM CATCHING THE SECOND MOVE OF THE DAY WHICH HIT ALL PROFIT TARGETS. SO INSTEAD OF BEING BACK AT BREAKEVEN I AM DOWN $1500. SO I MAY END UP HAVING TO RESET THE ACCOUNT, BUT I AM GOING TO DO MY BEST TO GRIND MYSELF BACK OUT OF THE HOLE. CONDITIONS IN THE OVERALL MARKET ARE STARTING TO IMPROVE AND VOLATILITY IS PICKING BACK UP, SO ODDS SHOULD BE TILTING BACK IN MY FAVOR. IT IS SUCH A SHAME AS ONCE I AM IN THE TRADE I HAVE BEEN EXECUTING MY PLAN SO WELL. BUT YOU CAN'T MAKE MONEY IF YOU ARE NOT IN THE MARKET. MY NUMBER ONE GOAL IS TO HAVE MY IDEAL RECORD MATCH MY ACTUAL P&L. THERE IS ABSOLUTELY NO REASON WHY THIS SHOULD BE A PROBLEM. TIME TO TAKE A DEEP BREATH AND REFOCUS.

This is my post this afternoon to my journal at TST. My system has given me exactly what I have needed to be successful in this combine. The breakdown has been within myself. Part of the reason for this has been that I did all the research prior to starting the combine without any actual live trading. And that really hasn't been a big deal. I have researched every possibly situation I could think of. I understand the potential drawdown. I understand the expectancy. I understand the weaknesses and the strengths. And I understand myself well enough to know that if armed with all the right information, I could trade the system with a high degree of confidence with few hiccups.

And for the most part this has all been well and true. But my performance needs to be perfect and it has not. I only get maybe one, and at the most two signals a day. And if I miss the first signal, or as in today lose the first trade but miss the second winning trade, it is detrimental to the performance of the system.

I have my trading and execution plan printed out, and checklists are in place. And if I follow each step exactly as I have written out I will be successful. I am going to re-read these lists twenty times tonight and drill them into my head.

Today after being stopped out to the tick after I had trailed my stop, and then the market continued to my target it threw me off my game. So I went on to other things instead of staying focused for another shot at re-entry which I would have got. In fact I may need to add to my list that if I get a losing trade that I need to shake it off and refocus until my quit time is hit.

Positive from the day, I figured out how to do an equity curve in excel.

But in all seriousness I am still in great spirits and super excited to be doing this. So thankful and so blessed.


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  #141 (permalink)
 lovetotrade 
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You grow with each decision, yet each decision has a price--you must discard a choice, and you must commit. Conditions are always imperfect! You must allow yourself to fail. Allow for human limitations and incorrect choices. Reserve compassion for yourself and your limitations.

-Linda Rashke

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 lovetotrade 
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Alright and so just like that, with one more full stop out I am out of the game. Didn't hit my actual loss limit, but it's close enough that I wont be able to continue to trade normally without hitting it.

And frustratingly enough, both full size stop outs have been almost to the tick only to run to my original target. Which is not something that has happened in my gathered stats with any regularity. So I am kind of at a loss and have to chock it up to randomness. The last 8 trading days has produced some of the weakest results so far, so I am really hoping that we can now move on to much better system performance.

I reset the account this morning, so hoping to start over again first thing tomorrow.


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  #143 (permalink)
 lovetotrade 
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So I wrote this in my journal the other day:

I have found that after a string of losses, my psyche tries to convince me that perhaps my plan/strategy is wrong, and as a result I start to focus and direct too much importance to each trade. I totally recognized these same feelings when the state of the market changed, when I was trading index futures at the end of last year. Volatility shrunk, everything I tried wasn't working, and when I pulled the plug the market came roaring back a month later.

And so because of this we must guide our thoughts back to the significance of what our edge truly is, and that is profitability over the course of several trades, and not a handful or any one trade in particular. For me this is trading mindfulness in action. The ability to catch those emotions and inner voices that speak to our insecurities, and put them in their proper place.

Of course a draw down after having made some money is not quite as painful, but our grit is truly tested when we start off with a string of losses as to whether we grind through it, or let our discipline fall apart. Draw downs are essential in the process, just as strings of winning trades are. We must remember that we have to take the bad along with the good to be successful in trading. I must remember that a trade is just a trade, and it shouldn't weigh heavier on me psychologically just because it is a loss instead of a win.

Linda Rashke once said that it is abandoning a successful trading idea during the draw down process, right as the market is getting ready to swing back in line with that same idea, is exactly what causes the search for the holy grail. Not to mention frustration and all kind of other bad habits.

One of my gifts(I see it as a gift) is that after a loss I am very tenacious to find out what went wrong, and if there was anything I had possibly missed to improve efficiency of my trades.

So my plan to help make my overall system more robust is to reduce my exposure to the Euro, and add another market that is experiencing much greater volatility, while I wait for the FX market volatility to come back in line. This way I still have exposure, and any continued draw down will not eat away at my account in totality. I am using the YM as I am familiar with the way it trades, the reduced leverage, and is currently backtesting as well as the Euro did in its prime volatility.

I would have never pursued this idea if I hadn't gone through the hard times at the beginning of this experience, but it is opening all kinds of new doors and I love it! If you can't fall in love with the process of trading that is all encompassing, I believe success is only a dream.

Here is to the process!

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  #144 (permalink)
 chipps1983 
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Linda Rashke once said that it is abandoning a successful trading idea during the draw down process, right as the market is getting ready to swing back in line with that same idea, is exactly what causes the search for the holy grail. Not to mention frustration and all kind of other bad habits.

I do not know who Linda is, but thats true. When we see the strategy we tested and felt so great about it. As soon as it fails we stop and start looking for new strategy indicators etc. The idea of any method what I feel is, any strategy first back test atleast 6 months of data, try atleast 30 trades on SIM and try on Live.

Just thought of sharing some info. I am still novie.

--------
Chipps
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 lovetotrade 
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Chipps,

The way of the Turtle by Curtis Faith does an excellent job of explaining how to test your method for expectancy and robustness. I truly believe this is the most important thing to follow through with besides making sure the trading style suits your personality.

Your trust and your follow through should and can only be in the numbers your system has generated through proper back/forward testing, and then we hope/trust that they will continue to perform in the future.

Start with a hundred trades, and this should be the absolute minimum. Your goal should probably be 500+. Only then can you truly understand the ins/outs and true personality of your system to then exploit it.

Edit: Oh and I also forgot to mention that you should test your method through various market cycles. Bull markets, bear markets, chop, etc.

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 lovetotrade 
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Alright off to a banging start. Up 100 points in the YM, and only down 9 points in the Euro.

Second trade fired off simultaneously on both markets, but got in with a limit order at the original entry point on the Euro, allowing me to recover some gains from an earlier loss.

Took all entries without hesitation. Happy to have a nice up day.




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 lovetotrade 
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Happy to announce another winning day today.

+25 Euro points
-8 YM points

+$250



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 lovetotrade 
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Winning day. Took my money to the bank after two wins. Almost completely out of the hole after a $1500 draw down.

YM- 50 pts $250
6E- 25 pts $312



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 lovetotrade 
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So unfortunately I wasn't able to get any play on the Dow because of the large volatility today, but I got two successful trades off on the Euro before the open.

So a little bit on the strategy I am using. It is a simple keltner channel breakout entry, with an expectation of price continuation. I use a specific 30 point stop, unless there was a swing low/high made inside of that 30 point stop. I trail price 4 points outside of any new higher highs/lows.

Once I stopped trying to curve fit the market to my expectations, I was actually able to notice a simple recurring pattern that fit well with my personality as a trader. I also decided that I must go down every rabbit hole I could think of, and research every aspect/metric of the trades, and document common recurring themes as these trades played out over a decent sample size. Only then could I come up with a trading plan that fit the market, leverage, and traits of the system vs. me trying to impose my own rules upon them.

The general idea is that through a simple trend filter, the trades that I take will continue farther than most think they should go, and a stop size large enough that most are not willing to use. The statistics show that nearly 70% of the time I can get at least 20 points out of the market, and less than 6% of the time will my full stop be hit. And this is what gives me the confidence in my system. Not a moving average, not some indicator, just the faith that I have in my discipline to take entries when my plan says I'm suppose to, along with the designated trade management.

Hope you all are making money in this wonderfully volatile environment!


