Welcome to NexusFi: the best trading community on the planet, with over 150,000 members Sign Up Now for Free
Genuine reviews from real traders, not fake reviews from stealth vendors
Quality education from leading professional traders
We are a friendly, helpful, and positive community
We do not tolerate rude behavior, trolling, or vendors advertising in posts
We are here to help, just let us know what you need
You'll need to register in order to view the content of the threads and start contributing to our community. It's free for basic access, or support us by becoming an Elite Member -- see if you qualify for a discount below.
-- Big Mike, Site Administrator
(If you already have an account, login at the top of the page)
I'd ignore actual risk and only look at initial risk. I think the best targets are based on MMs or some other obvious level that we might get to but there is so often a bounce or a reversal at 1R it's important to be looking at. Another way to look at is to shoot for 1R on TR days or on countertrend trades and to shoot for 2R on with trend entries on trending days. Choosing good targets is something I'm actively working on too and I'm finding it's a lot harder than finding good entries!
Thanks @mgcharl! I WILL try for 1R within TR's. I can be dense, but I hadn't thought about trading range scalping during this test run . I agree with you on the difficulty of choosing good targets. Sometimes it looks like I know what I'm doing when I enter a trade. But that illusion is always completely shattered by the time I exit!
Trade 1: I entered long using a limit order placed at a 50% pullback from the 535 (PDT) breakout bar. This was a breakout from the ON trading range. The pull back ultimately became a test of the trading range breakout. I set my stop 1 tick below the low of the breakout bar (2920) and my profit target at 2987.5 (2R). I was encouraged by the fact that my profit target coincided with a MM target using the width of the trading range that preceded the breakout. I got a MFE of 4.75 points but the market sold of and hit my stop. -15t.
It took me all day to come up with a reason why this trade didn't work. As a rule of thumb I tend to shy away from assigning cause to complex events. But what the heck, I'm only human. We are meaning/cause assigning machines. But I digress...The best explanation I could come up with is that the breakout occurred before the open, meaning the BO was on relatively light volume. So it was wrong to assume the market was long here. The breakout bar itself belied the true two-sided nature of the market...which was revealed on the opening bar, a doji bar. This is a good long MOST of the time for a 1R target, but probably only good SOMETIMES for a 2R target. Which is the objective of my experiment. So it's a bad trade for what I'm trying to do here. BUT a good trade to learn from and a good trade to take under normal circumstances. You get 2x+ ACTUAL risk. It's something I'll be taking a closer look at moving forward.
Trade 2: I entered long using a market order on the close of a bear bar that touched a gently upward sloping trend line (not pictured). I took the market to be two-sided and I used an aggressive entry to maximize probability to get a 2R swing up. Yup, this was a mistake. It is actually a lower probability entry. I was definitely trying to force something here. I set my STOP at one tick below the prior low and was stopped out immediately. -8t.
The 705 bar was the legitimate signal bar. Buy-the-close bulls got 2R where the market sold off a little, went sideways, and resumed up.
So it got a little messy today. I knew it would during this experiment. But it's all about learning to recognize 2R setups. With day 1 in the books I already feel like progress is being made . I'll try to do a market replay or two over the weekend but it's a busy one so we'll see!
You’re right about the signal bar you pointed out on Trade 2, that was the trade of the day! Something I’ve been learning the hard way recently is you absolutely must wait for a good signal bar, which can be a real test of patience when you’re anticipating the reversal.
Trade 1, not sure about trading before the open? The only reason I can think for trading during globex is if you can’t trade the main session. Having said that, I think your target was unrealistic, it looks like it did go for about a MM of the most recent swing down.
So I did a little Market Replay on a Saturday night. Does this guy know how to party or what? I'm continuing with what I now call my 2R hunting expedition/experiment. I did a market replay of February 11. It was a narrow range day. I've been warned by my fellow traders to only shoot for 1R on days like this. But I figured maybe I'd try for 2R targets anyway. I'd recommend this to anyone seeking slow and painful torture for their Saturday night. I took 3 trades, 3 losers (shockingly), -25t.
Trade 1: It looked like the market had tested below yesterday's high and was reversing higher. I couldn't be sure if it was a major or minor reversal. I bought the close (2709.25) of a reversal bar after two higher-lows had been made. This appeared to be the best opportunity I've had all session for a 2R move. I set my s/l at 2706.75 and my profit target at 2713.75 or 4.5 points. The market quickly went up to the 1R target where profit taking (by others) ensued and then selling. Stopped out, -10t .
