Matcha's Dow E-mini Journal

[PatientOperator]

Quote from Matcha:

....
10:00 Market made another bear wedge down to test the lower channel, forming the D/B patter at the magnetic price level earlier in the day - 11213. Since it’s still in a range, I had a buy order at 11214- Low of the 10:05 reversal bar. But the order didn’t fill, market never came down to hit price. ......

Hi Matcha,

Even though your order at 10:00 didn't get filled, but it was a very good catch! Could have been a great mid day reversal trade. Have you considered using a buy stop order instead of a buy limit order. This way you won't have to wait for the price to come down to the hit price and instead it will sweep you into the trade in the direction of your intended trend. I think Al prefers to use stop order to enter a trade. See page 396 near the end of the 2nd last paragraph. It actually said all of his entries are on stops.

Also on page 382, trading guideline 15) "Begin trading using a 5-minute chart and entering on a stop." He uses limit order to take profits.

Good trading to you on Friday!

--po

 

[Bolimomo]

Quote from Matcha:



PnL” -$29.80, 2 trades, 50%winrate

Matcha:

Some food for thoughts.

1) Observe your instrument(s). For the ES, it typically runs 5 to 6 points at a time, then maybe 10 to 12 points at a time. There usually are some kind of bounces at those points. For the Dow, it would probably be about 100 to 120 Dow points.

2) The overnight drop started from yesterday's after hour (Cisco disappointment). This morning big gap down all right. But note that Dow (ES too) ran down 100 points from yesterday's close, and it bounced.

3) Round numbers... round numbers... Always like a magnet. Note for Dow... every 100 point level. 11300, 11200, etc.. When it comes to big round number like 11000, the reaction is even more severe.

4) Morning reversal time. You can bet that there would be one most of the days. Sometimes twice. Rarely none (but does happen). Popular reversal time: 6:45, 7:00, 7:30, 8:00 am (PST). Plus/minus 5+ minutes sometimes.

With all these considerations... you see Dow gapped way down open (good for a fade)... and the first 3 bars (15 minutes) dropping straight down on the third bar... it would be a good fade. And if it does reverse, it could be a good fib bounce (e.g. 23%, 38%, 50%, etc..). And yesterday it would have given you 50 points.

When you do your bar-by-bar... keep some overall structure/evaluation in mind.

 

[Went Fishing]

Quote from Bolimomo:

Some food for thoughts.
Round numbers... round numbers... Always like a magnet. Note for Dow... every 100 point level. 11300, 11200, etc.. When it comes to big round number like 11000, the reaction is even more severe.
When you do your bar-by-bar... keep some overall structure/evaluation in mind.

Forgive me for butchering your post Boli, as always it' all good.

Matcha
The notion of reactions at even and whole numbers was suggested before in this journal. I looked, but couldn't find the post. As I recall the poster suggested removing all the other price levels on the chart, to get a clear visual of those reactions. This made a lot of sense to me. I (and I believe the poster) was not suggesting to trade with such a chart but use a "stripped down" chart to drive home the history of price actions at these levels.

I'm not a B by B trader, I love my squiggly lines. But I have been wondering about the "overall structure/evaluation" myself. During the 2 weeks you spent studying PA the trend was UP, since your return this past week the trend has been DOWN. I was wondering if there is a relationship between the "overall structure/evaluation" and the percentage of winning longs compared to the percentage of winning shorts in your PA signals (trades). We all know you keep "detailed files" of everything.

I like your new goals list,,,,, You'll be eating at Gary Danko's be fore you know it!!

 

[Matcha]

Took one of my favorite set up this morning today and made my daily goal. Should have just call it a week. Could have been an easy Friday ended the week with great winrate and #of trades per day. But later this afternoon, I screwed up my result today.

Reviewing these weeks’ trades, I felt like my entry skill is improved a little. The tightening stop prematurely and re-entering now have been more frustrating than entries. Part of reason is due to my manipulation to my trade and fear of stop hit. Today’s trades show my biggest challenges now…

Lots of dumb things I did today.
7:00 Market made a 3 pushes bull channel then retraced at the EMA, the run up from the opening is very parabolic. So I wait for a 2nd entry and also a nice break out pullback pullback short from YTD’s channel. Then 7:20am the large bull trap bar with large topping tail formed a D/T pattern increase the odds to short. I placed the buy stop at tick below the low, Then the following candle closed with a large Hammer body. I took out my order out because I don’t like the tail of the candle. Then market sold off from here…

8:48am,Trade 1: L2 short, Took 21Pts profit, The bottoming tails show too much buying. I am OK to exit the trade early here without seeing follow through. The pattern at that time looked like it is D/B here. On large time frame. price just landed at major support line.

10:00, price finished 3 legs down. Then buying strength is accumulating at 11113 area. On 60 min chart, price hit the 200MA(Great china wall, right ? Boli ) and held. The 11113 area is also the intersection of the bear trend line and the major support area. So I now would look for long set ups. A HL will be nice!

