Matcha's Dow E-mini Journal

[PatientOperator]

Quote from Matcha:

The biggest mistake for today is not recognizing uptrend quickly... Your comment is very helpful, Nodoji.

Hi Matcha,

Sorry to hear you had a challenging day. One thing I suggest for recognizing an uptrend quicker (at least to confirm it is happening) is to check the stochastic. Between 7:00 and 8:30 p.t. both the stochastic on the 5 minutes and 15 minutes charts were showing a rising uptrend. Countertrend trading is usually a low probability trade. It has worked for me to identify trends.

Today, I have a different kind of challenge in my trades. I started out the day riding the speedy downtrend at the open with a short trade (after a pullback) just before the 7:00 p.t. newsbreak and made a nice profit. I didn't make another trade until 11:00 p.t. chasing the breakout. I made 2 LONG trades and was stopped out. Then at around 12:00 p.t., I made the same mistake chasing the market to the downside and was stopped out. All these 3 trades were chasing the market at the extremes - buying at overbought and selling at oversold. But market promptly reversed against me taking out all of my earlier gains.

I gave myself a "D" grade in my trading today. My lesson learned today was I didn't learn from my past mistakes. I remember Boli has mentioned before, "don't trade countertrend too early and don't get on a trend too late". I know I am still a novice in trading with the trend. I need more screen time and practice!

--po

 

[Bolimomo]

Quote from PatientOperator:


..... I remember Boli has mentioned before, "don't trade countertrend too early and don't get on a trend too late". I know I am still a novice in trading with the trend. I need more screen time and practice!

PO/Matcha:

One comment:

How to help yourself...

1. don't trade countertrend too early

Look for Momentum Divergence for countertrend plays. Works more often than not.

2. don't get on a trend too late

To catch a trend... look for Bull Flag (uptrend) and Bear Flag (downtrend). Can can be observed from momentum indicators.

 

[Bolimomo]

Quote from Bolimomo:


1. don't trade countertrend too early

Look for Momentum Divergence for countertrend plays. Works more often than not.

Enclosed is a YM 5min chart for today 9/28/10. 3 places for MoDiv (Momentum Divergences). Using the simple RSI3 (3-period average of RSI (14 bar setting)).

#1: Around 6:10 am PDT. Price equal high. RSI3 obvious lower high.

#2: Market headed down... in the backdrop of recent bullishness. At about 7:02 am... Price quick lower low, but RSI3 higher low.

#3: At about 11:00 am, Price higher high but RSI3 slightly lower high.

 

[nqcruiser]

Quote from Matcha:

Thank you! I see what you are saying. I do trade on S/R levels. I will work on waiting to see price break S/R level then enter....

definitely whatever is good for u,will be good for me too.i will replaytrade yesterday's session and upload my results. what u need to do,is either get whatever s/r method suits u and use it. simple pivots, fibs, swing levels or market profile can help.

 

[Bolimomo]

Quote from Bolimomo:


2. don't get on a trend too late

To catch a trend... look for Bull Flag (uptrend) and Bear Flag (downtrend). Can can be observed from momentum indicators.

The Bull/Bear Flags are harder to see. Good intraday trends don't happen too often for indices. Take some practice. But the general idea is this.

YM, 1min, 9/28/10.

#1: Bear Flag. Price moved big down. RSI3 oversold. Then RSI3 returned to the mid-band (around 50)... no higher. Price recoiled only slightly. Bear Flag... Prepare for a second stage down run.

#2: Bull Flag. Market reversed to the up side. Price moved up big. RSI3 overbought. RSI3 returned to around mid-band (around 50). But no lower. Price didn't drop at all. Bull Flag... Prepare for a second stage up run.

 

[PatientOperator]

Quote from Bolimomo:

PO/Matcha:

One comment:

How to help yourself...

1. don't trade countertrend too early

Look for Momentum Divergence for countertrend plays. Works more often than not.

2. don't get on a trend too late

To catch a trend... look for Bull Flag (uptrend) and Bear Flag (downtrend). Can can be observed from momentum indicators.

Quote from Bolimomo:

Enclosed is a YM 5min chart for today 9/28/10. 3 places for MoDiv (Momentum Divergences). Using the simple RSI3 (3-period average of RSI (14 bar setting)).

#1: Around 6:10 am PDT. Price equal high. RSI3 obvious lower high.

#2: Market headed down... in the backdrop of recent bullishness. At about 7:02 am... Price quick lower low, but RSI3 higher low.

#3: At about 11:00 am, Price higher high but RSI3 slightly lower high.

Quote from Bolimomo:

The Bull/Bear Flags are harder to see. Good intraday trends don't happen too often for indices. Take some practice. But the general idea is this.

YM, 1min, 9/28/10.

#1: Bear Flag. Price moved big down. RSI3 oversold. Then RSI3 returned to the mid-band (around 50)... no higher. Price recoiled only slightly. Bear Flag... Prepare for a second stage down run.

#2: Bull Flag. Market reversed to the up side. Price moved up big. RSI3 overbought. RSI3 returned to around mid-band (around 50). But no lower. Price didn't drop at all. Bull Flag... Prepare for a second stage up run.

