DT1 Swing Trading Journal
- Thread starter DT1
- Start date
DT1..
You are going through a ugly drawdown right now.. and I think its time to rethink the plan.
Right now.. you are a pure high volume breakout player... you have to understand that breakouts working are cyclical.. and right now they are not working well.. because of the lack of momentum in the market.
You should still continue this strategy.. but pair back on your position size.. until you start hitting winners again.
Also.. maybe its time to add a few more swing strategies into your game plan. You can trade support resistance.. find stocks that ran up too quickly and are trading near resistance and vice versa for longs... THis type of strategy will work in this type of environment.
The way you multi swing trade different strategies.. is by going with the flow. WHen one strategy is not working.. increase size into the other.. because market environment characteristics usually last for weeks if not months.
--MIKE
You are going through a ugly drawdown right now.. and I think its time to rethink the plan.
Right now.. you are a pure high volume breakout player... you have to understand that breakouts working are cyclical.. and right now they are not working well.. because of the lack of momentum in the market.
You should still continue this strategy.. but pair back on your position size.. until you start hitting winners again.
Also.. maybe its time to add a few more swing strategies into your game plan. You can trade support resistance.. find stocks that ran up too quickly and are trading near resistance and vice versa for longs... THis type of strategy will work in this type of environment.
The way you multi swing trade different strategies.. is by going with the flow. WHen one strategy is not working.. increase size into the other.. because market environment characteristics usually last for weeks if not months.
--MIKE
A simpler idea.. which is one that I trade most of the time... is to trade with the trend only...
I look for stock making new 60 day highs/lows.... wait for an orderly pullback and play them.
I am not playing breakouts.. just playing the premise of a trend resumption.
The trick in this method... is to find orderly stocks that are trending well and the pullback has to be orderly. The reason this method works is because regardless to what the markets in general are doing.. you can always find a few stocks that are in a nice trend.
The catch is that when the markets are in an ugly trading range.. you will not be trading much and just sitting on your hands mostly.. but once the market trends.. you will have a plethora of setups...
The reason this strategy is more robust that playing simple high volume breakouts.. is because it forces you to pair back when the markets are in chop mode.. which is the most difiicult time for anyone to make real money. Breakout strategies are present in every type of market condition.. thats why they are very dangerous.
If you want to be a good swing trader.. before you put your trade on.. you have to identify what the current market environments are on a whole.. and now which strategy you should step up to the plate with.
As a pro trader you have to adapt to the market conditions.. One of the biggest mistakes newbies make is that they think trading one style consistently will always make them consistently profitable.. In reality markets change.. and its imperative to understand this and adapt to it.
--MIKE
I look for stock making new 60 day highs/lows.... wait for an orderly pullback and play them.
I am not playing breakouts.. just playing the premise of a trend resumption.
The trick in this method... is to find orderly stocks that are trending well and the pullback has to be orderly. The reason this method works is because regardless to what the markets in general are doing.. you can always find a few stocks that are in a nice trend.
The catch is that when the markets are in an ugly trading range.. you will not be trading much and just sitting on your hands mostly.. but once the market trends.. you will have a plethora of setups...
The reason this strategy is more robust that playing simple high volume breakouts.. is because it forces you to pair back when the markets are in chop mode.. which is the most difiicult time for anyone to make real money. Breakout strategies are present in every type of market condition.. thats why they are very dangerous.
If you want to be a good swing trader.. before you put your trade on.. you have to identify what the current market environments are on a whole.. and now which strategy you should step up to the plate with.
As a pro trader you have to adapt to the market conditions.. One of the biggest mistakes newbies make is that they think trading one style consistently will always make them consistently profitable.. In reality markets change.. and its imperative to understand this and adapt to it.
--MIKE
Thanks Andre.
DT1 will make a lot of $ when the market is breaking in a clear direction. Thats when his strategy is optimized.
Right now.. we are in a listless trading range environment... in reality by playing breakouts in times like these... he is betting for these stocks to totally diverge from the inaction of the broader market.. which is a low odds play.
One thing to understand is that trends and ranges.. last for a longer while than most people expect. You have to adapt to the philosophy of sticking with what style works until it stops... its kinda like a show me first attitude.
Right know the trending environment is clearly over . Pull up a daily 20ema on the S&p500 .. you will pretty much see how the EMA has flattened out and stopped slopping up as it began in April.
--MIKE
--MIKE
Hi Mike,
Thanks for your post. You are right I am going through an important drawdown.
I think that there are few high volume breakouts that are giving an interesting pattern to trade these days. High volume breakouts generally occur on big price movement making a trade at the EOD very risky. I took mainly these type of trades lately although I know I should avoid these type of patterns. One of the reason for this drawdown is probably that I overtraded (see my 08/08/03 post) by taking these risky positions.
I know I have to add more strategies to my plan. I tested some breakouts and consolidation on low volume and it did not work fine. This is also another explanation for my drawdown. Now I still believe that volume is important to confirm price action but I am no more looking only for very high volume to take a trade. Now I can take a trade if the pattern is looking promising even if volume is only close to average.
The last reason for this drawdown is the fact that I quit StockWatchPro for Amibroker. While setting the system I took some trades that I would not have taken if everything was properly set up. Even now everything is not fine. I need to build a new routine. I found that this is very important. It allows to be more mechanical. I am still not feeling 100% confident with AB but things are getting better.
I am happy with my latest picks... even if it is mainly breakouts
DT1
NO P&L for yesterday. IB shows wrong closing prices. It is probably due to the power shortage.
New position
+100 DCI (pullback on average volume)
+200 FSH (pullback on average volume)
+200 LEA (new high)
+200 LPX (new high)
+200 PX (pullback on average volume)
+200 SLNK (pullback on average volume)
As you can see I did no high volume play yesterday. One of the reasons is probably that I have a new routine where I would select more stocks, go through my list and select the best patterns.
Good trading,
DT1
New position
+100 DCI (pullback on average volume)
+200 FSH (pullback on average volume)
+200 LEA (new high)
+200 LPX (new high)
+200 PX (pullback on average volume)
+200 SLNK (pullback on average volume)
As you can see I did no high volume play yesterday. One of the reasons is probably that I have a new routine where I would select more stocks, go through my list and select the best patterns.
Good trading,
DT1