Making of a method

FT Day 3 Aug 26th

R: 3144 (highs from 13th and 14th)
R: 3133 ( High from ON)
R: 3128 (SH from ON)

S: 3122 (mp of congestion from PM)
S: 3120 (Thrice retested ON)
S: 3113 (multiple SL/congestion from 23rd)
S: 3097

Review:

The first long was not off established S. The error here was by entering a) too far from ant S level b) without either a significant Rev wave to establish S or a significant retest of S.

The first two short attempts were legitimate against an important R level of 39 on LOLR turning down. However, once the two attempts were stopped by buyers, there was no reason to anticipate a downwave without the LOLR being clearly down. Thinking short blinded me to what was happening, which was the establishment of S at 34.75. The LOLR was flat and there were opps to go long in anticipation of a break of R once the LOLR turned up.

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FT Day 4 Aug 27

Most likely scenario: Sharp selling during PM was climactic. PM action showing base forming with retested S and HL's. Buyers coming in at these prices. Rally building to the mp zone of 3104. P = 50%

Less likely scenario: Price will be range bound between 3076 and 3094. P = 30%

Least likely Scenario: Selling will continue until price reaches key S level of 3060 established on 21st. P = 20%

R: 3104 (ON breakdown level & mp zone of ON downwave from 3124)
R: 3097 (prior established R zone)
R: 3094 (PM Breakdown level)

S: 3084/3082 (retested PM S and SL zone from 22nd)
S: 3076 (mp zone of weekly congestion and SL from 22nd)
S: 3060 (multiple day S level and congestion from 21st)

Review:

Trade 1 Long: The bias from prep was long and jumped in once I saw the S come in at 84. Exited some on loss of pace at ant R level of 94.
Price fell quickly to mp zone and there was an opp to add in here.

Trade 2 Short: This was off an important R level. Went for it without the retest. No obvious mistake here.

Trade 3 Short: Upwave was turning against past and current validated R zone of 3100.

Trade 4 Long: Mistake. No reason to switch so fast. There was no clear S zone behind the trade. High price risk and high info risk given the extended wave and recent R overhead.

Trade 5 Short: OK quality trade. No obvious mistakes.

Trade 6 Long: Mistake. Action had been flat. We are at the mp zone and action is flat.

Poor performance due to overtrading. Need to slow down and remind self to take only high quality trades. Wait for CLEAR signals that establish S/R. Avoid the trades in the middle that have both high price and info risk.

The positive from today was acting without hesitation during the open, once price confirmed the bias from prep.

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The back and forward testing has give me confidence that the method of trading off S/R and along the LOLR is the right path.

My lack of clear entry conditions and tactics has led to over trading, hesitation and anxiety. My solution to overcome this is by taking my subjective judgments and quantifying them. The goal of this process will be to:

a) Maintain a clear basic reference point despite the clouding effect of PA on judgment
b) Revise the reference point in a deliberate way as PA unfolds by assigning weights to basic elements of PA. Keep busy by assessing PA instead of keeping busy by over trading.
c) Work towards making my judgment standards consistent, despite their being subjective. Achieve consistent subjectivity.

Approximating quality and quantifying it.

1) During prep, give points to S/R levels based on how important they have been in the past.

2) Observe PA at this level. The quality of PA here will either increase or decrease the score assigned to S/R.

3) Quality of PA will be divided into the quality of waves leading up to the S/R zone and the quality of immediate action at the S/R zone.

4) Once LOLR is defined, assign it an approximate score.

5) Take a position once the combination of S/R and LOLR is greater than min point requirement.

6) Trade has been entered

7) If initial entry score was high, then give trade more room. If initial entry score was just above min requirement, then keep it tight.

8) Revise total score based on unfolding PA and exit once quality degrades.

