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Great journal
I tried to fade the rally long 2times not a good idea.
I completely agree with you.
50% isn't even a Fibonacci number it's just in human nature to want to take profit half way of the move.meet in the middle etc..
Adding too many indicators also will make the read of the market much more too.
Really Fantastic
1) Did you take that buy on 72 to close the swing portion of your short or to go long? Im guessing to close but just wondering.
no, i dont take swings. that was where i exited my runner (SCX, breif opportunity to lock in profits as bulls and bears will buy for 2 legs up).
2) How did you decide that low/high 1's as support/resistance were your 'go to" setups? Did it just 'feel' right to you or was there a strategic reason that you chose that over other equally reliable setups?
very good question, and to be honest i really dont know the answer. i started trying to focus on 60% setups and naturally i began entering these. however you must be careful, here are criteria for 60% limit order entries.
buy below weak low 1 after strong bull spike or reversal, buy below weak low 1 at bottom of TR, or after a SCX, buy weak low 1 at bottom of bull flag, and vice versa for selling
3) It looks like you have more of a Mack style trendline / trend channel. Do you use the first data point and then the body of the next significant L/H or all bodies or most touches or does it depend on context. Mack always says trendlines are not subjective at all so I was just wondering what your thoughts were.
you could say i have a mack style, but i really think thats just how the mkts work versus it begin his style. i am not sure what he means be trendlines are not subjective? I think they are subjective depending on circumstances. it really depends on context and situation, but most of the time i use the bodies of bars versus tails or a best fit line.
3b) sometimes your trend channel goes through the bodies and some tails and then when a climax bar (or any bar) penetrates the TC, you consider it a trend channel line overshoot. Are you confident about the overshoot even though the trend channel is intersecting all the other swings as well? (if this question is not clear let me know!)
maybe i am not understanding completely, but a tail above a bull TC is a failed bull attempt to BO above the line. if the bar is a climax, the TC overshoot is just an additional characterstic to improve probability, but the climax is the important part. if this doesnt answer ur ? if u provide an example maybe i can explain it better
4) How did you develop a feel for your probabilities? Was it through math models and testing or based on your own personal trade accuracy/probabilities?
another great question. embedding al's mathematical chapter into my brain, and constantly focusing on these entries. I read somewhere a while ago if you constantly try to think in terms of probability then eventually your brain becomes entrained with them. and i could not agree more. over time (it took a while), but now when i look at any chart or setup, all i can think of is terms of probability. as for testing, no i have never done testing, but i know they are accurate. just simply trial and error and applying math to the markets as much as i can.
5) When you enter a stop entry trade for a scalp, are you putting your stop above/below the signal bar or still using a 10 pip stop? And how far does the trade have to go in your favour for you to move your stop to BE (i know(think) you move it to breakeven for your swing portion but just wondering if you ever move it to BE for the scalp portion as well)
i always use a 10 pip stop to begin with, no matter what. after more information develops (FT, lack of FT), i will tighten my stop to where i think it logical, but wont decrease my probability. or put it somewhere if hit i would not want to be in the mkt in that direction any longer.
6) Bar 42 on 02/10 - what made you feel that the low 2 short was 60% even though it was so strongly up and only a MDT. I know it was possible 2nd leg trap and it was at the low of the TR overnight but what made you feel that it was a 60% scalp (similar to questions 4)
final flag reversal, failed high 1, and variant of low 2 (39) at top of TR and after a BCX. i do not look at overnight data so not sure about TR low, i saw it as high of TR with 1 or 10
7) Do you often exit your scalps BE or for a small loss if it doesn't go in your favour right away or looks like it is doing something that it shouldnt be doing? Do you also exit before your profit target for the same reason. ,Or do you wait for the profit target to get hit or get a reasonably strong opposite signal before exiting.
i try my best to give the trade time to work, and try my hardest to hold for a SP. however if it is a stop entry, and prics are reversing at the LO price (like the other day), i will exit earlier to avoid a loss / BE and atleast lock in a small profit. i did this today as well. but in general i only exit if my premise is wrong or prices are clearly going against me. i will move my stop to BE once prices are within 2-3 pips of my tgt since i will not allow a winner to turn into a loser and this betters my traders equation.
