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I'm not familiar with your journal but saw the webinar invite and came in for a quick peek. I quickly glanced at the first and last pages, and noticed quite a few similarities to my own trading style. You originally requested feedback and im writing this up in hopes you still welcome input. Im by no means a supertrader guru millionaire so the following are just my personal thoughts. I also sincerely hope you or any other readers dont take this as negative critique.
Quick rundown on my style: i am 100% discretionary and mainly trade the ES now(CL previously). I probably go against all the posts on here and have no rules or triggers apart from only taking trades that seem like good risk tradeoffs given the current situation and context. I dont believe in applying static rules to a dynamic market- and believe that even at best it still shortens your potential returns. Take your losses tho, religiously. But place them smart (always have 1 emergency stop further away, manually exit on a churn your direction if possible). Make sure you give the trade sufficient breathing room tho, and remember 5x 5tick stops costs you more than 1x 20tick stop. Theres a great thread in here about that very topic which is a great read.
Anyway, I use simple 30min candles and volprofile to give me context (trend/chop and likely conflict/reversal S/R areas). I also watch Overnight and yday H/L and IBL/H. I sprinkle a little volume profile on top, but mostly to avoid entering trades in the thicker areas where the POC is as find these areas get churned and traded back and forth a lot, slowly.. bobbing between minor win/loss before it finally moves. Probably great place to scalp back and forth but i prefer to avoid them for entries. Bottoms or tops of a distribution area can be very nice long/short opportunities back to the other end of the distribution(passing through the poc) or potential breakout areas if the outer ends dont hold(spiking up/down to the next potential value area/chopzone). I love the Donchian channels tho, and can see you use something similar too. I use them purely to visualise and make it easier to spot previous highs/lows. Darvas(standard NT indy) also produces some interesting levels for me, as long as im concious about it repainting.
I subscribe heavily to the Price Action theory, but purely the simple part about how HH/HL /LL/LH's move. Meaning ZIG-Zag, or 1 full leg, followed by 1 halfback, then another full+half etc. If price got rejected at a point previously, theres most likely a reason for it. To me its a likely S/R area whether i spotted it in my prep or not(S ofcourse becomes R and vice versa !). If price has been rejected there multiple times(even prior day(s)) it adds more weight and is often a good place to consider taking some contracts off or even closing out if it turns out to become a big brawl between bulls and bears. Let the others with deep pockets do the fighting, join in on the drag once the battle is won instead of volunteering for massacre-duty in the front lines.
I dont believe in anything that changes when you modify your timeframe (moving averages, ANY oscilator, in fact most indicators..). For that reason i dont believe too much in Brooks method either, as it just doesnt resonate with me to look for dojis, wicks, hammers and tails and whatnot on a chart that will look completely different as soon as you only add 100 vol, or 1 extra minute etc. I dont mean to ruffle any Brooks's followers feathers - and I'm definitely not contesting its validity- im just stating it doesnt make sense to me personally
I do however love the vwap. By its very definition it is the avg. price("fair") and brokers offering "guaranteed vwap" orders and such certainly validifies its use for me. The effect(which is the only thing really relevant to me) is that price often reacts there and more often than not bounces off it to the tick, or somewhere pretty near. Another good use of the vwap for me is to _prefer_ shorts when price is below, and longs when it is above.
I used to fish for small 10-15 ticks in "zoomed in" charts. Once i started looking at the bigger picture life got a lot better. Using the 30min has allowed me to better identify where price currently is, and where it probably is attempting to reach. As a result my targets have grown substantially, while i've managed to apply very low risks. I use "zoomed in" entry charts(2min or 900tick) to pick my entries. I also use Jigsaw DOM and love watching what "actually" goes on throughout the day(id fall asleep without it) and has helped me stay out of bad trades i would have taken without it. Most importantly perhaps i watch the internals- well, 1 internal mainly. I always try to time my entry with the NYSE ^Tick and deeply recommend any ES trader to look into it and other internals. Watching YM and NQ can imo also provide a huge clue whether there is consensus in a synced move or whether they are fighting eachother.
