S/R Emini Journal

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I guess I have a bit more on my charts than you. I've kept the MACD and Stoch. I also use a second longer-term MACD (when there's a divergence coming on that one after divergences on the other two, that's a really good indication that the trend is over and going to reverse).

On the price chart, I've been using Keltner Channels for some time. I like them better than BBs because their width is more consistent than BBs (calculating off of ATR rather than volatility). KC penetration on the 5 min is one of the filters I use for TI divergences.

Recently, I've also added BBs (sounds crowded, huh?). When the BBs compress within the KCs, that's confirmation that volatility is quite low and a sustainable breakout will likely occur when there's a sustained candle penetration of both the BB and KC.

I monitor 1min, 5min and 30 min charts (30 to keep an eye on the major trend). I also use a 2500 volume candle chart to more consistently monitor parts of the day with high volume activity versus slow volume activity.

Lastly, I've been watching the YM along with the ES. They are highly correlated (more so than the NQ or ER2). A double bottom/top in one can cause the reversal in the other, even if there is no qualifying double bottom/top in the other.

I've heard some say that the YM leads the ES, but the bulk of the $ volume is in the ES, so I'm not sure which one really leads the other. Therefore, I keep an eye on both, but trade only the ES.
 
Quote from sandygray66:

In reading my post and comparing it to your breakout method, I'm thinking the simplicity of your method is much more appealing.

:D
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To be real honest, no system is any better than another if it is profitable. My system is simple because I need it be and that is the only reason. I am glad you like and feel free to try it out any time. I post my trades the day before so it makes it easy for anyone to try it. I also like to monitor the YM. I have noticed that if I watch IBM it usually leads the DOW and the DOW leads the ES. But once my trade is on that is all I concentrate on. Keep posting and we will figure this all out together.
 
Hey 4RE

I've been catching up my weekend reading and just finished your thread. You're using a great technique to accurately determine Support/Resistance Levels which a lot of commodities traders use.

This is the first time I've heard it being used on the ES, but hey, if it's working for you, more power ...

... and yeah sure, I'm a TI alum as well. The school really got trashed by ET (and they deserved it) but they've got a lot of good stuff in their basic teaching methodology (well, I think so).

But enough of that.

I know a lot of the time you can't watch your trades, but when you can get the "screen time", if you can set 1/2 half of your contracts for 4 pts or more you would see your Risk:Reward ratio improve over time (that's one of the main things I didn't like about the TI methodology, and one thing I still don't like about scalping, if you have the capital, it makes sense to be able to take advantage of the trend). I've done a lot of research on this one and I know it dramatically improves your Risk:Reward ratio.
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The MM goes like this:

Stop: 2.00 pts
1st Set of contract(s): 2.00 pts
2nd Set of Contract(s): 4.00 (or more) pts
Breakeven (or Breakeven +1) after 2.00 pts of profit (on the first set of contracts)

So this means that 3 things could happen

1. You could get stopped out (-2.00 pts on all contracts)
2. You could get 2.00 pts of profit on your 1st set of contracts, and get stopped out on your 2nd set of contracts (+1.00 on all contracts)
3. You could get your 1st and your 2nd set of contracts filled at profit (+3.00 - or more if you just let the 2nd set of contracts ride and exit them on a MA crossover, etc. - on all contracts)

Provided you have a good system with:

a) positive expectation which you
b) execute according to previously established rules,
c) you're gonna make more money because you've changed your R:R ratio from 1:1 to 2:3, with a breakeven kicker after the 1st set of contracts are filled
d) this also psychologically takes about 1000 pounds off your shoulders, because once you've heard the cash register ring on your 1st set of contracts, you can just relax and monitor your trade.
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You might also try having a "reverse at stop" option (I know NinjaTrader can do both of these things) if you find that you're getting stopped out much. I have not done the due diligence on the "reverse at stop" however like I did with the multi-tiered contracts, so I can't recommend that based on experience (and if you have a double stop-out, boy are you gonna be pissed!) :eek: :mad:

Best,

Jimmy :)
 
Quote from JimmyJam:

Hey 4RE

I've been catching up my weekend reading and just finished your thread. You're using a great technique to accurately determine Support/Resistance Levels which a lot of commodities traders use.

This is the first time I've heard it being used on the ES, but hey, if it's working for you, more power ...

... and yeah sure, I'm a TI alum as well. The school really got trashed by ET (and they deserved it) but they've got a lot of good stuff in their basic teaching methodology (well, I think so).

But enough of that.

I know a lot of the time you can't watch your trades, but when you can get the "screen time", if you can set 1/2 half of your contracts for 4 pts or more you would see your Risk:Reward ratio improve over time (that's one of the main things I didn't like about the TI methodology, and one thing I still don't like about scalping, if you have the capital, it makes sense to be able to take advantage of the trend). I've done a lot of research on this one and I know it dramatically improves your Risk:Reward ratio.
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Hey Jimmy,
It has been a while since I talked to you. Hope your trading has been going well. I think my method of trading has been around so long yo ucan find it in any market. It just takes time to accurately determine the S/R levels that are important. When I do have time to catch a trend I really like to do it with the 20day crossing over the 60. One thing I have found and it goes back to basic trend lines is this. We know that a trend line with an angle between 30 and 45 degrees are usually the strongest. Well if your 20 day moving average is around 45 degrees it is very strong and great to play the trends with also. I do like to double into my positions in a trend. It is a trick I learned from the late Eddie Toppell (The Samurai Trader). He is the one that talked me into switching from options to eminis. Being a former market maker with IBM, who am I to argue with him. Great talking to you, stop by anytime.

