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HumbleTrader's next chapter

  #111 (permalink)
 
HumbleTrader's Avatar
 HumbleTrader 
Vancouver Canada
Legendary , Always learning
 
Experience: Intermediate
Platform: Investor RT
Broker: IB & IQ DTN
Trading: Oh what a tangled web I weave, When I want to take profits in trading
Frequency: Several times daily
Duration: Years
Posts: 1,722 since Nov 2014
Thanks Given: 3,379
Thanks Received: 2,961

June 21 update 1

Entered Long 50 SPY as per my plan.

However, scaled out at @ 3750 and full exit at 60.

Number of reasons. 1. Weak/less bullish ticks. 2. Already 1 ATR due to yesterday's range. 3. Renko bar shows distribution in progress. Low confidence overall.

However, RV is high & sellers are not able to push the ticks to -500. Perhaps, that should be the reason to be bullish & leave my runners on. Will see.

Minimal regret as got hold of a good chunk. Looking to enter long again if we pullback to vwap. If no retracement to get back on, lesson learnt - Lack of selling in $tick is bullish.

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  #112 (permalink)
 
HumbleTrader's Avatar
 HumbleTrader 
Vancouver Canada
Legendary , Always learning
 
Experience: Intermediate
Platform: Investor RT
Broker: IB & IQ DTN
Trading: Oh what a tangled web I weave, When I want to take profits in trading
Frequency: Several times daily
Duration: Years
Posts: 1,722 since Nov 2014
Thanks Given: 3,379
Thanks Received: 2,961

June 21 Update 2

Bought 1/4 size @ 3760 area (just above ETH vwap and below RTH vwap). I sold at this level 1 hr ago because it was high/expensive. Now I bought at the same level because it's low/discount. I will try and name my biases from now on. Where is Mr Kahneman?

The risk of reversal to close the gap persists but it's a low probability event. (30% likelihood in general but even lesser at 15% in a bear market).

Though the profit factor is not great @ 1.25, it's a bit more attractive when I add the probability of higher close @ 55%. Hence took the long position again. This will stay till EOD for sure.

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  #113 (permalink)
 
HumbleTrader's Avatar
 HumbleTrader 
Vancouver Canada
Legendary , Always learning
 
Experience: Intermediate
Platform: Investor RT
Broker: IB & IQ DTN
Trading: Oh what a tangled web I weave, When I want to take profits in trading
Frequency: Several times daily
Duration: Years
Posts: 1,722 since Nov 2014
Thanks Given: 3,379
Thanks Received: 2,961


Doji bars - Boring or exciting?

I was never excited to see a doji bar in the chart, especially the daily chart.

We often look for exotic ones with long tails like upthrust, downthrust, spring or long, full body trend bars.

Statistically, doji bars has one of the most significant effect on subsequent price action.

Doji days happened approximately 15% of the times in the last 20 years. I admit that the definition can be tricky. If the open and close prices are less than 20% of the range of the bar, perhaps its a doji?

If the close was a +ve print, then the subsequent day is more likely to be bullish. Infact, @ 58% win rate and 1.5 profit factor, this is one of the best odds from a big sample set.

If the close was a -ve print, then the subsequent day is more likely to be bearish. Win rate is a bit lower @ 53% but a better profit factor @ 1.6.

Crowd behaviour explanation that the fight was intense in doji makes sense. Whoever wins, even by a slight margin is likely to see some momentum and follow through the next day. Fascinating.

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  #114 (permalink)
 
HumbleTrader's Avatar
 HumbleTrader 
Vancouver Canada
Legendary , Always learning
 
Experience: Intermediate
Platform: Investor RT
Broker: IB & IQ DTN
Trading: Oh what a tangled web I weave, When I want to take profits in trading
Frequency: Several times daily
Duration: Years
Posts: 1,722 since Nov 2014
Thanks Given: 3,379
Thanks Received: 2,961

June 21 2022 Review

Executed my long bias reasonably well.

Entry @ RTH open was good but scaled out quickly and went flat within 30 mins. Bulls seemed to be running out of steam, judged by $tick & Delta & concerned about reversal but I was wrong.

However, I was able to get back in during vwap pullback. Not much juice left after that though.

Overall, a positive day. Especially on a gap up & go days which are generally hard for me to trade.

Lesson for me - Lack of buying conviction doesn't mean reversal. Sellers need to show up. In the future, I will exit ONLY after a reversal in momentum (i.e Renko bar reversal).



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  #115 (permalink)
 
HumbleTrader's Avatar
 HumbleTrader 
Vancouver Canada
Legendary , Always learning
 
Experience: Intermediate
Platform: Investor RT
Broker: IB & IQ DTN
Trading: Oh what a tangled web I weave, When I want to take profits in trading
Frequency: Several times daily
Duration: Years
Posts: 1,722 since Nov 2014
Thanks Given: 3,379
Thanks Received: 2,961

Strange stats - Big Gap Days

When we get BIG gap days (defined by the time frame i.e biggest in the last 20 days/ 1 month, rather than the actual size), the following day is quite bearish. Sample size is pretty significant @ 500+ and profit factor for short is an attractive 1.5+

The strange thing is that this applies to both UP and Down gaps. They both have bearish follow up.