With this in mind, ive edited one of your latter charts from June 20th and added a few observations and attached it(my inputs are in purple).
First thing that struck me is that my charts used to look similar to this. Its almost eerie how often i would end up buying the highs or selling the lows and then puking my stops out on the pullback(which of course led to the classic "stop taken out to the tick then reverse" scenario more than i care to admit). Realizing this was one of my huge "aha" moments personally. What this resulted in for me is that i try to only get in on pullbacks. In the chart your Trade#1 was perfect- a half back leg up on downtrending move. Trade# 2 and #3 are classic buy high/sell low mistake-trades ive had too many of. A very helpful indicator(i usually steer as clear from indicators as i can, they only mess up the view and serve as distractions) was TMFT's MultiEMA21 which is around here somewhere. I stripped it down to only 3-4 emas, and while i dont believe in MA's per se - this one helped me tremendously on my 2min entry chart. When its yellow, thats usually the time to consider a trade. Not when its been red or green for 5+ bars.. ill add a pic to illustrate but please, please - do not mistake this for a green/red light trigger..
Secondly, I'm not sure what your overall bias was here, but as mentioned i try to go(and stay) with the 30min trend after a nice pullback- any counter to that is a _higher_ risk trade for me- which i still occasionally get suckered into, but then with a very nice/tight stop location nearby that can justify the higher risk. Now, even in uptrends moves get exhausted, and theres a lot of ticks to be made on the reverse back down..(and vice versa) - but those are generally quite risky and i'd need to see a very good reason/cheap entry to try and catch the "normalization" move back to mean where chop often shows up to fuel the next move. However, being up a few points in a early trending move on the 30min allows me to sit back and try to get a leg or three out of it before the trend flatlines. I used to panic when a 15 tick winning trade started coming back, and closed it out after giving back half my winnings. But if you read your context correctly and found a trend, thats actually where considering adding is a good idea- because more often than not its just a pullback and price keeps going. This is when you nail the big ones, and when you do - boy does it feel better than exiting with a 7 tick profit on a pullback that could have turned out something like my attached example2 pic.
My additions to your chart are the ones in purple, with some comments:
1. In what initially seems to have been a strong move up, this leg down extends beyond a normal "half back" move, nearly double bottoms the previous swinglow. This doesnt necessarily change my bullish bias at this point, but does definitely appear as a "red flag" and puts me more neutral ish. A trade here would be higher risk than normal, but the "short" stop down to the previous low could make it a viable/cheap long trade to attempt.
Looking at the previous lows however, there seems to be something causing a typical S/R behavior around 2086.25. Price struggled to break above it, then held it nicely in a classic S/R fashion. Had you been watching volprofile, there would most likely be a nice distribution top around that level- with a spike up.
2. After the initial leg down(1), instead of continuing the uptrend price price broke even lower taking out the previous swing lows which is a definitive "line in the sand" S/R level for me. This indicates to me a potential trendchange to the downside, at least in the short timeframe. I stress however that my definition of trend is what the 30min has been doing past couple of days/week(s) - same principal of HH/HL apply on the 30min. If the 30min were bullish, i would be looking for a "strong" leg up, half back pullback and then try to get in long there (didnt happen(yet?)on your chart).
3. The next leg down nearly took out another previous low. For me this indicates/confirms short bias, so now id wait for a 50% move back up (from the low, to the previous high marked 3.1). A short there would allow me to most likely lean on the bottom area of that previous move(where the "1" arrow is) and would expect that level to hold if this indeed is a developing short trend. The previous top at 3.1 would be my utter most extreme SL, but more likely id manually get out if (1) was violated, depending on the ^TICK and general context. The next two moves are smaller in distance, meaning id most likely would need to use previous swinghigh as stop areas instead of previous lows or even mids.
These are pretty perfect zig-zag (100% - 50% - 100% - 50%) moves even if the legs are fairly small/short. Following this amazing hindsight strategy, i would ideally get in at that pullback at 3.2 and stay in as long as i could for all the reasons mentioned above- perhaps even adding at 3.3 and even 3.4 if i was really ballsy that day and TICK, 30min etc were telling me to stay in and weather what is most likely a pullback before the spring really is "released" and the bulls realize they are trapped(resulting in stops popping, fueling the downmove).
