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Learning the Everything: 2015


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Learning the Everything: 2015

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  #1 (permalink)
SF, CA/USA
 
Experience: Beginner
Platform: SC
Broker: Stage 5
Trading: ES, 6E, sometimes NQ, and occasionally CL
 
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Posts: 1,335 since Jun 2014
Thanks: 4,255 given, 2,379 received

Well, it's 2015, and I'm still trading, and have lost yet even more money about 17.5K down so far. Here is my last journal.

I'm such as freaking addict. The good news is that I feel like I have a much better handle on price action, with trading the micro-euro futures. I'm still trying to figure out when to use price action, because it seems in a trend environment, following price action gets me out too early, and causes slippage/commissions to go way up. In a trend environment, figuring out the market context seems to be the most important factor. In a non-trending enviroment, price action becomes the dominant decision maker.

I'm still having issues jumping in at the end of the move, which burns up some of my profits from taking the move in the first place. I need to work on that. I've also determined that scalping too short of a term can kill any profits I might have gained, very quickly.

Instead of posting trades here, I'm going to post some of my thoughts on what's going on with the market, so I can back later and see what I was thinking, right or wrong. Here's to an educational 2015.

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  #3 (permalink)
SF, CA/USA
 
Experience: Beginner
Platform: SC
Broker: Stage 5
Trading: ES, 6E, sometimes NQ, and occasionally CL
 
jackbravo's Avatar
 
Posts: 1,335 since Jun 2014
Thanks: 4,255 given, 2,379 received


In thinking about the market, I would like to develop a fundamental view that I use to trade the price action. From reading the ES thread, I know that I'm far away from really understanding all the moving parts and how they fit together. I'm not sure whether to be heartened or disheartened by the fact that it seems many people who have been trading for several years also don't seem to have every put together. Anyway, here are some thoughts, many of which may be contradictory. Really, this is just an exercise for myself:

FUNDAMENTALS

Positive
1] The economy has been on a general uptrend, despite whatever manipulations are going on with the numbers. I know this because I can see in my line of work a significant amount of job openings compared to 2 years ago, something like 2-3x.
2] With the rest of world's economy slumping, the differential is positive for US stocks
3] The bond market seems to be at the top of a bubble. With the FED possibly/probably increasing interest rates soon, there's a high interest rate risk, which will mean a large sell-off in bonds. This is bullish for stocks.
4] Looks like more Japan QE might be coming. Weaker yen is bullish for stocks.
5] ECB QE is likely bullish for US
6] Race to negative interest rates around the world makes the US the destination for yield
7] Seasonality, including 2015, post-midterm elections, is positive for the year

Negative
1] A deflationary world economy might have deleterious effects on US economy.
2] Crashing oil and commodity prices suggest decreased demand for stuff. People can't afford to buy stuff??


TECHNICAL

Positive
1] Cumulative TICK is increasing suggesting buying across the board


2] McClellan oscillator, though has been in a downtrend, is starting to point up


3] ES 1960 support has been holding strong



Negative
1] Increased volatility in overbought long term conditions suggest market is topping. Since the December, the 21DEMA of VIX has been steadily increasing




2] Weakness on the monthly charts, with that doji at the top


3] DAX has been making lower highs and lower lows recently.


4] Gold has bounced off its bottom, making an inverted head and shoulders, with support around 1180.



SENTIMENT

1] Market sentiment seems to be neutral, with lower put/call ratio of around 0.67
2] Tiger is bullish, which suggests the institutions are likely bullish as well.

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  #4 (permalink)
SF, CA/USA
 
Experience: Beginner
Platform: SC
Broker: Stage 5
Trading: ES, 6E, sometimes NQ, and occasionally CL
 
jackbravo's Avatar
 
Posts: 1,335 since Jun 2014
Thanks: 4,255 given, 2,379 received

Looks like today puts us back in the trading range. The main questions I have been asking myself:

Is there any impetus to buy equities right now?