This is the last week of the journal challenge. I greatly appreciate anyone who gives "thanks" for my contest entry. I am currently in third so need more votes to secure a win (if you cant tell I really want to win! )
If you have not yet voted, the link is below.
Thanks!!
Yesterday prices reversed off the large bull channel trend line, leading to a gap open today and failed BO above the TC on the 5 min chart, and three pushes up in the bull channel on the 60 min chart. Today is friday so weekly support and resistance is important. Last week was a bear entry bar, but closed with a large tail on the bottom. So far this week also has a large tail and is a bull reversal bar, both suggesting buyers took control. The bulls want the week to close on its high (0632) for a strong bull reversal bar. The bears want the week to close around its open for a doji bar (0606) which is around todays open, or below for a bear FT bar.
19 sell setup for failed high two, double top, and second failed attempt to BO above bull TC. but stop entry in middle of opening range / LOM, so best to swing, potential HOD.
20 good bear EB, but small bull channel TL from 3-15. bears need BO below 3 with FT before AIS.
22 bulls defended bull TL, bought EMA. weak low 1 into bottom of bull flag, bottom of TR, and EMA.
23 outside bull bar, 10 pip failure for LO bears who sold 18 close.
26 bear BO, 18 BTC bulls exited BE on entire position. turned 25 into DTPB. AIS.
27 reached first mm tgt based on opening range, but likely more to go. potential mm from 26 spike. bears want to fill gap open. bulls attempt to form failed BO and reversal, but weak SB after flipping to AIS. prob SA for BOPBS.
28 second strong bear spike, increasing % of spike and bear channel. but still within bull channel from yest. poss sell vacuum test of TL.
29 filled gap open, broke bull TL and reached mm from 26 spike. 28 poss MG. bulls unlikely to buy again until a second leg down (wedge top on 60 min) and also wedge top on 5min (7,19,25). strong bear BO.
30 last STC bar, bulls attempt to turn 29 into spike and climax. weak SB, second leg down likely. prob SA but willing to SI higher using wide stop.
35 reached mm tgt from 28 MG. bears want to fill bull BO gap from wednesdays outside bull bar, which is mm down from 29 spike. but sell off is climactic, and increasing % of spike and climax bear trend and two legs sideways to up. NA close of next bar, could be catalyst for strong rally (test of bull high after break of TL).
36 2BR for CC SCX, DB with yest 83 and first break of bull TL. reasonable swing for 2 legs up.
38 weak low 1 after reversal, but poor FT bar and not yet clearly AIL, so better to wait.
39 outside bull bar, 3/4 good bull bars. prob AIL, but not yet clearly evident. bear channel still a possibility. first bull tgt is above 33 SCX.
41 reached min bull tgt and EMA. no strong selling at EMA, decreasing % of bear flag and bear channel, increasing % of second leg up. 41 poss MG.
49 double bottom, 2BR. but strong 3 bear bars, ok swing but better to wait for 2nd entry.
53 small trading range around LOD, suggests bear PT. prob bottom of TR / poss final flag reversal.
54 2 leg pullback to EMA, bulls making SP. middle of TR.
55 54 small gap, increasing BP. bulls need BO above 45 with FT before AIL, otherwise TR (bear flag). bears trying to form bear channel from 27-45, but double bottom decreased %.
56 bears sold 55 close, trying to hold bear TL. but TR more likely.
59 stronger bear setup, so far bears holding TL. poss 35 was TC overshoot and TC is from 30-49.
61 bull BO, failed low 2. bear TL failed. reached bull tgt above 46 SCX. bulls need BO with FT above 45. otherwise buy vacuum to high of TR.
62 unlikely bulls make SP buying on stop above 61 / 45. more likely LO bears above. weak high 1 into top of TR and after BCX. also a wedge bear flag (50,55,61).
64 bull BO, failed wedge. 61 poss MG. bears will try to form failed BO and reversal back into range. will prob give up if cannot. tight bull channel up from 49.
65 weak bear reversal attempt, but low 4, so reasonable swing. 64 poss MG, tgt is opening TTR and high of bull after break of HTF channel.
