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Thought I'd be clever using my name within the title....
Using Mack's PATs as well as a few tidbits from Al Brooks, Vince Virgil's journal- I'm making this journal to give some accountability to my journey.
I worked for an investment bank back in the late 2000's right out of school. It was mostly back office operations but have always taken an interest in the world of finance ever since high school. I also worked as a financial adviser for about two years, licensed to sell insurance and investment products but the hassle of clients made it less than ideal for what I wanted to pursue ever since high school - and that was to make a living for myself trading. Right now I lecture full-time at a University and have even run my own small business importing jiu jitsu and MMA gear to South Korea.
Since I do have a lot of free time on my hands I am able to invest a lot of time and effort into studying and sim-trading. I won't get into it here but I decided on the ES for many reasons.
I've been swing and momentum trading equities for about 2 years with reasonably good success (using price action as well). I studied a few books on futures for about a month before sim trading 2 weeks ago.
I need to work on discipline. A lot of my entries do not meet my trading plan criteria. I also enter trades minutes after a losing trade to try and make those ticks back - bad idea.
If I have a losing trade, I set a 15 minute timer, get up from my computer and go do something else until I can take the next trade.
My trading plan:
1. Identify the type of day. Main trend line is found off the first two swings of the overnight and/or first two swings after the regular session. Identify other potential areas of S/R looking back a few days.
2. IF:
TRENDING: Looking to take 2nd entries with trend that have the following characteristics. I generally don't take them if only 1 of these signals shows. I need at least 2 or preferably 3 or more to take the trade.
o Strong signal bar
o Off of support/resistance or EMA
o No prior price action that could act as strong resistance
o Break of the channel and looking to make a new extreme H/L or re-testing previous H/L
On occasion I will take a first entry and those are usually in the situations where:
o Pullbacks to the EMA (I see trapped buyers/sellers) and enter after strong bar back in the direction of the trend
o I need an actual touch of the EMA (sometimes getting close traps me, a touch or slight break is better for me)
o Enter after the first with-trend bar completes (stop buy/sell order)
RANGING: I am not as comfortable yet with entries that are in a range. But when I do, these are the traits I'm looking for:
o Fade new highs and lows for the day (if these are 2nd entries, even better!)
o Fade breakouts (counter-trend breaks preferable)
o Breakout pullback entry – wait on the breakout to fail, then pull back. When the pull back fails, then enter in the direction of the break. I like to have a strong signal bar on this as well before entering.
o Fade very small dojis at one side of the range
o Look for areas of support with long wicks (some call it churning?) that signal the opposing side isn't strong enough to take over
3. 6 tick target, 6 tick stop - 3 point daily target: I chose this because Mack's strategy employs a 4 tick target while stops could be anywhere from 4 ticks to 8 ticks. To me, if you are trading singles, this is not good risk management. When you get into 3 contracts, scalping 2 and having a runner, it makes much more sense.
need to win a lot more than 50% and right now, I'm not comfortable with that.
3 point daily target also means I would need 2 net winning trades to call it a day. I know I should continue trading for the day but as a beginner just starting out I feel that this is a good way to build confidence without giving it all back. It's a business and trading singles, this also means $150 a day, $750 a week, $3,000 a month, $36,000 a year. If I started a restaurant would I be happy with being $36,000 in the green my first year as a business owner? Hell yeah, being in the green first year owning your own business is a success in itself. So although $36,000 a year doesn't sound like much to most, it's a great start and something I can build on. Trading is a marathon, not a sprint.
I took a page out of Vince Virgil's journal and I made a small box that is 6 ticks in height. This allows me to fine-tune my entries. If the signal bar or recent price action is more than 6 ticks outside of my stop, I will generally pass on the trade. This allows me to be a bit more selective with my trades. I like to take trades where the most recent swing or price action is within 6 ticks of my stop which I believe will reduce those situations where price taps your stop and reverses off or at the very least I know I was wrong. This also gives me the opportunity to drop in a limit order vs. stop orders that MACK uses. I am not comfortable using MACK's entries so if I feel the entry is good, I'll put in a limit order a few tick backs from where MACK would've entered. If it goes without me, it goes without me. There will always be another trade.
4. Time Frame: 9:30 - 12:00 PM EST. Since I'm located in S. Korea, we are about 13 hours ahead. That means I'm trading at 10:30PM - 1:00 AM locally. I would like to sit around and trade the afternoon but I'm usually too tired and need to get to bed by that time.
Hope to upload my results soon. Although I'm doing this mostly to be accountable to myself, any input/feedback is welcome. I want to avoid skipping uploading chart for a day because I had a bad trading day. This will make me more accountable for the trades I am taking.
Had a fantastic night (day for most of you guys). I put on some concentration music that you can find on youtube which apparently uses a frequency that allows you to focus better. Maybe it worked maybe it's just a placebo. I don't know but I felt really focused tonight.
