Birth of a trader

[NoDoji]

Quote from frank8800:


Trade #1
06:55 - Oil up 50 ticks from the open on several surges. 06:45 gave a nice shooting star on high volume at the top of the move. The next bar closed lower, confirming the trend change. Entered short 74.45 at the open on the 06:55 bar and was stopped out on next bar as trend resumed. Perhaps there wasn't enough rounding, or the upward momentum was too great. In any case, I'm OK with this trade and would take it again.

I took this exact trade, also short @ 74.45 and it did not behave appropriately at all

Quote from frank8800:


Trade #5
09:18 - After skimming the 20 ema with large, overlapping bars (barbed wire - why didn't I see it while it was happening?), oil started moving up with solid, non-overlapping bars, making higher lows, higher highs, on increasing volume. Entered long at 74.85 for +25 ticks.

This was great, Frank. I didn't play the initial break because the previous breaks were so weak, but price offered a quick second chance and I even made the comment, "Looks like the bulls might have what it takes here" and then watched it go without me.

The early entry long for that breakout was the break of the 8:55 (your time) bar. Do you see the small ascending triangle inside within the larger one? I saw it after the fact, but my automated system-in-testing did what it was supposed to do and simply took the breakout of that resistance off the price action setup and rode it all the way to 75.19. I'm going to let my automated system become my new mentor

 

[frank8800]

Quote from NoDoji:

I took this exact trade, also short @ 74.45 and it did not behave appropriately at all



This was great, Frank. I didn't play the initial break because the previous breaks were so weak, but price offered a quick second chance and I even made the comment, "Looks like the bulls might have what it takes here" and then watched it go without me.

The early entry long for that breakout was the break of the 8:55 (your time) bar. Do you see the small ascending triangle inside within the larger one? I saw it after the fact, but my automated system-in-testing did what it was supposed to do and simply took the breakout of that resistance off the price action setup and rode it all the way to 75.19. I'm going to let my automated system become my new mentor

Thanks for your kind words!

I see that little triangle now that you mention it, but I wouldn't have thought a pattern that small would amount to anything!

In hind sight, another obvious trade I missed was not taking Trade #2 sooner. I should have taken it right after the second red candle printed. Instead, I only used them to justify the short after the doji at the 20 ema.

 

[NoDoji]

Quote from frank8800:

In hind sight, another obvious trade I missed was not taking Trade #2 sooner. I should have taken it right after the second red candle printed. Instead, I only used them to justify the short after the doji at the 20 ema.

Regarding your trade #2, I was on short alert when the 7:00am bar couldn't even muster a 10-tick breakout. Then the second attempt was an apparent false breakout. I decided to short the break of the 7:15 bar low (2nd red candle) and targeted 20 ticks off that. It felt very counter-trend at the time, but the upside momentum seemed too dead to consider long entries.

 

[FirstDegree]

I went long on the break of the 4th bar after the open, that 2nd red bar, somewhere around 6:15am (your time).

Price broke through the EMA, but failed to hold. I got stopped out at +1. There was a down trend line off those highs, which was initially resistance to that entry bar (the first green bar after that red bar). I moved my stop too soon. Price went +9, I moved my stop to breakeven+1 and it drifted down and took me out, only to end up going well in my favor.

Normally after a big run I hesitate on taking the first shooting star, after it makes new highs. I think of them as pullbacks rather than reversals. In hindsight I would have waited and not taken that first pattern, but then may have gone long again after it made the hammer pattern.

Unfortunately, I didn't sleep well last night and I had to go out of town so I had to get ready shortly before all of that happened.

 

[frank8800]

Quote from FirstDegree:

I went long on the break of the 4th bar after the open, that 2nd red bar, somewhere around 6:15am (your time).

Price broke through the EMA, but failed to hold. I got stopped out at +1. There was a down trend line off those highs, which was initially resistance to that entry bar (the first green bar after that red bar). I moved my stop too soon. Price went +9, I moved my stop to breakeven+1 and it drifted down and took me out, only to end up going well in my favor.

That's a nice early entry. I should have taken that nice surge bar with the shaved ends a few bars later. It's so obvious now.

Quote from FirstDegree:


Normally after a big run I hesitate on taking the first shooting star, after it makes new highs. I think of them as pullbacks rather than reversals. In hindsight I would have waited and not taken that first pattern, but then may have gone long again after it made the hammer pattern.

Funny, I was thinking that pattern right after the shooting star was a hanging man, and that was more confirmation in the trade!

Tomorrow I may be more aggressive with my stops. I've been letting the trades run out, but after looking at NoDoji's trades, I can see she's not waiting at all. We took the exact same trade after the shooting star. I lost 15 ticks and she made 1.

