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The Rule of 70
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The Rule of 70

  #31 (permalink)
Elite Member
Williamsburg, VA
 
Futures Experience: Intermediate
Platform: ThinkorSwim
Favorite Futures: Stocks
 
worldwary's Avatar
 
Posts: 523 since Mar 2010
Thanks: 259 given, 788 received

Another good day of trading. I took two CL trades (net loss of 5 ticks between them) and a few YM trades (net gain of 52 ticks) for a net gain of 47 ticks on the day and 168 on the week. Charts attached in JPEG format this time; hopefully that's easier for people to access.

I'm quite surprised at my success this week. I think it must have to do with the current phase the market is in: elevated volatility, uncertainty due to oil shocks, etc. Somehow I'm able to see the price action much more clearly now than I could during the low-volume rally from the beginning of the year. I'll have to make hay while the sun shines I guess.

What I Did Right:

1. Took several live trades without hesitation after starting off with a losing trade. It's always tough for me to take that second trade with the memory of the loss still fresh.

2. Stayed within my rules for the most part.


What I Did Wrong:

1. First CL trade was hasty. I logged in, saw what I thought was a favorable short setup, and took the trade in a hurry without first sitting down and taking in the bigger picture. Doesn't look like a good setup in retrospect and I might have avoided the loss if I'd given myself time to think.

2. Last YM trade might have been pushing my luck as I was already past my daily profit target.


Always nice to end the week on a high note. My struggle for the weekend will be to try to avoid obsessively checking the news since I'm holding some swing positions in my longer term account. I'm going to force myself to listen to calm music and read some fiction rather than trading blogs.

Daily Total: +47 ticks
Monthly Total: +168 ticks

Attached Thumbnails
The Rule of 70-march_4_cl.jpg   The Rule of 70-march_4_ym.jpg   The Rule of 70-march_4_ym_afternoon.jpg  
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  #32 (permalink)
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Thanks: 259 given, 788 received

Pretty quiet day. No CL trades. A few YM trades, mostly breakeven stops with one decent winning trade over the lunch hour.

The system I use to trade YM is primarily a countertrend system. Most of my entries today were long entries, fighting the dominant downtrend. Probably no surprise that my one winning trade was a short. I should think more about how to adjust my trading when faced with a strong dominant trend. Tighter profit targets on my long entries would have helped today, for instance.

What I Did Right:

1. Took several live trades. The fear and hesitation are receding a bit more each day.

2. Controlled risk well and didn't allow any unnecessary losses.

What I Did Wrong:

1. Too many long trades, not enough short trades. Should have been quicker to jump on the few short opportunities that presented themselves. (I look for a bounce into short-term overbought conditions before shorting; during a strong downtrend the bounces tend to be smaller and quicker. Might make sense to adjust my entries accordingly during a trend day like today.)

2. Maybe should have been quicker to take profits.


Daily Total: +27 ticks
Monthly Total: +195 ticks

Attached Thumbnails
The Rule of 70-march_7_ym.jpg  
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  #33 (permalink)
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Thanks: 259 given, 788 received


A disappointing day today. Two losses and two breakeven trades in YM, and one winning CL trade, for net loss of 12 ticks.

Data issues kept me from trading in the morning. When I started taking trades in the afternoon, I kept fighting the uptrend. Couldn't find any long entries and kept my stops so tight on the short entries that my stopouts were almost inevitable. Played it too cute today.

The big disappointment was my one long entry in the afternoon session. This would have gone on to my full profit target but I reset the stop to breakeven way too soon. My stop was taken out by one tick and the trade went on without me. That was an unnecessarily tight stop, particularly since I was trading in the direction of the dominant trend of the day.

What I Did Right:

1. Took live trades and didn't stop after a couple of losses.

2. Had good patience with CL and got a solid trade that came close to my profit target, then took me out on my trailing stop for a decent gain.

3. Avoided trading during chop in CL.

What I Did Wrong:

1. Too many short entries, not enough long entries. Same issue as yesterday.

2. Blew the one good trade of the day by tightening stop too quickly.


Daily Total: -12 ticks
Monthly Total: +183 ticks

Attached Thumbnails
The Rule of 70-march-8-cl.jpg   The Rule of 70-march-8-ym.jpg  
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  #34 (permalink)
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Very tricky day today, at least in YM. Just couldn't time my entries right as there were a number of moves that looked like they should have been exhausted but just kept powering on.

