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lovetotrade's YM Breakout Journal
Started:November 6th, 2014 (04:13 PM) by lovetotrade Views / Replies:11,140 / 187
Last Reply:November 22nd, 2016 (11:16 AM) Attachments:137

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lovetotrade's YM Breakout Journal

Old November 6th, 2014, 04:13 PM   #1 (permalink)
Student of the Markets
Cocoa, FL
 
Futures Experience: Intermediate
Platform: Sierra Chart
Broker/Data: Apex Futures/OEC/FXCM
Favorite Futures: YM, Forex
 
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lovetotrade's YM Breakout Journal

Edit: Feel awesome about starting the journal out with a mis-spelling of the word "breakout" lol, hope my trading is better than my spelling.

I feel like starting a journal here was inevitable, even though I already keep my own. Nothing like good old fashioned pen and paper. So my system is simple, I got the idea from John Carter's "Mastering the Trade". His teaching method, and some of the things I got out of that book have left an obvious fingerprint on my trading style. I really enjoy his trading style, and approach to the markets. I got the idea from him, but have made strategy my own. And after spending some time on futures.io (formerly BMT), I now realize that there is a lot more that goes into this than just setup, trigger, and profit target. A big part of it is price action, and beginning to understand it has lead to getting out of losers earlier, and less anxiety when a trade is moving swiftly towards my PT. So here it goes.

I use a breakout strategy using the 20 period bollinger bands, and a 20 period simple keltner channel. (Also known as the TTM Squeeze) As the volatility winds down, the BB's come inside of the KC's, and that lets you know that the market is consolidating, and that a burst of volatility will be released when the BB's come back outside of the KC's. Usually a good size move can be expected afterwards. This works on all markets, and on all time frames.

I trade a small account, so I am working on building that up to move from a one contract profit target, to two contracts with the second one being exited on price action.

The profit target is based on the average MFE after a squeeze fires off on a 5 minute chart, which is 50 points If there is a pivot level in between 40 and 50 points, I will place my target 3 points ahead of that PL. Otherwise will leave target at 50 and trail it.

I set my stop at 20 pts, and will adjust that up/down to just beyond any obvious levels of support/resistance. So initial risk/reward is 1:2.5. The 10 ema acts as a trailing stop of sorts, or line in the sand. If it closes below this level, I am out with a market order. If price action looks like crap I may exit earlier. The ema close theory has held up well over the course of a couple years.

My entry must be within 10 points of the 10 ema, this helps limit my risk with runaway moves, and gets me entry 90+ percent of the time. Once the market moves 20 points in my direction, I will set my stop to break even. Generally if the market moves against me after 20 points, the market will reverse and the trade is dead. I will follow the market 5 points behind the 10 ema, and at new HL's and LH's as the market moves toward my target. I trade 8 a.m. to 3 p.m. eastern.


I also watch out for the 15 and 1 hour setups, as they have the greatest influence during RTH. I check time frames beyond that before the market opens, as the 2 hour+ time frames will have an influence over the market beyond RTH, and generally will not take smaller counter trend squeeze signals during.

This strategy tends to work well on trend days(although sometimes missing killer moves) and is sometimes tough to work through days with tight ranges. As where any breakout strategy tends to fall apart. But I have been able to make it pretty profitable, and keep losses small. And now after spending some time on futures.io (formerly BMT), instead of believing I had found the holy grail, I now realize it is only part of the puzzle.

I have been researching and applying vwap, market profile, and volume profile, amongst many (new to me) more market nuances that help me read how the day might unravel better. My ultimate goal is to be able to trade the market flow throughout the day like that of @bigmike and @tigertrader. But my account must grow larger, so I will continue to trade my system as long as it stays profitable, and continue to watch the ES and learn.

My goal is to trade my system to the best of my ability, journal and document all of my trades, and focus on my performance rather than the money. I believe I have shaped these into my strengths, along with execution.

I know some of these trades will drive some of the price action guys nuts, but they have worked over the long term, and money talks and bulls**t walks correct? So here we go.

First I will list my stats up to this point, and then I will I will start my journal with my trades today.


Last edited by lovetotrade; November 6th, 2014 at 05:09 PM. Reason: illiterate
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Old November 6th, 2014, 04:27 PM   #3 (permalink)
Student of the Markets
Cocoa, FL
 
Futures Experience: Intermediate
Platform: Sierra Chart
Broker/Data: Apex Futures/OEC/FXCM
Favorite Futures: YM, Forex
 
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Trade stats


I started tracking results the last 3 weeks, which also coincided with me taking every trade, and cutting out the impulse trades.(go figure)

#of trades 28
wins 10
loss 14
b/e 4
win% 36%
avg win $145
lose% 48%
avg lose -$41
avg trade $34
total fees $189
total profit $960
net profit $760
acct % 24%
largest drawdown% 3%

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Old November 6th, 2014, 05:05 PM   #4 (permalink)
Student of the Markets
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11/6/2014

Wild price action after ECB news along with the open set the range for the day. The 4 hour and 8 hour, 10ema's continue to mark the lows for the day, then generally rally the rest of the day. A couple small trades today, continuing to focus on price action to limit losses on days like today. Need to figure out a way to make money on range bound days.

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11:12 5 minute squeeze fired off long. Entry 11 pts from 10 ema.
Stop -3 pts MFE 20pts

12:55 5 minute squeeze. Got long at ema, when the market respects the 15 minute 10 ema, and a squeeze forms above/below it, chances are good it will fire off in that direction.
Profit 8 pts MFE 20pts

Daily total: 5pts -commissions

Need to look into MFE on range bound days, and maybe set a small target like 15-20 points. Then if it breaks above the daily range I can just buy/sell the first pullback. Could have been up $150-$200 with a small target.

