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Late to the party on the July Journal contest...but the purpose of the journal is about more than the contest prizes...right.
So, I trade the ASX 200 Index (via CFDs). My method has shades of inspiration from long time FIO journaller, GFIs1 who relies on one trade per day for the DAX. I also focus on one trade per day per the ASX 200 ("Aussie Battler"). I've come to this method after attempts at longer term swing trading through to short term 1 minute chart trading and everything in between. I find staying disciplined on a one-trade-per-day method keeps both the "i'm bored and feel like a trade" monster and that little green "revenge trade" monster at bay. I'm hoping the discipline of this journal reinforces this view.
The approach is pretty simple and will expand on it in the entries. The basics are to look at the price action using 5 minute candles and the volume bars for those candles to try and spot an expected "normal" price movements over a period of time. As much of the volume is pushed into the market around the start of the session, I like to follow the crowd where it makes sense. The cash market opens at 10am AET and I focus on the 10:10 and 10:15 candles to look for market direction for the day. I also use a specific exit time during the day based on the bar candle pattern (my MT4 platform has an exit order for the time I want to exit so i can "set and forget" once i've entered the trade).
When I see unusual volume patterns, pre market or market open, I will often shift the focus of my candle pattern entry to a pre-market entry or an entry that uses the 10:25 and 10:30 bars. And...if it still looks confusing for me on the pattern for the day (or there is a planned major announcement), I will skip the trade altogether. I do use stop losses and there are occasions where I can see major resistance ahead in a trade when I'll just go for a smaller price target than letting the exit time dictate when I close the trade.
Overall based on 1 year's worth of trades (both testing and actual)...I will generally have a 55-60% win rate and a 2:1 RR overall. As I close the trade prior to day's end...I often will recycle the capital into a one trade per day DAX trade (hence where some of GFIs1 journal has helped me). Like him...i look at the Aussie Battler Trade as "you get what you get" each day and as long as my past trade statistics are managed and continue to hold, I will be happy.
So, I will start tomorrow with live trades and see how I go. Thanks FIO for the opportunity.
So here's my first trade for my journal. As I will (usually) focus on one trade per day per the ASX 200, I will document (edit) the progression throughout the day. Generally, each trade will have a pre-market 1 hr view of the trend to consider how potential volatility and major resistance zones and patterns for the day. I can then post my trade open and finally, trade close. Subject to my availability, I will try to do this real time (ie. the journal entry starts before I know whether the trade is profitable or not).
PRE-MARKET
Here's my pre-market view. There is the NAB business confidence index release at 11.30 AEST today. The index continues to trend sideways overall for the time being with both a double bottom and a wedge pattern emerging. A similar pattern was seen in late June which resulted in some volatility...so stay tuned. Not sure today is the day to kick start this volatility, but I need to be ready.
10.15 View
So, the 10.05 and 10.10 bars and volumes did not show what I would call a "natural movement". I like to see a good spike in the 10.00 market open bar and volume...which happened. This would be followed by some direction and declining volume in the 10.05 bar, followed by the 10.10 bar. Today, there was a big 10.00 spike, but the volume dropped for 10.05, then rose for the 10.10 bar. Not a "natural movement" to me, which means I think there's more activity to come before it settles into much of the day. When this happens, I fall back to the 10.25 and 10.30 bars to see if I will enter and which direction for the day...say tuned.
10.35 View (ENTRY)
Ok, so i am long at 10.35 at 5708 with a 16pt stop loss. Why 16pts? Well....it's simply based on back testing and my risk tolerance. Gives it wiggle room and works from statistical standpoint. I'm guessing I can do more work on this to fine tune. So the long entry is based on a long bar for both 10.25 and 10.30. When these two move in the same direction, that's the direction i head in. My exit time for this entry is 2.35pm AEST. Again, just based on statistics. I will set my MT4 to exit at this time and see what happens. I do have some reservations on this trade as a consolidation has happened below the "underside" of the diagonal trend bar shown in my first 1 hour chart. I'm hoping for a liquidity retracement to happen during the day to the starting point (and beyond). We will see. So, trading done for the day until my exit. Will see what happens.
2.35 Close - 7 point gain
Well, a very up and down day for me with a 7 point gain at the exit. Looking at today's chart, clearly there would have been many preferable exit points if managed discretionary or with a trailing stop. I've tested both of these previously over several months and over the long haul, they have underperformed vs the time exit for me. Also, I don't have time during the day to manage the trade. So if the intent of the journal is to follow process, that's what happened today. We'll see how we go tomorrow....although with US jobless claims during the week...tomorrow may be a "hold". (I also suspect as the days pass, i will also be less verbose on my descriptions )
Two double bottoms and a wedge pattern in the opposite direction suggests today may have some volatility, but no major breakout ahead of the US jobless numbers tomorrow. Depending on the initial price and volume movements with resistance, I may revert to my "safer bet" exit which is a 10 point target vs a timed exit. Will wait and see.
