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A mini ES scalper's journal
- Thread starter ycxc16588
- Start date
I just saw an email in my mailbox from trade2win. Someone is preaching not to use stops.
Ok. Maybe he is trading only stocks or options so he could get away with stops. If an option trader is wrong, the worst loss for him might be just the premium unless the trader is writing naked call/put. Or he probably trades low beta blue chips stocks which might be a small portion of his total investment.
For commodity and currency traders, because the margin account is highly leveraged, it would be a question of "when', but not "if" he will be wiped out without stops for his position.
My thinking about stops is there are two types of stops are often used, technical stop and emergency stop.
Emergency stops are intended for unforeseeable events (black swan event), for instances, war, computer/internet access problem, personal accident/injury which would prevent trader from contacting his broker in any means. If a daytrader's broker has automatic liquidation program and a daytrader is using low margin for commodity trading, he might not need emergency stop since his account will be liquidated as soon as he is below low daily margin (usually 300-500 USD for each ES position). He has to arrange it with his broker to carry out liquiation of his account rather than issuing margin call. Hopefully, that would be the maximum loss that can occur to a day trader in worst scenario unless broker fails to manage his clients accounts.
Emergency stop can be extremely important for those who has overnight positions.
I use technical stop when I try to get better fill without enough confirmation so I can limit my loss if I am wrong. For instance, if I want to go long after selling climax, and I want to get in very close to the swing low. The reason is there most likely will be second test (double bottom scenario), the second test can be new swing low if the selling pressure is not completely released at first swing low.
Ok. Maybe he is trading only stocks or options so he could get away with stops. If an option trader is wrong, the worst loss for him might be just the premium unless the trader is writing naked call/put. Or he probably trades low beta blue chips stocks which might be a small portion of his total investment.
For commodity and currency traders, because the margin account is highly leveraged, it would be a question of "when', but not "if" he will be wiped out without stops for his position.
My thinking about stops is there are two types of stops are often used, technical stop and emergency stop.
Emergency stops are intended for unforeseeable events (black swan event), for instances, war, computer/internet access problem, personal accident/injury which would prevent trader from contacting his broker in any means. If a daytrader's broker has automatic liquidation program and a daytrader is using low margin for commodity trading, he might not need emergency stop since his account will be liquidated as soon as he is below low daily margin (usually 300-500 USD for each ES position). He has to arrange it with his broker to carry out liquiation of his account rather than issuing margin call. Hopefully, that would be the maximum loss that can occur to a day trader in worst scenario unless broker fails to manage his clients accounts.
Emergency stop can be extremely important for those who has overnight positions.
I use technical stop when I try to get better fill without enough confirmation so I can limit my loss if I am wrong. For instance, if I want to go long after selling climax, and I want to get in very close to the swing low. The reason is there most likely will be second test (double bottom scenario), the second test can be new swing low if the selling pressure is not completely released at first swing low.
12-29-2009
from now on, all trades would be live unless specified as paper trade in this journal.
total trades: 6 RT
winner:4
loser:2
net P/L: 0 pt
SPX open slightly bullish (gap open, but less than 1 pt)
daily pivot range: 1126.94 to 1127.50
tested lower pivot and reversed at 11:30.
I started at 11:45.
From 9-11:30, ES formed down channel, around 11:45, the micro supply line was broken from 10:30-11:30 down swing. did a small long scalp at 11:58 after throwback test hold above previous swing low..
the congestion hits 50% channel line and turned down. It most likely would retest low to form double bottom. At 12:20, new swing low bounced at bottom channel line. Here is the long setup so I went long at 1123. I placed stop at 1122 and got stopout 10 minutes later at 12, while miniDow and cash index didn't touch 12:20 swing low. Ok I became victim of the stop run and lost 1 pt.
I didn't reenter since at the moment the major trend was still down and I got shake out by picking the bottom. went short after price hit 1124 resistance line close to the supply cline of down channel.
Price was forming a sort of bear flag from 12:30 till 2:40. Price rolled over and went short the moment it broke the lwoer bear flag channel line. I played poorly for this one. I was right in terms of reading the price action, however I didn't take profit when price broke 1123 at 2:52. I was holding for the second leg thought teh initial rebound was short covering. At 3 o'clock another price went back to bear flag channel and it was premature broke down. Winner turned into loser. I should also noticed the unusual volume spike implying the end of move.
did a short scalp after 3:02 when price hit 1124.5 and retraced.
Since the price could not break the up channel line of bearflag, I felt it at least would attempt to break bearflag bottom channel again. Expecting a little sell off at last 30 min. Went short at covered at 1123.25 at first Doji around 3:44 after channel break.
