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Four Months -- ZN Trading


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Four Months -- ZN Trading

  #71 (permalink)
svedan
Munich
 
Posts: 19 since Jan 2017
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Hey Lax,

are you trading solely based on the DOM or do you use the chart/price- action too?
Which size do you use?

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  #72 (permalink)
 
lax99's Avatar
 lax99 
Denver
 
Experience: Intermediate
Platform: Bookmap and Jigsaw DOM
Broker: Stage 5 Trading
Trading: ZN
Posts: 434 since Jun 2015
Thanks Given: 623
Thanks Received: 818


svedan View Post
Hey Lax,

are you trading solely based on the DOM or do you use the chart/price- action too?
Which size do you use?

I used to trade charts but I'm entirely DOM right now. I'd argue that price action is directly tied to the DOM, not the charts.

I trade a 1 lot. My strategy means that a lot of mornings go by without trading, so it's a slow process in sizing up. Some traders might have 10 trades in a day! I had 14 last month. If you view time as linear, it'll take me many more months to size up than it might for another trader. Trade-by-trade though will hopefully be similar.

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  #73 (permalink)
 
lax99's Avatar
 lax99 
Denver
 
Experience: Intermediate
Platform: Bookmap and Jigsaw DOM
Broker: Stage 5 Trading
Trading: ZN
Posts: 434 since Jun 2015
Thanks Given: 623
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I had one trade this morning which I'm intentionally posting about while it's fresh. I saw absorption at 120-145 and I offered out. I blew out two ticks higher at 155, and then the market really stopped in its tracks at 160/165. I saw the 160/165 trade and I offered again up there, but I was late to the party because I hesitated. That was the true spot--ZN promptly turned around and backed up 8 ticks down into the range.

So, what went right and what went wrong?

1) I recorded my trade. When ZN was 120-090, I said "It's refusing to print back into 090s"... and then I didn't buy it. And then it ran for 16 ticks. I think the lesson here is to take the easy, obvious trade. Perhaps my long history of buying breakouts which failed is leading to me not taking these trades. One thing is for sure though: I need to fix this. I need to take the easy money when it's on the table. It was irresponsible to not get long at 090 this morning.





2) I traded without hesitation at the first absorption spot I saw. I placed a stop and it happened to blow through it.



3) I traded with hesitation at the second absorption spot I saw, which was the one that worked. In the recording, I can actually see my cursor waver around!! As you can see below, by the time I had offered 160, ZN had already traded 16k at 160 and was not going to see those highs again.


______________________________________________________________________________________________

Things I want to continue to focus on in March: Taking the easy money. It's easy to say this in retrospect and tough to trade this in the moment. But come on--Why the hell didn't I buy that 095? At worst it would have been a 2 tick loser. The momentum and volume were there but I wasn't long. Bad trading.

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  #74 (permalink)
 John47 
Pittsburgh
 
Experience: Advanced
Platform: Ninjatrader
Trading: ES, GE, M6E
Posts: 77 since Jan 2018
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I feel like that is common. Or maybe I just think so because I think I've experienced it as well.....that is, taking a setup that may be sub optimal...or maybe good, just didn't work out....and then tightening up and not taking the next setup. Which inevitably is good. Maybe we've all experienced it.

Have you had issues following your rules? Something like that that would make you question your own decision making?

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  #75 (permalink)
 
lax99's Avatar
 lax99 
Denver
 
Experience: Intermediate
Platform: Bookmap and Jigsaw DOM
Broker: Stage 5 Trading
Trading: ZN
Posts: 434 since Jun 2015
Thanks Given: 623
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John47 View Post
I feel like that is common. Or maybe I just think so because I think I've experienced it as well.....that is, taking a setup that may be sub optimal...or maybe good, just didn't work out....and then tightening up and not taking the next setup. Which inevitably is good. Maybe we've all experienced it.

Have you had issues following your rules? Something like that that would make you question your own decision making?

I've got a handful of rules which I am following well. My edge has most commonly shown itself during busy days, so I focus my trading around news events. I don't trade the news itself--which would be a completely foolish coin toss--but I trade the action which results from the volatility. I've been thinking about the decision making aspect for a while now and I was going to make a post this weekend, but it seems that now would be the perfect time to do it.

1) One of my huge weaknesses is that I like being right. I'm an engineer by trade and being right is not only a matter of importance to the job, but a matter of contest between coworkers. Is the bridge two kilometers long? No, the bridge is two and a quarter kilometers long. Does the plane fly at Mach 10? No, the plane flies at this altitude with this profile and the engines develop this much thrust... You get the picture.

I tell myself before each session that "Trading is not about being right. Trading is about making good decisions. Trading is about making the best decision you can with the information at hand--if that information and context change immediately after you enter, then the next best decision you can make is to take the loss"

2) The trade in question in the previous post is a bit of an anomaly. I was in the position for six seconds and it stopped me out. The good absorption play was quick, whipped through a couple of prices in a couple of seconds, and by the time that I saw the trade and hesitated, it was gone. I like to think that I would have taken that trade no matter if I had a winner or loser beforehand; the fact of the matter is though that I had a loser before it, hesitated, and cost myself multiple ticks of profit.

