Working on Consistent Profitability

[bigsnack]

Quote from tlow:


Its easy to say in hindsight that it hit the target, but it would be tough to watch that trade in progress...seeing a some good profit swing against you but then come back...that would be a nerve racking trade.

+1.

With more experience and screen time, you start to get a feel for what price should / shouldn't do before it hits the target. If it's selling wave one, and we are making clean steps downward, then you have to expect that we might get a small pause in the action (resistances becoming supports) before a continuation. Also, when the market isn't making clean steps in one direction, the action can work both ways. If we get smashed and drop 4 points down with no pullback, the next area of support turned to resistance is further away, so a bounce off of the low can be just as violent. It was areas like this that I would get eaten alive when I first started. I used to try and trade fibs (50% retracements) , but not realizing that the market needed an area of previous importance to to stop at would get me shaken out, spooked, or stopped in a hurry.

Here is how you can make a case for the original target being hit. We have had one solid wave of selling, then price makes a higher high around 12ish. Now IF the bulls are going to try and take this thing even higher off of the bounce, I would think that they would try and support 1169's around 12:15 (previous resistance should become support). When that fails, that definitely makes the case for holding, especially if your stop is already in a + situation.

 

[tlow]

Quote from bigsnack:


Here is how you can make a case for the original target being hit. We have had one solid wave of selling, then price makes a higher high around 12ish. Now IF the bulls are going to try and take this thing even higher off of the bounce, I would think that they would try and support 1169's around 12:15 (previous resistance should become support). When that fails, that definitely makes the case for holding, especially if your stop is already in a + situation.

That makes sense...back to the hypothetical and adjusting the trade...

Now, lets say that support around 1169ish held and a bounce up off that level started, would you look to exit right away since its now turned into a HH off the recent low and thus adjust the trade?

Im trying to be mechanical as I can, but these sorts of discretionary areas are where Im having trouble. Which, I don't find all that surprising considering Im just starting.

 

[bigsnack]

Quote from tlow:

That makes sense...back to the hypothetical and adjusting the trade...

Now, lets say that support around 1169ish held and a bounce up off that level started, would you look to exit right away since its now turned into a HH off the recent low and thus adjust the trade?

Im trying to be mechanical as I can, but these sorts of discretionary areas are where Im having trouble. Which, I don't find all that surprising considering Im just starting.

If 69's hold and we make a higher high, I would be out with absolutely no hesitation.

However, I know from face time that after a strong one sided push down to 66's, we should be able to anticipate a second "wave". Now, that may end up in a HL or a double bottom, but that would be something to be looking for. The good thing is that price should set up the same way all over again (a support becoming resistance), so you should be able to get right back in. Here's a chart from this morning to give a pretty good example of:

1. Selling wave
2. Quick breather (with an attempt to turn a resistance into a support at 1133's)
3. Support fails, becomes resistance.
4. 2nd selling wave.
5. The next time a resistance becomes a support at 28.50, it holds...at least in the short term.

 

[tlow]

Quote from bigsnack:


p.s., how do I post a chart so that it is part of my post and not just an attachment?

There's a link somewhere in my journal from someone else who posted but here's what I do:

1.) add attachment
2.) hit submit (don't hit preview, it wont save)
3.) the next page loads and you should see your post in the thread and hit "Edit/Delete"
on lower right hand side
4.) scroll down to the name of the attachment, right click on it, and "copy link location"
5.) click in the edit area of the window where your post is and at the bottom type (without quotes)
["img"]hit ctrl-v or paste["/img"] so it should look something like:

["img"]http://www.elitetrader.com/blahblahblah["/img"]

6.) hit save and it should load into the thread.

 

[bigsnack]

Hey hey, waddya know! Thanks

 

[tlow]

not to be a pain in the ass or anything, but if you choose to do that, can you scale down the image before you load it so there isnt as much side scrolling? If you aren't that computer literate, no worries

And thanks for the chart! Makes sense!

 

[bigsnack]

Yeah I can totally scale down, but now I'm locked out of my own post because I am too slow on the draw. If you want to have a mod delete that chart and then I will adjust the res on any other charts I throw up here.

 

[tlow]

So went back into the market today. I was pretty happy with the way trading went. Stay fairly disciplined and kept proper notes. I noticed during my bad streak I was keeping really poor notes. Not writing down what set-ups I was looking at, why I was entering/exiting, etc.

Trade 1:

7:01- Short 1152.25 Stop 1156.50 Target 1146.50
7:20- Stopped out Buy to Cover at 1156.50

-4.25 points

Not too sure why this trade didn't work out...maybe you guys can help me out with this one. Had some nice downward momentum, came back for a bit on a pullback then continued lowered. At this point, the downtrend was fairly extended but other than that just seemed it didn't work. I would say my mistake with this trade was not exiting after the "M" in the downtrend failed and reversed higher. I probably could've save myself 1-1.5 pts had I been more disciplined and exited when the PA confirmed that a reversal may be in progress.