Trade 2: I was doing my autopsy of trade 1 when a reversal bar printed. The reversal occurred where there should have been 1R profit taking by the bears and a possible LH double bottom reversal. I entered on the long side but there was one more bar of surprise selling after the reversal. Stopped out...-5t...yep the stop was a little tight.
Trade 3: I sold the close of a reversal bar located under resistance from the EMA and yesterday's high. The market sold off but came up 3 ticks shy of my 2R target. One of the rules of my experiment are that I don't exit a trade unless a STOP or a Profit Target is hit. So this was painful to watch. -10t.
This was a pretty arduous session. To mix a metaphor: I was like a bull in a 1R china shop. There were a lot of 1R targets (as pictured). There was a 14.75 point range for this session making it impossible to get 2R. So I put myself through a little torture, but this perfectly illustrates the hazard in trading for profit targets that are incompatible with the type of day. Don't be like me...heed your fellow traders warnings!
On a slightly different subject:
Missing this trade was painful and I kept it in mind when trading this session!
Here are some results through 4 trading sessions(1 RTH SIM and 3 Replays):
The rules of this experiment are a little absurd. This is partially why the win rate is so low. But even with the low win rate I have managed to break even through a small amount of trades.
Trade 1: The first few bars after the open were up and down with OK range. I took the morning as a trading range and bought in the bottom portion of the range at 2944. I put my stop below the low of the bar and set my profit target at 1x risk. I chose a 1R target because up to this point in the day the range seemed too narrow for 2R targets. I cheated a little here on the exit ...As the market moved toward my target, the 'trading range' was starting to look more like a bull channel. This made 2R more likely so I set my profit target higher and pulled my STOP up to 1R. I ended up getting stopped out at 1R even though the market did get to 2R. +7t.
Trade 2: At this point the market looked to be in a bull channel type of trend from the open. So it was time to be on the look out for 2R trades. The market pulled back from the bull channel line and I bought the close (2945.50) of a bull signal bar. I called this the 'fake signal'. This is because there was another bear trend bar that completed a wedge. Several bars later the real 'signal bar' printed. This became important to me because I began to think that 2R from the real signal bar was possible. But I kept my profit target firmly in-place using the risk measurement from my 'fake signal' trade location. And we got there. +14t.
I'm beginning to see that it takes a little commitment to shoot for 2R targets. Watching price action develop after the market reaches 1R is pretty harrowing. Even when it goes up quickly!
Nice trading! Btw, I don’t think it’s cheating to adapt your targets based on price action after entry. Especially if you see a few different possible targets, it makes sense. Just be careful, you may not be quite as objective mid trade!
As an aside, if you’re moving to just trading/charting RTH and you’re able to number the bars on your charts, it will make discussions with other Brooks traders much easier so that the bars can be easily referenced.
Thanks mg! I've thought about numbering bars because it would make journaling way easier. But I like looking at the globex bars. They seem relevant to me. Plus, I'm super limited on the hours I'm able to trade so if I see a setup before the open I'm taking it . I guess I'm officially a Brooksie now...haha!
I had to leave the house WAY early for work this morning so I wasn't able to watch the markets at all this morning. Which was a bummer. But I was able to do some market replay to keep things sharp. I was able to put bar numbers up for easy journaling and easy reading for all the brookists...and others too!
I did two trades on Feb. 13 ES, 1 winner and 1 loser, 0t.
Trade 1: I entered long using a stop above bar 10. Bar 10 completed a sell test of the open and created a higher low. I set my target at 1R because of the trading range style price action. We got there. +13t.
Trade 2: I missed a really nice sell. I could have sold bars 20-22 after the bulls took profit at 1R and made a Lower high. But I just watched. I used a market order to sell the close of 34 expecting a probe below yesterday's high. I set my profit target again to 1R. I usually wait here to see if YH becomes support or resistance. But I thought the market was pretty short. I blame fatigue. It's been a long day. Stopped out. -13t.
Trade 2 was disappointing because lately I have been avoiding taking these types of trades...The type that look pretty good but don't have the best context. These are the trades that I need to cull from the repertoire to become consistent. I need more to 2R too!
. I agree with you on the difficulty of choosing good targets. Sometimes it looks like I know what I'm doing when I enter a trade. But that illusion is always completely shattered by the time I exit!
and a good trade to take under normal circumstances. You get 2x+ ACTUAL risk. It's something I'll be taking a closer look at moving forward.
. I'll try to do a market replay or two over the weekend but it's a busy one so we'll see!
.
Don't be like me...heed your fellow traders warnings!