9/20 - Whew, what a weekend! Worked on BOT2 quite a bit more but I'm just not comfortable yet with a consistent set of indicators or strategies for it yet. I started playing with some of the stuff Sharky has been teasing us with and looking to use it on the ZB but not comfortable with what I have yet. I also was playing with some of the Guppy/GMMA indicators/system a bit. It tends to pick up trend reversals pretty early. Also started incorporating multiple time frames (multiple BarsArrays) to filter out trading against a prevailing trend. This seems to increase the win ratio a bit when trend trading.
So instead of trying to create a new monster I worked on improving whats working (BOT1). I improved the entry logic a little bit and re-did my backtesting and optimization and am now trading with a lower risk/reward ratio, now less than 1.0, still with a 70+% win ratio and 2.0 PF! I feel much better about that. I also let it loose on a second instrument: the dreaded ES. We'll see how that goes. I'd like to put it on a commodity and a treasury at some point so I can diversify the number of markets I'm scanning and trading since it doesn't take trades very often.
9/21 - The new and improved BOT1 took an early morning while I was asleep this morning. The previous version would have entered at a price 4 ticks higher. Used a 24-tick stop loss. It would have been nice to continue in the rest of that run but that wasn't in my trading plan.
I've been enjoying your trading journal: I use NT and didn't know that the commission costs were different among the instruments. Good to know.
I also like what I read about the link and your looking into trading the gap. That is one of my primary possible trades in the ES. Someone told me about it - lucky for me, as I'm such a beginner. I look to see if the close of the previous day also matches any R/S areas on mypivots.com to try to avoid an entry that will hit a rough patch, so to speak. And, I try to keep in mind any "hot" areas (points visited and revisited) from the previous day's trading.
About trading in sim mode: I find trading in sim mode VERY different really than trading live. First, I don't have the slippage that is real and *always* get filled when and where I expect. This really threw me when I started trading live.
Thanks for the feedback goldilocks. I don't know if anybody is really getting anything out of this beside me or not, but at least it helps me work out my struggles and challenges as I articulate my thoughts online.
Yes, you have to be aware of the instrument you are trading. The parameters you need to look out for are
- Best hours to trade with best volume and liquidity
- Session open and close (if you are going to hold them overnight)
- Tick size
- Tick value
- Broker commissions
- Seasonal and cyclical trends (especially with commodities)
- Typical behavior, like is it prome to trends (forex), cycles/channels (commodities) or chop/scalping (indexes, treasuries). Some here might disagree with my characterizations.
OT: I'm just about finished reading How I made $2,000,000 in the Stock Market by Nicolas Darvas (originator of the Darvas indicator, which is included in NT). Besides the cheasy, get-rich-quick title (was written over 30 years ago) this is a great book as he takes you on his journey from novice to professional trader and we get to watch him screw up in a lot of the ways most traders do when they start out. If you're just starting out I recommend you pick up a copy. It's a quick and entertaining read. I wish I had read this book a lot sooner. It would have saved me thousands of dollars in losses I incurred a few years ago.
The following user says Thank You to shodson for this post:
9/22 - BOT1 took 2 trades of the 6E, 1 winner and 1 loser. That's the first loser I've had in a while. Luckily, my profit target is greater than my stop loss so it still ended the day with a small profit.
9/23 - BOT1 was busy today. Unfortunately, 3 losers, all had the right direction but the rounded turn was too wide and stopped me out before the turn completed.
I'm noticing, especially today, that the EURUSD and S&P seem to be correlated. I've heard others mention that before. Today was a great example of that: when the ES goes up, so does the EUR/USD. Why is that? Why does strength in US indexes cause the EUR to rise against the USD?
6E - 1 winner, 1 loser = +3 ticks
ES - 0 winners, 2 losers = -20 ticks
9/24 - BOT1, 1 trade, 1 winner. It would have been nice to get the rest of that run. Maybe I'll add an adaptation that once my PT is hit stay in until I get a bar that closes in the opposite direction, though those reversal bars are sometimes very large as well. I'll have to research that. In this trade that would have added another 37 ticks to my profit.
I've been researching fractals some more. Seems like a promising way to trade if you combine it with some other filters to reduce bad trades. However, which instrument, time frames, time of day you trade and chart type are a big factor to their effectiveness. Has anybody used fractals in their trading with any efficacy?
I think Blz17 is on-board with fractals. I'm also evaluating MultiCharts 5.5 and it has a nice Chaos Fractal indicator which got me interested as well.
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I ordered Reading Price Charts Bar by Baron Amazon last week. I want to get more into candlestick patterns and reading price action and stop using any indicators based on laggy averages. This week I also came across an article in TASC (but I can't remember which month) which talks about shooting stars, hanging men and engulfing patterns which have a lot of similarity with the way people use fractals for reversal signals. John Ehlers has an article this month in TASC called Fractal Adaptive Moving Averages which is on my reading to-do list. Unfortunately, having a very demanding "regular" programming job, wife and 3 kids, church responsibilities, head-coaching my kids volleyball team and running a Meetup makes strategy and indicator development time for me pretty sparse.