11:00, 3 dojis formed a HL. The set up wasn’t strong enough for me to enter long

11:35, long. 1 tick above the signal bar. Failed D/T. and a BO PB from bear trend channel line. I think the entry was fine. But this type of perfect entry always trapped me out of the trade…. I moved my stop to tick below the Entry bar ( doji bar). Then it was hit by the following large bear bar. Then I started to doubt my judgment, I thought the bear would probably continue to sell here and it will form a triangle bear flag. But market break to the upside, and it left me at the sideline with my doubt…

12:30 short, Wedge bear flag, D/T at the resistance level. Again, stop was hit after I tighten it up. I don’t know what I was thinking; The trade was only for a scalp. I re-entered at Low2. Then I realized I am doing something silly, the RR too small only a half of scalp profit. I was shorting at the bottom of the bull channel. Luckily I was able to get out with +3Pts…

This week, if I hadn’t move my stop too early, the PnL and winrate would have been improved greatly… Got to do more analysis on each set up.

Today PnL: $50, 4 trades, 50%winrate
Week:
PnL: $164
Pts: 42
#of trades per day:4
Winrate: 47%

Have a great weekend!

 

[Matcha]

Quote from Bolimomo:

Matcha:

Some food for thoughts.

1) Observe your instrument(s). For the ES, it typically runs 5 to 6 points at a time, then maybe 10 to 12 points at a time. There usually are some kind of bounces at those points. For the Dow, it would probably be about 100 to 120 Dow points.

2) The overnight drop started from yesterday's after hour (Cisco disappointment). This morning big gap down all right. But note that Dow (ES too) ran down 100 points from yesterday's close, and it bounced.

3) Round numbers... round numbers... Always like a magnet. Note for Dow... every 100 point level. 11300, 11200, etc.. When it comes to big round number like 11000, the reaction is even more severe.

4) Morning reversal time. You can bet that there would be one most of the days. Sometimes twice. Rarely none (but does happen). Popular reversal time: 6:45, 7:00, 7:30, 8:00 am (PST). Plus/minus 5+ minutes sometimes.

With all these considerations... you see Dow gapped way down open (good for a fade)... and the first 3 bars (15 minutes) dropping straight down on the third bar... it would be a good fade. And if it does reverse, it could be a good fib bounce (e.g. 23%, 38%, 50%, etc..). And yesterday it would have given you 50 points.

When you do your bar-by-bar... keep some overall structure/evaluation in mind.

thank you,sifu! I will focus on studying bigger picuture too!

 

[Matcha]

Quote from Went Fishing:

Matcha
The notion of reactions at even and whole numbers was suggested before in this journal. I looked, but couldn't find the post. As I recall the poster suggested removing all the other price levels on the chart, to get a clear visual of those reactions. This made a lot of sense to me. I (and I believe the poster) was not suggesting to trade with such a chart but use a "stripped down" chart to drive home the history of price actions at these levels.

I'm not a B by B trader, I love my squiggly lines. But I have been wondering about the "overall structure/evaluation" myself. During the 2 weeks you spent studying PA the trend was UP, since your return this past week the trend has been DOWN. I was wondering if there is a relationship between the "overall structure/evaluation" and the percentage of winning longs compared to the percentage of winning shorts in your PA signals (trades). We all know you keep "detailed files" of everything.

I like your new goals list,,,,, You'll be eating at Gary Danko's be fore you know it!!

Thank you, Went Fishing.
I will do the excise this weekend.
For the past 2.5 weeks, the winning short trades are 56%. Clearly, didn't short enough!

 

[PatientOperator]

Quote from Matcha:

Took one of my favorite set up this morning today and made my daily goal......


Reviewing these weeks’ trades, I felt like my entry skill is improved ....

Hi Matcha,

That was a great 1st trade!

I concur that your entry skill has improved and also you have been trading with more confidence.

Keep up the good work! You've logged in a positive week!

Don't let those 2 stop tightening trades border you too much. It is part of your game plan to PPC. I have seen it worked for you more times than not. You have been pretty consistent with your stops. I think the only thing missing might be (for that 11:35am pst trade) a re-entry when the market break back to the upside, it would have been a decent profitable trade.

The last 1/2 hour was a bit choppy.

Have a great weekend everyone!

