Technical Analyst to Trader journal

T

Trader1234

Hello all,

I've been following EliteTrader for some time now, and have decided to start my own journal, in the hopes that it will help me at my own trading but also to give something back..

To give you some more info about myself, I have worked professionaly as a Technical Analyst and have been recently trying to make the leap to successful and profitable trading. I have a very solid background in Technical Analysis, having read tons of material on diverse subjects regarding T/A.

I have also had some experience in trading, mostly theoretical and recently in practice, as I have started trading in the last 3 months.

I can say that my trading is going well so far, within targets, as I have managed to be breakeven as of this time: I am not winning any large sums of money yet, but I have limited my losses as well. The next step is to become profitable, and this is where I'm hoping this journal, and of course your input will help.

I am not one to only take and not give, so I have decided that I will give back in the form of sharing with you my daily pre-market analysis: Identifying the prevailing trend, support and resistance levels, and my strategy for the day.
 
Speaking of strategy, in broad terms, here it goes: I trade the futures, mostly emini Dow contracts (YM). I am an intraday trader, meaning I go flat at the end of the day. I decided to only trade intraday to limit the risk from gaps, but this is something I would consider changing (going from intraday to 2-5 day horizon) if I find that I would be more profitable in the long run this way. Maybe this could be one of your input points.

I analyze the market daily on Daily, 60m and 15m data, using Indicators such as MACD, RSI, Stochastic, Price ROC and some other momentum indicators, as well as price patterns such as candlestick formations, charting analysis, support/resistance, retracements, etc etc to decide the most probable direction of the day. My target is to take 2 trades, one in the "morning part" of the session (9:30 - 11) and the "afternoon part" (2:30-3:45) to try and take advantage of these highly volatile periods.

After deciding on the direction of the market, my trigger to enter a trade comes from a Higher High or Lower Low signal on 10m data in the YM future. I also usually prefer a break out of consolidation, if there is one, so as to take advantage of the momentum caused in this case.

Regarding money management, I use a fixed stop loss of 20pts, which I enter immediately after I take my position. I strongly believe in cutting my losses short, and this is one of the rules I follow immediately. My largest loss is therefore limited to 100$ (5$ per point * 20 pts)

I pyramid my positions up to 3 positions, one every 20 pts. Therefore, my risk always remains at 100$, whereas I have the potential of gaining up to 3x the amount if the market runs for more than 40pts.

I don't have a fixed strategy for exiting, I usually just trail my Stop Loss, especially after the 3rd position is on. My target on each trade is anything above 300$ (3:1 Reward-to-Risk), and when I go above 500$ I lock the profit at 500$ by moving my stop and let the market run with a trailing stop.

"Let your profits run, cut your losses short"
 
My shortcomings, and the reason I'm breakeven so far I believe, is lack of discipline. Mostly trying to anticipate the direction or change in trend, or being afraid to take a signal.

In the attempt to improve myself and correct my mistakes, I log all relevant information to my trading, both during the trading day for each trade (indicator analysis, reasons for entering trade, entry/exit levels, reasons for exiting trade, profit/loss, lessons I learned) as well as a full report (about 1 page) at the end of each trading day including posting my trades on a chart. I study these logs every week, writing an overview of my trading, summary of my strengths and weaknesses, and my targets for the next week.

This is pretty much it for the introduction. I will go into more details about my methodology with time, explaining on the charts that I will post my setups and way of thinking. I believe I have a simple, yet winning methodology which should be beneficial for someone going through my posts, and this is where I'm giving back to the community.

In return, I'm hoping for a positive response from the experienced traders of this forum, both in helping me identify my shortcomings and getting my account profitable, on a consistent basis. (my main target).

T
 
To give you an idea of how I work, here are my trades for Friday, 3/10. Please see chart below for more.

Trade 1:

Market opened with gap up of about 1.2%. Most gaps (70%)
up to 1.2% get filled, so a retracement strategy was used.

Entered on break of range of first half hour, and Lower Low in
10m data (LL 10m), short at 9573 (10:08). Added to position after 20pts.

Was stopped out at 9573 (10:19), with Stop Loss 20pts after the 2nd position, and therefore a loss of 100$,

Trade 2:

Index made Higher High (HH) for the day but was not able
to keep its gains --> bearish
Oscillators in 15m and 60m turned bearish as well

Therefore, looking to short.

Break below trendline, LL in 10m data, entered short
at 9605 (14:46), added to position 9585 and 9565, closed
position at 9565 (15:16) to take my 300$ profit which is my
profit target.

(lowered Stop Loss to entry price after 3rd position
to lock profit)


Please note that the times on the chart below are 7hrs delayed. This is because of my location (GMT +2) I will try to change the charts, to correspond to EST time (GMT -5) as of next week.

T
 

Attachments

Hi Trader1234:

I think you did well yesterday - your two trades, entered according to sound logic and good observation, both look good.
My only observation - and this is the area where I am presently working hard, is the exit on the first trade. Obviously, it is easy to say that you should have rode the trade a little further but that is not really constructive - its hindsight. What I postulate is sort of a caveat to your exit rule, the setting of an alert to
help you hold more profit.