Later on at 8:50-9:10, the market retested those lows and eventually did break down further...I was pretty unsure at that point so I decided to stay out. I wasn't sure if it was me that had failed on the first trade or if the trade just didn't work out.

Trade 2:

11:13- Long 1153.75 Stop 1151.50 Target 1157.75
1:04- Move stop to B/E
1:14- Sell to close at 1156.50

+2.75 points

Took this trade hoping for a continuation of the uptrend after the bottom had been put in. Pretty much a huge snoozer till the market closed. Stayed in the tight range until after 1pm. Came within 0.50 points of hitting the target. So close yet so far This trade went pretty well. Not sure what I would've changed. Pretty slow moving from the afternoon till the close.

I give myself a "B-" for the day. Unless you guys can correct me otherwise Felt good to get back into the swing of things and trade again. I felt good about everything, kept emotions in check, stayed diligent about taking notes all that sort of stuff. I feel like a much better trader when I go through those exercises. Would've been nice to come out a winner on the day but thats not such a terrible thing either since I feel I traded ok.

Total Trades: 2
Winners: 1
Losers: 1
B/E: 0
Total Points: -1.5
Avg. Win: $137.50
Avg. Loss: $212.50
Total Win Rate: 50%
Total Profits: -$75.00

On the chart, I just noticed on my entry price on the second trade it says 1152.75...should be 1153.75.

 

[bigsnack]

Hey man, glad you are still rocking!

I think you've already realized what was wrong with trade 1. You were a bit too late. I've attached a chart, to show you where I saw the entry for the same general area. One thing to comment on is can you see the "micro" supports turning into resistances as we head back down into that double bottom at 7:01? If you can see them, then you know that the next support should turn into a resistance as we break below the previous low. When that series of flipping fails (at 7:02 when 54.50's is being tested), that micro trend is over. I entered a little earlier than you, so my stop was a +1 in this area. I think your stop was too wide considering your entry point.

I think your long was a bit late as well, but it did work out. I've attached a chart that shows areas of interest to me over the session today. Only trade 5 was a full stop for me (-6 ticks). I've basically drawn a line at each support / resistance flip. When these coincide with other volume / $TICK criteria, it's a trade for me. Let me know if it helps or if it's useful.

 

[NoDoji]

Quote from tlow:


Trade 1:

7:01- Short 1152.25 Stop 1156.50 Target 1146.50
7:20- Stopped out Buy to Cover at 1156.50

-4.25 points

Not too sure why this trade didn't work out...maybe you guys can help me out with this one. Had some nice downward momentum, came back for a bit on a pullback then continued lowered. At this point, the downtrend was fairly extended but other than that just seemed it didn't work. I would say my mistake with this trade was not exiting after the "M" in the downtrend failed and reversed higher. I probably could've save myself 1-1.5 pts had I been more disciplined and exited when the PA confirmed that a reversal may be in progress.

Later on at 8:50-9:10, the market retested those lows and eventually did break down further...I was pretty unsure at that point so I decided to stay out. I wasn't sure if it was me that had failed on the first trade or if the trade just didn't work out.

I think this was a first class setup and an excellent entry. This whole move is a clinic in price action.

Price broke through yesterday's high on good jobs news, an excellent sign for the bulls' continuation move higher. The breakout should result in a pullback pivot that leaves behind a higher low. It looked like that's exactly what was happening at the close of the 9:20am ET bar. Trend-following longs were entering new positions or adding to winners at the close of that bar, or if they like confirmation, then they were waiting to enter long at a break of that bar's high.

A failure to break that bar's high would be a warning sign that price could retrace to the 20-bar EMA before resuming the move up.

Price fails to rally off that signal bar and breaks the pivot low of that bar, releasing a flood of sell orders that break right on through the 20 EMA. Next stop is the previous support price of 1156.25 provided by the 8:30am ET pullback bar low. That tries to hold and fails miserably, quickly breaking two more support levels before finding buyers at yesterday's low of 1152.50. Absolute textbook price action so far.

Price rallies to 1156.00 where previous support becomes resistance. The more conservative bears have now come out of hibernation to short this level. If you're an anticipatory trader, you already had a limit sell order there @ 1156.00 with a tight stop in case previous support doesn't become resistance.

If you didn't get filled or didn't chase an entry off that level, you're looking to short a breakout of yesterday's low, which would be a most confirmed entry to the short side.

Price tests 1152.50, wiggles a few ticks and comes back down where the breakout should produce decent follow through to at least 1151.50 giving you the chance to get out b/e if there was no follow through lower.

Your only mistake on this trade was not exiting quickly if it proved to be a failed breakout, which it did. The fact that price didn't even break another tick lower out of the gate was a warning sign to exit quickly because a 1 tick failed breakout is a reversal signal following a large move and wide mirror bars such as the 9:50 and 9:55am bars.

You can always get back in on a retest of that low, but I personally don't give breakouts a lot of wiggle room if there's no follow through.

So again I like the setup a lot and I like your entry, and I hope this post helps you limit the loss with similar trades in the future.