 

[NoDoji]

Quote from frank8800:

Tomorrow I may be more aggressive with my stops. I've been letting the trades run out, but after looking at NoDoji's trades, I can see she's not waiting at all. We took the exact same trade after the shooting star. I lost 15 ticks and she made 1.

I'm pretty inconsistent, sometimes jumping in really early off a 1-min chart, sometimes waiting for a specific confirmation level, and sometimes waiting for so much confirmation I'm so late to the party that I end up giving back what little profit was left for the taking. When I enter late in a move or enter on a break of a level where price momentum should be strong in my direction, I give the trade very little room to come back and stop me out at a loss. The way I see it is, momentum is momentum and I'm trying to catch a run, I can always get back in.

It's important, I think, to differentiate this type of trade management on momentum trades from standard setups where you have a specific stop and target that should remain in place unless the price action signals a reversal or it looks like the market may offer more than your initial profit target. FD's trade was one of those, and I sympathize with him because not too long ago I moved a stop after 9 ticks and was shaken out of a trade that I didn't jump back into and missed a really good profit.

 

[frank8800]

Quote from NoDoji:

I'm pretty inconsistent, sometimes jumping in really early off a 1-min chart, sometimes waiting for a specific confirmation level, and sometimes waiting for so much confirmation I'm so late to the party that I end up giving back what little profit was left for the taking. When I enter late in a move or enter on a break of a level where price momentum should be strong in my direction, I give the trade very little room to come back and stop me out at a loss. The way I see it is, momentum is momentum and I'm trying to catch a run, I can always get back in.

It's important, I think, to differentiate this type of trade management on momentum trades from standard setups where you have a specific stop and target that should remain in place unless the price action signals a reversal or it looks like the market may offer more than your initial profit target. FD's trade was one of those, and I sympathize with him because not too long ago I moved a stop after 9 ticks and was shaken out of a trade that I didn't jump back into and missed a really good profit.

I'm trying to ween myself from the 1 min bars, but I can see where it would make sense to drop down to time an entry.

When I was trading 1 min bars, the action was so fast, I expected every trade to immediately go in my favor, and if it didn't, that meant I was wrong and it was time to get out. I had tighter stops, and was more unforgiving in my trades. I don't have any real experience with 5 min bars, but my feeling is that I should give them more leeway.

As for setups, I've thrown out everything and am starting over. I'm reading Al Brook's book, and my forehead is sore from banging it on my desk.

 

[FirstDegree]

Quote from frank8800:

Funny, I was thinking that pattern right after the shooting star was a hanging man, and that was more confirmation in the trade!

You'll pick this up somewhere in the Brooks book. I'm not exactly sure if it was ever stated, but I've kind of adapted it over a short period of time.

When you have a strong rally that doesn't really have any pullbacks and you see that shooting star pattern at the top, it can be either a reversal or a pullback. If it's a reversal, most of the time you're going to get a double top where it retests that level and then you can jump in. Brooks calls it a "second entry."

I haven't really perfected it yet, but yesterday's pattern looked good for a long. It also happened last week where it looked good for a long and went much, much higher. I don't remember which day it was, but I know it wasn't Friday. It could have even been this past Monday.

The problem is that sometimes you'll say to yourself, "I am going to wait and see what it does when it retests that level," (meaning you're going to look to go short). Then, you totally miss the long signal while it breaks above the previous resistance without you.

 

[frank8800]

Quote from FirstDegree:

You'll pick this up somewhere in the Brooks book. I'm not exactly sure if it was ever stated, but I've kind of adapted it over a short period of time.

When you have a strong rally that doesn't really have any pullbacks and you see that shooting start pattern at the top, it can be either a reversal or a pullback. If it's a reversal, most of the time you're going to get a double top where it retests that level and then you can jump in. Brooks calls it a "second entry."

I haven't really perfected it yet, but yesterday's pattern looked good for a long. It also happened last week where it looked good for a long and went much, much higher. I don't remember which day it was, but I know it wasn't Friday. It could have even been this past Monday.

The problem is that sometimes you'll say to yourself, "I am going to wait and see what it does when it retests that level," (meaning you're going to look to go short). Then, you totally miss the long signal while it breaks above the previous resistance without you.

Thanks. I'm reading the Brooks book now (might need a root canal for some relief), and have picked up several things. No doubt this will take a lot of sim time and chart reading as well as another read of that book.

 

[frank8800]

I'm feeling pretty upbeat for someone who lost 23 ticks today. For most of the day I felt like I was in the game and tried to listen to what the market was telling me. Of course that didn't stop me from getting into bad trades or mismanaging them.