Yes
Bonds are currently high risk, low yield.
Gold has a lot of pressure on it, and no yield.
Oil is wild.
Economic numbers are great.
Incoming global QE
Where else are you going to put your money, cash?
Positive cumulative tick

No
Dollar may be hurting earnings this year.
High risk global environment.
Classic market leaders like oil, yield, and dry shipping suggest a decline imminent.
VIX is staying high, though under 20

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  #5 (permalink)
Washington DC
 
Experience: Advanced
Platform: TT
Broker: Dorman
Trading: US Treasuries
 
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Posts: 126 since Sep 2009
Thanks: 156 given, 290 received

you're looking at a ton of stuff. i don't want to steer you away from your method but once upon a time i was looking at too many things too. this is just a suggestion so you can take it with a grain of salt but you might want to have a process of how you organize these views and a way for these views becoming actionable.

For instance, every morning I look at the fundamental and big picture (weekly and daily charts); big picture fundamentals pointing up but we're now back in a range from a rejection on Friday. Coupled with the negative news out of Greece we're probably going back down to the bottom of range at 1980. probably safe to trade short with all the fear in the market.

Followed by the immediate term 60 min charts where i focus strictly on globex highs/lows, previous day highs/lows, and major swings. It doesn't have to be these, you can put up pivots if you want and just trade these. Trade only these areas to prevent you from taking emotionally-driven or adrenaline-junkie trades. Remember these areas and ingrain in your brain.

Short term, when price reaches these areas and present favorable price action, go for it.

I know I just did a hand wave overview that might not make sense but you really want to be a sniper in the markets. 1) know what continent you're on 2) know where your enemy is and 3) now you look through your scope and go for the kill. Just my 2 cents FWIW.

In trading, shortcuts lead to the longest path possible.
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  #6 (permalink)
MSP MN
 
 
Posts: 11 since Dec 2014
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Jackbravo,

I could not keep my eye on all that you have there. My eyes would have fallen out long ago, even before LCD screens were invented. Best of luck in your trading.

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  #7 (permalink)
SF, CA/USA
 
Experience: Beginner
Platform: SC
Broker: Stage 5
Trading: ES, 6E, sometimes NQ, and occasionally CL
 
jackbravo's Avatar
 
Posts: 1,335 since Jun 2014
Thanks: 4,255 given, 2,379 received


fminus View Post
you're looking at a ton of stuff. i don't want to steer you away from your method but once upon a time i was looking at too many things too. this is just a suggestion so you can take it with a grain of salt but you might want to have a process of how you organize these views and a way for these views becoming actionable.

For instance, every morning I look at the fundamental and big picture (weekly and daily charts); big picture fundamentals pointing up but we're now back in a range from a rejection on Friday. Coupled with the negative news out of Greece we're probably going back down to the bottom of range at 1980. probably safe to trade short with all the fear in the market.

Followed by the immediate term 60 min charts where i focus strictly on globex highs/lows, previous day highs/lows, and major swings. It doesn't have to be these, you can put up pivots if you want and just trade these. Trade only these areas to prevent you from taking emotionally-driven or adrenaline-junkie trades. Remember these areas and ingrain in your brain.

Short term, when price reaches these areas and present favorable price action, go for it.

I know I just did a hand wave overview that might not make sense but you really want to be a sniper in the markets. 1) know what continent you're on 2) know where your enemy is and 3) now you look through your scope and go for the kill. Just my 2 cents FWIW.

yea, I definitely need more organization. I haven't traded the ES for a while now due to account drawdown. So I'm just exercising my thought process. Thanks for your suggestions.

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  #8 (permalink)
SF, CA/USA
 
Experience: Beginner
Platform: SC
Broker: Stage 5
Trading: ES, 6E, sometimes NQ, and occasionally CL
 
jackbravo's Avatar
 
Posts: 1,335 since Jun 2014
Thanks: 4,255 given, 2,379 received


fcb98292 View Post
Jackbravo,

I could not keep my eye on all that you have there. My eyes would have fallen out long ago, even before LCD screens were invented. Best of luck in your trading.

