HumbleTrader's next chapter

August 18th, 2023, 01:03 PM

My "Process" update.

My daily bias has been statistcis & probability based for more than a year now with meaningful positive impact on my P&L and also reduced trading related stress.

I'm currently developing a methodology of execution where my entry points and targets will also be probability based. It's a bit tricky to explain and hence will use today's price action and my trades as example.

When we gap down significantly below previous day's low i.e like today, the overall intraday bias is Bearish (based on 250 samples) and I'm considering Shorts only.

The next step is entry points. For this, I analyse the odds of gap closure. This also helps to determine risk and potential stop location. There is a 38% chance of gap being closed, intraday. More concerning stats is that there is a 60% chance of half of gap being filled. Because of this knowledge, I did NOT short the open @ 53. I WAITED patiently and entered @ 63 and further scaled in @ 70.

Next step is exit analysis or targets for profit taking. This is the most complex step and involves combining ATR and past stats. I will explain this later in more detail. In brief, once we made a new HOD above 4374, the odds of making a new low of the day below 4353 reduced substantially to less than 25%. Hence my profit targets became conservative @ 15 points (not my usual 30 to 40+ ATR targets) and more crucially ABOVE 4353. This is exactly what I did today.

Finally, I could have reversed my bias to long based on the above info and play for gap closure thesis which fits in nicely with ATR target of 30 pts from RTH open. That would be my next stage of evolution.

August 19th, 2023, 01:48 AM

My goal is to beat my system.

I have a fairly robust methodology now and my system has a win percentage of 55 to 60% and a profit factor of >1.5 and often close to 2. Obviously this is based on historic performance and future is uncertain. I'm comfortable with that.

However, I want to do better than that. I want to beat my system in both win rate and profit ratio. In that sense, yesterday was a big success.

My system generated 'sell' signal yesterday. One of my parameters is seasonal factor and that included options expiry date. The following is the performance over the last 20 years. Note the clear bearish trend but the final spike up from yesterday's bullish move (marked by yellow circle). Result = -ve 30 points.

However, I outperformed it by netting a positive 16 points, not by going against the system but by better execution and trade management.

Even in my passive SPY trading where I was short from open, I exited during pullback instead of holding till the end. Hence, the loss was -1.8$ compared to 3.2$ by my system. That's an awesome A grade result. The key is NOT to trade against my system generated signals and yet beating it. Eventually, after enough experience, I could over-ride my system signals but for now I'm religiously following it.

August 22nd, 2023, 12:13 PM

I'm going to be hyper involved in a couple of my methodologies related to targets / scale out and exit plan for the next few weeks.

Looking after toddlers is beginning to have a toll on my sleep. Hence, I have decided to stop posting here for a month or two.

Good luck to fellow traders. See you later in autumn.

September 18th, 2023, 11:05 AM

Wow! It has been close to a month since I last posted.

My research is going well and the focus has been 'profit targets'. I am calculating the odds of certain points getting hit in certain conditions. For instance, we opened gap down today but above Y-L. Historically, this has a 73% chance of bounce above Y-Close. There are 2 ways of using this data.

First is for entry points. IF I had a bearish bias intraday, this stat would have made me wait for better entry @ 4500 area instead of 90s.
However, I had a bullish bias today, based on other daily data, and hence entered long @ 94 RTH open and also more confidently bought the dips. My 'wrong point' is ONL. My 1st scaling out position would be above Y-C and hence above 4500. Final exit is based on daily ATR (another work in progress).

Hope it makes sense.

I will probably need another 2 to 4 weeks to fine tune my execution strategy. I'm still breakeven this summer but profits can wait whilst I'm refining my tools.

I love this spaghetti noodles figure I found in google whilst browsing about 'Uncertainty'. Fantastic representation of the potential path market can take to reach my target.

September 18th, 2023, 09:49 PM

My execution skill has been steadily improving. Yesterday's trading was a good example.