The one thing I felt like I did do very poorly was trade management. I let my first trade run out to a stop, even though I was up 7 ticks and thought moving to BE+1 might be a good idea.

My second trade didn't give me much time to think, but I did move my stop up 5 ticks and saved a little.

Now I was down 15 ticks and determined not to let a winner turn in to a loser again, and this was precisely not the time to do it. I choked off the trade with a small profit, and 2 bars later it hit my target. What I DID do right on this trade was to realize the error of getting out, and I got right back in. Now I was determined to let it run, and it came to within 4 ticks of my target before stopping me out at BE+2.

I choked off my last trade at +10 ticks as well, and this was a major runner.

Trade #1
06:42 - After pissing away the morning returning emails and missing the opening bounce off the 20 EMA, I waited patiently for a pullback to reenter the trend. The 06:35 bar looked good, but instead of taking the trade 1 tick below the open of the next bar, I waited and got in long at 75.68. This probably didn't matter too much, since it was premature for the trend to resume. I forgot that there are usually two legs to the pullback, and this was the first. Too weak. In any case, even with a bad entry I was still up 7 ticks at one point and thought about moving to BE+2, but didn't. Got a full 15 tick stop.

Trade #2
07:15 - I noticed a nice trend line stretching back to premarket, and along with the top of the two previous failed breakouts, formed a nice ascending triangle. I was waiting for another bite at the 20 EMA trend line. So far so good, but here's where I had a brain fart. I distinctly remember reading from Brooks that over shoots on a trend line made for perfect entries, as people traders who jump on a counter trend play get caught on the wrong side and fuel the trend resumption. Remembering this, and knowing this, apparently wasn't enough to keep me from going short at 75.50 after price dipped below the 20 EMA. In my defense, if there is one, is that I was looking at two failed long attempts. I made a decision to short instead, even though I had been waiting for a long entry. I did move my stop up 5 ticks when I saw it wasn't going to work and saved a little.

Trade #3
07:22 - If I did do anything right this morning was to quickly realize the error I made on the previous trade, and got back in long at 75.60 as soon as I could. Not a great entry, but I felt OK. Now I'm down 25 ticks and even more determined to salvage a profit. The second bar after entry was a small doji, and I creeped my stop up to BE + 3 and was taken out. I took no heat on this trade, and when I saw price turn around after visiting my stop, I got a little frustrated with myself.

Trade #4
07:43 - I got back in to this trend, and was determined THIS time to let the trade play out. Went long at 75.72, and things were going swimmingly. There was an oil report due out soon, and I wanted to make sure I was out of the market before this report. I thought the steady rise in price was a precursor to the report. I was 16 ticks up on a 20 tick target and decided to move my stop to +10. This actually turned out to be a good idea, since I would have been stopped out on the 07:55 bar.

Trade #5
09:10 - I think I had 'Long Trend' ingrained in my head, so I really didn't see the change at 08:10. After the report and the usual spastic action, oil failed to make a new high and after a doji, a strong -25 tick bar with a shaved bottom sent oil below the 20 EMA. The next 3 bars did everything but slap me in the head and and scream short as they failed to break the 20 EMA and ended with a nice hanging man at 08:30. I watched that whole slide without doing anything. I was expecting a two legged pullback, and waited for the first leg. At 09:10 I entered long at 74.99, expecting this to push back up to the 20 EMA line. However, that bar was the end of the first pullback leg, not the middle. I moved my stop up a couple of ticks before it was too late, and was stopped out at -13 ticks.

Trade #6
09:50 - Having said that I was expecting a two legged pullback up to the 20 EMA, you'd think I would have been all over that 09:30 bar, but no. I think my cage was too rattled for being so right and so wrong at the same time. I did wake up and take the open of the 09:50 bar short at 74.89. Being down 33 ticks at this point, I was once again, determined not to let a winning trade turn bad. I was looking for 25 ticks, and as things progressed in my favor, I moved my stop to +10. Somehow the market knew this, because the 09:55 bar retraced and took me out. The high of the bar was - yes - my stop at 74.79.

At this point I decided to just be a spectator, but one exciting thing did happen. At 10:00 a hammer formed, and the next bar didn't confirm the reversal. Amazingly, the first thing I thought of was how many traders thought this was a reversal and went long, then when they realized their mistake, their selling would fuel the drop. The 10:10 bar was indeed a -36 tick bar on heavy volume. Happy thoughts!

I think the single biggest mistake I made today (besides micromanaging my trades, not listening to my gut, and feeling frustration) was to look at my P & L. I'm not saying things would be different had I not kept track of it, but it did affect my judgement.