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Papa's Trading Journal

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  #101 (permalink)
 papa15 
Wake Forest, NC
 
Experience: Intermediate
Platform: Sierra Charts, Investor RT, Ninja Trader
Broker: VanKar
Trading: NQ
 
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gulabv View Post
Excellent trading papa15 !!

Do you define 30 minute ORB as 9:00 - 9:30 eastern time?
Where do you place your stop for the ORB trades?

Thanks for your journal it is inspiring to read...

gulabv

Thanks gulabv for the kind words. The ORB for opening is defined to be 8:30-9:00 Eastern. There is a sister trade for the closing and the time period is 1:30-2:00 pm Eastern for that. Jeff Castille started discussing these trades in his All You Need thread last Nov. It starts about page 190 or so and goes for about 25-30 pages. You determine what size target and stop to use for these trades. I typically use 6-10 ticks profit and 12-15 tick stop. I know the R:R is not the optimum, and as I gain more experience, I will try to adjust it. I hope that helps.....

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  #102 (permalink)
 papa15 
Wake Forest, NC
 
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I forgot to post Wednesday that I was taking Thursday off....that is why I did the quarterly analysis on Wednesday...

Came back to find oil has gone up a lot since Wednesday. Overnight it was up about a $1.25/barrel. I set up an opening range play, was filled and profit target quickly hit. At 9:30 had an inside bar. I expected more downside movement, but was a little leery due to upcoming news and the cluster of bars showing price had difficulty getting through 80.95-81.00. I went ahead with the trade setup, was filled at 9:42. Price did not go down quickly, so I reduced the profit target. It was filled. After news, prices dropped rapidly to the half way gap point, and I thought about quitting. In fact I was writing a reply to the thread announcing I was done for the day when I looked back at the charts and saw price had reversed up strongly and was approaching the upper ORB line. I set up a trade and was stopped in. Before I could adjust the profit target, the bottom fell out. I moved the stop (say it isn't so) and then moved it some more and before you knew it I was in over my head. This happened to me on Aug 1st and lead to the monster loss. Today I cut the trade and it is not a monster loss but it is significantly bigger than what it should have been. It is all my fault. I had reached a daily goal I am comfortable with and had decided to quit. But I thought I might add to the total a bit and went to the well once too often. I compounded that mistake with the stop management. So on one trade there were two mistakes that really hurt.

We all make mistakes. I get too comfortable with trading sometimes and do silly things like move stops. They are there for a reason, to get you out of a trade when you know you are wrong and to keep the loss to a value you are comfortable with. The stop can not serve its purpose if you don't let it. I didn't do that today and I paid for it.

This time I really am quitting for the day.

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  #103 (permalink)
 papa15 
Wake Forest, NC
 
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Spent some time thinking over the weekend about how and why I let another trade get away from me. That is the third time this year I moved/canceled stops and had it turn into a much larger than normal loss. Back when I started the thread, I noted honoring stops as a weakness I needed to work on; it still is. The unfortunate thing is, there are times I move the stop and the trade turns around and works. That tends to reinforce a bad habit. Initial stop placement is the key, but once properly put, it needs to stay in place.

Today was a first for me. The bar that closed at 9am was an inside bar, so I traded it. The bar that closed at 8:46 defined the opening range high and low. I ignored those points and went with the inside bar. I noted that Friday's high and the opening range high were nearly identical so I expected some resistance in that area. I took profits there and waited for the market to show its hand. Didn't have to wait long as it went on to new highs. I waited until after news at 10 am before considering any more trades. At 10:30 an inside bar formed and I set up the trade. The profit target was hit.

I decided 2 good trades was enough for today and quit trading.

I added in a 400 tick chart with the Keltner Channel on it. I am just watching it. Initially, I think this may help with stop placement. Previously I have traded tick charts, using price action for entries (hh, ll breakouts) and over the next 2 weeks I may practice those again.

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  #104 (permalink)
 papa15 
Wake Forest, NC
 
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Oil was up again overnight. Who knows why? From what I read there is an abundant supply and demand is not excessive, but price keeps going up.....

