Trading Pattern Failures

[NihabaAshi]

Quote from fan27:

Trade 3 exited at 1125.00. I had my stop order at 1125.25 (with IB). When the price was hit at 4:14 pm it didn't execute. I had to cancel it and exit at the market.

At one point I was up 4.25 pts on this trade. I was going for a bigger move but the market had other plans. This part of my exit strategy that needs some work (Target is not hit but you still have a nice gain). Any suggestions would be greatly appreciated.

Hi fan27,

What's your purpose for trying to post your trades in realtime here at ET?

I believe doing such as either a new trader or struggling trader will create more disadvantages then advantages...

Thus, you should be just posting an in-depth end of day result with a chart...

Even better...post a chart of what the trade looked like at the time of your entry.

As for letting a profit of +4.25 points vaporize into a breakeven trade...

You stated your target was 1133.50...the high of the intraday after 0930am est and your entry was via the 15min chart.

Yet, you ignored all other trendlines...

(see chart attachment of horizontal trendlines...those trendlines I show are not at support/resistance levels)

Reason why I say there's too much subjectivity involved in your trading of trendlines...

It's that subjectivity that will allow you to have continued problems finding profit targets.

I highly recommend you spend a lot of time reading and then re-reading dbphoenix journal called "Price and Volume" to have an understanding of supply and demand...

http://www.elitetrader.com/vb/showthread.php?threadid=29005

Allowing you to better understand your use of trendlines especially when they occur at obvious support/resistance areas.

You seem to be using the trendlines as trade signals instead of looking for trade signals that may appear when price reaches a trendline.

Once again...trendlines can be very subjective and traders make a common mistake thinking they represent support/resistance levels.

Yes...sometimes trendlines can occur at support/resistance levels and sometimes they don't.

Reason why if your going to use trendlines...you need to learn and mark those support/resistance levels.

Based on your entry price and the time you posted that trade here at ET...

Your resistance level via candlestick s/r levels was 1128.75 @ 1545pm est...

Your profit target 1.

Also, I'm assuming your trading only one ES contract...

You should always be exiting at Profit Target 1 and not try and get greedy and get more...

One particular trade your PT1 may only be +1 point, another trade it may be +3 points, another trade it may be only +0.75 and so on...

Respect the ES, respect its s/r levels and you'll understand where supply/demand is at certain price areas.

Once again...the attach chart is based on trendlines...not based on candlestick s/r levels (arguably the best measure of supply and demand when trading the Eminis).

Last of all...again...learn what's going on in dbphoenix thread and you'll understand the above statement.

NihabaAshi

 

[fan27]

Quote from NihabaAshi:

Hi fan27,

What's your purpose for trying to post your trades in realtime here at ET?

I believe doing such as either a new trader or struggling trader will create more disadvantages then advantages...

Thus, you should be just posting an in-depth end of day result with a chart...

Even better...post a chart of what the trade looked like at the time of your entry.

As for letting a profit of +4.25 points vaporize into a breakeven trade...

You stated your target was 1133.50...the high of the intraday after 0930am est and your entry was via the 15min chart.

Yet, you ignored all other trendlines...

(see chart attachment of horizontal trendlines...those trendlines I show are not at support/resistance levels)

Reason why I say there's too much subjectivity involved in your trading of trendlines...

It's that subjectivity that will allow you to have continued problems finding profit targets.

I highly recommend you spend a lot of time reading and then re-reading dbphoenix journal called "Price and Volume" to have an understanding of supply and demand...

http://www.elitetrader.com/vb/showthread.php?threadid=29005

Allowing you to better understand your use of trendlines especially when they occur at obvious support/resistance areas.

You seem to be using the trendlines as trade signals instead of looking for trade signals that may appear when price reaches a trendline.

Once again...trendlines can be very subjective and traders make a common mistake thinking they represent support/resistance levels.

Yes...sometimes trendlines can occur at support/resistance levels and sometimes they don't.

Reason why if your going to use trendlines...you need to learn and mark those support/resistance levels.

