Matcha's Dow E-mini Journal

[Matcha]

After looking at so many trading journals, I think it's time to start my own.

The objective is to speed up my learning curve. Taking my trade to another level. I would also like to network with experienced traders to get more insights. I hope I can help new traders to learn my mistakes as well.

My background, I have been seriously studying trading since Feburary. I spent 10-12 hours per day studying and looking at charts. I finally have 2 patterns I will be trading only. I will only focus on Emini Dow. I do have my trading plan, trading journal. I analyze my trade, set up and behavior every week. I only trade one to two contacts.

My goal: To be consistently profitable. I am currently sim trading. I will go live when I can be consistently profitable.

Any constructive comments are highly appreciated!

 

[Matcha]

+$306
Trade #1: Price hit the support level , all the indicators lined up, Hanging man formed, MA slope UP. Anticipating a trending up day. A good set up for long.

08:08: Long 10855
Exit 1: 10861, adjusted cost
Exit 2: 10859, took 4 points. Price failed to reach a new high at 10878(yesterday's close)
A scratch trade. +10pt

Trade #2: Bais on the long side.
10:50: Long 10846. stoped out. enter too early
$-16pt yes, the loss is a little too large...

Trade #3, reenter-10862. saw a mini double bottom formed on Small time frame. price penetrates the MA a few times. Usually a great entry.
Exit 1:10868
Exit 2; 10874 . this time I took profits on yesterday close. Looks like a range day not a trending day at this point on my chart.
+18pt

Trade #4: 12:09
Short 10820, great pull back trade. Price broke the S level. All indicators lined up. Price are printing 3 red candle gaping down. MA slope down drastically.
Exit 1: 10814-ajust cost
Exit 2: 10802. take the profit ealy at the S level, could have held it to continue ride the momentum, but I was really nervous at that moment.
+24pt

Trade 5: 12:32, Failed H-S Price touches MA and rejected, continue to come down.
Short 10777
Exit 1: 10772
Exit 2: 10752
+30pt

PS: I am in West Coast time. I use EMA, I am trying to trade on 1 chart, but I feel like I need a smaller time frame to see the details and I trigger on the smaller time frame. I use 900 Tick chart, 300 tick chart
33 EMA and 99 EMA.
I try not to use indicators, only focus on price. but at this point, I do need indicators to confrim trades.

 

[Matcha]

Today's chart is attached.

This is the best day ever since I sim trading. Maybe I am just purely lucky. Or I have done something right. Or I just turned down a job offer choose to fully committed to day trade for a while, gods are pitty me. Or Al Brook is helping me develop the common sense, although I still don't know what he is talking about.

Finishing up analzing my trade. Off I go to boarders having my soy latte and continue reading Al Brooks!

Might stop by Gucci window since I am doing good today

 

[Matcha]

chart 2

 

[Bolimomo]

Quote from Matcha:


Trade #3, reenter-10862. saw a mini double bottom formed on Small time frame. price penetrates the MA a few times. Usually a great entry.
Exit 1:10868
Exit 2; 10874 . this time I took profits on yesterday close. Looks like a range day not a trending day at this point on my chart.
+18pt
.....
I try not to use indicators, only focus on price. but at this point, I do need indicators to confrim trades.

Glad to see you posting Matcha.

Not sure what time your #3 was. It was a iffy trade on the long side. Started at 11:00 am (I am on the west coast too), I saw that market looked like it was beginning to sell off (after yesterday and Tuesday's run up). The earlier low was just a speed bump. If you read the retracement, it was quite shallow at 12:05 pm. (Use Fib to help if can't eye-ball it). I wouldn't bet on it being a double bottom. And it continued the sell off.

Tell you a little trick of mine. (Sorry I trade the ES - S&P and don't have the YM data. But they move in sync with each other).

If you draw a support line, around ES 1163. That was broken. From a top of 1169. So the drop was about 6 ES points. Do a mirror about this support line. Likely that's how far the market would likely drop. For ES it would be somewhere around 1157. It did bump up a little bit, and dropped to 1154 before bouncing to 1160.

 

[illinimatt81]

Quote from Bolimomo:

Glad to see you posting Matcha.

Not sure what time your #3 was. It was a iffy trade on the long side. Started at 11:00 am (I am on the west coast too), I saw that market looked like it was beginning to sell off (after yesterday and Tuesday's run up). The earlier low was just a speed bump. If you read the retracement, it was quite shallow at 12:05 pm. (Use Fib to help if can't eye-ball it). I wouldn't bet on it being a double bottom. And it continued the sell off.

Tell you a little trick of mine. (Sorry I trade the ES - S&P and don't have the YM data. But they move in sync with each other).

If you draw a support line, around ES 1163. That was broken. From a top of 1169. So the drop was about 6 ES points. Do a mirror about this support line. Likely that's how far the market would likely drop. For ES it would be somewhere around 1157. It did bump up a little bit, and dropped to 1154 before bouncing to 1160.

Take note ET, a priceless nugget. Most won't even know it when it is right here in front of them.

 

[Matcha]

Quote from Bolimomo:

Glad to see you posting Matcha.


Bolimomo:
I really appreciate you take the time review my trade and share your trick!

at 10:55 i thought it was a set up for a next leg up. MA is up. I guess I should have looked at a bigger picture. Price has been trading in a range since start and making lower highs.

I applied your "measured move" on Dow chart. It matches very closely! Cool bean!

Thank you again!

 

[Bolimomo]

Quote from Matcha:


I try not to use indicators, only focus on price. but at this point, I

do need indicators to confrim trades.

