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"Less is More": Permeant's trading journal (CL & ES)
OK, the journal challenge has finally got me to bite the bullet and start a public journal on futures.io (thanks, Mike!). I'm doing this to hold myself accountable for following my trading plan. I would appreciate all helpful feedback.
I'm a price action trader and have done it with real money for about 5 years - have had winning and losing periods (and still learning and improving), but not net profitable for the entire period.
Here are my personal goals:
Be more selective in my entries ("less is more!")
Position sizing
Know when to stop for the day
I find that a few setups account for most of my profitable trades, but the challenge has been to avoid FOMO which gets me into trades that are overall losers (some of these may be winners with the right trade management, but I don't have the right skills yet to make them work). So in order to tackle the above challenges, I've come up with the following rules.
Entries:
Opening Reversal
Trend Days: 2nd or 4th Pullbacks (A2/H2/L2/A4/H4/L4 in Brooks terminology), H1/L1 (on strong trends only)
One trade today: Opening reversal on CL. I was trading only one contract, so was forced to exit at +20 ticks per trading plan, but the swing went for 40 more ticks.
Rationale: Opening reversal at Friday's LOD as well as bear trend line from Friday.
I don't see anything wrong here for this day at least. If you are concerned about not capturing the full move you can't worry about that. You can expect t capture about 30% of any move from top to bottom on average. The key is picking those periods that are actually moving.
I would recommend since you have so much data that you look at the statistics of your PL over the years. Plot your PL on a graph. The pattern of returns is critical for analyzing your style. Mark the periods on the graph where you made adjustments to your program. This should be part of your journal.
You want to analyze this data, such as the rolling win/loss %, the $ risk you took for each trade (and do a rolling average of these plotted to the P/L), and a rolling average win and average loss. A profitable strategy will have a positive number for the following on a per lot basis (Win% x Average $Win)+(Loss% x Average $Loss). This will give you the expected return per lot per trade. As you plot this number over time you can compare this to determine which approach is most effective.
You can roll the stats for any period it depends on how much you have traded, but I'd guess averaging over 30-50 trades or ideally the average between when you made adjustments regardless of the number of trades. I say this as I suspect you probably stopped when you lost took a break then adjusted and started "fresh", so the periods should be clear.
Thanks, Northernlimit. I do have an excel journal with a lot of stats like you mention here. I have only posted the relevant stuff for today's trades for simplicity, but will aim to share summary stats for the month/year etc.
A good, successful day! No regrets! You followed your plan, you made money and your off to a great start with your journal! You followed my first rule as you will see in my signature below. Again, good job!
Don't be controlled by GREED, Led by FEAR, or Puffed up with PRIDE!
2 trades today, both of them losers and good examples of the kind I'm trying to avoid having to include in this journal.
Trade 1: Long CL after the 9:30 CT EIA report, but the entry came way too late in the leg up, near the very top of the move. If I was going to enter long, I should've entered on the 4th bar after the report (after the failed bear BO attempt) or waited for a good pull back after the bull BO (which never came). Instead I bought into FOMO at top of the move. Given the strength of the move (similar to last wednesday) I thought that it might go up to test HOD yesterday, but boy was I wrong. The only silver lining is that I gave up on it after -17 ticks instead of waiting till it retraced a lot more.
When my long failed, I'd typically have reversed to short, but I wanted to wait for a short setup on my list, which brings us to...
Trade 2: Short CL after the post-report swing had been mostly reversed. But the bear leg stopped just short of the bottom and set up a pullback entry for a second leg down, with targets below (bear trend channel line, Monday's LOD, last week's unfilled gap). But of course it was just another dumb short at the bottom which promptly failed. Possible revenge trade, though at the time I was consciously avoiding one.
Two problems with this trade:
1) Given the big UP and big DOWN after the report, I should've seen it as likely to evolve into a trading range. If a bear trend did develop. I needed to wait for it to happen instead of shorting a pullback at the bottom before any sort of breakout had actually happened.
1) Given that I was -17 ticks on the first trade, it puts me close enough to the daily loss limit that I should've quit for the day (since I don't have room to put a reasonable stop on this and still stay within the daily loss limit). Instead I decided to fudge the daily limit and gave up $40 more than the daily limit. Another lesson paid for.