When the price broke bear flag, expected target would be around 1120.5 (equal distance compared to te downswing prior to the flag). 1121.50-1121.75 might provide some support as 78.6% retrace from premarket high to yesterday's low. The price did hit these target, but I didn't initiate any new position 10-15 min prior to 4pm close.
I felt I could often read price action correct than wrong. However, my actual trading management is definitely not as good as my price action reading. Sometimes I didn't act fast enough, or not being decisive enough to get in/out of trades. This is one of the hardest part for a day trader to learn.
from now on, all trades would be live unless specified as paper trade in this journal.
total trades: 6 RT
winner:4
loser:2
net P/L: 0 pt
SPX open slightly bullish (gap open, but less than 1 pt)
daily pivot range: 1126.94 to 1127.50
tested lower pivot and reversed at 11:30.
I started at 11:45.
From 9-11:30, ES formed down channel, around 11:45, the micro supply line was broken from 10:30-11:30 down swing. did a small long scalp at 11:58 after throwback test hold above previous swing low..
the congestion hits 50% channel line and turned down. It most likely would retest low to form double bottom. At 12:20, new swing low bounced at bottom channel line. Here is the long setup so I went long at 1123. I placed stop at 1122 and got stopout 10 minutes later at 12, while miniDow and cash index didn't touch 12:20 swing low. Ok I became victim of the stop run and lost 1 pt.
I didn't reenter since at the moment the major trend was still down and I got shake out by picking the bottom. went short after price hit 1124 resistance line close to the supply cline of down channel.
Price was forming a sort of bear flag from 12:30 till 2:40. Price rolled over and went short the moment it broke the lwoer bear flag channel line. I played poorly for this one. I was right in terms of reading the price action, however I didn't take profit when price broke 1123 at 2:52. I was holding for the second leg thought teh initial rebound was short covering. At 3 o'clock another price went back to bear flag channel and it was premature broke down. Winner turned into loser. I should also noticed the unusual volume spike implying the end of move.
did a short scalp after 3:02 when price hit 1124.5 and retraced.
Since the price could not break the up channel line of bearflag, I felt it at least would attempt to break bearflag bottom channel again. Expecting a little sell off at last 30 min. Went short at covered at 1123.25 at first Doji around 3:44 after channel break.
When the price broke bear flag, expected target would be around 1120.5 (equal distance compared to te downswing prior to the flag). 1121.50-1121.75 might provide some support as 78.6% retrace from premarket high to yesterday's low. The price did hit these target, but I didn't initiate any new position 10-15 min prior to 4pm close.
I felt I could often read price action correct than wrong. However, my actual trading management is definitely not as good as my price action reading. Sometimes I didn't act fast enough, or not being decisive enough to get in/out of trades. This is one of the hardest part for a day trader to learn.
12-30-2009
I am done trading for the day.
It is 3:26 pm. Today's price pattern looked like a symmetric triangle after yesterday's sell off. Though the bias is down to resume down trend. However, there was an overthrow little before 3pm. Price came down a little but not touching the lower line of triangle, instead it works around upper line. 1120.50 is also a neckline resistance for the double botttom between 10:30 to 11:30. Volume is low today and a littel difficult to read.
It is breaking upwards at 3:35.
I am done trading for the day.
It is 3:26 pm. Today's price pattern looked like a symmetric triangle after yesterday's sell off. Though the bias is down to resume down trend. However, there was an overthrow little before 3pm. Price came down a little but not touching the lower line of triangle, instead it works around upper line. 1120.50 is also a neckline resistance for the double botttom between 10:30 to 11:30. Volume is low today and a littel difficult to read.
It is breaking upwards at 3:35.
12-30-2009
Total trades: 5 RT
winner: 5
net P/L: 2 pts
There was a big snow storm here last night. I got at office around 9am pacific time this morning. Started trading at shortly after 12 am ET.
ES moved up for 30 minites then reversed. Double bottom between 10:30-11:30 retesting open range low without violating it. After first bottom, there was a bear flag from 10:40 to 11:15. Price broke down trend supply line at 11:45, then again the DB neckline and went half way to the extended bearflag channel. Retest intraday high failed. It looked like double top. Short scalp. around 12:25, an throwback testing bottom of extended bearflag channel line after broke it at 12:15. Short again and cover right above 1120.50 neckline expecting some support here. It actually broke 1120.5 and stopped at 38% fib retrace from 9:30-10:00 price range.
Price hit another down trend supply line around 1pm (throwback to test the a up trend line drawn from second bottom this morning and first pull back around 11:45 afterwards. Short again.