3) In general though, I find that if I am not "right" over a few trading days (repeated stop outs), then I will be exceedingly hesitant in taking trades for the next couple of days. It'll usually take for the weekend to hit for me to take a step back, reevaluate, and come back ready to fire again.

4) Overall, I find myself making better and better decisions each day. On Tuesday I made a bad decision by not taking the long. I made another bad decision by hesitating on the good trade. On Wednesday I made a good decision by not taking a short trade. The action was very back-and-forth, and although we hit lows during my trading timeframe, the action was not great and I believe that the absorption trade I took that day was a good one. On Thursday I made a good decision by not trading. I couldn't get a read on the action at all and I didn't risk any capital in that tough market. On Friday--today--I didn't trade because of Quad Witching.
_______________________________________________________________________________________________

I'll keep tight reins on my trades early next week. I won't trade on Wednesday because of FOMC later in the day. I'll trade Thursday and Friday because there will be plenty of folks repositioning themselves based on the rate decision.

I'm doing better this month so far. One of my goals is to lose less in March than I did in February. So far, I'm on track to hit that goal!

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  #76 (permalink)
 John47 
Pittsburgh
 
Experience: Advanced
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lax99 View Post
4) Overall, I find myself making better and better decisions each day. On Tuesday I made a bad decision by not taking the long. I made another bad decision by hesitating on the good trade. On Wednesday I made a good decision by not taking a short trade. The action was very back-and-forth, and although we hit lows during my trading timeframe, the action was not great and I believe that the absorption trade I took that day was a good one. On Thursday I made a good decision by not trading. I couldn't get a read on the action at all and I didn't risk any capital in that tough market. On Friday--today--I didn't trade because of Quad Witching.
_______________________________________________________________________________________________

I wanna point this out in a constructive way: looking at the recent good decisions you've mentioned, they seem a bit centered around how well you avoided danger....I don't wanna pigeon hole you I have not read every line of your journal, though. Could there be truth to this?

I spent my late twenties scalping and spreading IR futs based on order flow. Its interesting for me now to look back and think about that culture, the kind of trader I was then and my peers. Definitely some habits and patterns I learned were very good and some were not.

How long have you been at this (trading 10yr off of order flow) and what drew you to it if I could ask?

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  #77 (permalink)
 
lax99's Avatar
 lax99 
Denver
 
Experience: Intermediate
Platform: Bookmap and Jigsaw DOM
Broker: Stage 5 Trading
Trading: ZN
Posts: 434 since Jun 2015
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John47 View Post
I wanna point this out in a constructive way: looking at the recent good decisions you've mentioned, they seem a bit centered around how well you avoided danger....I don't wanna pigeon hole you I have not read every line of your journal, though. Could there be truth to this?

I spent my late twenties scalping and spreading IR futs based on order flow. Its interesting for me now to look back and think about that culture, the kind of trader I was then and my peers. Definitely some habits and patterns I learned were very good and some were not.

How long have you been at this (trading 10yr off of order flow) and what drew you to it if I could ask?

I'm essentially still a beginner at order flow in the scope of things. I've been using this methodology since the start of this year. And please don't feel that you're pigeon holing me! I bet that even at a quick glance, your years of experience show you the root of the matter much quicker than my couple months do. I'm very grateful for any and all contributions, so thank you.

I started trading charts and trend lines and other nonsense five years ago in the equity space. I made just over 20% that year because 2013 was a nice bull market and nearly every dart I threw hit the bullseye. In 2014 (at the ripe age of 19) I shifted to futures because I wanted the leverage and wanted to make gobs of money. For a while, I did. 2014 had some crazy trending markets. I was short yen and crude and the euro and gold periodically, and I returned more money than I ever thought was possible.

I hit a rough patch in 2015 which is around the time I became a member here. Of course, when one thing stopped working, I started looking for the holy grail. This grail-hunting led to a long extended drawdown which saw me blow up my account by 1000 cuts from 2015 to early 2017.

The reason I'm drawn to order flow is because I feel that I never really learned how the market moves. I can draw a trend line and click the mouse like anybody else, but in all my searches it seemed that I was missing why some things worked and others didn't. There have definitely been some Aha! moments in the past months as I see something really starts to click. I'd say that overall, I want to trade order flow because it is the base for everything else.

Order flow was a nightmare for me to read when I started. I think I'm getting a hang of it though and I'm excited to see my performance for 2018 as I turn 24 later this year.

On the topic of avoiding danger--is that to say that I should be seeking it out more, or that I'm trading scared, or something else?



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  #78 (permalink)
 
lax99's Avatar
 lax99 
Denver
 
Experience: Intermediate
Platform: Bookmap and Jigsaw DOM
Broker: Stage 5 Trading
Trading: ZN
Posts: 434 since Jun 2015
Thanks Given: 623
Thanks Received: 818

It has been a little while since I last updated my journal but I traded well this week. I had three trades; 2 winners and 1 loser, and I saw that the loser was going to be a loser quickly. I was feeling in the zone more than I have been in the past and I felt that I could see what the market was going to do before it went and did it.