After you put on the second contract on the first trade - I would have gotten ready to pull out my Fibonacci tool on the first sign of a retracement bar. Chances are pretty good that if the market stops its trend for a few minutes, it will most likely retrace 38.2% or 50% if it passes the 25% point. In this case, at 10:16, I would have either exited as close to the 25% mark as I could, ready to go short again if the 50% retracement showed good resistance.

What I am getting at is the fact that we do so much analysis to get into the trade, but we tend to neglect expected behavior of the market and use some very arbitrary stops -- which really don't reflect the current trend but rather a risk management policy idea which we came up with in sort of a vacuum. In a strong trending market, it doesn't matter and we hit our targets, we win. It is in the hesitating, sideways market, or worse, in the reversing market, that we "leave profits on the table" and even absorb a loss. Then, after the fact, we look at where we got taken out and what happened next and then don't truly incorporate that knowledge into an exit strategy, we just hope to win more next time.

These are just my 2 cents - and you may or may not care to acknowledge that there is anything of value here.

In any case: keep up the good work on the journal, I feel it will be one of the better educational tools for the people of want to learn how to trade.





:cool:
 
Hey dbTrader,

First of all, thank you for inaugurating my journal! :)

As regards to your comment, I have a question for you, which has puzzled me for some time now:

Which is a stronger emotion: Fear of Loss, or Fear of Loss of Profit (a profitable move)?

The answer is, it's always a compromise.

I have thought about tightening the stop on the 2nd position to 10pts, and therefore getting out even if the market comes to that. The problem is, 10pts is in the "noise level" of the market, and I am worried that I will be stopped out quite a lot and for no reason. I am afraid of missing out on some nice moves because of that.

Of course, you'll tell me that really strong directional moves usually retrace very little, and thus I should be able to follow those. This is one of the things I am taking into account, "scratching" some (most?) of my trades by exiting at 0$ loss (profit) but also zero risk (free ride once the trade becomes profitable) and just riding the really profitable ones (1-2 per week). This way, my losses will be greatly limited as well, and thus have the potential for net profit.

What do you guys think of this?

I'm a firm believer that succesful and profitable trading is directly related to money management, and that is why I'm putting a great emphasis on this aspect.

I'm open to suggestions regarding this aspect of my trading as the journal goes on - Exits: Stop Loss placement, trailing stops, exit stops.

Thanks again for your input,

T

PS:
In regards to your comment

In any case: keep up the good work on the journal, I feel it will be one of the better educational tools for the people of want to learn how to trade.

I'm also hoping this journal will turn out to be educational, both for me as well as for others reading it. I'm more than willing to share my knowledge and tactics, but I'm counting on the input of others as well to multiply the "learning" factor as I believe we can all get something out of this.
 
Quote from Trader1234:


In return, I'm hoping for a positive response from the experienced traders of this forum, both in helping me identify my shortcomings and getting my account profitable, on a consistent basis. (my main target).

T
More...

Why have you elected to focus on intraday trading of a futures contract as your first venture into trading? I am going to say something which many (mostly inexperienced) on this site will consider to be heresy, but IMO intraday trading of any instrument is the most difficult way to CONSISTENTLY profit in the markets, and certainly a very difficult trade to master as a newbie. There are certainly those who can do it month after month, but they are few and far between. Further, those who I have seen make money intraday are by and large not using strict systems for entry and exit. Yes, they use indicators for general setups, but overall their judgement, born of much experience, determines how they play the trade. So IMO, as a technician, you have entered a market that may not play the best to your strengths.

If you find yourself logging many days in your journal that are not profitable or satisfying, you may want to open yourself to other possibilities.
 
Quote from Trader1234:

I'm open to suggestions regarding this aspect of my trading as the journal goes on - Exits: Stop Loss placement, trailing stops, exit stops.
More...

You might want to see if you can come up with a simple exit that depends on market conditions, rather than points.

Examples from successful traders here on ET: no_pm targets the other side of the Keltner channer; NihabaAshi targets a moving average on his hammer trades.

Another thing you might try, especially if you get into overnight holds, is moving your stop up under/over important s/r.

For me it also depends on what phase the trade is in. After I first open I use a pretty tight trailing stop. But once i'm a few points above b/e, I will move stops to b/e and look for a logical exit.

On the flip side I have also seen verteran traders with set point targets. I've seen one ES trader use +2,+5, and +10 on each 1/3 of his position. This impressed me and I tried the same thing. Didn't work for me.

Like they always say, whatever works for you.
 
"I have worked professionaly as a Technical Analyst and have been recently trying to make the leap to successful and profitable trading."

Welcome to our world where there's no doublespeak and hedging of opinion, where real bullets fly. Muahahhahhahhaha:)
 
Quote from Trader1234:

Which is a stronger emotion: Fear of Loss, or Fear of Loss of Profit (a profitable move)?

The answer is, it's always a compromise.
More...

Wrong. Fear of loss, of course.
 
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