GL,
4re
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Yeah, I've actually been working all weekend on different methods which incorporate the S/R concept (my own version) in an attempt to catch the dominant trend(s) for the day (while staying out of the chop).

The scalping stuff was actually pretty good, but I've found that the time it takes with my attention, how you can't miss a trade because you don't know when the market is going to "pop", and having to take over 5 or 6 trades a day to max out profits (not always, but often, and some of the time its been over 10).

(Notice I said to max out profits, once I'm in profit, I just like to keep trading, because I'm greedy! - not bad greedy - but nevertheless, greedy.) :)

Honest, 10 trades a day!
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Sheesh! So I've been in major overhaul this weekend, and I incorporate the money management technique that I mentioned to you (and any good folks who want to stop by for a gander) but you already have that covered, so cool! (except I like to just let the 2nd contract ride a 20sma like you mentioned instead of "limiting" it to 4 pts). No matter how you slice it, statistically the odds are in our favor if we mix and match profit targets.
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I find that I like the way the ES and YM work with my system, and in case there are any problems with ES (like "locked market" - it's happened before), it's good to have the YM in your back pocket.

They actually have very similar characteristics, (it seems the quants have put together the perfect index in the Dow, otherwise how could 30 stocks so closely replicate the performance of 500?).
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Another thing I've discovered in reviewing my charts is that a trade(s) will move in my favor and put me in profit by either the first or second trade, or else the day is just going to go back and forth.

So maximum I'm looking to take 4 trades per day, per market, AND, 2 consecutive stop-outs and I call it a day.
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Best,

Jimmy
 
Jimmy,

When I was planning my new strategy I did it with an understanding that I would use more contracts and less trades. I noticed that the first trade I placed was usually my highest percentage trade. So instead of trading small contracts I started going higher and if/when that trade works and I am out of it. I don't trade anymore that day. I don't care if we go into a trend and I miss it I just do other work and I am happy with the money I made. If the first trade doesn't work I allow myself one more trade to recoup what I lost. But trades is all I take in a day. On Friday, after my first trade worked I got into a discussion with a guy and decided to take the exact same trade in the afternoon that I took in the morning to show him that by trading my system you can repeat the same trade if it comes up. Between my brother and I we took the same trade 3 times in one day. All successful. It takes discipline to just stop and accept smaller amounts in a day but my account has really gone up since I started doing it. Also I only increase the amount of contracts I trade on a monthly basis depending on my monthly gains. I never trade more than half my account in a day but will I put up to 25% of my account on one trade.

It just seems that the chances I take in a day the less successful I was. Plan your trade, trade your plan and be as happy wining $100 as you would $1,000 and I believe you'll notice a change in your account size very fast.

One thing I am working on now is my losses. When you trade breakouts they either work or they don't very fast. I am working on my exits. If the market moves in my favor say 1.5 points and reverses I need to get out quickly and save some profit instead of just letting it stop me out and losing 2 points. This has happened so now I will get out and accept 1 point. I then treat that trade as a busted trade and allow myself to make another trade if either my long or short trade set up comes back into play.


Regards,
4re
 
4re,

You might like to have this:

So many of my consulting clients are entrepreneurs who have capital to trade with because they worked their tails off in another business. They take that strong work ethic and need to feel busy into the markets and get whacked. I have helped many of them instantly increase their returns by simply decreasing their trading activity. By cherry picking out the most perfect setups from the endless stream of valid trades they find, their win/loss ratios as well as average risk/reward rise dramatically.

Personally, I trade rather infrequently when compared to the rest of the active trading world. When I did a real time trading forum, I would get grief all the time for not giving enough trades...being "lazy". Quite the opposite, I am finding and passing on 9 out the 10 valid entry points I see. In daytrading the E-Minis, I want to find the one spot in each session that has the potential to deliver a big move, and will pass on the myriad opportunities to grab a point or two.

Why? Simple experience. If I grind it out a few points at a time, the edge is thin, I am mentally tired at the end of the day, have tons of commissions to pay, and will not really make that much more at the end of the month for this increased effort. I have had too many months where I worked like a dog to make 30 ES points daytrading, with all the drawdowns and frustrations of the whipsaws, only to realize that the 3 swings I took paid me 28 points in profit, and never induced much stress at all. I would rather trade those swings with greater size, and then have the rest of my days free for research, relaxation, writing, whatever!

For those of you still striving, remember... Once you "get it", you have to be trading a style that allows you to...

1: have a life
2: have time to enjoy the fruits of your hard HARD work.

Otherwise why bother? Trading is freedom... don't do the work to obtain that freedom, then cast it off to become a market slave!

-- Bo Yoder
 
Quote from Lamont_C:

4re,

You might like to have this:

So many of my consulting clients are entrepreneurs who have capital to trade with because they worked their tails off in another business. They take that strong work ethic and need to feel busy into the markets and get whacked. I have helped many of them instantly increase their returns by simply decreasing their trading activity. By cherry picking out the most perfect setups from the endless stream of valid trades they find, their win/loss ratios as well as average risk/reward rise dramatically.


Lamont,
Thanks for the article that is great. I hope my friend Jimmyjam likes it as well. I always thought people would think I was nuts trading like that but it has really worked for me. If you have any other ones please share. This is the stuff that helps us all. And this one fits me to a tee, starting with the first sentence all the way to the end.

Thanks,
4re
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You'd probably enjoy Larry Phillips' book, Zen and the Art of Poker, in which he writes about using inaction as a weapon, i.e., actively choosing NOT to take a trade.

More to it than that, of course, and others have touched on the same concept (Rogers, Livermore, etc), but trying to cover it in a message board post would not do it justice.
 
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