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Didn't trade any more today. Got distracted making a modification to the candlestick pattern indicator in NT8. I have uploaded it to the indicator section. It allows you to select (by checkbox) which candlestick patterns you want to see. You can also just select find_all and it will find all of them. The original one only allowed you to pick one pattern from a drop down menu.
It's much easier than having to load multiple copies of the indicator to get it to show more than one candlestick pattern.
Ended up +270 for today which makes day 3 in a row for being profitable. Very happy with that. Not happy with my chicken sh** style of trading. That's also why I stopped trading. Could have easily been +1500 today. I started looking for good ways to find the end of a trend or find indication that it may continue. That's why I started looking into the candlestick patterns. I was looking for some sort of confirmation that the trend may continue. Candlestick patterns may be something to help. Not sure yet. I got frustrated with the version that came with NT 8 that only allowed one pattern to be chosen.
Thanks for sharing all of this with us. I have just started trading futures again myself. I once was a futures trader many years ago, and pursued different career paths, but kept trading stocks and options and a bit of fx. My objective is to go back to full trading again, trading futures that suits me better for many reasons.
My approach is more short term, looking at 5 min charts, only for day trades. One of the reasons is that it allows me to place shorter stops, hence risking less capital per trades, but on larger positions.
I am interrested to know how you handle stops using daily timeframes.
For Futures I only look at the longer time frames to get an idea of where to place support and resistance lines. For the most part I am looking at the 200 tick and 500 tick chart. They seem to give the clearest picture of what is going on with price movement.
Now, I do trade the daily charts for spot Forex. This allows me to check the charts once a day and make adjustments. Stops are initially way back with much smaller position size. At least 50 pips behind the last swing in price. Once it moves a good bit I will move my stop but sometimes that doesn't happen for weeks. It is my main source of income and Futures is just getting started.
So, here we are at the end of Thursday. One more trading day this week. What's going through this bucket head of mine?
Mostly good entries today. Only had one trade that even approached my initial stop. There was no real indication that the direction was changing so I stayed put. Towards the end of the trade it started to look more and more like a classic 1-2-3 pattern so I set a buy limit 2 ticks into profit. I also squeezed in my stop a good bit just in case it didn't hit the buy limit. To the tick it tagged it and I was out of the trade with a very small profit. All of the other trades today moved into profit fairly quickly and stayed there until I would chicken out and close the trade.
I get so excited with the speedy price movement that I feel like a chihuahua on crack. Need to back off and let the trade develop. Doing so would have put a bunch of money in the hip national bank. All profitable trades today so I can't complain there. What is dangerous about my chicken trading is the risk/reward is way out of wack. One bad trade will take multiple good trades to make up.
I am letting too much distract me from trading. Missed out on several trades while I was playing with the candlestick pattern indicator. Not a good way to spend trading time. Will have to work on that. Especially as I stop trading early morning hours and only have the U.S. session to trade. Trading should be the only focus during that time.
Goals for Friday: Last day of early morning trading. Would love to crush it tomorrow. Hopefully the markets will agree and give me a long term trend trade that lasts most of the day. If not, I will hit and run as much as I can. Focus is on letting trades develop and run as long as possible.
Overall it has been a good week. Would love for Friday to turn it into a great week.
Interesting price movement during the night. 57+ points. Enough to clear stops on almost all of the price movement from yesterday. Now it is trying to move back up. With some strength I might add.
Maybe this is a good sign for today's price movement. We will know in a little while.
No significant news events scheduled today although you never know about politicians.
No trades so far today. Why? Not like there hasn't been plenty of really good opportunities. Hesitation mostly. I really didn't want to blow a good week on a Friday.
Not happy with myself today but still pleased with the progress I have made in trading Futures.
Really curious to see how I do next week when I only trade the normal day hours. My guess is that without the fatigue of getting up early that I can be more focused during the most active time for NQ.
I pulled up a daily chart for NQ just to get a longer term feel for what is going on. What's really interesting is the spike in volume back in April. Since that time period volume has been on a steady decline with a steady increase in price. We have seen a nearly 500 point increase in the last 13 trading days. We have seen a move of over 1000 points since the last time price was at the 200 ema back in April when the spike in volume occurred.
