My Chick Goslin "Intelligent Futures Trading" Journal

You’re right monti1a, the line is dashed. I don’t have the option for dots so it will have to do, I think it is a step above the solid line though and still shows ML velocity quite well with the spacing between the dashes.


Pretty negative day in stocks. Really wasn’t expecting this down day. Its tough to put so many things together to make what seems like a solid case for the upside and then have it be wrong. I checked the news and saw no significant news for stock to go down today, but today also wasn’t really a spike type down day so it’s not the bad. YM and ES were also weaker than the ER2 (and NQ if we count the last 2 days together) which was a minor positive for relative strength today. VIX rose 1.32 to 24.23 which I think is reasonable for today’s movement.

Now a tough call whether to stay with long or not. I’ve decided to stay for another 2-3 days unless the downside gets very strong. Reason is I’ve just been chopping trades too much especially in the stock market (my last 4 consecutive stock trades were all chopped out and made good gains after I exited) MLs in all markets except YM are still strengthening upwards, though this will change if SLs continue to plummet.

Bonds had a good up day. Not that significant because MLs are also strongly down here (although will weaken just like in stocks now if SLs don’t turn around) But today’s up was obviously related to the down day in stocks so I’m not putting too much weight on it. Trend will turn up soon if price doesn’t fall so this market is also shaky but for now looks better to the downside.

Small up day in the currencies. Any more up or neutral tomorrow and I will probably lightly short the yen or swiss. Tough call which one is better, yen has the moderate downtrend but swiss has the stronger down cycle in the ML, and also a good negative ladder of lower highs/lows in the SL.

About same situation in the metals which are dropping what looks like a “valley” of old SL values this week. The valley is pretty high in the window so all numbers are more positive than where the SL is now which means ML will strengthen to the downside unless SL shoots upwards. One issue with today is platinum was the strongest, followed by silver. This is an upside relative strength signal, but only one day and not that great in magnitude. I will also wait until tomorrow at least to try something here.

I was probably too hard on copper the other day. I didn’t like that trend was potentially ready to start strengthening. On the other hand ML is still very negative and SL hasn’t turned up much even after 2 up days now. Today’s up was relatively minor as was yesterday’s, which makes me believe there is still significant downside potential especially with ML strengthening down. I’ve shorted one contract.

Soybeans still has the strongest ML downcycle. I was close to shorting it but I am concerned about short term upside pressure here more than other markets since both corn and wheat are overdue. Soy was also the most positive grain despite looking like the best short candidate now. I decided not to short today, but will reconsider tomorrow.

None of the softs are materially changed for today. Cotton is still looking good for the upside, cocoa and sugar to the downside. Coffee had a decent down day and fell to the bottom of its sideways range so I’ll probably leave it alone now. Cocoa had a slight down day after a day of neutral and then good upside so I think this minor rally is over. I’m shorting 3 contracts when it opens tonight.
 
Hi Ashan,
I have read Chick's book three times, but am still a newbie.
I would like to ask you a question on Cocoa if I may. My SMR
chart on Cocoa has the 49Ma in an uptrend, although slight.
The SL line is moving up off a higher low. The ML is headed
down slightly. SMR showes the ML with a possible upward
move on there future projected extension of ML. I would attach
the chart from SMR, but they might be copywritten. Can
you tell me why this looks like a good short?
Thanks,
Jack
 
Hi bradcox3, my full explanation for the cocoa situation is in the picture below.

The summary is that the trend is discounted as neutral at this point, ML is treated as the trend and is clearly negative, and the recent lower low in the SL is treated as a special case because of a large price drop that happened in cocoa 3 weeks ago (which makes the most recent low look higher in comparison, but I do not believe accurately portrays a buildup in price pressure to the upside

 
Unfortunately it was wrong and what was a marginal situation is now poor after the ML has turned up today on continued upside pressure. May very well be uneventful but this is not a good situation to trade anymore based on the lines, pattern is now concurrent to the upside.



Public Trading Issues

Chick warned me today that writing publicly may be affecting my trading. I think he is right, it certainly makes taking losses harder. On the other hand posting publicly seems to make me more accountable for bad decisions, more eager than usual to tear them apart and correct them. When I write in my offline journal I don’t seem to retain experiences from past mistakes as well as when I write here.

