Making of a method
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Review:
After selling down from OH, S was found at the same level as the Open from Friday, i.e. 3204.
I scaled in more after buying the Rev. The ret was given room and price surged to 3214, which had been the PM High. After a loss of pace at this level, price fell sharp back towards the 50% level. I made the decision to sell. OTOH, the sell down of the last rally from PM pointed towards weakness, OTOH price was still right at the 50% mark and there were a couple of SL test levels right below. If there is a natural test level right below the 50% mark, it makes sense to give price room till there instead of mechanically exiting at the 50% level.
Price surged off the 50% mark to create a new high. Entered long on the ret. But then sold at the slightest hesitation. Why? The natural entry test level here was the ret trough at 3214. Price never threatened this level. This was the biggest error of the day.
Comparing 0842 with 0923:
The 0842 long was given the briefest amount of space, when there was more likelihood of an explosive move, given that Price had just crossed the PM High and that it was still quite early in the session. Got out for a loss of 2 ticks.
In comparison, gave the 0923 long much more room(7 ticks), when given the extension of the swing since open and the presence of a major R level, a tighter exit was called for.
Trades should be given room based on entry level and the context - is it still early in the session? is this a late continuation entry in an extended swing?
Exit at 0908: Why? Price barely dipped below previous High. The long was in anticipation of trend continuation - so let it continue.
There was no significant hesitation or over-trading today. Did execute on scaling in.
The most important area to focus on is trade management. Specifically:
Determining the appropriate risk level for entry based on both the entry test level as well as overall context regd time of day, swing extension, etc.
http://www.sierrachart.com/image.php?l=1381164128239.png
After selling down from OH, S was found at the same level as the Open from Friday, i.e. 3204.
I scaled in more after buying the Rev. The ret was given room and price surged to 3214, which had been the PM High. After a loss of pace at this level, price fell sharp back towards the 50% level. I made the decision to sell. OTOH, the sell down of the last rally from PM pointed towards weakness, OTOH price was still right at the 50% mark and there were a couple of SL test levels right below. If there is a natural test level right below the 50% mark, it makes sense to give price room till there instead of mechanically exiting at the 50% level.
Price surged off the 50% mark to create a new high. Entered long on the ret. But then sold at the slightest hesitation. Why? The natural entry test level here was the ret trough at 3214. Price never threatened this level. This was the biggest error of the day.
Comparing 0842 with 0923:
The 0842 long was given the briefest amount of space, when there was more likelihood of an explosive move, given that Price had just crossed the PM High and that it was still quite early in the session. Got out for a loss of 2 ticks.
In comparison, gave the 0923 long much more room(7 ticks), when given the extension of the swing since open and the presence of a major R level, a tighter exit was called for.
Trades should be given room based on entry level and the context - is it still early in the session? is this a late continuation entry in an extended swing?
Exit at 0908: Why? Price barely dipped below previous High. The long was in anticipation of trend continuation - so let it continue.
There was no significant hesitation or over-trading today. Did execute on scaling in.
The most important area to focus on is trade management. Specifically:
Determining the appropriate risk level for entry based on both the entry test level as well as overall context regd time of day, swing extension, etc.
http://www.sierrachart.com/image.php?l=1381164128239.png
Performance has improved since last week's focus on going with the LOLR instead of over-thinking the effects of anticipated S/R levels. Hesitation on entries has dropped quite a bit, although impulsive exits continue to take place.
While S/R levels are still being reviewed during preparation, they play a more passive role now, being considered only during the action at the Open and when price shows good evidence of S/R at their level. Starting to see how the supply/demand balance is the key to all this.
Plan for the next 3 weeks in preparation to go live in Nov:
1. Execute the plan without any hesitation and seek to become error free with the basics.
2. Get clarity on what the entry level is and the amount of risk it represents before entering the trade.
3. Practice making exit decisions based on supply/demand instead of profit/loss.
4. Keep researching the foiled thrust entry
While S/R levels are still being reviewed during preparation, they play a more passive role now, being considered only during the action at the Open and when price shows good evidence of S/R at their level. Starting to see how the supply/demand balance is the key to all this.
Plan for the next 3 weeks in preparation to go live in Nov:
1. Execute the plan without any hesitation and seek to become error free with the basics.
2. Get clarity on what the entry level is and the amount of risk it represents before entering the trade.
3. Practice making exit decisions based on supply/demand instead of profit/loss.
4. Keep researching the foiled thrust entry
FT Day 33 Oct 8
R: 3214
S: 3204
Context: PM action tested S multiple times at 3204. Since then it has created a HH at 3214. LOLR is up.The Daily Range has been compressing over the last 4 sessions. While price is still within the Range, the compression forming at the lower half of the Range may just burst down through S.
http://www.sierrachart.com/image.php?l=1381236443717.png
R: 3214
S: 3204
Context: PM action tested S multiple times at 3204. Since then it has created a HH at 3214. LOLR is up.The Daily Range has been compressing over the last 4 sessions. While price is still within the Range, the compression forming at the lower half of the Range may just burst down through S.
http://www.sierrachart.com/image.php?l=1381236443717.png
Review:
An incredible day in terms of the breadth of action. Everything from range to hinge to chop to runaway trend, all in one fascinating session. I experienced a lot of flow today. It is the performance aspect of day trading that has me - that balance of speed and perspective, decisiveness and patience. As today's performance shows, I am still a ways from that ideal, although each day brings me closer to it.
