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My story is that I started trading a few years ago and tried various methods, I found success in using the orderflow to find trades. However, there never was real consitancy in my trading and also life overrolled me with new challenges leading to me abandoning my trading goals. Now I am back and trying to set foot in trading again with a few conditions:
First of all, I will trade one setup and one setup only.
The only thing I will trade for now are range breakouts, meaning that I will buy or sell a market that is currently in a compressed state and giving hints that it will break out. I will try to ride those trade just for the first push out of the range area. An image of how a volume profile could look for such a setup is attatched. The idea behind chosing that type of setup is that I hope to get a good feeling for when a market is active and when it is inactive, the logical consequence being that if I master this one setup the next will be to trade range reversals. For stops: I wont use fixed stops, I will have an emergency stop in place but will exit trades if I get the feeling that I am not right of if conditions change again. The usual entry point for a long will be between the mid and top of the range.
The instruments I trade will vary on the time I have during the week, being a student at the moment with a part time job available for trading hours are not always the same and so if I have time on (my) morning I will trade the 6E futures and if I find time on afternoons I will trade crude. I think these instruments fit me best in summer conditions. I might switch instruments going into september if the volatility and volume change dramatically. Also if I am not at home for trading hours for a week or so I might do some market replay on the weekends to get in some more screentime. Screentime will vary each week, depending on how much university and work I have to fit into my schedule.
Every trade will be logged with two pictures, one after the entry and one after the exit, with an explanation about the market state, the signal that led me to believe the range would break and the reason for the exit. I will also keep a more quantitative journal in Excel.
If anyone has questions about my approach feel free to ask, also critics are very welcome. Lets go the journey together!
To clarify what tools I am using and what I am looking for.
I use a jigsaw dom to watch the market. On the dom I have only plotted price, a line for notes, bid&ask depth, volume profile and current trades. I also use a tape that is filtered for larger trades.
What I am looking for to enter trades is basically just a few things. I am speaking for long trades now, short is just vice versa. In the upper area of the range I look for increased activity in order size, speed and the volume it trades. I just want the market to clearly feel "more alive" and accelerate into the top of the range. another great hint is if the market rotates down and cant make it through the middle of the range and then goes for the top again. Picture is attatched. If the market extended the range on the lower side, meaning it broke the lower side for a bit, but then came back into the range, odds are the market might extend the range to the top too and one has to be carefull with a breakout trade. Also before I trade a range, I want the market to have spent some time there and the volume should be significant.
Also for longer trading sessions I might reset the volume profile at some point since I dont care about the longer term few not so much. I just want to see the latest "active" range and if it has significant volume in relation to the moves it put in before. I am not a mental acrobat and therefore might need to reset if the market circles an area a few times.
I like these types of trades for a good R:R. It is also a very logical setup, since in a range a lot of volume gets worked if it pops the top the shorts will puke and push the market further, longs might be happy and buy more.
If there questions or critics please just hit me up with it, looking forward to conversation.
CL was trading in a narrow range for some time already. It couldn’t quite reach the top of the range when it was rotating up for the last time. When the market reached the lower of the range, a bid that was over a hundred dropped to ~80. I therefore thought it was fake and maybe some longs might puke. The market really broke down and I exited really quick when it started to work some volume at the bottom. Still afraid of those volume spike reversals. A learning from that trade might be that if there a larger orders on the edge of a range and they shrink when the market is moving in that might be a good trigger to enter/confirm a trade.
Trade 2:
Another range was formed at the current daily low. The top was touched two times withouth reaching the bottom but held. When CL traded down it did cut through the middle of the range like butter. I sold when I saw the acceleration below the middle of the range, unfortunatly I was filled at quite the bottom of the range. After the low was broken the market dried up on volume and started flipping up and down. Since the daily drive was to the downside I thought that this shouldn’t be all and just moved my stop to break even cause the only thing my brain likes less than not winning is losing. I was stopped out. A learning might be that in a fast market you could use hotkeys with market buy and sell orders, i tried to click my way in on the dom and i could have been filled maybe 2 ticks higher.