After these two trades, I was past the daily loss limit and so was done. A pity, since there were some nice profitable trades on a trending ES that I might have taken had I been trading it. Or possibly gone on tilt and found a way to lose more money. Hard to say, because I turned off the computer after the second trade.
Trade 1: Short CL, Opening reversal delayed entry (-8 ticks)
This was a decent entry with botched execution. Entry location was pretty good (opening reversal at the HOD of yesterday), as you can see it went a long way, almost 80 ticks. But I was hesitant to short the initial reversal given the doji signal bar. I finally entered on the third reversal signal but had my stop too tight - it would've worked if I used the stop beyond the original reversal signal or if I waited till the 4th entry. As it happened I picked the worst of all options (delayed entry and stopped out before a great move).
This is a trade that worked out but generally one that I'd like to avoid taking (I want to trade the pullback, not the breakout). Given the strength of the breakout bar and the fact that there were targets below (yesterday's close, yesterday's LOD), I thought it was ok to take. I had misgivings seeing the reversal bar right after my entry but the reversal never even triggered and the mkt fell right through yesterday's close to my target (and 30 ticks beyond).
Trade 3: Short CL on a second attempt to reverse the pullback after the sharp bear swing (+0 ticks)
Given the strength of the bear swing and a sort of double top on the pull back attempt, I thought there might be another swing to get to the unclosed gap from 2/8. Initially it looked good and went +10 ticks but reversed up from there, so I scratched the trade at BE (per plan!). It was the right call as it kept going up. But I was done for the day after this trade.
Trade 1: Short CL on A2 (second reversal attempt at the EMA) (-11 ticks)
I think this was a good trade even though it didn't work. Nice looking double top second reversal attempt at the 20 EMA, so no shame in that! Might have saved 5 ticks if I got out after the bull signal bar at the top of the range but I relied on my original stop.
This trade was near simultaneous with the first one. This was another good signal bar at the EMA and even had a nice looking 2nd entry but stopped me out and then immediately reversed again. Don't feel too bad about this trade either though it sucks to start with 2 losses.
Trade 3: Short ES on third reversal attempt at EMA after failed upside breakout (+0.25 points)
After the second trade was stopped out and followed by a reversal after the failed breakout, I reentered short, slightly higher. The trade went 2 points in my favor, so I moved my stop to BE and left the target at 4 points (LOD of yesterday). Sad to say I was stopped out BE before it went back down but it never went to my target (while I was looking) so possibly a day meant for small profit targets.
Trade 4: Short CL on a second reversal attempt at EMA (A2) (-15 ticks)
After my first trade got stopped out, CL fell back down below the opening low, then I shorted the pull back from that - despite the potential double bottom, we were at the EMA, the signal bar was a good reversal bar, and there were targets below (LOD yesterday) so this was not a bad trade, IMO. But wait! Same old story - stopped out. After 3 lossed, didn't stick around to find out the rest of the story.
Despite the 3 losses, I feel ok about the entries today.
It pains me to post to this journal today, but so I must since that is that point of this exercise. I hope this go some way towards curing me of bad habits and impulse trades.
I missed the opening reversal (again ) since it was so weak looking. Then got in late after the breakout. It then proceeded to put in a tight trading range. After a few too many bull bars, I lost faith and got out BE. It then proceeded to fall through the bottom of the TR to my original target. Oh well. This was a bad entry to begin with, since the correct entry is on the opening reversal (or second entry) or on the two-legged PB after the BO.
Trade 2: Long CL on the strong counter-trend leg (-20 ticks)
I didn't have the confidence enter on the bull reversal, but the leg up looked so strong w/o any pullbacks that I got sucked into an impulse trade on the BO above the big bear bar. When it immediately went against me, that should've been a warning and I should've been happy to get out BE when it got back to my entry after 11 bars but I didn't (still looking for a follow through bull leg. I was stopped out on a bear continuation out of the TR. This was another bad entry and cost me dearly. I stopped for the day since I'm not really reading the price action well today.
So two impulse trades that are not in my trading plan and just deserts. I resolve to have no more of these to report.
I resolve to have no more of these to report.