I guess I should get more than one screen.

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  #9 (permalink)
Washington DC
 
Experience: Advanced
Platform: TT
Broker: Dorman
Trading: US Treasuries
 
fminus's Avatar
 
Posts: 126 since Sep 2009
Thanks: 156 given, 290 received


jackbravo View Post
yea, I definitely need more organization. I haven't traded the ES for a while now due to account drawdown. So I'm just exercising my thought process. Thanks for your suggestions.

I'm sorry to hear that.


jackbravo View Post
I guess I should get more than one screen.

Ok 1 more screen maybe but there is no direct correlation with more monitors making you more profitable. It might help to prevent flipping charts and the ease just looking and seeing what you need, but it's more of a convenience thing.


I looked over your journal and you have to pick your spots to trade wisely. If you're finding yourself on the wrong side of trades or confused which way to trade, try this:

- Create a weekly chart and put 5, 20, 50, 100, 200 MAs of your choice. Are we 1-time framing or in a range?
- Create a daily chart and put 5, 20, 50, 100, 200 MAs of your choice. Are we 1-time framing or in a range?

Which way is the wind blowing? Not which way do you think it's going to go, I mean in the here and now which way is it going? Only trade long when above 5ma. Only trade short when below 5ma. And if we're in a range just trade both ends of the range.

I hope you don't take my simple advice as offensive, but sometimes the simplicity is key. Too much complicated charts and crap all over the place and either 1) your brain will ignore it or 2) you'll have analysis paralysis and not pull the trigger when you need to or 3) confuse yourself and find yourself trading the middle of nowhere wondering why the hell you took a trade.

Hope this helps.

In trading, shortcuts lead to the longest path possible.
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  #10 (permalink)
SF, CA/USA
 
Experience: Beginner
Platform: SC
Broker: Stage 5
Trading: ES, 6E, sometimes NQ, and occasionally CL
 
jackbravo's Avatar
 
Posts: 1,335 since Jun 2014
Thanks: 4,255 given, 2,379 received



fminus View Post

I looked over your journal and you have to pick your spots to trade wisely. If you're finding yourself on the wrong side of trades or confused which way to trade, try this:

- Create a weekly chart and put 5, 20, 50, 100, 200 MAs of your choice. Are we 1-time framing or in a range?
- Create a daily chart and put 5, 20, 50, 100, 200 MAs of your choice. Are we 1-time framing or in a range?

Which way is the wind blowing? Not which way do you think it's going to go, I mean in the here and now which way is it going? Only trade long when above 5ma. Only trade short when below 5ma. And if we're in a range just trade both ends of the range.

I hope you don't take my simple advice as offensive, but sometimes the simplicity is key. Too much complicated charts and crap all over the place and either 1) your brain will ignore it or 2) you'll have analysis paralysis and not pull the trigger when you need to or 3) confuse yourself and find yourself trading the middle of nowhere wondering why the hell you took a trade.

Hope this helps.


No offense taken at all. I appreciate all advice. I actually have those MAs (5, 21, 50 ema; 50, 125, 200 ma) on my longer term charts. I've getting killed I think because I'm trading too short of a time-frame - so for example, longer time frame is up, but the day is down - and i'm trading during the day, so i'm watching every tick against me and freaking out.

Trading the m6e has really really helped with trading longer time frames, since you can't scalp that contract due to slippage and percentage of commission to tick size. I'm still a long way from being very profitable, but there's a new issue which has cropped up that's taking away the profit. After a multi-day trade where I've made maybe 150pips, I'll revert back to short-time frame trading and wipe away all my profit within 20minutes. Plus take a loss. It's crazy, and goes to show me that my instinct to trade shorter time frames is completely wrong. So I'm trying to get over that, seeing if maybe momentum (range) bars might be more helpful to push to longer time frame trading.

Thanks again for your commments!

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