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TA about trendlines and got more into depth about volume.
Also quickly touched on the Dow Theory, but Schabacker seems to not have been the biggest fan of it. The book was written in the 30's when the Transportation Average was still the Railroad Average, but he meant even back then, that things in the entire economy have already changed too much since Dow's days, for the theory of the confirmation of the two averages still being important.
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Continued KR analysis and found the relative-strength situation similar to CHRW.
10Y KR
Consumer-Staples Sector
But the chart itself looked very good, because of pretty rapid "emotional" movements on the left side of the cup, which I think are favorable.
KR
Then unfortunately the Handle-High was already broken today, but with only 2 days of "handle-forming-time" and a straight up day requiring an entry at the top of a spike, so I didn't enter.
Otherwise I think I would have given it a try tomorrow or next week, depite the unfortunate relative-strength situation.
"Thou hast been faithful over a few things, I will make thee ruler over many things"
Can you help answer these questions from other members on NexusFi?
Stopped out in HPQ.
I do wonder if my numerous gauges are actually another disguised attempt to find the holy grail.
I have to admit that the thing in my mind is, doing a small number of trades, but with a high winrate... Question is if that way of thinking is a mistake.
A thing that is interesting is, that the strength of the sub-group to the entire sector, increased again, same as in STX, but the stock didn't really recognize that.
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"Thou hast been faithful over a few things, I will make thee ruler over many things"
Finished Technical Analysis and Stock Market Profits by Richard W. Schabacker.
This was an outstanding good book. I would even argue, that it comes as close to describing an entire, contained approach to the market as it gets, in a single book.
The difficulty as always lies probably in understanding the authors words in the way he really means them. But it comes through, that he is well aware of the major pitfalls and it sounds as if he actually practices what he preaches.
I had the book on the sidewatch already for some time, but I always put it in the same category as the book about Technical Analysis from John J. Murphy, but it actually is quite different.
Schabacker’s book is in my definition about chart-reading and trading and Murphy’s about actual, dry analysis but not the “putting it into practice” part.
Up next is Diary of a Professional Commodity Trader by Peter L. Brandt.
Brandt is probably the most trustworthy, proven real trader out there who has put Schabacker’s teachings into profitable action, so that book should be a good continuation.
"Thou hast been faithful over a few things, I will make thee ruler over many things"
Very close to throwing everything out the window once again.
I feel like I kinda look for a sure-fire way for forecasting the market and over-analyze things in order to not have to face the difficult emotions of losing.
Also I think I focus way too much on the entry again.
I have to find a spot, which suits me, my personality and my values once and for all, stay there and then never look back again! And that means excluding and saying no to a lot of other things!
One point that I can make with certainty is, that I don't want to go lower in the time-frame than the daily-chart anymore.
"Thou hast been faithful over a few things, I will make thee ruler over many things"
Finished Diary of a Professional Commodity Trader. That was a book I really needed to bring me back down to earth and to the roots of trading. Very interesting how he put the Schabacker / Edwards & Magee teachings into practice. He talks a lot about his trading plan called the "Factor Trading Plan", which tells me that I have to make a trading plan once again for myself, but I'll try to make it a bit different than the previous ones, more in a "dynamic" way and with no demand for perfection.
One difference is, that he doesn't use volume at all. He also explains why. One reason being that he trades a lot in the Forex markets where no real volume exists and in the futures, he says, that the meaning of volume is basically different than in stocks, because the number of shares in stocks are limited, whereas the number of contracts technically is unlimited.
The book I started today A Complete Guide to Volume Price Analysis by Anna Coulling stated that matter different, but I start to get it slowly: Such things just doesn't matter! Whatever works for someone works!
"Thou hast been faithful over a few things, I will make thee ruler over many things"
Stopped my daily updating routine of my various stock-market related charts today.
One last time I'll do a major transition. And I hopefully will really be able to stick to my new vision once and for all! I thought that already so many times and eventually I always got stuck somewhere and instead of trying to find a solution for the specific stuckness, just turned away and tried something else.