Long at 1:40 after price broke the micro supply line drawn between 1-1:30. Out at 1119.50 at first resistance encountered. Another reason to go long here was because the down move since second top didn't look impulsive and vol was quite low, besides, it swings perfectly between the channel boundary gave me impression it was calculated move.
at 2pm, the symmetric triangle pattern start to form, two touches at top and three at bottom. Vol dried up. Price moving between tight congestion range. It broke out slightly then immediately into a congestion to work out supply. It took 1:30 hr to slowly drift out of dynamic down trend channel up supply line. Buyers were patient to slowly wait for the dynamic resistance to come lower before breaking it.
A breakout of upper triangle at 2:48. It ran into some resistance from early double top area. did a short scalp tried to profit from quick pullback.
Although the triangle after yesterday's sell off has some bear bias, the price after 2:48 early breakout, the pullback didn't go all the way to test lower support line of triangle. 1119.75 a 50% fib provided good support heer. Price drifting upward. Didn't initiate trade since not clear if there is any later sell off, buyers were not overwhelmingly strong and it is later of the day, I didn't expect too much upside even with price breaking the upper triangle due to several resistance above.
I have been studying hamon's commodity trading books. The pivot finding line/recurring angle line were quite interesting.
Total trades: 5 RT
winner: 5
net P/L: 2 pts
There was a big snow storm here last night. I got at office around 9am pacific time this morning. Started trading at shortly after 12 am ET.
ES moved up for 30 minites then reversed. Double bottom between 10:30-11:30 retesting open range low without violating it. After first bottom, there was a bear flag from 10:40 to 11:15. Price broke down trend supply line at 11:45, then again the DB neckline and went half way to the extended bearflag channel. Retest intraday high failed. It looked like double top. Short scalp. around 12:25, an throwback testing bottom of extended bearflag channel line after broke it at 12:15. Short again and cover right above 1120.50 neckline expecting some support here. It actually broke 1120.5 and stopped at 38% fib retrace from 9:30-10:00 price range.
Price hit another down trend supply line around 1pm (throwback to test the a up trend line drawn from second bottom this morning and first pull back around 11:45 afterwards. Short again.
Long at 1:40 after price broke the micro supply line drawn between 1-1:30. Out at 1119.50 at first resistance encountered. Another reason to go long here was because the down move since second top didn't look impulsive and vol was quite low, besides, it swings perfectly between the channel boundary gave me impression it was calculated move.
at 2pm, the symmetric triangle pattern start to form, two touches at top and three at bottom. Vol dried up. Price moving between tight congestion range. It broke out slightly then immediately into a congestion to work out supply. It took 1:30 hr to slowly drift out of dynamic down trend channel up supply line. Buyers were patient to slowly wait for the dynamic resistance to come lower before breaking it.
A breakout of upper triangle at 2:48. It ran into some resistance from early double top area. did a short scalp tried to profit from quick pullback.
Although the triangle after yesterday's sell off has some bear bias, the price after 2:48 early breakout, the pullback didn't go all the way to test lower support line of triangle. 1119.75 a 50% fib provided good support heer. Price drifting upward. Didn't initiate trade since not clear if there is any later sell off, buyers were not overwhelmingly strong and it is later of the day, I didn't expect too much upside even with price breaking the upper triangle due to several resistance above.
I have been studying hamon's commodity trading books. The pivot finding line/recurring angle line were quite interesting.
I thought the equity market would close at 1pm ET. Nice move after the price break out of the congestion area. Last three day's pattern has formed nice down-consolidation(traingle)-down trend resume pattern. Tueday and today's intraday pattern are also very nice morning down/middle day congestion/ morning trend resume at last 30min.
01-04-2010
Total trades: 5 RT
winner: 3
wash: 2
Net P/L: 1.5 pts
SPX gapup open and traded above pivot zone 1117.14-1121.25 immediately and well above it for the entire day.
ES openned right above the top congestion range ~1119 from previous trading session.
Started trading at 11:15
quick short scalp after 11:20 breakout and new intraday high.
long after first test 1129.75 pull back. Out at second test of 1129.75.
short at 1:40 after second test 1129.75 failed. As vol dryup at 1:40 and anticipated quick pull back didn't happen for 20min, covered as a wash trade. Price quickly dropped soon after I covered.
Long again after vol spike and pullback stooped at 23.6% fib retrace level. Out as price retested 1129.75 the 3rd time.
another short right before 3pm. Covered again as wash trade in 20min. Again, price moved immediately after I covered.
From 11:30 to close, price moved between a ~2 pt range. There were many 3 ticker range bars, which do not offer tradable opportunities.
Since today is such a bullish day, I was mainly looking for long at pullbacks. Entered short for quick fade of new breakout with time constrain on these trades. Since the price range was fairly tight, as soon as the price shown any strength or weakness after pullback/breakout, 1/3 or half of the price movement range were already lost. So I have to look for small trades at ~0.5-0.75 pt range.