Next target will be to hold myself accountable for my actions like that each day. Happy trading!
I use a similar technique but I found I have a higher winning potential with the following setup. I wait for price to trade to VAH or VAL, if price goes through the level for a couple of ticks - even better. If this were to occur at VAL I would wait until sellers get trapped, means a block trade or a significant big number left behind and price goes the other way. Then I wait for price to come back to that area and if in this case buyers hold you go with them. Stop loss is behind trapped party, target is the other side of value area but I use trailing stop as target.
Feel free to send a private message if you think I can be of any assistance. By the way my mothertonge is german too.
thanks for the insightfull reply. your setup makes sense and after discovering the profitability of my current setup i might add that. for now full concentration on my first one.
I didnt trade for some time now due to vacation and family stuff. To keep the thread alive I will post one trade I did last friday if I am correct. Now at the end of August I see the tape getting a lot faster again, I cant even follow the numbers on my DOM. I might switch to some slower market soon, like the Ultrabonds or ES. If anyone has suggestions I am open, I am looking for volatility between ZN and CL, something like the Bundfutures with US Hours haha.
Trade No3:
CL had a nice range and broke it to the lower side which i was not expecting. It only went a few ticks and then rushed up again, my trigger was bigger buy orders hitting at the top of the range. I immediately set my stop to break even because the breakout was so fast and I thought its always better to sit in a risk free situation. Well, maybe it was too fast but I also wasnt too sure about the trade when it broke with low volume.
I got stopped out fast, which I dont have a problem with because with a range extansion bottom it could have been just another range expansion, and as said before its nice to sit in a risk free trade.
Will take a deeper look into it, I checked out the charts and it feels a little too slow. I need something that really goes when it goes if you know what I mean.
Only half an hour of trading today with the opportunity for two trades.
On the first I sold into 4.25 thinking that the range would break to the lower side. I assumed the break would come because there was a nice compression built up and on an upside push it couldnt quite reach the top. There were larger bids on the lower side and when the market traded down they vanished. After working a hundred contracts on the lower range side I went short.
The market broke quite nicely and I was able to move the stop to break even fast. A good feeling. After that it felt like the market hit a wall at 4.18, I set a buy limit there and got filled right after it went through for some more ticks. A winner of 7 ticks, but a very low risk trade in my opinion. Its a squirrels game hunting for small nuts every day, still waiting for bigger wins to show up. Market broke down to 4.10 after that, feels bad but still made +7. On the other side, I might have stayed in too long and wouldnt have catched the exit at 4.10. Better 7 in the pockets than 10 in the bushes.
On the second trade I bought 4.20 because I saw an interesting play develop. The market was really compressed between 4.20 and 4.15, a lot of volume traded on the upper side while there where large bids below, when the market went lower the bids vanished but noone jumped on it, no volume was traded on the lower side, so i assumed there was no interest in even lower prices. After I entered the trade the market instantly rushed down 4 ticks which made me quite uncomfortable, but lets see how this played out.
The market did really break to the upside, but at first with only low volume. I decided to wait it out and moved my stop to break even. After the market didnt find more momentum, traded some volume and came closer to my stop I exited because clearly the momentum play did not succeed. +1 tick on this one, could have made more, but could have made less.
Today was an interesting session, very short for me and just one trade, explanation below.
The market was in an downmove, yet it couldnt break the lower area of that range for four times. On the last touch of the lower edge large volume was traded and a big bid showed up, when the market went back up the bid followed and I jumped on increased order activity on the top of the range.
The breakout was slow at first, which made me feel very uncomfortable since i bought the temporary high. However, I liked the price action. There always were larger offers that got sweeped and then larger bids showed up. When the market felt stuck at 55 again I exited, I liked the price action but was missing the speed and an easy win of 6 ticks is okay to start the day. After I exited the market accelerated in a very very crazy way to 7.00. Could have made 51 ticks, but I guess you should be happy with what you get. I decide to quit the day because I might chase the market after that trade and it also was very fast so I couldnt even see the trades go through on my dom.
I hope I will be able to trade/post more during the next weeks, the last ones were tough uni and job wise.
