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Zimmer's Journal: Naked Chart Reading


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Zimmer's Journal: Naked Chart Reading

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  #61 (permalink)
Legendary Market Wizard
Upstate NY
 
Experience: Intermediate
Platform: TOS
Trading: Equities, Treasuries, Gold
 
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Posts: 634 since Dec 2018
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Reserved for 6.25.19 Journal Post

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  #62 (permalink)
Legendary Market Wizard
Upstate NY
 
Experience: Intermediate
Platform: TOS
Trading: Equities, Treasuries, Gold
 
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Posts: 634 since Dec 2018
Thanks: 1,663 given, 1,352 received

Today marks the completion of my first month trading futures with a live account. I will be out of town for the next few days and will not be watching the markets.

Results:

-Well.... I ended the month green. There is something to be said for that!
-Will update with exact figures and stats when I am next at my trading computer.


Positive Thoughts:
-First, I am grateful to everyone who has contributed to this thread. Your contributions have helped me tremendously. The progress I have made is a composite of all the suggestions and ideas you all have shared with me.
-Second, while there are many areas I need to improve on, I am proud of myself for this humble success I have achieved in the past month.

Areas to Improve:
-PSYCHOLOGY
-My analysis is so many miles ahead of my execution.
-I build a case for the bulls and bears and update it throughout the day. This is good, and my analysis is acceptably
accurate. However the monkey in my head convinces me sometimes to enter shorts when the bulls have a stronger
case and longs when the bears have a stronger case.
-DISCIPLINE
-On numerous occasions I have allowed myself to trade past noon. (always on losing days.) This is lack of discipline to
accept losses.
-MANY trades were taken that did not meet all of my criteria. This is lack of discipline to exercise patience.
-ANALYSIS
-I need to work on remaining directionally unbiased. I should be constantly building and adjusting the case for both
bulls and bears to keep my emotions out of it and only take the highest probability trades.

Tasks:
-Calculate the theoretical June stats excluding all the rogue trades. This should help to prove to the impulsive monkey in my head that following the rules = $$$ and breaking the rules = -$$$
-Journal and meditate on the root cause of taking rogue trades and breaking my rules.
-Develop additional methods and techniques for keeping me on task when I begin to drift.

Final Words:
I know that I have the skills and ability to be a consistently profitable trader. I recognize that this task will not be easy and will require constant effort. I accept that progress is not linear.

My daily reminder for the month of July is the following:
-The rules work. Trust the rules. Do not try to outsmart the rules.

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  #63 (permalink)
Legendary Market Wizard
Upstate NY
 
Experience: Intermediate
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Trading: Equities, Treasuries, Gold
 
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Posts: 634 since Dec 2018
Thanks: 1,663 given, 1,352 received


Last day of the trading month for me was this past Tuesday. Here is the journal post detailing my trades.

Trade 1:
Pros:
-ES, NQ, and YM @ LOD.
Cons:
-NQ and YM expectation is for new swing low.
3:2 Not an acceptable entry.
Did have acceptable trade trigger and stop loss was placed correctly. 50% accuracy sound right?


Trade 2:
Man I got robbed on this one but I did follow my rules bang on.
Pros:
-ES @ ONL
-YM in VAH and @ swing high
-Double top NQ
Cons:
-YM near ONL
4:1 Acceptable entry.
Good trade trigger and stop placement. Good trailing and stop management. Unfortunate result. 100% accuracy
[/B]

Trade 3:
Good idea but no entry trigger. Jumped the gun and got burned. 50% accuracy
Trade 4:
This was a good setup with a good trigger. Nice one. 100% accuracy


Results:
2 wins
2 losses
75% accuracy
break-even after commissions!

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  #64 (permalink)
Legendary Market Wizard
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Posts: 634 since Dec 2018
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mtzimmer1 View Post
Total Trades: 64 (2.37/Day)

Total Wins: 29 (45%)
Total Losses: 27 (42%)
Total Break-Evens: 8 (13%)

Total Trades: 30 (2/Day)
Total Wins: 14 (46%)
Total Losses: 11 (36%)
Total Break-Evens: 5 (17%)
All slightly improved.


mtzimmer1 View Post
Total Trades: 64 (2.37/Day)
Avg Win/Avg Loss: 1.23
Expectancy: 13.35R/100 trades
Max DD: 10.8R
Total Return: 4.73R (.21R/Day - .07R/Trade)

Total Trades: 30 (2/Day)
Avg Win/Avg Loss: 1.23 (WOW. Stayed exactly the same to the decimal... )
Expectancy: 20.5R/100 trades (Nice improvement)
Max DD: 1.78R Big improvement
Total Return: 3.64R (.24R/Day - .12R/Trade) Solid improvement in efficiency.



mtzimmer1 View Post
Total Trades: 64 (2.37/Day)
Course of Action for Next Month:
-Decrease trade frequency to focus on trade quality.
-Improve win rate as a function of decreasing trade frequency.
-Improve avg win/avg loss ratio by taking trades that have "legs" and allowing those trades to run their course.

-I did effectively decrease trade frequency and did improve trade quality.
-I did improve win rate marginally, but more importantly I cut my loss rate from 42% down to 36%.
-I did not improve avg win/avg loss ratio. I believe this is because of my few rogue days where I took way too many trades.

Course of Action for Next Month:
-Improve avg win/avg loss ratio while maintaining accuracy.

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  #65 (permalink)
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You're doing very well. Keep it up @mtzimmer1 !