Based on your entry price and the time you posted that trade here at ET...

Your resistance level via candlestick s/r levels was 1128.75 @ 1545pm est...

Your profit target 1.

Also, I'm assuming your trading only one ES contract...

You should always be exiting at Profit Target 1 and not try and get greedy and get more...

One particular trade your PT1 may only be +1 point, another trade it may be +3 points, another trade it may be only +0.75 and so on...

Respect the ES, respect its s/r levels and you'll understand where supply/demand is at certain price areas.

Once again...the attach chart is based on trendlines...not based on candlestick s/r levels (arguably the best measure of supply and demand when trading the Eminis).

Last of all...again...learn what's going on in dbphoenix thread and you'll understand the above statement.

NihabaAshi

Thanks for taking the time to share your thoughts with me NihabaAshi. If you scale out of your trades aren't you ensuring that you are going to have your largest position on when you are wrong and your smallest position when you are right? Is scaling out more profitable for you over a series of trades as opposed to some sort of trailing stop technique? What ever the case it beats the hell out of letting a 4.25 pt winner coming back to break even. :eek:

My goal is to make my trading plan as mechanical as possible. I am going to implement some sort of trailing stop technique for exit and will have it in place for tomorrow. After 20 trades I am going to go back over them and test various money management rules to see which works best. My hope is to achieve some sort of consistency. At this stage of the game it seems the only way I am going to do that will be with some solid rules.

Thanks again,
fan27

 

[nkhoi]

Quote from fan27:

Trade 3 exited at 1125.00. I had my stop order at 1125.25 (with IB). When the price was hit at 4:14 pm it didn't execute. I had to cancel it and exit at the market.

At one point I was up 4.25 pts on this trade. I was going for a bigger move but the market had other plans. This part of my exit strategy that needs some work (Target is not hit but you still have a nice gain). Any suggestions would be greatly appreciated.

the quick target is aim for 50% then 61.8% retrace of the move and you miss some action by limit your chart to reg trading hour only.

 

[NihabaAshi]

Quote from fan27:

Thanks for taking the time to share your thoughts with me NihabaAshi. If you scale out of your trades aren't you ensuring that you are going to have your largest position on when you are wrong and your smallest position when you are right? Is scaling out more profitable for you over a series of trades as opposed to some sort of trailing stop technique?...

Thanks again,
fan27

Hi fan27,

First of all...I didn't suggest to you to scale out of a multiple contracts position...

That was stocktrader. I think he made the suggestion if you were trading multiple contracts and not as if you should be trading multiple contracts.

The chart I posted simply show trendlines because you use trendlines whereas I don't.

However, your only trading ONE contract and shouldn't even be concerned with multiple contract positions nor entertain the thought of doing such until you learn how to manage one contract.

Your going to need to come up with a solution for determining your profit targets based on trendlines or whatever and not ignore those profit targets (specifically profit target 1) when such are reached.

The target you had was way too far away while ignoring all the stuff in between based on the fact your using trendlines.

NihabaAshi

 

[fan27]

Here are the Rules I am going to use for the next 20 trades.

Pattern Failure Trades: Bull\Bear Flag, Triangle, Channel Break, H&S)

1. Mark pattern using trendlines (The pattern has to be very obvious as so everyone else can see it and have time to trade in the expected direction). My goal is that Recognizing the pattern will be the only part of my system that is the slightest bit subjective.

2. When market breaks initial trendline and then reverses and breaks the opposite trendline, initiate position as soon as second trendline is broken.

3. Stop is place on the other side of the first trendline.

4. Once trade moves in your favor the distance of your stop, Use a 2 bar trailing stop.

5. Once trade moves in your favor the distance of 1.5 times stop, Use a 1 bar trailing stop.

6. Once trade moves in your favor the distance of 2.0 times stop, Use a 1 bar trailing stop in lower time frame.

5 min trade - 1 bar trailing stop
15 min trade - 3 bar trailing stop
30 min trade - 5 bar trailing stop
60 min trade - 10 bar trailing stop

The money management part of my system is the best I could come up with. I imagine sometimes I will give back to much, exit to early, or exit just right. The question is how will it perform over a series of trades? After 20 trades I will analyze my results and improve my system. At this point my primary objective is to be consistent.