I had a bullish bias (as long as we stay above overnight low). I loaded up on pullbacks so my average entry price was a reasonable 4495.

My exit point was above ONH @ 4507 and had a conservative 20 pts ATR (as it's pre FED days). I had NO difficulty in sitting through the chop because of the conviction in my system. I was also able to push up my size to 4 contracts and rewarded well for my risk appetite. My new rule is to be flat @ EU close.

Result = +58 points.

Very satisfying trade, despite a low range day.

Screenshot (9455)

September 21st, 2023, 02:11 AM

Profitable day but with mixed emotions.

I had bearish bias based on FOMC gap up open stats

Initiated short @ 4499 and scaled in at 4503. Bail out point was ONL.

After some hesitation and sluggishness, expected on FED days, the price eventually moved down. However the gap was NOT closed and my paper profit at EU close was a meagre 12 points.

I decided to ride the FED storm and carried 2 positions. My first Target of 89 and final Target of 78 was hit quickly.

+35 points yet I could've easily squeezed another 10 to 20 pts. Its not necessarily an execution error per se but rather caution on my side. I'm progressing but it feels painfully slow.

P.S. My current goal is to become more muscular and gain 10 lbs in 6 months. There are several surprising similarities between trading and weight lifting. Will eloborate more next.

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September 21st, 2023, 02:22 PM

Negative day but valuable lesson.

Stats had a mixed bias today. Gap down is bearish but post FED is bullish.

I chose to buy the lows @4505 and expected a reversal day atleast upto 4525. I tried to pick the bottom thrice and It didn't materialise. However, the damage was limited to negative 22 points.

All my safety gears were in place today as it's a counter trend day. I e. small position size of 2, hard stop of approx 6 points and a time stop of approximate 30 minutes.

I am happy about the overall trade though. It was frequently green as I bought the dips at good location and had MFE of 8+ points but I was stubborn in my 20+ points target. Since I decided to NOT scale out, I gave away my paper profit. No regrets though as it has a valuable lesson 'Expect choppy consolidation days after trend days'.

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September 21st, 2023, 10:57 PM

HumbleTrader

My current goal is to become more muscular and gain 10 lbs in 6 months. There are several surprising similarities between trading and weight lifting. Will eloborate more next.

I learnt a lot in the last 6 weeks of weights/resistance training. Main goal is to try and beat Sarcopenia (muscle loss) as I will be 50 fairly soon

. Though I am good at sports and NOT overweight, I generally prefer to be physically idle but with mental hyperactivity. Obviously. Otherwise, how could you love trading.

Now to the similarities between trading & weight lifting.

1. It's simple but not easy.
2. Most people KNOW what to do. It's the DOING part that's hard.
3. It's usually NOT natural/desirable to lift heavy things or taking small loss.
4. I like the results i.e chiseled body/ big P&L, but not the effort, discipline and the hard work it takes.
5. Huge array of techniques to achieve your goals easily. aka indicators.
6. However, very few people, if any, managed to achieve their goals.
7. Huge industry and profitability (for the people offering you the services).

I can list several more but you get the idea.

What I'm realising is that, whilst I'm training my physical muscles, my discipline muscles and endurance muscles are also getting stronger. You know how valuable those can be in trading.

September 22nd, 2023, 11:48 AM

Another good day. Profit was not much, mostly due to compressed range but my execution is seeing a strong evolution. It feels like I'm getting closer to my 'ideal trading self'.

I have no real life experience of watching 'real' traders at work but I have certain assumptions about how they initiate position, accumulate and distribute (mostly from TT's journal). I thought I executed in that fashion today and my bullish bias paid off well on a difficult day.

Screenshot attached. 3/4 covered. 1 runner with trailing stop. No other commentaries needed, I think

Screenshot (9471)

September 22nd, 2023, 12:49 PM

HumbleTrader

� mostly from TT's journal ...

Is that a journal I can look at too? Sorry a bit new to the inner circle.

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