Matcha's Dow E-mini Journal

[Matcha]

Quote from Went Fishing:

Matcha

.....

Boli is teaching you pure gold, give yourself time to process the information. YOUR THREAD IS ONLY 2 MONTHS OLD !!! that's what? 40 trading days!!!!!!!!!!!!
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Quote from Bolimomo:

ES typically "runs" in a 5 point increment. i.e. when it runs, it quickly runs for 5 points. I would imagine the Dow would be about 40-45 points at a time.
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I trade the EUR/USD and I've learned a bit about volatility and runaway trends over the years. I invite you to watch these moves closely. The way orders are processed these days through our brokers and at the CME along with algos and HFT discerning stop running from the beginning of a trend can be tricky. Every market is different, yet the same. As prices trend up they may run up 10pt back off 7pt run up 10(new high) back off 7 up 10 back 7 and so on. This is why waiting for that pull back to enter leaves traders standing on the dock as prices sail away over the horizon. Experience will show you, you must learn to embrace uncertainty to win in this business. In the price action above there is a pattern (easy to see on a chart after the fact when we ask ourselves, Why didn't I ????) look for this pattern in your market, you may be surprised at the consistency of these movements. A 2 or 4 lot trader hooks into a trend and "hangs on" a 2 or 4 hundred lot trader may buy and sell the fives and tens all the way up the trend, get the picture? I'm just asking you to give it a looksie as you're watching everything else. As you get to know your market you'll begin to see what's "out of line" and who's doing what.

I'm not suggesting you buy and sell up the trend. But maybe someday Boli will lend you his Super Duper Flash Gordon Raygun looking Laser Order Puter Inner http://www.elitetrader.com/vb/attachment.php?postid=2899577 and you will. I don't know if Boli has the glasses for that gun or not, but I might start with those.http://www.youtube.com/watch?v=AMEc_MiLmgw&feature=related He must use some kind of 3D lens to look at those charts, they're out of this world!!!!

<*)))><

LOL.

I will not rush. I just don't like to rush into something I am not good at it. Money is very difficult to make nowadays. I respect my tiny capital I put into trading. So far I enjoy trading YM. I think YM is the right product for me to trade. Boli is so generous. I can't thank him enough.

I am working my way to master YM. I wish YM could be my "edge" eventually. How long does it take you to know "who is doing what' in Forex market?

 

[Bolimomo]

Quote from Matcha:


BTW, what about the JH ? Is he the one who was kept being mentioned in multiple threads? He doesn't seem like having a strong fan base...

"Not having a strong fan base" may not be an accurate description. I think his writings draw some bipolar reactions. You may love him to death, or hate him to death.

Someone posted one of his papers:

http://www.elitetrader.com/vb/showthread.php?s=&threadid=203194

I can only say that it's "too deep" for me.

 

[NoDoji]

Quote from Matcha:

I am working my way to master YM. I wish YM could be my "edge" eventually.

After looking at YM charts today, I think it's a very clean instrument to trade! You will do well

 

[PatientOperator]

Quote from Matcha:

No position today.

...

I will try to be as detailed as possible to write down my thought process and trade from today,

....


Thank you everyone for your great advice! I now have RSI(Boli’s), EMA 20 and 100. Daily Pivots on my charts. That will be all for now.

...

Hi Matcha,

It's great that you detailed your thought process to decide whether to trade or not to trade.

As for the talk about indicators, I think you did the right thing to narrow it down and keep things SIMPLE. When I first started, I have too many indicators on my charts. They kept me too busy to concentrate and slowed down my thought process to come up with a decision quickly.

I have since pared down to use one momentum indicator (many to choose from but I just stick with one - the stochastics) and one trend following indicators (again, many to choose from and I just pick one - the MAs). This will cover both type of market scenarios:
- trading range market and
- trending market.

Lately, I also added on my charts the PP.

I think it is more important what you look at first when you decide on your trade. Do you look at the price action first and then take a peep at the indicators to confirm your decision or do you fix your eyes on the indicators to look for the next trading signal?

I used to spend 80% of my time fixated on the indicators first and 20% of my time on Price Action. I am slowly changing my primary focus spending more time on PA first and less time on indicators during the time of the battle. It is a difficult habit to correct but I think in the long run, it will help me to make better and quicker decisions.

BTW, I only made ONE trade today. I think we did good on the discipline exercise.

Have a great Tuesday!

--po

 

[Matcha]

End the day early today. I approached my daily maximum trades. Today’s over all move is trading in a tight, very tight range….

Today’s market prep: Market overnight was bullish. Market made it’s mega extended move overnight. Market now is near 10540 (Resistant level, 6/21 high). I would be cautious to go long at the open. I “anticipated” today could have some similarity as 6/21. Open gaped up, then sell off most of the day. Or today could be a range bound day.

Looking at the $TRIN at the opening, trading above 0.8. Still bullish. So I decided to continue play long side when price pullback.