Quoting someone else’s decision making process and then trying to run an analysis around that, however, is very bad. Case in point is the ER2 trade which I exited yesterday on lows and was therefore chopped once again, making this the 5th consecutive chopped trade in the stock markets. Considering Chick’s advice when I do my own decision making has helped me significantly, but quoting and then analyzing what he said in this journal has been an expensive mistake. For the sake of my account I can’t keep doing that so unfortunately I will have to stop posting Chick’s commentary. It will only be briefly mentioned when I feel it is appropriate. Chick re-assured me that he does not mind this decision either way and says anyone who wants his advice can find him.

Also, I’m tending not to report exact fills anymore. Even rough estimates of how a trade did (small, decent profit/loss etc) will only be done if I feel it is appropriate. It is another stressor that does not add much to my end but potentially hurts quite a bit. I know that people want to see my results and hiding the details of a trade can look suspicious (or worse), but as Chick has reminded me, I have to do what is best for my trading first and foremost before considering anything else. He said it took him a long time to be able to write trades publicly and even he eventually stopped with that (or minimized it greatly)

I don’t have a huge ego to defend so I will post monthly results no matter how good or bad. To be frank this month will not be good, a friend has looked at my account and hinted that I’ve done bad, lower than the low estimate I gave him. We will see exactly what that means in a couple days.

I do apologize for reducing the detail I present in my journal, I know many of you have told me you enjoyed my postings and I want to give the best information I can. It is unfortunate but if doing this potentially hurts my trading, I have to acknowledge that and find a good balance. I do believe this journal helps me, but only when I use it correctly. Good decision making is all a trader has, I have to be very careful not to compromise that in the slightest.


Timeframe Dilema

Trading timeframe has been the tough area for review this month. Early in this journal I said rather decisively that I was converting to full swing trading and would not have a trade go more than 3-4 days unless there were very special circumstances. After talking with Chick I began to hold longer than that once again. It worked great on a couple trades, erased profits on others, profits went to losses on a few.

In the short time that I held trades on longer time frames, I feel I’ve learned that this is simply not my style of trading, I seem to do much better in the 1-3 day time span especially when taking partial profits relentlessly. Only on the strongest situations would I want to hold longer nowadays.

Therefore the best course of action from now on is to get a sense of price flows but not try to trade them too strongly, getting out quicker than what may be justifiably reasonable, when either profits are decent or intuition tells me I’ve had “enough.”

This is taking trades on a “day by day” basis which exposes me to more short term noise, but I feel that I may be able to deal with this more proficiently than holding 3+ days. Fading dips/rallies or squeezing a day or 2 out of a small concurrent movement, getting knocked out with tighter stops at a level that shows clear momentum to the unfavorable side, then re-entering the position again after the day session is over if I feel the case for that side is still strong. That’s the plan anyways, and anyone reading this journal knows my plan is always subject to change.


Market Analysis

Disappointing action in bonds today which made decent lows but failed to keep them. ML is weakening rapidly now and SL is still on an up cycle, though it is leveling off slightly (not too much so hard to tell) Lines have weakened enough, and today’s action poor enough, that I exited 2 contracts at a loss and have only 1 left. I am holding this one because there is a reasonable chance that SL will turn tomorrow which will help ML continue down just a bit more before flattening. ie price pressure is just negative enough to give a light short one more day.

As noted I exited the ER2 contracts on lows, despite writing yesterday that I would hold them. I am once again long a ER2 contract today. A spectator watching my stock trading might think I have the perpetual problem of repeating my mistakes, but all I can say is every circumstance is different and I believe the case for the upside here is still good. Trend is down which is the major issue, otherwise longs are quite appealing and I would be taking on a larger position.

Copper had a small down day which was good enough because I happened to sell near highs of yesterday. This market is still concurrent down but ML has been quite developed, so I felt better to take profits early than too late. Contract sold.

Cocoa looks terrible for shorts right now so I could not hold on to this trade and sold my 3 contracts for a small to decent loss.

Sugar still has a flat trend and ML strongly down. Problem was yesterday’s up was larger than I would want to see. SL seems to be accelerating up which is very dangerous. However, ML is so strongly down, and the previous SL series, although now broken, was pretty good to the downside. Very tough call but I decided to give this trade one more day. This means strict probation, down or out tomorrow and stops have been tightened.

Deciding to wait a day to short the currencies and metals costed me because both fell nicely today. Shorts are not appealing at this level in metals because relative strength is somewhat mixed, and the SL up cycle has not produced any upside pressure which is a positive (when SL is on a bullish divergence against price we give the SL more weight)

Currencies are a bit more negative since there is no mixed relative strength here and the SL’s have been cycling downwards with some decent series’ of lower highs and lows in the euro currencies. (euro, swiss, pound) Yen does not have this SL downward ladder except a single lower low, but it has the established downtrend and strong negative correlation with stocks. Rather than decide if a negative trend was better vs a downward laddering SL, I shorted a Swiss (also a slight negative correlation against stocks) as well as 1.5 yen contracts.
 
