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HumbleTrader's next chapter

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  #121 (permalink)
 Narcissus 
Legendary , Always learning
Vancouver Canada
 
Experience: Intermediate
Platform: Investor RT
Broker: IB & IQ DTN
Trading: MES, SPY
 
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Posts: 1,253 since Nov 2014
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Combining probabilities to improve execution

I wrote in my #11 post about the 'odd days'. RTH higher close but ETH lower close.

The following day is more likely to be bearish. Whilst I'm considering shorts only for tomorrow, based on this info, probabilities favour a gap UP open.

Currently, ES is trading lower. I'm hesitating to execute bearish bias because of the higher likelihood of price moving up between now and RTH open.

Hence, I'm placing a limit sell order @ 3780 (25 points above where we are now, but still 25 points below Y-H). Whether it's filled or not, I'm at peace due to the fact that I'm playing this game based on probabilities.

P.S. I trade SPY in RTH with no Overnight hold. However, likely to restart MES for ETH trade & possibly hold for upto 72 hours.

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  #122 (permalink)
 Narcissus 
Legendary , Always learning
Vancouver Canada
 
Experience: Intermediate
Platform: Investor RT
Broker: IB & IQ DTN
Trading: MES, SPY
 
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Posts: 1,253 since Nov 2014
Thanks: 2,466 given, 1,785 received

June 23 2022 Thursday Prep

Somewhat conflicting data. Though it's bullish, the 'odd days of ETH down RTH up' I'm less confident of the calculations.

When I consider these unique factors, it's bearish. I'm going with that.

Plan is to short RTH Open 1/2 size.

I may add 1/2 to a loser above Y-H, IF the price action suggests range day. (edit - Not adding to a loser. Stats indicate that if Y-H is tested, profit factor for shorts DECREASE from 1.5 to 1.1. Not worth the risk)

If it's a winner, then I will scale in 1/2 once vwap is successfully negotiated.

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  #123 (permalink)
 Narcissus 
Legendary , Always learning
Vancouver Canada
 
Experience: Intermediate
Platform: Investor RT
Broker: IB & IQ DTN
Trading: MES, SPY
 
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Posts: 1,253 since Nov 2014
Thanks: 2,466 given, 1,785 received


June 23 update

Went short as planned and seemed to be working and scaled in after vwap test. Howevere, due to DTN data issues, there was a bit of lag in charting. Hence went flat. Unfortunately it's during the test of HOD and hence a small loss.

Still bearish bias and looking to short the bounce. If new LOD is made, may get more aggressive. I want to add that price is extremely choppy and sideways and not ideal for scaling.

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  #124 (permalink)
 Narcissus 
Legendary , Always learning
Vancouver Canada
 
Experience: Intermediate
Platform: Investor RT
Broker: IB & IQ DTN
Trading: MES, SPY
 
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Posts: 1,253 since Nov 2014
Thanks: 2,466 given, 1,785 received

June 23 update 2

Short 1/2 size.

Extremely choppy with a slight bullish slope but my bearish bias persists. Anyone using Moving average or other trend following system will be having a very rough day today

We had nice trending moves for several weeks now and when it was choppy, it was usually on low volume. Today is a bit unusual in the sense that the relative volume is pretty robust. I'm not sure what that means but if we break down below, it may have plenty of room to run.

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  #125 (permalink)
 Narcissus 
Legendary , Always learning
Vancouver Canada
 
Experience: Intermediate
Platform: Investor RT
Broker: IB & IQ DTN
Trading: MES, SPY
 
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Posts: 1,253 since Nov 2014
Thanks: 2,466 given, 1,785 received

June 23 Review

Short bias executed as per plan. Seemed to work really well. Scaled out at the best location (retest low) and then scaled in on the bounce. When I began to pat myself, I should have sensed that it's not a good sign. Market bounced back to make new HOD.

Breakeven day after staying in green most of the day. These are the days where my emotional battery drains faster (due to the earlier chop & more sustained screen staring than necessary).

My MES trade made a decent profit but I decided to NOT trade ETH hours for few more weeks. I will remain focused on SPY during RTH only (Too much emotional rollercoaster)




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  #126 (permalink)
 Narcissus 
Legendary , Always learning
Vancouver Canada
 
Experience: Intermediate
Platform: Investor RT
Broker: IB & IQ DTN
Trading: MES, SPY
 
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Posts: 1,253 since Nov 2014
Thanks: 2,466 given, 1,785 received

Response to another elite member's journal entry

"Lately I've been considering whether or not there's something seriously wrong with me which would make it so that I'm not cut out for trading."

-----------

You are absolutely correct. There IS something seriously wrong with YOU, ME and EVERYONE of us so that none of us is cut out for trading.

