ES Journal - 2013
- Thread starter Trvlwanderer
- Start date
For some reason my charts were not working right yesterday, and I decided to trade off of the DOM which is not part of my trading plan and I off course lost money. I updated to the newest release of NT and charts are working now.
Market Update:
"12:55 pm : Major equity indices hold midday losses with the S&P 500 down 0.6%. Stocks began the session in the red as headlines out of China contributed to the weakness among global equities. Specifically, press reports suggested top Chinese banks saw their debt write-offs triple during the first half of the year. Separate reports indicated the People's Bank of China may tighten monetary policy due to excessive inflation. The liquidity crunch has manifested itself in the overnight Shanghai Interbank Offered Rate (SHIBOR), which jumped 73 basis points to 3.78%. "
Due to market update my bias is looking for short trades. Due to the fact that I lost money yesterday, my plan is to take a scalp instead of trying for more money since I just want a winning day. Although above a moving average market was at a resistance level with my indicator suggesting that the next move might be down with a high probability. On CL, it's better to wait for the indicator to turn down, but on ES which has less movement and variance I was able to take the trade with a small stop loss.
Trade hit my target, but I could have gotten another 2 ticks of profit while maintaining the same stop loss. The only good news about yesterday is that I was able to prevent myself from major revenge trading. If one can keep daily losses low, you can then wait for a perfect trade the next day based on your trading plan. Also, I am glad the market went back up just now to resistance since I would have felt silly taking a scalp if the market tanked another 10 points.
Market Update:
"12:55 pm : Major equity indices hold midday losses with the S&P 500 down 0.6%. Stocks began the session in the red as headlines out of China contributed to the weakness among global equities. Specifically, press reports suggested top Chinese banks saw their debt write-offs triple during the first half of the year. Separate reports indicated the People's Bank of China may tighten monetary policy due to excessive inflation. The liquidity crunch has manifested itself in the overnight Shanghai Interbank Offered Rate (SHIBOR), which jumped 73 basis points to 3.78%. "
Due to market update my bias is looking for short trades. Due to the fact that I lost money yesterday, my plan is to take a scalp instead of trying for more money since I just want a winning day. Although above a moving average market was at a resistance level with my indicator suggesting that the next move might be down with a high probability. On CL, it's better to wait for the indicator to turn down, but on ES which has less movement and variance I was able to take the trade with a small stop loss.
Trade hit my target, but I could have gotten another 2 ticks of profit while maintaining the same stop loss. The only good news about yesterday is that I was able to prevent myself from major revenge trading. If one can keep daily losses low, you can then wait for a perfect trade the next day based on your trading plan. Also, I am glad the market went back up just now to resistance since I would have felt silly taking a scalp if the market tanked another 10 points.
I don't have a link to all my posts about entering a strong trend, but what I do is this (based on intraday scalping using a 5-min main chart and 1-min chart for with-trend entries):
1. On the 5-min chart, I wait for a high or low of the day, a key trend line, or a narrow range consolidation, to break with conviction (more than just a few ticks).
2. I then watch the 1-min price action for a pullback toward the 1-min 20-period EMA.
3. Finally, I position in the direction of the breakout during the pullback.
There are several ways to position during the pullback and it's best to backtest these ideas on whatever instrument you're trading to determine the method that has the highest odds of success within your personal risk:reward tolerance.
One way is to trail a stop order a tick above/below the close of each pullback bar.
Another way is to simply buy or sell the close of the first pullback bar.
A third way is to place a limit order a tick or two from the value of 1-min 20EMA.
If the breakout is especially strong, there may not be a defined pullback. Price may simply consolidate by printing an inside bar or two (small triangle), or by printing several narrow range bars (flag), in which case I'd buy or sell a break of the previous new high/low if the instrument you're trading is known for its momentum moves (oil, gold, and currencies come to mind).
So looking at ES prior to the open today, there's a channeling uptrend, not a strong trend. In other words there are pullback bars on the 5-min chart. During a strong trend, no 5-min bar high or low breaks in the opposite direction by more than a few ticks, if at all.
However, once that pre-market lower trend line breaks with some conviction during the 9:44 ET 1-min bar, I'd look to get short for an eventual test of the overnight low by trailing a sell stop below the pullback bars. The first pullback bar prints at 9:50 and I'd be short during the 9:51 bar at 1740.25 for a test of the overnight low around 1737.00.
I was referring to nodjoi's trendlines, they reflect a more recent trend so it should be more relevant. Think about it this way, trendlines (horizontal ones at least) are supposed to reflect "areas of contest", would you care if a certain price level was contested 5 years ago? Or would you trust an area that was strongly contested a few days or weeks ago?
I dont know about you but I'd trust the latter anyday.
What other lines are there other than trendlines (be it horizontal or diagonal ones)?
And thanks for repeating what I just said, lines dont matter when the market is at all time highs, theres no such thing as resistance because its uncharted territory, its all in the mind.
Of course I dont mean that a stock or index will now go to infinity once it hits new highs, it will tank someday, but its impossible to trade it until it happens.
Selling new highs based on some lines is the worst form of gambling ever, its not even possible to place an objective stop loss thats based on a previous area of contest (resistance), the stop has to be a subjective one, and those tend to be the worst stops ever.
NoDoji:
That is very kind of you to write in details on how you trade with trend. I will definitely spend time to digest your thoughts after which i may need to get back to you for further questions.
Regarding today's ES, i have one question: when i found out 9:35 EST 5m bar (9:38 1m bar) is at 1741 which would break pre-market weak up TL. I just shorted 1741 without waiting for 5m bar close. Immediately i got a heat of 1.75points when 5m bar is closed. Then i scratched out at 1m 9:50 bar high where you were waiting for short since i didnot want to have the second time painful heat and then missed the whole down move. You waited for break down TL with conviction and i did not wait for the conviction. May you please give me advice on my entry and exit?
How do you think of shorting bar 9:44 when it breaking down bar 9:43 low? lower high, L2 (B9:35 L1) and pre-market weak bulll channel. Thank you very much for your time.
Parallel, projected also come to mind.
The trick is line supported by a trend, as you stated, all time highs wouldnt qualify.
However, even if uncharted territory you can use lines to measure strength instead of using it as a fade tool which is how they should be used.