Awash's Journal

I think that two contracts will actually be good for you because:

Many of your trades do have a quick profit.
On ES, you could take a quick profit, like .75 to 1.25+ and then play the rest with a little more psychological comfort, letting it run.

Regarding the 1m chart:

You mentioned that you haven't completely gotten rid of, or eliminated (don't remember your exact words) the 1m chart yet.
I think that the 1m can still be very beneficial to your trading for TIMING ENTRIES.

When your 10m and 30m have given you a feel for the bigger picture and your 3m is turning into a set up, you're at a nice S/R or a pullback scenario, the 1m, if lining up as well, can give you that extra umph to go with the flow and WITH AN EVEN BETTER R/R because the 1m will probably get you in a little earlier.

In the attached chart, you can see that the 1m chart has a nice reversal pattern that could get you into a larger timeframe pattern with a lower R/R.

One thing: I have found that you do need to wait for the larger timeframe bar to complete before entering. For example if a 5m hammer is forming with a nice 1m reversal pattern with divergence, wait for the 5m bar to close before entering.
 

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Good trading day! I failed to act on several signals for the day but was able to take advantage of some. One thing I didn’t do today was trade 2 contracts, however tomorrow I will. I hope this will help with my premature exits and patience.

Trade#1 – [Long 1062.75 10:12 EST & Exit 1063.75 10:25 EST] [ P/L: + 1 ] Went long off my pivot level of 1062.50 and price moved up a bit. However, price failed to make a new high nor did it reach its previous high of 1064.50. Decided to exit with a profit as this is my first sign of momentum fading.

Trade#2 – [Short 1062.50 10:35 EST & Cover 1062.50 10:49 EST] [ P/L: 0 ] Awful trade because of late entry and poor trade management. After realizing price wasn’t going to push higher it took me too long to set up my short position. I was suppose to be short at 1063.25 around 10:32 EST. I also failed to set good profit targets based off previous lows and s/r levels. I decided to exit to regroup!

Trade#3 – [Long 1064.00 13:47 EST & Exit 1064.00 13:55 EST] [ P/L: 0 ] This was a high risk trade around the high of the day. I was banking the market would just plow through the high and I was waiting for a breakout but it never developed like I wanted it to. As a result of this trade I failed to set up my short position off the negative divergence pattern and missed another signal for today.

Trade#4 – [Long 1062.50 14:41 EST & Exit 1063.50 14:48 EST] [ P/L: +1 ] Took signal on 1 minute an confirmed price direction on 3 minute. Good entry but poor exit! Looking to start trading 2 contracts soon.

Trade#5 – [Short 1067 15:08 EST & Cover 1068 15:17 EST] [ P/L: -1 ] This was a completely awful trade because it was against the trend. No signal for entry just saw my 3 min stochastic at 94 and figured it would correct soon. Will not attempt next time. Bad trade!
 

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Your #2 and #4 were great entries. If you look at the candles, notice both entries were immediately after a 2nd failure, with the failures showing up as long shadows.

#3 was decent (there was a long shadow in a higher time frame) but if you look before that, there was a triple failure around the lows of the day with long shadows, and a divergence on your lower oscillator, much better to go long there.

One thing I have found very very helpful is to wait for that second long shadow when playing a reversal. (Sometimes there is a single very long shadow, and those are usually good as well.) And boy do I love those reversals. Remember those reversals take some time to take root, and you usually have a few chances spaced 3-5 minutes apart to get in, no rush. The "V" shaped reversals are much rarer (at least these days, the market can always changed).

In fact I'll bet if you look over your past good reversal trades you will find that most had at least one long shadow.
 
on the afternoon run up, notice that even though there is a divergence in your oscillator there is not even one price failure on the way up (no long shadows).

Also you remarked about that short after your #3 long. Look how there was a second failure there (a long shadow). By the way, the first failure with the red and green long bars sticking up I call "stop lights", i'm not sure what/if any real name they have ("pipe tops" in plain old bar terminology). But you can imagine on a higher time frame they'd look like a long shadow.
 
Didn’t get the opportunity to post trades yesterday but it was an awful day for me.

Trade#1 – Waited too late to enter, should have been short around 1071. All last week there proved to be considerable resistance in the 1070 – 1074 area and I didn’t take advantage of this opportunity. Got frustrated about chasing price down and decided to exit.
Short 1070.00 - 9:41 EST
Cover 1070.25 - 9:47 EST [ P/L: - .25 ]

Trade#2 – I was hoping the market would reverse but it didn’t! I never focused on the picture direction the market was moving in!
Long 1068.00 - 10:27 EST
Exit 1068.25 - 10:43 EST [ P/L: + .25 ]

Trade#3 – Completely awful trade because I was trying to be long in a downward spiraling market. Everything went bad with this trade.
Long 1067.50 - 10:53 EST
Stop 1065.50 - 11:14 EST [ P/L: - 2 ]

Placed two more trades but they were losers as a result of not sticking to the plan. Before I start trading live again I will ensure I’ll need to prove that I can reduce my most frequent errors that hinder my trading. If I can’t do it via simulator I sure won’t via live trading.
 