I don't know what else will come up in the future, but I do know that my intentions are right and since I have already figured out a lot of things that do not work for me, the circle should narrow down hopefully to only smaller alterations in the future.
I'll put my focus on 3 markets from now on and will leave everything else alone.
These markets are:
Mini-Corn
Mini-Wheat
Mini-Soybeans
Actually Corn was the market that introduced me to Futures almost exactly a year ago. The problem I faced back then was, that I wanted to trade Mini-Corn intraday, which didn't work the way I intended it to do, because of the low liquidity and comparatively high commissions. I then applied that idea to the MES and that's where this journal started.
There were some specific reasons why I got drawn towards the grains, of which I was only partially aware at that point, but they grew more important as I learned more about myself and being in the markets over the last year:
a)
I need to have a firm grasp on what I'm trading, even if it's on the surface just price-quotations. The more abstract the asset I'm trading gets, the more I lose the meaning over time and it's just not what I can take pride in. I can trade grains, I could trade cotton or sugar or livestock, but I can't trade currencies, interest rates, crypto and also index-futures I just don't like. Stocks are not that bad, but I prefer the futures-market.
b)
I do have some ethical issues at times where I'm asking myself: "And how do I actually contribute something meaningful to society by sitting behind books and the screen all day and pressing buttons?"
I know there are some answers that would work for every market and maybe they don't work for me because I still don't understand the actual mechanics of the market well enough, but in the grain-market I feel the most that I contribute at least something by being a useful link somewhere between a farmer and someone's bread on the table.
And if I lose money, I rather have it going in this direction than in some pumped penny-stock or being swallowed by Wall-Street-greed.
So with that in mind, I hope that I'm not just babbling hot air and will end up in a few months posting something completely contrarian to what I just wrote here again.
Started drawing charts for the grains and continued the book about Volume-Price-Analysis. There are some good analogies in it, like seeing only price-action as an online auction, and price-action in combination with volume as a live-auction where you see how many people are in the room, how eager they are and so on.
But as the book goes on, I feel like I have bought a sales-pitch for just the next guru-service. Things are noticeably written in a grail-implying way.
And putting a quote from David Einhorn, who is known for shorting questionable companies based on their fundamentals, saying "The loss was not bad luck. It was bad analysis" in a book about purely technical trading, is misleading I think and goes in the direction of the "I'm not a bad teacher, you are a bad student" - trick.
I'll fight my way through to the end, because you never know, but my patience is getting lesser with those type of things.
There are reasons why some books are published by renowned publishers and some via Amazon.
"Thou hast been faithful over a few things, I will make thee ruler over many things"
Finished the VPA book. There were some interesting things in it, but overall too much subtle, fomo for buying more material from the author, producing remarks, that I have to question the entire described concept in the book.
I prefer my old masters and started "Technical Analysis of Stock Trends by Robert D. Edwards & John Magee".
This book is very similar to Schabacker's and Schabacker's writing was actually the basis for Edwards & Magee.
Since they mentioned Schabacker in their preface, so much interest came up that his almost lost manuscripts luckily came somehow back up to the surface and eventually also found their way to the general public.
Actually this two books will build the foundational first layer for how I'll approach the grains.
Soybeans
In the soybeans there recently was a nice head and shoulders bottom which then build a triangle. This is a type of pattern I'll be looking for.
Wheat
In wheat there's currently a breakout of a falling wedge, which I think would be also a valid pattern.
The way I see those patterns is, that they are highly subjective and that two different traders who look for these patterns, could both see different ones, trade them and could be both profitable, provided their risk- and money-management is in line.
That's also why I'll have an eye on the duration on how long the pattern took to built itself to guide me if a valid pattern is actually there or not.
I think those three markets will produce 1-2 trades per month. So if I'm constantly making 3 or 4 trades I'm likely overtrading, and if I make 0-1 trades constantly I'm likely too hesitant.
