Filter_Sweep’s Hong Kong Journal

Quote from filter_sweep:

Osho67 requested some examples of my setups. See the attached jpg for a notated 5-minute chart showing the best MHI trade of the night and how I managed it. This is a very simple, bread-and-butter with-trend, double-bottom pullback after a breakout from the opening range that lasted way longer than expected (by me).

FYI, I use 1 and 3 minute charts during the first hour of the market, then step up to 3 and 5 minute charts as the volatility dies down.

Hope you find this helpful.
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Thanks for the setup. Plese post some educational setups when time permits. Thanks
 
I felt very tired coming into tonight's session and wasn't feeling very aggressive, which is a shame because there were so many good opportunities that I passed up on, I should have made a killing. Instead it ended up being just an average, mediorce night.

7 trades, 7 contracts: 4 winners, 3 breakeven, 0 losers.

+750 HKD
(+$96 USD)

So for the week I made +3125 HKD, which is slightly north of $400 USD. At this point I'm only 1500 HKD short of my goal, which I should hit next week if all continues to go well.
 

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Quote from filter_sweep:

Here's another setup example for osho67, this one is a counter-trend setup, a "close is close enough" example of a 3-push reversal.

The notated screenshot is a 3 minute chart of MHI's morning session.
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Thanks so much. I am keen to read about candlesticks as well. Can you please recommend any simple reading respurces on candlesticks. Thanks so much for a setup. Wish yoy good trading. You might laugh but at the moment I am using Renko charts.
 
Worked from home today and had a light enough schedule to put on some trades. Some really nice trend and counter-trend setups today in the US markets. Had a couple losers but mostly winners, happy with the result.

+$395 USD
 

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Quote from osho67:

Thanks so much. I am keen to read about candlesticks as well. Can you please recommend any simple reading respurces on candlesticks. Thanks so much for a setup. Wish yoy good trading. You might laugh but at the moment I am using Renko charts.
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I wouldn't recommend studying candlesticks, at least not the classic use of them, which is to look for certain candle patterns (e.g. morning star, dark cloud cover, etc.). I've done a lot backtesting with candlesticks and was never able to identify an edge with them. I just use candlesticks on my charts because I like the way they look, my eye has been trained to quickly understand what happened during the bar. I know others feel the same for bar charts. I think it's more important to understand how price movements represent the psychology of traders and learn to recognize spots on the chart where other traders will get caught with their pants down, and then have your orders ready to exploit them when it happens.

The purpose of every good setup is to take money away from your fellow traders, and since fear (and fear alone) moves markets (greed causes the absence of movement), you should study charts to find scenarios where fear will grip a large percentage of traders, or at least large enough percentage to move the market from your entry to your exits... kind of like in chess how you think about your opponents moves at least 2-3 moves in advance... if the bulls try to do xyz but they fail to do it, are they likely to bail at this level, that sort of thing. No candlestick pattern per se will give you that intel, just the study of price and a few thousand hours of experience.
 
Quote from filter_sweep:

I wouldn't recommend studying candlesticks, at least not the classic use of them, which is to look for certain candle patterns (e.g. morning star, dark cloud cover, etc.). I've done a lot backtesting with candlesticks and was never able to identify an edge with them. I just use candlesticks on my charts because I like the way they look, my eye has been trained to quickly understand what happened during the bar. I know others feel the same for bar charts. I think it's more important to understand how price movements represent the psychology of traders and learn to recognize spots on the chart where other traders will get caught with their pants down, and then have your orders ready to exploit them when it happens.

The purpose of every good setup is to take money away from your fellow traders, and since fear (and fear alone) moves markets (greed causes the absence of movement), you should study charts to find scenarios where fear will grip a large percentage of traders, or at least large enough percentage to move the market from your entry to your exits... kind of like in chess how you think about your opponents moves at least 2-3 moves in advance... if the bulls try to do xyz but they fail to do it, are they likely to bail at this level, that sort of thing. No candlestick pattern per se will give you that intel, just the study of price and a few thousand hours of experience.
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Your welcome for the book recomendation!
I still have my copy, dog-eared pages and high-lighter marks abound!

I'd argue with the "take money away from your fellow traders" bit.
So many huge companies/banks are using these indexes to hedge, we end up just being liquidity providers for those swinging a big line.
imho
 
Quote from filter_sweep:


I started noticing something strange though. I found that my buy-on-open orders would generally spend the whole day underwater on the day of entry, and this puzzled me. I pulled up intra-day charts on my stocks, and I noticed that the first trade of the day tended to be very high, a gap up from the previous day, and then the stock would come down quickly in a matter of minutes. That’s when it occurred to me that there were probably hundreds of people out there using the same software to pick the same thin stocks to buy and sell on the same days, and we were all entering and exiting on market-open orders, so the specialists were raping us. I was working from home one day, so I decided that instead of entering on a market-open order, I would wait for the stock to open, and then enter after price came down and settled.
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Is there any reason why you didn't start *shorting* the opening print on these stocks?
 
Quote from filter_sweep:

...The purpose of every good setup is to take money away from your fellow traders, and since fear (and fear alone) moves markets (greed causes the absence of movement), you should study charts to find scenarios where fear will grip a large percentage of traders, or at least large enough percentage to move the market from your entry to your exits... kind of like in chess how you think about your opponents moves at least 2-3 moves in advance... if the bulls try to do xyz but they fail to do it, are they likely to bail at this level, that sort of thing. No candlestick pattern per se will give you that intel, just the study of price and a few thousand hours of experience.
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I look at trading from a different perspective (the end result might be at the same place),

To me, the purpose of every good setup is to get you on the same side as the majority of your fellow traders.
(at least volume wise)
 
Quote from IanMacQuaide:

I'd argue with the "take money away from your fellow traders" bit.
So many huge companies/banks are using these indexes to hedge, we end up just being liquidity providers for those swinging a big line.
imho
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While I agree that we are bugs on the front bumper to the institutions who are using the index futs to hedge, are you saying the guys making the trades at the institutions aren't trying to get the absolute best price for their hedges, and therefore motivated by fear? I'd argue the opposite. If an institutional trader thought he could get his buy orders filled at the bid, he wouldn't buy at the ask and bid it up several ticks to fill his order. He does that because he's afraid he won't be able to get a better price, and if he doesn't buy the next few levels up, he might never get a chance to buy at these levels again. If he wasn't motivated by fear he would let the market come to him and he'd absorb selling orders at lower prices.

Obviously this is a gross generalization that doesn't apply in all cases, and may not fit with your market view, but it's a paradigm that helps me place a framework around my interpretation of price movements and trade selection. Whatever works, right?
 
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