Catching Tails

Another fun day of sim trading, while I stay awake, looking for a third wave breakout on the hourly chart. Five wins, no losses, no draws.

This is huge, for me. Sim trading brings out all my impulsive problems because there is no consequence for failure.

I recommend anyone who is serious about successful trading to test themselves and their ideas in sim. The old saying "sim doesn't count because your emotions aren't involved" is true, but I had the opposite effect of what the skeptics claim: I do much worse trading in sim because I couldn't take it seriously.

I'm the same way with flight simulators....... I can fly as crazy as I want, knowing my stomach is not feeling the G forces! I'm much more professional with real wingz.

:D

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Greetings, Amateur Traders (and perhaps a few professionals)...........

I watched the chart for a couple hours this morning and decided to take a nap, because nothing was happening. I made $4 paper trading.

:D

Sure enough FAZ popped above my trigger line but I don't trust it. I want to see it react to The Bernanke tomorrow. Ideally it would put in a decisive higher low with momentum divergence.

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Good looking price action from FAZ today. Crisp breakout from 130 SMA on 15 minute chart but not quite a decisive higher low / divergence on the hourly.

The only thing that could shut this down is ECB antics and the potential bull flag on the SP500 chart.

You never know......

I'm still not yet convinced.

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FAZ making good waves.....

My expected point of entry is after wave C, possibly after a .618 retrace.

When I first started trading, I would never go to these lengths to make sure I had it right. I would just jump in, because I "thought" something was going to happen...... And I would use long options to take my position.

Both these behaviors are "quick ways to the poorhouse", according to Jim Rogers.

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Premarket pop of epic proportions!

Looks like the "ABC" happened during that huge gap, or there is more to come......

:eek:

Times like this I think of Tharp, who said it's easy to design a Holy Grail system for any particular type of market conditions, but not one for all market conditions.

Trying to find waves in this chop is like trying to surf in white water rapidz!

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Weekend debrief.

"What If" time.......

How would I have executed FAZ (using my hindsight goggles) to perfection?

Don't laugh, amateurs like myself need this kind of mental development.

There were two obvious buy signals that I rejected on the premise that they were not "third wave breakouts" (circled in green). My spidey senses were going nuts as I held off, for some reason.

Part of the problem is Reg T....... if I get stopped out and another buy signal comes along before 3 days are up, it's tough luck.

The obvious solution is to make multiple buys in smaller size as the wave count is more clearly defined. This example shows two times that were obvious as they were happening, but I didn't do anything for lack of experience in this situation (buying the retrace).

Anyhow, FAZ is a 3x levered inverse fund, as you all know, and experiences decay like an option (nowhere near as severely) so horizontal supports older than a week may not give accurate signals.

The solution to this is to look on the ES and see if the signals agree.... this time they did, and the trade would have worked out.

One of these days I'll be better able to buy retracements after the breakout and not panic. The only setup I really like is the triangle breakout, because there is nary a second move once it starts taking off.

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*edit - MA bundle crossover / retrace / deflect also agrees with the second buy signal - this is a strange phenomenon I've been seeing since using all the MA's on the chart. It appears to be another reliable clue to keep in the mental tool bag.
 

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you should post an account equity update with numbers and graphs. That will make it more interesting. Good work otherwise.
 
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