--po

 

[Went Fishing]

Matcha
I agree with PO, "You have been pretty consistent with your stops." I'd say near perfect, I've never seen you let a trade get away from you, nor have I seen you give a trade a bit more breathing room. I believe as you become more confident with your method (as you are) your entry levels will continue to improve and this will alleviate a lot of this issue. I've got news for you, taking profits ( #1 ) and moving stops ( #2 ) will be concerns for as long as you trade with your finger on a mouse (discretionary trading). At the risk of "speaking out of school" I'll say, you move your stops prematurely thinking you're reducing your monetary risk on the trade, when in reality you may be increasing the trades failure rate by tightening the prices normal fluctuation range. When I read the F-word (fear) in your post I was taken back. I admire the intensity you give to simulated trading. When you allow every trade to bang against every stop and at the end of the week you show a profit, you'll know you have a method that generates consistent results and you will be completely comfortable with the risk level necessary to trade your method. I don't want to kick a hornets nest here or start a pissing match about bailing out of bad trades or moving stops to B/E or what the latest opinion of points or dollars away from the entry level is compared to account size. I'm just suggesting traders must be comfortable with the amount of capital they place at risk on every trade to utilize their method over the long term.

There have been many threads here on ET asking traders to reveal personality traits, character defects or psychological issues they had to overcome before they became successful trading the markets. I've battled many demons and continuously keep my minds eye open. Interestingly the very traits that served me well in other areas of my life turned out to be the most detrimental to my trading. My white whale was (is) perfectionism. My perfectionism was a trait that allowed me to file hundreds of tax forms and years of bookkeeping with few minor errors. I viewed being perfect (within 1/1000 of an inch) as an asset while building dozens of engines for cars, trucks, boats, tractors and equipment. I also enjoy woodworking as a hobby and perfection is my goal! If I'm going to pay someone to shoot a laser in my eye so I no longer need eyeglasses, I sure hope she (he) is a perfectionist (at their craft).

http://discoveryhealth.queendom.com/questions/perfectionism_abridged_1.html

I spent years trying (my definition of trying: a noisy way of not doing anything) to trade unaware of the root of my self destructive behavior. Perfectionism affected (and still does) most all aspects of my trading, entries, stops and targets. Until I became comfortable taking a loss (admitting I'm wrong on the entry) and taking 19 points profit instead of the 20 points my analysis projected (admitting I'm wrong on the target) my trading went nowhere. Perfectionism is part of my personality, just ask my wife! The hard work of trading (for me) was finding a method/system that fit my personality. Since my perfectionism is in fact a major part of who I am as a person, I've redirected this trait into my trading by following my system as perfectly as I can. Strive for progress not perfection.

 

[PatientOperator]

Quote from Went Fishing:

....... I've redirected this trait into my trading by following my system as perfectly as I can. Strive for progress not perfection.

Hi WF,

Well said.

I like what you said about "FOLLOWING my system as PERFECTLY as I can". Using your "perfectionism" energy to FOLLOW your SYSTEM/METHOD instead of striving for a perfect outcome of each trade.

Do you consider your trading method as more mechanical than discretionary?

Thanks.

--po

 

[Matcha]

Struggling with the exit today. I had a “not too bad” trade, but I felt like I almost had a heart attack holding the position –Yes, even in SIM, I can hear my heartbeat when the retrace almost bouncing right back at my face… I wish I am that type of person that trading to them is human nature—they just don’t care about being stopped out, exiting early, missing profit or taking losses. I am soooo hoping I can be a heartless cold bitch while trading!! Probably it is a good idea to talk to myself again while managing a trade. And also learn to repeat the same trade that was taken today again and again. So I can get used to the emotion battle then feel no emotion in the long run.

I didn’t take any trade this morning. I was ultra-conservative since the first 90 minutes market has been trading in a range. Lots of overlapping bars and trading in a tight range. The up and down momentum signals bears and bulls are equally balanced. How ever, the bulls slowly made H/Hs and H/Ls in a bull channel. I was left out since I wasn’t too sure what to do.

10:40am 60 min chart, price hit the major bear trendline and had a hard time breaking above it. 5 min chart, price made 3 attempts to break out. The bull channel started from Friday is fairly strong, but it has made a 4 pushes and the 3 attempts failed BO being a wedge reversal top. So I was looking into a short after the price broke the bull channel line in 5 min chart

Trade 1: 11:10pst, short, 11226 Target: Measured move down , and test of the magnetic area this morning- 11189 area.
Entry was nice! Price went straight down didn’t retrace a tick. 11:35, Market sell-off forming a wedge, the move down to 11199 is very climatic, I thought about exiting early since it made its 3 push micro wedge leg, besides its in a support zone. Then I thought the move is so emotional there might be more sellers when price made retrace. So at that point I moved my stop to B/E. Then price retraced sharply. 4 bull bars in a row. Retraced more than 50%. This 4 bars made my heart racing. I sort of regretted at that point that I should have taken early points. I let 27 points profit to almost b/e. But the other part of me thinks, there will be sellers at the EMA and it’s also the R level. If my stop was hit, I could look to get back in or switch direction if the bull overwhelmed the bears. Worst case I might just b/e today so I held. Shortly after, sellers came in and pushed the price down. Hit the target. +40Pts

PnL;+$197, 1 trade