 

[fan27]

Quote from NihabaAshi:

Hi fan27,

First of all...I didn't suggest to you to scale out of a multiple contracts position...

That was stocktrader. I think he made the suggestion if you were trading multiple contracts and not as if you should be trading multiple contracts.

The chart I posted simply show trendlines because you use trendlines whereas I don't.

However, your only trading ONE contract and shouldn't even be concerned with multiple contract positions nor entertain the thought of doing such until you learn how to manage one contract.

Your going to need to come up with a solution for determining your profit targets based on trendlines or whatever and not ignore those profit targets (specifically profit target 1) when such are reached.

The target you had was way too far away while ignoring all the stuff in between based on the fact your using trendlines.

NihabaAshi

I must have misinterpreted your previous post regarding scaling out of multiple contracts. The first sample set of 20 trades I am going to use a trailing stop technique described in my Rules. After thorough analysis of my trades, it might prove beneficial to switch to a profit target strategy where you are selling on strength or buying on weakness.

Thanks for the Help,
fan27

 

[DblArrow]

Quote from fan27:



6. Once trade moves in your favor the distance of 2.0 times stop, Use a 1 bar trailing stop in lower time frame.

5 min trade - 1 bar trailing stop
15 min trade - 3 bar trailing stop
30 min trade - 5 bar trailing stop
60 min trade - 10 bar trailing stop

Just curious - with the 15 min trade and 3 bar stop, is that three 5 minute bars = 1 15 min bar? Same going up 30 min, five 5 min bars?

Make 'em pretty, Chris

 

[fan27]

Quote from DblArrow:

Just curious - with the 15 min trade and 3 bar stop, is that three 5 minute bars = 1 15 min bar? Same going up 30 min, five 5 min bars?

Make 'em pretty, Chris

This is what I meant to say:

5 min trade - 1 min bar trailing stop
15 min trade - 3 min bar trailing stop
30 min trade - 5 min bar trailing stop
60 min trade - 10 min bar trailing stop

At this point a one bar trailing stop will be used in the indicated time frame.

thanks
fan27

 

[Albert]

I know that alot of people think every trade is an individual entity and that one trade should have no bearing on the next, but I like to get back to break even as soon as possible.
So if the last trade was a loser for 2 points, then I take the next trade out at the 2 point profit, at the market (almost always pays for the commission). I can always get back in, especially if you cone down to a lower time level. For the life of me I cannot understand why my friends HATE it when I do that but I always win out at the end of the day.
For me , it clears the slate. Breakeven days are ok. Also helps because you know if you take the loser now you can get back to even faster, which seems to help me get back in the fray.
I am surprised that there are no double or triple bottoms or tops in your patterns, as I look for those all day long.


Good Luck,
Albert

 

[PetaDollar]

Quote from fan27:


4. Once trade moves in your favor the distance of your stop, Use a 2 bar trailing stop.

5. Once trade moves in your favor the distance of 1.5 times stop, Use a 1 bar trailing stop.

6. Once trade moves in your favor the distance of 2.0 times stop, Use a 1 bar trailing stop in lower time frame.

5 min trade - 1 bar trailing stop
15 min trade - 3 bar trailing stop
30 min trade - 5 bar trailing stop
60 min trade - 10 bar trailing stop

Very good stuff. Your biggest challenge will be sticking to these rules, when you know they'll take you out for a small loss, or take you out with a small profit when you think there is more to come. Honestly I think right here is the difference between success and failure in any trading method. It's painful to close a trade and then see it run, or take a small loss and see it run... but it's equally hard to see the eventual profits gained by making each loss a half point less than it could have been. You have a great set of trade management rules & I think if you adhere to them like the law you'll do very well.