The price action in YM today is an example of what I think of as "flocking" behavior. Every move that starts to declare itself in either direction convinces traders to pile on and push the move along further, until there's an abrupt shift in sentiment and an immediate reversal into a trend in the opposite direction. Very difficult to trade unless, perhaps, you're able to identify the likely inflection points (which I wasn't able to do very well today). I associate days like this with uncertainty. Traders seem to anticipate a break in one direction or another but don't know which one so will play both sides, trying to be early to the party whenever the breakout occurs.

What I Did Right:

1. Limited losses to a manageable size. On days like today, tight stops are a blessing.

2. Got back on the YM horse after a number of losing trades in the morning session. A minor psychological victory although a disappointing result as the last trade pushed me into a net loss on the day.

3. Took good setups in CL and successfully avoided chop. Didn't come away with much of a gain on my CL trades but took only favorable setups and traded them according to my rules.

What I Did Wrong:

1. Jumped in too early on my countertrend trades. Might be wise to avoid trading so early in the day in order to give myself more time to digest market conditions.

2. Allowed myself to get spooked by my early lack of success with YM and passed on quite a few promising trade signals in the afternoon. I did take two afternoon trades but could have ended the day nicely in the black if I'd taken more.


Daily Total: -6 ticks
Monthly Total: 177 ticks

Attached Thumbnails
The Rule of 70-march_9_cl.jpg   The Rule of 70-march_9_ym.jpg  
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  #35 (permalink)
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I decided to make two changes today. First, I looked over the charts from the past few days and realized that I've been leaving money on the table by under-trading and by bailing early on promising setups. I've only been taking a small handful of the available setups, so today I decided to take more trades and give myself more room to let them work. Second, I've had some doubts about the all-in-all-out method I've been using. My entry and exit areas are really "zones" rather than specific price points, so I figured it might be useful to give myself more flexibility to execute trades within those zones by trading multiple contracts and scaling in and out. With this in mind, I doubled the permissible trade size to 2 contracts and also doubled the daily target and loss from 30 ticks to 60 ticks.

The day was going pretty well until the Saudi Arabia news came out. I was positioned long in YM at the time and had to bail for my max loss when that one surged against me. Thanks, market, for the first-hand reminder of the dangers of countertrend trading.

What I Did Right:

1. Took quite a few trades and managed my emotions pretty well.

2. Best move of the day was hitting the "close all" button when price started making its extreme move against me. It was clear after a few bars that this was no normal move and news must be out. I saw CL surging at the same time and decided to move to the sidelines, saving myself a much larger loss.

What I Did Wrong:

1. Missed a number of good CL setups. Hesitation was the problem today. Saw the setups but didn't get my orders in on time and price was moving so fast that it kept leaving me behind.

2. Had plenty of sloppy trades on YM. Lots of late entries and indecision.

Need to work on my plan for tomorrow. May be able to overcome the hesitation if I have a clearer plan of attack.

Daily Total: -62 ticks
Monthly Total: +115 ticks

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The Rule of 70-march_10.jpg  
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  #36 (permalink)
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Not much action today. Focused most of my attention on CL as YM is in contract rollover phase, which screws with the tick charts as volume is divided between the March and June contracts. Had two decent setups on CL but both stopped me out for a small loss, so negative on the day again.

This month has been a tale of two weeks. The first week it felt like I could do no wrong, and the second week was the exact opposite.

I feel pretty good about my trading overall. I've become quite comfortable taking live trades, which is a big step in the right direction. I haven't been as consistent as I'd like, however; I find myself making changes each day, widening or tightening stops for instance based on the prior day's results, and I think I'd be better served to find a consistent approach rather than constantly fighting yesterday's battles. I'm closer to nailing down that consistent approach in CL than I am in YM at this point.

What I Did Right:

1. Took two decent setups without hesitation.

2. Avoided trading YM when I knew the charts were not 100% to be trusted given the contract rollover issue.

What I Did Wrong:

1. Nothing today; traded everything I saw but unfortunately didn't get positive results.

Back to it next week.

