I agree on the addenda. Normally I end up breakeven taking the 30-minute breakouts, with several small losses offset by a big gain over a period of time. However, the break against the gap has tested profitable using this method, so I do take those. I also think there's something peculiar about trend days, and how robust they are. I'm going to test my theory, but I hypothesize that fading a trend day isn't profitable in the long run.
System Trading Journal
- Thread starter ddefina
- Start date
I agree on the addenda. Normally I end up breakeven taking the 30-minute breakouts, with several small losses offset by a big gain over a period of time. However, the break against the gap has tested profitable using this method, so I do take those. I also think there's something peculiar about trend days, and how robust they are. I'm going to test my theory, but I hypothesize that fading a trend day isn't profitable in the long run.
While I don't know the specifics of your strategy, be cautious about relying too much on experience and extensive backtesting. One of the reasons why I had to make fairly severe modifications to the strategy I had been using for so long was the range contraction, i.e., what might have worked a year ago just wasn't working at all with these narrower ranges. This goes for buying breakouts vs retracements, the length of bar used, the width of the stop, the width of any gap, etc. Going back too far may yield misleading results since the nature of the market was different.
--Db
--Db
The range was not that great today, not even 20 pts, the gap was pretty small, so ATR was still less than 20 pts. When you have a strong breakout like the one we had yesterday it's not unusual to see at least two strong days to the upside in a row.
Tomorrow will probably be a very cautious day, more downside than upside, but if we dive in the morning, we may end up higher than we closed today.
The range may not have been great, but it was more than sufficient. As for tomorrow, it doesn't pay to try to make calls. Apparently, the reason most people were unable to take advantage of today's action was that they expected the market to fall. Rather than ride the trend, they kept trying to fight it.
Trade what you see, not what you think.
--Db
62% retracements are better: your stop-loss can be smaller, they happen less frequently so you do not overtrade and you have a great opportunity to practice patience.
This month alone you would have had 6 entries of this kind, each a winner (6 winners) with 6 pts at least. Keep it simple: 6-6-6. I know, sounds diabolic. Two contracts would mean $3,600, not that bad. And not more than 12 hours of work. The best discretionary system you can think of, perfect this month, 100% winners, good profits, what else do you need? Only patience.
Set-ups that happen less frequently are not necessarily worse than those that happen more frequently. Usually it's the opposite. If you have a chance, always wait for a 62% pullback. After all, you have nothing to lose. The breakout will happen anyway, and you can only get a better entry.
Believe me, patience is the key in this business. I am even thinking about trading only when my 3 mechanical systems give the same direction, as this happened yesterday. This may happen only 2-3 times a month, but so what? Using options I can make quite bundle in such cases.
True, it was not a good day for shorting with TRIN so small all the day. As far as making calls, I leave this to my systems. They are flexible enough to accomodate most situations. Even my discretionary trading will revolve about enhancing my systems rather than doing something they disagree with.
And that also takes care of thinking.
Looks like today will be a narrow range with a selloff at the end. Can't be sure with all those crazy buyers from yesterday possibly still hanging around, so going long and short both have risks. Going to sit today out most likely. My first buy signal was 932.50 which I skipped. My stop would've been 928.50, which was missed by a tick already. My system would go short under 928.50.
personally, I would take that 928.5 sell entry.
A reason being, if its a system then you are just like a machine operator. From the posts I think the title should be "Discretionary Trading Journal", because that is what it is so far. There is nothing wrong with that but lets call it what it is.
A reason being, if its a system then you are just like a machine operator. From the posts I think the title should be "Discretionary Trading Journal", because that is what it is so far. There is nothing wrong with that but lets call it what it is.
Yes, it's become the discretionary systematic trading journal. If it was performing like it has the last year, it would be easier to take all the signals, but this month it's really struggling. I noticed in past months with narrow ranges the W/L rate averaged 35-45% and the R/R was around 1.5, where in the volatile months like July and August, the W/L was around 75% and the R/R was 2.5-3.0 (hard to believe I know). This is one of those low-end months that puts my discipline to the test, and forces me to find ways to improve the results. Obviously I should just take the signals after looking at my performance.
I just think there's too many stupid buyers out there so I'm going to skip the short signal at 928.50. If it trades up around 935 I might go short (discretionary today).
dbphoenix, I try to be long above the pivot +2 and short below the pivot -2 on the open. When it gaps away from the pivot, I use the first 30-minute bar for entry. That was an interesting fact that I believe Babak brought up about moving averages. The most accurate one on the S&P 500 is the one day average. Go long above yesterdays close and short below. That's kind of what my first trade attempts to do, but this month obviously that rule doesn't apply.