Technical Analyst to Trader journal

Hey guys, thank you for your comments!

Lindq:

I have chosen futures market, and specifically YM for two main reasons:

1) The Dow is one of the markets I have analyzed and know quite well, both on the longer term moves as well as the intra/inter-day fluctuations.

2) My "study" time afterhours is limited. Therefore, I've decided to focus on one instrument rather than having to scan many stocks or following a number of stocks for setups. Plus, I wanted to avoid the extra risk of announcements and/or gaps going against me, and that is why I decided to trade intraday rather than interday (swing trades)

I agree with what you say that futures intraday trading might be one of the hardest ways to extract money out of the market consistently, but is also very lucrative if you can gain enough experience to do it. I have already put countless hours and effort, and hope this journal will be a step closer to this goal. I'm not exactly a newbie, just someone who's finally breaking even after a lot of effort, and would like to become systematically profitable. Furthermore, I am also putting a lot of emphasis on risk management in my strategy and ways to limit my losses, so that I can survive the learning cycle.

I believe I have what it takes, and am determined to make it work.

Peter:

I don't want to set profit targets for my trades, simply because I believe in letting the market run. When things are going your way, why limit your potential profit?

On the other hand, I do use trailing stops and profit taking stops, where if the market retraces back to a point (usually a pivot point - LL or HH in a lower timeframe) I'm out securing my profits.

TraderKay

Ouch .. you seem to have a bad opinion about analysts.. :) Thanks for the welcome anyways, I hope I can change that opinion around!

As regards to the question of Fear of Loss, or Fear of Loss of Profit, I'm not so sure it's a clear cut answer. Greed can be quite powerful sometimes...

T
 
Market thoughts for 6/10/03

Dow had a wide range day on Friday, and attempted to break the high at 9680, but was not able to hold on to its profits. The reversal at this resistance level is significant, and could be potentially very bearish. (Double top)

Our oscillators remain bullish on the Daily chart, but are entering the overbought area. On the 60m and 15m charts they have already turned around and are pointing down as of this writing.

I'm looking more to the downside today, as I believe we will have a bearish day. A break of 9520 of the future YM confirms this. I'm looking to enter short at around 9530, on the afterhours low.

On the other hand, if the future YM breaks 9570 and manages to make a Higher High, I will take a long position.

I'm keeping in mind that after the wide range bar on Friday, today could very well develop into a consolidation. Thus, I won't be pushing my luck, in case I run into stop losses. Will save my money for later if the day develops into a range.

Good luck - good profits to everybody!

T
 
Trades 06/10

3 trades
0 wins
1 breakeven
2 losses (-105$)

Daily balance: -105$
YTD balance: -105$

(see chart below for visual on trades)

Trade 1: -5$
Entered short on LL at 9541 (09:40), since I was expecting a down market. Further, the indeces gapped up at open and closed the gap, heading south as well.

I lowered my S/L to breakeven once the market went my way, but since it didn't follow through I was taken out at almost breakeven.

Middle of the day
I did not take a trade after the break of the high at 9565, because I was worried of a sideways day as I mentionned in my analysis.

Trade 2: -100$
The market completed a 62% retracement of the move from 9670 and turned down.
Oscillators in 60m were bearish, but 15m data still pointed up (one of the signs saying I should've waited)

Entered on LL and break of consolidation at 9568. I kind of rushed since this was also close to a support level and the market immediately turned up.

Exited on S/L at 9588.

Trade 3: breakeven (0$)
The market made a new high at around 14:30 but was not able to hold it and entered back into the consolidation. This is usually a very bearish sign.

Oscillators also turned bearish in both 60m and 15m data.

Entered short at break of consolidation, at 9565. Moved my stop down as market went in my direction.

However, being the sideways day it was, the market reversed and took me out.

Not complaining, this is one of those "free ride" trades I will strive for, ie. bringing my S/L down to breakeven the soonest I can, and then playing with probabilities that I have made the right decision and the market will continue in my way.

One thing I'm considering is that maybe I should've entered short immediately after YM entered back into the consolidation after the Higher High (at about 9585). However, I'm always reluctant to enter a trade within a consolidation, as I don't really like being churned around.

--------------------

Overall, I'm happy with today's trading, considering the type of day it's been. Kept my losses to a minimum, didn't overtrade, was patient and disciplined which is what I'm striving for.

Your comments please,

T
 

Attachments

Market thoughts for 7/10/03

According to my analysis, I am expecting further downmove in today's session.

The market had a Narrow Range day yesterday, following the large expansion of Friday. I am looking to play the breakout from yesterday's range, taking advantage of the potential increase in volatility after a consolidation.

As of the time of this writing, the futures are down -0.40% and are flirting with yesterdays' low at 9530, which is bearish. If the futures remain as they are and the market opens with a gap down, we can expect it to retrace back to the opening price if the gap is smaller than 1.2%. After this retracement, I'll be looking to enter short either on breakout or near resistance (following LL rule).

The above bearish scenario is invalidated if the index can muster enough strength to climb above yesterday's high of 9595 in the YM.

Keep in mind that if Friday's double top is not taken out in the next few days, it could signify a larger degree retracement, and should be quite interesting to see how that develops. I'm always fond of the downside, as short trades are usually more profitable much faster (fear being stronger than greed)

Good luck, good trading!