6E- 50 pts $625

Don't pay too much attention to the exact number on the risk:reward tool I use on my charts. I just put them up there for me as a quick reference for the trades I took. Specifically entry, MAE, and MFE.

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 lovetotrade 
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I tell you what, it is a lot more fun winning than losing!

Lots of things to learn from today, and it's very important to me that I do not repeat the same mistakes twice if possible. So let's get to it.

The first trade was on the YM this morning. Volatility was fairly normal this morning pre-open. Well as soon as we opened, within three bars the ATR on the 5 minute chart was at 72! Unfortunately I did not recognize that before I hit the enter button, and what a wild ride that was. I fumbled when trying to find the flatten button, and I was trying to get flat at breakeven but just didn't happen. Fairly stupid move, I could have gotten out with a much smaller loss than a full stop. Moral of the story....Get Out immediately!


After taking another small loss on the Euro after the market went sideways after entry, I took a revenge trade when the market broke out against me. Well it reversed right after I took another loss leaving me pretty frustrated. Haven't cursed at the screen in a while lol. But then I gained my composure and decided that two unnecessary losses on the day was already too much.


I have had a nice little winning streak as of late, and it is time to re-focus. My trades need to be perfect, and I must focus on trading my plan correctly. I did add to my plan a max ATR I am willing to trade that I didn't have before, so now I have another entry filter that should save my butt when vol is out of whack.

YM- -58 pts -$240
6E- -19 pts -$237.50

Consistency = success.

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  #151 (permalink)
 lovetotrade 
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Another small loss today. Not much happening in the Euro, and range still too large in the YM.

Typical trade here, tomorrow is another day.

6E- -28 pts -$300


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  #152 (permalink)
 lovetotrade 
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Just a quick update, it's a little hard updating my journal here while I'm so entrenched with keeping my spreadsheets up to date, my hand written journal, trading, and testing new trade ideas.

After two wins on friday, and then two losses today I am pretty much treading water. Discipline has been very consistent, so just waiting for results.

Hopefully more tomorrow.

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 lovetotrade 
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Alright so an update on my progress. Last Thursday after three losing trades in a row, I hit my max stop loss point....again. So back to the drawing board I went. Fortunately the combine is forcing me to take a hard look at my entire process and maintain a very professional point of view, along with giving me some great practice.

After the last reset I was pretty convinced that I could spread my risk between two markets, and end up with a better result with a lower risk profile. The truth is that if I had a deeper drawdown limit that it might have worked. But the current limit pretty much kept me out of the YM for the last two weeks as volatility soared, and I was forced into trading mostly the Euro. Another key problem I hadn't fully thought through was my max daily loss. My original rules had me quitting after taking two consecutive losses. Well how does that factor when you double the markets you are trading? Yes I had reduced my leverage, but would have to take twice the losses to stay consistent with my rules, which exceeded my daily max loss limit via the combine.

So now to the meat. What I learned after reviewing my process was that I obviously had not back tested enough market cycles even though I thought it was good enough, but also that I had ignored a key component in the systems long term success.

Adam Grimes is a big proponent of the pull back trade, but when I was doing my initial back testing, my results were showing sub par performance for any kind of measured pull-back or momentum rollover as compared to a simple breakout with a large stop. And as you will see in my equity curve model, the system worked great until the beginning of August go figure.(This was when I first started the combine, and it was the only month that the month ended lower than it had started)

I was also missing the fact that buying on retracement limited my slippage and risk quite a substantial amount. That reduced risk goes directly to the bottom line for every unsuccessful trade. So now I have modified my plan to take into account all that I have learned so far, and have added a simple limit order entry on pull back after the initial breakout. The result has surpassed the original system performance with less than half of the drawdown.

You can see where the 20x25PB on the equity curve sliced right through the period of drawdown that the 20x 35 breakout system was experiencing and continued to reach all time highs. So I am trading the new plan starting today, and only the Euro this time with two contracts.

I will continue to back test while I trade the system looking for any new hiccups. I am committed to the process, and reducing errors in all aspects of my trading. Success should not be far off. The pic below is the simulated system performance since the first of the year.



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  #154 (permalink)
 Sazon 
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...I will continue to back test while I trade the system looking for any new hiccups. I am committed to the process, and reducing errors in all aspects of my trading. Success should not be far off. The pic below is the simulated system performance since the first of the year....


I'm sure you're already aware of this....but I wouldn't get too caught up in those great-looking backtested results. If you have not already, I highly recommend reading @kevinkdog Kevin Davey's book "Building Winning Algorithmic Trading Systems" and, of course, what I consider the bible of systematic trading, "Evidence Based Techncial Analysis" by Aronson which provides answers to the problem of why there's deviation between backtest and future results. Kevin's book is one of the best in detailing how to approach the aforementioned problem.

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 lovetotrade 
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Thanks I will check it out. It's been a while since I've cruised through Kevin's stuff, but I need to make it a point to re-visit it. Please understand that I am not placing all my expectations of future outcome on my back tests. I am using it how I feel like one should use it, and that is to identify how the system reacts in different market cycles, so that I might notice any common nuances or pitfalls I might be able to easily avoid, as compared with no chart analysis.

So far I have been able to trade the system pretty much exactly how I back test it, and with my simple rules and consistent trade management I see no reason why I should not continue to look at more data. Even if I only get a third of the results that I have seen so far then I will be a very happy camper.

If you have anything else to add please feel free to do so. @kevinkdog as well. Thanks guys.

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 kevinkdog   is a Vendor
 
 
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How far back does your test go?

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 lovetotrade 
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My main back test goes back one full year. There have been some large swings in direction and volatility throughout the last year in the Euro that I thought it was a good place to start. There were a little over 200 trades which I thought was a decent sample size to start with. I am also in the process of targeting specific environments that are not as common in the past to see how the system performed during those as well.

Specifically the doldrums of last fall where volatility fell off a cliff. And what I am finding is that my current minimum ATR threshold has kept me out of the market during almost all days of super low volatility. So while I may not be making money during that time period, I am also not losing money which is encouraging.

Any thoughts or advice going forward?

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My main back test goes back one full year. There have been some large swings in direction and volatility throughout the last year in the Euro that I thought it was a good place to start. There were a little over 200 trades which I thought was a decent sample size to start with. I am also in the process of targeting specific environments that are not as common in the past to see how the system performed during those as well.

Specifically the doldrums of last fall where volatility fell off a cliff. And what I am finding is that my current minimum ATR threshold has kept me out of the market during almost all days of super low volatility. So while I may not be making money during that time period, I am also not losing money which is encouraging.

Any thoughts or advice going forward?

I always recommend testing at least 5 years back. For currencies, I'd start no later than 2007. Go further back if the electronic data looks good...

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 lovetotrade 
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Just finally posting a screenshot of my current TST combine since I haven't done so yet. Just figured out how to use the screenshot function last week. You can see the previous two combines collapsed at the bottom of the picture.


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 lovetotrade 
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Alright, so time to update some things I've been working on. Its neat how ideas are flowing all the time now since I am focusing on the right things.

So I am in the process of more back testing of my current system, and continue to find great results. Loving the lower risk profile that the pull back aspect has added to the system.

I am also currently developing a systematic, but discretionary approach to swing trading the Euro. It actually seems to work on most markets since it is 100% derived from price action. But it takes advantage of turning points as the market swings from counter trend to trend, which keeps risk lower and maximizes profit. All good things.

Now onto my current project. I was thinking after looking at several trades, that there might have been a flaw in my thinking when I set my current stop at 4 points outside of the previous market swing, so that my stop might not be picked off. Well, after realizing that the 4 points x 2 contracts = $100 (on the Euro) adds quite a bit of drag to my overall performance, since this affects my P&L quite often. Even with a high win rate, since I do not take discretionary exits(or try not to anyway), every trade that does not hit all targets is stopped out at some point and is affected.

So I got to thinking, how many trades out of my entire sample size requires a 4 point stop, and do those couple of trades I might win offset the constant savings of a smaller stop?

Well after doing my initial run, I have come up with another idea. Even though the one point stop does not seem to be the best choice right off the bat, what if I re-entered on all trades that were stopped out by 1-4 ticks, and then broke market structure back in the direction of the trend? And it looks like there is some gold there so that is my next pursuit, but for now here are my findings with a 1-3 point stop, and how they compare.

You can see how the market goes through cycles of running different size stops, but the 3 point stop seems to perform the best. This still saves two points on a large amount of trades vs my current 4 point stop. Next I will post the new equity curves for all three vs my current, and see how it affects the bottom line.



