ES Journal Archive (2006 - 2008)
- Thread starter Buy1Sell2
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Can't blame you for not willing to trade during the FOMC, that was the answer I, personally, was looking for from you.
Did you try out a line chart?
Remember I mentioned the daily pivot yesterday? Both of the long grails's higher lows were trading above the daily pivot. That is a good sign for a long position. Your 1st trade based on short grails price was still above the daily pivot, perhaps that's why it wasn't quite right to take a short there.
I would have entered 1st long @ ~1384, stop is not a straight forward point of exit in a discretionary trade, but it would have been very close to 1382, you could either use a trailing stop or scale out.
Second trade I would have entered as soon as price started closing above yesterday's high, similar stop and PT strategy would have been used.
I would exit the second trade here @1388.75
sometimes you will catch very nice large moves off the 5 min chart. I would still reference:
CCI (don't forget that grails are also present in CCI and THAT will strengthen the signal)
pay attention to where price is trading in relation to the daily pivot (above pivot good for a long, below good for short)
pay attention to higher TFs channel - where is the price?
When in a trade watch out for a divergence, as they do trigger pullbacks/reversals.
Use relatively tight stops and try to learn to be patient and give positions a chance to gain more than 2 points, even though you are trading a 5 min TF.
It's not that complicated, once you get used to paying attention to the above. I wouldn't just use reversal grails as an exit point.
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Helpful question Buy1sell2;
strong uptrend, even NasdaQQQ which tends to downtrend well in OCT.
Short positions may be helpful now, but smaller than longs personaly.
Quote from billp:
Buy1sell2,
Ok, I can generally agree with what you are saying about taking whole profits and not scaling out as I've given it thought and run through my past experiences and tested out different scenarios logically (although I initially did not agree).
However, there are 1 or 2 scenarios where I do not know how to play it (or I feel where it may be an inferior method) That's why I'm asking for advise on how to handle them. Hopefully I will be able to ask clearly. Its very clear in my head but putting it down on paper is another thing altogether
It has to do with your below quote on short trade:
"..... If I see an obvious bullish divergence on hourly charts, I may consider taking profits and reentering at a higher price, but it needs to be very very obvious"
The problem is at times one may not be able to get a better price. I will use an example of long stock here (ie bullish bias)
Scenario 1
I am long stock here (eg: swing trade for a few days) and I see that currently there may be a shorter term reversal point. I decided to take all my profits in the hopes of reentering again (full position as before) at a lower price as I'm still bullish.
[Eg: bullish that stocks will rise the next few days (my original stop loss is at $19.8), however in between the few days there may be some short term (eg: a few hours or 1 day etc) where price will drop a bit before continuing its ascend]
The complications arise when the below occur (ie the price where one reenters the buy stock is worse than where one took the profits):
A) Before I can buy at a lower price from the price that I sold (eg: $24), the price starts to take off. (That means the reversal was much shorter lived than expected). As a result, I will have to reenter again at a higher price(eg: $24.3) than what I exited (which means my profits would have been better if I did not try to exit at what I thought was the reversal point).
Qn: I suspect that the right thing to do is to enter the full position at $24.3 with my stop loss at the original point ie $19.8. That means that I may have 'unrealised loss' and realised profit (instead of all unrealised profit if I did not exit at all).
Also, I will get less profit (lesser by 30 cents) than if I have not exited and reentered the position. The reason for this is because I misread what the market was telling me
B) Same as above except that the market/stock shoots up.
Qn : Do I reenter full position (as my bullish bias has not changed) at this much lousier price (eg: $24.5) or wait for a retrace.
(Sometimes the retrace is at a lousier price eg: $25 than if I were to reenter when price shoots up ie $24.5)
My stop loss will still be the old (original) point of $19.8
These scenarios are what I have encountered where I will get a lousier result than if I were to take partial profits off. (Cases like spikes etc where taking full profits and reentering again makes sense as generally one will get a better price). As we cannot accurately predict all the time, the above 2 scenarios are very real. How would one go about handling it? Thanks.
The only solution I can think of is that if one is good in judging that its a short term reversal and have a good track record of reentering at a better price, then one should take the whole profits off and reentering the full position again (as bullish bias has not changed).
However, if one do not have that good a judgement or the scenario is not very clear, then scaling out or not trying to take advantage of the short term reversal (ie do not exit and reenter again) is the answer.
The bottom line is that the shorter term signal must be very obvious in order for you to buck the daily and weekly. All profits are taken off of the daily and weekly trade and you are then putting on a short term trade and the exit to get you back into you initial trade must be on that short term chart etc. You run the risk when trading around a position that you will lose money on the trade around. (That's what you are doing essentially is putting on a short term trade). The other option is to leave your initial position there and add positions for the short term trades. Always keeping within your risk parameters of 2 percent of total liquid net worth. By the way, you should always count unrealized profit when doing the 2 percent calculation. That's not house money, that's yours.
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