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Papa's Trading Journal
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Papa's Trading Journal

  #71 (permalink)
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Two fairly quick trades today. The first occurred at 9:02. An inside bar completed at 9 am on both the 10 min and 15 min charts. I set a sell stop 1 tick below the low of the IB and was stopped in and my profit target hit right away as prices took a tumble towards the gap fill. In fact, my sell stop executed at the selected price but slippage on the profit target added several ticks in my favor (first time that has happened). I have seen these quick moves up and down before but never been in a trade when it happened. The extra ticks were nice but I know it could just as easily been going through my stop loss the same way.....The second trade took place at 9:37. I missed the break below the inside bar at 9:30 (actually I let it go as I was a little biased the market would go up). I took the outside bar trade. I then watched prices keep going up and decided to call it a day.

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  #72 (permalink)
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It was bound to happen sooner or later

I had my first loss on an inside bar trade today. It was the 24th trade of the inside bar setup (not counting the outside bar ones), so no complaints from me. I must confess there was an IB trade in July I should have cut but I let it play out and it turned profitable. And truth be told, if I had done the same today, I would have ended up profitable also.

I did not have the stop loss below the IB. The range of the bar was too large for me to feel comfortable with that large of a stop loss. But as soon as I was stopped in to the trade on a buy stop, the market dropped rapidly. I moved the stop a little closer to the low of the IB and set back. The stop was hit. And the market went 2 more ticks down and reversed back up. So, just as baseball is a game of inches, trading is a game of ticks. Today 2 ticks was the difference between a loss and a win.

Looking back at the trade, there are lessons to be learned.
1. Market was down big overnight and the 10 am news was not good, so there was another drop just after 10. Just an overall negative atmosphere to the market. Quite honestly probably just best to walk away in that kind of an environment. My entry was a long, but it was above the open of the pit session.
2. The ranges of the bars was a bit larger than usual. Buyers obviously wanted to go up, but sellers wanted to go down. They were having a real tug of war. Overall, looking at the big picture, the market was in a wide range between 71.90 to 72.20 or so. If the range is larger than my comfort zone, walk away. Really the range issue is the reason behind my looking at the 10 min chart. Had I traded off that chart today, there would have been no trades....

Ready for the next trade.
Papa15

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  #73 (permalink)
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I want to start off by saying today was a profitable day on the bottom line. That being said, I took a couple of steps back in my trading.

I have noticed that when price closes outside a Keltner Channel (based on 1.5 ATR, 21 ema using H+L+C/3), price has a tendency to go back to the moving average. The way I practiced this, I would set a price well within the Keltner Channel so price would be on its way to the MA and then exit just shy of the MA. Such an opportunity presented itself at 8:50 this morning on the 10 min chart. I did a real money trade. I set the buy stop at 71.38 and was stopped in. MA at the time was about 71.57 or so. The prior bar also happened to be an inside bar. I watched with increasing concern as price went 2 ticks in my favor and then did a prompt drop all the way to 71.10. I held on. At 9:00 am the market opened at 71.16. Price took off toward the MA. As soon as I was in the green I went to the sidelines. Why? 1. I had no business in this trade. 2. I was just grateful the heat/pain was gone.

Next at 9:30 an inside bar formed. Price had made it to the MA, so with the negative funk over the market the last few days, I thought price would go back to the lower Keltner Channel line. I set a sell stop, was stopped in, watched prices go about 2 ticks in my favor and then just take off. I again held on, figuring in my self excusing way, the market is just going up in order to have a gap fill on the emini's...surely it will come back down. I held and held....getting closer to 10 am news on new housing. With the housing data from yesterday being bad, surely today's data would be bad also. The news spike at 10 am did get me out of the trade, but I forgot to cancel my stop loss. The market reversed and stopped me in. I flattened that trade for a profit.

I realized how blessed I was to be out with a profit after trading so poorly. First of all, I should not have done a real money trade on a technique I had not practiced in a while. Big Mike's 2 week rule is a good one. Second, this is a big news day. Jeff recommends not trading before the oil inventory report....another good practice I did not follow.

Finally, the oil inventory data was bearish, the market sold off hard, so you would expect a reaction. On the 15 min chart, an inside bar formed with the top of the IB right at the lower Keltner Channel band. Probability was high that prices would go in the up direction towards the MA. I set a buy stop, was stopped in and hit my profit target just seconds later. I used my reduced profit target rather than the MA, but if you look at a 15 min chart you will see the MA was touched.

The last 2 weeks have been very good because I stuck to a plan. I deviated some this week and the increased heat was the result, so back to what has worked....