1. My first entry was a bit shaky. I saw those long tails that I highlighted in blue. This showed me that the sellers were having a tough time taking over. I also saw a new uptrend forming off of the higher low of the previous downtrend channel. When I saw that doji struggling again to break lower I entered a limit order on the next bar. My 6 tick stop gave me some room below those dojis. It took some heat right after entry which had me sweating, but eventually my thesis was correct and buyers took over. This support line ended up becoming support again later for a trade. +6 ticks
2. Second trade was off of the overnight highs and previous day high. This was also a second entry short off of the low created off of my first trade long. BUT - I could not enter a stop sell order because my golden box which shows me my risk level was exceeded by the previous 2 bars.
SO - I felt the combination of
1.) previous high of the overnight + previous day high = strong resistance
2.) strong bear bar after a quick run up shows sellers are thinking "nuh uh, not today bulls"
3.) it was a second entry
I put in a limit order a few ticks back to where the previous high would still be within my stop. It could've take off without me, but luckily it came back and I got filled. Took just a tiny bit of heat in the beginning and it was all down from there. + 6 ticks
Done for the day, my target was reached. Wow, what a great day. I attribute it to my focus more than anything.
Some nights I'm tired and enter a trade only to see that oh crap, I didn't consider this area of resistance it's heading right into.... or oh, wait, there was no channel break..... or oh no I entered off of a terrible signal bar.
Green circles show my areas of interest. I put these in there as the trade plays out, I do not go back and put them in.
The first green circle you see had me going "oh my, what a terrific long setup." BUT I need to keep my discipline and because I met my daily goal of 3 points, I didn't take it.
It was a 1.) 2nd entry long 2.) off of previous support 3.)great signal bar
And all three of those combine to make a strong reason to enter a trade.
Second green circle ran into some consolidation after I already drew it in. But it was a 1.) second entry short 2.)had those long tails above it, which to me shows me again the bears saying "nuh uh, not today bulls" 3.) again, off of former resistance 4.) strong signal bar
Hindsight it was a good trade to take, but a lot of consolidation might've spooked some.
It exceeded my golden risk box so I personally wouldn't have taken it. If you got it, it was good for a long runner.
Since it was Friday night here when the market opened, I decided to take the ol' lady out for dinner and drinks. My mind was not in it to sit and focus so I listened to myself. Was not able to trade but am trying my best to avoid seeing what kind of day the market had. Will go to market replay on Sunday to see how I would've done.
Ok, played Friday (Sept. 30th) on replay. I did of good job of not looking at the news or knowing what the market did that day.
Another pretty solid day. I was able to hit my daily target with my first two trades of the day. I promised myself I would close up shop once my 3 point daily is hit because I've had problems in the past of trading more and more and giving it all back. Once I gain more confidence in my strategy then maybe I will look to increase it. But rather than increase my daily target, I think I'd rather increase my contract size.
Anyway, drew my first trendline based on the overnight, which is trending up. Also put in the lavendar line which was the previous days resistance, which I had a suspicion would become today's support should the uptrend continue.
After the morning high of 2158 I was still looking to go long.
1st trade: 2nd entry long off of the previous days resistance turned support. The signal bar was a bit weak as it was a strong bear bar but the strength of the following bar had me put in a limit order. I was also expecting a test of the previous high. Another reason I took this trade was that the low of the previous bear at support was well within my 6 tick loss should I choose to enter. And I believed that this was a trade where if I'm wrong, I'm definitely wrong and that type of trade fits my personality type - If I'm getting stopped out, I'd rather be totally wrong than sorta right. Was it a great trade? Not really, but hindsight is always 20/20. Was it a decent trade? I think so, albeit a bit aggressive. +6 ticks
2nd trade: I drew in the new support line off of the previous low. This was again a 2nd entry long off of support. I did not use the red "stumpy" bar as my signal, but rather the following strong engulfing bull bar as my entry. Since the low of that bar exceeded my 6 tick loss if I entered on a stop buy, I placed a limit order a few ticks back so that the low of the previous bar was within my stop loss. Luckily, the following bar came back to fill me and then took off in the other direction. I took the risk that it could've left without filling me, but I'm very ok with that vs getting a bad fill that pulls back to tap my stop and take off. Good trade I feel. +6 ticks
Didn't put any green circles in after those trades as I didn't feel comfortable chasing that big surge up. The first pullback drew some attention from me, but again I like to stay disciplined with taking 2nd entries off of some channel/support/EMA. I felt that entering on that pullback was still a good trade if you took it on a stop buy off of the strong bull bar following the two red ones but otherwise I don't feel comfortable chasing those types of trades just yet...... not only that but I reached my daily target.
Kind of a tough day for me today. It was tough because I had to be patient and because there weren't many "clean" entries as I like to call them - which are basically 2nd entries where you have a precise low swing to measure off, or 2 legs back to a channel/EMA, etc.
After realizing (after my first loss) that today wouldn't be a downtrend day, I looked at fading entries at the upper and lower ends of the range.
