Birth of a trader
- Thread starter frank8800
- Start date
Not happy at all with today. I don't know if logging my Passed Trades is a help or a problem. Any time there was the slightest doubt about a setup, I logged it in the Passed Trades log, passed on the trade, then watched it turn to a winner. There were 4 winning and 2 BE trades in there.
Trade #1
CL had a couple of big pushes up to go along with the general trend, but from 06:00 - 06:30 price stalled and started to roll down. I saw price falling on increasing volume. At 07:05 price turned around on big volume, but 2 bars later a shooting star formed as price failed to follow through. I debated on whether to place a stop sell under the shooting star or place a limit order on a 50% retrace. I opted for the stop order, was filled and stopped out. -11 ticks.
I was waiting for a pullback in the trend to enter. A double top formed at 08:15, then the next bar was lower. I was waiting for a second pullback bar to enter, but never got it.
The pivot made by the 08:10 bar would have been a great place to put a buy stop, but my track record with those trades isn't great, so I passed.
Meanwhile on the 6E side, I watched several trades turn to winners because they weren't "perfect" setups. There was one limit order I placed and watched the DOM hit it, but I wasn't filled - WTF!?! Price then continued on in the direction I wanted to go.
Frustrated, I switched to sim.
Sim Trade #2
Price was increasing again on decreasing volume. CL formed an IB at 09:05. I placed a buy stop 1 tick above and a sell stop 1 tick below. I misread the scale and my sell stop was 91.05 instead of 91.06. I had a 10 tick stop and was stopped out at the high of the entry bar, to the tick. Jeez. -10 ticks.
Trade #1
CL had a couple of big pushes up to go along with the general trend, but from 06:00 - 06:30 price stalled and started to roll down. I saw price falling on increasing volume. At 07:05 price turned around on big volume, but 2 bars later a shooting star formed as price failed to follow through. I debated on whether to place a stop sell under the shooting star or place a limit order on a 50% retrace. I opted for the stop order, was filled and stopped out. -11 ticks.
I was waiting for a pullback in the trend to enter. A double top formed at 08:15, then the next bar was lower. I was waiting for a second pullback bar to enter, but never got it.
The pivot made by the 08:10 bar would have been a great place to put a buy stop, but my track record with those trades isn't great, so I passed.
Meanwhile on the 6E side, I watched several trades turn to winners because they weren't "perfect" setups. There was one limit order I placed and watched the DOM hit it, but I wasn't filled - WTF!?! Price then continued on in the direction I wanted to go.
Frustrated, I switched to sim.
Sim Trade #2
Price was increasing again on decreasing volume. CL formed an IB at 09:05. I placed a buy stop 1 tick above and a sell stop 1 tick below. I misread the scale and my sell stop was 91.05 instead of 91.06. I had a 10 tick stop and was stopped out at the high of the entry bar, to the tick. Jeez. -10 ticks.
I went through this whole process, documented in my journal and via email with experienced traders and what I was told and found out is true: Either it's a valid setup or it's not. The fact that nearly 70% of your "doubtful" setups produced a profit and none produced a loss tells me they were valid setups and there is no reason not to trade a valid setup that allows you to exercise your trade management rules.
After your early short, there was strong support established at 89.80, which was yet another higher low in a long overnight uptrend (previous low being 89.59 and attracting buyers on decent volume). This tells you chances for breakouts through the previous resistance levels are likely.
Here are several long entries off a 5-min chart:
89.92 during your 7:50am bar
90.13 during your 8:00am bar
90.28 during your 8:00am bar
90.52 during your 8:20am bar
90.74 during your 8:30am bar
91.07 during your 8:50am bar
Why not go long somewhere in between your 2 short trades? There were 130 ticks of upside move from the early long entry off the well-established 89.80 support level, through the HOD.
Hi, Frank! thought I might jump in and throw in some dumb opinions of mine own!
I kept noticing a lot of your trades are trading against the major trend. As a new trader, I know most of the time it's not the intention that you C-T the market, just some time you could got the wrong read on the trend-I have that problem too!
But today, on your trade one. what makes you think the trend is going to reverse then to go short? Would you be able to list the reasons? Or it's just purely, it "looks like falling down"...
Now using Brook's method.,
1. I see a broken minor trendline(4:25est-8:15est), But i see the major trendline hasn't yet been broken. so we are still in an uptrend. -some scalper C-traders took some profits here.
