My First Journal

Quote from increasenow:

how is your NQ trading and studying going?...
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Didn't trade today either.

Obviously I need to work harder on developing a detailed plan with rules etc. Paper trading has been fun and I've learned a lot of lessons already, but I could be putting the information to better use by using it to trying to define a set of rules etc. From now on I will be paper trading to that end.


There seem to be 2 parts to trading. Emotional Control and Method

I have read a lot about PA, and VA, and most importantly supply and demand. I suppose thats the reason my trading hasnt been that bad (6 up days out of 7). Or maybe its just a fluke. I don't know. But like I said it doesnt matter if I cant use the information i obtain to develop a specific methodology. I just ordered DB's book and hopefully that will help get me on the right track.

What I will be doing now: I'm reading all of Douglas' books ( I still believe the mental aspect is more important than anything else, so that will always be in the forefront of my mind). I will and do hold MYSELF accountable for all losses and gains, not the market, which is always right. I want to conquer my emotions to the point where my plan is all that matters. It will be well defined and rigorously tested so I will have no reservations in putting money on it when the time comes. When that happens nothing will be different. There is no difference in real money and paper money except for the difference I create and let affect me; which I don't plan on doing, and if it does affect me, I won't trade with real money. When I can trade with real money profitably and emotion free the amount of contracts will be arbitrary (except for the possibility of slippage which I will look into) whether its 1 or 50, it won't matter unless I let it matter.


That's where I'm at right now.
 
Quote from jonbig04:

Didn't trade today either.

Obviously I need to work harder on developing a detailed plan with rules etc. Paper trading has been fun and I've learned a lot of lessons already, but I could be putting the information to better use by using it to trying to define a set of rules etc. From now on I will be paper trading to that end.


There seem to be 2 parts to trading. Emotional Control and Method

I have read a lot about PA, and VA, and most importantly supply and demand. I suppose thats the reason my trading hasnt been that bad (6 up days out of 7). Or maybe its just a fluke. I don't know. But like I said it doesnt matter if I cant use the information i obtain to develop a specific methodology. I just ordered DB's book and hopefully that will help get me on the right track.

What I will be doing now: I'm reading all of Douglas' books ( I still believe the mental aspect is more important than anything else, so that will always be in the forefront of my mind). I will and do hold MYSELF accountable for all losses and gains, not the market, which is always right. I want to conquer my emotions to the point where my plan is all that matters. It will be well defined and rigorously tested so I will have no reservations in putting money on it when the time comes. When that happens nothing will be different. There is no difference in real money and paper money except for the difference I create and let affect me; which I don't plan on doing, and if it does affect me, I won't trade with real money. When I can trade with real money profitably and emotion free the amount of contracts will be arbitrary (except for the possibility of slippage which I will look into) whether its 1 or 50, it won't matter unless I let it matter.


That's where I'm at right now.
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great Man...go for it!
 
Ahh the frustration. I only took one trade today. It was a loser. Anyways here was my train of thought behind and during the trade:

To me the days bias was an up trend. I looked at some longer zoomed out charts and that's what I determined. I saw the one climax at 8:12 (My chart is 2 hours behind EST) and the pull back at 8:21. Price then congested a little (from what I've learned that can be expected after climaxes) and then resumed its normal pace in the uptrend. Then at 9:27 it happened again. As far as I was concerned the main trend was still an up trend and this was just a volume/volatility climax (term coined by Atto). Price pulled back as expected and congested as expected. At this point I drew a tentative support line at 1950. I waited for it to near it again and it did, and bounced. Also on the fast chart (5 sec) it touched it what looked like 10 times, being quickly pushed back up every time. With all his in mind I expected price to bounce off support again and resume the general up trend. I was planning on riding the main trend and exiting at a volatility climax. I entered near support at 1950.25. Price bounced off and quickly resumed in the uptrend I was expecting. All the way up to 1955.75. I could have taken profits there and I almost did, but I saw no reason to. Sure I was up by a good amount, but is that a good enough reason to sell when you're waiting for something else to happen (thats not a rhetorical question, I really want to know haha). I figured price would jump around with an upward bias for a while (which was exactly what it was doing) and eventually volume would come in hard (sending price up)and that's when I would sell. All the small retracements were on low volume.

Of course at 1955.75 price stalled out and started to drop. I really didn't care, but I should have. The high at 1955.75 (11:03) was a lower high compared to compared to 1957 (9:48), also volume was decent and price broke through my support level and stayed there on good volume. By this time there were a few lower highs and now a lower low. Combined with the rest of the factors was the market telling me that my prevailing uptrend wasn't around to save me. So I bailed at 1948 for a loss of 2 or so points.

Of course 1 minute later price rockets back up to 1954, then back down to 1945, and back up to 1955.

A couple things. Ninja always erases my stops and trailing stops when I turn it off. I then forget and enter the trade without my stops. If they had been there I probably would have gotten stopped out early on for a point or 2 in profit.

Was my reasoning sound here or was I simply mistaken?

Was I right about the trend and climaxes initially?

Was my support at 1950 ok?

I tried to stay in control. I thought I had a pretty good idea of what was going to happen. I guess I didn't. Did the trend itself reverse at 9:35? If so where was my first clue to the fact that it was a climax and reversal and not just climax like at 8:15? As I type price is STILL farting up and down between 1955 and 1945. I stopped trading because I don't know what the hell is going on. A higher high was made at 12:30 hmmmmm.
 