So already I can see that the minimal impact of the 3 point stop on the current system makes running the 1 and 2 point stop numbers as they stand a moot point.



So two thoughts cross my mind immediately. This is something I can implement immediately with little effort on my part, and have a slight positive outcome on the overall performance. This adds no extra rules to my current plan. Or I can continue down the rabbit hole and see if something major happens by the reversal idea on the one point stop. Well no point in stopping now right?

----------------------------------------------------------------------------------------------------------------------------
Ok now we are getting somewhere. The average MAE for the trades that are stopped out and then reverse is over 35 points! So I just set my normal targets of 20 & 25 for the reversal trades, and we have success with a high hit percentage. Even the couple of trades that did not make target were stopped out at a profit. So unfortunately the sample size is low, but the win rate is above 90% for the trades available. So I will keep this in mind going forward for back tests, but I plan on implementing this immediately.

Here is the new equity curve compared to the previous ones. Something else that is not considered with the equity curve is the fact that trade size will increase as the account grows.

Well today was a very productive day!


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 lovetotrade 
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Update on the combine.

So yesterday I had both targets met after a pullback from the FOMC announcement. It ended up being a precision strike, as both targets were met within a few minutes. Pretty sweet. Just shows that patience pays off, and that you don't have to catch even the bulk of the move to make good money.

6E- 45 pts($550)




Losses continue to remain small which is a great thing, and I had another winning trade today which will boost me to an all time high in the combine.

More importantly than just passing the combine and getting funded, is the ability to trade consistently and profitably.

Very happy with my progress and ability to stick to my plan. Who would have thought it would be so hard to want to stick to your rules! It's getting easier. Today's slow grind lower had me wanting to jump in early, but I followed my plan and profit targets were met.

I am using this experience to build onto this system and factor in other ways to profit from days like today.

Happy trading!
-Chris

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 lovetotrade 
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 lovetotrade 
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Alright so I got to use the stop reversal technique, and that seems to be a very legit trading pattern. It ran for over 50 points once again so my targets were fairly conservative, but it kept me from having a pretty large losing day. I just might need to spend some more time researching that isolated pattern. Add that to the list haha.

Currently reading Van Tharp's trade your way to financial freedom. Quality of the information is amazing considering it was written in the mid 90's! He was obviously well ahead of his time.
Update: This book has the most extensive explanation and application of expectancy I have seen by far. If the position sizing chapter is any bit as good, then this book will make it into my top three must reads. There is some serious meat in this book.



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 lovetotrade 
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So the following quote is from Tharp's book, and made me take a step back. I think it is generally accepted in this forum that multiple scale out profit taking is the best way to go. I mean that's what I have learned and been convinced of for a while now. Yet here is what I just read.

"There is one kind of exit that is designed to get rid of losses, but it totally goes against the golden rule of trading of cut your losses short and let your profit run. Instead, it produces large losses and small profits. This type of exit is one in which you enter the market with multiple contracts and then scale out with various exits. For example, you might start with 300 shares and sell 100 of them when you can break even on all 300 shares. You might then sell another 100 shares at a $500 profit and keep the last 100 shares for a huge profit.

Short-term traders use this type of strategy frequently. On a gut level, this sort of trading makes sense because you seem to be “insuring” your profits. But if you step back from this sort of exit and really study it, you’ll see how dangerous this type of trading is. What you are actually doing with this sort of exit is practicing reverse position sizing. You are making sure that you will have multiple positions when you take your largest losses. In our example, you’d lose on all 300 shares. You are also making sure that you only have a minimal-sized position when you make your largest gain-100 shares in our example. It’s the perfect method for people with a strong bias to be right, but it doesn’t optimize profits or even guarantee profits."

So it definitely has me thinking. I am not one to take just anyone's word as the be all end all, but I believe there is definitely some merit to what he has said, and is worth taking a hard look at.

Recently I have changed my strategy to start taking profits at what seems to be the most logical levels based on the MFE of my system, so when I capture profits larger than 1R it is kind of by chance and not the norm, since that system has a higher than 50% Win rate.

But as I design new strategies and think through ideas, the multiple scale out profit taking is deeply ingrained in my thought process. I do think that there might be some specific strategies that this works best on, but it probably shouldn't be our go to process.

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 Sazon 
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... I am not one to take just anyone's word as the be all end all, but I believe there is definitely some merit to what he has said, and is worth taking a hard look at.....

Also keep in mind that it doesn't have to be an all or nothing proposition. For example, you could scale-out on your trades until you get to a certain a level of profitability - i.e., the "houses money". Then, you could switch to an all-in-all-out methodology once you're no longer trading on your capital. But of course, this also depends on the particulars of your system (i.e., is it a high-probability system or low probability one).

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 lovetotrade 
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So after re-analyzing my back test numbers, now taking into account the pull back method vs. the break out, my previous profit targets seem to be obsolete. I am also finding that my win rate has fallen from the high 60's to the mid-50's, but I am quite o.k. with that as this is a pretty high number for a system that technically falls under the "trend following" category.

So my win rate goes down, my average stop is moved closer by 30%, and my profit target is extended by almost 40%. I can deal with that

So my new targets are now 25 and 40 points respectively, as compared to 20/25 previously. This small change would have added over $500 to the bottom line of my current combine. As of now my average loss will stay the same, but my average win will increase substantially. I will just have to become a bit more patient as my full PT will not be hit as often.

My biggest struggle currently is reducing trade errors. Having small errors here and there adds up quickly, but I try to learn from each one and set some sort of safeguard when I can, to make it easier to avoid those errors in the future.

Very happy with progress so far. Missed a winning day today due to travel, but that's part of the game right? Numbers seem to be falling in line with my expectations.


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 lovetotrade 
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So the following quote is from Tharp's book, and made me take a step back. I think it is generally accepted in this forum that multiple scale out profit taking is the best way to go. I mean that's what I have learned and been convinced of for a while now. Yet here is what I just read.

"There is one kind of exit that is designed to get rid of losses, but it totally goes against the golden rule of trading of cut your losses short and let your profit run. Instead, it produces large losses and small profits. This type of exit is one in which you enter the market with multiple contracts and then scale out with various exits. For example, you might start with 300 shares and sell 100 of them when you can break even on all 300 shares. You might then sell another 100 shares at a $500 profit and keep the last 100 shares for a huge profit.

Short-term traders use this type of strategy frequently. On a gut level, this sort of trading makes sense because you seem to be “insuring” your profits. But if you step back from this sort of exit and really study it, you’ll see how dangerous this type of trading is. What you are actually doing with this sort of exit is practicing reverse position sizing. You are making sure that you will have multiple positions when you take your largest losses. In our example, you’d lose on all 300 shares. You are also making sure that you only have a minimal-sized position when you make your largest gain-100 shares in our example. It’s the perfect method for people with a strong bias to be right, but it doesn’t optimize profits or even guarantee profits."

So it definitely has me thinking. I am not one to take just anyone's word as the be all end all, but I believe there is definitely some merit to what he has said, and is worth taking a hard look at.

Recently I have changed my strategy to start taking profits at what seems to be the most logical levels based on the MFE of my system, so when I capture profits larger than 1R it is kind of by chance and not the norm, since that system has a higher than 50% Win rate.

But as I design new strategies and think through ideas, the multiple scale out profit taking is deeply ingrained in my thought process. I do think that there might be some specific strategies that this works best on, but it probably shouldn't be our go to process.

Something else I would like to add to this. Van Tharp talks about how the best money managers in the world set themselves apart by their creative money management processes, which have a lot to do with position size, but I think is also a combination of a variety of aspects, with profit taking being one of them. I most definitely believe that the greater you understand your system inside and out, the more you can manipulate max draw down among other things, through scaling out early, layering into a position while trailing your stop higher, etc. until you get the desired outcome.

And I think this is truly the artsy side of trading, where you are only limited by your own imagination, and through a clear objective and goals. I am loving this current process of learning as I go, and making adjustments as they seem necessary.

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 lovetotrade 
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Wow, I didn't realize it had been so long since I updated the journal. No worries, I have plenty of lessons and thoughts to get down on paper. Well electronic paper anyway.

But first an update on the combine. On Friday I hit my trailing stop max DD which ended the current combine. My opinion of the combine so far is still mostly positive after three attempts, and I start my fourth on Monday. My biggest issue so far is the lack of wiggle room to have a reasonable draw down without fear of stopping out of the combine.

