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A+ trading: a price action/volume analysis journey
I have kept a detailed private journal for the last several month and found it to be a great help, so I thought the New Year would be a great time to start a public trade journal.
I am a beginner/intermediate trader who has been trading for about three years. I have not been consistently profitable and have never been able to string together a string of profitable days.
Recently I have made a lot of progress through 1) overcoming my biggest shortcoming, which was chronic over trading; and 2) realizing that my problem was not my trading strategy or my money management, but my self-management. This led me to totally revise my thought process and trading style, without changing my trading strategy.
My trading strategy: I am a price action/volume spread analysis trader primarily, with price patterns and fibs used occasionally as added confirmation. I don’t use a lot of indicators, just volume and support and resistance.
I try to limit trades to pullback entries with the trend, but will also take reversals at support or resistance.
Almost all my entries are triggered by what I call High Volume Long-Tailed candles (“HVLT”) (I’m sure someone else has coined a name for these ) which are basically an up thrust or down thrust candle with high volume. i.e. in a down trend, a high volume up thrust on a pull back will trigger me in short and in an uptrend a high volume down thrust in a pullback will trigger me in long.
I guess most people would call me a scalper since I trade off of a 30 second chart and I was taking 15-30 trades a day. With the mindset that if one trade can make you a $100 then 10 trades will make you $1000. In my case this lead to over trading and loss.
But my recent epiphany was the realization that I was becoming really good at spotting high percentage set ups. I took some really great set ups and trades, but I negated all the positive trades by over trading and taking some really mediocre and low percentage trades. So why not limit myself to only A+ trades??!! Obviously this seems like common sense. All I can say is we must each walk our own path to knowledge.
I trade the Dax, Crude, Gold and Russell.
My goals, which I hope this journal will help hold me accountable for are:
Process goals:
1) enter only trades which rate as A trades under my system;
2) Have management of each trade grade out as B or higher.
Number goals
1) 1 to 3 trades per day.
2) 85% of trades as winners.
3) 10 ticks per contract per day
Today was a good start to the new year. I took two trades on Gold.
1st trade) Short at 1169.4 at 8:22am on opening bell breakout. price moved short very strongly and I entered on the pullback. Due to volatility I only enter in one part. my read of the market was correct and I closed the trade for a small profit of 3 ticks, but in hindsight there was too much volatility given the small stops I utilize. Market moved down another 17 ticks before turning around but I was only able to get the 3 ticks do to the speed of the market. I rate the set up here as an A and the entry was also A/A-. Management was a C as I was not quick enough in recognizing the retest of the new low. Given volatility this was probably a trade I should not have taken. Overall grade C.
2nd trade) Short at 1171.2 at 8:32am on pullback. opening bell bear move had pushed through support level and then pulled back to prior support with a HVLT up thrust candle. Set up was text book. because signal was so strong right at prior support I entered in two parts. A for signal, A for entry and A- for management. +13 and +18 ticks. Over all grade A.
Overall I was happy with today both from a process and results standpoint. First trade was only so so, even though it was technically correct. Second trade was textbook. If I could replicate that trade everyday I would be happy.
Did not get a chance to post yesterday. Monday was a not a great trading day. I took too many trades and ended the day up only 6 ticks. Today was a worse day as I hit my stop limit for the day. I took 4 trades today. One was an excellent opportunity, which I mismanaged and the other three were just poor trades all around.
What I want to focus on today is the trade sequence which happened in the space of 10 minutes following the opening bell of the Russell. During this time I took two trades and passed on a third. Below is a chart of this time frame with my entries and exits.
In a nutshell I started with an A+ signal, right where I had anticipated and hoped for it and 10 minutes later price had moved 40+ ticks in my anticipated direction. during this time I took two trades, one a 6 tick winner and another an 8 tick loser, and then passed on a textbook reentry on a 78.6 retracement!
As I prepared for the open of the Russell, I was anticipating a down day and looking at price sitting right below a prior support level (the red shaded area on my chart) I envisioned the market moving up to this area before continuing down. Per the chart the market did exactly that. Shooting up right to resistance on high volume before closing on the low. For me this is a perfect signal and I entered on the break below on the next candle at 1180.1 at 9:30.
So far so good. However, the volatility was slightly outside my comfort zone and I tried to move my stop to prevent myself from getting whipsawed out of the my position. this initial move had a range of 27 ticks. I ended up with 6.
Needless to say I was unhappy and anticipating a continued move down, I jumped back in after a minor upthrust candle. my entry short at 1178.6 at 9:32 initially looked great as the entry candle moved down 10 ticks before reversing and stopping me out in the same candle. I was pretty disheartened by this, but I should have maintained my focus, because....
