My journey to profitable trading: NQ price action journal

[Turveyd]

This year I did an analysis (@Turveyd: notice the word "anal" in there ) of two new trading ideas. First I did a manual analysis to evaluate the price action around 100 appearances of the setups. This gave me ideas for various methods of entry and trade management rules. Then I tested each of these methods over a three month period of time, which provided well over 100 appearances of the setups.

Both setups are now a part of my trading plan. Interestingly, they came out of filters for avoiding trades where most of the criteria were met, but one thing was different, resulting in a low win rate. I noticed that the price moves off these voided setups were often very strong in the opposite direction of the initial signal. By testing just how "often" and just how "strong", I ended up with two stellar setups.

as long as your happy and you can call them Live which is always the issue, I like to keep it real simple, the simpler I get the better I perform.

I'm getting to the point, where I'm just going market is going up, go Long tight SL and hey presto money printed, it's hard to trust live but it's where I want to get to, just a 9sma for me, play the direction via DAX.

 

[Georgii]

This year I did an analysis (@Turveyd: notice the word "anal" in there ) of two new trading ideas. First I did a manual analysis to evaluate the price action around 100 appearances of the setups. This gave me ideas for various methods of entry and trade management rules. Then I tested each of these methods over a three month period of time, which provided well over 100 appearances of the setups.

Very interesting, thank you for the insight. So I guess you just go back in time from today till you can find 100 setups, and then test it on the last three months' data. Makes sense. I'm trying to find the sweet spot between testing too large of a sample and too small.

Do you have a ranking system of sorts, e.g. 'successful trades', 'half way', 'failures', and how do you handle the variations? Do you file them away and keep a 'notebook' of them?

Also, do you do a proper test of the trade in Excel to get potential performance figures?

Thanks...

 

[NoDoji]

Very interesting, thank you for the insight. So I guess you just go back in time from today till you can find 100 setups, and then test it on the last three months' data. Makes sense. I'm trying to find the sweet spot between testing too large of a sample and too small.

Do you have a ranking system of sorts, e.g. 'successful trades', 'half way', 'failures', and how do you handle the variations? Do you file them away and keep a 'notebook' of them?

Also, do you do a proper test of the trade in Excel to get potential performance figures?

Thanks...

After doing the rough analysis using Excel to track a variety of items such as MAE, MFE, context, etc., I come up with what appear to be positive expectancy ideas for entries, stops, targets and additional trade management (if applicable). I then run backtests comparing variables, and finally I check all the trades from the backtesting and adjust for things such as fills at high/low ticks (I assume those trades won't happen in live trading).

 

[VV Cehpei]

Just a heads up that I might miss the first few hours of trading tomorrow, and if I do I probably won't end up placing any trades for the day. I'll know more tomorrow morning though.

There's been a fair bit of activity in this journal since my last post, but you guys will have to forgive me if I decide to start a fresh week here and just post today's trades.

Today's results:

2 trades

1st: +1.75
2nd: +1.50

Net P/L +$57.44

 

[VV Cehpei]

Just one trade today that didn't go anywhere.

Today's results:

1 trade

+ 1.00pts

Net P/L +$16.22

 

[VV Cehpei]

I placed one trade today.

Almost as soon as I entered the position I took some heat. When it came back down, it hovered at b/e to a small profit, and I didn't really like how things seemed at that moment so I decided to scratch the trade and came out with 0.75.

Today's results:

1 Trade

+0.75pts

Net P/L +$11.22

 

[NoDoji]

I placed one trade today.

Almost as soon as I entered the position I took some heat. When it came back down, it hovered at b/e to a small profit, and I didn't really like how things seemed at that moment so I decided to scratch the trade and came out with 0.75.

I'll share my own experience with this sort of trading by how things seem at the moment: It caused me to bail out of far more winners break even than save myself from losers.

Over the past couple weeks alone quite a few of my trades came within a tick or two of stop loss before reaching or exceeding my profit target. When price was against me and so close to my stop, I didn't like how things seemed either. There was a time when almost anytime this happened I'd have been happy to get out break even. Tracking the outcomes of every setup every day helped me cement the fact that a trade is valid unless an opposing signal appears, a signal that would have me looking for a new position in the opposite direction. Your short trade was a little late to the party, but the retrace that made you nervous was a common normal retrace that happens all day every day and allows traders to grab more contracts amid the liquidity of all the break even stops. There was nothing that signaled a reversal for your trade. Price didn't even pull back the little swing low before your entry. Good solid weakness for further downside.

If retraces make you nervous, consider watching the entry signal move, then placing a limit order at the price you would've gotten in the first time. That way once you're filled you'll either be stopped out pretty quickly or you'll take almost no heat on the trade.

 

[VV Cehpei]

Hey thanks ND, and haha, all things still make me nervous while in a trade! I'm getting better, but I still have a long way to go. And you're right, there was no reason for me to exit that trade today.

And I will definitely look at that entry method you mentioned. Anything that can reduce the amount of heat you take on a trade is something that sounds good to me!

 

[VV Cehpei]

I placed 2 trades today. I went out for a bit during the day as well.

Today was another reminder that I need to leave the trades alone and let them work. I'm thinking about placing the trade and having my stop and target set, and either sit back or get up and do something. That's what I was doing at the beginning of this journal. Longer term, I want to be able to just sit there and watch and not really care, but I think that for now I will try it that way.

One benefit of that will be that I will be getting some 5+ point wins, and my losses will be 3-5 points at most.

A positive that I'm taking out of this is that it seems that I'm on the right side of the trend, and with a bit of work on my entries and giving my trades some time, then I think I'll be heading in the right direction.

Today's results:

2 trades

1st: +1.00
2nd: +1.00

Net P/L +$32.44

 

[NoDoji]

I

A positive that I'm taking out of this is that it seems that I'm on the right side of the trend, and with a bit of work on my entries and giving my trades some time, then I think I'll be heading in the right direction.

Today's results:

2 trades

1st: +1.00
2nd: +1.00

Net P/L +$32.44

On that second trade, it's apparent by the 14:03 bar on your chart that price is printing higher lows and higher highs and there's a swing high up there ~ 3982.00. That's what I call "airspace". If you buy during that 14:03 bar you have just about equal risk:reward (5pts either way) and if price gets to the swing high and it's a failed breakout, you still make money; if price gets there and breaks out with conviction, there's a great chance you'll get a measured move target of at least 10 points (which does happen).

By entering up there at the swing high, you risk getting trapped in a failed breakout and since you hate sitting through retraces, you're at risk of ending with a break even trade because unless it's a really strong trend that's making one new high after another, price tends to retrace to the breakout level and sometimes back inside it.