I had a serious psychological issue/breakdown(I'm assuming fear of failure) once I came within $1,000 of my trailing stop, and it was all downhill from there. I basically set myself up for disaster. I started making impulse trades, and hesitated pulling the trigger on my real trades. Mainly because the thought crept in that I was probably going to blow it, and it got worse with each and every loss. So something major to be learned from there.

So I guess that kind of bugs me about the combine program. My peak equity was right at 51,000, so I had a trailing stop loss set at 49,000. So here I was at break even on the account, nervous that I was going to blow my most successful combine, even though I hadn't lost any money on the account yet! Would I have even been remotely that nervous after even losing only 2% on a real $50k account? Assuredly not. So this leads me to the next major lesson, a lesson I have re-visited several times. The need for consistency.

One of the requirements to graduate from Van Tharp's Super Trader program is to trade at a 95% efficiency rate. This means that a trader may only make 5 execution errors for every 100 trades. Unfortunately even before I went off the deep end, I had already made quite a few silly errors in my trade execution that threw off my live equity curve from matching my hypothetical equity curve, which is my number one goal.

And guess what? My hypo PnL still is only at that 2% draw down of the 4% that I am allowed, and still within very acceptable limitations of the systems back tested history. What I am saying here is that if I had followed my plan, I would still be in the game. But hey, a hundred bucks for a combine reset is a much cheaper lesson than losing real equity on an account that size. So for that I am thankful.

So going forward consistency is my number one priority. I have optimized the targets further, and that has actually resulted in closer targets vs. farther away as I had previously thought. Right now I continue to average a 54% win rate, with a 2:1 reward to risk ratio. Not bad and it suits my personality quite well.

I continue to test my system against new ideas that come to mind, along with designing a new system that looks very promising, and will compliment the other, adding a new level of robustness to my overall performance.

As you can see my combine results were pretty good considering the period of under performance it is experiencing.

Continuing to learn and improve every day, really it's all we can do!


Rule number one in the markets is to never lose money. Well since that isn't realistic, I say if you're going to lose some money anyway then lose small, but when you win, give it all you've got and win big!
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 lovetotrade 
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Hey guys, so I realize that once again it's been a little while since I have posted, but it was for good reason I think. I was really just trying to focus on performing, and getting this combine conquered, which as of today, I was finally able to do.

So pretty excited to say the least. Our baby boy is due in January, and the wife had pretty much put a cap on my time left to take this to the next level. Actually there hasn't been much support in any part of my friends or family, so unfortunately I have had to get this far without support, and in spite of everyone instead of with the wind at my back. But I give thanks amd all praise to the good Lord for blessing me with the abilities that have gotten me this far, and am so thankful for the possibility to do what I love everyday.

I understand that I am not out of the woods yet, but I am very encouraged by my performance and current market environment. My number one goal despite winning or losing was, can I do this consistently enough to make money over the long term? And after my experience with TST I believe that is a resounding YES! I have taken my trading to an entirely different level, a new much more professional level, and my trading ideas are flowing at an all time high.

Another thing I have come to terms with is that the psychological part of trading is probably more than 90% of my actual trading ability. I chock it up to divine intervention, but I ran across Van Tharp's offer to give away his book "Trading beyond the Matrix", and it set me on the path to conquer all my psychological hang ups that were affecting my trading negatively. I am happy to say that I am successfully working through them and making great strides.

"Awaken the Giant Within" by Tony Robbins is my current platform, a book no doubt that I have had all along. Again just randomly picked it up, and fell perfectly in line with where I was at, and what I needed.

I am still fine tuning my system, truly becoming an expert at it. The system and I are becoming one, and it is performing just as good if not better than I had hoped. So I will scale it down to get me through the TST FTP, and scale it to size once I become funded and my account begins to grow.

Here is the combine as of this morning at $2500 profit, and my winning trade today at 40 points($500).


Rule number one in the markets is to never lose money. Well since that isn't realistic, I say if you're going to lose some money anyway then lose small, but when you win, give it all you've got and win big!
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 lovetotrade 
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Rule number one in the markets is to never lose money. Well since that isn't realistic, I say if you're going to lose some money anyway then lose small, but when you win, give it all you've got and win big!
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 lovetotrade 
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Final trade report. The email has been sent to the funding team to start funded trader prep. A little nervous...


Rule number one in the markets is to never lose money. Well since that isn't realistic, I say if you're going to lose some money anyway then lose small, but when you win, give it all you've got and win big!
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Good work....thank you for the diligence on this forum

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 lovetotrade 
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So I got the email back, and I will be starting FTP on Monday the 30th. Not even really sure the reason for it, besides the explanation that it makes the transition into the funded trader platform smoother?

Profit target is 1k and max DD is 2k, with 60 calendar days to complete it.

I plan on trading my current strategy with one contract, and an add on contract when structure favors a decent R:R for it. It's a funky time to be doing this in between holidays and all, but as a good trader it shouldn't really matter. It gets easier to recognize when you should not be in the market, and using an intra-day strategy that does not always take a trade every day has given me the patience I need to succeed.

@bobwest made a comment on the TST thread that was an eye opener for me about a key aspect I hadn't given much thought to. At first it racked my nerves a bit, but then I realized a positive aspect as well. Once you have completed FTP and you start your funded account, you have 10 trading days to build a profit cushion to trade from. That's it. This could be $500, $2,000, or it could be $5. If you return to the starting balance you are done.

So this got me thinking, what the hell is the difference between this and trying to trade successfully from a super small funded account? Well actually nothing, except for the fact that I get to keep 100% of the profits and my fees will be lower lol. So herein lies the good part. If things don't work out with TST, I should be able to re-fund my futures account and trade successfully with it. So I have a back up plan now, and I may actually do it simultaneously for extra income/get used to trading it live.

But this is the essence of any trading strategy really, as long as you understand your system and are disciplined, you don't need much more than the expected max drawdown in your account to trade it successfully. Well for me using one contract that's like $500, so I will probably throw a few grand in the account and see where it takes me!

Rule number one in the markets is to never lose money. Well since that isn't realistic, I say if you're going to lose some money anyway then lose small, but when you win, give it all you've got and win big!
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 lovetotrade 
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Good work....thank you for the diligence on this forum

Thanks! It is near impossible for me to post the book worth of notes I write on my pen/paper journal, but I try to post the ground breaking/real value thoughts here. Well for me anyways lol.

Rule number one in the markets is to never lose money. Well since that isn't realistic, I say if you're going to lose some money anyway then lose small, but when you win, give it all you've got and win big!
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 chipps1983 
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The only part plays is emotions when you move to real money and that too your own account. I did clear the TST and was all set to start with Funded but I had reasons to not to go for it (Visa work regulations).

I started with my account (Little Fund). Emotions plays a lot.

If you start your own then just take my word. "Stick to the plan and trade with discipline" ( I tumbled and sitting sideline to straighten my mind).

Good Work on your TST and all the very best.

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 lovetotrade 
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The only part plays is emotions when you move to real money and that too your own account. I did clear the TST and was all set to start with Funded but I had reasons to not to go for it (Visa work regulations).

I started with my account (Little Fund). Emotions plays a lot.

If you start your own then just take my word. "Stick to the plan and trade with discipline" ( I tumbled and sitting sideline to straighten my mind).

Good Work on your TST and all the very best.

Thanks homie. Yep I know there will be some bumps in the road, but the TST platform provided me a very real simulation of my trading performance(as in the trades felt exactly the same as real money in my gut), and I have had quite a bit of live trading experience. So I am pretty confident in my expectations and ability, which I feel is still pretty realistic.

I understand that there is still a chance of failure. But this is also a motivator for me, I am not afraid to fail. I understand that each of these hurdles must be cleared for me to grow and ultimately succeed. I am just thankful that I get the chance.

Rule number one in the markets is to never lose money. Well since that isn't realistic, I say if you're going to lose some money anyway then lose small, but when you win, give it all you've got and win big!
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 bobwest 
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lovetotrade View Post
@bobwest made a comment on the TST thread that was an eye opener for me about a key aspect I hadn't given much thought to. At first it racked my nerves a bit, but then I realized a positive aspect as well. Once you have completed FTP and you start your funded account, you have 10 trading days to build a profit cushion to trade from. That's it. This could be $500, $2,000, or it could be $5. If you return to the starting balance you are done.

