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RUNNING THROUGH THE JUNGLE! TRADING THE COMBINE VIDEO SERIES
"BROADSIDED! Swimming to shore. Cap'n ran us into the alley, and she caved in on us."
RUNNING THRU THE JUNGLE! TRADING THE COMBINE PT 7a
RUNNING THRU THE JUNGLE! TRADING THE COMBINE PT 7b
RUNNING THRU THE JUNGLE! TRADING THE COMBINE PT 7c
Trading for Friday, August 18, 2017
Right there in the yellow box, and I goofed up. Between trying to explain ongoing in the macro economic/political picture worldwide, and handling a very risky trade, I duped myself. Blew up the account.
The rules are still the same. I did not follow them. It's as plain as that. Don't lose your hat. I know a lot of traders get the heeby jeebies, and they freeze up the next go around. Well, we know the rules here. Let me guide you through the cataclysmic wreck "out at sea," and you'll be better off to handle it the next time it happens to you.
Well, I was very bearish "political/economically," and that largely affected my trading. I was doing great at it that way. I was up almost +$500 on the day in the first 30 minutes. I could have called it a day.
Here's what I did right. I shorted the quick wicks at the top near the open, through the support. I was being very bearish, so I was will to pay more for the expected cascade down. I was right on it, and about about +$135 up I add a second contract. Never add to a losing trade only to a winning trade, so that you don't lose so much if you are increasing your risk, and you can only lose what you profited that day. It depends on how strong the indicators are in that direction though. Very rarely does anything call for this kind of trading.
I was up +$345 almost at the low, and I should have just taken the money, and ran. Triple digits in one trade, and you take the profits to go. That's the rule. I was up two contracts in a 3 contract account with a $500 drawdown, so that was already very high risk. It was so early in the trading session, and this was the second profitable trade, so I added another contract like I could just come back if I blew up the profits already. So basically I was doubling down with a plan. BUT I ADDED TO THE TRADE AT A BAD TIME. I BROKE THE RULES.
I should have taken the profits when we broke through the lowest support level, and I should have waited for the price to return to the resistance level to bounce, and then enter the trade again completely fresh before looking for a reason to add more than one contract to the "winning trade." Easy peasy stuff. INSTEAD I ADDED MORE TO THE TRADE ALMOST AT THE VERY LOW OF THE BIG MOVE. BIG MISTAKE.
NO. HUUUUUUUGE MISTAKE.
Well, price retraces to the resistance, MACD begins to flip over, and had I had gone by the rules, I would never have had a loss. I'd be up almost $500 on that day, and that's 1/3 of the $1,500 target to pass the combine. My oh my how combines could fly by at that rate, right?
I'm usually falling asleep by the time the middle of the trading session rolls around, and waking up the day before, so that and other projects and everything else was why things weren't posted instantly. It's all going on.
Like I wrote before I have big doubts about your system .Because
1- you use same system to trade different markets --- CL , GC, ES ... all behave differently .
2- you use same system to trade SHORT and LONG ---- Futures move differently on up and down moves .
3- you take small profit and have a tight stops- more like a scalper stile and using 5 min chart, MACD , breakouts ----- does indicators and time frame is for a swing trading .
4- your tight stops dont give any movement room specially for a volatile futures like CL - will be stop out most of the time . Just some observations .
I gotta admit I'm too loose with my stops, and I should actually use a stop order to prevent losses. Also my system on bad trading days will not work, and the only prevention against the losses that will incur during those days is a daily drawdown limit and a weekly drawdown limit because terrible market action can last an entire week. If the drawdowns are broken, then that implies it is a bad day and/or week, and the trader should be paying attention to what events are on the horizon see what patterns there are which have caused the funny business in the markets. For instance this week the central banks are doing their political interventions publically, so the market suddenly starts trading funny. Funny market days incur losses not gains, and this perception is viewed the same why by many other traders not just through my personal eyes. Even decades in the trading business broker millionaire pros that have traded with the biggest of the bigs in the floor pits say it exactly the same way. It is why there are drawdowns to begin with.
With experience it becomes obvious that during days when the market behaves poorly or "uninvestable" because of some overlying pattern in the political/economic macro scene, it proves to be a double negative:
No profit
Lost income from the week or day before.
Why? Because when liquidity is down, algo can run you out of what you were doing before. When liquidity is high, participants are so abundant that they move the prices from support to resistance to support to resistance until they make their money, and then they leave it for everyone else, and during this during this time, to make money means to play with it, or wait on it to finish what they are doing. Even the algos are more cooperative front running these moves during these times on order flow (delta) volume triggers, and they enforce the levels, but during low liquidity times they contradict the levels constantly breaking forcing price to break the conventional levels.
The awareness of these things comes through wisdom from experienced traders explaining it like talking about when a weather storm is are coming, and how to know it, and how to prepare for it, and it comes from one's own hard work through the years of trading experience. They also do much research, and they've heard much hearsay.
