S/R Emini Journal
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Blamo!
I stretched my stop and got busted! (easy come, easy go - using the same technique that brought me the money lost it).
So what's the moral of this story?
Divergence trading gives you 50/50 returns, you have to use Martingale position sizing hoopla (so that's why Romik was asking about that) or a "no stop", stretch and average type of MM to make it work.
The TI manual and cd's along with all of my divergence trading paraphanelia are official going into the trading museum under random walk with a subheading of fooled by randomness.
Later,
Jimmy
My two cents: buying support works best on days in which the market' crosses the open at least an additional one or two times (like yesterday). If the market's open looks like it is going to be near the high or low of the day (and at this point it looks like the high), then that portends a trend day. Support and resistance often do not hold on trend days.
I have been following this journal for a few weeks. Thanks for doing this.
Hi JJ,
I use a Martingale approach for S/R trades, not for divergence signals. The S/R breakouts that I base my trades on are very good and it is a rare occasion that a selected level is hit more than twice and there is no breakout to follow. These levels have been back-tested and I have been actively trading them since Feb 2006. I bear no modesty in saying that this is because these levels are so reliable and my trading capital allows to extend positions by applying Martingaling these levels. I have posted my system in the past and have no secrets, as I don't believe revealing this simple strategy would affect reliability of generated signals in the future. In the end of the day we, retail traders, do not create waves, we simply can ride parts of these waves. I would not use a Martingale approach if I had a trading capital less than $40k, in actual fact I would even say that $50k would be my minimum requirement to keep risk down to under 2%.
To be honest, I have not traded Gary's S/R levels, but I believe them to be very very good. I do note them down every day though and sometimes they coincide with my levels and that adds to signal strength.
So, bottom line is that I do not use Martingale in divergence based trades and I do have an upper limit, where I stop.
Hey Guys,
Dropping in for a look.
Romik,
I think what you said in the past is that what you do for S/R trades is this:
Buy on a breakout of or right at S/R
If it fails, then you will wait for a retest and that is when you double into it.
Is that correct?
I believe if this is how you work it and you wait for the initial breakout your odds probably will be very good. It is very rare that I have 2 busted trades in a day. I think it is has happened 2 or 3 times since I started this journal. I go for breakeven on the second trade whereas you go for in the money.
Gary
Yo Gary,
absolutely, the simple reason that an "important" level is being attacked continuously (2, max 3 times) is to be broken. My levels normally fall in the territory of broken yesterdays High/Low, so the initial "damage" has been done already, this is to put it simple. Now you take other "major" S/R levels (see how I differentiate between MAJOR and IMPORTANT) and trading breakout after double touch down and Martingaling would be unprofitable, as major S/R levels double tops/bottom will create a pullback, rather than a breakout IMO. Therefore, one reading my writings on Martingale approach to trading S/R levels has to bear the above said in mind to prevent situations going for the kill and not knowing what to expect.
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