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lovetotrade's YM Breakout Journal

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  #1 (permalink)
 lovetotrade 
Rockledge, FL
 
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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.

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  #3 (permalink)
 lovetotrade 
Rockledge, FL
 
Experience: Advanced
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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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 lovetotrade 
Rockledge, FL
 
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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.




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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 lovetotrade 
Rockledge, FL
 
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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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 lovetotrade 
Rockledge, FL
 
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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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 lovetotrade 
Rockledge, FL
 
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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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  #8 (permalink)
 matevisky 
Budapest, Hungary
 
Experience: Intermediate
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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
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 robert880 
Chicago + IL
 
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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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 lovetotrade 
Rockledge, FL
 
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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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 lovetotrade 
Rockledge, FL
 
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robert880 View Post
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.

I have been learning to read price action on the 1 minute ES chart, while switching over to my YM chart for live trades. I thought I could read PA a little better in the ES, as the S/R lines are a little more clearly defined IMO. I do not have any actual entry or exit rules for trading the ES, but one of the setups I was looking at setup, and I took the trade. It went a point in my direction, and then reversed, so I exited at a point loss. But that is not part of my system, and therefore that trade hurt my trading record, and my P&L. So I must be disciplined in squashing any kind of random trading behavior.

I have commented on my appeal to the YM vs. the others in this thread here. If you have anything to add please do!

https://="futures.io/index-futures-trading/33682-ym-mini-sized-dow-futures-contract-vs-es-s-p-500-futures-contract.html"]

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 wirechild 
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Why do you even open an ES chart at all? It seems to be more of a distraction than be helpful at this point.

I would focus only on the YM if that is what you are trading at least until it either works or doesn't and you are confident you put every effort into it.

I "day trade" the TF for 3 hours every morning. For 2+ years I did open another chart during this timeframe. I put 100% of my effort into learning everything I possibly could about TF. Looking back this has been the best decision I made in my career.

In the afternoons/evenings I review other instruments for possible future trading, but would not let that distract me from my main focus. I made several attempts to make my system work on others and didn't fit. Most likely because I have not put in the same effort and focus as with the TF.

I now swing trade the ES on longer timeframes and follow it a little closer however I am confident that it will not distract me during my TF trading. I also still trade some stocks and ETFs on longer timeframes (weeks) but generally only look at them in the evenings or weekends however not once do I look at them during my TF trading sessions.

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 lovetotrade 
Rockledge, FL
 
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Well the idea was to transition to the ES eventually, since all the big hitters here seem to swear by it. But watching the ES chart during the day was never a distraction, as my system only sets up a few trades each day. I should have never had the DOM up for the ES, but I was watching order flow, and trying to learn that as well. But I am convinced after reviewing things this week that I will learn to trade the price action on the YM, while allowing the squeeze to set up.

As I have mentioned, my current breakout system really does not do well during a week like this week, but there would have been plenty of price action to trade on the one minute chart.

But I was looking to be able to watch the ES live, and paper trade entries and exits until I had developed a plan, and was willing to throw some money at it. But now I realize that with watching the YM on the one minute chart, I can get a lot more trades on the YM risking 10 pts, than I could on the ES risking 1 point. Monetary equivalent the same. So that's what I will do.

I had already been watching the YM one minute chart, but mainly for monitoring active trades around S/R points. So now I will be taking it a step further. So you're right, probably should have been focusing there all along. Glad it only cost me $50 to figure it out.

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 lovetotrade 
Rockledge, FL
 
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Only a couple small trades today as volume was weak, and moves were small again. Used price action to manage the trades. Took some notes, and everything seemed to trend well today on the one minute chart.




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 lovetotrade 
Rockledge, FL
 
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Yesterday's chart:


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  #16 (permalink)
 lovetotrade 
Rockledge, FL
 
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11/14
I have been on vacation for the last two weeks, and so the last few days trading has been sparse, and typically break even. So I haven't posted much, but I am back with vengeance now

8:40 Nice pullback after morning economic reports. Price action gave me a buy signal with only 6 points of risk. Took it and got stopped out. First bearish indication of the day. We are in an hourly triangle, and it's Friday so I am assuming the market will pick a side, and trend with it to go home over the weekend. Looking to take trades today after the market has established direction. Entries and exits will be based on price action, and will be marked up on my chart. Actual trades marked with arrows, trade ideas in the bubbles.

I have realized over the last week that my whole entire strategy that I held dear to for so long, is all easilly identifiable through price action. I can actually feel and see the 5 minute squeeze set up on the one minute chart. And while I could continue to trade just the 5 minute chart, the problem is that the market sets up so many more opportunities that the 5 minute squeeze misses. And the problem is that below the surface, they act and trade just like the 5 minute squeeze does. So I plan on only taking a trade once the new trend has identified itself, and managing that through price action. In this lower volatility environment, 30 points has shown to be a reasonable price target, and if the market continues to show strength after the target has been hit, then I will re-enter.

The 5 minute squeeze just has not been cutting it as the larger time frames start to consolidate, which has forced me to look under the hood, and really ask why? What I have found is opportunity.

So I will continue to post charts of each method: What I am looking at, thinking, and doing on the one minute chart, and the potential squeeze trades on the 5 minute chart.

Then I can truly determine whether I am just going through another phase, or if I am really onto something here. In the past I have been quick to maybe look for squeeze trades on a smaller chart, or add an indicator or pattern to the mix, trying to improve upon what I had built. But I feel like I am on the right track and do I will let this play out.

9:53 Market broke down out of consolidation, but only a couple of points away from the hourly trendline. Should have waited to see how it reacted with this level first, but after watching it fail to the upside, I was fairly confident it would work out, the vix broke out to the upside as well. -8 points. This also would have been where I entered for the 5 minute squeeze. Volume is not as good as I was expecting this morning, and market has pretty much been chop since 8:30. Must wait for the market to pick a direction. Note: would have made sense to flip long here.

12:22 Failed 5 minute squeeze short w/reversal. This time I was able to avoid the short, and got long on a close back above the pivot point and hourly trendline. Hoping to now head higher through the down trend line. Out at B/E, volume is so low and the 5 minute bar closed back inside the trend line. Would have been stopped out.


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 lovetotrade 
Rockledge, FL
 
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I have been trying to prepare for the upcoming week all weekend. It's amazing how much of this I can take without getting burned out. I have to throw out some mad props to @PandaWarrior and everyone who has contributed to his journals. It is really speeding up my learning curve, and clarify many of my own thoughts and misguiding thought processes. Priceless information I tell ya Also seems to be an outstanding human being, and makes it a true joy and privilege to read his work.

My process over the last few weeks has been to dig deeper into the psychology of why my strategy works, and how I can extract more from it through price action. I had originally thought I might need to throw it out, but now I am starting to see how I can combine the two to increase my performance and results. I am starting to understand that all markets behave differently, and am enjoying getting to know mine.

So the idea behind the squeeze is basically a quick indication of whether the market is consolidating, trending, or just oscillating at a quick glance. When it works, it works great, and gives some great signals, but like all indicator based systems it seriously lags sometimes. Like I could catch a great breakout in the morning, hit my profit target, then the market would do a full reversal, and I would have to sit out of all of it if the market didn't consolidate enough to give me a signal. Obviously this is no good, and for me it is unacceptable. But I tell you what, when a large move is building up, nothing gives you a better heads up than the squeeze from what I've seen. So I don't need to throw the baby out with the bathwater, I just need to use it as another tool in the old war chest. And as a guide from time to time. Especially since the nature of the squeeze/breakouts fit so well with my personality, but I am learning to adapt to all situations. When to take a trade, and when to stand aside to observe and let things set up.

So when I do not have a signal from my system, I will be watching out for price action, and other market internals to help guide me throughout my day. Look forward to taking a new step tomorrow.

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 PandaWarrior 
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lovetotrade View Post
I have been trying to prepare for the upcoming week all weekend. It's amazing how much of this I can take without getting burned out. I have to throw out some mad props to @PandaWarrior and everyone who has contributed to his journals. It is really speeding up my learning curve, and clarify many of my own thoughts and misguiding thought processes. Priceless information I tell ya Also seems to be an outstanding human being, and makes it a true joy and privilege to read his work.

My process over the last few weeks has been to dig deeper into the psychology of why my strategy works, and how I can extract more from it through price action. I had originally thought I might need to throw it out, but now I am starting to see how I can combine the two to increase my performance and results. I am starting to understand that all markets behave differently, and am enjoying getting to know mine.

So the idea behind the squeeze is basically a quick indication of whether the market is consolidating, trending, or just oscillating at a quick glance. When it works, it works great, and gives some great signals, but like all indicator based systems it seriously lags sometimes. Like I could catch a great breakout in the morning, hit my profit target, then the market would do a full reversal, and I would have to sit out of all of it if the market didn't consolidate enough to give me a signal. Obviously this is no good, and for me it is unacceptable. But I tell you what, when a large move is building up, nothing gives you a better heads up than the squeeze from what I've seen. So I don't need to throw the baby out with the bathwater, I just need to use it as another tool in the old war chest. And as a guide from time to time. Especially since the nature of the squeeze/breakouts fit so well with my personality, but I am learning to adapt to all situations. When to take a trade, and when to stand aside to observe and let things set up.

So when I do not have a signal from my system, I will be watching out for price action, and other market internals to help guide me throughout my day. Look forward to taking a new step tomorrow.

Thank you for the kind words, BUT don't put to much stock in my threads, its mostly me wondering out loud what the heck I'm doing.....so take it for what its worth....and much of the time its not much....

Good luck on your journey.....it can be bumpy....

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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 lovetotrade 
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Thank you for the kind words, BUT don't put to much stock in my threads, its mostly me wondering out loud what the heck I'm doing.....so take it for what its worth....and much of the time its not much....

Good luck on your journey.....it can be bumpy....

Searching through one man's mumblings on a similar road traveled before you, can lead you to a many breadcrumbs of wisdom. I am on page 110 of the first chronicles, and am looking forward to the last half. Quite a journey, and really easy to read. Just wanted to give you a shout out because it has made an impact on my thought process. Because I am at a similar point in your journal thus far, it is accelerating my learning curve of some things to look out for, things I should be placing more importance on, and things to avoid.

It's a little strange as I started from the beginning, I have no idea where you are at now, but I have to assume much further along, as you were making great strides in your journal up to this point. So I hope all the best, and may hit you up again when I'm done

Cheers!

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 lovetotrade 
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11/17

9:40 Hourly down trendline is still holding. Price was immediately rejected off of that level. Honestly didn't see that line until the market started moving higher, it wasn't in my screen till then. I figured we might get to HOD though since there was obvious rejection from the downside. I moved my stop to -5 after 10pts were hit. Still determining if this is good practice or not. Reducing my stop by half allows double the trades to be taken. But like this trade I was stopped out, and now the trade is working out. I know the market doesn't care where my stop is, but after a large selling tail and reversal down it appeared as if the trade had failed. But sure enough it came down through the pivot level, tested the last support area(and the 5 ema), and then bounced higher. My trade setup has always worked for the 5 minute squeeze, and that's what this was, so maybe I just need to stick to that plan during the setup. Note: Trade never made it to target, and is reversing through that stop level anyway. And reversed again and hit my target. This is not normal behavior so I don't think I should stress too much on this one. But my line of thinking was correct, and the target was good, so there is something to take away from the loss. Getting a good entry on the one minute chart was fine, but I should have managed it from the 5 minute chart. This was also a 15 minute squeeze that fired off as well.

When things like this happen it zaps my confidence. I want to improve, but I don't want to be taking steps back either.

10:43 Ok so I thought I had a good chance at re-entry. Price action failed to make a significant new low, then we stalled and closed back above the pivot level with a bullish bar so I got in long. Never closed below the 5 minute 10 ema on the 5 minute chart(which I use for confirmation) so I thought I was in the clear. Nope, stop taken out, and reversed on me again. My timing is just sucking wind today, as my premise seems to be correct.

Will take the rest of the day for observation. May take a regular squeeze signal if one pops up.

So the truth is that nothing about this day makes sense to me, and it's frustrating. I was thinking earlier that the day seemed to want to go higher, and that the end of the day that S1 would probably have looked like the obvious area to buy. But that doesn't do much for me. It took me way too long to realize that instead of having a nice trend day, that the opening range had been set, and I knew volume sucked, but I guess I was hopeful. Hope doesn't cut it, volume does lol.

The thing that is killing me the most I think, is that I was just starting to get into a nice groove of profitability as the holiday season was approaching. From what I understand this is normal market behavior, and I am trying to force something that isn't there. I need to be patient, observe, and keep my finger off the trigger, or else I am going to whittle down my account.

But I guess these are all decent observations. At 10:30 we were back below the ONH, and volume was crap. That rally had sold off pretty hard, and while it didn't break too much support, chances were that even a re-test of the highs were pretty slim, much less than besting that level. When we failed to break the ONH for the second time, I should have known sellers would step in more aggressively there to test market strength. Then once the market created a nice supporting trendline, failed to break down, and gave me a nice reversal right above the S1 pivot to take a shot at a long. This area was also at the VPOC, and market obviously did not want to go lower here.

Was going to buy the market once it broke the pivot point and pulled back as it didn't seem sellers were coming in aggressively there. Then I pulled the buy order as I thought the lack of volume would prevent the market from making new highs on the day. So then I was going to switch short, but thought the long bias would chop me up. Well market broke lower into the LVN on the volume profile that I had minimized, and then reversed back higher, which means that price was rejected, and market would be searching for value higher. Well it then broke to new highs. Price then reversed and fell all the way back down to support at the pivot.

