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Here's a summary of the trading day. I get home from night shift at 6:30 AM. Try some Automation stuff until about 7:10 before bring up my good and proper charts around 7:10. I've got my trade ideas and forecast in place by 7:30. I'm a good boy and stay out of the opening 5 minute candle. Trade's 1 and 2 come pretty quick. I call them pot shots while I wait around for a bigger trade with better potential to form on the chart. Here's the sad thing. It was forming, right before my eyes, just like I called it out, but I was too wiped out by night shift to take advantage of it. I tapped out at around 8:10 AM with 4 points.
The good, the bad, the ugly.
A LOT more was good for the day than anything else. I came in, got my 4 points, realized I was no longer effective enough to trade for the day, so I got out. The 2 quick scalp trade I made were 100% valid trades. By all metrics we were in an up trend at the time. Price pulled back to a level, in this case it was the 20 EMA, and then proceed to move back up. One of those 2 point trades every day, for 44 weeks is worth over $1 million. Pot shots indeed. The bad is I had to get out and sleep. Its bad because I had a I really good read on what price was going to do, and did nothing about it. What's the point of good forecasting if I don't do anything with it? Not sweating it right now, but I can see a trade out there in my future where I trust my analysis enough to put trades on based on it, and then go to bed. Food for thought.
1. Price moves in cycles- Trending, ranging consolidating. ADX rising and holding above the 25 on the DM shows me what cycle we are in. If we are trending, consider holding the trade you are now in when DM+ crossed above DM-, and adding to you position every time price rejects off the 20.
2. Hopefully you were noticed that we retested the high of the day, and rejected it, so you took profits. You should be done trading for the day, if not, when DM- crossed crossed above DM+ the strategy automatically entered you into a new trade trending now to the downside. A good profit target would be the 200 SMA, or even the daily low at 4257.
3. Although we are still making LH's and LL's, the ADX drops below 25 and tells me that we are now either in a range or consolidating. the first 2 highs and lows clearly predict what price will do the rest of the day after the trend lines are drawn, thus becoming tradable. Now, armed with the information of when and where price will likely turn, when the strategy enters the trade, you know which to take, and which to kill.
You Don't have to trade 3, but you will have to in the future if you want to be in position to catch trending moves like 1 and 2. That is what this strategy is about. We automate the hardest part of the trade, the part my shitty lizard brain recoil's from, entering the trade, entering the unknown, and with that done, we are now free to focus on better understanding the context. Now I'm in a trade, what cycle are we in? Where is price going to turn and why? And will be filthy rich really change me?
It's the high win rate. This report is raw, it's not taking into account on how I plan to use the strategy, which is only for automating trade entries while discretionary trading. Why I am hopeful is that the strategy does a good job of placing trades in good positions that can be better managed for a better profits.
The chart in this post tells the tale of something afflicting us all at some point: fear to take risk. You buy a breakout, sell it for a point or so, do it again, get flat again. You may have been wiped out, but this is not a symptom of being wiped out. You aren't willing to take the risk. You just can't wait to get flat. This is why you are drawn to the "2 points a day on 50 contracts, 252 days a year"... because you don't like being in the market.
When you take risk, let the market prove you right or wrong. Easy to say, hard to do. But don't let fear get you out. If you think it's hard to take risk on sim, just wait until you go live (with MES, I highly, highly, strongly recommend). And if you think live with 1-2 MES is hard to take risk, imagine how stomach churning it will be with 50 ES on. That's a nice E-class monthly car payment per tick.
This leads to my actual advice:
Your spirit is admirable, and you can do this. But if financial motivation is your primary driver, and it is for most of us, you are fighting an uphill battle with your emotions that all but dooms you to failure. If you have a million USD sitting around to trade with, making a million isn't really that stressful. If you lose it, you can just make another million. But if you have $5K in the bank to trade with, it's a little different. The only reason to trade is to make money. Anything you can do trading, you can find outside of trading. The real draw is the scalability of profit potential. Which is why it draws in so many people, who are so focused on the money, and this is ironically why so many lose. So, paradoxically, you have to trade in such a way that you don't care about the money, when in fact the money is the reason you're doing it.