Personally, I don't think there is anything wrong with using indicators. I use all kinds of indicators. I just think one needs to know when to use the indicators and when to ignore them.

I think some of those who bash using indicators may not know how to use them correctly. Their big reason is "any indicator is lagging than price" (therefore indicators are useless). Well... lagging behind price they may be. But it does not necessarily mean they are useless. There are many different indicators for different purposes. I think what most people refer to, though wasn't said explicitly, are momentum oscillators. Momentum, CCI, Stochastics, RSI, MACD, William %R are all momentum oscillators. Make your pick.

Where did the usefulness come from? Momentum precedes price. That's where it gives you some leading indications. For a price trend to reverse course, the momentum has to slow down and dissipate first. So for beginners... the best use of momentum oscillators is for reversals and continuations. This evening let me just talk about the reversal.

Remember one term: MoDiv - Momentum Divergence. You see it everywhere, everyday. It is a good tool to do counter trend trades (though I don't advocate counter trend trades for beginners... beginners should stay with "buy the dips" and "sell the rally" kind of trend continuation plays).

Momentum Divergence means:

Uptrend: Price double top... making a higher high while the momentum oscillator makes a lower high.

Downtrend: Price double bottom... making a lower low while the momentum oscillator makes a higher low.

Use your ES/Dow trend run this afternoon for example. You can see 2 MoDiv conditions. Both triggered a bounce. Of course the second MoDiv was stronger because the market had already sold off quite a bit and was mature for a bounce. It would have been a good counter trend trade. ES protested for 5 points. So that must have been 50 Dow points.

The key question is: where do you enter the counter trend trade? Entering too early will get you killed because you are standing against the prevailing trend. Well... remember the little measured-move trick??? Also, look to the left for any support/resistance price levels to lean on.

Also, which each oscillator type the periodicity setting is very important. What value(s) to use is crucial. The default set may not necessarily work well. Different chart periodicities (e.g. 1min versus 5min versus 10min) need different settings. You may need to do trial and error to find out what works best for you.

I am a fan of RSI. I have a modified version of it which I called RSI3. It is a 3-period average of the RSI. (This is a trick that Learned from reading a magazine.) Looks like you use TradeStation too. If you want the Easy Language code, let me know and I will post it.

 

[Bolimomo]

Quote from Matcha:


.....
Finishing up analzing my trade. Off I go to boarders having my soy latte and continue reading Al Brooks!

Good luck finishing the book. I bought a copy. I so far couldn't pass page 15 or so. Sitting on my bookshelf now. Maybe one day.

For one thing... I really don't rely much on reading bar by bar. If you read the daily bars, that's okay. But I use 42-tick charts to trade! When FAS runs heavy, zoom... I got 10 x 42-tick bars zoom by me... LOL

Also hard to get over is the failure of the failure of a failure means it's okay after all. LOL

 

[Matcha]

Quote from Bolimomo:

Personally, I don't think there is anything wrong with using indicators. I use all kinds of indicators. I just think one needs to know when to use the indicators and when to ignore them.

I think some of those who bash using indicators may not know how to use them correctly. Their big reason is "any indicator is lagging than price" (therefore indicators are useless). Well... lagging behind price they may be. But it does not necessarily mean they are useless. There are many different indicators for different purposes. I think what most people refer to, though wasn't said explicitly, are momentum oscillators. Momentum, CCI, Stochastics, RSI, MACD, William %R are all momentum oscillators. Make your pick.

Where did the usefulness come from? Momentum precedes price. That's where it gives you some leading indications. For a price trend to reverse course, the momentum has to slow down and dissipate first. So for beginners... the best use of momentum oscillators is for reversals and continuations. This evening let me just talk about the reversal.

Remember one term: MoDiv - Momentum Divergence. You see it everywhere, everyday. It is a good tool to do counter trend trades (though I don't advocate counter trend trades for beginners... beginners should stay with "buy the dips" and "sell the rally" kind of trend continuation plays).

Momentum Divergence means:

Uptrend: Price double top... making a higher high while the momentum oscillator makes a lower high.

Downtrend: Price double bottom... making a lower low while the momentum oscillator makes a higher low.

Use your ES/Dow trend run this afternoon for example. You can see 2 MoDiv conditions. Both triggered a bounce. Of course the second MoDiv was stronger because the market had already sold off quite a bit and was mature for a bounce. It would have been a good counter trend trade. ES protested for 5 points. So that must have been 50 Dow points.

The key question is: where do you enter the counter trend trade? Entering too early will get you killed because you are standing against the prevailing trend. Well... remember the little measured-move trick??? Also, look to the left for any support/resistance price levels to lean on.

Also, which each oscillator type the periodicity setting is very important. What value(s) to use is crucial. The default set may not necessarily work well. Different chart periodicities (e.g. 1min versus 5min versus 10min) need different settings. You may need to do trial and error to find out what works best for you.

I am a fan of RSI. I have a modified version of it which I called RSI3. It is a 3-period average of the RSI. (This is a trick that Learned from reading a magazine.) Looks like you use TradeStation too. If you want the Easy Language code, let me know and I will post it.

I now have MACD and RSI on my chart. RSI give me signal on cycle high/low and DIV. MACD give me the momentun on price. I did spend lots of time exploring the power of Divergence. Theoretically, it makes so much sense to me. But when I put on the conter-trend, I got killed most if the time. I think that's why reversal trade is high profitable lower probablity trade? Because my winning rate is so minor on reversal trades. So I currently abandoned the D/T and D/B patterns at this stage. I only trade pullbacks.

I believe there is something missing on my reversal trade set up. I am doing the excise that pulling 60 trades of D/B, D/T and analyze them again and again...