2. First EMA gap bar 10est. large bottoming tails(pin bars) tells me some demand is picking up. Some one took profits, some new buyers think it's a bargain price to get in with the trend.
3. 2 leg pb. at 10:00. this is your set up, be ready to take, BUT, the leg is very bearish. so better wait for a BO PB / H/L from the bear leg
4.10:45 could be the posible entry
But in this situation, the thing is price did not fly to north here if you entered at 10:25, instead its trading in a Tight TR. Brook would tell you to stay away here. since too much uncertainties.
But I think I would take the chance to buy on tick above 10:25 bar here since trend is in my favor... I would want to embrace the risk since in the past I see so many this type of profits slipped...I always hear WentFishing's voice sometime (yes, its risky, but that's our trader's job to embrace the risk). This type of risk to me is worth taking.
I took the same type of trade today in YM, #1, but the exit didn't go on my way... in your case, this trade flied!!!!!!!!!
How do you ID a trend? How do you ID a TR? I think it's more important than just to recognize the patterns. It took me almost 11 months to learn that and I am still figure it out.....
Thanks NoDoji - how did you finally break free? I just finished an hour of simming last Tuesday, took every setup, and came out way ahead. Same thing during yesterday's sim. There's a little voice inside screaming to get out.
I've been waiting for 2 pullback bars before trailing a buy or sell stop. That first red candle formed a double top and through me off. I was waiting for one more pullback candle, but never got one. I'm still working on jumping in front of the train trading.
Hi Matcha, I do appreciate your feedback. Thank you.
I know I do tend to counter trend trade, but it's not my intention - and I think I'm getting better at it.
The reason I took that first short is because I saw price flattening out, then fall on increasing volume. I waited to see which way things were going to play out, and when that shooting star formed and price failed to resume the trend, I went short.
My second short could have gone either way. I had a buy stop above the IB, and a sell stop below. I just happened that the short was filled, and had I not misread the price (or kept my usual 11 tick stop), it would have been a winning trade.
Strong trends are easy to see, but I definitely have trouble spotting those ABC waves in a trend. I am trying to pull back from the monitor every once in a while and look at price overall to spot larger trends or ranges. I look at the 60 minute and 15 minute charts just to see if my trade agrees with those charts.
I'm going through Brook's book again (my fourth read), and am picking up more. The first read was a joke, and read number two not much better.
Thanks again for your help.
Here are a couple rules to throw into your bag of rules.
1. If price is sticking on the EMA, don't trade until it is able to break away from it. You'll notice that when you took your first trade, price kept trying to move, but then it would come back. Only when it finally was able to get some strength and break away from it's "rubberband effect" did it really get moving.
You'll notice that around 9:45 EST it made a low at 89.81, then pulled back to the EMA. Shorting that pivot low created a massive inflow of sell orders, propelling it away from the EMA. It eventually came back so again, we don't take anymore trades until it picks up strength.
The 10:50 bar was a strong move up off of a support area of 89.80. I fell into the trap of trying to sell at the support and I got chopped up (many of my losses come in areas of congestion/selling support/buying resistance). I had been looking at 90.27 as a strong resistance area, but if it could break it at 90.28, we would get sucked into the HOD looking for a strong breakout. After taking a few losses I was getting a little irritated so I decided to just buy one tick above the HOD and ended up getting +20.
My point is that price finally got away from its sticking point and busted itself through those levels.
2. Don't try to trade counter trend after a strong trend in one direction.
Just because an uptrend line gets broken, it doesn't mean we are now in a downtrend. It just means it's possible that the trend is changing, the uptrend is losing momentum. As you can see it went from an uptrend to a sideways range.
One thing that was said to a group of people that wasn't really meant as a learning point, but it always stuck with me: "V-reversals are hard to catch." Basically, a V-reversal is an uptrend immediately into a downtrend. It doesn't happen often and so you shouldn't expect to try to catch one. If you miss it, I don't really think you're going to be losing out on a lot of value in the long-run.
As Matcha said, you tend to always be countertrending. You need to be with the trend. If 100 people are with the trend and only 5 are against the trend, who would you rather be with?
Try buying(selling) one tick above the HOD(LOD) and use a 10-tick stop. If it doesn't instantly snap out of the gate with strength then it's probably a failed breakout.
