Prop Trader Journal

Quote from Maverick74:

How did you close the week?
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Ended the week down $-5.00 (net). Many of the traders in the last group were down MUCH more when they started, so doing ok in that regard. Ill update the trades taken and P&L tom or so...don't feel like doing it right now lol. Learning as much as possible while keeping my tuition fees down!

Checked at Bano's site and everything looks good...very comprehensive and straightforward in his teaching style and approach. Application and execution will be a challenge, but that will come with practice. Will prob sign up next week and start the process.

Going forward I feel like I can try to narrow my focus and develop an approach so that I can track my progress a little better. Looking to apply the level 1 tape reading to news driven stocks and also play relative strength/weakness with leaders/laggards. Been focusing on the SPY's and overall market movement, printing out the 5 minute chart everyday and looking at price and volume. As well as looking at multiple TF's throughout the day.

The real work can begin!
 
Hey Shan,

Sounds like you're on the right track! The past couple weeks I've been doing exactly what you're doing: Printing out SPY charts and identifying patterns.

Glad you're doing your HW, keep it up!
 
6/24/11

P&L= -11
Shares traded=600

Took three trades today with one small loser, one small winner, and one final loser.

HRB:

-$4.00

Traded the open here based on order flow and was stopped out with a loss of 4 cents. This is a skill set that I believe I need more guidance with...like others have pointed to in this thread! Only when I can know what too look for can I accelerate the learning process or even begin it in this case! I will be starting TradingRaw's mentoring service for tape reading this upcoming week.

NEE

+4.00

SPY had bottomed out and looked to be heading up...Got long NEE as it was an out performer on the day(one of the few). Took some heat on the trade but closed it out with a small gain. I closed the trade out, because after reviewing the SPY's I asked myself if there was sufficient catalyst for an upmove to occur. We were coming into a low volume period and I decided to close out the trade as we did not break a key level(Context).

CTL

-9.00

Another relative strength play. SPY was reversing off of lows and I contemplated getting long somewhere. CTL was an out performer and I got long. I jumped the gun here. I have noticed that at times there will not be a significant reversal of a move if it has not happened under certain conditions. A grind down move may not lead to a strong reversal, but a fast sharp move may lead to one given the right conditions. Was stopped out of the trade. I am trying not to think in absolutes as the market is dynamic, but I have noticed tendencies in price movements after observing them for the past ~year. Going forward... I will ask myself certain questions. Before taking a trade based off of broader market movement I will ask myself what is the context and type of trade. What time of day is it? Am I fading a move or getting in at a pullback? Could you expect a reversal given what you have seen before ? What is the volume looking like(Climactic, healthy)? etc. In this way I will start to look for the right things before I enter the trade, thereby enhancing the learning process.

Will that is it for today. Just read an article by Brett Steenberger on Trader Psychology(the zone) and things of that nature. More and more I am realizing that trading is an art(skill set). You can only achieve success by learning in the right environment and mindset, and practicing over and over. Having done martial arts my whole life...I know that going into it with this mindset will provide me with the correct perspective. I am putting together the correct environment and mental environment for learning and ultimately successful trading!

I'm going to be focusing on watching the level 1 and achieving the skills to trade based upon level 1 action in catalyst driven stocks. TradingRaw will be very helpful in guiding me as a boxing trainer would. I will also continually drill an open and flexible mindset so that I may observe and note patterns while at the same time not being rigid! I'll be watching the SPY's day in and out and always looking at context, PA, volume etc. Testing out hypothesis' with trades and having a disciplined approach. So many contradicting and harmonious concepts at play here, but it is the same with any craft...nothing new under the sun. Just like a boxer must be relaxed and composed, while at the same time be focused and ready to attack!
 
Quote from Chris_Anonymous:

Hey Shan,

Sounds like you're on the right track! The past couple weeks I've been doing exactly what you're doing: Printing out SPY charts and identifying patterns.