67 good bear entry and FT bar, first break of bull mc. filled 64 gap, but 61 still open.
68 three strong bear bars, back into TR.
72 small second SCX (70 first) down to bottom of TR. new LOD likely after strong bear leg (prices likely to test below range after failed BO above). poss bear trend resumption day and second leg sell off into close.
Today was a bear trend day (spike and trading range bear trend). After several failed attempts to break above the larger bull TC, prices sold off strongly before forming a trading range (bear flag). There is a possibility that the day becomes a bear trend resumption day and sells off in a second leg down, closing the day on its low, and a stronger bear FT bar on the weekly chart.
Best Trades
19 failed high 2 / failed bull TC overshoot, and double top. Stop entry in middle of TR and LOM, required swing. turned into HOD.
36 CC SCX, second attempt to reverse after break of HTF bull TL. required swing for 2 legs, exiting below 45 would be a good choice when prices did not reach full swing tgt.
44 weak high 1 into top of bear flag, 2 legs up from 36. best entry was above 44, but selling below 45 was also acceptable for a scalp (failed high 1, first EMA gap bar, MDT).
65 failed BO above TR (bear flag), low 4 sell setup and failed failure (wedge bear flag failed, and then BO failed). was best taken as a swing for test of low of range / new LOD.
The only entry i took today was the weak low 1 into bottom of TR early this morning, which i exited with a small profit when something didnt feel quite right (I like to think it was my warrior trader intuition!). Turned out to be a great decision as prices sold off strongly!
*Notice I avoided entering trades for most of the day. This was due to me feeling somewhat stressed / not in the zone since before the open today, and being unable to focus. This is a good learning opportunity to new traders. The best thing to do is avoid trading when feeling any emotions / stress / or anything at all. Instead, wait until you again feel normal, and can remain objective. Although it sucks to sit on the sidelines and watch prices go without you, it is the correct thing to do. Otherwise you end up giving back most or all of your hard earned profits due to an unstable mentality.
And remember, profits are a bi-product of trading, not the only goal. If you are focused on making money, you will not make it. All trading must be done purely for the sake of "artistic perfection" and nothing more. So when you are not in the zone and not aligned with the markets, stay out!
This is the last week of the journal challenge. I greatly appreciate anyone who gives "thanks" for my contest entry. I am currently in third so need more votes to secure a win (if you cant tell I really want to win! )
If you have not yet voted, the link is below.
Thanks!!
After a break of the bull channel on the 60 min chart, prices are currently retesting the bull high. Today opened with a ttr, at the start of yesterdays bear channel, suggesting heavy two sided trading today. The bulls want to fill yesterdays 26 bear BO gap.
20 gap up, prob AIL. poss small bull channel.
22 bull BO with FT, AIL.
23 BCX, poss MG. mm tgt fills yest 26 bear BO gap.
24 weak sell setup for BCX and reversal. increasing % of 23 MG.
26 2BR, stronger sell setup for BCX. poss small final flag.
29 second small BCX, but mm tgt and gap just above, prob will be reached before correction.
30 BSP, bulls no longer getting CC bull bars. second entry for BCX, and final flag reversal. reasonable swing.
31 small ET (25,27,29,31).
32 reached mm tgt, filled bear gap, tested near middle of yest ttr (magnet). second BCX. rally prob limited.
33 weak high 1 after 27 high 1 and CC BCX.
37 bear BO after BCX. second leg down likely. bears reached first tgt (below 23 BCX), next tgt is mm down / test of opening TTR.
40 filled bear 36 BO gap. let 32 BTC bulls out BE.
42 retest of bull high, bulls want bull channel from 13-19-39. but bulls took profits above 32 high / LO bears sold aggressively. rally probably limited. transition to TR soon.
44 LO bears reached SP selling new high. SOW of bull. transition to TR likely soon.
48 strongest 2 bull bars of bull trend since open. bull TC overshoot. reached mm based on 23 spike, and test of HOY (high of bull on HTF charts). less likely, 48 becomes MG
50 test above yest high found sellers (tail). 10 pip failure for 49 high 1 bulls. LO bears scaling in for test of 41. bull TC overshoot but no strong reversal yet.
