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Thanks man good to be back, I think part of the reason I cut back is because it really is time consuming, but so worth the effort. So I was using VP until I read that thread. Ben explained it perfectly, the volume is important, but structure is why the volume builds on those areas. Makes total sense. Not that VP doesn't have it's uses, but I am convinced MP TPO has everything I need.
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!
So it's a little hard to explain, usually it is something as simple as a momentum reversal on TPO structure, and then a failure at VWAP while having room in the ADR to make a worthwhile attempt. But the EURO had exhausted itself to the upside, and was weak compared to the EURO the whole run up in price. So if the upside is weak and can't even get us to a decent range on the day(40+), then there is probably room to run on the downside.
I honestly did not know if we would follow through to the downside at first, and I was ready to start peeling contracts back off if we reversed back to the upside. But at that point I had enough information to make an attempt at downside price exploration, so you gotta go all in or get left behind.
Oh another pretty important thing I look for is balance areas in the MP. If the move coincides with a move out of balance into another balance area then I want to see it accepted and not rejected back into balance. I want a clean break, I have learned to just be a little more agile in those areas.
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!
Alright so gonna start out wit the fact that collectively I am not happy with today lol. I have already journaled about it twice, so clarity is there to apply to tomorrow. Loss wasn't too bad, but larger than it should have been, actually should have been profitable period! Forgot to set the 10 a.m. eco report alarm, and the volatility stopped me out of my position right as I added, and the market carried on without me. Would have reversed my day. Frustrating because it's a rookie error, I check my news absolutely first thing every morning. Been burned too much in the past.
Ok so first things first. Range has been pretty tight last couple days, not allowing for solid directional moves. Not a big deal. In the past I have adjusted my trading to fit low vol, then when the big days come I am ill equipped, so I will try to exploit these days as much as I can for now.
Also did not read my morning checklist, and initially violated rule #9. Try to look for extremes to get positioned. Low risk, high reward obvious areas. Be patient for a good entry.
I was able to correct my errors, and get scaled in but not as efficiently as it should have been, and caused me to scramble to get full size. Really have to work on nailing this, and cutting down my execution.
Now for the main issue today, price diverged significantly from the EURO without a news event. That is something brand new for me. Lesson learned here is to follow GBP momentum, and look for volume to come back in and the correlation to re-align. So that caused some improper trades from me. No matter what, I should not deviate from the way I enter. Patience is key. No break out trades, especially when we are in uncharted waters.
Frustrated not at the losses, but because they were unnecessary.
Marked the balance areas within split TPO today. Balanced, moved higher, balanced, moved lower, balanced, moved higher. This is all still new to me so really trying to focus on the correct things in real time.
You can see from my entries and exits that trading was overall sloppy, but particularly bad once I didn't have conviction to the downside, but decided to go for it anyway. Now in hindsight I can see why that lack of conviction was justified, and hopefully we trade the diverging markets better.
Hope others succeeded better than I did today, here's to a new day tomorrow!
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!
3. Adjust value areas for previous day, weekly on Sunday nights. Mark the open, and try to anticipate how the day will close. (Helps me with bullish/bearish conviction larger picture)
4. Check the 5k chart(one of my larger TF charts) and over night price action. Note important levels in play. Check for potential gaps to be revisited.
5. Note the current balance area in regards to current price action. Are we in balance or out of balance? If in balance where are the extremes? Note the next balance area we may visit above and below us.
6. Did we move towards value or away from it over night? It it looks look the market has had a solid run in either scenario, be prepared to reverse course. Focus on where we are at in the daily trend to adjust expectations.
8. Follow the EURO TPO and price action to help us guide our direction for the day, noting any obvious divergences and correlation. Watch closely for reversal signal. *NEW* If we completely diverge from the EURO, follow momentum until correlation resumes.
9. Try to look for extremes to get positioned, low risk, high reward, obvious areas. Be patient for a good entry.
10. Focus on where we are in the trend. Are we in line with momentum, or has momentum started to reverse and we should now be cautious of any attempts at trend continuation, watching price action closely around the VWAP/1SD. Remember that just because the TPO has reversed, doesn't mean the whole trend has reversed course just yet, look for signs.