Gonna start keeping the smallest trending chart up to guide me through the day. Today it was the 30 minute, and that would have helped guide me through the reversals and chop.


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 lovetotrade 
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11/18

So we dipped below the 8 hour 10 ema yesterday briefly, and popped right back above it. The 8 hour is in pretty tight consolidation, but hanging out in the upper portion of the BB's. We made a double top to the all time high's over night, but the market is not selling off. Bonds are bid this morning, and the rest of the indexes look a bit weaker than the Dow here.

So key areas to watch today are the double top at the ATH/ONH, and ONL as it was tested three times overnight, and should put in a good bottom if the market is gonna hold here, and head to new highs.

Big trade ideas today are:
1)Test highs, and roll over to test the lows, then chop through session higher.(This has been typical lately)
2)Break through high's, come back for a re-test and trend higher all day if volume is good.
3)Test lows, then bounce and chop back up through the session.
4)Break lows, and head lower down to 17511 to test yesterday's low of 17511, and bounce at the bottom of the bands shortly thereafter.

8:39 PPI report came out, market tried selling off, then was bid at the 2 hour ema which is our large trend chart for the day. Hanging around the VPOC now. 5 minute market is in a squeeze.

9:00 The support level where the market should have broke down, for the 5 minute squeeze to fire off short held and reversed. This was also right at the 2 hour ema, so I took a long there with my stop right below that double bottom. Buyers definitely stepped in there. That level is only 12 points away from the overnight lows, so I would have had a hard time justifying a short into that level anyway. Except to hold it and hope it broke down below it. Will post results. I feel much more comfortable taking a trade when I have that longer term perspective in mind. Seeing the forest through the trees I guess they call it. Didn't really quite grasp that concept until yesterday I think. Market is retracing, but bonds continue to sell off nicely, should give me another reason to be bullish here. So here we are at market open, and we are still hanging around my entry price. Don't know if I should hold the trade or let it go. It hasn't quickly moved in my direction, although it did test the bottom and hold. If we are below my entry at the opening bell I guess I will hold to see what happens. So the market tried moving higher, all the indexes were moving higher, and of course the Dow is the weakest today. Stopped me out and is reversing. Story of my life. Do not hold through the open unless you have some profit to bear the swing.

9:40 Market broke out to the upside, and squeeze fired long. Volume is good, and is coming back to test the ONH. So it looks like scenario 2 might be playing out. If we take off from here, will be looking to add another contract. 15 minute squeeze fired off, and the hourly could as well. Market reversed at all time highs. I could have taken 20 points profit at the ATH, and then tried to add another contract at pullback. Actually that's what I should have done. I got greedy. I added another contract, and then got stopped out. In hindsight not that big of a deal. The stop out was small, and if the trade would have worked out, then it would have made my month. Just really hurting for profits, so giving up anything stinks at this point.

All three markets were in a 5 minute squeeze this morning, and I now realize from price action that the Dow was obviously the weakest. The best one to take would have been the Nasdaq. It ran a full 20 points($400) before petering out, as compared to a paltry 30 points($150) in the Dow. And since that is the average run in the Dow, I entered 10 points late, and should have been looking at taking profits at 20 points which coincided with the ATH. Another hard lesson learned. I have been wanting a trend day so bad, and I need to let that feeling go.

Missed the buy signal at the 15 ema while I was wallowing in my regret. 15 minute squeeze is still active, and wouldn't be surprised to see it take out the highs. This time without me. This level was very obvious support, but after the fact for me. It seems that as soon as I take my sight off the larger picture, things go into disarray for me. This pivot mid line, along with the 6 times overnight it bounced there as resistance is now support, and would have been obvious. When the market started pulling back, I should have been looking for obvious support, and this level should have stuck out like a sore thumb. The more I focus on the longer charts, the more the movements in the smaller charts make sense.

Definitely important that I mark important overnight levels, and keep an eye on them throughout the day. The ONH/ONL is important, but key levels, pivots, etc. can be used to help make decisions during the trading day.

So I just had an epiphany about this morning. The right choice of action would have been to exit the trade before the market open, so that I could have objectively watched the price action, and made a logical decision based on what I saw happen. Like I would have seen it run through where my stop would have been, and then do a hard reverse, knowing to get long there as the other indexes continued cruising higher. Instead I let it stop me out, I got emotionally overwhelmed about the reversal, and completely missed the long signal. Then all of that profit would have helped me stay objective when I bought the break out later, at a much higher price, and was desperate for the gains. It cascaded out of control, and that was not the ideal way to trade.

12:30 Been watching the price oscillate between the ATH and ONH, which is obviously bullish price action. The VPOC moved to that level as well from well lower, also bullish. So I took a stab at the last bullish price action from the lower area. I am comfortable in this area, and could have even added another contract when it moved a little lower to get a better price, and been comfortable with it. So price made a move to the upside then broke back down the VPOC where my entry is. It's now been close to a half hour, so I don't know if I should close it out and wait, or wait it out. I feel like the market may try to move lower again to take out stops before it moves higher. Will wait for a DT failure or some other price action to get me out. It has definitely made a DB recently so that is confirming my thinking. Broke out, then pulled back hard, tightened my stop, and then broke higher again. Got out for plus 10 points, when the market didn't hold at the pivot. Only thing I am a little disappointed about is I didn't watch the LVN at the pullback.

So the market traded through the LVN, but then found support at the value area, and bounced in search of higher prices. I am seeing this after it happened, as I had no idea to even look for this. Broke out to new highs, and hit my original target. Volume profile seems to be very instrumental in reading market behavior. I understand that a lot of my original beliefs are coming under scrutiny, as I learn more about how the market moves. Most of them wrong. So the sooner I can convert these wrong beliefs, to terms of probability, and finding evidence to anticipate market moves, the quicker my learning curve will be. Like this last trade, I had a 30 point target. How did I justify that? I don't know seemed good, but in reality the R1 pivot was the first resistance at the markets new ATH. So when I was at 20 points profit, and was above the R1 I should have taken it. Next once we bounced at the value area, and traded through the R1 level, we ran right to the R1 mid line. At new highs, this is more than likely what all traders were looking for, other than that, the round number of 17,700.

I had a 10 ema, and a 20 ema on my chart, so I figured if I condensed that to a 15 ema it might turn out well. So far so good.



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 lovetotrade 
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11/19

Bonds in a downtrend this morning, has a chance to make a good solid double bottom here, but indexes also weak. Central pivot has been overnight resistance twice, and S1 midline is overnight support, so we have a pretty tight range. I think continuation higher is less likely at this point, but the bonds did break to new lows, so we will have to watch volume at the open. Dow looks to be the weakest index again as ES and NQ double bottomed at building permit report, and Dow made new lows then bounced.

Big trade idea is that we double bottom at the midline so I can get in long, and then the market breaks to new highs today. Although we may best the central pivot first, and then go for it.

So the bond market continued to break down, and then the indexes jumped higher, so I guess that is all the info I needed. But it would have made much more sense, and probably would have taken a trade if the Dow had double bottomed, instead of stretching my risk out to new lows.

So this morning's open gave me something similar to my big trade idea to work with. We quickly slammed down all the way to test yesterday's lows, then reversed very hard there, all the way back up through the overnight low, and the midline. This tells me that price was definitely not accepted lower, and the bullish action around the ONL told me there were definitely buyers there. So I just got in as close to the midline as possible. Planning to hold there for a test of the overnight high, as the range was only 36 points. And apparently that is not what the market had in mind, definite weakness throughout the indexes all though the Dow held the selloff the best. But all the indexes did break lower, so I got out with a tight stop.

So the market came right down to S1, and then reversed. This falls in line with my extreme value buying idea. To buy the first pivot support that is below the trending 8 hour 10 ema, if you see buying come in, and can get a low risk entry. Both of these were true, and I missed my entry by 1 point, as I didn't really have a plan of attack once I saw those conditions being met. So my plan for the next time that happens is to just place an entry 5 points from the low. Keeps it super low risk in case it doesn't work out. Cause at these levels, the market could continue to sell, and turn into a nice downward trending day. You just never know.

So I didn't take the 5 minute short squeeze signal at 10:00. I guess that large buying tail from the open just messed with my mind too much. I watched the one minute break it, then retrace, the the three minute close back under it, which is the trigger. It fired off outside of my risk level, pulled right to where I could have gotten entry, and then watched it sell off. Cannot be doing that. It did retrace to my B/E level, but still I could have never known that, and would be missing out on more profits. IF the signals come, you have to take them.

The bonds never stopped selling off through the next decline of the indices, so I'm assuming that is telling me to not get too excited to the downside. Even though I am seeing more and more signs of a decline in the mix, this would make sense to be a point where the market turns everyone on its head, and goes long. As I'm writing this, the vix and bonds are finally catching a bid and the indexes are rolling back over. The Dow was definitely strongest, and the Nasdaq the weakest. Next time I notice that, I could definitely try looking for shorts on the NQ, where it was giving some great short signals, while the Dow was fighting the shorts every step of the way.

So I was definitely right about the S1 level, and my overall feel that it was really fighting the selloff, indicating strength. So I should have been watching harder for a bottom to form, but I really do not have the experience to know for sure that is what I was seeing, with the other markets still looking so weak. But then again the market isn't about assurances, it's about probabilities, so go figure that one out. Gotta be watching the market closely around those levels I expect to hold. Volume profile, and price action would have shown me everything I needed to see to have the confidence to buy there.

Noticing I should be paying the closest attention when I am looking for entry in a certain area, and also important areas of confluence. It seems for some reason that I am looking elsewhere sometimes when a good entry pops up. For some reason I did not set alarms, nor draw trendlines today, both of which affected my thought process negatively. Should make another morning checklist.


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 lovetotrade 
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So I think having this nice long holiday weekend off has given my mind some vital rest away from the markets. Pretty happy about that, since for weeks prior I wasn't able to turn my mind off. I would go to bed thinking about it, and wake up early with my mind racing. Most definitely not the way I like to live my life.

I have made a major hurdle in as far as how I view the market, and how it is traded. I have really embraced the bigger picture in respect to the smaller time frames, and how large of a piece of the puzzle that is for my trading. My trading is evolving, and taking a new shape, but it is harder for me to explain just yet. So I have been just jotting my thoughts down as bullet points in my notebook at home. It helps me get the ideas out so I can clear my head.

When I joined this website I really thought I had this game almost figured out, and like the rest of times I had thought that, I was really just beginning to turn a new chapter. Although this time is different. I have had a good bit of experience, and some success under my belt now. I am able to quickly filter and discard unneeded information, and make sure that good information is kept close by, and put to good use. So my learning curve is accelerating, I just have not been giving my self enough time to digest all the new info, and have been burning myself out in the process.

So my goal is to get my act together, along with a new game plan for the new year. I have been back on the demo account since the beginning of last week testing my new ideas out. I have had some success so far, and am optimistic for the final outcome. Hardest part is organizing all this new info, and turning it into a trading plan. But I am looking forward to the challenge.

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 lovetotrade 
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12/1

So the first thing I noticed this morning, is that the weekly and daily pivots were lined up today. I generally look to see if any longer term pivots(weekly/monthly) line up with any dailies, cause it usually ends up being pretty strong S/R during the session. But since they all lined up, it pretty much negated that idea. But price did happen to double bottom overnight at the S2 level, so when we opened up and sold off, I was looking for a re-test of this level to hold.

The biggest thing I missed was the huge volume spike that came in, and halted the market at that level once we got there. these are all things I would be looking for, for an intermediate bottom to be put in. Generally when big buyers have come in at these levels, we rally to R1's and R2's the next day. So as long as we stay strong today, and don't make new lows, then I am looking for the market to consolidate/rally through tonight, and into tomorrow. We did put a nice double top in on the 8 hour chart last week, so that very well may hold. Will have to wait and see.

We rallied hard for a hundred points after the morning retest of the overnight DB, which is the strongest rally I have seen in a while. Was able to snatch 40 points out of that, after a nice pullback to the S1/S2 mid-line. Have had one more decent 20-30 point trade via the 2 minute consolidating DT/DB strategy I am working on.

Still trying to determine exactly what to watch, and how often to watch it without straining myself.


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 lovetotrade 
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12/1 Afternoon

Very solid double bottom along with a 5 min squeeze fired off long right at 12:45. I have been looking at taking lunch off from noon to one, because that is where most of the chop/false signals were located on the one minute chart. But now I see I should at least check it every 15 minutes, so I don't miss anything significant.

Another decent trade right at last week's close price stopped and reversed. Nice two part target hit relatively quick. I have decided that I need to definitely check all charts, every time the alarm goes off. I tend to take this for granted but it is so important. And I plan on keeping a list of important S/R levels starting in the morning, and add to it as the day goes on. So as we rally or sell off I have a quick reference of exactly what to look for.

Plenty of money to be made today. I only caught a couple of the trades because I got bored(the DEMO account does this to me). But this time is essential, and I need to stay as focused as possible. Tomorrow is another day!


