The purpose of this journal, like so many others, is to keep myself accountable. I encourage all constructive criticism and welcome suggestions. Let me be clear: I am relatively new to futures trading, thus the need for this.
Dabbled in trading for the last couple of years, mostly creating mechanical strategies that traded leveraged ETF's (FAS, FAZ, TNA, etc.). Chagrined by the ridiculous PDT rules, I discovered futures. And, as the mechanical strategy that I used to trade mainly focused on TNA, I was delighted to learn about the Russell Mini. Let's face it: the daytrading leverage available on this thing is ridiculous. Far more than should be used, frankly.
I'm a data analyst by trade, and the original mechanical strategy that I created (for which I thought I was a genius) was a kind of breakout strategy wherein I went back over several months of minute TNA data and determined optimal parameters for a buy, stop loss, and move to breakeven. I would optimize these each week, then see how it did on the following week. I figured this out really, by instinct, only later learning the proper terminology for what I was doing.
At the time, I had to intuit just about everything. When you don't know what you're doing you end up pretty much figuring out all the stuff that others have discovered before you. When I found Pardo's book, it was helpful as it more or less confirmed everything I had figured out the hard way.
Still, I came to believe that my mechanical strategy, interesting though it is, was, frankly, too risky, and I went looking for something else.
Over time, I've tested and borrowed just about a million things. I don't use tradestation or Ninjatrader, so most of what I do is manual or excel.
So why the 3 10 MACD and this journal?
Well, the original version of the setups are on trading naked, so I'm not doing anything new here. And LBR has bee touting the 3 10 for eons.
And I'm at a point where, I think, I have too many ideas and not enough discipline to stick with anything. I keep looking for the next shinier pebble, when all the while, the one in my hand was already good enough.
This old strategy was recommended by someone to serve as a kind of "training wheels" to better learn price action trading. Yes, I have read the Anek thread on that other site, but I struggled with it. I think that something like this is good for me now. I mostly just wanted to pick ONE thing, and stick with it for a while.
The nice thing about this strategy is that it basically provides a "Price Action for Dummies" approach.
Stop loss is set where one would be wrong about the trade and is usually reasonable
As for exiting with a profit, I'm still not sure. I've struggled with this one in my attempts to be a (partly) discretionary trader. It seems when I hold out for an extended target, my breakeven stop is hit after a perfectly good profit was already on the table. On the other hand, when I take, say, a point, the price continues to move a good bit further.
The only thing I've tried to do recently is look at a longer term chart's ATR to get an idea what might be reasonable. For example, since I trade a 2 minute chart (yeah, I've tried volume, range and tick charts) I will often take a glance at the 10 minute and see what the ATR is at. If it's well below a point, then a point is probably a good target. If it's a point and a half or so, then I may hold out for two.
As per Mike's suggestion, I will update this journal each day for at least two weeks and ONLY trade these setups and not dilly-dally around with any of my other stuff just to see what happens.
As it is, these setups, which are as old as the hills, don't provide any sexy 20 point days, I think you're doing well if you can average a couple of points a day. But, as Al Brooks says, (and I'm being tongue-in-cheek here): "If you can get just a point a day with 100 contracts, then you can make, like, two million a year!!!"
In my next post, I'll attach a chart of today's trades.
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Yes, the idea (and this method isn't mine) is that when we are in an uptrend as indicated by the MA,
AND the MACD slow line is also above zero,
THEN, when the fast line dips below the slow line we seeing temporary weakness in the trend.
A buy stop would be placed one tick above the high of the first candle that forms when this happens.
If triggered, then a stop loss would be set at one tick below the lowest low of the swing down.
I'm sure that this is amateur hour for the more experienced traders here. My only goal here is to use this method as a crutch until I can see what's happening without it. You know, trading without indicators, etc.
So, yeah, the basic strategy, as I mentioned in my first post, is certainly not new. I am not trading the divergences and the other setups, I just want to keep it simple.
Also, I'm not only looking at the first cross, I'll take any valid signal.
This is by no means the best way to make money. I just want to see if I can stick with one thing for two weeks. I'll probably do better than I would if I were hopping around trying a bunch of other things. (more about those in another post).