9) If trade works, use current exit guidelines.
 
put up 2 doms,they will represent your two sides,new game dom only take the best setups ,sit on hands majority of times,other dom wil be traded by old game,keep a daily tab defining the days,range ,breakout trend, and notice which does better,this will be seen by you and the other you only,will help you eliminate personal side when trading and be more like a machine, once used this prospect to motivate another carpenter who was good but hadnt broken thru yet, i would walk around and show him his work, saying this was done by tommy the boy and this by tommy the man,he thru away the boy within a week..strive to become better at what you do day by day, hour by hour and only put your best effort forward
 
FT Day 5 Aug 28

Sharp sell of from yesterday represents oversold condition. There has not been a significant rally yet, except for the SH's from ON. The S and SH's define this range.

R: 3090 (congestion from 27th)
R: 3082 (mp of weekly congestion)
R: 3070 (retested R from ON)
R: 3065 (LH from PM)

S: 3057 (thrice tested from ON and PM)
S: 3052 ( Low from 27th)
S: 3027 (SL from July 23)


Review:

3 trades taken just outside S/R as BO trades. These are high info risk trades and I need to be quick with closing them if the BO retraces back inside the value area. There is no reason to give them room.

The action at the open was too fast to get in. But the S level was anticipated to be strong due to the multiple retests. A Reversal Buy stop could have been set in anticipation of the bounce.

In addition to the missed long at the open, the best opp was the missed long during 0911. Being in the short at the time took away from acting fast and going SAR long.

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FT Day 6 Aug 29

The multiple rejection at 84 signaling that upside exploration is over. Bias is for price to breakdown toward S at 3056 and then eventually to 3024.

R: 3084 (major R level. DT from PM and multiple tested yesterday). Score 6
R: 3076 (recent SH from PM) Score 3

S: 3068 (recent low from PM) Score 5
S: 3064 (SL from ON) Score 3
S: 3056 (multiple S over last week) Score 6

Review:

Saw price bounce from the S level at 68 but hesitated to place a buy stop because of the 4 pt risk. There was a tiny ret but I missed it and price shot up. Once I missed the long, I did not think about entering on any ret's because of the importance placed on the R level of 84.

There was a good opp to enter on the 5s during 0830/40 as the rev wave retraced. During prep I had evaluated the 68 level to be important S, assigning it a score of 5.

Since price fell to this level at the open, I should have been watching the 5s for a ret of Rev wave to enter. Watching the 1 min and expecting a ret on this bar interval led to missing the long position for the ride up.

The negatives today were:

Hesitating on the long at the open once price bounced off S.
Last short was an error

The positives for today were:
Recognizing 68 as an important level during prep
Keeping losses to a min despite being counter-trend

For future:
Strong S/R levels at the open demand decisive action. Focus on the 5s during this period to take advantage of faster retracements.


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Key errors from the 6 days of Forward Testing.

1) No Continuation plan: Once initial entry close to S/R is missed, I hesitate to get in at a higher price risk level. I perceive the continuation entry as being 'in the middle of nowhere' since it's not close to any established S/R zone. Thinking about taking trades only at boundary zones has led to missing out on some very good runs. It also creates cloudy judgement, since I am giving myself only 1 shot at major swings. The only time I feel comfortable with entering new or adding to a position is when the main wave retraces to the mp zone.

Solution: If the S/R zone is of high quality, then I should not just stand and watch if the best entry was missed. On continuations, since the price risk is higher, I can always give these trades less room if price moves adversely.

2) Expecting a wave to turn down just because it has run up enough: I have this problem primarily with buying waves. I am expecting mean reversion to kick in and traders to take their profits from the swing. This takes me away from watching PA in an objective manner. This may also be happening because I am viewing the up movement of price as a physical movement against gravity.

This leads to overtrading on the short side. Once a wave starts consolidating, I am much more inclined to expect it to fall than to resume the trend upwards. I use the anticipated R level to justify the shorts. But if the R level has not manifested in a strong Rev wave, then the consolidation at that level can point to strength just as much to weakness.

