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Zero to Hero journey
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Zero to Hero journey

  #21 (permalink)
Melbourne Australia
 
Trading Experience: Beginner
Platform: Jigsaw / NinjaTrader
Broker/Data: S5 / Rithmic
Favorite Futures: Various
 
Posts: 26 since Jun 2019
Thanks: 26 given, 41 received

Thanks Matthew28. Point very well taken and I was starting to realise that as well. Perhaps another point worth making is how I think about risk?

You are completely right that making 150% in a day is taking ludicrous risks. However what I did not mention is that while I’m waiting for my real $ account to be open with $5k, I am trading a $100k sim account that came with Ninja. Now even though the sim is 20x bigger, the absolute numbers actually don’t matter so much as the risk levels being assumed with every risk.

My original plan called for trading the ZN, which has a tick value of $15.625. The way I look at risk is a factor of the following characteristics:
1/ Personality of the market - with slower markets you can use tighter stops. So for ZN you can probably get away with say 4-5 ticks
2/ Tick dollar value as a quantification of risk per smallest change
3/ Num of contracts as a relationship to total account equity

So combining these three for ZN (assuming 5 point stop) would give a maximum risk size of $78.13 per tick per contract. Now if you wanted to only risk say 1% or 2% of account ($50-100 on a 5k account), then the biggest trade size is 1 contract for 2% risk level. Then of course you have margin requirements etc on top to consider.

Now for CL, it’s a bit different, CL moves around a lot more, but same principles apply. Tick value is $10 and stops would need to be wider, say 8-10 ticks. So on a 100k account with 2% risk, you have $2000 of risk to play with, therefore size can go to 20-25 contracts and still keep it within roughly the same risk levels as the ZN.

Now we can of course argue that the two makers are nothing alike and yes you do need to adjust how you trade them. My approach this week was actually to test my processes and to see if the tooling has been setup correctly. I traded a bit more during my daytime, also on CL in the Asian session and the CL behaviour was a touch different to the US session. I managed to scalp out a further $2400 using same techniques as per my plan.

Overall my findings from this week:
1/ US treasuries don’t suit me. I find them too slow and the extreme thickness of the market (thousands of contracts per level) and the monster trades going through 5k at a time was just too hard to read. I could not tell which way it was going to go.

2/ CL has a lot more movement and is much thinner. In saying that, on a 100k account I would not being past say 25 contracts per trade so CL has plenty of liquidity to handle that. I also tested one trade with 48 contracts to see how the fills would respond and it was fine. No specific issues - Jigsaw/CQG even managed to split my single large order onto multiple lines to ensure fill.

3/ I found my prep and analysis of CL spot on. Actually a lot better than expected and the pattern of big picture -> fundamentals -> technicals -> setup is a good one. I also realised that CL has a specific behaviour on the US open. It effectively starts to tell you which way the bias should be around 1 hr before open and follows it through. Been testing that and so far so good.

4/ Overall result for the week is +10k on a 100k account so +10%. 60% win rate. My thinking here isn’t dollars and cents per se. Rather I’m looking for confidence of the execution stats to see where I currently sit on the spectrum and do I know how to use the platform sufficiently to trade live. This is a resounding yes. While I’m not a scalper, I was very comfortable getting 2-3ticks or a 100 depending on situation and where I could read market was exhausted or being absorbed. This will get better with practice.

5/ What can I do better? Several things. I got caught in some consolidation zones and traded when I should have stopped. Need to think through how to deal with that one a bit. I was also aware of the pressure to win and therefore holding on for too long a couple of times. I guess this happens and ultimately I was able to recover from most losses this week. I think this is a skill that will continue developing.

6/ plan for next week is to continue with sim. My real account will be funded next week and after testing the new account and data feeds (Rithmic) I should be ready to trade live in a week or two. Live trades will obviously be initially 1-2 contracts as per my risk approach.

I also want to mention that over the last few years I have tried my hardest to train my mind to not think about $$ during a trade session. For me it’s about a score. A game where you win points to some extent which is why during this week I was also watching for how my emotions were playing out. For the most part I was ok, other than those couple of situations.

