Working on Consistent Profitability

Well, today was a snoozer, but I traded poorly regardless of how the market action was. I was just watching in the morning when the huge upward move came. Im glad I was out of the market...I waited for the news to come out then I went looking for trades. I've also noticed Im having trouble getting a feel for early market and first 10-20 mins of trading. Definitely need to start watching this more closely to get an idea of how things function.

Anyway, since there was very little volume and action today after the move, I was mainly watching the 5min chart for trades. Per NoDoji's comments, after we got in that range bound area for most of the day, I was looking to play a bounce off the top or bottom of the channel. The best set-up came at around 11pst, was going to go short right at 1079.00-1078.75, but I didn't pull the trigger...had all the details hammered out in my notes...stop 1079.75 target 1076.00...but didn't take the trade. The next trade I failed to take, Im not terribly upset with myself about. At 12:10ish, starting establishing new resistance area, I had all the details written down, but realized this trade was only good for 1-2 points and I didn't want to take a scalp type trade. Im glad my thought process was correct and in the end glad I stayed out. I am realizing my emotions and thinking are definitely tied to how the market is moving...faster market, start thinking faster, slow market, slower thinking/emotions. I think the slower emotions part gives me too much time to think or get overly anxious about a trade/maybe not "care" as much...who knows...but need to get this under control.

So my last trade was pretty dumb. I was watching the 5m chart almost all day and I saw another minor blip down off the 1078.00 range on the tick chart and decided to take it short. I am pretty sure this trade was a cause of "wanting to be in the market" and upset I didn't take the earlier trades. If I had been watching the 5m chart and concentrating better, there is no way I would have taken this trade. I think my lack of concentration and wanting to get at least 1 trade in was my downfall today.

Trade 1:

12:37- Short 1078.25 Stop 1079.75 Target 1075.50
12:45- Stopped out Buy to Cover at 1079.75

-1.5 pts

Total Trades: 1
Winners: 0
Losers:1
B/E:0
Total Points: -1.5
Avg. Win: 0
Avg. Loss: 75.00
Total Win: 0%
Total Profits: -$75.00

Here is the 5m chart:
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Having been burned badly many times in the "major resistance, way overbought, can't go higher, well, at least certainly can't go higher than X" couldron, I can provide the following conclusions from my expensive experiences:

Support and resistance are the prices at which the opposite camp overwhelmed the other side, and price turned around. These levels aren't ceilings or floors, they aren't containment levels. They're control zones: Price zones where the bulls and bears will fight for control, and these levels can break out as easily as they can hold.

When a support level is tested and holds up well three times (as ES did recently around 1037.00), buyers will fear missing the bounce up and will expect the previous resistance level to be tested at the very least. The previous resistance level to be tested was the 1072.00 zone and this morning price sliced through it like butter, creating a breakout of 1) previous resistance and 2) the 20-day moving average. With price having closed above the 20 MA, it's very likely that the 1098 double top zone will be the next stop UNLESS the economic news disappoints. In other words, without an opposing force to change the current sentiment (up), you should always be thinking continuation. (Credit to Bighog for drilling that into my head for over a year.)

When you trade without a stop, it means you are trading based on a strong opinion, not price action. Your opinion may be completely correct, but your timing can be off. "The market can stay irrational longer than you can stay solvent."

PRICE ALWAYS TAKES PRECEDENCE OVER NEWS & FUNDAMENTALS.

If you have a trading plan (exit if price hits X), fading moves and averaging down can work as a strategy. Ammo provided a great example this morning of how a professional manages an average down trade:

09-01-10 05:50 AM

sh 60.75 ,offer 62,63,64 going into employment #s in 25 minutes

09-01-10 07:59 AM

avg 62.5 out 68.75

All that said, fading a strong run can work very well ...until it doesn't.
 
Hello! The mood of this journal seems pretty friendly and gentle, so I will throw 2 cents in if that's okay. From looking at a couple of your past charts, it would appear that you buy/sell breakouts of levels, and then oftentimes your b/e stops are when there is a test of support turned resistance or resistance turned support. Would that be a correct observation?