Solution: Refocus on viewing price movement as traders buying and selling contracts. If there is congestion at the top of a wave, then someone is buying at that level.

3) Not having a clear expectation of what price should do once entry is made: Just because my entry is off S/R does not mean I can just sit back and hope for other traders to come in and help me out. If price bounces off a SL level, it is telling me something. I should at the least get out and become neutral so that I may have an opp to switch and go in the opposite direction should PA justify it.

On Breakouts, if price shows indications of coming back to the value zone, get out. If the price does eventually break out, there is always a ret ahead.

Solution: Don't view multiple entries at an important level as overtrading. It is better to try multiple times at an important level than to develop the habit of giving a trade room no matter what. This type of thinking will not only lead to greater losses on the trade, but will also prevent me from seeing that the prior S/R level is not going to hold and that a SAR may be coming up. Do whatever is necessary to stay objective and unbiased.

4) Being indecisive when major S/R zone is tested soon after the open.

Solution: Plan ahead and set stops should price bounce off the S/R level. There will be more risk here. Accept that.

5) Overtrading (often in the reverse direction) once a successful trade is exited. The movement of the successful trade colors by expectations of future movement.

Solution: After exiting a successful trade, I need to bring the mind back to center by quickly going through the main elements of the method.
 
There is a tendency to hover when somebody is trying to work their way through a problem. You'll find this on all those threads where somebody is having difficulties and the advice comes fast and furious. But at some point the individual just has to work through the process, which is what you've been doing, and doing it well, which is why I've stayed out of it. The quality of the suppositions you're making are the result of this.

So I hope you are pleased with where you are even if you're not entirely satisfied. You're learning to see, and that will open doors.
 
FT Day 7 Aug 30

R: 3109 (high from 29th) - 5
R: 3100/3103 (mp of range from the Daily and Multiple SH) - 4

S: 3089 (thrice tested SL from 29th and slight HL from PM) Is also mp of yesterday's upwave from 3067 to 3109. - 6
S: 3084 (previous R now S) - 4
S: 3067 (yesterday's low and prior established S) - 5

Review:

1: Error. No Reason to take this. Price had not tested planned S level of 88.
2: Error. The downtrend since the open did not justify getting in this early off S. The right approach would have been to let S establish itself given that price was down since the open. PA did not justify the aggressiveness.
3: OK.Trend since open is down and 88 does not hold. The reaction is not high and the sell stop is hit in anticipation of testing next level of 84.
4: Error. No reason to take this right above anticipated S level of 84. This should have been a preparation to go long instead.
5: OK. Price breaks S level of 84 and the reaction is not very strong.
6: OK. S is formed at 76 and long is entered on the ret of the Rev wave.
7: Error: High Price risk. Did not wait for ret.
8:OK. SAR short off mp zone in anticipation of downtrend continuation
9: OK. Odds favor down because of trend since open and the recent rejection of rally attempts. Trade in anticipation of testing S at 76.
10: OK. Price breaks S and the ret never goes back to value zone.


Negatives:

4 Trades that should not have been taken, of which 2 were blatantly wrong.

Positives:

Focused on having clear expectations of what price should do after entry and exited when it did not happen.
Regained perspective despite the poor performance earlier in the day

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Quote from dbphoenix:

There is a tendency to hover when somebody is trying to work their way through a problem. You'll find this on all those threads where somebody is having difficulties and the advice comes fast and furious. But at some point the individual just has to work through the process, which is what you've been doing, and doing it well, which is why I've stayed out of it. The quality of the suppositions you're making are the result of this.

So I hope you are pleased with where you are even if you're not entirely satisfied. You're learning to see, and that will open doors.
More...

It's been very encouraging to see the theory work in practice even though I am far away from good execution.

I was reading an academic journal article where it was shown that 99% of daytraders lose over the long run. So if 1% are consistently profitable, it is likely that only about 0.1% are consistent with size.

I am grateful for your guidance in the face of such odds. I bet it can be done.
 
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