I also like that I can scale without changing my trading approach. This too me is a real major benefit. If I can grow my account and keep risk levels to the 1-2% range and just compound trading size then this is a very compelling situation. It’s kind of like running your own business where you can just keep adding resources to drive more business at almost zero cost but without all the drama of people issues. I find that highly fascinating.

And lastly, I want to thank the FIO community for taking interest in my journal. Have never done this in my life and to be honest I was. Bit apprehensive about putting myself out there. Anyway, it’s a journey of discovery and improvement.

So onwards and upwards.

Good trading.


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  #22 (permalink)
Melbourne Australia
 
Trading Experience: Beginner
Platform: Jigsaw / NinjaTrader
Broker/Data: S5 / Rithmic
Favorite Futures: Various
 
Posts: 26 since Jun 2019
Thanks: 26 given, 41 received

Trade Plan for 02-08-2019

Big Picture, Fundamentals & Catalysts
• Last week CL experienced a major drop of 8% partly as a result of weaker inventories on growing demand and a Trump tweet announcing further tariffs of +10% if China does not come to the party
• As a result, on Friday, we saw a sustained round of profit taking with a CL bounce off the 54.34 low to finish that day with a 55.19 close
• In today’s over night CL market the CL retraced a bit further towards 54.67 and is now looking for a swing off a 55.30-40 high.
• The CL option market is pricing a 52.61 low and 58.71 high (a 5.48% 1 STDDEV band with 32% volatility). The Put/Call ratio is 2.12 indicating that there is a significant downside bias in the options market
• Additionally, in economic KPIs, several PMI numbers have been reported slightly better than expected (meaning manufacturing activity and demand will be higher). Further US PMI kpi is being reported at 11:45pm (or 8:45 ET) and this will likely affect CL somewhat
• Trump now threatening a further 10% tariff hike on Sep 1 if China does not come to the party which I think is quite likely.
• Overall, today there is a fundamental short bias

Technical Analysis Commentary
60m Chart with longer term analysis
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900tick chart with swing analysis and key levels
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• Key levels (R1, S1, YH, YL, POC, VWAP, HVN): YH: 56.05, YL: 54.34, YC: 55.19, POC: 55.25, VWAP: 55.10
• Technically, the market has had a major Gap Open Buy which would be closed if CL gets up past 55.60. However we are also seeing a sustained down trend at the moment with a major key level at 55.00.
• The US Dollar Index is in a confirmed down trend with a bearish pivot two weeks ago and a sustained downward move towards 98.4. Looking for further weakness there and a retest of 97.8. This dollar weakness should put pressure on CL
• In CL overnight, relative volume is hardly registering the up-move and cumulative delta is also steady, indicating that there is no buyer conviction behind the move.

Setup
• What is the setup (if this then that…):
• Today we are looking for reversal trades off 55.36 or 55.50 with a target to 54.70 provided the DOM/T&S confirm conviction of sellers behind the move.
• H1 - If sellers come in force and push CL off 55.36-50 then it’s a short trade with a target to 54.34. This is probably a higher likelihood given the macro and technical context. This is also a better risk/reward.
• H2 - Alternatively, if buyers step up and push CL above 56.05 then it is very likely CL will look to close the gap to 56.60. If CL gets above 56.05, then go long with a target to 56.60

Trade Management
• Based on feedback received and my own reflections over the last week, this week I'm treating my demo account as if it has only $5000 as a starting position. Account equity in NT8 says $109,070 so I will deduct 104,070 from all results and report back.
• I will also reduce size to 1 contract per $1500 of account equity. So trading a max 3 contracts at any given time for this week in order to reduce the "emotional connection" to trading size larger than what I would be trading in real life.

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  #23 (permalink)
Melbourne Australia
 
Trading Experience: Beginner
Platform: Jigsaw / NinjaTrader
Broker/Data: S5 / Rithmic
Favorite Futures: Various
 
Posts: 26 since Jun 2019
Thanks: 26 given, 41 received


Daily Report Card

Daily P&L ($): +270 (+5.4%)
Win Rate (%): 71.4% day (62.5% overall)
Profit Factor: 1.76 (1.86 last week)
MAE: 5.45 (6.50 last week)
Trades (#): 14

How was the prep (score out of 5)? 4
My prep was really good before my trading session. I even started to look at the options market for clues about where options traders and open interest is positioned. It was very clear quite early on that there was a downward bias and the options yield curve was screaming short. The market did almost exactly how I called it. This actually made me think that over the last few days I was able to pick the directly for the 1st hour with an amost 100% hit rate. Beyond the 1st opening hour it becomes a bit different.