You use NinjaTrader so you can go into your DOM properties and turn on the colors for the HOD and LOD. That way it is easy to see and you can just put in an order 1 tick above or below that colored price bar.
If you'd like to talk about my patented "rubberband effect" send me a PM.
1. If price is sticking on the EMA, don't trade until it is able to break away from it. You'll notice that when you took your first trade, price kept trying to move, but then it would come back. Only when it finally was able to get some strength and break away from it's "rubberband effect" did it really get moving.
You'll notice that around 9:45 EST it made a low at 89.81, then pulled back to the EMA. Shorting that pivot low created a massive inflow of sell orders, propelling it away from the EMA. It eventually came back so again, we don't take anymore trades until it picks up strength.
The 10:50 bar was a strong move up off of a support area of 89.80. I fell into the trap of trying to sell at the support and I got chopped up (many of my losses come in areas of congestion/selling support/buying resistance). I had been looking at 90.27 as a strong resistance area, but if it could break it at 90.28, we would get sucked into the HOD looking for a strong breakout. After taking a few losses I was getting a little irritated so I decided to just buy one tick above the HOD and ended up getting +20.
My point is that price finally got away from its sticking point and busted itself through those levels.
2. Don't try to trade counter trend after a strong trend in one direction.
Just because an uptrend line gets broken, it doesn't mean we are now in a downtrend. It just means it's possible that the trend is changing, the uptrend is losing momentum. As you can see it went from an uptrend to a sideways range.
One thing that was said to a group of people that wasn't really meant as a learning point, but it always stuck with me: "V-reversals are hard to catch." Basically, a V-reversal is an uptrend immediately into a downtrend. It doesn't happen often and so you shouldn't expect to try to catch one. If you miss it, I don't really think you're going to be losing out on a lot of value in the long-run.
As Matcha said, you tend to always be countertrending. You need to be with the trend. If 100 people are with the trend and only 5 are against the trend, who would you rather be with?
Try buying(selling) one tick above the HOD(LOD) and use a 10-tick stop. If it doesn't instantly snap out of the gate with strength then it's probably a failed breakout.
You use NinjaTrader so you can go into your DOM properties and turn on the colors for the HOD and LOD. That way it is easy to see and you can just put in an order 1 tick above or below that colored price bar.
If you'd like to talk about my patented "rubberband effect" send me a PM.
Thanks FD. I'm only beginning to dip my toe in the water of trading break outs. Today I watched the DOM as price hit them, and it happens so fast, I'm not sure how many times a 10 tick stop would survive. It all depends on where you're filled.
I know a lot of my trades are counter trend, but I'm not focusing on that exclusively - it just looks like it. My preferred method of entering a trade is with a limit order, and I frequently don't get filled. The past few days I have been experimenting with using buy and sell stops instead of limit orders. That's been going better, and now I'm trying to wrap my head around what a good pullback looks like.
Today I was patiently waiting for that pullback, and when it happened, I didn't recognize it.
If you have any questions about the book, feel free to PM me. Sometimes it might be helpful to understand it quickly if someone can tell you in simply phrase. I am not shamed to say that I do have a great understanding on what is he trying to interpret and I read his chart over and over.
But I have to warn you that in reality, everything is very different.
I forgot where I read someone commented on his method one time:
In his book, he is telling you to take all the setups
In reality, he has every reason not to take any trades.
The concepts in his books are great! But whether and how to adapt them. it's all our own calls. I really hope soon enough I can prove the comination of the methods and my own stats can generate some sounding systems. Lets see!
There is definitely slippage risk trading breakouts, even if trading only 1 lot, which is why it's more comfortable being positioned for them on a pullback. After a strong move in a given direction, watch the 1- or 3-min chart as a cross-reference, because often the pullback in a strong trend is so shallow that you get only 1 bar on the 5-min chart. A really shallow pullback is good sign that there's a lot of pent-up emotion (greed and fear) for a continuation move. There have been times when a trend is so strong that I'm staring at the move with my mouth hanging open and I finally decide to just jump in on the break of any previous bar, even a 1-min bar because I want in!
If you end up missing a pullback entry, then trade the breakout as long it's part of a defined trend, place the stop loss based on your INTENDED entry, not where you get filled and tighten it if the breakout is weak (less than 8 ticks out of the gate).