Quote from AshanD:

........I do apologize for reducing the detail I present in my journal, I know many of you have told me you enjoyed my postings and I want to give the best information I can. It is unfortunate but if doing this potentially hurts my trading, I have to acknowledge that and find a good balance. I do believe this journal helps me, but only when I use it correctly. Good decision making is all a trader has, I have to be very careful not to compromise that in the slightest........
More...

No apology necessary...first and foremost your account must always come first.

Also keep in mind that your results this year have been nothing less than spectacular...Hell...if you wanted to quit trading for the rest of the year starting today, your results would still be spectacular.

You may want to consider the following until you are confident that you have a firm grasp on Chick's/your methodology:

1. Significantly reduce your position sizes until your account has fully recovered. You have already had a successful year. Now focus on learning the methodology inside and out...which will unfortunately just take time.

2. Be patient and take only the highest probability setups (i.e., dips/rallies from concurrent setups only).

3. Consider taking some profits out of the account and putting it to use in other, non-futures or stocks, money-making ventures.

just a suggestion...
 
Thanks mont1ia, all very good points. My circumstances described in the long post below will hopefully be in line with what you suggested, I think I finally have the answer to accumulating experience faster while substantially reducing risk.



I called Chick today and probably received the most valuable advice ever from him. Ironically I would probably be the only one who didn’t think what he told me today was obvious. He said not watching the day session was very bad. I now feel it has been costing me an enormous amount of money, probably significantly reduced my risk/reward and made trading much more difficult than it needs to be.

It sounds so obvious now, but I just did not realize this before. I learned a day to week timeframe system and followed a daily newsletter. I remember back then when I would watch the markets during the day session. It was a painful experience, I even jumped in a couple times and exited trades that were looking very bad, only to have them reverse and make good gains later.

The lesson I “learned” from that at the time was that it was better NOT to watch the day session, and instead review an intraday chart after the market closed to get an idea of daily market activity. The primary tool for determining price flow, however, would be the daily charts. I would learn to read them like Chick did and trade daily bars where price flows were more smooth and reliable, unlike the crazy day sessions.

It worked very well back then, I believe because Chick was excellent at compressing his knowledge into a format that would allow myself and the other subscribers to trade end of day and still make the bulk of the profits that good inter-day movements gave.

But there is a problem with this approach. It cuts off an enormous amount of a trader’s edge, so large that it is amazing Chick could write a newsletter that for the most part required no more insight than a daily end of day commentary to trade successfully. I just don't know how Chick put out those comments usually just one time per day, yet following his comments studiously allowed me to take minimal losses and disproportionate profits. I swear that even if it takes me 10 years or more I will learn to trade like that one day.

Trading EOD also forces one to trade the lines instead of price. This would seem good because the lines are supposed to show internal price flows, but the problem is they are not perfect and thus can not be relied on to such a large degree, at least not the way I use them.

What I really should be doing is the following. If you learn nothing else from Chick or me, please take note of these points:


1) TRADE THE PRICE and use the lines as a guide, an INDICATOR of which side has the best odds potential. It is often hard to do this because we sometimes have to regard true price action as noise, with the lines supposedly showing truer probabilities of price flows across various timeframes.

2) Watch price flows for REASONABLE CORELATION to the ANTICIPATED FLOWS that our lines have projected (ie price is acting reasonable according to what the TL, ML, SL have been anticipated to do with it)

3) GET OUT when price flows become UNREASONABLE against what our line patterns tell us is expected, then GET BACK IN (at a worse price) if the PREVIOUS PRICE ACTION WAS A "FALSE ALARM" and price flows favorably to our side once again.

4) Acknowledge that our lines are only guides and subject to BEING INACCURATE sometimes. Therefore it is good to find out WHICH LINE IS CORRELATING STRONGEST to the current price flows. Sometimes is the trend (natural gas, cocoa for several months) sometimes the ML (stocks until recently) sometimes the SL (any strong price spike that results in enough continuation to turn a fairly strong ML) Of course having the lines in one direction provides the best odds, but traders need to be flexible in their strategy and not be confined by their own system.

So it appears that I’m heading back to the day session. I actually started today and have had a decent first day. My “old” system of placing orders the previous day and hoping for a good continuation (or else a stopout) would have posted slight positive results in most trades and a large loss in sugar and crude oil (which I shorted last night) I let the crude oil and sugar run to its stop as usual because I had not spoken to Chick and revised my strategy in time.