Glad you're doing your HW, keep it up!
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Yep, it helps in a certain regard. But watching things in real time gives a totally different perspective. The speed, extent, and prints of the market as it unfolds is a great learning environment. Throughout the day I continually ask myself...what is happening now and what could happen...and noting what happens. Testing hypothesis and noting close levels in the SPY's and DIA every hour. Planting these things in the back of mind and noting them when I see them again and again! Always asking the head traders what they think and keeping that in mind as well! I love the markets! They are truly a fascinating environment to participate in!

One pattern that I have seen is the relationship between intraday volatility and volume.They are positively correlated. The most active periods of the day(volume-wise) are between 8:30-10:30(CST) and ~1:00-3:00(CST). These are not absolutes but can be noted by looking at a majority of trading days! This has many implications to a trade that one may put on throughout the day and can serve as a guide to if a move might have a lower or higher probability of occurring.

Anything you have noticed in this regard?

Also, anybody know where I can access intraday data for the SPY's? Need to brush off on my spreadsheet skills and start to test out other observations that I'm noting. I can see how this can help give better perspective to PA.
 
On the relative strength plays, have you considered waiting for a confirming pattern or breakout on the stock itself? Doing that and then waiting for the first pullback or pause has looked like a promising strategy to me. I personally prefer going to the 1 minute chart to make those entries.

Good journal, keep it up.
 
Quote from baggerlord:

On the relative strength plays, have you considered waiting for a confirming pattern or breakout on the stock itself? Doing that and then waiting for the first pullback or pause has looked like a promising strategy to me. I personally prefer going to the 1 minute chart to make those entries.

Good journal, keep it up.
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Hmmmm I haven't. I guess I presumed it would be harder to enter after the move already starts. I guess it also depends on what type of move I a looking for in the overall market. Another question I will have to ask myself before putting on these types of trades. I am attempting to limit my risk, that is why I am trying to enter where I have a clear level that will hold if I am right and vice versa.

I will explore this further next week...do you operate with a strict out when trading like this or wait for the market to confirm or disprove your trade?
 
I'll post an example later. I like really small stops too and this entry allows for that. I recommend that you pick this or whatever specific entry you like, and stick with it for a while. It could be tape reading based, or a pullback, anything really. It is just important that you create rules so that you are consistently doing the same thing. That will allow you to create history and evaluate the effectiveness of your approach. If your style is too subjective it will be difficult to evaluate it.
 
Quote from baggerlord:

I'll post an example later. I like really small stops too and this entry allows for that. I recommend that you pick this or whatever specific entry you like, and stick with it for a while. It could be tape reading based, or a pullback, anything really. It is just important that you create rules so that you are consistently doing the same thing. That will allow you to create history and evaluate the effectiveness of your approach. If your style is too subjective it will be difficult to evaluate it.
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Baggerlord,

This is exactly where I'm at now, trying to define clearly recognizable setups so that way I'm not being too subjective. Hopefully this plus experience will get me to better trust myself, as that was an issue I was having several weeks ago and I can see that becoming an issue again in the future if I don't do my homework.
 
Here is an example from Friday. RIMM has been kick ass all week so we could be looking at it to trade. Say we decide if the gap fails we will look for short signals.

Here is the 5 min short. We want to short below the horizontal line.



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I personally would look to the 1 min chart for entry.

Here is a 1 min chart with a "Ross Hook" entry highlited. The short would be when the low of that green bar is taken out.
Google ross hook to find some detailed explanations for free. This entry is effective in a fast moving market.



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The stop loss would be above the high of the green bar, at least the way I trade it.
 
Here is another 1 minute entry on the pullback to the 20 period moving average, nodoji style.



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You look for the for price to penetrate the MA, and then wait for it to close back below it. You place a short order 1 tic above the high, or a sell stop below the low of the bar that closed back below the MA, or both.

If are interested in learning this style read through some of her posts. She explains it in detail.

These are just some ideas. I have more I can post if you like. There is a lot of good stuff out there, if you can decide the right area to look for an entry. Just pick something and master it. And that could very well be tape reading. If that is the case, study Mavericks posts in that thread and try to create concrete rules.
 
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