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Quote from jonbig04:

I could have taken profits there and I almost did, but I saw no reason to. Sure I was up by a good amount, but is that a good enough reason to sell when you're waiting for something else to happen (thats not a rhetorical question, I really want to know haha).
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When you're up by a "good amount", I would say lock in profits with a stop, or take profits on at least half the trade. Then there's always the old standby: Take profits :p
 
I would like to start off trading retracements and only retracements.

These are what I'm working on now. This is basically an outline of what I want to determine. All the real work still has to be filled in, but this way I know what I'm looking for. Each step is contingent upon the completion of the previous one. I still have some steps to add, but i hope you can get the general idea.


1. Identify the daily trend.

Using some way of general trend determination i.e. trend lines, linear regression etc. The trend will have to meet certain requirements (which I have yet to figure out). If it meets those requirements I will be comfortable saying the trend today is X.

2.Asses the strength and probability of continuation of said trend.

Using a certain amount of support zones and watching how price reacts when it nears them. For me to consider the trend strong it will have to break though X amount of support areas with X amount of volume.

3. Identify smaller retracements of the daily trend.

I will have various criterion (yet to be determined) that the retracement will have to meet.Including a percentage it will have to retrace from the current trend ( I havent yet figured out how to do that). It will have a lot to do with declining volume, and other factors that will indicate buyers or sellers are simply taking a break from continuing i the current trend as opposed to buyers or sellers actively pushing the price away from the primary trend.

4.After the criteria for a retracement have been met I will cross examine the potential retracement with what I've learned about reversals (yet to be determined). This will depend on how many characteristics I can find on reversals. It will be something like: off all the reversals I've looked at I can identify 5 things that price did before it reversed. Each reversal had at least 2 (or 3 or so) of these characteristics so my retracement won't be allowed to have more than 1 or 2, whatever the case may be. This will change in time. If I find that the reversal vs retracment ratio is to high when the retracement has 2 of those characteristics, then I will knock it down to 1 and so on and so forth.
 
Hello Jon,

Thanks for the invitation. Yes is the answer to your PM. But to your trading, a few questions. Why did you choose the NQ over the YM? Do you use profit targets or rely on formulas for exits? Where did you learn about investing? Where did you learn about trading? What is your goal in trading? Why did you choose Ninja for your charting and platform?
 
. I was up pretty late last night working on step 2. I don't know why I went out of order, but I quickly realized I wasn't going anywhere until I get step one taken care of.

The problem I'm trying to get around right now is simply recognizing trend. When the market opens how do I determine the trend (of course there are 90 ways to do this) reliably and quickly. For example the NQ rose a little on open then dropped 20 points and rose 20 points and now appears to be in a downtrend. What I need is a specific way to measure the prevailing daily trend. I think I've gotten past my momentum problem, but of course that doesn't help with showing which way the trend is likely to go for the day. The NQ looks to be in a downtrend (with slowing momentum) but I need to know exactly what constitutes a trend and opposed to just what it looks like.

I will look into that gann fann as well as the 3 higher lows (highs) and see if they have been reliable in the past.


Another thing I'm unsure of is whether to post the specifics of what I'm doing on here. If I knew if was just you all (the people tha have been helping me) I would mind, but I'm a little leary about posting exactly what I'm doing for the whole world to see. I'm not sure why exactly.
 
Ok I think I am getting somewhere. When I say getting somewhere I don't mean I've necessarily figured out the problem or solved it, just that I'm one step closer.

I think (I'm still testing, I wish there was some kind of computerized way to do this) I've found a way to identify the trend direction, and its strength. This goes a long way towards helping me with 1 and 2. firstly because I of course have to know the direction of the trend, secondly I need to knows its strength so I can assess whether to try to get in with it. This is especially important when trying to trade retracements as hey can of course turn into reversals a good percentage of the time.

Not to get too specific, I'm first watching price only. When price does X (a certain number of times) I then look at a certain momentum indicator. If all is well I wait for a retracement (yet to be defined) and enter hopefully near the bottom (yet to be defined) if and only if the momentum is still on my side. If the probability of a reversal is too high I don't enter. I wait for the reversal or more momentum (from PA and the indicator) to show me the trend is solid for the time being.

Right now I'm in the process of studying the actual retracement. One thing I'm doing (not the only thing) is going through chart after chart and numbering with a pen every retracement (and reversal) I see. I then can assign specific attributes to each one and hopefully find some common denominators (and hopefully attributes exclusive to reversals). Now I'm focusing on the retraced amount as a percentage from the trend. So basically I'm looking at these 50 or so RETs (now shorthand for retracement) and calculating the difference between the point it left the trend and the point at which is started back towards trend; then converting that into a percent as to make apples to apples comparisons between RETs, reversals and just small fluctuations in price. This will help me do a couple things hopefully. If a RET has gone way beyond the typical percentage it may actually be a reversal, and I can decided which fluctuations are in fact RETs I can profit on or if they are too small. I havent done this much math since....ever. haha.
 
Quote from LoveMySystems:

Hello Jon,

Thanks for the invitation. Yes is the answer to your PM. But to your trading, a few questions. Why did you choose the NQ over the YM? Do you use profit targets or rely on formulas for exits? Where did you learn about investing? Where did you learn about trading? What is your goal in trading? Why did you choose Ninja for your charting and platform?
More...


I chose the NQ for a couple reasons. None of which are that great. I also watch CL quite a bit.
I'm more interested in tech companies and what they are doing, the point value is kind of in between...not too large, not too small. Same with the margin req. Investing is my passion. I'm a real estate guy first and have been developing investing in real estate for years. My goal in trading is to reach the top 1% of traders and take a chunk of the money that so many other traders lose. Ninja seemed like a good choice bc everyone else was using it. Kind of like the wal mart of trading software, and the demo is free. check your pm's

Thanks!
 
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