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)
Thanks for the encouragement rtrade, and everybody else. And I love your enthusiasm and energy. I only thought a couple of people ever looked at my journal.
Not to be a buzzkill, but I don't think the 5/15 OBV double signal strategy outlined is all that great. This assumes you only exit when the 5min OBV turns against against the 15min OBV. Here's ES for 2010 so far.
Can you help answer these questions from other members on NexusFi?
So I've taken to heart some of your recommendations and decided that I just have to make some time to become a better discretionary trader. I know I can't sit in front of the screen all day, but if I can get 1-2 hours in, like I originally intended at the beginning of my journal then that might be good enough to find a few trades. I think it will be hard for me to not overtrade and get in a trade during my time window. In the meantime, I will still mechanically trade gaps and first-hour ranges and not give that up. It has served me well and I can't let a little drawdown make me bail out.
So shortly after the open I looked for some trades and decided to do some SIM trading on CL today. I decided to take several screehshots at various decision points of my trade. I was thinking what a good idea it would be to video record my trades, like Mike has recommended, with audio of me thinking out loud through these trades, kind of like my own one-on-one trading room with myself. It'd be cool to then review these with a team/group, like SMB does.
So I took one trade, then I had to get my daughter off to school early.
120min chart - I saw the big reversal CL had yesterday and it killed the 2hr trendline pretty hard after Bollinger, RSI and Stochs had it oversold for quite a while. However it looked like it was starting to make a move to the upside out of oversold conditions and bouncing off of the bottom Bollinger, and the uptrend might resume, so I thought I'd look for long entries on the lower timeframes.
15min chart - It looked like the overnight session was consolidating yesterday's move and we were in a range. Maybe I should wait for a new trend to emerge before picking a market direction.
I decided to enter on a pullback to yesterday's closing price after it looked like it wanted to make a move to the upside. I was filled at 88.69. I had a 20tick stop and a 40tick target, but that I would use discretion in trailing my position. I almost immediately took heat, and thought about bailing early because the trade was going against me, but I thought I'd give it more room. It had already gone down 15 ticks, so I might as well see if it goes down another 5 and hit my stop. I wrote my check to the market for 20 ticks so I might as well see if it turns around in my favor.
Question: So how do you handle situations like this? If a trade immediately goes against you do you just bail, or do you have a stop loss level in place that you're willing to suffer? Some of you will bail and not take a full stop and just have the stop there just for emergencies, while others use the stop no matter what the tape is doing.
Anyways, it luckily turned around to the upside and got me 30+ ticks. My ATM moved my stop to B/E+1. I started seeing gradual crescendo volume on the 1000 vol chart up into resistance, so I took that as a warning that we might get a reversal, so I tightened my stop even further to lock in profits. I was stopped out +13 ticks. Good thing, the market did reverse and went through my original stop.
1 trade, 1 day, so far so good. I have to admit, on SIM I was much more cavalier (while in the trade I went and cooked eggs and toast for my kids) than I would be with real money, so I kind of just got lucky on this one. This is why I don't like SIM trading, it's easier to "goof off" but I don't really even have a trading plan for discretionary setups, so I can't imagine trading real money without a plan in place. I guess my ATM was part of a plan, but not a whole plan. My plan was, I guess, just to trade what I see. I think eventually that's where I want to get to: trade what you see and feel, knowing the market well enough that I can just know when it's a good time to get in or out.
Well its good to see that you took some peoples advice and didn't quit. Nice to see you get a win and build back a little of what you were missing. Keep at it and I look forward to the progress.
If you have a proven methodology which you have "forward tested" (NOT backtested) using live trades or out of sample data only, then you can rely on that methodology to tell you what to do.
Otherwise, I would ask why a 20 tick stop? What exactly on the chart told you that at 19 ticks you were still correct about the trade, but at 20 you were wrong and the trade was no longer going to work? This is how a stop should work. It has nothing to do with comfort. Comfort is defined in your risk management, where you decide ahead of time, regardless of price action or any chart, that you cannot take a trade if the required stop is more than 'xx' ticks. That is prudent risk/money management.
But a stop is decided based on the chart. Based on the price action. It has nothing to do with your comfort level.
So you first have to answer that to be able to answer your next question on "should I get out if it immediately goes against me". I've been getting better at identifying turning points, so I am able to use a smaller stop. That stop is there because after 'x' ticks, I am now WRONG. It has nothing to do with my comfort level, or "willing" to give the market 'x' ticks. No. My stop is set based on me looking at price action and the chart and saying, OK, I think this is going down. I will set my stop to 'x' because if it hits that, then I am wrong, it is not going down.
Now, when I enter a trade there are many times (majority even) that I have the opportunity to get out well ahead of a "full stop". It is important to manage the trade. That is what discretion is all about. Putting the trade on and then leaving the room is like automating a strategy, and won't work. Such a "strategy" has its uses for some over the course of their "trading education" (like for instance if you always pull your target off too soon), but in the long run you must manage the trade in both directions --- targets and stops.
And that means discretion. Brett always says he constantly evaluates the trade from the opposite angle. If he is short, he constantly looks and says "what reason do I have to go long here". You need to perform a similar exercise when in a trade. If you've decided to set a stop 17 ticks away, you may find other indications before price gets to 17 ticks that the trade is not going to work. Pull the trade, save some money. Don't just hope for the best. This is a very difficult thing to master, and it is why recording the reason you took the trade and exited the trade in a journal are crucial, because if you are doing it for the wrong reasons it will obviously not work well.
I think video recording yourself is an EXCELLENT way to quickly learn a multitude of ways to improve your trading. Just remember, no one is perfect - you are going to make mistakes. But mistakes are what lowers your expectancy and costs you money, so your goal is to minimize them. Sometimes you will pull a trade off too soon. Sometimes not soon enough. The goal is to continue to learn and improve. Set just two things at a time over a two week period to focus on, don't try to do too many things at once. Get those two things down pat, then move on to two more.
Wednesday, December 8th - I picked up 3 gap trades as we opened above yesterday's close, all 3 winners. They took a fair amount of heat after the open but then decided turned southward.
Hey Shodson, there's a lot of posts here since I last looked, but since you were trading morning gaps, you should check out the latest FUTURES MAGAZINE. There is an article on morning gap trades...
Thursday, December 9th - The gap guides were strong but the markets opened above my 40% rule. All markets filled there gap and my 40% rule kept me out of $1,300 of profits today. I may have to revisit that rule, see if I really want to keep this rule in place.
First hour setups weren't that strong so I didn't do anything there either.
I woke up too late to do any SIM trading. I got some nice crescendo reversal signals on the larger volume charts.