Just note that the rule about being profitable after the first 10 days also applies to the FTP. At the end of the 10th day you can no longer continue if you are negative but above the Trailing Max Drawdown; in effect, zero is, at that point, your lower limit.

I think that part of the point of FTP is to focus on consistent trade/account management, which is part of why the profit target is so much lower: it takes the emphasis off of making money, and puts it on keeping the account going, under the funded trader rules.

Many people have run aground in FTP on apparently slight, but actually significant, rule differences with the Combine. For example, a couple of things change at the end of 10 days (Net positive after 10 days, 45% profitable days after 10 days.) Also, there will now be a weekly loss limit in addition to the daily. And, no positions held into major economic releases. I've seen many people bust up on these things, and it seems they didn't read, or didn't understand, the new rules. Check out here, if you haven't: https://topsteptrader.desk.com/customer/en/portal/articles/1964572-funded-trader-preparation

And good luck.

Bob.

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 lovetotrade 
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Thanks for the details Bob. I guess I took all of the info from the combine and FTP, and then structured my trading plan around that so each step would be a smooth transition. I'm taking it that everyone doesn't do that lol.

Man that place is cranking out funded traders, it seems like every other day I get an email of 10 or 15 new funded traders. They have said that there is no cap on the amount of people they will fund, which is good for those of us that are slow . I would really like to see the stats on the funded traders though, particularly how long they stay funded.

Maybe it's better I don't see that one lol.

Rule number one in the markets is to never lose money. Well since that isn't realistic, I say if you're going to lose some money anyway then lose small, but when you win, give it all you've got and win big!
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 trendwaves 
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I wonder why the FTP is so hard to get through ? Is it just the new set of rules ? As @lovetotrade pointed out, the design of his strategy was influenced to fit into the original combine constraints. So a change of constraints (objectives) may disturb some traders in the FTP ?

It seemed to me in studying it, as a complete outsider to the TST experience, the FTP is designed to get the new trader calmed down and focused on controlling risk. It's like a 'mini-combine' focused on risk control.

Some folks here that got through the FTP then ran aground on the other side with a live funded account. I think I can understand that due to the potential for a higher emotional aspect influencing results. I think the TST 'Scaling Plan' is designed to help alleviate and smooth out the transition.

My suggestion here is first don't over think this. Just make sure your trading plan fits well (will still work) with the new constraints. Like a sanity check, will this still work given the new objectives ? This of course requires you make sure you have a complete understanding of the constraints and objectives for this phase (Bob's point). If so, then simply move forward and trust your plan.

Be Patient and Trade Smart
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  #180 (permalink)
 bobwest 
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Thanks for the details Bob. I guess I took all of the info from the combine and FTP, and then structured my trading plan around that so each step would be a smooth transition. I'm taking it that everyone doesn't do that lol.

I was pretty sure that you had . But once I started typing, I thought "What the heck, put it all in, there are other people who read this and it may help."

As to the traders who drop out, some of course will just flame out, a common-enough experience. Some probably will move on to just trading their own account, after using TST to help build up a stake.

Aside from the more favorable profit split (keeping all of it ), there are tax advantages to trading your own funds.

As a funded TST trader, who is not trading his own money but is getting paid as an independent contractor, you would pay tax at the normal ordinary-income rate. Trading your own capital in futures lets you pay the 60/40 (long-term capital gains/short-term capital gains) rate, which is extremely cool. (Normal disclosure that I'm not an accountant apply.)

My guess is that the successful TST'ers migrate eventually away to do their own thing, although keeping up some TST trading might still be worthwhile, because, after all, TST is still putting up the money.

I hope that will be a decision that eventually I will have to make....

Bob.

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  #181 (permalink)
 lovetotrade 
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trendwaves View Post
I wonder why the FTP is so hard to get through ? Is it just the new set of rules ? As @lovetotrade pointed out, the design of his strategy was influenced to fit into the original combine constraints. So a change of constraints (objectives) may disturb some traders in the FTP ?

It seemed to me in studying it, as a complete outsider to the TST experience, the FTP is designed to get the new trader calmed down and focused on controlling risk. It's like a 'mini-combine' focused on risk control.

Some folks here that got through the FTP then ran aground on the other side with a live funded account. I think I can understand that due to the potential for a higher emotional aspect influencing results. I think the TST 'Scaling Plan' is designed to help alleviate and smooth out the transition.

My suggestion here is first don't over think this. Just make sure your trading plan fits well (will still work) with the new constraints. Like a sanity check, will this still work given the new objectives ? This of course requires you make sure you have a complete understanding of the constraints and objectives for this phase (Bob's point). If so, then simply move forward and trust your plan.

Thanks, that is the plan. My biggest struggle right now is deciding whether or not to trade two contracts during the first ten days of the funded account(I know I'm getting a little ahead of myself here). I will only have one shot at this, so I am trying to balance getting enough profit built up vs. the chance market conditions are not good for my strategy and I just tread water, albeit more deeply with two contracts vs. one.

Fortunately I have some time to think this through.

@bobwest thanks for the insights, your remarks are always warmly welcomed here.

Wishing everyone a blessed and wonderful Thanksgiving!

Rule number one in the markets is to never lose money. Well since that isn't realistic, I say if you're going to lose some money anyway then lose small, but when you win, give it all you've got and win big!
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 lovetotrade 
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Just a little something I have been working on. I find that most strong trends happen once the current price action starts trending away from the VWAP, on the same side as yesterday's VWAP close. I know this seems super obvious, but for some reason it didn't really click until I put this framework around it.

I have also developed a volume indicator, that works similar to the directional index, but uses directional volume to give you a visual heads up of whether bears/bulls are in control. And even though moving averages are lagging indicators, it can still give you a nice heads up that strength is shifting from one side to the other. All this is, is a combination of up/down volume on the same chart region, and then 15 period EMA's applied to each. The idea is that whichever side is trending tends to be in control.

Here you can see that price chops around as price churns in balance, in between current and y-day VWAP. You can also see in the corresponding volume rectangle below that the bears aren't making a very strong effort as up/down volume seems to negate each other. Shortly after, nice bull volume comes in and we get a strong reversal back through VWAP in the direction of the trend, this is your confirmation to get long where you deem appropriate.

Now you have several confirming cues to get long with conviction:

1. Volume is showing solid buying pressure
2. Broken VWAP with no consolidation indicating strength
3. Wind at your back as price comes back in line with the main trend.



I have been researching when I should be looking for trend days, and I feel like I'm getting warmer. I feel like I am drawn to a certain level of discretionary trading, and I want to have a plan for when opportunity meets preparation on days like this. Keeping it simple and focusing on context and price action.

Rule number one in the markets is to never lose money. Well since that isn't realistic, I say if you're going to lose some money anyway then lose small, but when you win, give it all you've got and win big!
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  #183 (permalink)
 lovetotrade 
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Wow can't believe it's been almost a year since my last entry here. I feel like my last post is still pretty in line with the trading I was seeking, but I sidetracked from that and created a mechanical system that seemed very promising. This journey led me to the British Pound and away from the Euro. Still can't believe I ever traded the Euro now that I have traded the Pound most of the year. It's like the equivalent of riding on a cheetah vs. a tortoise.

So over the last few weeks I have broken away from the mechanical stuff and leaned into discretionary, which is the way I have always desired to trade, but could never quite get the hang of and make it profitable. The mechanical system was essentially a B/O system designed to catch moves outside of the VWAP 1 standard deviation bands, as the theory was that no large move can ever happen without price making it outside of those bands, and kept me out of the chop that generally happened inside of them. Through the course of several months I traded and tweaked the system to be profitable, had a nice sloping equity curve, and through proper profit target and stop placement, minimal draw down. But something still didn't feel quite right even though I thoroughly enjoyed the process, and was much more in sync with that, than any other system I have created.

Which led me to the discretionary type trading I am doing now. Spending all that time watching price action on the Pound allowed me to take notes alongside my system, learning the ins and outs of how this particular market trades. And pretty soon I was able to start seeing the better moves before they started to happen as context, price action, and volume came in line. In essence, once I felt I had the contextual direction nailed, I could sense when and where money would come into the market to try and make another leg higher or lower. And that is when I had to leave the mechanical stuff behind.

The final aha moment for me was when I watched a few of @FuturesTrader71 webinars over again, and I saw him going over the theoretical average price(I believe it was called) as he scaled out quickly as price moved in his direction during a trade. Previously I was struggling with where I would place profit targets or exit a trade because I had so many good ideas floating around, that made a lot of good sense, were flexible depending on price action, and allowed me to capture the bulk of the move on large days. But on choppy days, shooting for the moon can eat you alive, and even full stop outs on a couple of trades can really eat into or even negate one large winner.

