I've been obsessed with the markets for a few years now, first with options and then futures. I used to think of leveraged investments as a way to rake in some easy money. Well, it's been the toughest easy money I've ever come by! Nevertheless, the fascination remains and I have the great advantage of increased maturity in my views and goals with trading. This summer I finally have the opportunity to go at it full time and give it the proper attention. I am trading CL with a small simulation account (5k) to see what I can do over the next few weeks. I've started a more detailed trading journal that I scribble in throughout the day, but have benefited immensely through reading hundreds of pages of posts on futures.io (formerly BMT) over the last little bit, and so thought it would be beneficial and proper to keep track of my trading on here as well, and maybe receive a bit of feedback along the way.
I'm in a bit of a rush right now but I will try to briefly detail my methodology in this post. Here's the long version:
I trade price action. I am using a 6 range chart, a big departure from the time charts I previously used, and am seeing the advantages/disadvantages. I also have a 12 range chart I use to see more or less where I'm at and a daily chart to help me see where we are overall.
Entries consist of breakouts from flags/pennants, thinking of them as continuation patterns within an already established trend. This doesn't always lead to many setups during the day, but I've noticed that I particularly struggle at trading within channels and so I don't feel comfortable adding that into the trading plan. I do feel comfortable trading breakouts of channels.
I take trades whose stops are no more than 10 ticks away (small account you see). I put my stop at the middle of the flag/pennant I am trading the breakout from. I move that stop to BE+1 on profitable trades once I feel the price action is such that a reversal back to the pattern could not be due to the normal noise but actually be a sign of a failed breakout. I still take allow myself to take a bit of a psychological beating on losses, and in the past have tended to move my stop up too early just because I don't want to run the risk of seeing green turn into red. That is obviously a weakness and a pattern of behavior that I cannot allow to continue.
My main concern is exiting out profitable trades early. Correcting that behavior is essential to my success. On Thursday, the day before starting my tracked sim account, I made that mistake. If I catch myself doing that again, I will rewrite in my paper journal the following quote from a book I recently read: "It is far better to get stopped out than to close out a winning trade that is moving with the trend. What you gain in potential breakway moves is far greater than what you gain in taking a quick profit."
My plan for exiting winning trades is to sit tight with my stop at BE+1 until there is a retracement. Then, sit on my hands. If there is a move back to BE+1, I'm out there. If the move continues beyond the retracement, to move my stop to the bottom of that retracement and sit and wait for the next one. Unfortunately, I am quite skinny and my hands easily slip out from under my rump to move stops and "protect profits" against the possibility in stronger moves in my favor. This is especially difficult if the initial jump in my direction is 20+ ticks. In those situations that the market seems to be running a bit, I'm allowing myself to keep a 50% trailing stop while I wait for the market to take a breath and retrace a bit. I figure (now doesn't that word engender confidence..) that if the market runs 30 ticks one way and comes straight back more than 15 ticks the other without any pressure against the retracement, the initial run wasn't due to anything sustainable and I might as well get out with some change in my pockets.