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 lovetotrade 
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12/2

Key levels:
17880 All time highs
17839 Weekly/Overnight high
17808/809 Weekly close/Yday high
17768 Overnight reversal/Yesterday close
17755 Overnight low
17707 Yesterdays low

Not sure if having those levels at my disposal will help or not, but worth a try. So as I expected, several failed tests of the weekly S2 yesterday led to a rally through the R1/R2 mid-line overnight, but we couldn't hold those levels, and the market is now rejecting the weekly central pivot. This is pretty bearish going forward, until we clear and accept that level. ES & NQ much weaker overnight, so another case for the bears.

Our gap fill would be at 68, and we are at 90 now, so I can see us hitting a double bottom there before we test the weekly pivot again. But it's only 8:53 and the market is already cruising down, but I will be watching that level more closely now. This is making me think I can almost envision the TPO by thinking about how the market reacted to yesterday's HLC overnight. We did not come close to hitting yesterday's low, rallied 30 points beyond yesterday's high, and re-tested yesterday's close only to bounce hard and re-test the weekly pivot. So that puts things into perspective, and doesn't seem so bearish all of a sudden.

So market opened, and missed filling the gap by 5 points, then reversed and would have hit my target of 40 points. Kind of frustrating missing my entry by 3 points. It rallied right to the weekly pivot where I was expecting it to. Guess it means I am looking at the market the right way now. Definitely would not have anticipated this move two weeks ago. Looking to see if we can clear the weekly pivot, big volume today so a re-test of the highs at 880 might be in the cards today.

So my alarm stopped working this morning for my time intervals to check my charts, and that really hurt me as far as staying on top of things. I missed a key reversal pattern on the 5 minute chart where I was looking to get long on the 2 minute chart. I also missed the 15 minute squeeze that had a perfect pull back to it's ema, which would have given me two great low risk entries, and greatly reinforced the long trade. It is so important that I see these things since the majority of my time is spent staring at the smaller time frames.

I have felt in sync with the market today, I guess you could call it being in the zone. But I think I am just seeing more market patterns after looking for the right things, and a change in overall perspective. I guess I didn't let the market sway my opinion so much, the market seems to move with a purpose from one level to the next. And I think I am starting to identify opportunities where big money targets entries, and it's usually right after a place where the little guy(me/retail) would get stopped out at obvious S/R, cause me to change my mind about direction(losing focus on the bigger picture), and then the buyers would step in and take off without me. I feel like I can see it play out, and jump on board once I see my setup.

Overall pretty happy with my trading today, would have been a stellar day if I had gotten the 40 point trade from the gap fill, but overall happy with +40 points total. New strategy seems to be working, ultimately I would like to trade it with two contracts, but so far profitable with one. And sure enough we did make new ATH's today.


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 lovetotrade 
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12/3

Important levels: *No gap today
17933 Weekly R2
17886 New highs
17882 Overnight High failure
17870 Weekly R1
17841 Overnight Low/Double bottom
17837 Central pivot
17822 8 hour 10 ema
17815 Weekly pivot
17808 Weekly Close

Well we have been consolidating overnight above the central pivot, and very near the highs. Pretty much tested the high at 80 overnight then sold off into a double bottom just above the daily central pivot. I expect that level to hold. I will be a buyer at the double bottom, with a stop below the pivot. And if we fail there, I will try again at the weekly pivot with a stop below the weekly close. We are in an hourly squeeze, and if it does test those levels I expect it to fail to the downside. This should be where the biggest gains today will be found.

So I need to have a back up plan for when the trade doesn't go my way, or in other words, have a plan for multiple scenarios. The slam down at open today again missed my entry by a few points, and reversed hard. Which tells me buyers were again looking in the same area I was. The only thing I see that I missed was a LVN close to the bottom, that price rejected, and bounced from. I don't know if this was a value area from yesterday, but I am going to pursue more advanced software for this purpose. I was also looking at the 5 minute chart, when I should have been watching my 2 and 1 minute charts at the open. They can reveal a lot of information in the underlying bars on the 5 minute chart. There was a 3 bar reversal that I could have jumped on board with, when the market reversed out of my buy zone. Have to remain flexible.

Gonna do some more back testing on the 15 minute squeezes, and pullbacks to its ema. It is typically the best trending time frame of the day, and I can still sometimes get the same R:R as the 5 minute chart. Just seems to be an obvious opportunity I need to be taking advantage of, that I am not currently. When the market is trending via a 15 minute squeeze, the best entry seems to be blind at an LVN, and then maybe a stop on the other side of the HVN of the same value area. If it coincides with the ema then even better.

That's it for today, pretty much a dud except for the opening range. Using the down time to learn more about price action.


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 shodson 
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Nice journal, keep it up.

Have you considered...
  1. Seasons - What direction does the market usually trend this time of year? Presidential cycle? Macro fundamental environment? What are currencies doing?
  2. Individual stocks - since you trade YM (30 stocks) do you know what's going on with those stocks? If one of the stocks in the Dow 30 came out with bad news the night before, don't you think that might put a drag on the Dow? Does that come into play? This is much easier to do with YM than with ES, TF or NQ.
  3. Higher time-frame trend - What if you only looked for trades in the direction of the higher time frame trend direction, higher than 10min or 15min charts? Like 4hour, daily, or weekly?
  4. Why don't you have/use the momentum part of the squeeze that JC uses for direction choosing?

Hope all the best for you...

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 lovetotrade 
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Sweet, well the ECB press conference seemed to give a bit of an oversold market, down into some of my key buy areas. So after a couple small stop outs, hoping that I got the low for the day. Will post my results and thoughts later today. Target is just below the highs at 70 points, or exit at EOD.



Added another contract, and reduced stop by half. Re-testing that area(S1), so if we bottom here, gains will now be twice as big. And just got stopped out lol. Today is fundamentally different from previous days. Will be watching action around S2, but no longer looking for a bottom to buy. I guess the failed double top at the central pivot was really my first heads up

This was the trade I did catch after it bottomed: Doesn't get much prettier than that.

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 lovetotrade 
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shodson View Post
Nice journal, keep it up.

Have you considered...
  1. Seasons - What direction does the market usually trend this time of year? Presidential cycle? Macro fundamental environment? What are currencies doing?
  2. Individual stocks - since you trade YM (30 stocks) do you know what's going on with those stocks? If one of the stocks in the Dow 30 came out with bad news the night before, don't you think that might put a drag on the Dow? Does that come into play? This is much easier to do with YM than with ES, TF or NQ.
  3. Higher time-frame trend - What if you only looked for trades in the direction of the higher time frame trend direction, higher than 10min or 15min charts? Like 4hour, daily, or weekly?
  4. Why don't you have/use the momentum part of the squeeze that JC uses for direction choosing?

Hope all the best for you...


1) I do consider seasonals, which leads me to be a bit extra bullish, but I feel like it takes a back seat right now. With the market making new highs pretty much every day, and consolidating overnight near them, I feel like it doesn't get much more bullish than that. I have watched so many double tops on the one hour chart, watch the market start to sell off into a lower pivot level, and then boom big hands come in, and we have a multi day rally. I know it will not last forever, but it is a pattern that has been repeating basically since the October lows(have not looked back further into the year yet).

2) I appreciate the idea about actually keeping tabs on the 30, hadn't thought of that. It would be awesome if I could find/put together a heat map of the 30 I could watch throughout the day as well. Will try to come up with something I can use.

3) I actually use an 8 hour chart with the daily/weekly/monthly pivots on them, along with a 10 ema. Helps me really see the big picture at a glance. Whether we are trending, where major support and resistance is(maybe a double bottom lined up with a monthly/weekly pivot), and major trend lines. When we are really trending I drop down to the 4 hour chart. Lately my big trade idea of the day is to watch where the 8 hour ema is between which two pivots, and one of the two ends up being the low for the day. So I know which levels to stalk if we get down there, and set some big targets to start the day off right. The sell off has been occurring right after the open as of late. But I do like to watch how the market reacts to key levels during the day, but still trying to figure out how to trade around those levels along with volume profile. I have one strategy I am trying out that involves the squeeze, and is fairly consistent. I actually have my main trade screen set up with a 5/15/1 hour chart for drilling down.

4) I have been using the squeeze long enough to where that aspect of it really doesn't do anything for me anymore. As you can see in my most recent chart, it tried testing the upside, and when momentum broke to the downside it was obvious it was heading lower. One of my favorite setups is a trending squeeze on a higher time frame, and the squeeze sets up on the 5 minute. You would think that would be consistent in breaking out with the trend, and that's not always the case either. It's hit or miss trying to get on the train early, but as of late I have not been a big fan of buying the breakouts, especially since the daily range has been contracting. But I do use momentum to watch strength, and generally don't buy pullbacks once the momentum starts to fall off. But you mentioned JC, and if what/he is using might be of help to me please shoot me a link. I will hit the search box in case it is a journal you are referring too.

I appreciate you taking the time to toss me some wisdom, always appreciated!

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 lovetotrade 
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12/4

Important levels:
17946 R1/R2 midline
17933/29 Weekly R2/ Daily R1
17904 Yday high
17889 Onight Low/double bottom
17885 Central pivot/4 hour ema Line in the sand one
17870/68 Weekly R1/ CP/S1 midline Line in the sand two
Added these two after:
17852 S1
17807/08 S2/weekly close

Well I'd like to give myself a pat on the back for getting the direction right this morning, but the truth is I did not check the economic reports this morning, and it may have been sheer luck that the market launched higher into the double top that took me out at target, but I did hit target. But that was after again getting lucky with entry. I did not see that entry until I looked at overnight context, and market bounced right where I thought it should if we were to keep the pattern higher. So I got in after a bounce of the yday high, a couple points from a pivot level, and it took off and retested the overnight high.

This reinforces how important it is to check context first thing in the morning! So I am printing out a new morning checklist sheet, just to help reinforce the morning steps, because even though I do this every day, I still forget. Oh I also am labeling my two most important buy levels in bold, and labeling them lines in the sand. Need to have buy orders set up on the chart ASAP first thing in the morning. Also place stops at least two below where the market bottomed, preferably below a pivot level.

So I'm actually pretty excited after this morning, I see learning opportunities galore. So I have seen the first flaw in my methodology, for trying to pick the bottom with the context I look at. So far I have placed too much importance on the longer term chart, and overnight price action, but not enough on price action right before, and at the open. There were plenty of signs that we were going to get a pretty strong push down, and I let my bias override looking for signals telling me to jump out at a small gain, and look for lower prices. Then I actually missed the very obvious, and even better bottom below! I did get in once we made the bottom, and started moving higher, but I wasn't looking for it like I was with the previous move down.

So I want to go into what it was that I saw, that should have made me skeptical that we would just bottom and bounce today. The awesome part is that they are already part of my current squeeze system, and so it makes it very easy for me to identify. I just need to make sure I am keeping my eyes wide open to price action. So at the open we had a very tight long consolidation, the 5/15/hourly squeeze, which can be a very explosive move and this morning it was, and to the downside. And the larger squeezes were still active when the market double topped at the pivot point, where I could have gotten out of my trade at a profit, and gone short or waited for lower prices. And that is where I could have placed another order at the double bottom of S2 and the weekly close for a hundred point move higher.

Ok so I've had one great trade this morning, and have started to give back all its gains. When we go into a prolonged squeeze, you truly can't just guess it's going higher or lower. You need to watch and see where the volume is coming in. Since we had that huge V-bottom this morning, and was consolidating near the highs, I assumed we would just break out to the upside. And from past experience I knew that during a prolonged squeeze that you will often get a fake breakdown. So I tried to keep the stops small as we broke down from one level to the next, searching for a good entry for higher prices.

You have to watch volume on the smaller charts, and really pay attention to any levels that are being rejected. If your bias is too strong because of a position that you opened then you need to close it until you can see the market objectively again. You obviously had enough evidence to open the trade, what you are looking for evidence that you might need to close the trade or reverse, instead of just looking for reasons to hold the trade and be blind to what's really going on. From what I've noticed volume spikes really give you an inside peak as to S/R on the smaller time frames, and if there are no spikes, and volume seems to be pretty equal on both sides then a continuation of previous trend is more likely.



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 lovetotrade 
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12/5

Important levels:
17946 R1
17929-33 Yday high/weekly R2
17882-85 Overnight low/Yday open
17870-73 Weekly R1/Central pivot

So I have been able to read this morning pretty well. 8:30 NFP came out way better than forecasted, so have to assume that's bullish for the stock market and dollar. Initial reaction was a sell off to test the overnight low, and it bounced hard there. VPOC has already shifted higher from yesterday and overnight. So longs are the only thing entering my mind for sure. First time I have been able to read through the chop like this, pretty exciting!

Got a good entry at a double bottom for higher, then the thought crept into my mind that since I am trading only one contract, that I need to really stretch my target instead of going for the most obvious one. So instead of grabbing 18 points which is a decent trade, I got out at B/E +1. Pretty close to my second entry anyway. There will always be another trade idea, but if I choose to trade with one contract then that is on me, and I must go with the closest target, having already measured if the R:R is worth it. I can't try to force the market into my own idea of what it should be. That's an easy way to go broke. So pretty easy formula from here on out. If the R:R is close to 1:2 then take it, if not then pass. If you can get an entry withing 5-8 points, then go for the extra contract and stretch your second target.

Very nice and tight initial balance this morning. Hanging out at the IB high, just waiting for it to break through now, and will be looking for a good entry. If we don't head higher just yet, I will be looking for a test of the VPOC, and hopefully I can scoop an entry around there. So now I have a plan for either direction. Have to remain flexible, but anticipate what the market might do, and have a plan for when it does it. From what I understand, a narrow IB is more likely to trigger a breakout and trend day. So hopefully I can get that breakout, and a re-test for entry.