To trade and think about the money is allow your own personal financial situation, and your daily P/L, to influence your decisions about the market, which assuredly doesn't give two shits about you or your finances. In other words, you're looking at the market with a filter that can only harm you.
To be brutally honest, when someone says things like "will being filthy rich really change me?", all I can think is, thank goodness for fresh meat like you. Your'e my competition. With that kind of attitude, I like my odds in this competition. It sounds like you're taking it lightly. What makes you different from the 95% who lose money? It's not the f**king NT DM indicator, that's for sure.
If this sounds brutal, good.. you haven't seen anything yet. Just wait until the market puts its foot so far up your ass one day, when you're having a particularly confident attitude, that you are literally afraid to trade for a week. Or, when you have a large losing day (EVERYone does, btw) that you literally want to throw something, or cry, or who knows what. I hope right now you're thinking that this can happen to you, because I can guarantee you, it will. No trader who's been doing it for a long time has escaped days where you are just so overwhelmed that you don't know how to handle it.
Real traders who have made and lost money and who have been at this a long time are nodding their heads right now, because they know just how real this game gets at times.
I hope you are reading the above as helpful words coming from an experienced dude who still wonders sometimes if he's good enough, who curses himself out for being a total moron, and who makes mistakes all the time. I'm saying the above because trading is not a game you play with a flippant attitude (like jokingly asking "will being filthy rich change me?") and survive. I want you to survive, and I like you, so that's why I took the time to type this.
Best wishes to you, and if I can help, let me know.
I do appreciate ANY input, and sincerely thank you for yours. Time is the most valuable commodity of all. I've also joked about buying a white tiger- when I'm filthy rich, because its funny, not because those are my actual aspirations. I take my trading as seriously as anybody. I've given up drinking, tobacco use, masturbation and all other forms of recreation in order to learn discipline and free up more time in order to perfect my craft.
This journal is a true and accurate account of my trading journey. I use it as a way to collate my ideas and hold myself accountable. As such, its going to reflect who I am, how and what I think. I think trading is is possibly the greatest activity anyone could ever undertake if they truly want to know the truth about themselves. I KNOW I'm scared to trade, that's what made today so special. That F**king DM indicator, as you called it, just might have given me a solution- or not. Either way, I journal these things so I can know what worked, what didn't. I joke about these things because humor is something that thrives between man's aspirations and his limitations. There is more logic in humor than in anything else. Because, you see, humor is truth." –Victor Borge
Yep. I conditionalized the take profit and stop loss so that I could more easily test how these affected the backtest by inputting different combinations. for instance, if I ran the test with a SL of 24 and a TP o4 1 (ticks) I was able to get the WR up to 83% What was money is that this test revealed that a SL of 12 was sufficient.
What this test is telling me is that this strategy has the potential to to automate trade entries that put me in a good position to take profit depending on the context of the chart, which is something I'm not yet sure can be automated at the retail level. This approach is thus a semi-automated strategy.
Your advise is always welcome. I've incorporated your fallacies into the cannon.
That is good that you tried different SL and TP, so you can see how those exits have a big influence on the win %.
Of course, that win rate is not even that important, except for some psychological benefit. Expectancy is what really matters.
If you wanted to test how just the entry does, run the test of entries and exit after 1 minute, 2 minutes ,etc. This might be tricky with the Renko bars though.
Speaking of Renko bars, beware of any backtest with Renko bars, it is easy to get misleading backtest results due to how Renko bars are recreated in backtest. I use Tradestation, and I can tell you that there is only 1 specific order that gives accurate backtests with Renko. Everything else is bogus.
Your slippage of 338 - is that points, ticks, etc? If your slippage is off your results could suffer. Yout TP exits won't have slippage, but market/stop entries and stop loss exits will.
Finally, a 1 month test, even with 1000 trades, is IMO insufficient. This goes back to the flavor of the day comment I made earlier. What worked a month ago might not work today.
