Pete's Place

Quote from Ditch:

http://www.nqoos.com/Jimmer_Anticipation_Manifesto.htm

Perhaps this link will add something to your way of thinking.
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Not only did it add something to my way of thinking, but it added over a c-note to my account on Friday... here's how:

I had one winner and one loser, both longs. Instead of waiting for the upside breakout of the pivot low bar, I bought after price pierced the 18 SMA and turned back up.

In both cases the entry was 1.5 pts better. In the case of the loser, I lost less. With the winner, I made more.

The question is how many more additional losers will I get by being preemptive on the entry? Will trading this way be a net gain for me?

That's the question i'm going to answer for the rest of this month on the simulator. It's going to depend on how good I am at reading the market, nothing else.

I'm excited about it. If I can shave a point per trade on the entry, as one ET poster put it, "I be pimpin'"...
 
Instead of having a set profit target on my day trades, I like to close the contract when there's reason to and let the profits take care of themselves.

First there are two phases to the trade:

initial: right after I open the trade, i'm trying to figure out if the market is headed my way. I trail my initial stop (usually no more than 3 pts) with discretion.

run: Once I get my stop to b/e (usually when i'm +4 to 5 points) I let it run.

This run phase is what i'm going to talk about now. Every day I log the best trades the method had to offer, whether or not I took them. I also note the best exit for each of those trades. Here's the tally from September:

============================================

30 tick: 1 (9 and 18 SMA crosses on various charts)
90 tick: 1
200 tick: 2
300 tick: 2
875 tick: 4
2k tick: 1

hold b/e: 1
hi/low : 3

=============================================

I view this from a probability standpoint. Once I had this trade going Friday, I didn't even think about closing it until 1385 or so, because that's when the SMA started to cross on the faster charts. Looked like support at 1383 or so. At that point I placed my stop at 1382. The stop was eventually hit. I made 11.5 points on a MFE of 18.

I was also watching the S&P up against that Sept. 18th high. I could have closed after it turned down at around 1386. I took the chance and kept my stop at 1382, risking 4 pts for who knows what kind of breakout there could have been.

With this pullback method, it seems like each trade either works really well or doesn't work at all. I get MFE's of like 0-3 pts, or a whole lot more. I didn't plan it that way, it's just the way it turned out.
 

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Pete
I've read most of your journal and I can see the progress (evolution?) of your thinking and it seems the journal is serving its purpose and reaping rewards.

My question is: Isn't it difficult to be taking signals from different size charts? You've got 4-5 diffferent tick charts. One of the things you've said that resonates with me is learn one thing well, stick with it until you're totally comfortable with it before starting to include additional systems (types of entry signals etc).

Are you saying that by virtue of using different size tick charts that you're comfortable with your system regardless of size chart? Of course we're all different but for me I would find that using different size charts would be a crutch to validate taking a signal that should be confirmed by the basic signal and any other oscillators etc. I use for confirmation. My feeling is that a signal in one size frame may not work in another because of time differences and not getting a better fill.

Best regards,
JD Schaefer
 
Quote from JDRower:

Pete

My question is: Isn't it difficult to be taking signals from different size charts? You've got 4-5 diffferent tick charts. One of the things you've said that resonates with me is learn one thing well, stick with it until you're totally comfortable with it before starting to include additional systems (types of entry signals etc).
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Welcome JD.

Right now I take entries from the 200, 300, 875, and 2000 tick.
The 200 has a win rate of around 33%. The 2000 is much better-- the way I trade it, almost 90% chance of b/e or a win... but the signals are sparse (maybe 10/month).

I only take the "level 1" entries described in the "Floor Trader Method", meaning price must touch or pierce the 18 SMA.

FYI I am considering dumping the 200 for entries, pending the results of the rest of this month.

The faster charts are helpful for "tape reading" and for warning me about exits coming up. Also, it looks like the 90 tick is good for continuation signals. In other words, when a trend starts, say you get a good entry on the 875 tick, do you then get little pullbacks as the price moves? In September, the 90 tick was a star for continuation signals. I am keeping an eye on it and may use it to add contracts in the future.

So i've got this big spreadsheet where I keep track of which of the charts is giving the good signals, month by month. I want to learn how things change with market conditions.

Finally to answer your question. The way i'm looking at things, all of the charts are part of the system in some way. They are my employees.
 
Quote from peterfigliozzi:


Not only did it add something to my way of thinking, but it added over a c-note to my account on Friday... here's how:

I had one winner and one loser, both longs. Instead of waiting for the upside breakout of the pivot low bar, I bought after price pierced the 18 SMA and turned back up.

In both cases the entry was 1.5 pts better. In the case of the loser, I lost less. With the winner, I made more.

The question is how many more additional losers will I get by being preemptive on the entry? Will trading this way be a net gain for me?