Have you thought about trading those retests as opposed to the breakouts themselves? Typically that can give you a very clean cut entry and place to put your stop, and it can also help you trail your stop in a meaningful way (Trail supports turn resistances or vice versa, if that's how you choose to manage your money)

I know my strategy includes an indicator (NYSE TICK), but the price analysis applies so I will throw up a chart and see what you think.

FYI I use a 512 tick chart, and use the most recent price swing or hesitation to help identify support turned resistance or vice versa. I won't comment on the NYSE TICK unless asked.
 

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Quote from tlow:

And the tick chart:

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More...

You will not progress until you realise that there were no shorts today. None. Ignore what you can draw on in hindsight. Open yourself to the possibility that the best trade was to go long at 09.30 today and hold until the close. I can guarantee that many traders did this and did well, as they knew the outcome in advance.
 
Quote from tlow:

Trade 1:
12:37- Short 1078.25 Stop 1079.75 Target 1075.50
12:45- Stopped out Buy to Cover at 1079.75
-1.5 pts
More...

Same question that I posted to Matcha: Today...

$TRIN = 0.2-0.3 most of the day
Advancers to Decliners Ratio - 6 to 1

Why do you want to do a short trade????

Is this like moths always need to flock to the candle light?

The right mindset should be trying to look for a "bearish" moment to long.
 
Hello! The mood of this journal seems pretty friendly and gentle, so I will throw 2 cents in if that's okay. From looking at a couple of your past charts, it would appear that you buy/sell breakouts of levels, and then oftentimes your b/e stops are when there is a test of support turned resistance or resistance turned support. Would that be a correct observation?

Have you thought about trading those retests as opposed to the breakouts themselves? Typically that can give you a very clean cut entry and place to put your stop, and it can also help you trail your stop in a meaningful way (Trail supports turn resistances or vice versa, if that's how you choose to manage your money)

I know my strategy includes an indicator (NYSE TICK), but the price analysis applies so I will throw up a chart and see what you think.

FYI I use a 512 tick chart, and use the most recent price swing or hesitation to help identify support turned resistance or vice versa. I won't comment on the NYSE TICK unless asked.
 
Quote from Bolimomo:

Same question that I posted to Matcha: Today...

$TRIN = 0.2-0.3 most of the day
Advancers to Decliners Ratio - 6 to 1

Why do you want to do a short trade????

Is this like moths always need to flock to the candle light?

The right mindset should be trying to look for a "bearish" moment to long.
More...

Bolimomo,

What TRIN, A/D, and other criteria do you use to go long / short / unknown?

I have used TRIN (admittedly not combination with A/D) for several months... I ultimately came to the conclusion that even with it below 0.4 or above 1.7 it was only marginally reliable... maybe I won and maybe I lost using it, but the idea that "TRIN always wins" has not proven out for me so far... in fact, it seems very often that "TRIN is a trap" as much as it wins.

Thoughts?
 
Quote from GatlingGun:

Who said I claim to be an experienced trader? Perhaps you're right and I'll consider that going forward...

When you say 82-84... do you mean 1082 or 1084?
More...


I think the market answered your question.
 
Quote from GatlingGun:
Bolimomo,

What TRIN, A/D, and other criteria do you use to go long / short / unknown?
More...

Draw a reference line of 1.0 on the TRIN chart. 1.0 is neutral. Generally... TRIN below 1.0 is bullish, above 1.0 is bearish.

A bullish day, you typically see TRIN around 0.5 or so.
A bearish day, you typically see TRIN above 2.0 or so.

It has to been taken consideration into the context as well. With S&P up 20-30 and Dow up 200-300, there can be no doubt this is a very bullish day.

Also you need to note not just the value, but the intraday trend of TRIN and A/D to see if the sentiment is shifting.

Here is a screenshot of a page that I use. See the A/D ratio started as 12. But came back down to about 6. (Still extremely bullish). Advancing issues over 2500 at all time today.

The lower chart is AMZN. (One of the stocks that I trade regularly.) It has almost a text book case: bullish up. Flat during doldrums. (Note no retracement.) In last 2 hours... took off like a rocket.

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