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Apologies for not keeping this going, was spending a lot of time doing the posts and due to work commitments outside of trading have been finding it hard to juggle it all. Will try to get this journal back on track in the next few weeks. Hope anyone trading eurostoxx/bund has been doing well!
Loooooooong day. But aren't they all. Still not getting to work early enough so am going back to working from home where I can roll out of bed, dunk my head in cold water and get to trading!
No longer trade eurostoxx as the bund is enough for me to concentrate on. I don't have the brain power to concentrate on both, and as such keep missing signals!
Key S/R levels.
7-8am UK time. Make a box around that and stretch it for the entire day.
8-9 UK time. Bigger volume kicks in for the London open. Same as above.
The first 3 minutes of trading at 7am UK time. Horizontal lines-stretched out across the day.
Developing bell curve on the Volume Profile (VP).
Naked POCs on previous trading days and the edges of bell curves on previous trading days where no-one is interested in trading.
Volume vacuums that have occurred on the the VP over the last few days.
5 day composite VP with the volume gaps/high volume nodes.
The normal intraday highs and lows.
On 3 min chart-bars that have big volume spurts. If these bars get beaten, then the price levels act as S/R.
Support and resistance levels are key. I do not get involved if price is trading near/around a VPOC UNLESS my signals come through with decent volume in favour of the move combined with a decent price move to show that buyers/sellers are truly in control and are making a real attempt to move away. Almost like a breakout. But this is definitely not my preference.
The Support/Resistance (S/R) levels provide the background reason why traders might be reacting, and the volume surge with price confirms it.
It can be frustrating-there are many price moves that do so in a volume vacuum, but I feel less comfortable with these as it shows a lack of commitment from traders. As such, I have less of an understanding of their dynamics.
Use a combination of Volume profile, tick charts (private settings) with volume histogram, a tick volume chart and Jigsaw DOM for entries.
Preferred trade is to get a signal off my tick charts after a move as it retraces back (a hook trade some people call them) and then it resumes the move with decent volume.
The tick charts are my main entries. Have started using Jigsaw to help with breakouts. Look for big numbers to come in for my breakout direction combined with limit orders on the other side being pulled. It happens fast-I missed it today.
One thing I need to keep reminding myself-look at the 15 min chart with VP to gain a constant perspective of where you are. Focussing on short term charts all day can make you forget the bigger picture. Occasionally glance at the 1 hour for reference for those longer term prices and VP areas.
Early analysis: Inside bar yesterday on the daily. Potential for a big move as both sides remain committed. Looks like another inside bar today at time of writing. Could lead to some very strong moves in next few days. Not that I manage to stick with them!
Today's trading:
An annoying day-no trades. Missed loads of signals as I was too slow. Some bouncing off the S/R levels for early morning trades as detailed above.
I missed 2 breakout moves as was too slow despite seeing my signs on Jigsaw.
Breakouts are dangerous though-as such I look to my 3 min chart for extra confirmation that one is occurring. Am looking for a close on the 3 min above the breakout level to prove it's not a fake. This is combined with a good move in price action and decent volume (always decent volume!).
To be fair, if I had used my 3 min breakout rule properly then I would have been in the trades anyway! Although a lot more wary of the second one due to longer term price resistance (near multi day highs that have not been breached. See my note below on breakouts. So far we've had 3 price touches at 153.30 with price driven down afterwards. If that is broken to the upside then hold on to your hats.
One note about breakouts.
I am aware that they are heavily gamed/watched.
Strong breakouts (in my opinion) are most likely to occur when there has been a couple of tests and rejections of the area first. The reason being that it shows more traders are committed against the breakout direction. As they rush to close their losing positions when the breakout occurs, this will drive the move even higher as they combine with traders like me.
First chart-
Missed morning trades: First circle on the left: Price coming off 7-8am resistance box with good price action. Corresponding increase in volume with left hand arrow shows commitment.
Second trade-same again but the Resistance is now a simple 1-2-3 with price action/volume backing me up.
Second chart: Tick chart showing the breakout at approx 1.15pm UK time. Strong price action with bar (and more importantly behind it), and check out that volume for commitment of traders.
Third chart: That same breakout but on the 3 min chart. Entry would have been open of the candle with a stop just underneath the breakout bar.
Prices suck in a range. Have managed to break the previous 3 longer term highs but has not broken through. Could very well be a stop run before heading lower.
Trading in a range-as stated I don't like to trade around the VPO as there is lots of chop. ANd if the definition of a VPOC is an agreement on price then why do I want to trade there?
I should add that the earlier bounce higher which started at 153.16 was a hit of yesterday's VPOC and the 3 min open price range. That opening range really is important I think.... Anyone have any thoughts on this?
One trade taken today-short.
I did not enter the breakout (chart 1) as I did not see people pile in long, nor did I see a big step away from sell orders.
Also, I was looking at my 3 min close above the level with strong price movement and it definitely didn't show that (chart 1). Not to say that price may not have continued higher. It may well have done, and I may well have gone long.
I did not go short at this point as I am trying to cure myself of catching the falling knife etcetc. I firmly believe that I do this for 2 reasons:
1) The increased risk reward for when you are correct (ignoring the amount of times you are wrong, and ignoring the trend following trades that you miss out on because of this mindset)
2) The rather more complicated psychological scenario of being right when everyone else is wrong. Tied in with ego-catching something that hardly anyone else spotted. Pat yourself on the back etc. Buying /selling on pullbacks is just too easy isn't it?
Chart 2 is a trade I didn't take but which fits with my trading plan. Came after the failed breakout-had all the hallmarks but it was a major price support level on the day+at the bottom of the bell curve-I just thought it might retrace and I'd get stopped out. The purple line represents the 3 minute high volume bar that had been immediately beaten to the downside, implying that people were trapped. You can see price retrace back up there+into the VPOC before showing you where it wants to go.
Chart 3-took this trade. Retrace into VPOC price dawdles around then bam, price action hits with good volume. A great example of trend following-only take the trade when price, volume and levels are all perfectly aligned, and the price action shows you that it wants to go. The preceding price bars to my signal candle are all saying nothing-there is no commitment to any direction at that particular point in time.
Didn't take this (as usual) but is a great example of intraday price Support and Resistance.
To summarise, price moves higher than two areas where price has moved lower from very quickly.
Price then beats these levels, and this zone now becomes resistance and price bounces away well.
Price then moves higher, and hits the 3 min candle volume line. This line was drawn at the start of a high volume 3 min candle that was then beaten to the downside. As such, this area is now resistance as those who went long who have been beaten will be looking to close their long position by selling to close when price returns (clearly a lot of the big boys don't use stops?!). Price has turned almost to the point. Did I take it? No! I'd much rather be a smart arse who says things in hindsight and who doesn't trade.