Though it didn't make sense initially, I think the likely explanation is this. The default market bias is UP or bullish due to a number of factors like inflation, main investment vehicle, money printing etc.. Big gaps, regardless of the direction, is a 'jolt' to the system that instills uncertainty. This causes the reversal of default and market goes down in a defensive mode. May be

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  #116 (permalink)
 
HumbleTrader's Avatar
 HumbleTrader 
Vancouver Canada
Legendary , Always learning
 
Experience: Intermediate
Platform: Investor RT
Broker: IB & IQ DTN
Trading: Oh what a tangled web I weave, When I want to take profits in trading
Frequency: Several times daily
Duration: Years
Posts: 1,722 since Nov 2014
Thanks Given: 3,379
Thanks Received: 2,961

July 22 2022 Wednesday Prep

Stats are BULLISH.

But there is a dilemma. Trend and momentum indicators are still bearish.

I can play this in 3 different ways.

1. Wait for trend & momentum to turn bullish and then enter long - full size.

2. Wait for momentum to become bullish, then enter 1/2 size. When the trend also turns bullish, scale in 1/2.

3. Or, Initiate short @ the RTH open. I'm wrong when the trend turns bullish and then I reverse my position to long.

P.S. Trend is defined by EMA 35 above 50 & momentum defined by EMA 5 above 12.

One more quirk with today's stats. Gap down is actually bearish BUT if it gaps down a lot and when RTH opens below Y-L, it's bullish. I assume that means, price had been pushed too far below value by ETH sellers and attracting bargain RTH buyers.

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  #117 (permalink)
 
HumbleTrader's Avatar
 HumbleTrader 
Vancouver Canada
Legendary , Always learning
 
Experience: Intermediate
Platform: Investor RT
Broker: IB & IQ DTN
Trading: Oh what a tangled web I weave, When I want to take profits in trading
Frequency: Several times daily
Duration: Years
Posts: 1,722 since Nov 2014
Thanks Given: 3,379
Thanks Received: 2,961

July 22 update 1

Long @ open as momentum shifted to bullish @ RTH open.

Able to scale in and out twice and at a better location today. Currently flat.

Still looking to go long at the next pullback to vwap.

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  #118 (permalink)
 
HumbleTrader's Avatar
 HumbleTrader 
Vancouver Canada
Legendary , Always learning
 
Experience: Intermediate
Platform: Investor RT
Broker: IB & IQ DTN
Trading: Oh what a tangled web I weave, When I want to take profits in trading
Frequency: Several times daily
Duration: Years
Posts: 1,722 since Nov 2014
Thanks Given: 3,379
Thanks Received: 2,961

June 22 Update 2.

Picked up 1/4 size just above ETH vwap. Not sure whether I will add but sure will hold this till EOD.

-------------------

Fun stats. We are having a very unusual day playing out now.

We had a bullish day yesterday. Then we gapped down (big) today and opened below Yesterday's low. This is very bearish and this happened about 200 times (4%) in the last 20 years.

The gap was closed in less than 1/3 of the times. Market tested the previous day high in less than 1/5 times. Clearly a low probability event playing out now.

How did it end in the past? Neutral to mildly bullish. It suggests to me that we are likely to chop around and make a HVN above vwap. May be stop out the stubborn bears but less likely to see a reversal. If that happens, that's a low probability outcome over a low probability day.

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  #119 (permalink)
 
HumbleTrader's Avatar
 HumbleTrader 
Vancouver Canada
Legendary , Always learning
 
Experience: Intermediate
Platform: Investor RT
Broker: IB & IQ DTN
Trading: Oh what a tangled web I weave, When I want to take profits in trading
Frequency: Several times daily
Duration: Years
Posts: 1,722 since Nov 2014
Thanks Given: 3,379
Thanks Received: 2,961

June 22 2022 Review

Bullish bias executed very well.

Scale in was a bit more aggressive in the first 30 mins and exercised more patience in scale out.

My final scale in could have been exited at new HOD after EU close, as per my expectations but instead I chose EOD. I will slowly begin to break my rules if that's what the market action requires.



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  #120 (permalink)
 
HumbleTrader's Avatar
 HumbleTrader 
Vancouver Canada
Legendary , Always learning
 
Experience: Intermediate
Platform: Investor RT
Broker: IB & IQ DTN
Trading: Oh what a tangled web I weave, When I want to take profits in trading
Frequency: Several times daily
Duration: Years
Posts: 1,722 since Nov 2014
Thanks Given: 3,379
Thanks Received: 2,961


Collision of probabilities

When we have 2 opposing probabilities based on price action, it can be confusing.

For example, we had an Outside reversal day with lower close yesterday. It was also the day when the biggest down gap was closed.

The 1st variable is bullish and has a profit factor of 1.3 for longs.
The 2nd variable is bearish and it's profit factor is also 1.3 for shorts.

One may assume that they cancel each other with no edge. Similar to the concept of destructive interference, like the picture below.

Occasionally, if we have enough sample data, I will put those 2 variables together. In this case, it happened only 11 times and the bias is strongly bearish. Let's see what happens today.

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Last Updated on March 25, 2024


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