But after getting feedback from Chick I cut off all my stock, bond, currency, positions resulting in slight losses, instead of slight profits that they would have posted, because today was a large counter-move across the board for the positions Chick and I favored. Chick notes that Crude Oil seems to be the culprit and has been having unusual influence lately.

However, upon seeing action turn positive once again in stocks, I re-entered the trade on upside momentum for decent profits. Nowadays I don’t have the terror of the daily swings that I used to when I first started and it seems my trading experience has programmed me to enter with good odds and price momentum. My best month ever (June) made liberal use of “momentum orders” that were designed to enter at a poor price, but caught strong price energy flows to that side (if I did it right). I wonder what would have happened if I had actually been watching the market at that time!

Every trader says this, but I believe I’m prepared to make money by trading the day session now. So do I now consider myself a day trader? No. I asked Chick the same question, he said the same with an almost disgusted voice :) I understand why. I had picked it up before from talking to chick, he jumps in and out of a market several times, but often considers it a single trade. Why? The overall rationale for the trade may be the same, he just constantly changes his mind about whether price flows are acting the way he feels they should. Thus he continuously plays defense against poor price action and buys higher than he has to (but also gets in cheaper sometimes with still favoriable price flows, which negates this somewhat)
 
I think the trick to trading like Chick is as follows:

1) Continue to IGNORE SHORT TERM PRICE FLUCTUATIONS, but be more lenient about jumping out of trades and jumping in at higher prices. As a general rule with my new strategy, I will assume any move of less than 30 ticks (ie 7.5 ES points) to be noise, anything in the range of 50-100+ ticks to be a significant movement. This will vary from market to market and is a general rule that I may use trailing stops in conjunction with, but subjective analysis of the situation (ie using my head instead of being a robot) always predominates. If I see the ES creeping down past 30 ticks at a time when significant downside might have been expected (negative news report) I may cancel a trailing stop and substitute a wider emergency stop to give more leeway to the trade but also keep myself from making a critical error.

2) Gain an ACUTE SENSE of how price energy flows should act in ACCORDANCE WITH THE LINES. As a general rule for coming into this new strategy, I will assume that there is always a predominant line in every market, and that any market without 2 correlating lines is unappealing for a trade. Strong trend will be the best line possible, followed by strong ML. after that it is a pure judgment call.

3) Be OK WITH CONSTANT CHOPPING. It’s really ok now, my trading frequency is going up substantially so I will be buying at worse prices often. This is a good sign, because it means that I’m trading price momentum and not trying to pick tops/bottoms. Chopping will be negated at least a little from extra losses I would have had to ride through (or get stopped out on)

4) To guard against the increased chopping mentioned in #3 I need to be EXTRA SURE that I’m trading MARKETS WITH GOOD PROBABILITIES. This is one of my greatest assets since most people trade a few markets every day, trying to make up for this by getting intimate with a single market (I don’t know how that works but my feeling is that really getting in tune with a market will require substantial experience and still may not offer odds that much greater than trading reasonably reliable price flows. My humble opinion of course) If I don’t do this, I’m another “piker” in the markets, trying to chase every movement without any coherent trading system.

5) Watch out for EMOTIONAL TRADING. This actually does not seem to be a factor so much since I've had so much experience with high dollar swings. I remember years ago when I would play some poker and a $50 loss would produce a lot of pain. Today I watched some of yesterday's positions degrade into several thousand dollar losses and didn't feel that bad. My tolerance of swings is quite high now. But even still i need to be careful of emotional issues, day sessions move fast and produce a flurry of changing numbers that can compel one to act before they can rationally think. Very important I watch out for that.

I'm excited to be trading the day session now, it alleviates my greatest concern that I had with the pure interday swing trading I used to do, which was having to weather sometimes very large losses. I found that my temperament was not suited to that, and now I feel Chick has given me the final bit of advice I needed to put together the system that will best work for me, and what he has been using himself. I sometimes wonder if Chick had been teaching me systematically. He told me to scale down and widen stops when I was trading to heavy for the market conditions, now he has suggested day session trading. Perhaps he thinks the time is right for me? On the other hand he mostly answers my own questions so maybe I've just worked up my questions to more advanced levels (not saying I'm advanced, just not a total newbie).

