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“There is a time for many words, and there is also a time for sleep.”
― Homer, The Odyssey
After being active in several markets over the past 10 years, I decided to return my focus to the FDAX in 2022. I will start posting part of my notes here on a to be defined interval. I keep them in a local journal, but will share some of it here for anyone to have fun/read.
I am returning to the DAX after several years of trading crypto. You can have a variety of opinions about the coin industry, but for me I believe my time in the crypto markets helped me with the coming-of-age as a trader. I learned how to be profitable, and with that I also endured big drawdowns, and learned how to take losses. I also learned how to think in probabilities. I mean mentally I was aware of them, but 'knowing' something is quite different than actually doing and experiencing it, at least that is how it worked for me.
In the end, I created several algo based systems that were up 24/7, which I learned to trust. Obviously in the end it's not the technology/algo that I learned to trust, it was my research and math. Sounds great, but that was not an easy thing to do/learn. There is always that initial first night where you go to sleep, and wake up in the morning to see how it performed. It required a business mindset, and de-attachment of the emotional value of my capital, among others. But it clicked, and it now has allowed me to open up a new account which I will use to trade DAX futures.
My approach is very simple, I don't use indicators, and/so no algo's! Quite the opposite: this will mainly be a price action based approach. I am primarily looking at context and price behaviour, price velocity and sometimes volume. I will use that and other metrics such as the IB, previous highs/lows and closes to determine the context of the day. I have a volume profile on a higher timeframe to help me come up with my thesis.
In the morning, I fill in my preparation sheet, look at the Asian/overnight markets and take note of the economic calendar for that day. I prepare my trigger chart by identifying area's of interest (levels) that I depict before the market open. My trigger is a 8-range chart, which is arbitrary (like most things in trading), but works for my approach. I will take breaks, (initial) tests, re-tests and several other entries that are pre-defined in a setup sheet that I have. My position size, SL and TP levels will vary, all depending on the actual context in play at that time. At the end of the day, I perform a session review where I am looking to see how the pre-defined levels came into play (or not), and if I was wrong (often) trying to understand how in hindsight I can see what I might have missed. Price is continuously telling a story, and I might have taken a wrong conclusion at some point. All levels get deleted after the review, and redrawn the next morning.
After my preparation routine, I will start looking at the pre-market open and just watch. I categorise the open type and put that in my journal. It helps me with setting the initial(!) mindset of what (day type) might be expected. My trades will on average (not always) be in the morning session, after the Initial Balance has formed, and my journal post will probably always be at a later time. It will be mostly intended for anyone who finds it interesting to see what someone else's (my) thought process was during the session.
Over the years I have found my most profitable setups were based not only on screen-time, but also on social interactions with other traders which often inspired and/or triggered a certain thought process in me. So with that intention I am opening up this journal, perhaps somebody will find it useful in their own personal journey.
PRICE ACTION Last Friday price closed at the VAH, making an after-hours recovery back to the IBH, after making a lower low on the daily earlier in the session. That was a 300-point rally from the LOD. Today is the last day of the month.
10:24 note: retest IBH from above, 33 points swing.
10:44 back into IB range, expect lower prices.
11:12 look for move up through 30SMA, and break below for Wave 2 entry short. Target IBL. Stop above IBH.
11:13 IBL reached, no entry setup.
11:19 enter 15470 on entry setup (IB MID). Target yday high, 15440. Stop 15512 above IBH. Risk 42. Expect an initial bounce on the IBL during the trade.
11:31 exit, +30.
OPEN OAIR. Expect a Non-Trend or Neutral Day.
Open at yday high.
RESULT
no trade.
PRICE ACTION Beginning of a new month.
08:00 Retail sales worse, doesn't seem to have any impact on the open.
09:00 Immediate move away from yday high, note the 1st of the Month stat.
09:20 126 tick swing up on the open.
10:00 lower high, swing fail, looking for move back down to IBM
10:09 missed entry, not chasing
10:11 IBM reached, looking for entry for short continuation to 15575 SR.
10:23 15575 SR reached, no entry setup
10:27 looking for entry for wave 2 continuation to IBL/yday high
10:29 IBL reached, no entry setup
PRICE ACTION
Not finished my day type study yet for DAX, but for now I will classify yesterday as a Normal Variation day.
09:06 Yesterday price rejected previous day high, today's open is on the top of yday range. We are auctioning above/just below.
09:25 Participation not strong, IB volume 50% lower than yesterday, lower on average as well.
09:30 IBH (right) on SR 15710, IBL on yday VAH.
10:03 on a slow day, yday SR comes into play, at least today. Look for tests, also on intraday levels. Using rotation stat to finetune entry and RR.
10:10 took short IBM/yday high for 10 ticks, 2 contracts. Used a pre-defined limit order, still getting used to SC, looks very useful (on these days).
Example of an high probability scalping opportunity mentioned in my notes today using harmonic rotations coming into a pre-defined SR level.
Market conditions have to be favourable for these types of setups though.
PRICE ACTION Today is ECB day. Not too confident about the levels today, since the structure is unclear with all these gap days in a row. We'll see.
09:03 opened and scratched short yday low (no stats). This short was decent. 35 tick swing into the low.
09:06 Rejected yday low.
09:30 Just like yday participation is not great, slightly higher than yday, but still below average.
10:24 short setup, did not take it, was distracted with other tasks.
10:47 opened and scratched long SR 15522. Level was fine.
PRICE ACTION
09:09 scalp 15366 area long yday close/low/cash close for 2 contracts, +20 points
09:16 yday low was another scalp opportunity
09:21 break of yday low, expecting lower prices. Order entry 15330 SR long scalp
09:26 SR did not hold, added 2 contracts after rotation of 80+ points
09:33 exit for -6 points
09:41 entered long scalp SR 15267 1 contract, +10
09:41 added order 1 contract SR long 15257, removed
For reference of this journal, this is my FDAX Initial Balance study, based on data from January 2011 - January 2022 (Denali). The data sample contains 2.829 days.
The IB range is defined as the first 30 minutes of the XETRA cash session, which runs from 09:00 - 09:30 CET.
The most common IB range from this study turns out to be 33points (65 times).
An IB ranging from 17 - 60 points will be considered as normal (68%).
An IB ranging from 12 - 110 points lies within 2SD (95%).
An IB ranging from 11 - 239 points lies within 3SD (99.7%).
So far in 2022, the average IB range was 97, which lies within 2SD of the most common range. In 2021 the average was 80, based on the same period.
Finally, in February 2021 the average IB range was 78.
PRICE ACTION
Spend the weekend adding a swing volume chart to get a feel for the participation of a 8-range swing. I also performed a statistical analysis on the IB which I posted in this thread.
Open within yday range, and auctioning both ways.
09:15 order PMK low long 15127
09:19 market long 15148 after rotation of 77 points, 2 contracts, +14
09:25 PMK low filled @ 15127, 2 contracts, +20
09:26 order entry long yday close 15088
09:33 yday close filled, 2 contracts, +20
End of session for today. Volume swing marked the directional swing in volume.
