CL Redux

Regarding trade management, I'll review my last CL trade today because it demonstrates how I manage a trade when I follow my actual rules instead of making assumptions like I did with the breakout trade :p

I was watching for the next with-trend short entry after the breakout finally found support near 84.50 (which happened to be the 20-day moving average on the daily chart).

After a strong 3rd push like that, there is usually a 2-leg pullback and very possibly a trend reversal. I expected price to try for the 20-bar EMA on the 5-min chart, which it did and failed to break out there.

The 1:15pm ET bar was the 2nd attempt and it failed. This was a valid short entry, which I missed due to an interruption. When price left behind a higher low after that, I drew the narrow uptrending channel (connect the LOD to the 1:20pm ET low, and draw a parallel upper line at the 1:05pm pivot high). At the upper channel line, the move stalled and pulled back. I shorted the low of that bar (85.04), looking for a move to the lower channel line to break out and retest the LOD because an LOD generally gets a second try before a trend reversal occurs.

When price moved to the lower channel line (84.90), I moved my stop to b/e. My goal on the trade wasn't to scalp the channel or I'd have taken 10 ticks profit there. My goal was a break of the channel line, followed by a break of 84.77 previous support, and a possible test of the LOD. I was rather skeptical that price would get to the LOD itself because trend-following swing traders would be looking to try for a bargain-priced entry slightly above that level.

My trade management plan at this point is to trail a stop just outside each previous bar. So when the 1:45pm bar closes, I move my stop to 85.02; when the 1:50pm bar closes, I move it to 84.91.

Price broke the 84.77 previous support and my trailed stop took me to my minimum 20-tick profit.

Price tried to break through that 1:55pm bar high twice and failed, leading to a rapid drop off. I quickly moved my stop to 84.74 to lock in 30 ticks profit in case a higher low was left behind, which is what happened.

If it wasn't for the fact price was down nearly $3.00 from yesterday's high, I would've simply continued to trail a stop after the close of each bar, but a rising 20-day MA is a strong support level for trend followers, so I micromanaged this one a bit at the end.

Congratulations to anyone who played the long and short of the NYMEX close. Those were two sweet moves!
 
nice job, long time did not peek the site, you guys doing pretty well.

I used points to manage trade target, normally cl moves in 2points, or rarely case 4points (that happened one time last month). I shorted morning low at 86.51, then wrote a limit buy order at 84.63, remeber the recent high is 88.63, I did cover it there. I was thinking 2points move. I think trailing stop is not effective in this case.

actually I saw this pattern in NQ too, after I shorted it at 2142.75, my first target is 2132, then 2122, I covered it at 2123.25, pretty accurate.

of course, I used EMA, R/S line to help me zoom in on my target, monitor them very closely, not those little10/20ticks move.

Quote from NoDoji:

Regarding trade management, I'll review my last CL trade today because it demonstrates how I manage a trade when I follow my actual rules instead of making assumptions like I did with the breakout trade :p

I was watching for the next with-trend short entry after the breakout finally found support near 84.50 (which happened to be the 20-day moving average on the daily chart).

After a strong 3rd push like that, there is usually a 2-leg pullback and very possibly a trend reversal. I expected price to try for the 20-bar EMA on the 5-min chart, which it did and failed to break out there.

The 1:15pm ET bar was the 2nd attempt and it failed. This was a valid short entry, which I missed due to an interruption. When price left behind a higher low after that, I drew the narrow uptrending channel (connect the LOD to the 1:20pm ET low, and draw a parallel upper line at the 1:05pm pivot high). At the upper channel line, the move stalled and pulled back. I shorted the low of that bar (85.04), looking for a move to the lower channel line to break out and retest the LOD because an LOD generally gets a second try before a trend reversal occurs.

When price moved to the lower channel line (84.90), I moved my stop to b/e. My goal on the trade wasn't to scalp the channel or I'd have taken 10 ticks profit there. My goal was a break of the channel line, followed by a break of 84.77 previous support, and a possible test of the LOD. I was rather skeptical that price would get to the LOD itself because trend-following swing traders would be looking to try for a bargain-priced entry slightly above that level.

My trade management plan at this point is to trail a stop just outside each previous bar. So when the 1:45pm bar closes, I move my stop to 85.02; when the 1:50pm bar closes, I move it to 84.91.

Price broke the 84.77 previous support and my trailed stop took me to my minimum 20-tick profit.

Price tried to break through that 1:55pm bar high twice and failed, leading to a rapid drop off. I quickly moved my stop to 84.74 to lock in 30 ticks profit in case a higher low was left behind, which is what happened.