Now, the steady decline in volume may just be a return to "normal" but I believe it is something to keep an eye on. A drop back to the 200 ema would make it about 600 points.
There was a decent correction back in June which dropped it about 300 points. Do I believe the markets are about to drop and correct? I have no idea. LOL! Looking back to the drop in April, when price broke below the big candle from March 9 is when the real drop started. We had a significant move up back on Tuesday. If the pattern continues a drop below about 7280 may be the start of another correction. 4 of the 5 trading days this week were red.
I started looking at VWAP yesterday (at the recommendation of @texastodd)and it looks interesting when you combine it with my normal style of trading. It seems to be really useful in providing confirmation at what my normal trading style is showing me. I will be studying it intensely this weekend to see if I want to trade it live next week. It definitely is worth some time.
Ordered a couple of books on candlestick patterns. I am hoping to be able to use them as a good early reversal indication. However, using the candlestick pattern indicator in NT 8 it doesn't appear to be reliable on lower timeframes. Not sure if those are programmed the same at what Steve Nison recommends but I will check it out and make changes based on his style of candles.
The one key thing about trading swings in price is trying to figure out how much of a swing is significant enough to use as a possible turning point. The goal is to minimize the "pain" of a trade staying in the red for a long time. The swing indicator in NT 8 is ok but it tends to miss ones that I can see visually but they don't meet the rules it needs to see a swing.
Tons of studying to do this weekend. I plan on scribbling all over the 200 tick charts. LOL!
Long short short long short long.... oh whatever. LOL!
Spent the majority of the weekend studying charts. Running the market replay simulator in NT 8. Tried everything from the 50 tick chart to a 1000 tick chart. Not like in 1 tick increments. LOL! 50,89,100,200,500,750,1000. Here is what I see.
50 tick chart, ok if the markets are really slow like 1-6 a.m. Eastern time US. As you get closer to market open the speed of the candles almost makes it impossible to work with. Some groups of candles are sub 1 second each. Would be fine for a strategy to run but not a human. Results are sporadic for me at this tick size. Sometimes you get in at a really good price with a really good stop other times it isn't much different than the 200. Sometimes the swing really isn't a swing just price movement.
89-100: Close to the same. Of course 89 gives a bit more detail than the 100 but overall both are good for scalping up to about 7-8 a.m. depending on volume. At 930 hang on it gets crazy. 1-2 second candles. Sometimes groups of candles all show up with about the same time.
200: Gives the best overall results for entries. Very consistent. A swing that you can see on the 200 is usually a valid swing. If you are patient enough, it even works well during the early morning hours. You will miss some of the small trades the 50 tick will give you but not enough to matter. Consistency wins with this tick chart.
500: Great for longer term intraday trades. Candlestick patterns start to matter at this tick level. Look for price movement at or around the different levels for the VWAP indicator or at support and resistance.
750: For some reason this doesn't seem to work very well with NQ. Maybe with ES. Haven't tried it.
1000: Best overall for longer term but still intraday trades. 1-3 opportunities every day. Candlestick patterns seem to work well also. I really like the 1000 tick chart. Jump in from the 200 tick chart and then run it from the 1000.
Going to play around a bit more this evening.
Doesn't seem like I missed much in early morning trading.
Looking at the 12,000 tick chart we are sitting on the 200 ema after the drop since markets opened. If price gets below and stays below the 200 ema we could be in for a drop today. Next potential support would be around 7292.
No real clarity on the 200 tick chart as of yet. Price has come up to test VWAP a few times with it being rejected each time. I have the potential support and resistance lines drawn from Friday's trading (blue horizontal lines). I don't like entering trades when the market is sideways like it is right now. There is a possible short opportunity at around 7332.50. With a possible long above 7343.75. Will probably wait for the markets to move some before placing any pending orders.
The blue shaded areas on the chart are from the VWAP indicator showing the std dev lines.