51 48 may become MG afterall, tgts not far above based on 39 low, next is based on low of TTR.
52 sell setup for BCX, bull TC overshoot, failed BO above HOY, and second attempt to reach SP from 49 that failed. reasonable swing for 2 legs down, but second entry would be stronger.
53 weak high 1 after a failed high 1, and BCX.
54 stronger variant of high 2 (52 high 1). mm tgt not far above. prob BTW for more info / more selling pressure.
56 sideways PA above yest high and after BCX. likely bull profit taking. poss final flag reversal (51-56).
58 second BCX, reached first mm tgt, next just above high of bar. also wedge test of bull high (41,50,58), increasing % of two legs sideways to down.
59 sell setup for wedge top, final flag, and CC BCX. reasonable swing, also weak high 1 after CC BCX, acceptable scalp if prices tick above.
65 first close below EMA / steep bull TL. but CC BCX's. strong bulls and bears likely to wait for 2 legs down before buying.
68 first close below bull channel TL, and EMA gap bar. strong bear MC down from 62. second leg down likely even if minor. bears want LHMTR and test of 39 beg of bull channel.
77 small SCX, first bear tgt just below (bottom of 47 BCX).
82 reached 47 BCX target and bear tgt of bottom of bull channel.
Today was a variant of a trending trading range day, and also a bear reversal day. The day began as a trend from the open bull (gap and channel). But after a wedge top and CC BCX's prices sold off strongly in a tight bear MC to the start of the bull channel. This is also a MTR on the 60 min chart so 2 legs down are likely, and prices may continue to sell off over the next few days.
Best Trades
33 weak high 1 after a BCX and micro wedge (25,29,32). ET top and final flag reversal. acceptable scalp. I reached my scalpers profit on this entry, and should have exited with a SP on my runner as well after the 39 sell vacuum test of the bull TL, but instead i held and was stopped out breakeven.
45 large high 2, ii buy setup, BOPBL from 39, but not quite back to bull TL. Required swing (entering in middle of small TR since 25 and not yet back to TL).
59 sell setup for second BCX (51,58) failed TC overshoot (second attempt so higher %) and wedge top (41,51,58). swing entry for 2 legs down. This is a great example of a strong swing entry (60% probability of two legs down), which should be a beginners focus.
61 weak high 1 after CC BCX's and failed bull TC overshoot. acceptable scalp but also netted good swing profit and turned into HOD. I reached my SP, and a swing profit of 30 pips when prices began to reverse on 79 after testing below the bottom of the BCX. Although i could have held for another 10 pips or potentially into the close (if continues down). but was reasonable to exit.
Tomorrow is the last day of the journal challenge (and my birthday so a great present if i place top 3!! ). If you have not already, please give "thanks" under my user name on the link below if my posts have helped you. Thanks!!
Overnight prices formed a small two legged rally on the 60 min chart, potentially setting up a lower high and second leg down from yesterdays strong sell off. Today opened with a small gap up and sold off in a tight bear micro channel. Since the bears have formed a double top (20) which could set up a bear trend from the open day.
20 big oustide bear bar, 2BR, and double top. The bulls want to form a large trading range around yesterdays low and fill yesterdays bear gaps. The bears want a lower high and second leg down, and to fill yesterdays gap open.
21 weak bear EB, bulls attempt to turn 20 into failed low 2. middle of opening range 50/50%. but TR is a bear flag, so bear BO more likely.
23 II bull high 2 buy setup. but middle of range, and after a double top. prob bull trap / DTPB.
24 sell setup for failed high 2, DTPB, trapped bulls
25 stronger bull setup, failed failure. bulls want to test 19 close.
27 LOM, middle of opening range and small ttr. better to look to BLSHS. bulls trying to form HL and second leg up.
28 back to back failures, small ET. BOM.
29 2 CC bul bars, but closed at 19 BTC bull BE price after scaling in.
30 3 bull bars, but bulls need BO above 20 with FT before AIL. poss second leg up from 12 parabolic SCX. poss bear TL from yest 59/62 - 20 (30 closed just below).