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Yesterday, was a completely poor trading session, actually one of my worst in a while. I know I need to reduce my errors in order to continuously make money in this market. I’m reposting my most frequent errors and will highlight them in my daily post from this point on, hoping it’ll help.

I’m not striving for perfection but I just want to be consistent with my trading and I feel like the only time I lose is when I do something wrong. I do realize I won’t follow every rule in the book exactly but it’s worth a shoot at trying to strive for it. Each week or month I want to work on reducing my errors down to zero!!!!!


Frequent Errors
1. Failure to enter market off market entry rule#2.
2. Late Entries & Early Exits.
3. Missing overall big picture of the market.
5. POOR TRADE MANAGEMENT.


Elimination of Errors

Error 1: My revised market entry rule states “enter the market with the trend if price continuously breaks intraday s/r levels and previous price highs or lows.” I’m always relying on divergence setups and ignoring other key signals, especially during trending days. I have to just put more confidence in this reliable signal as it can be highly reliable.

Error 2: This is my most frequent error! I either enter late because I have no confidence or early because I’m eager to take profit. Once signal confirmation appears I will execute, I will try to mix it up with limit vs. market orders. I also will attempt to use 2 lots per trade and set good profit targets for both. One contract plays a number on my psychology.

Error 3: Actually, I’ve gotten a little better at recognizing the overall big picture of the market, however on 12/09/03 I was buying in a downtrend. I’m going to refer to my 1-minute chart a lot less (only to confirm certain entries) and put more emphasis on higher time charts as this has helped tremendously.

Error 4: This actually is the most difficult to resolve and I know only time and experience will help me. Everything after the entry from initial stop, trailing stop, profit target, continuing price analysis, support & resistance and most of all PATIENCE will increase my chances of success.
 
Quote from Awash:


Frequent Errors


3. Missing overall big picture of the market.


Elimination of Errors


Error 3: Actually, I’ve gotten a little better at recognizing the overall big picture of the market, however on 12/09/03 I was buying in a downtrend. I’m going to refer to my 1-minute chart a lot less (only to confirm certain entries) and put more emphasis on higher time charts as this has helped tremendously.
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What has helped me with the big picture of the day is keeping up a chart of the a/d line. For example, right now on the Naz it's less than -1000; I didn't go long, why bother, even though I had an otherwise legitimate entry from the price action. I'll just wait for another short opportunity. Besides the actual number of a/d it's also good to watch s/r of the a/d line. Also many times there are divergences between a/d peaks and price peaks which are a whole lot more powerful than price indicator divergences.

Second comment. Those longs you posted from yesterday were not that bad. I think an error was not holding onto that first short. If you look at a longer term chart, say 60 min, it was a possible turning point in the current down channel. Turned out to be true. Point is, some trades are going to have home run possibilities, and for those I say part of your position should be gunning for a home run exit.
 
Quote from peterfigliozzi:



.......... Also many times there are divergences between a/d peaks and price peaks which are a whole lot more powerful than price indicator divergences.
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peterfigliozzi,

Good input! Thanks again. How powerful are those divergences when compared to indicator divergence? Just curious, post when you have time to elaborate.

Those longs were tough trades. However, you're right about exiting my short at 1070. When I make a mistake like enter late or chase price, I start telling myself that I'm doomed because I'm starting off with errors. Most of the time I'm right but it turned out yesterday that my short was good.

Next time, I will follow my rules for exiting instead of just covering on my discretion. I'm also seeing some good things in my trading as a result of not focusing too hard on my 1 minute chart. Thanks again for your input.
 
I started out focused on not making mistakes and it worked good until the afternoon.

Trade#1 – Entered good off 1-minute chart (used verification card) confirmed on 3 minute but exited too early (no set profit targets).
*Short 1061.75 - 10:26 EST
*Cover 1060.75 - 10:38 EST [ P/L: + 1 ]

Trade#2 – I failed to enter around the LOD but took next continuation pattern after price broke my trend line and failed to retreat back to its initial low. Good entry!
*Long 1059.50 - 11:41 EST
*Exit 1061.50 - 10:38 EST [ P/L: + 2 ]

Trade#3 – Another awful trade! We broke the 1057.50 LOD at 14:30 EST and I waited 25 minutes to enter a short position almost 3.5 points later. This trade was never going to work out because of my tardiness.
*Short 1054.00 - 14:56 EST
*Exit 1054.00 - 15:09 EST [ P/L: 0 ]

Total Errors: 2 mistakes!

Stopped trading at 15:10 EST!

For tomorrow: Work on reducing errors to zero!
 

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Quote from Awash:



How powerful are those divergences when compared to indicator divergence?
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I don't have anything quantitative to answer with, but you
should definitely take a look at it and see if it helps. I wouldn't take entry signals off the a/d line, but it's great to filter out entries, confirm good entries, and very important, to keep you on the lookout for upcoming great entries.

Ex: suppose we make a new high in price but the a/d line is way under its high of the day and starts turning over. I would then look for a short entry to start forming, and aggressively enter early with full size. I'm still following my entry method, just not waiting for closed bars or anything like that. For you, maybe in this case you would take an entry off the 1-min chart.
 
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