The results of day session trading have already shown in today's transition day. I took a small/decent loss in stocks before converting to day session trading. Then I neutralized most of it by getting back in on revival of the upside pressure. This was an against trend, against Chick trade, and these 2 together spell very poor odds. But I took it confidently at a less desirable price and made a decent gain. I simply followed the up cycling ML and tapering SL (which has turned up after today’s action) along with clear upside price flow across all stock markets and the intermarket mover, crude oil. If I had been doing that the whole day I would have minimized the crude oil loss also, instead of taking the large losses at my artificial stopout level which was placed yesterday (and consequently had poor stop levels based on the most recent price action of today). In sugar, things would have been even better because I wouldn’t have waited for the stop to get out on clear intraday upside pressure, and I may have even aligned with the SL/trend to flip backwards and catch the upside move (I think this is what Chick did).

This is all speculation so somewhat useless. Another benefit with day session trading is higher frequency trading and decision making which I feel I am ready to take on without being overwhelmed. So I will now have more feedback to learn from and refine my trading. I can’t wait!

Chick has told me he’s pausing with the comments again, and I feel that I must also do this to transition to the day session without an extra burden that could potentially alter my decision making. Unless I get ridiculous and wipe out, I do not expect this break to be permanent. I see myself taking a month off to get started in trading the way that Chick does.

I do love trading this method and am looking forward to it's real time application. The day session is where the action happens. I am up against the various creatures of the futures markets: All forms of short term traders including the price band faders who try to anticipate fluctuations eroding back to the mean. Pivot point traders with their liberal use of S/R levels. MACD traders trying to spot dip/rally conditions. The analysists of various candlestick or chart patterns. Scalpers with their little black boxes trying to pick up ticks with who knows what kind of formula. And of course the Commercials, there’s no market without them. They're not part of the short term chaos but no question that they have great power in the markets, just sometimes hard to read what their COT influence is doing (at times maybe nothing)

We will see how the "price energy flow" trader stacks up against the other players in this wild game. If Chick and TGM are any indication, the good ones do quite well :)

After I feel sufficiently confident, I will resume this journal and post an end of day backlog of my trading day along with the usual market analysis. This makes a lot more sense anyways, I feel I will be able to give a much more thoughtful commentary having actually traded during the day session and feeling the daily price movements first hand. Chick didn’t write his commentary after looking at an intraday chart, he lived it. There’s no substitute for that.

So in the mean time no comments, sorry for that but you all know by now I like to contribute if I have something to offer. I did not learn to trade by myself, I was given a tremendous opportunity to learn to make sense of what some people think is a fool's game. They are wrong of course but no need to argue. I intend to learn how to make money trading and pay it forward by helping others do the same. So I'll be back.

Good luck to everyone in the mean time, “A little luck never hurts in this game” (Chick Goslin)

AshanD
 
Hi Ashan
I have enjoyed this journal and thought I would offer a couple of suggestions about the day session. it is difficult I think to try to employ Chick's method to a day timeframe -what time period do you use is one question but more materially the day session is often characterised by sharp high volume reversals at specific levels before the prevailing day trend is resumed eg yesterday es plunges to weekly pivot then makes miraculous recovery.
Three things I have been finding helpful to pick spots you might want to consider:

1. the market profile - get mind over market by Jim Dalton or more simply as that is one mighty tome JPJtrading can teach you the profile the best imo for trading on an intraday timeframe and you can apply that knowledge for longer term trading. Do not be put off by the one week trial where he shouts his trades and gives no explanation. Alternatively markets in profile by Dalton is meant to be an easier read than mind over markets, not read this one yet.

2 the pivot levels and previous days highs and lows. Use weekly and monthly and daily points and midpoints. The daily midpoints which are often not used by retail are v effective imo on es. Not found weekly or monthly midpoints useful on contracts I look at.

3. Carolyn Boroden Fibonacciqueen newsletter has good support resistance levels calculated on basis that markets often look to retrace to levels which have symmetry with prior swings. She also has a chatroom which may be a bit pricey for what you need but you could trial and see what you think.

4. heikin ashi bars combined with volume, some kind of bollinger/keltner channels and the levels. I use 5 min bars for main bias in es and also look at constant tick charts.

Looking at this you might say you will get a load of levels but you are looking for clustering of levels and also price reaction off those levels. You are also filtering everything through your daily bias calculated under Chick's system.
Good luck and thanks for sharing your journal
Regards
 
I have been rooting for this guy. He seems intelligent and eager to be successful in the trading game. But he disappeared and never returned. Does this tell one something about his trading ability or the method used? Perhaps people who attempt to trade the short time-frame are just wishful thinkers?
 
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