Anyway, I was leery of the price runup, so when price immediately broke the opening range high, I did not enter a position. Factors that crossed my mind were the very late runup in ES and YM. ES was up about 3-4 points, then quickly went up to 8-9.5. I was concerned with a pullback after such a quick move. Shortly after the open, price immediately turned down and would have given a lot of heat. It did eventually go up and a profit target would have been hit, but about 20 ticks heat would have been taken (which would have meant a stop loss most likely). At 9:30, price formed a reversal bar. I put in a sell stop beneath it, was filled and profit target hit. Price went below the opening price, reversed up for a bit and then rolled over. I put in a sell stop below the recent low, was filled and my profit target hit. This second trade was based on a combination of gap fill expectancy and use of the 400 tick chart. I used a smaller profit target since it was all I needed to meet my daily goal and it was using a "new" chart. I have traded this method before, so it really is not totally new.

Anyway, there was news coming out at 10 am, I had reached my profit target by 9:40 so I quit for the day.

I know "that this time it is different", but most major market corrections have occurred in October. Most happen after the options expiration point for some reason. I have no idea if we will see another correction this month (I expected stock prices to fall in September and it was the best September performance in 70 years). My only point is to caution all to not get complacent and expect prices to go up and up....but with the election coming, who knows what is really driving the prices, just trade what you see and be vigilant.

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  #105 (permalink)
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papa15 View Post
Oil was up again overnight. Who knows why? From what I read there is an abundant supply and demand is not excessive, but price keeps going up.....

I am assuming you are not a fundamental trader. So don't worry about why. What do your charts say? Was price moving up or down? Seems to me price was clearly moving up.


Quoting 
Anyway, I was leery of the price runup

Why? I mean I know you somewhat expressed why, but why truly? Just because price has gone up 100 ticks doesn't mean it can't go another 100 ticks. Just because price is up 5 days in a row doesn't mean it can't be up 6 days in a row.

"Trade what you see, not what you think"

Just some thought-provoking questions

Mike

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  #106 (permalink)
 papa15 
Wake Forest, NC
 
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Big Mike View Post
I am assuming you are not a fundamental trader. So don't worry about why. What do your charts say? Was price moving up or down? Seems to me price was clearly moving up.


Why? I mean I know you somewhat expressed why, but why truly? Just because price has gone up 100 ticks doesn't mean it can't go another 100 ticks. Just because price is up 5 days in a row doesn't mean it can't be up 6 days in a row.

"Trade what you see, not what you think"

Just some thought-provoking questions

Mike

Mike
I am definitely not a fundamental trader. I do like to trade what I see but when I see price run away from yesterday's close at the open, I am much more cautious....for whatever the reason, gaps have a tendency to attempt to close (I have noticed on CL that price will often go as far as the half gap and then run up....sort of like today)


I fully agree with trade what you see, as stated in my daily post, but I also know gravity works very well and what is up 100-150 ticks overnight, can come back down very fast....something that is built quickly tends not to last very long. I know Mr Market can go where he wants to when he wants to for as long as he wants to, but I get very cautious when I see big moves, especially when I don't know of a good reason for the move.

I truly don't care why the market has moved (one of the best comedy shows on tv is to watch the CNBC pundits explain why something has happened, most of their reasons don't seem logical but they have to say something). I just get a little more cautious after a big move.....just me

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  #107 (permalink)
 papa15 
Wake Forest, NC
 
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This is Wednesday, which means the oil inventory report is released at 10:30. I have had some issues trading on Wednesdays and reminded myself that I would not trade the IB setup until after the inventory report.

The opening range breakout provided a good setup this morning and I took it. The high price of the 0830-9am period was 82.61. Opening price was 82.55 at 9am, and yesterday's close was 82.83. I set my entry price at 82.62, was filled and the market kept going up towards the gap fill. My profit target was hit fairly quickly, with no heat at all. I left the computer to do my daily workout, came back in time for the inventory report, and watched the response. No IBs formed by 11:45, so I quit for the day. Quite content.