Wow, so the short comment i intended to write turned into a proper wall of text. I apologize if this was too much or comes off as anything else than friendly observations/comments from a fellow aspiring trader.
Regardless i hope that the webinar is a success and your future trades even more so!
Edit: in our line of business theres too much snake oil and poseurs with "great" advice. I just wanted to clearify that the above is my theory, i all too rarely practice what i preach well enough tho... for all intents and purposes im attaching the real trades i did on the same day my bigger picture example was from.
Last edited by danielk; June 21st, 2016 at 08:51 AM.
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- Japan, up 1.2%
- China, up 0.7%
- Europe, up 0-0.6%
- Oil, down 1.9%
- Gold, down 1.1%
- Bonds, up 4/32
Overall sentiment is neutral.
Redbook released this morning, little bit better than previous period.
Yellen speaks at 10 am (16.00 CET)
Important price level
- 2096-97. SR level
- 2089-90. SR level (30 min)
- 2074-75. SR level (30 min), yesterday’s close, small opening gap
- 2054-55. SR level
Overnight made it’s high just above yesterday’s VWAP, then pulled back. It’s chopping sideways until the market opens.
There is a small opening gap which will be closed once price pulls back to the significant price level 2074-75.
Since I don’t trade around the news, I’ll wait for Yellen before my first trade.
I’m expecting price to be chopping sideway’s until then.
No idea what is going to happen after her speech.
If price price goes below the 2074-75 level, I will anticipate a further drop towards ADR low / weekly PP.
If price breaks the 2089-90 level, I will anticipate a further rise towards 2096-97 level.
If none of these levels get broken, I’ll be trading it as a range day.
The following 2 users say Thank You to GruttePier for this post:
- Overnight made its high just above yesterday’s VWAP, then pulled back. It’s chopping sideways since, waiting for the market to open
- Upon the open, price made a small new low just above yesterdays close (not filling the opening gap)
- Yellen is speaking now, price is barely moving. Opening gap is nearly filled, price then bounces off into the OR and finds resistance at OR mid / PP. This happens to be exactly at a trendline on the five minute. Price tests the 2074-75 level again, fails and pulls back towards the OR low making a lower high just below the PP. Seems like price is trapped between PP (/OR mid) and yesterday’s close / SR level. It’s chopping around the VWAP, 6 point range day sofar
- Price has tested the PP several times now and does not find momentum to break it. Minor TICK divergence and NQ (leading) is at LOD. Taking a short with small profit target around yesterday’s close, anticipating that price will keep on ranging (trade #1). Stopped out.
- Following up on my range bias, taking a short (trade #2) at OR high / IB high. Price goes higher a little more, then pulls back to below VWAP making a double bottom at -1SD. Price is pulling back. I’m expecting/hoping it will find resistance at PP. Very slow day. Price moves a little further towards 1SD, then tests VWAP and the trendline. Moment of truth for my trade idea, will the OR low / trendlevel hold? TICK looking weak which is good. There is goes. Next stop is the double bottom that should be taken out. It’s taken out by 1 tick. Moving my stop to measure move target and stoploss to about breakeven. Fed member Powell speaking in 30 mins, I don’t expect much firework until then. Stopped out
Despite my bias being ok, I did not end with a profit. In hindsight, I should have faded the price level 2074-75 that I mentioned in my prep. On the otherhand, Yellen was still speaking.
I don't want to risk more in this 8 point range day and I stop trading for today.
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Trade 1: -4 points
- VWAP trade
- TICK making small higher higs
- Short, 1 contract, risk 4 points, profit target at yesterday’s close
- Hindsight: Too bad, just didn’t work
Trade 2: -0.5 points
- Fade of extreme
- TICK not supporting
- Short, 1 contract, risk 4 points, profit target just above yesterday’s close
- Closed, -0.5 points
- Hindsight: Good excercise to practice patience
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