Consumer confidence report was negative (index slipped to 50.4 in July from Revised 54.3 in June). Market continued to sell off at the opening

TRADE A: long, consumer report released, looks like market has been calmed down. On 1 min chart price finished 3 wave move and formed a Double Bottom, Trend is still bullish. Price hit yesterday’s high, formed a full body small low tail bar, signal trend could reverse here. But the move didn’t go very far, it touched the R1 level then continued to head down. So I stopped out. It could be a good trade if I flipped to short side. Because the R1 level 10501 is 50% retracement of the previous swing low.

Circle 1: Could be a great entry to long. Market finised it’s ABC retracement and touched 100EMA, then quickly formed a long body reversal bar. I didn’t take the trade because I was “expecting” a second chance entry—a double bottom on 1 min chart. D/B didn’t happen ,price immediately rally which makes it’s hard to find a reasonable price to get in. However, I entered @ TRADE B.

TRADE B: Market formed 2 pause bars-2 small doji bars at the YTD high level. Righ after it developed a green decent body bar, I went in. Then I moved my stop quickly, unfortunately, I was stopped out with another scratched trade. I didn’t got back in becase it was already 9:00 PST.

Back to market at 11:00PST, saw price is making a higher high and wants to break R1 level. So I entered long, I entered 4 times, stopped out 4 times with losses.

After failed long trades. I looked at $TRIN, 0.95, TRIN has been making some small higher high. 20EMA stays fairly flat. Then I realized that I might need to play range days not to expect break out trade. The 2nd time failed to break R1 level (11:30PST)could be a great place to take a short trade. But of course I didn’t entered at the very top, I entered at small retrace.

TRADE C: Entered at the Hammer bar (11:40 bar). The trade worked, but I set my target aggressively to Today’s low. It didn’t happen. Just because a D/T is confirmed and direction of the trade worked doesn’t mean it’s heading to south… the downside energy wasn’t there yet…. It ended up being another scratched trade.
Then I went back in to continue short, market rallied back hit the stop again…

Today’s PnL: -$104. 8 Trades, 38% winrate

 

[Matcha]

1 min charts

 

[Matcha]

Quote from PatientOperator:

Hi Matcha,

It's great that you detailed your thought process to decide whether to trade or not to trade.

As for the talk about indicators, I think you did the right thing to narrow it down and keep things SIMPLE. When I first started, I have too many indicators on my charts. They kept me too busy to concentrate and slowed down my thought process to come up with a decision quickly.

I have since pared down to use one momentum indicator (many to choose from but I just stick with one - the stochastics) and one trend following indicators (again, many to choose from and I just pick one - the MAs). This will cover both type of market scenarios:
- trading range market and
- trending market.

Lately, I also added on my charts the PP.

I think it is more important what you look at first when you decide on your trade. Do you look at the price action first and then take a peep at the indicators to confirm your decision or do you fix your eyes on the indicators to look for the next trading signal?

I used to spend 80% of my time fixated on the indicators first and 20% of my time on Price Action. I am slowly changing my primary focus spending more time on PA first and less time on indicators during the time of the battle. It is a difficult habit to correct but I think in the long run, it will help me to make better and quicker decisions.

BTW, I only made ONE trade today. I think we did good on the discipline exercise.

Have a great Tuesday!

--po

The way I use indicators now...
Price action comes first.... I look at the price action first, bars, patterns, S/R levels, then I would check indicators to filter whether it's a high-prob trade.

I also got to look at the indictors for early warning signals to show the strength of the trend.

Stochastics, RSI, MACD are showing the momentum trend and strength, not the trend of the price. I got to keep remind myself not to get confused and too attached to it when trend is strong.

 

[PatientOperator]

Quote from Matcha:

The way I use indicators now...
Price action comes first.... I look at the price action first, bars, patterns, S/R levels, then I would check indicators to filter whether it's a high-prob trade.

I also got to look at the indictors for early warning signals to show the strength of the trend.

Stochastics, RSI, MACD are showing the momentum trend and strength, not the trend of the price. I got to keep remind myself not to get confused and too attached to it when trend is strong.

Hi Matcha,

I did not do very well today either, both my PnL and winrate were lower than yours. I started out having a winning trade and then towards the end of the session, I got trapped into the tight range bound market and got stopped out many times. I got to be more careful in this type of market cause I never do very well in a small trading range.

You are correct that we need to know when the market is trending we should ditch the momentum indicators and follow the trend following indicators. Using Boli's $TRIN rules, for the most part of today, we could have done well just by using the 2-min stochastics or RSI to go both long and short accordingly.

I guess I need more practice to know how to react to what type of markets and what kind of indicators to focus on.

Thanks for sharing the way you track the market. I will try to spend more time on PA, patterns and S/R and use indicators as filters.

I like the way you prep the market before it opens. You did a good job in analyzing the details. I don't normally allow time in the morning to prep. I would rather stay up late to look at the Asian and European markets and then catch up with a quick summary briefing from CNBC or Bloomberg in the mroning and then get down to "business". I seldom trade the 1st half hour of the market. Guess I need to take advantage of the wider movement during the early morning session.