11. Large volume news events, reduce size, and widen stops. Wait for the pull back.
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!
Ok so I realize that I just commented on updating my morning checklist to include a new aspect of the EURO correlation/divergence, but after another significant divergence this morning that handicapped my trading, I will be scrapping following the EURO for now in regards to conviction and trade decisions. I have a previous note where I mentioned that if following the EURO had a negative impact on my trading, that we would have to let it go. Well after 3 days just within the last week, I would have been much better without it. So I will keep an eye on it going forward, and can always re-add it later.
So today we came in knowing the FOMC is this afternoon, so I already was thinking balanced day. Then after looking at the previous profile, which was also very balanced, it was easy to formulate a plan for the day. Which now I am also thinking that actual market structure just completely overrides market correlation, another reason to let the EURO go.
We opened up near the ONL, and VAL where we were having a mini balance area(think consolidation). So if we are targeting the upper end of the profile, we would take a long from the bottom of support, where we quickly know if we are wrong. Weekly VWAP was just below the ledge of the balance area, so this was our next attempt, but after high volume oscillation came in around my entry I quickly exited assuming it was news, which it was.
Remember larger volume can come in and blow your thesis out of the water, and now cause range expansion so wanted to re-analyze. Well volume and volatility quickly shrunk back to normal and the EURO just kept cruising lower, eroding my confidence in my long thesis. After getting stopped out from an improperly placed stop, from not that great of a B/O entry, I thought maybe we would get a break lower. Well we just continued to melt higher. I took a 2/3rds size short from VWAP, as we usually get a reaction there, and thought it would be a good place for the GBP to start correlating with the EURO again. Well it blew right threw my stop, and I knew it was time to get long. Waited for the pull back, and took another 2/3rds position since we were now much closer to my final targets from pre market planning. VPOC and top of the balance area. Scaled out to end B/E on the day.
You can see how frustrating planning the day correctly is, but having such distracting negating information is. EURO you gotta go!
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!
ive thought about this many times.Some traders watch other markets, to try to read the market they are trading.As you point out, this affects your view on your trading instrument.Sometimes this is helpful, sometimes not.Frustrating for sure!Especially, if you focussed on your instrument, and the context for it alone, and there was a clear plan that worked.I think FOMC is a big culprit here as well.
The market is waiting for one thing: is Powell going to be unambiguously bullish or is he going to be uncertain? It is not important your thesis was proven incorrect. Happens a lot and you must expect it in a FOMC week.
What is important is the mathematical expectancy of your strategy. How much are you likely to win on average, and how much is this value likely to fluctuate in the short term? Key word here is fluctuate. Your strategy statistics will deviate from the norm and this understanding should give you a bit more confidence when you are on a negative swing.
But my thesis was proven correct. My reliance on EUR/USD price action kept me from getting in where I originally planned with conviction, and therefore had to enter from a much less advantageous level.
I understand expectancy, and monitor a large range of statistics in regards to my strategy. My reliance on the EUR/USD to help guide entries and directional conviction has hurt my execution, profit, and therefore expectancy this week, which is why I am removing it. With the EURO removed, there was nothing preventing me from executing my plan to perfection today, market moved very much in line with my pre-market plan. I thought I was pretty clear with all that in today's update, maybe you are referring to something I am missing.
Thanks for commenting!
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!
For sure! And like I had previously mentioned, one of the main reasons I like it was to build conviction in my position if the EURO was trending well, but my market was lagging. But the trade always remained valid regardless, so I am assuming I was just looking for a cushion there. It definitely would not make or break my trading, and I am sure there is some value in at least monitoring the correlation, but I am convinced placing so much weight on it for my own trade decisions was incorrect.
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!
Sorry my mistake, I misinterpreted your original post. Im an expert at reading things incorrectly and jumping to conclusions.
btw, great journal. I read an earlier post where you mentioned this would be your last attempt. It says a lot about a persons character when they pick themselves up off the floor and keep fighting. I really hope you make it this time. Ill be following along. Best of luck!