Lastly, I'm not very merrily having to say that one style of thing is a scalp, a trade, a swing, or an investment. They are all investments. They are all trading. They are all business as in the brokering and risking of assets and talents between leverage capital holders and the industries of enterprise at large. In other words we broker capital between our firms and lenders or our own capital between with economy picking out where it is profitable to apply it while inadvertently placing it precisely where it is most needed or "demanded." It's the business of capital supply brokering. That's what trading or investment is.
What we're all trying to do regardless of nomenclature is trying to learn why prices do what they do, and then how to strategically capitalize on them while strategically managing our costs of risk without going broke. Whether it's a split second break out trade with one contract and a tiny $500 drawdown limit or it's a pyramid scale in trade over an entire day or swing or long term with 15, 50, or 5,000 contracts, we all are interested in the exact same business talents and wisdom. Grammar don't make money in this business. Wisdom does.
So teach it, and let's debate it. Then let's allow the tests to prove what is wiser, and what is not.
So this was a break even day first, but I wiped out half way on purpose basically knowing my limitations like a big brother showing you how bad it can't get on a bad trade to make a point win or lose on the trade.
In the yellow box I was short in a trouble handle cup and handle. I though the bullish reversal was failing. The first cup and handle failed, so I thought bearish. The price broke out through the lowest support line putting me into the short trade. As soon as price pops back over resistance, that trade is a scratch. Get out! I was still very bearish economically/politically in the bigger picture, so I was stubborn. Then you see the trend line, and once I crossed that I would exit, but I hung in harder.
Basically I figure I was already down triple digits, and I thought I'd spin out the account a little bit, and show off how I can come right back from it all the while knowing I would be more profitable on the day for not risking that trade letting the chart set back up again for later and that 9 out of 10 times in that kind of trade the bearishness in the market is vanished. But I could come back from it.
Point of that being THAT I DON'T LOSE MY MIND AND BECOME PANICKY.
And I showed just that. I talked about what I did wrong. That's as clear as day. I talked why that is wrong, and to do the right way. At the same time another trade on another market caught triple digits. That's just how it goes.
I traded back up to break even on the day.
TERRIBLE TRADING WEEK BY THE WAY. KEEP THAT IN MIND. DRAGHI AND JACKSON HOLE ARE CAUSING FUNNY TRADING MARKETS. DON'T WORRY. IT WILL CLEAR UP. TIGHT DRAWDOWNS OR STOP TRADING DURING TIMES LIKE THESE.
Trader 2016. Base on your strategy you can build an automated strategy using Bloodhound in a 15 min. Then test it on a different markets and different time frames in a matter of minutes . Then you will see what really works and what not . It will save you tons of time and loads of $$$ .
I looked at the video. That looks similar to the Trader Technologies application by X Trader.
I wonder how I would apply my strategies to that.
My checklists before a trade are mostly:
1. 5min candle stick because that is what most of the trading world reads and responds to universally
2. Time of day because the market is more liquid at certain times than others or volatile
3. Location from open swing high and open swing low because the trading world responds to this universally
4. Cup and Handle Reversal because this is the single most easiest trade to spot which attracts the most participants causing more liquidity, and thus more enforcement of the chart patterns such as support and resistance levels.
5. Number of Legs up or Down from the Cup and Handle Reversal depending on time of day because after traders have taken profits, they tend to leave the trend to move on to another chart or another day on the same chart. Therefore participation decreases, and the counter trade starts to shove price making it react erratically.
6. Reading higher lows, and lower highs on 5min candle stick and DOM Visual Heatmap because I want to see what prices are not being accepted or invested in the competition between bears and bulls, so I can see who is more abundant, thus who is more of the capacity to lead a trade. It's like watching cultural or fashion tends happen or fade.
7. Reading market orders through surge through red and blue bubbles to spot icebergs and heavy panicking or greed on DOM Visual Heatmap in order to read who what kind of people are abundant in the crowd.
8. Watch rate of MACD Histogram color shift and the moment that the MACD Histogram flips to opposite color, so that I know when the delta ratio of buy to sell order has critically changed over to the other side, bear to bull or vice versa which signals that a trend is ending, profits are being taken, and stop runs will trap traders in the reversal making a very probable profitable trade.
9. Candle stick wicks and tails because this signifies a deep test of prices, and an intense conviction to invest in the market price headed the other direction.
10. Volume levels to determine intense convictions in price bars suggesting a reversal is beginning.
I'm not sure I can put all of that into algos. I'd be impressed if someone proved otherwise.
BTW, that is what I'm using in these combine videos, but those are not the only strategies I use successfully. When there is more capital in the account with a larger drawdown, then other strategies are added to what I'm doing here for this journal. Otherwise other strategies are not good for small accounts with small drawdowns.