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  #66 (permalink)
Legendary Market Wizard
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Some may call this cherry-picking but I have attempted to do this in the most objective way possible.
The point of this exercise is to prove to myself that my plan is profitable and that I am the weak link in the chain.

I went through all of my trades in the month of June and only kept the ones that met the conditions specified by my rules. Many of the days when I traded past my quitting time at 12 I would recover losses with one big trade. These trades were not counted because they were outside my trading hours. I only included trades that met ALL of my rules.

These are the hypothetical stats. What my performance for the month of June could have been.

Total Trades: 12 (.8/Day)
Wins: 8 (66%)
Losses: 3 (25%)
Break-Even: 1 (8%)

Avg Win/Avg Loss Ratio: 1.91R
Expectancy: 101.06R/100 trades
Total Return: 7.14R (.47R/Day - .59R/Trade)

Thoughts:
Wow. Just wow. I believe this exercise is enough to convince me on a deep level to stick to my rules. These are the kind of stats that can make me a consistently profitable trader.

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  #67 (permalink)
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In the last week of June, I went on a short vacation with my girlfriend to the beautiful lakes region of New Hampshire. The vacation was a great reset from the ‘grind’ that trading and life can become at times. It also served as a reminder of my goals with this whole trading business. I want to be skilled enough to finance full-time traveling with my income from trading. To achieve this I NEED to follow my plan to the letter and achieve consistency, allowing me to scale up my position size and risk accordingly.

Over the past few days I have thought about why I deviate from my rules. I believe that I have a better understanding of my own psyche now. I am more willing when bored to enter a trade rogue with the chance of making money than to sit and wait for the opportunity which may not present itself. This is flawed logic because my discretionary rogue trading has a negative expectancy. I need to remind myself that NOT LOSING money is equally as important as MAKING money.

To combat my boredom I have decided to add currencies futures to my list of tradable instruments. My setups are very specific and I don’t think I will be overwhelmed by watching nine instruments. My intention is to create more opportunities to trade in accordance to my rules in hope that this will lessen the temptation of abandoning the rules and going rogue.

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  #68 (permalink)
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Content with how I traded today. Sat on my hands and waited for the setup to come to me. Executed on that setup without hesitation.

Bullish Case:
YM & NQ both had bullish divergence from AD and VOL (market internals)
Gartley formed on NQ
Bat formed on YM
ES @ LOD
YM @ ONL
ES & NQ both held there ground above LOD while YM dipped beneath it by a tiny margin.

Bearish Case:
NQ had made a double top.

This was an 8:1 setup. Very strong. In addition, the risk:reward to where I expected the bulls to achieve was over 3:1. Solid trade. Ended in a stop out but that is just part of the business. The important part is that I identified a great setup and executed on it.

One note I need to think about is which instrument I should choose when taking a trade. YM was the weakest today and yet I chose YM over NQ (strongest) because NQ had formed a double top. If I had entered this trade on either NQ or ES I would have had a chance to break-even the trade. Something to research: how often does the strongest market at open remain the strongest throughout the session?



Result:
1 loss
-.6R (stop was just large enough to prevent a 2 contract entry. In this case that was a good thing!)

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  #69 (permalink)
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So yesterday I qualified my trade with a set of criteria that were based on market internals, harmonics and one index at its ONL.

The YM ONL was the only true significant level in this trade and I believe that is why it failed. Over the past month or so I have studied market internals and harmonics and while I think they have some use I don't want to rely on them for trade decisions as I did yesterday. The attached screenshot shows where all three indexes bottomed yesterday. I drew these lines over a week ago. I believe that price and structure is what truly defines price movement. I am simplifying my qualification process and returning to pure significant level + volume profile analysis.

Trades will be qualified as follows.

Trend trades:
-Significant level well below current price for shorts or well above for longs.
-No significant low volume area directly below for shorts or directly above for longs.

Counter-trend trades:
-Price trades into a significant level and reacts off of it breaking the previous swing high/low.

According to these rules I should have shorted near the open as it was a gap up with the first significant level MUCH lower.



Cheers all. Hope everyone has a good day of trading. I have intentions to trade my plan and embrace the results!

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  #70 (permalink)
Legendary Market Wizard
Upstate NY
 
Experience: Intermediate
Platform: TOS
Trading: Equities, Treasuries, Gold
 
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Posts: 634 since Dec 2018
Thanks: 1,663 given, 1,352 received


Trade 1:
Was eager to trade.
ES reacted off swing high
NQ almost touched ONH

Figured there was no support until the ONL's beneath us.
All three broke their swing lows and I took this trigger.
Was it a valid entry. Yes, but weak. Would I have called it perfect if the trade had went my way? Probably.

What I did do wrong is the following:
Price shot through my limit order and nearly stopped me out. I pulled my stop to the next swing high (broke a rules.)
Then price came back to my entry price giving me a chance to get out at break even or realistically -4 ticks.
I didn't take this opportunity because I was stubborn. My rules state that I need to remove risk when price does not react as anticipated.

Instead I let price hit my pulled stop for 10 extra points of loss that were unnecessary.

Self-Eval:
100% accuracy on entry.
0% accuracy on exit.

Trade 2:
This trade actually had a lot more going for it then the first one.
ES and YM reacting nicely off of ONH is a key indicator that those sellers are still present.

Problem was price started to drop quickly and I became impulsive entering with a market order. Took some heat and actually did follow my rules by closing the trade at break even when the market gave me opportunity. Of course this was the big trade of the day and I missed it.

Self-Eval:
0% accuracy on entry.
100% accuracy on exit.



Results:
1 loss
1 break even
-.8R

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