31 reversed off suspected bear TL, low 2 and 2 legs up from 13. ok swing short.
32 high 1 near high of TR and into bear TL, but prob BTW on failure / ses off high of TR before looking to short.
33 outside bear bar, failed high 1. low 2 off bear TL and high of TR.
35 bulls formed another failed falure and high 2 buy setup with good EB, tested 19 close. but top of TR. poss bull channel from 13-29-34 but unlikely to hold.
37 outside bull bar, bear give up bar. BO to new HOD. mkt will decide between MG or EG.
38 bull FT bar, bull TC holding, confirming bull channel. first mm tgt from 19 spike fills yest bear BO gaps. next mm tgt is above yest high based on 37 gap.
41 filled yest bear BO gap. bull TC overshoot, first mm tgt just above.
44 outside bear bar, reached first mm tgt. weak SP since 37. prob start of bull flag instead of reversal.
45 high 2 buy setup but high in bull channel and after bull TC overshoot. BTW for pullback to TL / EMA.
46 big outside bear bar, sell vacuum test of bull TL (closed right at TL). reached first bear tgt of below 37 BCX. first close below EMA and BO test of top of opening range.
47 bulls bought 46 close for scalp up. filled bear BO gap.
48 second BCX, bull TC overshoot, reached mm tgt based on 37.
50 sell setup for BCX and second failed bull TC overshoot. ok swing short for 2 legs down.
Today is a trending trading range day. The morning began with a bull BO of the opening range (also a bull channel), and a mm up based on the opening range. After two CC BCX's and two failed bull TC overshoots, prices sold off to test the upper side of the lower range, and are currently working back to the start of the bull channel.
I allowed myself to become distracted a lot today (my birthday so i am allowed ;0) so i did not trade for most of the day (sorry for above analysis lacking the whole day). But today is a good example of why i prefer to use limit orders in the forex markets. I took a total of 3 trades today (all stop entries), and lost on 2. However it is my fault for taking lower probability trades than i should have, and not forcing myself back in when i needed to. But i did recover most of my earlier losses for a small loss / breakeven day (hoping to recover the rest with my runner working).
Best Trades
28 double bottom bull flag, high 2, failed low 2. swing buy for second leg up since middle of TR.
34 high 2 BOPB to small ttr, and off bull TL. but into TR highs so required swing.
45 failed high 2 high in bull channel and after CC BCX. acceptable scalp
62 weak low 1 into bottom of bull flag and 2 legs down from 49 BCX. acceptable scalp
65 second 10 pip bull failure, double top bear flag off top of TR, and lower high MTR. acceptable scalp but also turned into a good swing.
79 failed second entry off top of opening range (bulls failed to form support), likely to test start of bull channel. also a wedge bear flag at EMA. acceptable scalp.
***Today is the last day of the journal challenge. If you find my posts helpful, please provide "thanks" under my user name on the link below. Thanks!!
It is with mixed feelings that I say this will be my last post. It is time for me to drift back into the shadows to focus on myself, and becoming the best trader I can possibly be. I would like to thank all of those who supported me along my path with positive encouragement, and those who helped me win the journal challenge. I am very thankful for the opportunity now in front of me, and I owe it to those who helped get me here to do the best I possibly can.
Before I go, I would like to share one last chapter from my book that I think is very important to becoming a professional trader. I feel this information may have shortened my learning curve had I understood it sooner, so I hope to do so for someone else.
If you are interested in receiving a copy when my book is complete, "thank" this post so I can keep track of who wants one. I cannot promise everyone a free copy, but I am willing to give some away, within reason.
I wish you all the best! Remember to keep pushing yourself even when it gets tough, and never give up!
Controlling Emotions / Remaining Objective
As stated in the introduction, the hardest part of becoming a professional trader is not learning to read a chart, or understanding the institutions. Instead it is overcoming our human nature, learning to constantly remain objective, and developing the ability to apply this material in real time. A trader must first understand himself, and that emotion is not a variable in the trader’s equation before earning a living from the markets. Focusing on probability and the trader’s equation gives a trader an edge over the markets, and himself.