That's the question i'm going to answer for the rest of this month on the simulator. It's going to depend on how good I am at reading the market, nothing else.

I'm excited about it. If I can shave a point per trade on the entry, as one ET poster put it, "I be pimpin'"...
More...

Pete,

I like your journal, and to be honest, looking at your positive progress through it was a motivation to start mine. We have similar styles of trading and I think we can learn from each other.

Regarding your question above, this has been something that puzzles me as well: buying on the pullback rather than waiting for the breakout

From my own experience, I have found that many times this gets me into sideways, choppy markets, in other words consolidations. I'd rather wait for the breakout and miss out on those initial few points, but be in a directional and moving market.

Of course, there's always a copromise to be made.

What I use to enter is a Higher High or Lower Low in 10m data (break out of consolidation basically). To avoid false breakouts, however, I also filter that with a close in 3m data below my support or resistance level. Let the market run before you enter... at least most of the times (when I'm not fearful I'll miss out on the move :))

Keep up the good work, come visit my own journal and feel free to share your thoughts: I'm always open to suggestions for improvement. I'll make sure to do the same!

Regards,

T
 
Quote from Trader1234:



Regarding your question above, this has been something that puzzles me as well: buying on the pullback rather than waiting for the breakout

From my own experience, I have found that many times this gets me into sideways, choppy markets, in other words consolidations. I'd rather wait for the breakout and miss out on those initial few points, but be in a directional and moving market.

T
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Welcome T, I saw your journal last night, i'll be following it.

Re: confirmation vs. pre-emptive strike:

Looking at the entry I posted from Oct. 3, 1371.5 is the high on the pivot low bar, making 1372 the breakout entry. But is 1371.5 really a support/resistance level? Not any s/r I know about.

The method is trying to capture a pullback which touches or pierces the 18 SMA. So in the "pre-emptive strike" I'll enter like on Friday, when I see the price turning around from that area. This seems like plenty of confirmation.

In the case of Friday's exit, 1383 was an actual support level. Price had moved sideways for a couple hours around there, so we guess that a bunch of folks have positions around that price, waiting and watching. So in that case I waited for confirmation (by placing my stop exit at 1382). This was around the same time you went short. In that case waiting for confirmation made a lot of sense, for both of us.

Anyhow, I have detailed stats on my entries for the past few months using the 'breakout' (really a misnomer) method. So i'll be able to compare the next three weeks of testing quantitatively. Success means the avg risk per trade and loss per loser numbers should decrease. There may be more losses, but that might not turn out to be a bad thing, as long as they are small. We'll see.
 
Some good ambush trading today.

It's only been my second day with it, but so far the results are clear:

  • Average initial risk reduced from 3.7 pts to 2 pts
  • Average loss reduced from 2.7 pts to 2 pts
  • Net gains (from losing less on losers, and winning more on winners) overcome 'extra' losing trades introduced by more aggressive entry
  • SWEET SURPRISE: when I realize i'm wrong, the point loss hardly shows it. Before I had to place my stop in a "grey area". Now I can place it where i'll know i'll be "wrong" about the trade.

Here's a chart with today's entries, all longs since we are still trend up. Day trade beat swing trade again. I dumped my swing near the close because it did not appear we'd get over yesterday's high.
 

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Discipline: the ability to delay gratification to honor a higher principle or value.

In our case, trading right, not by P/L.
 
Today presented some Mother of All Support and Resistance Trades.

Trend still up, came in looking for longs. Yesterday's low was 1371. Sure enough, using the Poor Man's Visual Tape Reading Method (see attached chart) there were some big resistive volume spikes. Basically what I do is look for big trades. On the 10 tick chart I plot # of trades and also the volume. Big trades show up as higher than avg vol spikes while number of trades don't spike as much or at all.

The first trade was stopped at b/e (entry is first white arrow).
Since the same support showed up I entered again at the second white arrow. Turned out to be a goody.

On the flip side, when a run is drying up and all kinds of late to the party little guys are jumping on, you see just the opposite. That's the exit I took, third white arrow. We started moving sideways around yesterday's high. Trades were still brisk but volume decreased. Divergence shown with the red lines.

I try and remember that these are only indicators, price must always confirm. This bit me in the ass later in the day. See next post.
 

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Well that's not the end of the story.

So of course, my swing trade contract by the afternoon falls back down to b/e. But then it happens again. Same resistive volume spike around 1371 and I get in again with a tight stop.

Price starts moving up... and I get scared. I start thinking about p/l. I've had a great day and I don't want to screw it up.

I bailed at the first (incredibly weak) sign of weakness on the 10 tick. Of course right after that we had a super rally. I would have had another great day trade, but more importantly, a swing trade that stuck and closed above important support (1386-1389) for an overnight hold.

All because I momentarily thought about P/L instead of trading.
 
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