Ok so we had a failed breakout of the IB, then the chart got ugly, looking back now, it wasn't big volume, but if I was trading bar by bar, I wouldn't want to buy right down into that. But this is the problem that I have come across twice this morning. I know that the chart is bullish and buyers are active, but after a nasty top where I would have considered shorting in the past, has kept me from taking a stab at a good logical entry. Which has ended up being the perfect buying opportunity in both instances. Now the main reason I am really peculiar about this, is because the place I was looking to buy both times was right above areas of heavy confluence: Open,VPOC, Yday high, Weekly R2. So after the fact it seems obvious you just have to buy it blind into support, and then watch to see what happens after the fact. @shodson maybe you can help me with this one? I also believe it probably depends on how much support, and the importance of the support vs. the volume of selling that's coming in. The only thing I have seen to really decipher these areas for entry is the volume ladder, but that is beyond me for now.

So now I missed the pullback to the IB High by one point. Today was definitely setup to be a trend day, and I just haven't been able to take full advantage of it. But I see the opportunity. I have been able to recognize entry points throughout, and I know now that I definitely need to be an aggressive buyer on days like today. Could have made bank with multiple contracts just this morning. Would have done well with even one contract. Another 15 minute/hourly squeeze firing off today, but now I can see and understand the underlying market, and where to get best entry in anticipation of what I would usually have to wait for the breakout, and hope for a pullback for entry. Aggressive is definitely the key word here.

So I had forgotten about the ask/bid volume difference bars that I saw @mpo7 using to describe a specific scenario, that he was reading what was going on underneath the hood of the bars he was looking at. Just got my free trial at Sierra Charts, so playing with the VWAP as well. Lot's to review over the weekend.


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 lovetotrade 
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12/8

So I din't get as much done over the weekend as I would have liked, the wife works both nights, so I watch our baby girl. And between family time, and church on Sundays, I maybe get 5 hours total between naps, and late night. So I was up late last night trying to get Sierra chart the way I like it. My goal is to get that up and running, and get as much market replay time as possible out of my free trial. So now I can play a little catch up today, as I know I can trade today's session later.

My goal now is to get organized, go through all my notes, and try to define exactly what scenarios I want to trade. Right off the top of my head I am thinking an opening gap play, a targeted LOD play, a trend play, and an extreme play for range bound days. From what I have seen the squeeze plays are still a legit option, I just have to be dynamic with the targets. So instead of a 30 or 50 point static target, like this morning, the gap fill would have been appropriate, and risk reward would have still been great. Primarily the 5 minute/15 minute combo squeeze tends to have the greatest market impact.

Fortunately I have some good market research on different market patterns, and developed some good intuitive sense when it comes to price action. So I hope to combine that with watching these levels to develop a winning strategy.

I have been working hard at digesting new information, without getting bogged down or burned out. But I can feel things getting a little foggy, so I need to work on getting my focus back. So I think having a strategic goal in mind, as I go through my notes will help bring clarity and focus back to the fore front.

Important levels I watch and why:
Previous week close- Weekly strong S/R
Previous day HLC- Close for gap play, and HL act as S/R, and give context for the days movement.
Overnight HL- S/R and context.
VPOC- Market is drawn to value when extremes are rejected, reversion to the mean.
HVN/LVN/VA for VP- S/R and context throughout the day.
Open- S/R and context.
Pivot levels- S/R and context.
VWAP- S/R and context.
IB and extensions- S/R, context, and targets for trending days.
Working on adding TPO.

Morning checklist:
Check for any economic reports for the day, and set 5 minute warning alarms ahead of them.
Check longer term charts from daily down for time frames in a squeeze, and more importantly time frames that have fired off and still active. (Larger trends)
Go over hourly chart, and overnight price action, list important levels of S/R, and any important pivot levels and trend lines.
Go over the daily, 8 hour, 4 hour, and 2 hour charts for overall context of the market, and potential turning points on the 3 way pivot chart. Scout the closest pivot point above/below the 8 hour 10 ema, this is your big buy for the day if the market is trending higher. If the market is trending higher, but is no where near the 8 hour ema, move down to the 4 hour chart, and use it as the same as above. Hourly double bottoms at or above the central daily pivot will be key to identify, if the market made a good bottom the previous day or overnight(like a DB at S2 for example). Also identify a worse case scenario the market could sell off to, bounce, and still maintain the trend. An hourly squeeze short at the open may produce these extreme buy points.
Set your repeating 5, 15, and hourly alarms for chart development.
Be watching charts by 8:30 as some of these lower buy ares develop before the market opens.

Market behavior:
Definitely need to be watching for cheap trades, and characteristics I have seen that lead up to them. These are great PnL boosters with minimal risk. These are your trades with >5 points of risk. They generally show up on the one minute chart as double tops and bottoms. Best ones are double tops/3 bar reversals in strong downtrends. Hit em with two contracts and let em
run.

For choppy markets, there is generally a one hour squeeze involved as it oscillates between one side of the keltner channels and bollinger bands to the other. I think if I do a little backtesting with the IB thrown into the mix, I can probably get some identifiable patterns. And now that I can see when value is building outside of the IB's, then I know when to abandon the strategy, instead of just buying and selling blindly.

Also making a note of the infamous 61.8% fib pullback I have seen. After large moves with seemingly no pullbacks for entry, they then reverse, and just when you think the market is selling back off it bottoms and reverses. These have a tendency to hit the 61.8% fib retracement, and bounce hard.

*Will continue tomorrow, got through most of my paper notes, and now have new notes to add to the journal lol. Gonna try to read my online journal tonight.

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 lovetotrade 
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12/9

Behavior continued:
Failed squeezes: usually indicate a a failed break out, which usually puts a floor or ceiling in the market. The bigger charts such as the hour can be used for longer term S/R. As where a failed 5 minute squeeze may be a great entry for a move in the opposite direction. The idea behind this is some herd mentality along with trapped short term break out traders. As the market consolidates, traders enter and choose a side, and subsequently are betting that their side will win. So lets say we get an initial move to the downside out of a squeeze that breaks support, this is a trigger for traders to jump in short. So now you have your new longs probably stopped out, and as the market reverses hard, trapped shorts begin to panic and start to bail on their position. This condition is ripe for a reversal as it has bucked most traders off the train. So there are technical, psychological, and emotional factors at play here. The best part is that failed squeezes usually happen counter-trend, so it creates an even better entry opportunity to get back in on the larger trend.

VPOC shifts: I like to watch where the VPOC shifts to from the previous day, to overnight, then after market open. This lets me see how value is moving from one area to the next. Really just another piece of market context to gauge market movement. I think it helps add weight to the bulls or bears for the next day. If the market has shifted down three times since yesterday, then I am not going to be looking to buy the market, I am going to be looking for signs of weakness on rallies. The market must prove to me at that point when to turn back bullish from bearish. This is also assuming the larger overall market is painting me a bearish picture as well, but from VPOC shifts I know I where I need to be paying close attention for that first hour.

Failed new highs/lows: Where the market appears to have broken out, but then just bleeds back into the previous high/low/break out level. Looking for failed market retracements, and reversal signals with good risk on these trades. Look for these at important levels of S/R like IB, S2/R2, CP. One of your targets should be a test of the VPOC. After the failed breakout attempt, the market seems to seek value first before re-testing S/R or heading higher or lower.

I know there is more, but this is a great start for how I like to trade. I will add more as it comes to me.

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 lovetotrade 
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12/9

Holy cow what an awesome trading day. Starting to trade the way I have seen myself trading in my thoughts. I just about have Sierra chart set up the way I would like, and it is becoming very obvious that this will have to be a permanent fixture. It is so much more advanced than my broker's free platform it is ridiculous. And the price is very reasonable, way less than I thought it would be.

I have added cumulative delta bars, and the bid/ask volume ratio. They compliment each other nicely, allowing me to see similar things in different ways. I was able to use them both effectively in my price action trading today. And you know what is really cool, is that the CD on the 5 minute chart generally tells me which way the 5 minute squeeze is gonna break, through divergence or confirmation. It is a great addition to that side of my trading as well.

I think it's safe to say that I no longer trade the squeezes, as much as I trade the price action around them which has been my goal since about a month ago. I now use the squeeze to quickly identify what state of the market is in, then make trading decisions from there. But not gonna lie, knowing that I have the squeeze in my back pocket does give me more confidence when I pull the trigger.

I have noticed that when I lose focus on the big charts(and this seems to happen on a daily basis so I must learn to stop this) and stare too long at the one minute I end up coming to the party late on a setup I thought about taking, but if I had known of the context on the large time frames I would have jumped in with both feet. These are generally the easy runners, so I must focus on taking advantage of this. But now that I am starting to read the charts correctly, there is no anxiety, and the movements make sense. I am working on steadily building onto this intuition through more screen time. Lots of market replay is in my future.

I will try to work through my thoughts and notes, and try to develop a detailed plan of my setups along with examples so I have a clear picture to fall back on. I know it is too broad right now, so I would really like to drill down a few specific setups, and then become very proficient at executing them. Then I can start my spreadsheet back up, and get back to that critical aspect of logging data. But right now I am just enjoying the moment, and taking things one step at a time.

Gonna mark up a chart from my Apex platform of my trades today, and then post a picture of my new sierra chart.




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 lovetotrade 
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12/10

So from what I have gathered I can rely on cumulative delta to give me a couple things. Either a good divergence where the market is heading lower, but traders are accumulating longs for example, and then we break to the upside. Or the market is heading higher, and you are getting a good positive delta accumulation, only to have price reverse, and squeeze everyone out of their position/reverse for example. The latter is preferable for a squeeze setup since it will exponentiate the move. The first is better for double bottoms, or failure at new lows, and to then go long. I'm gonna do some back testing on my 5/15/1 hour chart squeeze chart to see if I can get some more confirmation of trade direction with the CD.

I cannot express how much context needs to be in charge throughout the day. I can tell it will take me a little while to put it all together, before it becomes intuitive. I need to come up with a series of questions to ask that will direct my thought process until it becomes second nature. And naturally those questions will change as my learning progresses, but I have used this method before, and it is effective. I would say this is most important once you have taken a trade through the smaller entry chart, maybe managed the trade through to exit, and then get lost in the price action. This is when I need to be looking at the bigger picture to re-evaluate. I think this is why having an automatic timer that forces me to look at the larger picture periodically helps so much.

The important but vague questions to start are: What has the market done so far? What is the market trying to do now? How good of a job is it doing? The awesome thing about cumulative delta, is that it gives me context to go along with the price action. I just have to keep my eyes open to it. So here are some questions that I can see that were important today. I need to keep the list simple, but not vague. Specific, but not so much that it bogs my thinking process. And well rounded enough for any trading environment.

Insight on direction and strength:
Are we in an uptrend or downtrend on the hourly chart?
Have we spent any time above or below the VWAP?
Are we moving away from the VWAP or oscillating around it?
Are we outside of the IB levels or oscillating inside them?

Trending market:
Are we trending well on the 5 minute chart?(HH's/HL's)(LL's/LH's)
Are we trying to/have broken out of the nearest IB level?
Is the market treating the VPOC as support/resistance/oscillator at value?
Is the market respecting the pivot levels?
How did the market react to the last S/R level?
What level should I be watching for entry to get in on this trend?
At what point is the trend dead?

I know it's redundant, but I really need to be asking these questions every 5 minutes to stay focused. And the first set of questions until I figure out what the market is trying to do.

It's funny the desire to counter trend trade becomes so powerful on trend days, and on oscillating days all you want is an extended break out move. And again I feel like this is because of not spending enough time on the larger charts really focusing on the market at hand. If the market is trending down, the majority of your trades better be looking for retracements to get in short vs. trying to pick bottoms. We oscillated through a good part of the day today, and there were some good divergences with some good money in it. But the hundred point moves were at the beginning and end of the day, and that is where my true focus should be.

Both moves were started with a 5 minute squeeze as a warning. So from this point forward I need to build my trading plan, and focus on taking advantage of all opportunities that are presented within the time frame I choose to trade. A fellow trader suggested I choose a 4 hour time frame to trade instead of a full 8 hours, to help stay focused, and reduce decision fatigue. I would like to take full advantage of trending days, so if we are trending from the beginning of the day, I would more than likely stay for the day. But an oscillating market from open through lunch is probably best left at lunch. Goal tomorrow is figure out what I am doing with the squeezes, setup all charts on sierra, and get some back testing done.

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 lovetotrade 
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12/12

So I seem to come full circle back to the squeeze every time I learn new things, and dig deeper into the market. Which really speaks volumes in that this is the right trading style for me. And the new knowledge I have acquired will help me pull even more money out of the squeeze. Unfortunately the markets are moving, and the squeezes are hitting home run after home run, while I sit on the sidelines and do research. But the market will always be there tomorrow, and the most important thing for me to do is to finish out this shift in processes, so I can be a better, more well rounded trader in the long run.