T
 
Trades 07/10

2 trades
0 wins
2 losses (-100$)

Daily balance: -100$
YTD balance: -205$

(see chart below for visual on trades)

Trade 1: -50$
Entered short on LL at 9513 (09:46) even though I was expecting a retracement of the opening down gap. This trade was a mistake, and a slight lack of patience (rushed, afraid the market will run away).

Tightened my Stop as soon as the market turned around, closed almost immediately as I realized my mistake. (1 min)

Trade 2: -50$
Following the expected retracement after the opening gaps, entered short at 9525 (10:01) since I was expecting the market to move downwards. Added to position as per my pyramid strategy after 20 pts.

Unfortunately the market didn't follow through and I was stopped out with 50$ loss.

[Thought: Maybe I should've brought the trailing stop to breakeven once I saw the market was not moving according to my plans? ]

Middle of the day
I have a rule saying that if I do 2 continues losing trades in the morning part of the session, I stop trading for that part since something is wrong. This has saved me many times from revenge trading (trying to make back the losses and compounding)

[Thought: If you are expecting a strong downmove, and the market breaks support but then enters the consolidation, it indicates that it's not acting as per your plan.

A potential trade would've been to enter long at around 9530 (10:30) as the market was making HH - if it ain't going down, it's gotta go up. Unless, of course, it moves sideways - that's what stopped me at the time, the fear of getting caught in a consolidation]

Afternoon
I was away from the computer until about 3pm and missed the reversal. Anyway, I think I wouldn't have taken a trade as I was predisposed to the downside. (more on that below)

-------------------------------------------

Thoughts on my trading

I'm not very happy about today's trading. Part of it has to do with the fact that I ended the day with a loss :cool:, but also looking back at the trading day, I realized that my current strategy (buying/selling breakouts) can't handle days like today ("sideways" days of some sort)

I've been considering some kind of system to take advantage of pullbacks to the moving average, which would work nicely for the 100pt move from 2pm to 3:30pm. What I'm worried though is being stuck in ranges, as I enter long near support, or short near resistance.. At least with the breakouts, you know you've overcome the range and have "free space" above/below.

Of course, the problem is, you never know in advance if it's going to be a directional or consolidating day.

Anyhow, some random thoughts. In the end, at least I was disciplined (one of my major targets):
a) I did not overtrade as I would've in the past, and
b) I kept my losses to a minimum (a month ago a day like this would've cost me at least 300$ in losses plus a huge dissapointment). And waiting for my opportunity to make it back and more on trending directional days.

Have a good night,

T
 

Attachments

Quote from Trader1234:


Of course, the problem is, you never know in advance if it's going to be a directional or consolidating day.
More...

Absolutely correct. But it appears on reading thru your last few posts that your bias toward strength or weakness is a big part of your thinking. You might want to revise that?

Old and true saying may be appropriate: Trade what you see, not what you think.
 
Quote from lindq:


Old and true saying may be appropriate: Trade what you see, not what you think.
More...

Yes, I agree. Try to come into the market day without any bias, either up, down or sideways. Rather, let the market decide.

Kermit
 
I think you are questioning your system too much at this point.
If these journal trades are all you've traded with it, I would
say you should give it more time to work. At least on a simulator.

Quote from Trader1234:

Thought: Maybe I should've brought the trailing stop to breakeven once I saw the market was not moving according to my plans?
More...

I too wrestle with this issue-- you get a great setup and all of the sudden you see danger signals. No matter what the trading method, what we do in these situations makes all the difference.

There is a bigger issue at the heart of it.

I think if there is a recurring issue about stops to b/e, it means the entries need to be better. The trader realizes that while moving to b/e is necessary, he knows that it corresponds to a place where he still can be right. The poor entry paradox.

If at that point today you really saw no hope for the trade, you would have closed it, forget about stops.

This is just another one of the sneaky ways P/L can bite us, distracting us from trading.

"Trading First, Accounting Later"
 
Hey guys, thanks for your comments.

lindq

You're right, I do have a bias for the day. This is good when you have a directional day, because you can keep your positions longer, but kills you on a sideways day (whipsaws)

I consider myself a "trend-follower" and not a reversal trader, even on an intraday basis. For that I need to have an idea of the most probable direction for the day. Of course that gets me into trouble some times...

You say, you might want to revise that?

What suggestions do you have?

Peter

Actually, I've been trading this system since July.

As I said, I'm in the breakeven phase, making some and then slowly bleeding it back. That's why I'm so careful with my losses, hoping to bring the system to a level where I'm winning more than I am losing.

Especially for bringing stops to b/e, I very much like the idea of a "free trade". You bring your stop to b/e as soon as the market gives you the chance (moves in your favor by a pre-determined amount of pts) and then it's all a matter of probabilities, you have a good chance of making profits with nothing to lose (besides commissions). If your entry is correct, then chances are you'll make money in the long run probabilistically.

I saw your trading today, and even though it is easy to come after the fact and say that "I should've kept my position", during the day you are tempted to take it off the table. This is only normal, you want to secure your profits.

What you could do is secure part of the profit and then let the rest run, using some sort of trailing stop. I've written more details in your post.

Regards,

T
 
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