Two occasions where short positions rapidly reversed after being in the money by 10 points, primed me to exit the trend run early. From prep work, I was aware of the potential for a violent break to the downside. The repeated support by longs was ending in lower highs. Just as I was getting tired of Reversals, so were they. When the break came, the likelihood of capitulation was high. Non primed thinking would have led me to see this.
Much better performance on entry level identification and management. Hesitation and over-trading were minimal.
A lot more to review from today's session. This is it for now.
http://www.sierrachart.com/image.php?l=138124967724.png
An incredible day in terms of the breadth of action. Everything from range to hinge to chop to runaway trend, all in one fascinating session. I experienced a lot of flow today. It is the performance aspect of day trading that has me - that balance of speed and perspective, decisiveness and patience. As today's performance shows, I am still a ways from that ideal, although each day brings me closer to it.
Two occasions where short positions rapidly reversed after being in the money by 10 points, primed me to exit the trend run early. From prep work, I was aware of the potential for a violent break to the downside. The repeated support by longs was ending in lower highs. Just as I was getting tired of Reversals, so were they. When the break came, the likelihood of capitulation was high. Non primed thinking would have led me to see this.
Much better performance on entry level identification and management. Hesitation and over-trading were minimal.
A lot more to review from today's session. This is it for now.
http://www.sierrachart.com/image.php?l=138124967724.png
FT Day 34 Oct 9
R: 3164
S: 3154
S: 3144
Context: Yesterday's selling found S at the level from where price had previously broken out on Sept 9th. The high made during ON represents only about 28% of the sell off.
http://www.sierrachart.com/image.php?l=1381323441154.png
R: 3164
S: 3154
S: 3144
Context: Yesterday's selling found S at the level from where price had previously broken out on Sept 9th. The high made during ON represents only about 28% of the sell off.
http://www.sierrachart.com/image.php?l=1381323441154.png
Review:
Trade Management continues to be the major issue. Drawing a supply line after the first SH would have kept me in for the majority of the downswing. I need to get things back to simple and draw up some basic guidelines for exits. I can reduce fear during exits just as I have with entries - by going back to the underlying principles.
Hesitation: The best way to scale in to the trend would have been the potential short at 0902. I hesitated because there was a sense that the past 4 trades had been either losses or scratches and I erred on the side of not taking the trade. But taking a short off the countertrend wave is always a much better bet than taking continuations in an extended swing.
Overtrading: The long at 0854 was premature. Long at 0914 was based on the new entry method based on foiled thrusts, but it was late. These two errors reduced confidence and led to hesitation on the potential short at 0902. Overtrading not only adds to losses from errors but there is also a big opportunity cost as it adds to future hesitation.
The state of mind produced by one error cascades into other areas, resulting in more errors. Poor trade management led to overtrading, which then led to hesitation on future opportunities.
http://www.sierrachart.com/image.php?l=1381330973956.png
Trade Management continues to be the major issue. Drawing a supply line after the first SH would have kept me in for the majority of the downswing. I need to get things back to simple and draw up some basic guidelines for exits. I can reduce fear during exits just as I have with entries - by going back to the underlying principles.
Hesitation: The best way to scale in to the trend would have been the potential short at 0902. I hesitated because there was a sense that the past 4 trades had been either losses or scratches and I erred on the side of not taking the trade. But taking a short off the countertrend wave is always a much better bet than taking continuations in an extended swing.
Overtrading: The long at 0854 was premature. Long at 0914 was based on the new entry method based on foiled thrusts, but it was late. These two errors reduced confidence and led to hesitation on the potential short at 0902. Overtrading not only adds to losses from errors but there is also a big opportunity cost as it adds to future hesitation.
The state of mind produced by one error cascades into other areas, resulting in more errors. Poor trade management led to overtrading, which then led to hesitation on future opportunities.
http://www.sierrachart.com/image.php?l=1381330973956.png
FWIW, all but two of you are overtrading, most likely because you're not following the approach I detailed at the beginning of the SLA thread. Not that you're required to follow it, but you're far more likely to overtrade if you don't. Yesterday, for example, there were at most four trades -- three shorts and one long -- that would have taken you all the way to 60, This morning there was only one, at 0933, assuming that one wanted to wait for the open, that would have taken you all the way to 35.