Did you follow the plan (score out of 5)? 3
I am going to be a bit harsh on myself for this trading session. The +5.4% to the P&L is fine, bu8t I made mistakes with my execution early on and was effectively starting handicapped. 3 bad trades resulted in a realised loss of $1,050 before the session got going good.
Effectively I took a series of good short trades on #momentum when sellers came in force off the key level at 54.77. I rode that down into the major support at 54.34 and then decided that I should really have some automatic stops given that the price action was a bit choppy. I typically enter a trade without an initial stop at a logical point. So for example when I see a confirmed absorption or exhaustion. Then I wait and add a stop behind either a key level or where there is a clear reversal point. This method let's the trade develop while I hold my finger on the FLAT button in case the whole thing takes a dump. Now, I set my auto stops to 10ticks and ohh boy was that a mistake. 3 trades in quick succession got toasted.
In saying that, I guess I can set the stops a bit wider (call it an emergency stop) however, looking at CL and how it behaves, yes it can run but it almost always reverses and gives you a couple of chances to correct a mistake.
For the rest of the night I essentially scalped CL out until I got back into green. I think this might be my largest sequence of green trades (8 in total in a row). Subsequently my stats went up.
I think this is probably not the best way to trade. It would have been better to enter a singe trade at my key level on open, then ride it and get out once my target got hit. Then maybe look for additional opportunities. What I'm realising is that while I look at the DOM, and I have total focus on the buyers and sellers battling it out, it pays to sometimes sit back and take stock of the slightly bigger picture. I didn't do that last night - I just focussed on the DOM. I guess this will get better with time and working on demo for now is providing ample time to practice and learn.


How do you feel (score out of 5)? 4
I am very happy with my progress. I watched more Jigsaw videos and did some more research over the weekend. I also joined the elite circle on FIO. Reading through the various journals and blogs, I find this community to be one of the best I encountered, so I'm pleased to be part of it and continue developing my skills.
I'm also very pleased with my platform - while it encourages more the scalping type of trades, it's the first time where I can see and smell consistency in my trading. The platform and the education has contributed in a big way to this. I guess you'd say the approach finally resonates with me after a few years trying and searching for an answer.


Goals for next trading session?
- Patience, patience, patience (what else can I say)
- At the same time need to be more decisive. I was a touch late for the party on a couple of occasions where I clearly can trust my prep but hesitated and as a result was at a slight disadvantage in terms of trade positioning

Good trading

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  #24 (permalink)
Melbourne Australia
 
Trading Experience: Beginner
Platform: Jigsaw / NinjaTrader
Broker/Data: S5 / Rithmic
Favorite Futures: Various
 
Posts: 26 since Jun 2019
Thanks: 26 given, 41 received

Trade plan for 6/08/2019

Big Picture, Fundamentals & Catalysts
• Continued demand weaknesses in the US economy emerging and this combined with the US/China trade war is providing a downside backdrop to CL
• We have further seen significant drop in the valuation of the Yuan with weaker China exports and some terrorist activity there. Weaker Yuan is generally bad for the global economy and especially for consumption of Oil in China.
• In the US, the active Oil rigs has been recorded at the lowest level seen in 3 years which will constrain production. So weaker production and demand is likely to send CL prices lower.
• Today there is a downside bias in CL