So if I can express what the last couple of weeks has done for my trading in just a few words, it would be this. Squeeze in context. I really wasn't looking at the market as a whole before, didn't pay attention to volatility, or what phase the market was in, and I was basically fighting myself because of it. I thought my strategy was to blame, and that I needed something different. But in reality that just wasn't true. It was my lack of knowledge, and close minded approach to the market I am trading. It's never just as simple as going long or short from a buy or sell signal. You must take the entire context of the market, and let your strategy work out within that context. This is what I was truly missing I believe, my "holy grail". I was profitable before, when the market was in a specific phase, but now I believe I can use a variation of trading around the squeeze to make money in any market phase or condition. And my journey from now on will be to continue to learn from the markets, and continue to improve one day at a time.

I watched the webinar about Wycoff last night, and that showed me some important price action I was missing. Pretty integral stuff since I trade breakouts, and will help me minimize risk, target new areas of entry, and help understand price action that I knew was there, but couldn't explain. So I will be using today and this weekend to specify the context needed for my strategy, and rework my trading plan. A lot of things will be similar, but will be a more flexible approach.

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chaim
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when you take profit at lower band

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 lovetotrade 
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Haven't posted here much lately, but my notebook is filling up. Half of it is just market observations, and I assume there is a lot of repetition in there, but I will use that to refine the trading plan. But the other half is me meticulously going through each process and scenario. Almost done, trying to be ready to trade on the 6th.

Psychology pattern recognition notes:

Goal setting- identify problem patterns, but also patterns of strength when trading well. Our primary goal is to duplicate our patterns of trading well every session. So to be able to do that, we must work to eliminate any problem patterns or behaviors that get in the way of reaching that goal. And establish specific goals that replace those problem patterns with a new thought process or action.

So this will require a heightened sense of awareness for any flaws in my trading that are emotional based, and/or deviate from the trading plan. The plan was designed for long term sustainability, so any feelings or feeling based trade decisions that deviate from the plan need to be identified as quickly as possible, documented, and set on a course for correction.

Time and experience will inspire confidence in my trading plan, and time will also prove the viability of certain ideas and methods. But I must strive to trade at my best, and that is when I am following my plan.

I will document all negative thoughts, feeling,and trade errors, but the largest problems need to be focused on first and foremost. Then I will continue to hone my process from there. I need to make it a priority to continue to read and learn even when my trading is going well, not just when things are falling apart.

My trading should be broken down into 3 parts:
Psychology
Risk management
Method


These three parts of my trading are not a final destination, and can never be perfected in a sense of completion. Only if I refuse to continue learning and improving, will this process end. May it never be.

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rfdevoe
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trying to teach myself trading the ym and jour journal i excellent. thank you

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rfdevoe
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trying to teach myself to trade the ym and your trading journal is excellent. thanks for the info

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 lovetotrade 
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rfdevoe View Post
trying to teach myself to trade the ym and your trading journal is excellent. thanks for the info

Well hopefully you stick around and we can bounce some ideas, because not too many people on here trade the YM. I took a detour with an awesome psychology book, and still doing some market replay trading, so I haven't been on here much. But I will be actively journaling again very soon. Good luck on your journey.

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 lovetotrade 
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Here is the link to the PDF of The Daily Trading Coach, by Dr. Brett Steenbarger.
https://www.beletrie.eu/data/attachments/The%20Daily%20trading%20coach.pdf

Book is absolutely awesome and has done a great deal in helping me fill some holes in my trading plan that will be absolutely necessary down the road. Highly recommend it, took more notes than I ever have from any other trading book. Just finished it and implementing many of his lessons into my trading.

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 chipps1983 
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Hello lovetotrade, I loved your posting on price action. Little background about me. I am from India, I have trading experience in India on Indices futures/Stocks/Options. Since, I moved to US a year ago, I stopped trading in Indian market due to timzone issues and started reading US Indices Markets.

Opened an account $10k with Infinity. Their platform is good so far to me using Sierra charts. Its been just a week but made some good profits. I mainly look at NQ100 and trade with pivot levels. I added Stockastics 10,3,3 on 5 mins charts. take 1% of risk i.e $100/day and 2% reward. I stirctly trade from 9.45 am to 11.30 am EST and sometimes after 2.30 pm till 3.30 pm. This is due to full time job.

Looking forward to read more of your experience and day trade. I will sure post some of my trades too.

P.S:- This is my first post on futures.io (formerly BMT).

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 lovetotrade 
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Hello lovetotrade, I loved your posting on price action. Little background about me. I am from India, I have trading experience in India on Indices futures/Stocks/Options. Since, I moved to US a year ago, I stopped trading in Indian market due to timzone issues and started reading US Indices Markets.

Opened an account $10k with Infinity. Their platform is good so far to me using Sierra charts. Its been just a week but made some good profits. I mainly look at NQ100 and trade with pivot levels. I added Stockastics 10,3,3 on 5 mins charts. take 1% of risk i.e $100/day and 2% reward. I stirctly trade from 9.45 am to 11.30 am EST and sometimes after 2.30 pm till 3.30 pm. This is due to full time job.

Looking forward to read more of your experience and day trade. I will sure post some of my trades too.

P.S:- This is my first post on futures.io (formerly BMT).

Thanks for the kind words, let me know if/when you setup a journal and I will check it out. As you have seen I have gone through some major changes over the last several months, and a lot of that was due to this site. It is a great tool and resource(and for me a real eye opener that I did not know everything like I thought). Just trying to simplify the process, and get back to making money. Good luck on your journey.

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 chipps1983 
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Not good day to start. But I followed my rules. I risk only 1% of my capital and i.e. $100 and close to preserve my capital and come with fresh mind the next day. I just follow pivot levels blindlly without any emotions (hard part).

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 chipps1983 
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Good day and week to start. Entered near Support1 4254 and exit near Pivot 4264.

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 lovetotrade 
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Good day and week to start. Entered near Support1 4254 and exit near Pivot 4264.

Cool, how do you structure your trades? Just through S/R? What determines your entries and exits?

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 chipps1983 
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This has been a start up strategy and works well in trending market. The Pivot strategy (Intraday) came to my mind as I do not have enough capital to trade positional. Since I came to US (been a year ago), I have been trading DEMA trading (Virtual) using 5/20 positional and been able to successfully made $48k Virtual profit on 5lots on NASDAQ100 eminis. This is a SAR strategy. I had followed the same DEMA strategy back in India and was successful and started to recover the money I lost over the few years.

The pivot strategy is basic support/resistance number that everyone follows. I opened my account start of the year and started watching pivot levels. It was very tough for me to pull the trigger since real money is involved. I can't risk more than 2% on each trade. So I wanted high probability setup with pivots. That is where I added Slow Stochastic with values (10, 3, 3).

I take NQ100 future values from yesterday but I would only take 9.30 opening till 3.30 pm EST (this is my default chart settings in Sierra) closing HLC values.
I always wait for 15 mins from opening i.e. I start my trading from 9.45 am EST and closely watch pivot levels and stochastic levels.
Buy mode when Stochastic crossing near or above 20 levels and NQ future price level is at support or Pivot levels.
Sell – When stochastic crossing happening near overbought zone i.e. near or just below 80 levels.
I use 10 points SL for this strategy or day low/high whichever I fell not risking more than my allowed 2% of my capital.
My day stops as soon as I hit profit or loss and switch my trading mode to simulation. This helps me not to over trade during the trade. I do trade in simulation to calm my mind.


I back tested this strategy for a couple of months and gives 60% Winning ratio.

Hope I was good in explaining. And will keep updating my records here and soon start a trading journal.

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 lovetotrade 
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chipps1983 View Post
This has been a start up strategy and works well in trending market. The Pivot strategy (Intraday) came to my mind as I do not have enough capital to trade positional. Since I came to US (been a year ago), I have been trading DEMA trading (Virtual) using 5/20 positional and been able to successfully made $48k Virtual profit on 5lots on NASDAQ100 eminis. This is a SAR strategy. I had followed the same DEMA strategy back in India and was successful and started to recover the money I lost over the few years.

The pivot strategy is basic support/resistance number that everyone follows. I opened my account start of the year and started watching pivot levels. It was very tough for me to pull the trigger since real money is involved. I can't risk more than 2% on each trade. So I wanted high probability setup with pivots. That is where I added Slow Stochastic with values (10, 3, 3).

I take NQ100 future values from yesterday but I would only take 9.30 opening till 3.30 pm EST (this is my default chart settings in Sierra) closing HLC values.
I always wait for 15 mins from opening i.e. I start my trading from 9.45 am EST and closely watch pivot levels and stochastic levels.
Buy mode when Stochastic crossing near or above 20 levels and NQ future price level is at support or Pivot levels.
Sell – When stochastic crossing happening near overbought zone i.e. near or just below 80 levels.
I use 10 points SL for this strategy or day low/high whichever I fell not risking more than my allowed 2% of my capital.
My day stops as soon as I hit profit or loss and switch my trading mode to simulation. This helps me not to over trade during the trade. I do trade in simulation to calm my mind.


I back tested this strategy for a couple of months and gives 60% Winning ratio.

Hope I was good in explaining. And will keep updating my records here and soon start a trading journal.

Interesting, so do you scale out on the way up or down, hold one to the other pivot level, etc.? And you have a 2% max loss, so what do you use to determine to stop trading if you are profitable?

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 chipps1983 
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I never interacted with much fellow traders, but loving to read serious traders discussions on futures.io (formerly BMT).

Due to job I don't get to see my terminal every tick.. So I take position only when I see an opportunity and wait for 5-10 candles price action on these important levels (Pivot, S1, S2, R1 and R2) and watch stochastics crossing. I trigger only when I see that its a perfect with risking 2% trail to hold my profit $100.
My rule is simple If I earn or loose $200 close for the day and NO trading for rest of the day. To control my emotions, I close my live trading account and open Simulation just in case. My first important rule is preserve capital.

Today will be hard to trade as market will open big gap down below S3.

Pivot: 4263.75
S1 4252 R1 4282
S2 4234 R2 4294
S3 4222 R3 4312

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 lovetotrade 
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chipps1983 View Post
I never interacted with much fellow traders, but loving to read serious traders discussions on futures.io (formerly BMT).

Due to job I don't get to see my terminal every tick.. So I take position only when I see an opportunity and wait for 5-10 candles price action on these important levels (Pivot, S1, S2, R1 and R2) and watch stochastics crossing. I trigger only when I see that its a perfect with risking 2% trail to hold my profit $100.
My rule is simple If I earn or loose $200 close for the day and NO trading for rest of the day. To control my emotions, I close my live trading account and open Simulation just in case. My first important rule is preserve capital.

Today will be hard to trade as market will open big gap down below S3.

Pivot: 4263.75
S1 4252 R1 4282
S2 4234 R2 4294
S3 4222 R3 4312

Ok so just trying to get you to think a little bit, how did you come up with the $100 target?

Is that just what you are comfortable with, or is it based off of the MFE of the average move?

You say you have backtested for 6 months with a probability of 60% success rate, so what is the total number of trades you backtested? Are you sure it is enough?

How many low volatility market cycles did you test your conditions under, as pivot points can really shrink during periods of low vol, and do you add more contracts if pivot levels are not wide enough to reach your target?

And probably the most important one, not knowing your account size, is your profit target of $100 at least a 1:1 risk reward compared to the 2% account stop loss? I know you say the probability is 60%, but you want to have a little cushion for trade errors, commission, and slippage.

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 chipps1983 
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Sorry Lovetotrade, I am not able to explain properly. Let me try again and more in details.
I started trading with $9550 (Infinity futures). I was looking for intraday trading since I don’t have much funds to trade in positional which is my ultimate end goal. I am reading “Mastering the Trade” by John Carter. I liked his Pivot trading strategy and started to observe with the levels.
Then I started trading with levels only in NQ100 emini, I initially put 1% risk of my capital and 2% tgt. But It used to hit my SL and run to target. That’s where I started to look for one more confirmation and I added stochastics indicator. I applied and started to observe the price action at Pivot levels along with stochastics with crossover.

Since using this strategy, I am up by $550 so far. I always trail my SL. Let’s say If I enter and price is moving towards my target, I will ensure that I do not end up giving all. If I am up by $100 then I will trail SL just a tick below my entry. If I am up by $200, I will trail my SL to $150. I will continue this strategy until I complete 3 months. And if good profits, I will increase my lot size to 2.

Hope I was able to explain in details. I will post my trades P/L after I complete a month.

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 chipps1983 
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Lovetotrade, Todays Pivot of NQ100 emini futures. Watch closely the pivot levels and Stochastics levels.
Pivot: 4173.67
S1 4145 R1 4205
S2 4114 R2 4233
S3 4085 R3 4264

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 chipps1983 
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Good day. made $485 on 1lot. Strategy is 5/10 mins crossover and stochastics crossover at overbought. thats a good signal in trending market.

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 lovetotrade 
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Good day. made $485 on 1lot. Strategy is 5/10 mins crossover and stochastics crossover at overbought. thats a good signal in trending market.

Cool, sounds like you are getting some consistency. I strongly recommend you start your own journal to document your trades and have a reference. Then you can write out your plan, any psychological issues that come up, and any improvements you might be able to make to your strategies. I also recommend you start a spreadsheet documenting your trading metrics.

I don't mind you asking questions, or wanting to talk about trades or ideas, but these posts of your trades really belong in your own journal

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 chipps1983 
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sure LovetoTrade. As soon as I complete a month, I will be writting a journal with all the setup/strategies. I would post real trades performance as well.

This blog is making me to follow my rules/patience etc. FYI, See the chart pic, Pivot S1 and stochastics crossover for perfect entry. I didn't take the trade as I am done for the day already.