The couple of issues I had this week were as follows:

1) Trading against the trend. I had a trade on Thursday morning which I told myself was absorption, but it was just a stopping point at which somebody with size on decided to take size off. I need to read the size and volume of transactions better in the future and tell when I need to just market in and go along for the ride.

2) Not taking the easiest money I saw all week. I was watching the ES overnight on Thursday evening and I said to myself "It's going to puke here" as it traded from 2625 down to 2618-ish. I saw the bearish price action, I knew that I could get paid on the trade, and I didn't take it. I didn't see a super clear entry point and I just stepped aside. Lesson Learned--If it's moving quickly and a stop run is likely/imminent, click into the trade with a wider than normal stop. Even if it doesn't go the first time, I'm paying for information that either 1) the stop run won't come; or 2) it's going to be a powerful run, but the timing wasn't quite right.

My focus for the end of the month is to maintain consistency. I've found a decent consistency in the last couple of weeks and it has come on the back of just feeling the market. I can't describe this well, but sometimes I'll just know what the trade is and it'll come. My goal is to take as much advantage of this as I can in the coming days, because you never know when it'll go again!

Good trading everybody!

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  #79 (permalink)
 
lax99's Avatar
 lax99 
Denver
 
Experience: Intermediate
Platform: Bookmap and Jigsaw DOM
Broker: Stage 5 Trading
Trading: ZN
Posts: 434 since Jun 2015
Thanks Given: 623
Thanks Received: 818

March went very well for me! I traded much better than in the past two months and it showed. I basically ended up breakeven on the month (0 tick P&L, -$9.39 in trades and -$55 in commissions after 12 trades). I’m proud of the improvement I’ve made, especially because it is entirely a personal effort. Those trades which I made weren’t from some “flavor-of-the-month” trading room or some bonehead trading buddy. They were from my own brain and my own market reads.

Things I did well this month:

1) My market reads got much better. My strike rate is 50% with a 1:1 R at the end of March.

2) I bailed on crap trades much quicker. I had 6 losers; 3 were full stop (-2 ticks), 2 were half stop (-1 tick), and the last was a full stop on an ES trade (-3 ticks). I had the presence of mind to bail out on trades which didn’t have a chance in hell of paying me.

3) My context calls are improving. I used to look for absorption everywhere I could, which meant that I was insta-fading whenever I saw 4000 absorb. Now, though, I’m seeing when that absorption actually takes the market back, and when it is more likely a spreader or just somebody scaling out of a position. In the latter case, chances are that the market continues churning right on through that absorption spot.

4) Along with #3, I took more breakout trades instead of trying to fade everything I saw.

5) I was more aware of my state of mind. There were times in which I could feel how tired and disconnected I was at night, and I just turned off the computer instead of chancing a bad read, trade, and inevitable loss. I also recognized when I started to chase trades in a revenge fashion, and also turned off the computer. I limited my loss that day to 2 ticks, instead of what would have been -6 or -8 in the past.

6) I stopped worrying about the statistics and I just traded. I know many folks focus on Opening Range Stats, IB Stats, and other associated market statistics. I bet there’s an edge in these, but there’s no edge without a contextual understanding. I focused on my contextual understanding this month.

Things I did poorly:

1) I traded when I had no read on the market. Many of my trades this month were stop run type trades in the ES overnight. The ES is terribly thin overnight and I couldn’t get a read in many cases. However, I forced trades twice; the first gave me 5 ticks, but I bailed for +1, and the second stopped me out. The action was too thin and whippy for a solid order flow read. Trading during this time was a bad idea.

2) I was too eager to take 1 tick winners, thereby inverting my R/R. These 1 tick winners also hardly printed against my entry, meaning that I had a good location and a solid edge. On multiple occasions, the +1 I took could have been a +4 or +6.

3) I’m sure there was something else I could have improved on, so I’m leaving this open to fill in later when it comes to me.
______________________________________________________________________________________________
For April:
1) Focus on continuing to make good reads.

2) Continue to understand the relationship between pause absorption and stop absorption, and when to trade with/against that price action.

3) Don’t trade if the edge isn’t there, or if I can’t get a good read on the action.

4) Continue to keep stats on which type of trades are winners/losers, and how well I think I traded each.

5) Take more +2s instead of +1s. Trading with a R/R less than 1 is unsustainable and I intend to trade in a sustainable fashion.

6) Pick out zones to trade in. Rather than trading wherever the hell the market happens to be, come in each morning with an intent to execute some price action at some price. Visualize this, and reconcile the visualization with the action when it comes time to execute.

7)Lose less money than March.

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  #80 (permalink)
 
rintin2x's Avatar
 rintin2x 
salt lake utah
 
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Hi @lax99 I also just got back with ZN, saw your post and thought I might able to relate more with this guy now .

Keep it up!

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