If it wasn't for the fact price was down nearly $3.00 from yesterday's high, I would've simply continued to trail a stop after the close of each bar, but a rising 20-day MA is a strong support level for trend followers, so I micromanaged this one a bit at the end.

Congratulations to anyone who played the long and short of the NYMEX close. Those were two sweet moves!
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Quote from trader198:

I think trailing stop is not effective in this case.

of course, I used EMA, R/S line to help me zoom in on my target, monitor them very closely, not those little10/20ticks move.
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You describe an intraday swing trade, where you hold through the day looking to catch a strong trend. Trailing stops at previous 5-min bars in an intraday swing trade would make no sense at all. You would leave an initial stop and target in place (which you did), or trail a stop based on a 30- or 60-min chart.

I use S/R for my initial target and tighten the stop after that initial target zone is passed through, based on the specific price action, and I trade a 5-min chart to capture profits from very short term bi-directional price moves. I doubt I've had a trade on longer than 45 minutes, with most of my trades lasting 5-20 minutes.

The advantage of the intraday swing trading you do is you catch most of the move during strong trend days. The disadvantage is strong trend days are not all that common. So if you put on a trade with a fixed target and no management in between to lock in profits at various levels, you risk having a very nice profit evaporate completely at some point during the day.

If you trade very short term bi-directionally, you are positioned to catch several legs of a strong trend as well as each swing of a wide range, without having to do anything differently.

Today for example, an ideal intraday swing trader, assuming s/he could sell the top and buy back the bottom, tallied a 200 tick profit. But a 5-min bar price action trader working all signaled trades and managing them by trailing bars after a certain move in one's favor until a reversal was signaled, tallied 270 ticks during NYMEX pit hours.

But yesterday, if the ideal swing trader went long at the NYMEX open, targeting a break of x ticks above the previous high, and placing a stop below the pivot low, at the end of the day, s/he's out b/e or at a very small profit, because neither target nor stop was ever reached, whereas the ideal short term bidirectional trader likely escaped with 40-60 ticks profit.

Wouldn't it be nice to be those ideal traders? :p
 
Wow... so much passion for the trading arena! When a Friday evening around midnight (EST) is spent discussing price action, then you know you're unmistakenly hooked for the long run :)


Nodoj... you may really need to reconsider authoring that book...


Walt
 
Quote from jones247:

Wow... so much passion for the trading arena! When a Friday evening around midnight (EST) is spent discussing price action, then you know you're unmistakenly hooked for the long run :)
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To become an accomplished musician, I spent 6 years immersed in it, pretty much to the exclusion of everything else.

I'm older and wiser now, still willing to put 6 years of hard work into something I want to master, but always making time for "soul food": A long stretch at the park chasing the dog, a 2-mile trail run through the canyon, a home-cooked feast and guitar jam with my bro, followed by deep philosophical conversation and star gazing (and I promise I saw no price patterns up there). :p

So I wasn't sitting at my desk all afternoon and evening. I just dropped in last night to say hi to trader198, who still seems to have the knack for picking perfect tops and bottoms, but only tells us about it at the end of the day :D
 
Please understand, I applaud and can relate to the driven passion and immersion that anyone has for a given craft. It's also great when one can incorporate the balance of taking time to "smell the roses and savor the sweet moments" of life. My problem at times is that I wonder if I'm "OCD", as I'm unable to sustain the balance of including "soul food" moments as much as I ought because I'm so consumed with mastering the craft of trading...

To all who are committed to this trading endeavor, or any other speciality of life, I salute you and say: "much love and respect" :cool:

Walt
 
Quote from gov:

I need to get a clone of NoDoji's crystal ball, dammit! Here's a shout to ND for her call last night.
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Finally caught up on the earlier posts here. My call for a pullback to 84.97 was supposed to take a few days. If you told me it would happen the next day I'd have thought you were nuts....wait a minute this is CL. Never mind. :p

Here's my "crystal ball" for that call. I noticed on the long term daily chart that in a strong uptrend when CL runs hard several days in a row, has a shallow breather and runs to yet another new high and is at the top of the trend channel, it has a pullback to at least the 20-day EMA and often to the lower channel line (in this case that would be around 82.00). Thursday's daily candle was a key signal bar for that pullback.

Blox, question for you: On those stops you had below the key support levels, did you get any slippage? The breakouts were really strong. I've never placed a stop more than 1 tick outside a level, because I always assumed the slippage would be very bad if a breakout was strong.
 
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