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  #74 (permalink)
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After I quit trading yesterday, I reviewed the use of the Keltner Channels as an aid to trading. I found my mistake in yesterday's trading. Once price closes outside the Channel, you need to wait until price closes back inside the Channel before you consider entering a trade. Typically price will come back inside the channel, but in those instances where the market is moving strongly up or down, the price bars will tend to stay outside the channel. Frequently in those moves, price will make an excursion back into the channel but will then turn and go back outside. Once price closes within the channel, it has a strong tendency to move back to the moving average on which the channel is based.

Given all that, today on the 10 min chart, there was a strong response at the 8:30 weekly unemployment report and price took off outside the channel, but closed right at the channel line. The next candle formed an inside bar with price closing well inside the channel. I set a sell stop below the inside bar and gave it an extended target (at least for me) since the MA was much further than my normal target and yesterday's closing price was beyond that. Once my order was in, the next candle continued up (I like to see the initial move go away from the order point) then turned and stopped me in. Price continued to my profit target, giving very little heat. Price continued to fall all the way to below the lower band of the Keltner Channel and then the bar that closed at 9:30 was another inside bar that brought price back within the channel. I set my order, was stopped in and promptly hit my profit target. Price went to within 2 ticks of the MA, then turned down. The 9:50 bar was an inside bar. I set a sell stop beneath the low, was stopped in and quickly hit the profit target. I did use a reduced target since the lower channel bar was close by.

I did miss the opening inside bar play on the 15 min chart. Once the IB formed at 9am, price dropped rapidly below its low, before I could get the order put in. I don't want to chase the trade, nor do I want to set the order too far in advance as I have been burned doing that before. I would rather miss the trade.

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  #75 (permalink)
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Done for the Day and Week

Today had some important news early; GDP revision at 8:30 and Bernancke speaking at 10. Plus it is a summer Friday. Given that, I wanted to trade in between the news items giving them a 15 min cushion.

The GDP revision was not as "bad" as the pundits claimed it would be, so the market seemed to like the less bad news and oil spiked from about 73.22 to 73.69. On the 10 min chart, it closed right on the upper Keltner line. Ideally it would have closed outside the channel. The bar that closed at 8:50 was an inside bar that closed inside the channel. Yesterday's close was around 73.11, so the biased direction was for price to go down. I thought about putting the sell stop beneath the body of the 8:50 bar, but decided to stay with the IB guidelines of 1 tick beneath the low (beneath the wick). Was stopped in and the market chopped around a bit until 9am when it did a prompt drop, dropping all the way to 73.03 which was right on the lower Keltner line. The next bar was an inside bar that closed inside the channel, so I placed a buy stop above its high, was stopped in and price continued to rise to the profit target. I was content to stop.

For the week 11 of 12 trades were profitable. On 2 trades I took excessive heat but held on. In hindsight, better to cut the trade, regroup and start over rather than risk more than I should. I am willing to take the risks necessary to trade but do have limits and must remain within those in order to be prudent.

Adding the Keltner Channels has helped with the IB trades.

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Last edited by papa15; August 27th, 2010 at 11:55 AM.
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  #76 (permalink)
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Not a great start to the week

Last week was really successful. Had an inside bar loss but recovered and met weekly goal. Was expecting this week to follow suit, and it still can. However, not off to a great start.

Market went up last Friday on news that was not as bad as expected or just as a result of being oversold or for whatever reason. Overnight CL was in a downtrend. Had a inside bar on the 15 min chart right at the ma of the Keltner Channel. With Friday's close above, I was biased for prices to go up, but prices turned down instead. For whatever reason, and I guess it was just that I really expected the market to go up, I did not have a sell stop below the inside bar, so I missed that trade. Price went below the Keltner Channel and then the 9:30 bar closed below the channel. The 9:45 bar closed above it, and I expected prices to go to the vicinity of the MA, so I put a buy stop in. It was filled, but I noticed not as soon as it should have been (price had gone above the entry price by a tick or so without it filling.) Price went a couple of ticks in my favor and then dropped, went through the stop without it triggering, and continued down. I watched and price turned around and came back up above the stop and towards my entry price and then dropped again. It started up again, and was about at my entry price (I was going to cut the trade then) when my system informed me the stop was hit (several minutes prior). ToS did an upgrade over the weekend and it must not be running very well or they are having server problems. I tried one other trade but it was having execution problems as well...the trade did not trigger at all.

The loss today is my fault for 1. missing the IB trade 2. Putting real money on the Keltner Channel indication alone. It should be an assist in the IB trades. ToS's issues did not help matters, but are not the reason for the loss.