Technical Analysis
Long term chart (60m)
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Short term chart (900tick)
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• Key levels (R1, S1, YH, YL, POC, VWAP, HVN): poc: 55.03, vwap: 54.87, YH: 55.60, YL: 54.22
• In the Asian session CL had a massive opening drive up from 53.72 to 55.41. Later in over night trade, CL retraced back to 54.89 as Asian traders took profits leaving CL in a pronounced downtrend back toward the Asian session lows
• Key Level (KL) has been established at 54.77 and if CL breaks down below this then there is a good risk/reward short trade there
• CL has also been making consecutive lower highs and forming continuation of the down trend with smaller swing highs as it continues. This again looks like market exhaustion playing out with the US open probably heading lower as US traders take into account the fundamental weaknesses in the global CL market
• Looking at the options market. The put/call ratio is 2.09 pricing a move lower to 54.05 and volatility at 36% (just a tad higher than yesterday)
• Key support levels have formed at 54.81 (S1) and at 54.73 (S2) based on thickness of the limit bid orders on those lines. These will be key levels to watch and if they get taken out or pulled then we have a potential landslide with a target to 54.22 and lower depending on momentum.
• Cumulative Delta is sitting at -12890 contracts.


Setup
What is the setup (if this then that…):
• If CL breaks below 54.77 then there is a good risk/reward short trade there
• It is doubtful if CL will trade higher that 54.77. All analysis is pointing towards a weak market. There might be good reversal opportunities if CL has a massive landslide
• If CL gets to 54.22 and buyers step up, then there may be a good fade trade at that point.

Trade Management
• Today I will also try to have less trades and hold for longer but will smaller size to start with. So start with just 1 contract and scale as needed. I can go to a max 3 contracts for a good risk/reward trade

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  #25 (permalink)
Melbourne Australia
 
Trading Experience: Beginner
Platform: Jigsaw / NinjaTrader
Broker/Data: S5 / Rithmic
Favorite Futures: Various
 
Posts: 26 since Jun 2019
Thanks: 26 given, 41 received

Daily Report Card

Daily P&L ($): +120 (+2.3%)
Acc Equity: 5,390
Win Rate (%): 65.2%
Profit Factor: 1.83 (1.86 last week)
MAE: 5.30 (6.50 last week)


How was the prep (score out of 5)? 4
My trading plan was good again although CL appeared to move a lot sooner prior to US session open. My key levels were spot on although the opening hour was wild. My process is proving to be quite useful so far which is:
1/ Check fundamentals via CME ActiveInsights
2/ Check economic news via TradingEconomics.com
3/ Check Options market positioning, volatility estimates and range of 1stddev movement via CME QuickStrike. Have also discovered there is a r4eally useful correlation measurement tool on QuickStrike. CL, for example, is 82% correlated to RB and 88% to HO. So if anyone is interested in looking at correlations then that's the play.
4/ Identify key levels off my analysis charts and look at any obvious levels where the market will take action to monitor
5/ Determine my setups for the session with if-then statements


Did you follow the plan (score out of 5)? 1
My trading session was very volatile in the opening hour. This was after a backdrop of the Asian session in CL which saw CL with a massive up move, and then US session just seem to churn and try to figure out which way CL actually wanted to go. It felt like a bit of a battle ground.

I am super glad I reduced my size to 1 contract per trade and added 10tick stop. This forced me to be a bit more careful and selective about when to enter. I have to be honest, adding the stops automatically felt unnatural, as previously I would enter the trade, wait to see how the market responds at that level and then add a stop behind the next closest logical level. I think if you have a large account and can sustain the volatility then this is probably ok. However, on a small account it's probably better to just have a hard stop at the 1% risk level (which my 10tick stop is).

I had a series of trades where I let it run and it went my way. So pleased with that. I also had a few where I let it run instead of cutting them early when I kind of knew that it wasn't going to work. All in all good amount of leqarning from my trading session.

I think my main issue at the moment is that while I know my prep is good, being patient and waiting for the right moment is proving a bit elusive. I have learnt to rect very quickly to obvious absorption/exhaustion in the DOM but what I still need to work through is waiting for the right moment where the trade is obvious and then taking the trade.

How do you feel (score out of 5)? 4
Actually quite good. Practice makes perfect as they say and the CL volatility is providing plenty of practice so that's good. I think a more active market is a good way to learn to recognise and practice absoption/exhaustion events and trade those (for quick scalp trading that is).