The second layer will still be my 3-point-reversal P&F charts. If I don't know if I see a pattern on the barchart, I'll look on my less subjective P&F-chart if there is a P&F signal and I also found the concept of the bullish and bearish resistance lines to be supportive.
The third layer which will not influence any decisions, but I still find it very interesting, will be keeping a "book" ala Taylor Trading Technique, and see if I can see over time if the 3-day-cycle can somehow help me in my decision making.
Since my average initial risks and the contract-size will be in a way that the risk is on the higher side for my account size, but still not reckless, I will really try to stick to my plan and just see what happens.
Either the account will grow over the year or it will bleed down. I even welcome this forced higher risk a bit, since I can't fool myself with chump-change trades anymore.
I'll also try to see the "craft of chart-reading" as an ongoing process I have to hone over the years, but no perfection being possible.
"Thou hast been faithful over a few things, I will make thee ruler over many things"
Stopped out in APH for still an initial loss. Entry date was Nov 5th 2021
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Worked on my trading plan and did some research in the recent CFTC Open Interest report.
I can't assign to what "Swap Dealers" and "Other Reportables" mean (for me), but I know what Producer/Merchant and Managed Money means. I have also ignored the spread positions.
However the open interest as of January 18th in the commodities I'm going to trade in (actually the major-sized contracts, but I disregard that in this case) is as follows:
I'm probably not getting the entire story, but to me it looks as if we are far from a "playground for reckless speculators" here.
Even more the opposite being the case and looking as if more participants on the side of risk-taking being welcome.
What I like is the term "Managed Money" used in the report, because if I think about it in the plain essence of these two words, that's what I'm trying to do.
The farmer produces, the merchant I'd say distributes, the baker processes, the other farmer might feed his cattle and we make an extra loop there and somewhere in between I'm sitting and managing the price-risk.
I have no clue what type of flour the baker has to mix together in order to make different pastries.
Also have I no idea what type of food, how much and when another farmer has to feed his cattle, and on the same token, they have no idea of how to deal with fluctuating prices which constitutes a serious problem for them.
The farmer (hopefully) chose to become a farmer, because that's what he likes to do.
The baker (hopefully) chose to become a baker, because that what he likes to do.
And I chose to (try to) become a trader, money-manager, speculator, risk-taker or whatever whoever wants to call it, because I like studying the price behavior of markets.
Sounds to me like a nice situation for everybody involved!
The funny, but probably more sad thing is, that two persons reading my "legitimation" part of my trading-plan, could think two different things.
One might think:
"Sounds like a good idea. I do like buying my bread whenever I want for the price I'm used to. Seems to be a useful service he is trying to provide."
Whereas another person might think:
"It's bad enough that he gambles with food, where there are children in the world that doesn't have enough to eat, now he even tries to disguise his vice with doing something good. What a jerk!"
It's maybe a sign of my immaturity that those things still bother me, but at least I'm not letting me being held back by them anymore.
As the old saying goes: Don't justify yourself. Your friends don't need it and your enemies won't believe you!
"Thou hast been faithful over a few things, I will make thee ruler over many things"
Finished the pattern part in the Edwards & Magee book. Since I intended to read the Schabacker book a second time, I've decided to "tandem-read" them. They are anyways very similar structured and so I think I'll have a better comparison for better brain-digestion. At the same time I'll also transfer my own take, merged by those two, into my trading-plan.
Interesting in the Edwards & Magee book is, that they traded and observed charts in the bull-market that led up to 1929, during the great depression and then also leading up to and through WW2.
They occasionally describe changes they saw in some of the patterns and in the frequency they occur, prior to and after the SEC was found.
For example were margin requirements generally lower before the crash, which made it easier for the big-boys to "bear-raid the public out".
They also saw less clear-cut rectangles appearing after the SEC-founding, which they assign to a change in the law which made pool-operations more difficult.
The more I think about it, the more I come to the conclusion that a hedge-fund nowadays is in essence what a pool was back in the days. A bunch of wealthy individuals put their money together and one manager operates with it in the market.
"Thou hast been faithful over a few things, I will make thee ruler over many things"