I quit until tomorrow. Hopefully ToS will resolve their problems by then.

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  #77 (permalink)
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Expectations and Trading Never Work


papa15 View Post
Market went up last Friday on news that was not as bad as expected or just as a result of being oversold or for whatever reason. Overnight CL was in a downtrend. Had a inside bar on the 15 min chart right at the ma of the Keltner Channel. With Friday's close above, I was biased for prices to go up, but prices turned down instead. For whatever reason, and I guess it was just that I really expected the market to go up, I did not have a sell stop below the inside bar, so I missed that trade. Price went below the Keltner Channel and then the 9:30 bar closed below the channel. The 9:45 bar closed above it, and I expected prices to go to the vicinity of the MA, so I put a buy stop in. It was filled, but I noticed not as soon as it should have been (price had gone above the entry price by a tick or so without it filling.) Price went a couple of ticks in my favor and then dropped, went through the stop without it triggering, and continued down. I watched and price turned around and came back up above the stop and towards my entry price and then dropped again. It started up again, and was about at my entry price (I was going to cut the trade then) when my system informed me the stop was hit (several minutes prior). ToS did an upgrade over the weekend and it must not be running very well or they are having server problems. I tried one other trade but it was having execution problems as well...the trade did not trigger at all.

The loss today is my fault for 1. missing the IB trade 2. Putting real money on the Keltner Channel indication alone. It should be an assist in the IB trades. ToS's issues did not help matters, but are not the reason for the loss.

I quit until tomorrow. Hopefully ToS will resolve their problems by then.

Hey Papa,

I noticed that you have a lot of expectations with your trading. I believe you should never have expectations what the market should do. That's a formula for destruction IMO. What I do is look to build a case, if the market goes up to this level then I will ss. If the market goes down to this level I will go long. Now I just don't lob an order out there, when getting close to the level of interest I then focus on my 1 min chart and that is mainly the time I look at that chart and look at the tape and Dom. I want to know how we got to that level. I decide on the O&P and then make my entry or not. I hope this makes sense and is helpful.

Cheers
itrade2win

 
  #78 (permalink)
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itrade2win
(love that name btw)
I tend to trade better when I use less indicators and go with the flow of the trade. For the inside bar method that means go with the breakout direction, be it up or down. I admit I have been looking at the early morning opening and being biased by yesterday's close, and thus have missed several trades that went the other direction, and recently I added the Keltner Channel and that has also biased me. I am leaning more to getting back to the core basic inside bar.

I used to use a smaller timeframe chart and build the case just as you do. I found more often than not I confused myself.....I seemed to be able to make the story go either way.....is it going to hit a resistance level and drop or is it going to go to a new high and thus meet the higher high breakout.....(would find myself like the kid the night before Christmas with visions of sugar plums).....the use of the IB has allowed me to get down to a very simple setup that I can explain in very few words and I have reduced the number of monitors, charts, etc....in fact, I often trade on just my laptop.

I hope this makes sense. I am finding this works for me.

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  #79 (permalink)
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Calling it a day

Opened up ToS and it appeared to be working normally....thankfully.

Prices down overnight, and this morning was loaded with news at unusual times. Home Prices was at 9am, Chicago PMI at 9:45 and consumer confidence at 10am. Volume yesterday was very light and the remainder of the week volume is expected to be light as those on the major trading desks get in the last of their summer vacations.

The news was released at 9 am and prices initially went down. I normally don't play the news but in this case I put in a buy stop above the previous candle in case the market reversed the inital reaction. It did and the trade worked. This was an outside bar play.

At 9:30, an inside bar formed. The closing price was outside the Keltner Channel. I put in a sell stop thinking prices would come back inside the Channel. Price did exactly that. This was an inside bar play.

I waited until after the 10 am news which turned out to be better than expected on consumer confidence. The market had an immediate positive reaction. I watched it 74.73 and then come back down. The candle ended with a small real body and a long wick, with the closing price inside the channel. I put in a sell stop beneath it, was stopped in and hit my profit target. I used a slightly smaller target on this trade. This was a reversal bar trade.

So, today I did all three of the setups Jeff discussed in his Three Setups thread. My favorite, and most used, is the inside bar trade.

I may be able to trade tomorrow but Thursday am taking my mom to a doctor's appointment and Friday is sure to be a very light volume day, so I probably will not trade either of those days.

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  #80 (permalink)
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Good job papa. You may want to read @Fat Tails thread on volatility, I think he discusses day of week volatility (namely Friday).

Mike

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