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Old November 7th, 2014, 10:06 AM   #5 (permalink)
Student of the Markets
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Forgot to add that I did figure out a way to add an extra contract without adding really any risk to the account. Once a squeeze trade has fired off, it must move at least 20 points in my direction so I can establish my B/E +1 stop. Then once the 5 minute 10 ema has moved well up past my entry, I will add another contract if the market pulls back nicely into the ema. Then I will set that stop to my original B/E +1 on the first contract.

So now, worst case scenario I have a break even trade with two contracts instead of one. Haven't had this one work out yet, as this week has been range bound, but when it does it will be killer. I have gotten to test it a couple times, and ended up with some small wins. Second target is 100pts, or a close below the 10 ema, and will trail that ema till stop out or target is hit.

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Old November 7th, 2014, 11:34 AM   #6 (permalink)
Student of the Markets
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Wow, this week must be really wearing on me. Trying to pick bottoms, and trading in the ES. None of which are in my trade rules. Lucky I caught myself before I did any real damage to the account. Emotions are high this morning, need to get myself under control. Hoping venting will help.

Edit: Well at least I was able to refocus, and get some of the money back I lost this morning. I think this week being range bound every single day, and not hitting one single profit target had me searching in desperation for profit elsewhere. No surprise that didn't work out. Fortunately I was able to correct that before blowing my loss limit for the day. Ended up down $100, with half of that being commissions.

Just set me barely negative for the week, which is a little disappointing, but really tested my system(and sanity) through what was my largest draw down period. At a -3.36% I will take it.

Only posting one chart which was my last trade of the day, and the only one of any significance. Was for +10 points with a trailed stop out. Made a couple good new lows, but some solid buying came in so I tightened my stop, and let the market take me out. On the one minute chart I noticed it would have been a good candidate for reversing the position. Will be watching the one minute chart with much more frequency, as I have been becoming more competent in reading price action there. I had moved my target up from 50 pts to 35 pts right in front of the pivot point, but never got there. Didn't like any of the pullbacks to add to my position. Oh well, can say I survived for another week.

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Last edited by lovetotrade; November 7th, 2014 at 07:42 PM. Reason: Update
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Old November 7th, 2014, 07:45 PM   #7 (permalink)
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If anyone has anything to add or take away please jump in. I started this journal partly because of the feedback I saw from other traders' journals. So please don't be shy

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Old November 8th, 2014, 01:28 AM   #8 (permalink)
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lovetotrade View Post
If anyone has anything to add or take away please jump in. I started this journal partly because of the feedback I saw from other traders' journals. So please don't be shy

What is the timerange on the YM what you are looking for to be in target?
Did you do any analysis what are the most likely moves on the YM?
Do you use any intraday level on the YM (like opening price, globex range etc...?)
Do you have any backtested result about your strategy, ot feeling?

thx

Máté
Full time traderLive journal here
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Old November 8th, 2014, 10:55 AM   #9 (permalink)
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you mentioned ES is against your rules so what is the appeal? Also, why do you like the YM vs NQ, TF or ES? Like the journal I will follow.


lovetotrade View Post
Wow, this week must be really wearing on me. Trying to pick bottoms, and trading in the ES. None of which are in my trade rules. Lucky I caught myself before I did any real damage to the account. Emotions are high this morning, need to get myself under control. Hoping venting will help.

Edit: Well at least I was able to refocus, and get some of the money back I lost this morning. I think this week being range bound every single day, and not hitting one single profit target had me searching in desperation for profit elsewhere. No surprise that didn't work out. Fortunately I was able to correct that before blowing my loss limit for the day. Ended up down $100, with half of that being commissions.

Just set me barely negative for the week, which is a little disappointing, but really tested my system(and sanity) through what was my largest draw down period. At a -3.36% I will take it.

Only posting one chart which was my last trade of the day, and the only one of any significance. Was for +10 points with a trailed stop out. Made a couple good new lows, but some solid buying came in so I tightened my stop, and let the market take me out. On the one minute chart I noticed it would have been a good candidate for reversing the position. Will be watching the one minute chart with much more frequency, as I have been becoming more competent in reading price action there. I had moved my target up from 50 pts to 35 pts right in front of the pivot point, but never got there. Didn't like any of the pullbacks to add to my position. Oh well, can say I survived for another week.

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Old November 9th, 2014, 06:08 PM   #10 (permalink)
Student of the Markets
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matevisky View Post
What is the timerange on the YM what you are looking for to be in target?
Did you do any analysis what are the most likely moves on the YM?
Do you use any intraday level on the YM (like opening price, globex range etc...?)
Do you have any backtested result about your strategy, ot feeling?

thx

Could you clarify a little more on what you mean by "most likely moves"? Size, direction, etc.

I got rid of my chart that showed the gaps from the U.S. session vs. the 24 hour chart, and I probably need to get into analyzing that again. I spent some time looking for useful info there, but never really could get anything other than gaps are usually filled within a week or so. But I guess that could be helpful if it's a move away from the trend. But I'm kind of confused by your question again, sorry. Do I use an intraday level for what? I watch volume profile throughout the day, how the market reacts with the central pivot point, and I mark up the overnight highs and lows.

I have been using the squeeze strategy for over a year now. I used to use it in forex, and have found it to be best in line with the way I trade in the YM, although it also works in the ES. I back-tested about 6 months worth of data pre-August 2014, that is where I got the MFE I use from. It seemed to catch the majority of large moves after a consolidation, and was quick to identify when a trade wasn't working out. So that fit my criteria pretty well.

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