1st Trade: 2nd entry short off of a green pinbar and the following bullish engulfing candle. I played this off of the top resistance bar (although it didn't quite touch it) and a down sloping trend channel off of the overnight (I later removed this line so it isn't visible on the attached image). So I had 2 resistance lines working for me, as well as a 2nd entry. I was a little bit bored, as you can see the previous 2 blue points I marked as places I wanted to enter. Because I missed them I wanted to get back in as soon as something half decent popped up. Seemed like there would be strength to carry me down at least 6 ticks...... but no, it took me down about 3 ticks in both directions. I wanted to exit at BE but I tend to micro-manage trades too much and decided I would just let it ride. If I didn't take this trade, I probably almost definitely would've taken the 2nd entry short following this one which also would've gotten me stopped out. So not too upset at this one. Maybe next time stay away from so much congestion? - 6 ticks
2nd Trade: Wow, this one was scary. I am learning to trust myself in fading the ranges but generally they go so violently out of the range that if you have a tight stop, it can be a very short trade. And I don't like loosening my stops. SO, I kept my 6 tick stop and decided I would only enter if the trade would come back to pick me up after the strong bull candle before my entry. I left 4 ticks below the lowest low (I figured if it breaks down 1 point further than the previous low, it ain't comin back). It came down violently and had me at -4 ticks in an instant. I kept the trade on and it like Mack always says "pretty predictable." Shot back up just as violently as it came down. + 6 ticks
I am starting to really like trading these false breakouts. In my limited experience they fail 9/10 times. The only problem is that it's almost like playing chicken. Feels a bit unnatural (unless you're an adrenaline junkie).
So, it's a break-even day for me. I stayed at my station for another hour following my last trade, but wanted to only enter if a real juicy setup came but just more chop and traffic. Gotta stay disciplined.
Although I have only been sim trading the ES for 3 weeks now, I have never seen a day like today.
Sharp sell off with no pullbacks. Stops on a dime. Reverse upwards with little to no pullback. Consolidates, big sell off again. Left me confused.
Fading the day's highs/lows or even the overnight would've got you smoked. Looking at 2nd entries early in the day got you chopped around and tested every ounce of your patience.
Anyway, I only made 1 trade. After I realized today was above my pay grade, I just sat out.
The one and only entry I made was an attempted 2nd entry short after that big bounce up after the huge selloff. I thought it was going to be a bounce, not a complete 180 back up to where it sold off from. That big selloff also had my senses hightened and I wanted in. It was on me though, I made a big error in judgement. It was a terrible signal bar and as the entry bar ticked lower I wanted to get in, only to see it go immediately against me. I should've exited quickly after that bar closed and got out with 2 ticks loss. Lesson learned. - 6 ticks
I liked the way today moved. All of my trendlines that I drew in as the day progressed turned out to be accurate.
I'm not sure if it was a data issue with my sim account, but prices must've tapped my limit order 4 times or more 2 separate times and wouldn't fill. So I marked in GREEN the trades I had a limit order sitting there to be filled. I was tempted to go short at the red circle and hindsight it was a pretty good trade to take as it was a 2nd entry shot off of resistance.
The two green trades were both 2nd entries long off of support. Pretty solid trades and I tried my best to get filled and even chased it up but it just kept tapping tapping tapping my order with no fills.
Oh well, it's just sim so no harm. I felt a good bit of confidence build after this day because I had my orders sitting there at the right places.
It's midnight here in South Korea. Volume seems low and it's been in a 2 point range for the better part of the day. Didn't reach my daily goal but I'm in the green so I'm going to call it a day.
It started off as a down trending kind of day then went into a 3 point range. When it broke below the range I was looking still looking to stay with the overall trend and go short.
When I saw a 2nd entry short off of the EMA along with lots of long bearish wicks in the vicinity, I took the trade. Placed a Mack style stop sell order just below the wick that poked through the EMA and I had plenty of room above the highest wick to keep within my 6 tick stop. Got filled on the next bar and this trade actually went against me 4 ticks right away. It did have me a little worried, but the difference from some trades where I second guessed the entry, this entry I was pretty confident with. So as I saw it tick against me, I stayed patient and waited for it to start ticking my way. It read my mind and once it did it was rapid and scalped out my +6 ticks.
This is why I like 6 ticks as my target/stop. It seems to be the sweet spot for a lot of these small ranges and trades. 4 tick scalps almost always have a couple more ticks it would've given you and 8 ticks is a lot of times just at the edge of the range.
Glad I started this journal. Whether anyone reads it or not isn't that important. It's more the accountability aspect and knowing that I'm going to post this everyday, I'm more conscience about my entries because I don't want to make silly and sloppy mistakes that I have to take responsibility for in my journal. It does keep me from pulling the trigger more, but at this stage in my trading career, I'm happy taking the setups which I feel are higher probability.
This is now officially 4 weeks since I started my journey to day trade the ES and I really feel like I'm making good progress. I put in about 4-6 hours a day towards marking up charts, reading, sim-trading and journal entries.
I'm hoping that in another 4 weeks I can look back and see that I've really improved from this day.