So after I watched the webinar again(I believe that one was about trading the hard right edge) and watching him explain the theory, I went to work punching in my own numbers and what did I find? That having a couple highly achievable targets would more than likely be the one thing that would allow me to succeed over the long haul. As he has mentioned before he likes to take more information risk over opportunity/price risk, and I can easily see why now.

More than likely a trade will move in my direction. How far? No one can know that. But I do know that if I take the first third of my position off at 5 points, and my stop is at 10 points, then even if the last 2 contracts get stopped out then my risk on the trade is still reduced by 50%. 50%!!!! And if I take the second third off at 10 points(which is also highly achievable) then I automatically have a winning trade/risk free trade even if my last third gets stopped out. Now I can let that baby run run run, and even add another third if the market is trending well and calls for it. This makes all the difference. And understanding that by putting more ticks back in my pocket through lower losses, allows me to not have to fight to get every tick on the upside. That makes my life so much easier, and I am ok with that.
---------------------------------------------------------------------------------------------------------------------------------
So now to the actual trading. A while back I created (what I guess you could call an indicator) something I call volume trend. It's actually a set of moving averages that follows the up/down volume individually, and basically gives you a visual aid in strength and direction of the volume trend alongside the price trend. At first I thought it might be the next holy grail! I mean this thing trends, has divergences, and crossovers to boot! And when I realized after trying to test it, it was inconsistent as anything else, I put it in the dustbin of Chris' failed trading experiments. But little did I know I was actually onto something pretty neat.

So I use a 120 minute chart for my largest context(essentially obvious support/resistance)
A 30 minute chart to determine daily and trend support/resistance
A 5 minute chart to determine intraday S/R
A 1 minute chart that I trade from and watch price action patterns develop
and a 30 second chart that I use the volume trend to help determine entries

VWAP is a huge part of identifying context for me now, along with the previous day VWAP close, and whether we are moving towards or away from it. Price action very consistently interacts with the daily VWAP and its standard deviation bands, and this provides many clues about what the market might do next.

I also watch volume profile very closely to see how well/not well the market is auctioning higher or lower. This also helps me determining whether we are getting closer to entering the market or not.

With all this information now at my grasp, I have no fears of missing out, or impulse trades anymore. Don't get me wrong I still have my fair share of errors to work through, but I am now starting to understand why the process of learning how to trade correctly takes so damn long. It's because it's a lot! There are so many moving parts, and psychological factors working against you, that there is absolutely no substitute for time. I realize that now, and it keeps me grounded when I get frustrated.

So onto today's trades:
The first chart is the 120 minute chart, I have highlighted what looked to be the next good target since we started to trend well overnight and after yesterday's reversal. This ended up getting hit after I was done for the day, but could have easily happened on the third trade.


Next we have the 30 minute chart where you can see we have started to move significantly higher, and I marked trend support with a black arrow. So we are well above yesterday's VWAP close(black line) and the 30 minute trend is up, so if price is finding support at VWAP today then I will be looking for longs.


Next we have the various entries I took on the one minute chart, and how price action played out. There was an important eco report out at 8:30 so that trade got bailed on early, but both initial targets were hit.


And lastly is actual execution on the FXCM platform.


Now let me be clear, I am still trading quite small as I learn to trust my gut and my rules. But at least it feels like we are as one. Main problems I have had are small execution errors, which are well documented in my journal, and reviewed on a weekly basis. IF you do not treat this as a professional, you will never become one. Will slowly add size as I continue to trade well.

I probably still won't be around too often but I do get emails about replies and what not. Hope all you guys are doing well. I now have an 8 month old boy that is amazing, and a part of my drive to succeed. Love you guys, still don't think I would be where I am today without the Big Mike community.

Ciao

Rule number one in the markets is to never lose money. Well since that isn't realistic, I say if you're going to lose some money anyway then lose small, but when you win, give it all you've got and win big!
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  #184 (permalink)
 lovetotrade 
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Updated Trade Plan

Trade Plan

Start from Daily chart to make sure you are not near any major S/R, if you are mark it on chart

Then 480 minute chart for trend, also for S/R, but larger targets of profit taking as well

Next 120 minute chart for the same when 480 is strong

Then 30 minute trend structure, pivot levels, Y-VWAP, Weekly VWAP bands. Is the intermediate term trending or choppy, who is in control? Areas of confluence.

OTF will take trend above/below R1/S1, and outside of weekly +/- SD1 bands. This is important. Retail will typically keep the daily range in between R1/S1, if it breaks out of this we are looking for large targets to be hit, S2/480 structure etc.

5 minute S/R mark up in real time

Next we generate our trading thesis('s) for the morning, areas of interest where we want to trade, and how we think the day is going to play out.

Set 30 minute alarm to focus on context and update thesis.

Scale in and out as thesis plays out.

Adapt and conquer!

Notes:
Broken 1 min trend structure will likely reverse to 5 minute structure unless trend is strong. Keep this in mind. Also be mindful of what happens when VWAP/bands are in the mix of this PB.

After large S/R is tested what happens next is very critical, but trend is not reversed unless we break days VWAP with conviction. As long as the 30 minute trend is not broken we should still be looking for trend continuation. A temporary break of 30 minute trend signals caution to get too aggressive.

Can only reverse from opposite 1SD when in line with larger trend, otherwise always long above VWAP, short below it.

Choppy market, emphasis on 30 min structure targets. Trending, target structure further out.

Rule number one in the markets is to never lose money. Well since that isn't realistic, I say if you're going to lose some money anyway then lose small, but when you win, give it all you've got and win big!
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  #185 (permalink)
 sagor 
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I was hoping I will find another YM trader here.
Have you switched completely to currencies now?

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  #186 (permalink)
 lovetotrade 
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Yes, sorry I have not traded the YM for some time now, and have no intentions to do so in the near future.


Sent from my iPad using futures.io futures trading

Rule number one in the markets is to never lose money. Well since that isn't realistic, I say if you're going to lose some money anyway then lose small, but when you win, give it all you've got and win big!
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  #187 (permalink)
 lovetotrade 
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Alright, so this morning I had one of my best trades ever. Still left a bit to be desired, but that serves as a desire for me to constantly improve, so I am ok with that.

I did not use a hard stop, and am getting more comfortable with that. I do keep a trailing stop for my additional add ons, and there is a reason for that, but for my initial position/contract which is also my runner I am focusing on closing manually. When I no longer want to be long/short I will just get out.

So the range has been decent, but nothing crazy on the pound. ADR @80. So this mornings large move, with essentially no scheduled news came as a bit of a surprise. Either way, I had my plan and executed it pretty well I think.

So the daily trend has been down for a little while now, and after a nice pull back in the daily trend, momentum has started to shift to the downside. Probably has something to do with the dollar's move higher since the election, just a guess lol.

Next, monthly VWAP has just shifted seemingly from support to resistance, and the monthly VWAP close of the previous month seem to be offering decent support.


This is a little better view, and where I start to get an idea of where it might go. The arrow to the right, points out the LVN which also just happened to be right above S1. So this looked like a good final target, since it was around other previous support as well. The other target that I did not think of till after was the monthly VWAP -1SD, the market actually reached this point on the sell off, so this is now on my radar for future potential targets.


Next is my 30 minute chart with a weekly VWAP focus. Here I could see that we had broken down to the -2SD before the current pullback to the -1SD. The 30 minute trend looks to be up, but we just re-tested previous support not so successfully, weekly VWAP is sloping down, and Yday VWAP close is above us as well. All pretty bearish. The weekly -1SD was actually sitting right on top of the daily VWAP, so I thought it prudent for my thesis to be essentially long above/short below VWAP depending on price action.


This is my 30 minute with pivots, mainly just to check on OTF action and potential target levels. I mentioned S1 looked good earlier.


I marked my entries and exits with arrows just as a point of reference with my FXCM execution chart. Took some notes at 7:30: Short from VWAP, only got to 2/3rd position after a fairly quick breakdown with weak retrace. Just broke ON Low and M VWAP close. S1 could be in sight. Selling pressure seems good, though volume is pretty light. Market finding -2SD as resistance showing strong trend, market can't get back to -1SD but market stabilized VWAP well this morning.