Goals for next trading session?
I think I am starting to see the need to be more selective and then try to hold longer. So that is my goal for the next few days to see if I can really just wait for the right opportunity, enter into a trade on DOM confirmation and hold it for as long as makes sense. Obviously some days will be better than others for that swing-style trading. Last night was more of a scalpy market.

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  #26 (permalink)
Melbourne Australia
 
Trading Experience: Beginner
Platform: Jigsaw / NinjaTrader
Broker/Data: S5 / Rithmic
Favorite Futures: Various
 
Posts: 26 since Jun 2019
Thanks: 26 given, 41 received

Trading plan for 7/08/2019

Big Picture, Fundamentals & Catalysts
• EAI numbers are due just at the US session open. EIA has now also lowered their output estimates by a massive 90k which is a big drop
• Further afield, OPEC pumped significantly more supply towards China while Saudi Arabia tried to balance out the increased supply by lowering their output
• The general demand at the refineries is continuing to be weak
• The CL options market has a massive put/call imbalance at a ratio of 3.88 and is pricing in CL lower to 51.00
• In the Asian session, CL was contained to a very tight range and is now trading within a bearish flag pattern with a potentially bearish trend emerging
• Sentiment today is neutral.

Technical Analysis
60min Chart for longer term analysis
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300 tick chart for short term
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• Key levels (R1, S1, YH, YL, POC, VWAP, HVN): YH: 55.42, YL: 53.29, YPOC: 54.92, POC: 53.53, KL: 53.29 and 53.75, VWAP: 53.55
• CL has an established down-trend and currently trading at the Yesterdays Lows in a bearish flag pattern
• Significant amount of limit orders sitting at the 53.30 bid line protecting CL from the downside and is a level to watch if it holds
• Asian session volume profile is sitting distinctly at the lower extension end of previous day’s volume profile. There were clearly some large players in the market to the downside and they may want to unwind their positions depending on EIA numbers.
• This trading session could go 50:50 either way

Setup
• What is the setup (if this then that…):
• Scenario 1 – scenario to the down side if CL breaks below YL at 53.29. Look for a break-down and then a pullback for a second entry after a pullback and test of 53.29 then becoming resistance for a short trade.
• Scenario 2 - if EIA number come out better than expected, CL might break out of the down-trend and recover the losses from the last two days. If CL breaks out above 53.75 then there is a long trade on DOM confirmation of buyer strength behind the move.

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  #27 (permalink)
Melbourne Australia
 
Trading Experience: Beginner
Platform: Jigsaw / NinjaTrader
Broker/Data: S5 / Rithmic
Favorite Futures: Various
 
Posts: 26 since Jun 2019
Thanks: 26 given, 41 received

No real report card today. Analysis was spot on and CL took a massive dive. Unfortunately I got distracted and wasn't at my screens to trade properly when the initial move occured. So I watched the market to see how it woud behave around the EIA numbers release.

OMG! I think my laptop had a meltdown when EIA was released. Never seen anything like it. The dump and volatility was a thing to behold.

I think this is a classic example of when not to trade. Either that or maybe have a positional trade right under my 53.29 level and just let it ride on 1 or 2 contracts with very wide stops. Then again that's probably more gambling rather than trading.

Wonder if anyone here traded it around the EIA release?

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  #28 (permalink)
Seattle WA/USA
 
Trading Experience: Intermediate
Platform: TradeStation
Broker/Data: TradeStation
Favorite Futures: CL, YM, ES
 
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Posts: 99 since Sep 2018
Thanks: 132 given, 251 received


ScurvyJoe View Post
No real report card today. Analysis was spot on and CL took a massive dive. Unfortunately I got distracted and wasn't at my screens to trade properly when the initial move occured. So I watched the market to see how it woud behave around the EIA numbers release.

OMG! I think my laptop had a meltdown when EIA was released. Never seen anything like it. The dump and volatility was a thing to behold.

I think this is a classic example of when not to trade. Either that or maybe have a positional trade right under my 53.29 level and just let it ride on 1 or 2 contracts with very wide stops. Then again that's probably more gambling rather than trading.

Wonder if anyone here traded it around the EIA release?