3 minutes later price moved up to the tick in a 78.6 fib retracement with two upthrust candles. this was a great entry signal which was collaborated with a retracement zone. But I a little gun shy after the prior trade and passed on this trade. this trade would have never put me in a drawdown of more then 6 ticks and then would have moved 50 ticks with out a retracement!
My take aways 1) be patient on good trades; 2) no revenge trades; 3) poor trades negatively affect your ability to take great trades later.
I have not posted in a while, as I have not had a really memorable trade for good or ill in the last couple of days. Although, I have set a new personal best for consecutive winning days.
Anyway, today, that streak came to an end on what is probably the worst non-impulse trade I have taken in a long time. attached is a chart showing the price action right before I got into this trade. Price had been moving down all day and finally hit a support level at 10202, bouncing off and then consolidating briefly at 10202 again before moving lower for 20 minutes, before breaking above 10202 again at which point it tested the recent swing with a very large upthrust candle, although volume was not as high as I would expect. Price did not reject off of this large candle the way I expected it to, but it did move lower, with two more large upthrust candles, but again on low volume and the move down was not very strong.
Given this behavior, on a down thrust candle that touch the 10202, support level on high volume, I jumped in long. the next seven candles seem to confirm that the price was moving in my direction as most of them were down thrust candles with price moving up. However, price never broke above the last swing high and reversed and quickly took me out for a full stop out.
looking back on this trade, I don't know what I was thinking. I would usually take this short 10 times out of ten. everything was saying short, but somehow I decided that this one down thrust candle was a clear signal long. Terrible!!!
No charts today, did not really have any trades which warrant discussion as either very good or very bad. Today was a strange day. In reviewing my trades this evening, I realized I didn't take a trade that once I account for signal, entry and management, that I would grade as an A trade. Additionally, I took way too many trades, a lot of my entries were late, and because I took some iffy trades, I was very conservative with my stops, resulting in dramatic under performance on possible profit.
Another thing I noticed today, not for the first time, is that I am strongly biased towards shorts. to the tune of 3 out of 4 of my trades are shorts, even in a upward trending market. this results in a lot of counter trend trades and the resultant tight profit windows. I really need to work on see longs better and trading with the trend... All that being said I some how managed to end the day 8/12 and up 36 ticks per contract. I guess it is better to be lucky then good.
If you are failing to see long signals, that probably means you are already in short trade. Once you are in a position, we enter into a mode of selective perception, where we mostly see signals that justify our position and discount the rest. Follow your rules and exit the trade, if it is not working. Do not "hope" ,relax the rules and stay in the trade. Once you are flat, you can think better with a clear impartial, objective state of mind.
One thing that helped me in the past, from Brett's book, is to create a self talk journal. Write down all the stuff / thoughts you have while trading. This will provide a lot of insight into your underlying beliefs that is driving your trading.
Four trades today in a 20 minute span. 2 breakeven trades and 2 losses. total of -7.5 per contract
All four were decent signals and all but one should have been either a small profit or breakeven, but with a combination of late entries, stubbornness and one platform freeze up combined to put me in the negative for the day. Out of all this my stubbornness is what led to the big loss of the day.
1st trade: quick scalp long. signal was good , but entry was late and I didn't like the next two candles so exited for breakeven. I hindsight I could have gotten 8-10 ticks, but given that this was a counter trend trade I'm ok with playing it conservative here.
2nd trade: quick scalp long right before the opening bell. two nice HVLT right at support. entry was good, but was immediately stopped out for -10. Even though this was a full stop out, the setup was good as was the location, only the timing made it iffy.
3rd trade: trend trade short on pullback with HVLT, great signal, but my platform locked up for a second and I got a terrible entry so I scratched at breakeven.
4th trade: trend trade short on strong continuation after a tiny pullback. I really liked this setup, the market was moving strongly down on high volume and all the candles were closing low. But again, I entered late and when price stalled I refused to take a small profit because I just knew it was going to continue down. The unforgivable part here, is not that I refused to take a small profit or even that I let a profit turn to a loss, but that I moved my stop!!! -21
With this trade I was done for the day. A bad finish to a good week.
FDAX 10726.5 at 8:39 short off of high volume pin bar near resistance on my 2.5 minute chart. this was a larger then average trade as it involved a 48 tick stop, but the r/r looked good. Trade did not work out as there was a price surge on the 8:45am news (Chicago PMI). So a 48 tick loss was bad, but the kicker here is that my stop got blown through for an additional 22 ticks!!
I make it a habit to never be in a trade on the top of the hour or the half hour, but I have never really considered any other times as large news events, so I was pretty upset to see my stop get blown through by 22 ticks.