Will have to look and see if FXCM allows a change in entry/exit order, as of now I can't keep the runner on, just have to keep an eye on my overall average, and continue to scale.


End of morning recap: Pulled the plug on the trade right before S1 target at LVN. Not sure whi I got spooked, another 30 seconds would have resulted in 20 more points. I managed to capture 89 points out of the 110 offered, feeling pretty good about that. Although the key to aggressive account growth is making the most out of days like today, must keep this as a forethought when the trend is pretty. The fact that the majority of the trend was outside of the -2SD should have been a good heads up to push the trade.

Rule number one in the markets is to never lose money. Well since that isn't realistic, I say if you're going to lose some money anyway then lose small, but when you win, give it all you've got and win big!
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  #188 (permalink)
 lovetotrade 
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So part of the struggle so far in sizing my trades correctly, is that I haven't had a losing day since I started trading my morning thesis through scaling, instead of trading setups within that thesis. What a great problem to have! LOL. But seriously, until I get an idea of what an average day's loss looks like I don't know how to optimize my size. FXCM allows such a drastic range, I can go from literally 10 cents a point to $10,000. Even the typical 1-2% stop loss rule no longer applies because my trading is so fluid with scaling in and out, that I have yet to take a full stop(this will happen I am sure). I will start playing with that next week.

This morning was a bit tricky, I really thought it might be a losing day after the first trade didn't go so well, and I started losing my way a little bit. I think I kept just enough of the larger picture in my forethought that I was able to trade through it, and turn it into a profitable day. Which felt really good as the last half of the morning went spot on. I also let those first losses go out of my mind, and focused on trading what was in front of me. Pretty sure that made all of the difference.

So I started off the day seeing that we seemed to be digesting yesterday's large reversal. Was on board the 100 point 1 minute bar yesterday, although didn't catch as much as I would have liked. But it looked to be a trend reversal on the larger time frames. Today we had come back to support and bounced, although initially broken.


Next couple charts show lots of support. Monthly VWAP close, Monthly VWAP, Weekly VWAP, etc.



You can see where it got a little tricky, but I knew once we broke the triangle I no longer wanted to be long, and if we broke support then I wanted to get short.



Still profitable and took a few things away from today, what more could you ask for?

Have a happy Thanksgiving everyone!

Rule number one in the markets is to never lose money. Well since that isn't realistic, I say if you're going to lose some money anyway then lose small, but when you win, give it all you've got and win big!
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  #189 (permalink)
 lovetotrade 
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Just making note of my new work station. Hope everyone had a great Christmas!



I have seriously ramped up my journaling, and I am finding that it is exponentially speeding up my learning curve once again. I probably write three pages now per day, and end up with 2 or 3 notes on what I can improve on or look into. Then I do a weekly review of the good and the bad, and at the end of the month, I review all the weekly reviews. It has truly been great. Most of what I write is just my thought process for the day as I am stalking trades, reading market movement, and working my trades.

I had a thought last week, and I have been trying to keep t in the forethought of my mind. I have been reading the market better than I ever have, and working on getting my execution to match the read. But the thought was this: Rangebound days or at least days with little range expansion, my goal is to make a little income, break even, or have a small loss depending on how tough the day was. On trend days it is my job to let the market do its thing and capture the lions share of the trend, and make the most out of the move. These types of days are for account growth.

Should be ready to try out for TST again in another month or two, trading in an entirely different way than before. Previously I was mechanical with some discretionary, this time will be purely discretionary. Can't wait.

Looking forward to 2017.

Rule number one in the markets is to never lose money. Well since that isn't realistic, I say if you're going to lose some money anyway then lose small, but when you win, give it all you've got and win big!
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 lovetotrade 
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I think I have finalized my trade rules as I head closer to my next attempt with TST. We have vacation next week, and moving at the end of the month. So looking at mid-end of February for that. Will probably be going with the $30k account this time, as risk parameters should be fine, and profit target more easily attainable. And it looks like the perfect time as well, now that they just changed their FTP guidelines. I do believe the new rules set you up for success.

So I have two separate guidelines. Trade Plan, and execution. Hoping others might be able to get something from them as well. Even though these are quite detailed, I try to keep things as simple as possible once I take all the information in. Going over all this stuff is important mainly because it covers all the bases, and then puts me in sync with what the market is doing, and/or attempting to do.

Once I start trading, I let the market tell me what it wants to do, and I just try to tag along for the ride. Keeping that big picture in focus is a must, and still my biggest struggle. I have found though, the better I continue to get at that, the better trader I become. Now it is all coming down to the grind. Trading the full session day in and day out, taking notes, and learning from mistakes. By no means am I near perfect, but you do not have to be perfect to make money in these markets. You must be willing to grow a little bit every day, and you cannot do that without having complete transparency and honesty with yourself about your trading. I have "entered the zone" as Mark Douglas called it, where every mistake is a valuable tool that lets me know exactly where I am at as a trader, and what I need to do to get better.

I am happy to say that I am as close as I have ever been to trading professionally, and I love every step along the way.

-------------------------------------------------------
Trade Plan

Check news!!

Start from Daily chart to make sure you are not near any major S/R, if you are mark it on chart. Are we in chop or trending? What did the market do overnight? Is the trend strong and we are looking for trend continuation? Then market should be seeking value away from overnight H/L. Or did we consolidate overnight after a large move previous day, then we should be looking for intraday S/R to get aggressively long/short from for a trend day.

If the daily trend is up we are looking to fade potential levels from the pivot point through S1. and vice versa if the trend is down. Be very aware of this when the market is trending but we are pulling back on the daily charts.

Update all volume composites

Then 480 minute chart for trend, also for S/R, but larger targets of profit taking as well. Use vol profile composite to determine potential auction destinations.

Next 120 minute chart for the same when 480 is strong.

Then 30 minute trend structure, pivot levels, Y-VWAP, Y-Day VPOC, Weekly VWAP bands. Is the intermediate term trending or choppy, who is in control? Areas of confluence.

Mark up composite volume nodes. The market will trade to and from these levels, very important. Use a different color than for structure.

OTF will take trend above/below R1/S1, and outside of weekly +/- SD1 bands. This is important. Retail will typically keep the daily range in between R1/S1, if it breaks out of this we are looking for larger targets to be hit, S2/480 structure etc.

Mark up 30m S/R on 1m chart, and also on 5m chart. Remember this is where we will be looking for important trend contination or reversal cues. The more important the S/R, the more likely we may get a reversal. So if we are breaking these levels easily then the trend is very strong and you must be in the move.

5 minute S/R mark up in real time, or at least be aware. Remember 5m DT/DB are important to watch for as well, break of 2m S/R will more than likely bring the 5m S/R test.

Next we generate our trading thesis('s) for the morning, areas of interest where we want to trade, and how we think the day is going to play out. Draw previous day's vol profile and see what might be tested or become intraday S/R.

This is our final piece of the puzzle, we are looking for the daily and and 30 minute trend to line up. Our entire focus should be on 5m S/R and 30m S/R failure tests to get in on the intraday trend. Regardless of any counter trend movement we should be focused on getting in on the trend.


------------------------------------------------------------
Execution


Focus on 30 minute trend, strongest is when the daily lines up with this, but our main focus is on the immediate 30 minute trend. We always trade in this direction until that trend is broken, and the market shows us it wants to reverse.
We always want to be looking to fade levels that fall in line with this trend: 30 minute S/R, 5 minute S/R, VWAP, W VWAP, etc.

Our goal is to get positioned well to ride the duration of the trend, holding a contract behind 5 minute S/R/or VWAP trying to capture the bulk of the good trends.

When we hit the 30 minute S/R levels what happens next is critical. We should see signs of trend continuation, as this test will cause deep pullbacks in the trend if continuation does not happen right away. But as long as the 30 minute trend is not broken after a 30m S/R test, then we should be looking to fade all VWAP levels, and any large swing points. And remember that any level broken is likely to bring us to the next area of interest, so we must be nimble.

Currently we are trading two contracts. We scale into positions as we move into these predefined levels, specifically three and one points before we hit the level. Although VWAP may require a little more finessing, always be willing to fade any moves that jump over the VWAP.

Our stop is currently 3 points above/below that level we are fading, this is subject to change, and must be willing to jump back in if level ultimately fails. But for the most part this has proved to be a good distance.

The first target is at the next 5 minute S/R, as an income target.

We add an additional single contract after the first contract has been scaled out, and as we approach the next reasonable level. Again scaling out the same, although on smooth trend days, we may hold that additional contract until the next 30 minute S/R or CVN(Composite Volume Node).