Daily Total: -18 ticks
Monthly Total: +97 ticks

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The Rule of 70-march_11.jpg  
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  #37 (permalink)
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worldwary View Post
What I Did Wrong:

1. Nothing today; traded everything I saw but unfortunately didn't get positive results.

Nice work, good job recognizing this.

Have a good weekend!

Mike

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  #38 (permalink)
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Played "small ball" today, taking only a few trades and keeping stops tight. Finished with a tiny profit. Even a tiny profit is a profit however so I'm not complaining.

One thing I've noticed about my state of mind while keeping this journal: the results of the last string of trades tend to affect the way I think about the next trade. When I'm on a "hot streak," I take more chances. When I've had a string of losers, I either get scared or conservative or I start overtrading in an attempt to force a winning trade out of thin air. My mood at the end of the day is impacted as well. I need to work on developing a thicker skin so I don't get thrown my gameplan based on the fluctuations in my P&L.

What I Did Right:

1. Took enough trades without forcing any.

2. Did a good job of taking profits on a couple of the trades, getting out just before overbought/oversold conditions sparked a reversal.

What I Did Wrong:

1. Failed to take profits quickly enough on some trades, despite seeing the reversals coming.

2. Hesitated on a couple of signals and ended up missing the trades.


Daily Total: +9 ticks
Monthly Total: +106 ticks

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  #39 (permalink)
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Posts: 523 since Mar 2010
Thanks: 259 given, 788 received

Today was a case of being in the right place at the right time. I happened to wake up in the middle of the night and glance at the charts when the retest of the deep lows from earlier in the session was setting up. I was able to pick up about 85 ticks during the panic selloff that ensued. Unfortunately I gave about 20 of those ticks back in the regular session rather than quitting while I was ahead, but still a good trading day under tragic circumstances.

What I Did Right:

1. Recognized the signs of panic conditions and stepped in with a relatively low-risk trade.

2. Had the patience to ride the trade for a larger move than usual for me.

What I Did Wrong:

1. Overtraded. Should have quit while I was ahead.

2. Let myself become overconfident based on the earlier trade.


Daily Total: + 62 ticks
Monthly Total: + 172 ticks

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  #40 (permalink)
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Posts: 523 since Mar 2010
Thanks: 259 given, 788 received


A great day for trading today, but unfortunately I wasn't able to capitalize on it. Hit my max loss after finding myself on the wrong side of the mid-morning selloff and stopped trading.

I took the opportunity to watch the markets and pull some thoughts together the rest of the day. It's fascinating how market behavior changes from day to day.

A few words about market bias: A lot of traders believe that bias is something to be avoided. I'm not one of them. I believe that bias is a very important element of successful trading over the long haul, not necessarily bias in one specific direction or the other but rather bias about what kind of market you're dealing with on a given day. What "mood" the market is in, you might say. Trades that work in one kind of mood are disastrous in another.

Today was a good example of a day when I wasn't able to shift to the correct bias quickly enough. If I hadn't hit my daily stop so early I might have turned it around once it became clear we were still in "panic mode." Key rules for panic mode: Avoid longs. Keep short limit orders above the current action in order to reenter short on bounces. Be prepared for the occasional "rip your face off" rally but be aware that it won't last. Trade often, scale entries and exits, take profits when handed to you on a golden platter, etc.

The kind of precise, tight-stop, small-ball tactics I've been using lately just aren't suited for panic mode. I'm kicking myself a bit for having abandoned my panic mode bias so quickly in fact. I did some good panic mode trading just yesterday, but the rally off the lows sucked me into a "bounce mode" bias coming into today. It's been a while since the last serious correction; maybe my downtrend instincts are rusty. Oh well, the damage to the account was minimal and tomorrow's another day.

What I Did Right:

1. Respected my daily loss limit and kept damage to a minimum.

What I Did Wrong:

1. Entered the day with the wrong bias in place. I'm recognizing (not for the first time in this journal) that I should avoid trading right after the open. I need to give the market an hour or two to declare itself. Once I have a clearer idea what kind of market I'm dealing with I'll be in a position to adopt the right tactics.


Daily Total: -36 ticks
Monthly Total: +136 ticks

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