For the last 30min, mini DOW had shown some weakness after made new high at 2:45. I didn't expect a 4th test due to several congestion range and 23.6% fib retrace level right below the price. No trades after 3:30.
Total trades: 5 RT
winner: 3
wash: 2
Net P/L: 1.5 pts
SPX gapup open and traded above pivot zone 1117.14-1121.25 immediately and well above it for the entire day.
ES openned right above the top congestion range ~1119 from previous trading session.
Started trading at 11:15
quick short scalp after 11:20 breakout and new intraday high.
long after first test 1129.75 pull back. Out at second test of 1129.75.
short at 1:40 after second test 1129.75 failed. As vol dryup at 1:40 and anticipated quick pull back didn't happen for 20min, covered as a wash trade. Price quickly dropped soon after I covered.
Long again after vol spike and pullback stooped at 23.6% fib retrace level. Out as price retested 1129.75 the 3rd time.
another short right before 3pm. Covered again as wash trade in 20min. Again, price moved immediately after I covered.
From 11:30 to close, price moved between a ~2 pt range. There were many 3 ticker range bars, which do not offer tradable opportunities.
Since today is such a bullish day, I was mainly looking for long at pullbacks. Entered short for quick fade of new breakout with time constrain on these trades. Since the price range was fairly tight, as soon as the price shown any strength or weakness after pullback/breakout, 1/3 or half of the price movement range were already lost. So I have to look for small trades at ~0.5-0.75 pt range.
For the last 30min, mini DOW had shown some weakness after made new high at 2:45. I didn't expect a 4th test due to several congestion range and 23.6% fib retrace level right below the price. No trades after 3:30.
1-5-2010
Total trades: 8 RT
winner: 6
loser:2
net P/L: 1.5 pts
Started at 11:30.
After market made new high (all three indices) yesterday. Today most likely would be a range bound consolidation day.
ES open range 1129.5 to 1127 (I use first 15 min)
ES dropped to 1125 (38% fib retrace from yesterday's price range), rebound quickly an dmade new high.
Since, it retrace 50-61% to test upper open range, then lower open range (78.6%), reversed at supply line and tried to retest intraday low and failed.
ES looked like diagonal ( 3 touch on each line) and break downtrend at 2:40, and retest 1130.75 as I write.
YM looked like triangle, and NQ was adown channel.
basically, I went long near the bottom of the diagonal and short near top of the supply line. I didn't go long at the 3rd touch of bottom of diagonal at 2:15. Went long again after price broke the supply line.
From 1:15 to 3:00, YM and ES look like a inversed HS and testing the slanted neckline.
When I short or long at bottom/top of the diagonal pattern, I use 2-5 min bar's higher high/lower low to confirm if I was on the right side. Most of my exit was premature and didn't took the full advantage when I was right and got good fill. I did ok until then ( had 3 pts)
Last short at 3:40 after a reverse candle (5 min). Stopped out at intraday high. I could have exited earlier since the expected pull back didn't happen. I had a few opportunities, but got a little stubborn.
This was a good lesson to me. As close to end of day, I should focus on profit protection rather then try to make more.
Total trades: 8 RT
winner: 6
loser:2
net P/L: 1.5 pts
Started at 11:30.
After market made new high (all three indices) yesterday. Today most likely would be a range bound consolidation day.
ES open range 1129.5 to 1127 (I use first 15 min)
ES dropped to 1125 (38% fib retrace from yesterday's price range), rebound quickly an dmade new high.
Since, it retrace 50-61% to test upper open range, then lower open range (78.6%), reversed at supply line and tried to retest intraday low and failed.
ES looked like diagonal ( 3 touch on each line) and break downtrend at 2:40, and retest 1130.75 as I write.
YM looked like triangle, and NQ was adown channel.
basically, I went long near the bottom of the diagonal and short near top of the supply line. I didn't go long at the 3rd touch of bottom of diagonal at 2:15. Went long again after price broke the supply line.
From 1:15 to 3:00, YM and ES look like a inversed HS and testing the slanted neckline.
When I short or long at bottom/top of the diagonal pattern, I use 2-5 min bar's higher high/lower low to confirm if I was on the right side. Most of my exit was premature and didn't took the full advantage when I was right and got good fill. I did ok until then ( had 3 pts)
Last short at 3:40 after a reverse candle (5 min). Stopped out at intraday high. I could have exited earlier since the expected pull back didn't happen. I had a few opportunities, but got a little stubborn.
This was a good lesson to me. As close to end of day, I should focus on profit protection rather then try to make more.