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 chipps1983 
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Couldn't risk more than 2% so aovided. But could have been good day.

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 lovetotrade 
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So I am adding the final element to my trading plan, and is one of the most important aspects that will have been added to my trading. I have mentioned volume spikes in the past, but I am able to filter between large buying/selling of position initiation and profit taking now, and I plan to ride on the coat tails of these large trend initiating orders. They lead to the largest and best trends of the day, and these are the main trades I will focus on.

So my plan is now complete with a combination of the following:

Larger time frame market context
Tracking squeezes of various time frames(periods of low volatility)
Breakouts and failures of these areas as volatility begins to expand
Tracking of large volume coming into the market around these areas.

I am in the process of documenting data points around all of these to finalize my process going forward. As I realize with this being a marathon and not a sprint, that making sure I have my strategy down 100% is much more important than trying to get back into the market as quickly as possible. Gathering all this data is a very time intensive and tedious process, but is so important to my long term success.

I am super anxious to get back to trading, but until everything comes together I must wait. And I am sure it will click once I am at that point.

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 chipps1983 
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I would love to see your full trading journal. I didn't get setup from last 2 days. I am working on writting my journal.

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 chipps1983 
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Good day to start of week/month..

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 chipps1983 
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Posting another opportunity charts.. I didn't trade as I was done for the day..Up by $400 already.. My weekly is done..

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 lovetotrade 
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chipps1983 View Post
No opportunity today..

How's that journal coming man? Takes about as long to post in your own journal as it does in mine. You did say that you would have that up and going by February.

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 lovetotrade 
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I have so many things going on in office.. will start writting over the weekend.

Ok well listen, I appreciate that you are trying to stay disciplined by posting your trades but I am going to ask that you stop posting them in my journal. That's why we each have our own individual journals, and they should revolve around our own individual trading, not someone else's.

The journal is so that I can post my thoughts, plan, and trades. And my posts are starting to get lost in between the posts of your trades and thoughts meant for your own journal.

So you can do a couple of things, you can either save the pictures to your computer and write the notes down in a notebook or on your computer, and post them to your journal when you get the time to make one. Or what I would do is just start a temporary journal here until you have time to do a thorough one.

I have been trying to drop hints and be as nice about this as I can, but when you are posting in my journal more than I am then it's starting to become a problem.

Thanks.

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 lovetotrade 
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I'm gonna post this here as well because I am surprised it came out of my head, and I want to document it:

Man, there is some serious wisdom in this thread. I think we so often start out looking for those large momentum moves in the market, as was said previously, and focus all our energies on finding the most promising indicator to catch all those profits. In hindsight it looks so easy, but as tiger trader said, if you are not focusing on what is happening the majority of the time in the markets (the daily fluctuations) then ultimately you are more likely to go broke trying to catch every breakout/breakdown, that you will be so financially or psychogically (or both) weathered to the point you won't be able to take full advantage of the opportunity anyway!

And that's why there is such wisdom in patience while trading. Actually I would go as far to say there is no success without it, both in waiting for the right conditions and setups, along with spending enough time in the trade to know whether it is working or not, and whether it has completed its move.

They say markets can stay irrational longer than you can stay solvent, and if this seems to speak near and dear to you then I would say you are not flexible enough, nor are you letting the market lead when you trade. Someone posted above about fading every move on a beautifully trending chart, and that is a great example of our psyche trying to impose our thoughts onto the markets vs. letting price action within the context of the market dictate our trading behavior.

A few months ago I could have read this thread and completely missed the point, I owe all my new found knowledge to this site, and those experienced and gracious enough to post here. Just hoping I can give back. Thanks.

From this thread which is amazing and hope everyone serious about their trading reads it, and fights to truly understand it.


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 lovetotrade 
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So my market analysis will be broken down into a few parts. Obviously documenting what I can before the market opens, but keeping a keen eye on market developments as they happen.

The goal is to gather ideas about areas that will bring in large market participants, and make trade hypotheses on how those areas, when tested, might play out. So I figure the easiest way to do this is to use my eyes to spot obvious areas of S/R and trend lines on the larger charts. The 1 hour and 4 hour charts seem to fit this bill. I also want to observe the time frame that is trending the best, and seem to bring in buyers/sellers as its' EMA is tested. This gives me a larger perspective as to what the market is trying to do, and where the big guys are putting their money for the time being. When the market is choppy, you just need to reduce the time frame to where you can find areas that jump out at you, as they will jump out at everyone else too. Extreme areas when the market is in balance are important too.

Once support and resistance lines, along with any obvious trend lines are drawn in on the hourly chart, which is part of my trading screen, I want to be zoomed out enough to see a few days worth of price action, and the story in which it is trying to tell me. This gives me a better idea as to what to expect as we come close to the drawn S/R lines, but also to remain flexible and to keep my mind open to other possibilities.

The next thing I want to be looking for on the charts <1 hour are any active trends or tight consolidation. This is the idea of the squeeze, and gives me a reason to watch particular time frames that might be looking to break out. These smaller time frame breakouts along with volume are what give me my trade ideas, as I watch them play out within the larger market structure. For example: The hourly trend is up, but the 5 minute chart just broke down out of consolidation right into a larger time frame support area. Now the traders with a myopic perspective are about to get smoked as large money comes in at the support area and just below it, and the market reverses hard to continue the larger trend. The goal is to recognize what is happening in those moments, and remain flexible enough to jump in when the opportunity strikes. I also want to be aware of the time frames that have successfully broken out, as their 10 EMA is often respected as well.

So the last part of the puzzle if you will, is deciphering large participant volume. And if you are reading the market right, and paying close attention, then this isn't so hard to do. Volume is what moves the market, so it would only make sense that you can gather clues when large volume hits the market. What happens immediately after that volume comes into the market tells you all you need to know. The three biggest things I am considering when I am listening for volume alerts, that are set off by different levels of volume coming into the market are: Momentum buying/selling, profit taking, and profit taking/reversal.

I monitor all of these on a one minute chart.
Momentum buying/selling: These generally happen when the market is breaking out of an area that has shown to be good S/R, often times from the 5 minute time frame. They also happen as the market makes new lows/highs. Watching how well the market is trending along with price action is key here. These are generally large full candles with minimal wicks, and price should not even retrace more than 1/2 of that candle before continuing higher or lower.

Profit taking: These will generally show up as price reaches S/R after the market has been trending. The volume here will be high in nature, but the candles will not be as big, and can be overtaken as price pulls back. It is important that you are anticipating these areas, and keeping a close eye as to where the actual trend becomes invalid. These candles can have some good sized wicks on them, but you should not be getting high volume candles in the opposite direction of the trend....yet.

Profit taking/reversal: These candle will generally have unusually high volume attached to it, and will often be around areas of higher time frame S/R. Sometimes these will stop the market in its tracks, and the low/high of the candle will not be violated. Other times you will get one more small push that will fail quickly, and the low/high of the candle will become S/R. These areas are generally accompanied by many high volume candles with one spike. Again watching price action around these areas are key to making good trade decisions as far as direction goes.

I have started to project a box to the hard right edge as these bars are formed. The box will be the width of the bar, and just gives me a specific area to focus on price action, immediately after the bar is formed.

Now keep in mind, I do not pay attention to every large volume candle that comes into the market, and this is where discretion is absolutely necessary. I only pay attention to large volume in areas that make sense via the current market context. And there are no hard or fast rules here either, large volume does not always lead to successful breakouts, just like super high volume does not always stop a large trend. But using volume can give you an edge over traders that are not paying attention to it, obviously in my opinion.

Alright back to work

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 lovetotrade 
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"Keeping good notes introduces an essential learning loop into a traders performance. Whenever you put on a trade, you have two goals. The first is to make money; the second is to become a better trader. You may or may not reach the first goal on any given trade, but you must always reach the second. You can learn from your winning trades as well as your losing ones. If you fail to reach that goal, the trade has been wasted."

Dr. Alexander Elder

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 lovetotrade 
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So part of my strategy is to maintain profitability throughout the many market cycles, so that I am able to take full advantage of large range days that offer spectacular opportunity. This may mean trading less when volatility is low, and I think paying attention to the initial balance, the daily range, and whether or not volatility is expanding or contracting will go a long way here. As compared to before when I had no concept of high or low volatility, nor a change in strategy when cycles began to shift. If I can do this one thing correctly when the moment arises it will go a long way in securing long term profitability.

So the main tool I will be using to identify really strong trends is how well the market is making new highs/lows, and how deep the pullbacks are on the one minute chart. This is where I will look to go for the kill, and hold until the trend is broken. I will also be looking to add contracts as we pull back to value, and scale back out as large volume profit taking comes into the market. Still working on where to add, playing with a few ideas such as at the ema during a one minute squeeze or new high/low.

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 lovetotrade 
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"I believe that identifying true with-trend strength (or weakness, for shorts) and being able to discern it from exhaustion is perhaps the key technical skill of with-trend trading. No one talks about it very much, and it can’t be done perfectly, but, with some work and hard study, you can learn to dodge the most obvious bullets. (Note that this will also take you deeply into sentiment analysis and understanding crowd behavior.)"

How to trade pullbacks - Adam H Grimes

Adam Grimes does an awesome job explaining how to trade pullbacks in this post. I have been following this train of thought from the quote above for the last couple months, and it resonates well with me in my interpretation of volume during large trending moves. I will be posting some charts soon showing exactly how this plays out in my observations. He is actually a brilliant market technician, and if you haven't heard of him I suggest checking out his blog. He has a book that has rave reviews, and a free and thorough trading course. Another great resource, and it's absolutely amazing how much quality information you can get for free nowadays.

I am trying to get screen time in practicing my trades, but I am just not getting it done. I am still learning so much and trying not to get caught in "analysis paralysis", but I must get my feet wet again soon. It is truly amazing how much my focus has shifted when looking at charts, and I can't wait to turn that into profits. Slow and steady wins the race right?

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 TheShrike 
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I've read Adam's book and also follow his blog posts and agree that his methods are both simple and effective.

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 lovetotrade 
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Here is an example of using a couple different levels of volume to confirm price action, and guide my thought process.
I forgot to add onto the chart that at the high, the market has already had two solid pushes with virtually no pullback to value indicating blowoff/exhaustion.

Any sustained move is generally confirmed with rejection of value at higher and higher(or lower levels). This vertical move is not sustainable and so profit taking at any sign of weakness is acceptable. Actually if you look at the spike in volume 5 bars beyond the high is a solid push to the downside, indicating bear strength. This is a perfect place to take final profits.


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 lovetotrade 
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Well, heading the Boston on Thursday then to Vermont for some snowboarding with the wife. Taking Monday through Wednesday off from anything trade related to spend time with my family before we drop the kiddo off with the grandparents.

I will start trading in the demo account the following Monday or Tuesday depending on how the market is setting up. It has looked like absolute crap lately, but hopefully I can get some good practice in and start documenting some live trades. Looking forward to hitting the reset button for a week. Peace.

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 lovetotrade 
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"It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong."
~ George Soros


Forgot that I need to actually have a specific set of rules to trade before I can sim the plan. Finishing that up this week. The focus will be on intraday trends, and getting on board larger trends that run through U.S. RTH.

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 lovetotrade 
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Still about a week out from having any kind of plan finalized, in fact I feel like I am constantly running a week behind.

This is an excerpt from my notes today. I would love to write out everything on this journal but I just can't pull myself away from the pen and paper. Maybe one day I will transfer all my notes over. I definitely plan on documenting everything here once I start trading again.

When to anticipate large, trade worthy, momentum type moves in the market: The largest trend type moves happen during range expansion, reversal, and rejection of S/R levels on the hourly time frame. So once again anticipating these areas and turning points is very important to my long term success. This is part of the reason why the squeeze as a stand alone system fails. This market reaction with larger time frame participants at high points of interest creates a spark in volatility, as where the squeeze needs time to consolidate, so that the market can re-enter a low volatility state.

Now on the other hand, a squeeze forming on a larger time frame such as the hourly, gives us an idea of when the market is ripe for range expansion. Therefore some sort of rejection or reversal right before or after a period of low volatility can give us a high probability expectation of direction and some sort of range expansion. Obviously we can never know exactly how far or long the market will move, but at least we know the conditions warrant this kind of market action.

Ideally the ATR should be at least 100 during the RTH daily session, and should be expanding. When contracting we know to be more conservative depending on the market structure.

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 lovetotrade 
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So after another month(wow that flew by) I am just about ready to publish my new trading plan. I had one drawn out and was pretty extensive at over six pages, but have edited it extensively with new knowledge and research. The only thing I have yet to do is read back through my journal over the last six months and make sure I haven't left out any small important details.

It amazes me how far I've come since I stopped trading last November. I just finished reading Markets in Profile and Enhancing Trader Performance. Two more killer books that continue to refine me as a trader. One of the things that has helped me understand the markets extremely better was looking at it as an auction process. I know this seems pretty obvious, and obviously that is exactly what all these markets are, but a couple of months ago it was another revolutionary step for me.

When I looked at it as a fairly standard auction process in the way it moves, it took a lot of the emotion out of it for me. Now I have simple answers and reasoning when things happen that used to cause me so much frustration. Also taking the time to truly dissect why trading as I saw it doesn't work, and then starting on a new course from there was very instrumental in my move towards a more realistic and professional outlook.