The market is constantly changing as it transitions through the market cycle, so a trader must be nimble and open to all possibilities. In any given moment a breakout can occur and a trend can begin on the next bar. This is why it is so crucial to always respect the opposing view of the other side, and never become convinced something is going to happen. Nothing in trading is ever 100%, and 40% of the time the lower probability event will occur. As a trader we constantly swim in a sea of uncertainty, where the next wave or current can carry us out into the abyss, or into shore and safety. Just like a rip current, never fight the market. Instead go with the flow, conserve energy and wait patiently for comfort to return.
It is human nature to feel and focus on fear. Fight or flight is embedded in our DNA, and the after affect is stress. When a beginning trader loses a trade, he feels disappointed, is eager to recover the loss, and will look to enter again quickly. This results in repeated losses as he fights the market, attempting to take back what was once his. A professional trader will instead take a moment to relax, realize the mistake he made, and wait patiently for the next opportunity to develop. Most importantly, he will let go of the loss he just incurred and accept it as part of the job.
A similar situation happens with a beginner and taking flight. Once entered into a position, prices quickly go against him but does not invalidate his premise. However he can no longer take the pain of a potential loss, and quickly exits with a small loss, at breakeven, or with a small profit. Just after exiting, prices reverse back into his direction and reaches his original profit target. Again leading to the feeling of disappointment and ultimately stress. Not only did he cause self-inflicted stress, but he also failed to rely on the math of the trader’s equation, and it cost him. A professional trader would have relied on his bracket orders (trader’s equation), trusted his read, and waited patiently unless his premise was clearly invalidated. He understands the math is on his side, and continuing to trade with a positive trader’s equation will result in a profit in the end.
Probability is arguably the most important variable in the trader’s equation. Constantly thinking in terms of probability gives a trader a mathematical advantage and an edge. It also leads to control over emotions and objective thinking. Instead of acting on emotion, a professional trader will rely on the probability of an event happening, and will change his premise as more information becomes available. This decreases the number of mistakes due to emotional outbursts, and provides a way of rational thinking.
Remaining objective is another difficult yet crucial mental barrier to overcome. A trader must constantly analyze both the bull and bear cases, since 90% of the time both sides are able to generate a profit. Because of this, it is vital to understand what each side wants to accomplish, and how they are initiating trades. This allows a trader to mimic the institutional activity, and can lead to a vast amount of opportunities every day. A trader should always align himself with the institutions by doing what they are doing, and never do the opposite. By remaining objective and removing emotions from trading, a trader increases his probability of success, and strengthens his ability of creating a profit.
Regularly practicing some form of meditation also helps to overcome undesirable emotional behavior. There are many forms that are beneficial to trading and everyday life. Practicing mindfulness can help a trader recognize and overcome his emotional weakness. Mindlessness can help clear a trader’s mind of unwanted clutter and provide a clean slate for objective, rational thinking. Haragei (body posturing around the one-point) can take a traders mind off a loss or prepare them for entering the market with confidence. Or Kokyu-kihara (breathing into the one-point), can allow a trader to focus on the only controllable moment in time (now), and avoid making a rash decision due to fear.
However it does not matter how a trader chooses to handle his emotions. What is important is that he accepts he is human, understands he is susceptible to his emotions, and does something to prevent himself from becoming controlled by them. Simply avoiding or ignoring them will only pro-long the inevitable outcome of emotional trading. Remember, this is the most difficult aspect of trading, and the change will not occur overnight. It takes a long time and practice to overcome what has been instilled in us by evolution. Trading will never be easy, and every day is a constant struggle against yourself and the markets. The only path to success is through constantly striving to better yourself, and focusing on becoming the best you can possibly be.
It's been great following your thread MC...you've put a great deal of effort into all of your charts and things. It's nice to know there's someone in the neighborhood who also trades
Its was a pleasure to follow your thread mate, i got a lot of inspiration from the way you read the charts in your posts. I will still read them to fine tune my chart reading to get as close as possible to your detailled view of the market.
I am looking forward to read your book as well, either a paid copy or a free one. Anyway here is my big:
). If you have not already, please give "thanks" under my user name on the link below if my posts have helped you. Thanks!!