I stay away from the EIA reports because I don't have any inside information so it would be a gamble. I've heard some people say they bracket the release but, IMHO, that release time is so volatile that my luck would be to get both entries triggered, all stops triggered and do nothing but generate commissions!


I did trade CL prior to the EIA yesterday. I caught what was either a pullback or a breakout failure at 0608PDT right after the OR was set. I had hoped it would break out of the bottom of the OR and head for 52.00 but it bounced off the bottom of the OR instead. I managed to get 21 ticks out of it but then on the very next swing price did break out and dropped right past 52.00.

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  #29 (permalink)
Melbourne Australia
 
Trading Experience: Beginner
Platform: Jigsaw / NinjaTrader
Broker/Data: S5 / Rithmic
Favorite Futures: Various
 
Posts: 26 since Jun 2019
Thanks: 26 given, 41 received


NW Trader View Post
I stay away from the EIA reports because I don't have any inside information so it would be a gamble. I've heard some people say they bracket the release but, IMHO, that release time is so volatile that my luck would be to get both entries triggered, all stops triggered and do nothing but generate commissions!


I did trade CL prior to the EIA yesterday. I caught what was either a pullback or a breakout failure at 0608PDT right after the OR was set. I had hoped it would break out of the bottom of the OR and head for 52.00 but it bounced off the bottom of the OR instead. I managed to get 21 ticks out of it but then on the very next swing price did break out and dropped right past 52.00.

Yes, I agree. A bracket would have been ok given there was a fair range between where a short or a long would make sense. From my big picture analysis there was a significantly better risk/reward and skew towards a short side. I admit, no one can foresee what the inventory number will be ahead of time and I was actually surprised that inventory was significantly up given that CME was broadcasting weaknesses om the demand side. That's what I had in my analysis. so the additional supply plus the demand weakness is what ultimately produced that violent move we saw.

I'm trading the Asian session today as it's in y day time and is a bit calmer.

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  #30 (permalink)
Melbourne Australia
 
Trading Experience: Beginner
Platform: Jigsaw / NinjaTrader
Broker/Data: S5 / Rithmic
Favorite Futures: Various
 
Posts: 26 since Jun 2019
Thanks: 26 given, 41 received


Have been away from my trading screens the last few days due to work and family commitments so I was only able to go back through my records at the weekend to see how my setups have performed. I was also super exhausted after 2 weeks doing midnight trading sessions, so slearly that's not a long term sustainabke strategy in my case. Still, there are plenty of opportunities in the Asian and UK sessions.

I am now also setup with live accounts and my preferred data feeds so will spend a bit of time to reset my platform with the right workspace etc.

Now back on setups, and specifically on CL, I have noticed that CL has a distinct behaviour as it moves from the end of US Session, into Asian session, then into UK Session and then back to US session. I have noticed that:

1/ The asian session CL will often sit in the middle of the volume profile value area in a tight range and tends to just zigzag around

2/ Breaks out of that tight range during the UK session and travels between 80c - $1 (so approx 80-100 ticks)

3/ Reverts back to value (POC) at the start of the US session

It's as if, the stronger money in US, recognises that the weaker Asian money has pushed CL unfairly away from value and then corrects it. It's also interesting that as CL moves from the Asian session into the UK session it is a lot more trend oriented rather than the super volatile US session - so might be better for those people who prefer a slower moving market but still with very good volatility.

Now, of course this applies on days where no major Oil affecting news or fundamental announcements take place. This has me thinking that this behaviour can be exploited with a DOM where you can use the acceleration of either buying or selling as a confirmation signal for a trade.

This pattern is effectively going to be my primary setup from next week onwards while I track the more detailed stats for this "UK open drive" setup.

So the parameters for "UK Open Drive" in CL (using 15 min charts):
1/ Prior day must have a wide volume profile range
2/ Asian session CL must have a tight, narrow volume profile as CL comes into the beginning of UK Session (6:30pm AEST) and be trading inside the previous day's volume value area
3/ Prefer RSI(14) to be below 30 for a long setup or above 70 for a short setup
4/ Volume Delta must confirm directional bias
5/ Break through below vwap for short, or above for long
6/ Trade is valid at the UK open

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Super simple and let's see how the stats come up over the next couple of weeks.

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