That's heuristics. It's likely that you read a lot about it. We are fighting against 600,000 years of evolution and genetic adaptation that made us survive till date. I am a practicing mental health professional for 20 years and assumed that it would be easier for me with my awareness and experience. Trust me, It's not. It took 4+ years of casual trading, 2+ years of focused part time trading and 6 months of full time trading to reach my stage of 'confident' breakeven trader.

The best way, in my view, to become successful in this 'anti-natural' career is to impose strict rules in a structured environment with layers of supervision and continuous support for improvement. Ideally, like a prop set up. Since, it's not possible for me (and presumably for most of the traders here), I modelled many of the prop firms functioning. (I used SMB capital as a model).

Though I made several radical changes to my trading methodology and style in the last year, Going 1 time frame up is THE best thing I ever did. My holding time is hours, not minutes, and my future goal is 'days'.

I hope my unsolicited comments are taken in the right spirit.

Good luck

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  #127 (permalink)
 Narcissus 
Legendary , Always learning
Vancouver Canada
 
Experience: Intermediate
Platform: Investor RT
Broker: IB & IQ DTN
Trading: MES, SPY
 
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Posts: 1,253 since Nov 2014
Thanks: 2,466 given, 1,785 received

Follow up conversation
----

The rules we need depend on our individual weak spots.

I picked up my 3 cardinal sins and imposed FIRM rules to tackle them.

Sin 1 - Holding losers overnight (usually with the hope that price will turn around and often ended up holding it for days and occasionally weeks).
Solution - Market on close MOC orders in IB @ midday. Flat @ EOD. 100% guaranteed.

Sin 2 - Overtrading.
Solution - Max 3 shots/day. Individual trades or scale ins. No reversal of direction unless stopped out once.

Sin 3 - Gut instinct trading - mostly fading
Solution - Stats based trading. Only taking higher probability trades. No exceptions
-------

You are right. It's hard to overtrade @ higher time frame, by default, as your targets/stops will be lot wider. I'm sure we can be VERY creative in our perception of dangers and get out lot sooner than we should Heuristics again. This is where our trust/conviction in our edge with a healthy dose of respect for probabilities play a huge role.

I can demonstrate this with an example from yesterday. I entered short MES @ 3780. My thesis would be wrong above Y-H 3905. (25 points higher). I set my target atleast 30 points below. During the RTH chop (pretty intense, I must add), I wasn't shaken as I trusted the stats. Eventually ES went down but ONL was providing good support and hence I took my conservative profit. Not to brag but to emphasis the points about over-trading and developing confidence in our edge/system. Hope it helps.

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  #128 (permalink)
 Narcissus 
Legendary , Always learning
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Experience: Intermediate
Platform: Investor RT
Broker: IB & IQ DTN
Trading: MES, SPY
 
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Posts: 1,253 since Nov 2014
Thanks: 2,466 given, 1,785 received

Stat Session - Gap UP

Since I'm considering overnight holds in the near future, currently studying the historic patterns of gaps.

Over the last 20 years, RTH opened gap UP 2600 vs gap Down 2200.

i.e Gap UP is 1.2 times more likely than gap Down. Something to think about if I'm holding a short beyond RTH. I am better off going flat @ close and re-initiate short @ RTH open.

The only exception to this gap up rule is when we are transitioning from a Bear market to a Bull market. During this period, we are 1.2 times more likely to gap down on opening, especially when we close higher the previous day. It's as if, the crowd not believing the bounce back and selling into the rally! Guess what. Those days are more likely to end higher. Fascinating.

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  #129 (permalink)
 Narcissus 
Legendary , Always learning
Vancouver Canada
 
Experience: Intermediate
Platform: Investor RT
Broker: IB & IQ DTN
Trading: MES, SPY
 
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Posts: 1,253 since Nov 2014
Thanks: 2,466 given, 1,785 received

June 23 2022 Friday Prep

Stats are bullish.

Plan is to go long @ RTH open 1/2 size.

I'm unsure whether adding to a winner above ONH is a better strategy or adding to a loser @ vwap a good one. May stay light if we see chop like yesterday. Some profit taking is possible into friday PM. Will see

P.S. These are the days where my perma-bear fading tendency would cause havoc to my P&L in the past. Not any more. Even if I end up with a losing day, that's a low probability event and I trust the stats.

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  #130 (permalink)
 Narcissus 
Legendary , Always learning
Vancouver Canada
 
Experience: Intermediate
Platform: Investor RT
Broker: IB & IQ DTN
Trading: MES, SPY
 
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Posts: 1,253 since Nov 2014
Thanks: 2,466 given, 1,785 received


June 23 update 1

That's a pretty quick and impressive move by the bulls.

Long 1/2 size at open. Reluctantly, I have to add.

After 10 AM spike, I sold half at 3870 and the rest at 83. Flat now.

It was tempting to take profits at 50s. I chose to delay my gratification by teaching my daughter 3rd grade math and rewarded handsomely.

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