Our focus is to get a core position going for the duration of the trend, all adds, scales and focus should be on maximizing that position. This reduces trades, and allows us to capture most of the trend.

If we only get one contract on, this will act as our core for the time being. If we are trending well then we will look to add to that position, and scale out as necessary. IF we are within the daily /overnight range, and we get a large move with no pull back potential, then we can capture those profits at a suitable level. This would be any 30 minute S/R, overnight High/Low, S1/R1.

When large countertrend volume comes into the market we must be a bit more cautious, especially around 30 minute levels where we might need to be more agile, in case of trend reversal.

These rules will continue to evolve as we learn, and continue to gain experience.

Rule number one in the markets is to never lose money. Well since that isn't realistic, I say if you're going to lose some money anyway then lose small, but when you win, give it all you've got and win big!
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  #191 (permalink)
 lovetotrade 
Rockledge, FL
 
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Alright, so today was the first day of a new 30k combine. As in usual fashion when I start a combine, volatility is at ridiculously low levels. Also my main trading computer decided to randomly install its first major update this morning, so I am just now getting that computer back 5 hours later. This was obviously my fault, and totally preventable, but regardless sent me into a tizzy of unneeded distraction and frustration first thing this morning.

Fortunately I had Sierra Chart installed on my other computer, and quickly worked to throw up a few charts that matched my other workspace.

So today was not an impressive day by any means, neither range nor of my trading. I felt I was definitely leaning on the conservative side this morning, as random, non news, large volume entered the market. Once we had two failures to move higher, I decided the day more than likely was range bound, and that any chance of large range expansion was near zero. Although I did follow my plan, and trusted my gut, I do consider today to be a success.

Large volume bars of 8000+ can initiate very strong trends/reversals on the 6B. Once large volume came in and price was rejected off of 30 minute trend support, my first thoughts were continuation. So I bought the pull back to VWAP with one contract to start. We failed to make new highs, so once we got a rejection higher from a previous low, I moved my stop to right below that swing. So of course I was stopped out at the exact swing low to the tick, but this was the my plan, and I accept it. A couple points wider next time might be wiser.

Once we moved back outside of the +1 SD on decent volume, I took another stab at a long. My initial plan was that if we continued to move higher I would add to it, and if the level failed then I would get out, and make another attempt at support/VWAP. The level failed, we got out, and the market turned once again. I don't think I have ever seen the market start to make its move at 11:30, so I assumed it was not worth taking the risk on a third attempt so I called it a day. Got a small rally with no place to enter on pull back so I let it go. Range absolutely pathetic, and tomorrow is a new day.

I see we have monetary policy from U.S. and England Wednesday and Thursday so that should give vol a bump!

It's easy to look at today and say, well if we would have just widened our stop both places, then we would have given the trade proper room to work out, and maybe had a decent little day. To that I say no way to the first spot, pure coincidence, but I could have held out a little longer on the second. Ideally I would have only held if I was going to scale another contract to improve my average, but I would have had to push the stop out another 10 points for it to make sense. I was even less confident after the first trade didn't go anywhere, and would have drastically increased my potential risk for the trade. Too many things just weren't adding up today, but regardless it is noted, and will keep it in mind going forward.

You can see my entries and exits on the 5 minute chart below.






Rule number one in the markets is to never lose money. Well since that isn't realistic, I say if you're going to lose some money anyway then lose small, but when you win, give it all you've got and win big!
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  #192 (permalink)
 lovetotrade 
Rockledge, FL
 
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Day two, and another day not really worth trading.

We had put in a test of a previous bottom, after quite a sharp move overnight. So I did start out the day leaning counter trend, assuming we would test HTF resistance levels that I could lean against. After the sloppy build up to the 30m resistance, price did maintain the RTH +1sd. For my first fade against weekly/monthly -1SD, I should have waited for the test to enter, instead of placing the limit order in case of a pop, which it did. So took a quick 8 point loss on a high volume B/O higher. No biggie I thought, as now we have clear direction, and volume entering the market.

In the back of my mind I thought the large bar might be exhaustion, and so I thought I would play it conservative, but I did the opposite. I played it more aggressive than usual, and it bit me. I managed to exit on the final low tick of two separate bars, as I watched the market move right to my first target. With high counter trend volume coming into the market after the break out, I never should have entered the second contract until we started to show signs of sell exhaustion. That simple move would have moved my losing day into a profitable one. More vertical moves to follow, with no break of the new highs left much opportunity to be desired, so I decided not to dig deeper. The next two days should offer lots of opportunity for profit, and hopefully a bump in overall volatility.




Rule number one in the markets is to never lose money. Well since that isn't realistic, I say if you're going to lose some money anyway then lose small, but when you win, give it all you've got and win big!
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  #193 (permalink)
 lovetotrade 
Rockledge, FL
 
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As we are settling into this period of low volatility, the market has started to skew greatly towards counter trending during the U.S. morning session. So this has lead me into some new market research that I am excited about. Anytime I am not performing well, usually it is because the environment is changing, and generally into something I am not totally familiar or comfortable with. This is exciting because every session that lacks my peak performance is an opportunity to take a fresh look at the market and learn something new, or at least tweak what I am doing.

This month so far has only had 2 out of 14 trading sessions where the European market was trending, and the U.S traded in continuation of that trend, vs. some sort of counter trend for the majority of the session. This is very low, and are numbers that will crush me if I am only looking at trading with trend first thing. So now I can go into analysis mode, and look for clues that might help me change direction earlier. When I get the direction right I tend to do quite well, but when things are convoluted and conviction is low, not so much.

I am still feeling quite confident as I know that one good day can completely erase my string of losing days. I am keeping losses small, while I wait for better opportunities on the horizon.
--------------------------------

So unfortunately the only good day to trade last week that offered significant opportunity was on Thursday, which is a day that I watch the kids all day while my wife works. But the truth is that everyday offered an opportunity to profit in which I failed to execute effectively. My nerves were definitely better today, so I think I am settling back into trading live.

Looking for trend continuation, I found a suitable place to test a long just above the weekly vwap, after we had double bottomed from support, tested the downtrend line, and pulled back. I figured we would either find support there, or the trade wouldn't work out, and I would exit for a small loss. After we failed to clear a composite volume node, and the down trend line, I wanted to wait for a test of the Up trend just below support, so I exited. The market broke, offering no good areas for a good pull back entry, and with a test of yesterday's vwap we filled the day's range. So I stepped aside, and fired up excel.

Looking back, where I exited would have been a great place to reverse, had there not been a HTF trend line in the way. Plus it was technically a break out trade which I try to avoid. Patience for a better entry has definitely improved my trading, yet sometimes you just miss the trade. It just comes with the territory. Tomorrow is a new day!




Rule number one in the markets is to never lose money. Well since that isn't realistic, I say if you're going to lose some money anyway then lose small, but when you win, give it all you've got and win big!
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  #194 (permalink)
 lovetotrade 
Rockledge, FL
 
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Alight much better trading today, but man what a tough one! The range was literally 40 points for the first 4 1/2 hours, the smallest I have ever seen it. I thought we were gonna get some follow through today, but it just didn't happen. Most critical error I made today was missing the nice chance to add to my core position, but because of the lack of follow through this would have only slightly boosted my PnL. This is not the point though, if we did have follow through it would allowed me to push my core as far as possible, and given me the confidence to hold the trade as long as needed.

Since I missed the best opportunity to add, it forced me into a much less ideal location, right after buying exhaustion, and a high volume reversal. This is super important that I drill this. The market may not look pretty as the trade develops, but you actually get better trade locations as the market fights to form the trend. I actually had an entry order where I wanted to get in, but the market jumped my order after it bounced, and I refused to chase the entry. Even though this was the exact time I needed to chase lol.

My largest loss was taking a stop on that add, but made it up on a reversal trade after buying seemed exhausted. Ending the day at B/E is a win after being down -20 so I will take it. I am absolutely ok with these small range days oscillating around small wins/losses, waiting for the trend day that makes it all up plus some.




Rule number one in the markets is to never lose money. Well since that isn't realistic, I say if you're going to lose some money anyway then lose small, but when you win, give it all you've got and win big!
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  #195 (permalink)
 lovetotrade 
Rockledge, FL
 
Experience: Advanced
Platform: Sierra Chart
Broker: Gain Capital, OANDA
Trading: GBP