I am so much more calm, confident, and excited about this next part of my journey. And it is my mission to never cease learning about markets, psychology, and trading.

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 lovetotrade 
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So I officially will not be trading the YM anymore. I transferred the money out of my futures brokerage and will be transferring it back to my old FOREX account. I have done enough research to realize that I am too over-leveraged for futures, and will work to build my account size up through currencies. I can significantly de-leverage my account so that my stops will be in the right location and so that I can scale out.

I think I spent too much time trying to figure out a way to make the near impossible work, instead of just sucking it up and making the right decision for my career going forward. The EUR/USD seems to trade similar enough to the way I have been learning that it should be a quick transition. My previous experience in currencies will help expedite the process as well.

The dollar will pick a direction soon enough, so I will be able to take advantage of the next trend which I am excited about. FXCM's charting software is garbage, but I will be using Sierra chart so that works out as well indeed. I am glad that I took the trip down the futures path and I look forward to trading it again some day. The last year away from currencies has definitely been an awesome learning experience, and I will be able to apply most of what I have learned going forward.

If my money hits the account tomorrow I should be able to start trading Wednesday. I will post a daily recap and charts of the good and ugly of my trading so that I can hold myself to extremely high standards, and continue my current growth pattern.

I will be risking about 2% of my capital per trade.
I will be scaling out 2/3rds of my position, and holding the last third until the trend dies.

More to come......

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 cory 
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lovetotrade View Post
So I officially will not be trading the YM anymore. ...

More to come......

could have told you YM too jumpy try ES, maybe?

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 lovetotrade 
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cory View Post
could have told you YM too jumpy try ES, maybe?

Nope, I actually really enjoy the way the YM moves compared to the ES. Risk was actually a bit smaller for my trading style as well. But I have made up my mind that I cannot correctly trade any futures instrument with my current account size. So it's time to start trading "correctly" as I view it, and then make another determination down the road.

I have briefly edited my plan from the YM so that it will apply to the EUR/USD, like I mentioned most things will stay the same.

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 lovetotrade 
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2015 Trading plan


Morning Context

Pre-Open

What is the overall daily trend? What is the current daily market structure telling me? Are we near any hourly support/resistance? Is the hourly chart trending? Are we near its' ema? If we sell off/rally first thing counter trend, which S/R levels should I be targeting?

What is the expected daily range? Is the ATR expanding? Compare the previous day's range to the ATR to get a feel for the days movement. If the market is contracting, compare the previous day's range to the ATR to get a feel. Are we in balance or out of balance?

Draw red lines on 5 minute chart for hourly S/R, draw lines for previous day HL, and previous week close. Mark the open/gap, and keep it there till it's filled so you know to pay attention to it.

The sooner we can prepare for what type of day it might be, the better we can capture a higher percentage of the day's range in profits.

The point of focus needs to be on the highest time frame S/R, and its breakout/down points. It will often test these to confirm the move for continuation/rejection of trend.

Setup your alarms, and remain alert throughout the day as opportunity presents itself:

Overall trend direction
Larger time frame squeezes, and active fired squeezes (15m-hourly)
Breaks and re-tests of IB levels upper and lower, and also failures here on range days
Tests of hourly, 15 minute, and 5 minute support/resistance, and acceptance/rejection of these levels.
5 minute squeezes and how they relate to the bigger picture
Failed highs/lows, and then hard reversals at important areas of market structure.

Momentum moves:

I identify momentum conditions by the 10 period moving average moving outside of a 20 period keltner channel. What this means is that the average price has accelerated outside of a 1.5 standard deviation, and conditions favor accelerated movement. This is the same for all time frames.

You should also be aware that these momentum thrusts show up as a final wave of a trending move. Sometimes these moves extend long beyond most expect them to, and it is my objective to exploit that scenario as long and efficiently as possible.

We are looking for these to come from areas of strong S/R and important market structure, whether continuation or reversal. Days of balance will have targets at the previous extremes, and days of range expansion will have open targets. Profit will be taken as the market calls for it.

Our entry is either by limit order of new high/low, or by bar closing beyond previous bar in trend direction during pullback. Once a pullback begins(that is any closing bar in the opposite direction) then a limit order should be placed one point beyond the extreme high/low. The pullback should then be monitored for any chance to get in on the pullback with proper risk.

The first profit should be taken by volume/price action, the second profit should be taken out by official end of trend on the entry time frame.

Squeezes:

The goal here was to design this as easy to identify and execute as possible, so that I can focus on the task at hand, versus trying to work through a complex set of conditions. I know we are working with probabilities here, so the objective is to get in the market as early as possible, and let the market work itself out. Then we can become an unbiased observer of the market, letting the market tell me whether the trade is, or isn't working. It should be easy and repeatable, so as to become second nature.

So as the market consolidates(squeezes) on different time frames, I will watch for signs of trend on the next lowest time frame. This will generally give you a heads up as to which direction the market will break out in, along with other factors. Once the lower time frame begins to trend our job is to get into the market on a pullback to value at the ema or keltner center line. You will generally get one small pullback as the market starts to trend, but if you do not get entry then you must enter with a limit order just beyond new highs/lows, as long as we are not at the extremes of market structure on a balanced/low volume day. Remember that new highs or lows should draw in significant buying/selling activity if the right conditions are present. We must be nimble here.

Once we have entry, our stop will be trailed by price action just below/above HL, LH. Watching where volume is coming in can give you a heads up as to how the market is accepting/rejecting the breakout and new highs/lows.

You need to know where the market is in relation to the next higher time frame's ema, from the squeeze you are looking at. If it is coming into contact with a higher time frame trending market's ema, you do not want to counter trend that move. Wait for confirmation to jump in the main trend here. This is only important if the higher time frame's price action has been respecting its ema, and momentum is consistent or picking up speed. We only want to counter a larger trend that is in excess, not as it is coming into value.

Setups:
1) Reversals with/against trend at areas of important market structure.
2) Trending of the 5 minute chart during range expansion
3) Using 1 minute price action to enter early into 5 minute squeeze and/or trend once price action lines up.

Failed highs/lows:

Points of failure at important areas of support or resistance can lead to higher time frame market participants entering into the market. This can lead to significant trends and busts of momentum for us to trade. These areas on lower time frame trending charts will often fail as volume dries up on each successsive test of counter-trend direction. For example a new lower low and then hard reversal to a new higher high during a trend gives a good signal of market strength and continuation to trade around.

But overall our focus should be on the larger context of the market, and that is getting entry on the larger trend at hand.

Volume spikes:

These can stop the market on a dime, and you need to be aware if this happens at a key level of S/R. This may happen in a morning selloff for example, when the larger overall trend is up. These are footprints of the big guys, and you want to be tracking/following them. Price action around these bars are very insightul for making trade decisions.

Range days and non-squeeze trades:

These should really be kept to a minimum, and mainly only targeted areas from homework. But sometimes a great looking trade pops up from a re-test of previous S/R, and opportunities that arise should be taken advantage of.

Risk should be small, and targets should be prior support or resistance.

Range days you should be looking for trades at the extremes, usually around the IB High and low. High volume rejection bars should mark some good trades in these areas.

Remember that range in the morning can lead to breakout in the afternoon.

Things I should be watching while in a trade:

Set an alarm for volume spikes on the one minute chart every day. I always want to know when this happens. I also want to be watching for volume effort vs. reward on these candles. This gives insight into who is in current control of the market, and can paint a vivid picture as buying or selling wanes. The easiest way to describe this is, how far did the candle push and how strong was the bars close compared to the volume of the candle.

Extreme volume one minute candles. These can be either exhaustion or a large buyer/seller. You can figure out which by watching price action immediately after the candle. Price should not move more than 50% into a large buy/sell candle, and should not spend much time there before heading higher or lower. Price will have a hard time moving beyond an exhaustion bar, and should over take it fairly quickly. These are the differences between immediate continuation or reversal.

Should be watching the chart below the squeeze closely, while constantly referencing the larger charts. Patiently waiting for the lower trend to develop or give clues as to which direction it might move.

Should have your 5/15/1hr alarms set for the whole day.

Always be looking left to see where buyers/sellers could be stepping in. This also includes the time in which squeezes are being formed, we need to know if there is an obvious double bottom or top being formed/completed inside the squeeze. This will give us another early low risk entry to work with.

I mentioned looking left on the chart for S/R, but it's not only just at the immediate left. Sometimes you have to look beyond the current price structure, to the rally or selloff previous to the current range/trend. And sometimes days back when the market really gets going. These points are obvious on the hourly chart.

5 minute data points must be placed onto the one minute chart as the market develops. This gives me context to the noise of the one minute chart, and keeps me from placing too much importance on insignificant areas.

I should be checking the 4 hour chart daily for areas of strong S/R and market structure, and labeling them on the 5 minute chart. I have to know where to expect areas of congestion so I am not fighting it unknowingly.

Trending markets on all time frames I should be watching for length of trend legs and corrections to gauge trend strength. I always should know where in market structure is the trend taking place, which leg/correction we are in, and what volume has/is coming in.

Conviction of trade direction. Once I have analyzed current market structure and price action I should be able to quickly pick market direction and base trades around these conditions. I should also have a strong conviction of this direction so as to make smart entry decisions, and should not change trade direction unless something serious has shifted in price action/structure.

Hitting known levels of S/R while in a trade. Price action can cut right through these, bounce off them and continue trend, turn into chop and build value around them, or completely reverse. If we have not predetermined a specific level for profit taking, then no matter how strong the level of S/R is, the market should not violate the current trend structure if the move is valid and our trade execution should not change.

Journaling and goals:

Every day we will make entries into our journal and market metrics spreadsheet.

Our daily goal is to trade our plan exactly how we have researched and tested it. I have spent countless hours narrowing down the style of trading and time frame/s that work for us. There is absolutely no reason for straying off course or shooting from the hip. Our window of opportunity will be very limited most days, and so patience along with a high level of focus will be key. If I have a strong desire to trade outside of our plan in certain market conditions, then I should write that into my journal so as to quantify/research any possible edge when the market is closed. Then I can determine if it's something that should be written into the plan or discarded. Basically if I have a strong urge during market hours, write it out instead of trade it out.

Our overall goal and highest priority is to trade our plan exactly how we see the trading day after hours during review mode. Which boils down to; not trading when opportunity is not present, and taking full advantage of opportunity when it is.

Every day we should be looking for things to improve our process, as we continually gain more market knowledge and experience. This is the mark of a professional.

Every weekend we will review the previous week and do a write up of positives and negatives, and how we can improve our overall performance. Positive self coaching is key here. We should be focusing on and improving a small part of our process each week.

Expert status is the goal, and through learning, discipline, and experience we will achieve it.

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 lovetotrade 
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Well today was my first day getting my feet wet again and man it feels good! A few rookie mistakes to start off the day, but I was quickly able to recognize and document all trading errors, and finish off the day with a decent winning trade..... with more errors lol.

So far so good. I plan on trading in sim mode through Friday just to get back into a groove and hopefully fine tune some areas as I am definitely a little rusty. Super excited to be back in the drivers seat though!

My main mistakes today were:
1)Not buying the correct breakouts from the 5 minute chart
2)Not watching volume profile for better trade location
3)Not re-initiating my full position once the 1 minute trend re-established itself
4)Focusing too much on 1 minute price action, and not keeping a piece of the position on through the full 5 minute trend

There were 3 scenarios for me to take profitable trades from. I took all three and made money on one of them. I traded the last one very well minus holding the last contract through the full trend. I also took two trades counter trend, I will let you guess how those went.

I have a new chart that I will overlay onto the 1 minute chart for when I am holding a trade so I do not get sucked into short term price action. It is an RTH 5 minute chart so I can see previous day S/R along with the initial balance extensions. This chart helps me see how well we are truly trending/not trending for that day's session.

You can't see anything worthwhile on the chart today except you can maybe make out my last trade, but I am posting it anyway.


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 lovetotrade 
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Already done for the day. What an awesome morning! I traded today exactly how I pictured myself trading, and I know for sure now that I was holding myself back by trying to stay with futures. It's like I have broken free of my chains! lol

I do have a couple of notes from earlier:

I should constantly be geared towards market continuation until price action proves me wrong. My main goal is to trade smart to maintain profitability during most days, but be prepared to swing for the fences on days of range expansion. So I must balance being conservative, yet being prepared to take full advantage of whatever the day offers.

Market entries. The edges of current value on the volume profile seem to offer great areas for entry after a rejection or reversal. At these points it is quick to identify whether a trade is working or not, and I know the majority of the public is not using this so I would think I am on the right path of thinking outside the box. At first glance it looks as if these areas along with cumulative delta make a great pair for targeted entry.

All trades were profitable but one today, which was what inspired my idea for the trade location note above. I was correct to enter, but was outside of my acceptable risk even though I entered small. I scaled in and out throughout the morning and managed to pull out 188 points! Now that's more like it.

First chart is from this morning. The GDP release did push the market in my favor but the market setup for breakout and so I took it. You can also see the second trade where if I had entered closer to the bottom edge of the current value area, I would have taken much less heat, and the market clearly showed little interest in going lower.


The second chart is of the beginning of the third trade


The third chart shows full scaling in and out as the trade progressed, along with cumulative delta for the day.

