Well today wasn't the nicest of days, but as I mentioned in prep, this is to be expected. My charts today won't make all that much sense for the first 15 minutes. The data feed kept cutting out for a couple of seconds, so I reloaded the data, and then everything changed. What was a solid setup for a trade or to draw in a line now looked different, but hey, I can only trade what I saw at the time.
A - Prior to the open, we had this tight range of 09 to 13. Just before the open, I could finally draw in a DL as well. We breakout the top of this range but hesitate for a couple of minutes, but nevertheless, its showing strength, not weakness.
O - The opening looks funny because its in the middle of the bar, but an opening should of course be at 09:30.00, which should be between the close of one bar and the opening of the next. I placed the "O" in real time, so after the charts reloaded, I'm not sure why it looks like this now, in the middle of a one minute bar.
B - Of greater importance, the two bars before this with the same height is an excuse to go long. It would be just before the open, but we broke out of the range and have a trigger for a long. It didn't look like this before reloading the data... perhaps I might have gone long. Its funny to decide to enter long or short just because of a tick, the retracement is after all still there, and depending on how the ticks are packaged, the bars can throw you off. With enough practice, I'm sure using the tick chart or using the right tick bar will be all I need!
C - I really had trouble drawing in the next DL. The one from within the range doesn't work since price is too far up now, but we didn't have a swing low yet to connect/fan. Below this bar, I note a long and short because I could see it both ways depending on where price went after this bar, and since I didn't have a firm DL yet I didn't know if it would have broken or not. It went up, so I could draw in the DL.
D - Here, with my original data, I had two bars the same height, hence a RET, and it was over a point above yesterday's high, and hence a good reason to go long, which I did. It goes against me pretty much right away.
Shame the entry is quite far away from the DL, so I had to take a loss of 3.25 points on the next bar as I wanted to at least break the DL. Had I held on a bit longer, the exit for sure could have been better, but the next bar also went much lower, so perhaps the exit could have been much worse.
E - So no problem, just gotta keep at it. I see this next short op here (once again the lines a bit messed up because of the data feed), but this short doesn't trigger. And after this, I knew we would be in a chop/tight range environment.
I was looking for trading the range perhaps, seeing that going above 3823 keeps getting rejected, but just not enough confidence. I was also now thinking to scalp to make a point here or there. Not so much because I'm desperate to make back my loss, but simply for the reason that its not a trending day, hence SLA isn't going to be working out too well around this price range, and I was therefore thinking of shifting gears.
F - What follows is just messy price action. I drew in some lines, they all get broken quite quickly, and although the highs just above 23 can't seem to break, I'm not ready to take the reversals. The bottom is less defined, perhaps around 19.25, perhaps around 18, but if I am to play with a tight stop of 1 point, this "lose" bottom definition is not good.
G - Looks like we are breaking out the bottom here, so I just want to track this short.. turns out good enough for a scalp.
H - This short doesn't go far at all, but an exit could be very low cost.
I - I mark in a possible short right here, playing off the fact that 23 cannot be penetrated, and seeing the entry in a 15 sec charts.
I do think these ranges can be traded successfully, but I need a few things. I need to develop firm rules about the limits. I need to have firm stops in place. And most importantly, I need to keep hammering away at a trading range I think. There might be quite a few scratches, and a trading range will only be successful with the power of numbers. What I mean by this is that 2 or 3 trades might go nowhere, hence a loss of 1 or 1.5 points per trade, but if you have at least just as many winners as losers, but your winners are of the order of 4 or 5 points (given a wide enough range), then this is a mathematically valid strategy.
This short I mark at "I" goes against me 0.75 points, twice, but there is also an opportunity to exit for a 2 point profit several times as well. This is a bad example of a trading a range mind you. The range should have at least 5 points profit I would say to even make it worthwhile.
But I am clearly not ready emotionally to keep taking trades after a few scratches, although I see opportunity in it, especially after SLA gives you two scratches and points to a range type of day rather than a trending day.
SUMMARY
Down -$(69).
I was calm today, followed the rules mostly, and the only reason I didn't keep at it was that nothing looked really good. Perhaps that short at G could be justified as it would have been leaving the bottom of the range, and this would be a good scalp, perhaps having made 3 points to bring me back to break even today, but I didn't take it, so it doesn't matter much now.
The weekend is here, and I will hopefully hammer out something more solid after two days of solid testing.
Here is what I will be looking for:
1. Identify the overnight range, and especially the hour leading up to the open. If its tight, does a break in either direction lead to a profitable trade if taken in the direction of the break.
2. What does the opening range, the first 5 minutes lets say look like, especially in relation to where the overnight range was, and more so, in relation to the opening price. Often I see the opening range shoot in one direction, come back to test the opening price, and then shoot off again if it can't penetrate in the opposite direction.
3. Find most instances of my little wedges, and see what happens if I just took each one, breaking in the direction of where the price is getting squeezed for a potential breakthrough.
4. Trading ranges... once I see them (the way I see them), what happens if I just take the REV trade when price is at what looks to be the limit.
As I'm finishing writing this, I see we are bumping up against 23 again, but our lows keep getting higher. On a higher time frame chart, this certainly looks to be a wedge.. so will a break of 23 go anywhere if it breaks through? Hmm....
