My Chick Goslin "Intelligent Futures Trading" Journal

About neutral overall day for me.

My last bond contract hit its stop. I got very good profits in this market.

My 2 ES contracts plunged on today's down day and hit their stops. So I went from good profits (about $3000) to a small $200 loss. This is why I don't check my balance every day. I probably won't be reporting my win/losses in money terms either, it just pushes the wrong mindset.

The GCL trade worked as planned and I made a quick 130 points on that. I wish I would have held the position with no profit targets as I normally do (this is the great edge of position trading) but the risk of a same day rally/reversal was too much for me to try that here. Oh well. I feel it was better to try a new type of trade and make some money than completely neglect the trade and not make anything.

Copper has rallied once again today. These sharp rallies in this market are difficult to ride through. Im not sure if this is even still a rally at this point. I may have to sell it for a loss (it current atands at about 3.63 and I shorted at 3.60)

My cocoa contracts did well today. My charting software is reporting a different close price than Open E cry (my broker platform) Ensign says close 2894, OEC says 2865. Either way the contract performed well today.

I shorted 3 sugar at .987 and was stopped out at .1011 for a quick loss.

Markets are closed so I'm going out with a friend but tomorrow (Saturday) I'll post my daily analysis for upcoming trades.

Overall my feeling is that I will be holding trades for a shorter timeframe, 1-4 days. This is more swing trading than position trading. Chick Goslin was good at holding for the longer timeframes and even he said that holding for those big paydays occur relatively rarely, but when they do the reward is substantial. Trading like that is what generated those $20,000 months I had before. However, that type of trading is just a more difficult style and one that I feel needs a more experienced eye to do correctly. I think my best option for now is to time the smaller moves and take profits abruptly before they can be given back. If I would have done that yesterday I would have posted a substantial profit for the week.
 
That is the nature of swing/position trading. I didn't get that $3000 gain by keeping tight stops. I have to put in my positions and let the market pull them around until I feel that the risk/reward is not good towards my side anymore. If you're afraid to give back profits, you just can't trade longer timeframes than intraday because they will happen.

Doesn't mean I traded correctly though. On the contrary, I should have cashed one contract at least. Chick also warned that there is a lot more chop recently and it might be better to be quicker with profits even before the lines say otherwise, I will be doing that in the future. When the markets trend well again I might resume the chase for those longer, bigger moves. (maybe not though, those ones are always harder for me to trade mentally. Giving back a day of profits isn't so bad anymore.)
 
As mentioned before I’m converting to full swing trading instead of trying for some longer holding times on positons that I see have big potential moves. This is just too advanced for a new trader to attempt to read or deal with. My new timeframe for holding will be about 1-4 days or so. I will also be taking partial profits relentlessly.

Market Analysis

The fear index (VIX) shot up 4.93 to 26.46 which means the smart money is more worried of downside risk right now. On the other hand the YM was still the most negative today with NQ being the least negative, and this relative strength points to the upside.

On a line basis the ML will start dropping some low numbers from the SL in 2-3 days, which will pull the ML up as long as the SL at that time is also not putting out low numbers (in that case the ML would be flat). The SL has turned down once again after making a quick lower high. For now the ML is neutral. Because short term price is so indecisive I will have to leave this market alone for now. Bias is still to the long side unless something happens which changes the short term picture significantly (larger than expected selloff these next 2-3 days)

Bonds are another tempting short (again) because The ML here is positioned to strengthen to the downside, AND the SL is turning down from a decent up cycle that came out of a lower low. The single issue here is that this is a one day rally so far and rallies tend to last 1-3 days. Tomorrow could easily be a down day, but I do not do that type of trading. I want to see another up day or neutral day and I will short this once again.

The euro is another market where shorts are appealing. Here we do have 2 good up days, but these up days are pretty strong and so there is good risk of another up day here. Overall this is a better opportunity for shorting but still not good enough for me. If tomorrow is another big up day then I will leave this market alone. If tomorrow is neutral to decently up then I will short. I may even short upon seeing some weakness later today.

Yen has a very strong negative correlation to stocks (like bonds) This market is solidly concurrent to the downside and in a positions to strengthen. Issues are the SL being sideways as well as an uneasy situation in stocks right now. The stock issue is why I shorted only one contract. I’ll let this postion ride for today and hope that heavy stock moves won’t influence it the wrong way because the lines are very good for a downside move. But this market has a good chance of getting stopped out.

I felt that the sharp crude oil rally would continue another day and it did, but I had no idea that the magnitude would be so great. I was guarding against a same day rally reversal with the way I put in my market order and got a quick decent profit out of it. At this time The long side clearly looks better but there are many problems with a long side trade. For one there is heavy news in CL right now. 2nd there is a heavy speculator bias towards the upside now, other guys are looking at the daily charts and realizing that there is massive potential in the upside. These 2 can cause very sharp, sudden selloffs at any time. I don’t expect a dip in the near future but if there is one I will probably long it, but for now the market is too uncertain.