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 robert880 
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Isn't the 6EM the futures contract? I thought you were moving over to forex.




lovetotrade View Post
Already done for the day. What an awesome morning! I traded today exactly how I pictured myself trading, and I know for sure now that I was holding myself back by trying to stay with futures. It's like I have broken free of my chains! lol

I do have a couple of notes from earlier:

I should constantly be geared towards market continuation until price action proves me wrong. My main goal is to trade smart to maintain profitability during most days, but be prepared to swing for the fences on days of range expansion. So I must balance being conservative, yet being prepared to take full advantage of whatever the day offers.

Market entries. The edges of current value on the volume profile seem to offer great areas for entry after a rejection or reversal. At these points it is quick to identify whether a trade is working or not, and I know the majority of the public is not using this so I would think I am on the right path of thinking outside the box. At first glance it looks as if these areas along with cumulative delta make a great pair for targeted entry.

All trades were profitable but one today, which was what inspired my idea for the trade location note above. I was correct to enter, but was outside of my acceptable risk even though I entered small. I scaled in and out throughout the morning and managed to pull out 188 points! Now that's more like it.

First chart is from this morning. The GDP release did push the market in my favor but the market setup for breakout and so I took it. You can also see the second trade where if I had entered closer to the bottom edge of the current value area, I would have taken much less heat, and the market clearly showed little interest in going lower.


The second chart is of the beginning of the third trade


The third chart shows full scaling in and out as the trade progressed, along with cumulative delta for the day.


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 lovetotrade 
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Isn't the 6EM the futures contract? I thought you were moving over to forex.

Caught that one did you? Well I also did say that I would be trading sim until next week too. For some reason the EUR/USD FOREX option stopped at 8:30 a.m. on Sierra Chart so yes I am using the 6E in the mean time. But you do realize that the two contracts move in lock step right? So in reality the only thing different is the name in the way it trades.

I will actually have even more flexibility with FXCM in the EUR/USD because I will be trading micro lots and can extend my scale out even further which I plan to do. I will be scaling out 5 or 6 times on a full trade vs. 3 with futures. Which reminds me I need to get that money transferred over, thanks for the reminder!

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 robert880 
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Mostly asking because I noticed the volume profile on the chart and thought you moved over to forex which did not make sense. Your reasons for going over to fxcm seem right on. the only reason I would not is because I like volume profile too much. But I suppose you could trade on fxcm and also keep up a futures account to see where the volume is hitting.

Please keep us updated. And I realize the futures market and forex move lock step but I wonder about the nuances in the price action if any at all. I hear that the futures contracts "reacts" slower than the forex market as computers come in to arbitrage and keep the markets in line.

final question/comment. You said you like to scale 5-6 times. Isn't that a bit much? I wonder about your thoughts.

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 Tap In 
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Have you considered Micro 6E? It is $1.25 per tick

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 lovetotrade 
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Mostly asking because I noticed the volume profile on the chart and thought you moved over to forex which did not make sense. Your reasons for going over to fxcm seem right on. the only reason I would not is because I like volume profile too much. But I suppose you could trade on fxcm and also keep up a futures account to see where the volume is hitting.

Please keep us updated. And I realize the futures market and forex move lock step but I wonder about the nuances in the price action if any at all. I hear that the futures contracts "reacts" slower than the forex market as computers come in to arbitrage and keep the markets in line.

final question/comment. You said you like to scale 5-6 times. Isn't that a bit much? I wonder about your thoughts.

Well I will be monitoring them very closely side by side as it looks like I will use the 6E on Sierra chart for charting, and then execute on the FXCM platform. I know that Sierra supports FXCM, but I have not looked into switching from the OEC datafeed to FXCM. I really like having access to all the futures data, but I can use my brokerage platform for that as well. So still kind of figuring things out. More than likely it will depend on whether using both platforms is a pain in the ass, or if it gets old after a while. Trial and error gives the best personal experience IMO

From what I have seen though, the bars looked exactly the same on each chart, so all time frame charts, S/R, etc. SHOULD line up the same. I'm sure this will become obvious very quickly if it does not.

Ok so thoughts on scaling and profit taking. I have a chart that monitors the ATR of the U.S. session of the EURO(8am to 4pm as I see it) and also the days range. So then I can get a good idea of volatility expansion or contraction, plus an overall avg movement during my trade hours to base targets from. I plan on digging into this a little deeper so I will be prepared for Monday. The micro lots that I will be trading(approximately 30) give me the option to break down my scaling in a virtually unlimited number of ways, and if I remember correctly the commission is based off the spread, which I think comes off each lot separately regardless of when exited/entered. Not 100% sure about that though.

So lets say I am expecting the days range to be around 100 pips, and lets also say the EURO was trending into the session, and it looks like I got entry close to the lows of the U.S. session. Now we all know there is no guarantee of trade continuation, so scaling is part of my risk management through averaging. So does it make sense to scale at say 30, 60, and keep the last third on as a runner, when I can scale out at 20, 40, 60, 80, and still have the option to take profit two more times as the trend presumably comes to an end. For me trading is all about feel and flexibility, so for me option two offers many more advantages suited to my trading style than option one. Now again this will more than likely change as I grow and gain more experience, but for now this makes me happy.

Thanks for asking some great questions and allowing me to clarify my thought process! I hope this reply answers your questions.

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 lovetotrade 
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Tap In View Post
Have you considered Micro 6E? It is $1.25 per tick


Well I did not know that the option existed, so that could be an option when I venture back into futures. But my response above helped me clarify why that wouldn't work at this point in time, and a good part of that is reduced scaling options.

Thanks for the recommendation though.

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 robert880 
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Yep, if you're going to forex because of the scaling flexibility that seems like a good fit. Not sure about the micro lots...very low volume ( I checked it out the other day). But again in theory they should move lockstep.

as an FYI: I believe you can run two version of SC on one machine..might want to look into that.





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Well I did not know that the option existed, so that could be an option when I venture back into futures. But my response above helped me clarify why that wouldn't work at this point in time, and a good part of that is reduced scaling options.

Thanks for the recommendation though.


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 robert880 
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Curious about how the spreads works when you scale in forex. Please report back when you confirm. Perhaps that is what promoted my original question. Scaling 5-6 times in futures would kill the P&L because of the commissions.

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 lovetotrade 
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Curious about how the spreads works when you scale in forex. Please report back when you confirm. Perhaps that is what promoted my original question. Scaling 5-6 times in futures would kill the P&L because of the commissions.

Ok yea, I don't know where you are getting your info from, low volume, etc.? Spend some time on FXCM.com, plenty of info there. From what I read briefly is that FXCM is one of the most liquid FOREX markets in the world, and it doesn't matter whether you are trading micros, minis, or full you are getting full liquidity of their market and their super tight spreads. I don't remember having any issues with spreads with any of the major pairs that I used to trade.

I will be going over all profit/loss including commissions when I start trading live. But I think that scaling 5-6 lots wouldn't necessarily kill your profitability in futures if that was all figured into your account size and trading plan. As your account size grows your contract number should grow based on the percentage of capital you are trading. Which is again why I have de-leveraged to hopefully take advantage of the full opportunity the market presents, while only risking a certain % of capital as I see fit via my trade plan. I hope this all makes sense.

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 lovetotrade 
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One quick trade this morning before the wife went to work. Playing around with cumulative delta.

You can't see it on the screen but the first area of Hourly Support I was targeting was 1.1129. At the line that runs through cumulative delta, you can see a divergence where CD made a new low but the market did not. So I threw an entry on and just figured I would manage the trade from there, with an acceptable stop below the previous low. Got stopped out on the last third, but the market ultimately ran to target.

So I am convinced that I need to spend some more time researching CD around targeted areas and market confluence. Order flow seems to be quite important to long term successful traders, so I try not to ignore that kind of info anymore. And the divergences in CD along with price action, as well as when they are running together is starting to make more sense to me. I have to assume that is from my much upgraded knowledge base of PA since the last time I looked into CD.


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 robert880 
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I was speaking about the futures E-Micro product on the CME (6EM) product not forex. Makes sense, I will follow. Thanks for posting.



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Ok yea, I don't know where you are getting your info from, low volume, etc.? Spend some time on FXCM.com, plenty of info there. From what I read briefly is that FXCM is one of the most liquid FOREX markets in the world, and it doesn't matter whether you are trading micros, minis, or full you are getting full liquidity of their market and their super tight spreads. I don't remember having any issues with spreads with any of the major pairs that I used to trade.

I will be going over all profit/loss including commissions when I start trading live. But I think that scaling 5-6 lots wouldn't necessarily kill your profitability in futures if that was all figured into your account size and trading plan. As your account size grows your contract number should grow based on the percentage of capital you are trading. Which is again why I have de-leveraged to hopefully take advantage of the full opportunity the market presents, while only risking a certain % of capital as I see fit via my trade plan. I hope this all makes sense.


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 robert880 
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I like the template you use. Mind sharing? You have peaked my interest in trading the Euro.


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One quick trade this morning before the wife went to work. Playing around with cumulative delta.

You can't see it on the screen but the first area of Hourly Support I was targeting was 1.1129. At the line that runs through cumulative delta, you can see a divergence where CD made a new low but the market did not. So I threw an entry on and just figured I would manage the trade from there, with an acceptable stop below the previous low. Got stopped out on the last third, but the market ultimately ran to target.

So I am convinced that I need to spend some more time researching CD around targeted areas and market confluence. Order flow seems to be quite important to long term successful traders, so I try not to ignore that kind of info anymore. And the divergences in CD along with price action, as well as when they are running together is starting to make more sense to me. I have to assume that is from my much upgraded knowledge base of PA since the last time I looked into CD.



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 lovetotrade 
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Good example of CD divergences here around volume profile. On the left side of the chart we see two large bars down while CD spikes higher. Price action immediately after this spike reveals this was an intermediate low, and an important area to take profits. A re-test of this area to the right shows another divergence as again the market makes a new low, yet CD begins to trend higher. I'm assuming showing a lack of selling aggressiveness at this previous pivot. You can also see the LVN below the low supporting price.

You cannot see that the second test was with larger volume because of the very large volume bars at the first test, but there was also good volume at the second test as well. And I think this is important as large orders are coming in with very little reward, and market delta showing aggressive buy market orders absorbing that volume and reversing the market higher.


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 lovetotrade 
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First chart shows a little context of current market structure. Current intermediate trend(hourly) was down, and my disregard for this while setting my profit taking locations today absolutely hindered the money I pulled out of the market. So definitely something to keep in mind going forward. I need to wake up a little earlier and spend some more time doing homework before I start trading. I need to spend some time also reviewing charts at night for at least a few minutes so that I can stay in tune with the market.

Some notes from my trade journal:
So far trading has been extremely calm. I believe there is a lot of wisdom in trading small enough that you can maintain proper risk exposure, and also small enough that it is not psychologically distracting through the swinging P&L. I do believe that through experience you can leverage more as your confidence in yourself and your trading plan grow. But I also think/now know that it can be a big mistake and financially as well as psychologically damaging over-leveraging as a beginner. I was just able to sit through a 15 point retracement calmly as I waited for the trade idea to work out, and now the trade is moving heavily in my favor. Six months ago I would have had so much anxiety that I probably would have exited the trade, and then screamed at the screen as I watched the trade work out. Talk about a 180. As the market moved against me, I rechecked context and the appropriate charts, and they told me the direction was correct and to sit tight.

Successfully traded profitably the first day and pretty happy with execution and trade management. Still a bit to be desired as I am intensely researching order flow and its application to reading price action. I read about it before, but I understand it completely different this time around. So I am in the process of watching webinars, and reading the thread on volume profile/footprint all over again.

Looking into eventually using some sort of performance analyzer like TraderVue, as there is no way I will hand document all these trades and scales individually in my metrics spreadsheet like I used to. I would much rather use that time more effectively. Looking forward to tomorrow!




Thicker arrows are entries, and thinner arrows are profit taking.

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 lovetotrade 
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Not much to post on today, took one trade this morning and got stopped out after one scale out. Price action very confusing this morning and the news didn't help. So spent the rest of the day building new charts to help me see contextual development during the day. I guess I need to spend more time with larger charts when things don't make sense. A zoomed out perspective if you will. Hopefully tomorrow will be more trade worthy!

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 lovetotrade 
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Alright, well my wish came true, much more trade worthy price action today. We opened up this morning out of balance towards the very high of the recent range. We were also at major support for the dollar. So when we tested those levels a couple of times and market seemed determined to move higher I got in. That is one thing I have learned is that you do not fight price action when it hits major S/R and does not break the short term trend. Chances are good for continuation.

News events caught me a little by surprise today so I spent some time factoring that into my plan. I should be watching these events closely, and anticipating how the dollar might react to the actual news, and also how that relates to my plan for the morning.

So we had been hanging out, out of balance since news hit this morning, and price was being rejected higher away from value as the developing VAH moved up. This is seen here as the thick blue lines.


Scale areas seem to be working out just fine, although I am thinking I definitely want to hold a larger piece of the pie for my discretionary and final exit. Basically when I do not want to be long or short anymore based on price action.


Larger picture of the trend


Contextual chart I developed yesterday, since I do not have access to TPO's currently this will have to do. But I am happy with it and offers the clear perspective I was looking for.


One more note via my edit: I have decided to ditch cumulative delta. For me it is a distraction, and inconsistent to the point that I cannot gain anything that is aiding me in profitability, in my targeted areas of trade. And I do believe that it has something to do with the market I am trading. I noticed it traded completely differently and much more in sync with the ES over the same time period I watched it for the EURO.

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