After a consolidation day, may be tomorrow will be different!

Best of trading!

--po

 

[Bolimomo]

Quote from PatientOperator:


.....
You are correct that we need to know when the market is trending we should ditch the momentum indicators and follow the trend following indicators.
.....
I guess I need more practice to know how to react to what type of markets and what kind of indicators to focus on.

PO:

There is no need to ditch the momentum indicators. They work for both trending and chopping markets. You just need to interpret the "overbought" and "oversold" areas differently. For a trending market (e.g. up), the mid-band (e.g. RSI 45 - 55) is the place to get long. RSI is not likely to go <80 in an uptrend (until it is overly extended). In a chopping market, then overbought band is where to sell and oversold is where to buy.


Matcha and PO:

Looks like you both were chopped up today.

Bare in mind that there is a seasonal factor may be in play: From mid July - end of August... you know what happens... Traders/investors/hedgefund-managers with kids are likely to take vacations. Sometimes you see that the market is in a tight range and chops around... Unless there is some external stimulus...

The morning: some kind of report... something (unemployment?)... caused the market to drop from 0630 to 0715. Then a 2-stage run (down) to about 0820. The whole range was only about 90 Dow points. 2 legs, 3 waves each. Then the market bounced up. Likely you will see an inside day. Not quite a day, may be an inside hour. Meaning that... like a spring... once it bounces back from the maximum extension (from the impulse event), it gyrates up and down - to a lesser degress each time... until another stimulus event comes in to cause it to move. In classical TA terms, this is a "wedge", "triangle", etc.. Matcha you tried to have a few trades while prices are still in that settling mode (false breaks). The max range was only 80 Dow points... it will take 10-20 points for you to notice something, by the time you get in, and have a tight stop (let's say 10 points)... these things are going to chop you to death.

You know... because the morning was in a bearish tone (from whatever report it was)... and that recently the market had moved up quite a bit (S&P 1010 to 1110 or so), breaking to the upside was very unlikely. So I think you shouldn't be trying to long on the "break" (false break). It is more likely that it would break on the downside. My advice would have been to fade the uptick - especially the "break" was still below the high-of-day. Or wait until YM really breaks above the earlier high.

Or pass on it. Wait until you see there is a clear break out or break down - one way or the other - before you pile on. For a true break, there typically is a small pull back. You can set a stop order to enter on the price break out/down. (See my scribbles)

 

[Matcha]

I like to call today as “a garbage day,” when I woke up, I wouldn’t be trading today if I were in live account. One obvious reason, 20EMA and 100EMA were flat and tangling together at the openings, besides the market is up against resistant level, beige book is released at 2EST. And market stays in consolidation pattern yesterday, not sure which way to break.

Although the market did break to the downside at the end of the session which generate great opportunities. It turned out to be a late day break out day

To quote Boli’s future New York Best Selling book “Trading Success the Sun Tzu's Way”, Weather is not in my favor today, I am not sure bearish or bullish, so I shouldn’t be fighting and I couldn’t t find weaks’ crutches to attack! ;-P

“Weather: The market environment (bullish/bearish/neutral, trending or choppy). This is what you cannot control. …..You must act in favorable weather - long in bullish weather and short in bearish weather.”

However, I traded today for practice. My intention is to test playing trading in a range. It proves that I will lose in a foggy weather garbage day, and lose big. Not only lose in a choppy environment, but miss the breakout move when market does break out because I was so attached to play some range trades. And I also ran out of bullets at11:30.(Maximum 8 bullets per day)

Trade A: Short, Market slightly broke yesterday’s triangle pattern, then pull back the scond time. I went in, Market didn’t go to South. So it was just a scratched trade

Trade B, continue short at range high. Stopped out for a very small loss, bacasue I entered right at the up tail of the Doji bar. Step away from my desk, missed the 2nd chance entry, double top.

Trade C: Short, this time I took profit right after the reversal candle turned up. A very small profit, Scalp profit

The late session was where I lose the most.

10:45, Went in at a second Doji bar with long lower tail, Double bottom pattern on 1 min chart, but stopped out with a small loss. Then I went back in long, stopped out at break even by 11:05 bar( the beige book bar)

Trade D: 11:05 bar- my greatest lesson for today, After I stopped out at b/e by this News bar, Bar becomes extremely long red body, the news were negative, so I went in short right away without thinking too much and filled at 10466, short at the bottom of the bar. So my buy stop become larger than I wanted it to be, 13 pts. Needless to say, my greed was punished by market, it didn’t sell off to the news, it retraces up.

After being stopped out, I flipped to long. I thought the market would continue to swing back up to the previous high, but it didn’t it came down hit my stop again…

I ran out of my bullets. So I had to watch the market now broke to the down side and broke the triangle pattern.


Today’s PnL: -$159.2, 20%winrate, 8 trades

Bear flag on 60min chart now, tomorrow jobless claim, Friday GDP report and PMI data. It will be interesting to see if price will break to the upside or sell off from here.

I will only trade first 2 hour tomorrow. Got to leave after lunch.