Natural gas has the best trend of any market I’ve seen. It is also selling off sharply to clean out the many upside speculators who are pushing up this market. GNG is also moving with crude oil recently which I don’t like. However a good dip here would be even more desirable than in crude. Timing the dips is getting harder and harder, they seem to last 1-3 days and reverse instantly which throws off the ML since intermediate term price flow is constantly in chaos. The SL does help in timing price pressure here though.

Both gold and silver are in a strengthening concurrent mode to the downside. There is the same issue of calling the top of a rally like in bonds and the euro here but in this one I feel good about shorting the rally, because the previous day was weaker then the strong first day rally. Trying to short the top of a rally is always highly speculative but I’m going short one contract of GSI with stops above 18.

The copper trade is my most difficult decision and part of the reason I want to shorten my timeframe. Both trend and ML are strengthening to the downside but short term pressure is to the upside and may be accelerating. I see good odds of price flowing back to the downside in 1-3 days from now, it is just these next couple of days that are uncertain. I’m holding this contract for now with the intent of riding through perhaps one more rally day and then a regain in downside movement.

Cocoa profits are good and will be cashed out today per my new quicker profit taking strategy.

Coffee has been in a sideways range for a long time. Because of this there is no trend. There are occasional rallies to the upside which fail, but this means that something is compelling the market to keep trying for the upside. 1.32 seems to be a fairly solid resistance to the bottom. The SL is pointing up, and the ML is slightly down now but will be turning up in the next whole week unless the SL falls significantly from here. This is an anticipation trade made based off the ML turning to the up and continued short term upside strength. Going long one contract with stops at 1.33.

Sugar is once again mixed with trend strongly down but SL up and ML positioned to go up. Staying away from this market for a while.
 
sorry to hijack, but why did chick stop his newsletter?

i just recently read both his books and found them worthwhile, and have recommended them to a friend whose style would benefit greatly from chick's books.

funny part, i already used part of his setups in my trading before i read the books, kinda proves that (almost) everything out there is known by someone else.
 
Nothing new here with Chick, basically it say's don't screw with the median line or in other words don't trade against the trend. In my opinion the same can be done by looking at price action and pivots (H's & L's) with better accuracy/earlier entry.

But the concept is sound and if your going to trade directionally than always trade with the trend, buy pulbacks, sell bounces etc.

There's a big fish in here (ET) who trades using very similiar methods, so these methods do work.
 
Chick and I spoke about this. One reason was that the letter took up a substantial amount of his time. Another was that his book sales and subscription service never really sold that much. He was upset about this and rightly so, there are other books and subscription services that are garbage and yet sell very well because they follow the protocol of hyping up to what people want to hear. This is what seems to sell the best. (My own personal vendetta is against the ever popular Reminiscences of a stock operator)

I told Chick the reason for his failure was that he was too honest and too modest. Who else writes in their trading book of their substantial past failures in trading (all the other guru's I know seem to never have a bad year), give out their number freely for anyone to call and ask advice, charge $50 a month for a detailed market letter including daily analysis with market calls and stop settings?

Chick was one of a kind. His letter is gone and we've lost a substantial trading resource because of it. This is part of the reason I started this journal and why I dedicated it to Chick. This is HIS system, not mine. I merely try to learn it the best as I can because it makes sense and cuts out all the strange artificial noise I've seen in some other methods. This system is merely an attempt to pin down various price energy flows and trade with them for the best chances of a good trade.

It's my hope that more people will be drawn to his method and we can get a good discussion going. I know it is unlikely but possible if I am able to post a good track record.

I feel like I wrote a eulogy :(
 
Which one of his books do you recommend?

Quote from AshanD:

Chick and I spoke about this. One reason was that the letter took up a substantial amount of his time. Another was that his book sales and subscription service never really sold that much. He was upset about this and rightly so, there are other books and subscription services that are garbage and yet sell very well because they follow the protocol of hyping up to what people want to hear. This is what seems to sell the best. (My own personal vendetta is against the ever popular Reminiscences of a stock operator)

I told Chick the reason for his failure was that he was too honest and too modest. Who else writes in their trading book of their substantial past failures in trading (all the other guru's I know seem to never have a bad year), give out their number freely for anyone to call and ask advice, charge $50 a month for a detailed market letter including daily analysis with market calls and stop settings?

Chick was one of a kind. His letter is gone and we've lost a substantial trading resource because of it. This is part of the reason I started this journal and why I dedicated it to Chick. This is HIS system, not mine. I merely try to learn it the best as I can because it makes sense and cuts out all the strange artificial noise I've seen in some other methods. This system is merely an attempt to pin down various price energy flows and trade with them for the best chances of a good trade.

It's my hope that more people will be drawn to his method and we can get a good discussion going. I know it is unlikely but possible if I am able to post a good track record.

I feel like I wrote a eulogy :(
More...
 
There's a discussion thread regarding CG methods at the trade2win boards, as far as I can see there is no difference between Chick's and any other MA techniques (they are all lagging in general). I don't doubt it's effectiveness but just the same.

sg20
 
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