10.15 Entry
Entered the trade at 5710 short with a 16 point stop and an exit at 11.45. These are the rules with the body of the 10.10 5 minute bar is <50% of the 10.05 bar. Still some indecision in the market, hence the exit at 11.45 based on my statistics. I've also decided to add a target price at 5687 and will periodically check the trade when I can to see if the stop can be moved.
Closed at target price +23 points
Target price was hit. Will see how much a "gained or loss" by not letting it go to my timed exit at 11.45 AEST. Otherwise, done for the day with the ASX 200
Excellent ty for sharing, sounds like you drilled down a very simple and clean set of trade rules. Any newbies would benefit to test this on theor own to improve and simplify their own chartd
Still remaining cautious today with US jobless numbers late tonight. The movement is still stuck between a declining trend and a double bottom, although we saw that break yesterday. Of late, i've seen a few solid looking double bottoms break of late as the market dives for liquidity below the bottom. Unclear on the direction for today, and may seek to take a 10 pt gain if trading conditions are looking tight. Will see...
Trade open 10 am AEST (special rule with pre-market volume)
Ok, I opened my long trade at 5728 today. It's a special rule that when I see pre market volume in the 9.50 bar hit volumes at/above the 200 volume mark, I will trade in the direction of that bar right at market open (10am). While not certain, I tend to think this larger pre-market volume is driven by bigger money getting a jump on the market.....and I like to follow on their coat tails. My concern about this trade is the volume hit "just below" the 200 mark...and my internal voice is questioning whether I've jumped to early and should have waited for my "usual" trade. I guess this is what journaling is all about . Timed exit for this early trade is 3pm AEST with a pretty ambitious target price of 5840. Stop loss is set at 16 points an will see if I have time to adjust this during the day. Will see which of these three exit points is hit today.
Stopped out today at -14 points
I had a another look at the market movement about 20 min after my entry and felt more strongly about my concerns at market open, moving my stop from 16 to 14 points. Eventually, i was stopped out at this level. In hindsight, I should have paid more attention to the pre-market 9.55 bar which was just after my setup bar at 9.50 with volume just under the 200 market. The 9.55 pre market bar had even higher volume than the 9.50 bar and it looks like it was market participants were running up the price and then bailing...letting the sells eventually take over. There may continue to be back and forth today...but i'm out. Interesting side note on whether journalling for an "audience" played a part in wanted a trade to happen...accepting a market entry on a trigger that had "almost" hit the volume mark I needed..whereas I should have waited for more clear signal. I'll need to pay attention to this one.
Thanks Planetmoto. Yes, i'm trying to keep the rules simple and base on stats where I can. The rules I have have been developed over about a year of walk forward testing on paper and five months of live trading on a smaller account. The key for me personally is the focus on "one trade per day" and taking what the market gives me. I find it works best for me and my trading personality.
The Index remains range bound with a short breakout through a declining wedge. If it pushes above the triple top resistance today, we may see further movement to the upside.
Trade open 10am
Ok, the pre market 9.50 bar hit the 200 volume mark and today there was further follow through from the 9.55 bar. So it's an 10am entry at 5751 with a timed exit close at 3pm today and a aim high target at 5844. Stop is set at 10 pts today.
Ok, so closed out at my time stop of 3pm (manual close). I see I missed opportunity to capture more points during the day when I wasn't at my PC. Them's the breaks on my system though. You can't think about the "coulda, shoulda, woulda" when you are not at your desk for much of the time. So i'll take the 9 points to close out the week.
Weekly Wrap Up
So for the the week, my trading points were +7, +23, -14, +9 (total 25 pts). Like today, I missed some further profit potential. Need to think more carefully about setting tighter exit targets. My previous stats don't support, but need to keep an eye on this. Have a good weekend.
I missed the pre-market summary this morning as I was away from my computer. Overall, the broad sideways trend continues.
Market entry at 10.35 - Short 5758.5
The market entry was based on the 10.30 bar engulf of the 10.25 bar for a short trade with a stop of 10 points and a target of 5732 (EDIT) or 2:35 AEST...which ever comes first. The reason I picked my late entry signal at 10.35 was the 10am volume just wasn't there. The 10.05 and 10.10 volume bars were higher than the usual market open 10am bar. To me, this becomes a signal to delay my entry to my later set up (comparing the 10.25 bar to the 10.30 bar for a 10.30 entry).
We'll see how it goes.
Exit at TP +27 points
Just checked...looks like my TP was hit today. Doesn't always work out as well timed...so i'll take it. Done for the day.
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