I am enjoying watching the 400 tick chart. I am forming some guidelines/rules that could be used in trading the setups, but not ready for prime time yet.

I also changed my charts ever so slightly. I turned a red down candle into a filled green candle. An up candle is "hollow". Just making it more "eye pleasing" to me.

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  #108 (permalink)
 papa15 
Wake Forest, NC
 
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Oil continues its climb. Yesterday's close was 83.24, it opened at 84.36, and the half gap fill was at 83.80. From 8:30 to 9 am, oil did a rapid rise in price from 83.47 to 84.38, and opened at 84.36. I just forgot about any opening range play with that meteoric rise. Again, I just don't trust something that goes up that fast. ES, NQ, and YM were not showing that sort of bullish power, so I set my mind on playing a retracement towards the half gap fill.

Price initially dipped after the open, down to about 84.27, then went up towards the high of 84.43. I put in a sell stop below the 84.27 mark, was filled and profit target hit. Price dropped to about 84.0, retraced up to around 84.28. I put in another sell below the 84.06 mark, was filled and profit target hit. My daily goal was met, so I quit for the day.

These trades used a combination of price tending to close the half gap and the 400 tick chart to define entries. They are not inside bar trades at all. I consider this the third tool in the bag. The first is the IB trade and the second is the opening range breakout. If I traded in the afternoon, I would add the closing range breakout. I try not to blindly use these methods, but add in a healthy dose of discretion and judgement in order to improve the results.

I am still trying to refine the use of the 400 tick chart to make it a "stand-alone" component of my trading. The huge drop that has occurred since I closed my second trade has shown plenty of opportunities for an entry following a retrace, and on the use of a trailing stop. I want to keep practising this technique. One of my weaknesses has been not following trends very well; this technique offers me a way to do that.

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  #109 (permalink)
 papa15 
Wake Forest, NC
 
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Well, I smacked myself in the pocketbook again. Had a good week going, but finished poorly. I started today with a successful ORB trade. CL was in an obvious uptrend (higher highs, higher lows, higher closes on the 15 min chart). Saw CL go below the 21 ema on the 400 tick chart, retrace up and start back down. Put in a sell stop below the previous low, was filled and then the price started back up.....stopped out. Had another identical setup about 10 minutes later and for some reason, I tried that one also....not a smart idea. Ended up the week breakeven. For that, I am thankful (it could have been worse).

Lesson learned: stay with the trend on the higher time frame. It is obvious, but in the heat of trading, it is easy to forget.

Also, stay with the proven technique. I let my desire for "one more trade" get in the way of common sense today. I need to step back and take a deep breath and remember the big picture....

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  #110 (permalink)
 papa15 
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I have been doing a lot of thinking since I quit trading for the day. Last week and this week I traded well during the week only to have a poor trading day on Friday. In both cases, the poor trading was a result of using a technique that had not really been tested fully (last week it was trying to capture both sides of the opening range break and this week it was using a 400 tick trade counter to the larger trend). These trades should not have been taken. Part of the issue is my desire to make more. The question revolves around when is enough really enough.

My situation is different than most others; I don't trade to have money to pay bills and live off of. I am trying to accumulate money for grandchildren to go to college and to have extra to support missions. If I trade until I lose, as I have done the past two weeks, then I don't make progress. A major issue here is my losing days are larger than my winning days. Mike has warned on multiple occasions that this will not support long term profitability. I am working on this issue.

In the mean time, I am going to revert to a simpler money management plan. I have a template that I got from Rockwell Trading a while back. One of their suggestions was to trade to a weekly target that is reasonably achievable and then quit for the week. Once you have increased your account an acceptable amount, increase the number of contracts. Don't increase the weekly per contract goal; let the increased number of contracts increase the weekly goal.

Anyway, I am attaching my first attempt at this money management technique. My weekly goal is going to be $300 and my delta will be $4000. I am going to use the opening range technique and inside bar on the 15 min chart as my only trading techniques. The last two weeks I more than made this goal but then gave it back. If I stick to this plan, I should more than make my long term account goal.

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