Hi Boli Sifu,

This is great! Thank you very much for spending the time to document these golden trading knowledge for us in great details. I have taken notes and saved all your charts for future reference.

The Bear Flag #1 was where I captured the SHORT trade on 9/28/10. Too bad, I wasn't keen on spotting Divergence #3 at 11:00 pdt. Otherwise, I would not have lost the 2 LONG trades.

I will continue to work on these excellent trading advice.

Thanks again.

--po

 

[Matcha]

A wild ride! Still ended the day negative. Took 2 trades that weren’t part of my plan… So I had to pay for them. Pay for my lousy behavior!

First trade was a short at breakdown. Shorted at Pivot Point act as a strong support. I got a bit anxious when I see 3 large red candles came down and tried to break pivot point. So I didn’t think through. I ended up selling low. Even if it were to break down, a breakdown pullback will have high odds. Since 10759 is a very strong support from yesterday and premarket.

2nd trade was a “buy high”. After large bullish candle 100% retraced early sell-off. I entered a long at a pause bar high. A large red candle took my stop in just one second.

2 losing trades cost -19pts

TRADE A: 7:42. short. Double top with topping tail set up on 2 min. VWAP down, EMA test, Pivot points has been violated. I was expecting to take profit at mid pivot point which is also a support level. But price came back very quick and took my stop. Small profit turned to a loss… -6Pts

Was too confident that my direction was right, so I re-entered. Stopped out again. -11pts .Buyers now are in control! “Think Bullish” So I now switch my side to play long!

TRADE B: long. Bulls are strong. A large green candle poke through EMA and VWAP. A breakout continuation pattern. Enter long at 1 tick above the pause bar. This trade finally worked out! Haven’t had a nice trade for so long!
Took profit at high of the day. 20Pts.

10:50. Market made another push. It retested previous high, then consolidated for a while. Bull was still strong. But looked at internals, $TRIN and $ADD were fairly neutral. Consolidation could ignite a break out move. 12:00. I entered a long at D/B pattern. Stopped out by a red candle which ignite a big sell –off. Trendline was broken, VWAP was violated. Support was violated. Now “Think Bearish”-at least for the moment…

TRADE C: Price again cut through VWAP.EMAs. Trendline was broken. Support was broken. Volume comes in. Took a short trade here. Held through first retrace. Thought the 2nd leg could collapse even more. But,no. The first retrace was aggressive. It came right back up without testing today’s low. It was too aggressive, so when it formed a large bottom tail at 2 nd retrace, I exited. Then price came down again took today’s low by 3 ticks…
21Pts

Today’s PnL: $-24, 7 Trades, only 20% winrate

 

[Matcha]

Quote from Bolimomo:

PO/Matcha:

One comment:

How to help yourself...

1. don't trade countertrend too early

Look for Momentum Divergence for countertrend plays. Works more often than not.

2. don't get on a trend too late

To catch a trend... look for Bull Flag (uptrend) and Bear Flag (downtrend). Can can be observed from momentum indicators.

We missed your charts lately...

 

[Matcha]

Quote from PatientOperator:

Hi Matcha,

Sorry to hear you had a challenging day. One thing I suggest for recognizing an uptrend quicker (at least to confirm it is happening) is to check the stochastic. Between 7:00 and 8:30 p.t. both the stochastic on the 5 minutes and 15 minutes charts were showing a rising uptrend. Countertrend trading is usually a low probability trade. It has worked for me to identify trends.

Today, I have a different kind of challenge in my trades. I started out the day riding the speedy downtrend at the open with a short trade (after a pullback) just before the 7:00 p.t. newsbreak and made a nice profit. I didn't make another trade until 11:00 p.t. chasing the breakout. I made 2 LONG trades and was stopped out. Then at around 12:00 p.t., I made the same mistake chasing the market to the downside and was stopped out. All these 3 trades were chasing the market at the extremes - buying at overbought and selling at oversold. But market promptly reversed against me taking out all of my earlier gains.

I gave myself a "D" grade in my trading today. My lesson learned today was I didn't learn from my past mistakes. I remember Boli has mentioned before, "don't trade countertrend too early and don't get on a trend too late". I know I am still a novice in trading with the trend. I need more screen time and practice!

--po

Hi, PO. I like when you say "stochastic confirm it's happening". Just like book says: Stochastics. MACD, RSI are momentum indicators that indicate the momentum trend not price trend. But when trend is starting-price trend. momentum got to be in it's favor-better odds. Rely solely on momentum to trade on trend won't help... DIV and Convirgen give powerful early warning signals!

I thought that I was so crazy to take counter-trend trades yesterday that I didn't even realize I did that! :eek:

 

[Matcha]

Quote from Bolimomo:

PO/Matcha:

One comment:

How to help yourself...

1. don't trade countertrend too early

Look for Momentum Divergence for countertrend plays. Works more often than not.

2. don't get on a trend too late

To catch a trend... look for Bull Flag (uptrend) and Bear Flag (downtrend). Can can be observed from momentum indicators.

I love these comments! But I will still only practice #2 now...