swansjr

Day 9 November 18, 2009 P&L: $97 on 1 trade. This morning consisted of a lot sitting and watching. The market was, once again, in a strong bull mode all throughout the evening. Kind of makes me want to stay up late. In my days before I got married I was a night owl and trading EC at 2:00am would be realistic. I'm not so sure now. Anyway, the market started breaking trend lines when I appeared on the scene around 5:00am. Today's action was also a little confusing because I noticed two distinct trend lines that were in play. After the first one broke, the second one broke I was asking myself, how do you count the two downward pushed after a trend line break? do I count four? I started guessing that it would be a three push down to a resistance area and sure enough it happened. The first push down broke the second trend line and the last two pushes were for the second (longer term) trend line. But I did not take the trade because I was not convinced my concept was correct. I'm trying my best to simply trade setup I have defined, and this is not one. So I watched. Sure enough it bounced. Then it bounced even harder creating a very strong bullish candle. I jumped in for a quick trend continuation scalp that took less than 1 minute to complete. Price would then test it's extreme from the first trend line break. I would have shorted at this point, as per my plan, but it was getting late in the morning and I needed to get to work. This work thing is really getting in the way of my trading! No video today.

Day 8 November 17, 2009 P&L:$(244) on 3 trades. Today was a screw-up. My first two trades were well executed. My first trade nearly hit my scalper target. When it missed it by a tick or two I moved my stop to break even +1 tick. I was stopped out. OK fine. My second trade took me out the same bar that I entered. Now, this was a signal that something was wrong. I even noted this in my video recording. However, I let my emotions get the best of me as I entered on third time. The entry was not even a valid setup - I was chasing the market - and I got nailed for it. Damn! :crap: I was on the verge of catching myself but I lapsed into trading emotionally on my last trade. Time to refocus once again. I need to constantly remind myself. I need to push away from my trading screen when my setups are not materializing. There will be other days to trade. I want to make consistent money, so that means I need to stick to my setups. Please see the attached video for today's screw-up in more detail. Live_Trade_2009-11-17.swf

Day 7 November 16, 2009 P&L: $45 on 2 trades. This morning I decided I was not going to take scalp profits. Instead I was going to let the market move in my favor while I advanced my stop. I would exit either on a test of an extreme level or after a break of a trendline. The market was in a bullish trend during the overnight session. When I started watching the market at 5:00am the bullish trendline was in the process of breaking. I watched for two legs down and purchased the first H2 bar - a typical trend continuation pattern. Price moved in my favor but not very much as my stop was hit. I lost around $50. In retrospect my initial drawing of the overnight bullish trendline was not have been correct. With a slight adjustment I could see I was actually buying the first pullback - not the second. The market would fall to a longer term bullish trendline. It appeared this was the second leg down and I wend long at the first H2. Again, I held on systematically moving my stop up. This time I was taken out for $100 profit. Today would have been a good scalping day, but that's OK. I followed my rules well and I'm aiming to make more profit per trade. Holding on to these trades and knowing when to get out is a skill I've not worked on at all! Attached video of today's live trades: Live_Trade_2009-11-16.swf

Day 6 November 13, 2009 P&L: $97 on 1 trade. The market was in a bullish trend in the overnight session. When I started watching the market at 5:00am the bullish trendline was in the process of breaking. I watched as the market was coming down to test a major support area (the yellow line on the chart) and planned on going long there. The market created two legs down and hit the support level. This is a continuation pattern (bullish) so I went long. I scalped this trade, but in retrospect that was based on emotion. Anyway, my target was hit and I was done for the day. Lots more info on the attached video. Attached video of today's live trade: Live_Trade_2009-11-13_1.swf

Day 4 - Day 5 November 12, 2009 Day 4 (Wed, Nov 11, 2009) I placed no trades as none of the patterns looked very appealing. It was on of those days where most of the price action happened very early in the morning and stalled in the few hours before the opening bell at the NYSE. P&L: ($17) on 2 trades. Today was Day 5 and proved to be my first losing day since starting this thread. My first trade of the day was a reversal setup as price broke a trendline and re-tested the extreme. I entered on the first H2 bar after testing the previous lows. However, I was promptly stopped out. Price would move lower and hold at a previous day's support level. This constituted a lower low after a trendline break and I was weary price was simply going to continue to move down. However, I made my second attempt at going long by purchasing the H2 bar. The second trade sputtered as it move up which resulted in me moving my stop up fairly aggressively. I was expecting a more forceful move on a reversal trade. In retrospect I may have been too aggressive in moving my stop. The rally was short lived but I managed to grab 9 ticks. Price made three distinct pushes up then failed to hold it's bullish trendline. Staying in the trade until the trendline broke would have resulted in 11 more ticks. Attached are two videos of today's live trade. Live_Trading_2009-11-12_1.swf Live_Trading_2009-11-12_2.swf

Just to let everyone know I started a new thread, Return of Daybreak Trading where I will be day trading EC based on setups from Al Brooks methods. See you there.

Well, I might be wrong as well. But I think I have the gist of it.

Yes, I agree. I'll be posting images soon.

Day 3 November 9, 2009 P&L: $147 on 1 trade. Today's video is a live trade! Check it out below. Today I woke-up to find the market in a bullish mode. I had two bullish trendlines on my chart. One was a short-term and the other, which extended over a day, was a longer-term trendline. The market came down and testing the short-term trendline and I was looking to go long at a H2. I was never filled as the marked moved down to test the longer-term trendline. Once again no setup. So, here I had two broken trendlines and I started to watch for a good L2 entry near the newly formed bear trendline or the EMA. But I noticed the downward action was weak and not very convincing. I thought to myself I will sit this out to see what happens. Some time later the market broke the bearish trendliing and I waited to see a test of the lows. In fact I was anticipating the market to create a lower low as it tested a former support level. In short order the market came down and tested the very level I was watching. I planned on going long at a H2 after the test of the support line. I did enter but it was a bad fill. The market was moving swiftly and I had to do a little chasing. This did not make me feel very well. My stop was $150 and I adjusted my target to $150 as well. I did not use a scalp target because I was playing this as a reversal trade (which it was) and the potential for a sizable move was real. Since I had to go to work I could not use an open discretionary target. Then my Internet connection went down! This has never happened with an open order. My connection is very reliable. I called TradeStation and in a very short time I was speaking with a representative. He told my my target was hit and my stop loss was cancelled. I was told that when I enter my trades on the "matrix" the orders are sent directly to the exchange. At least, that was my understanding after his explanation. So, target it. This is five good trades trades in a row. Well, the fist one was a scratch. So, lets call it four good trades in a row. I'm very pleased with myself. The last two trades were entered after I watched the market for over 2 or 3 hours. I'm patiently waiting to for clear setups and entering. This may be beginners luck, but I'll take it. Attached are two videos of today's live trade. Live_Trade_2009-11-10_Part_1.swf Live_Trade_2009-11-10_Part_2.swf

Day 2 November 9, 2009 P&L: $97 on 1 trade. Today I woke-up to find the market made a huge bullish move in the overnight session. I drew what I thought was a major trendline. In short order price action broke the trendline which put me in a counter trend mode. I waited for a re-test of the highs before going short. Price proceeded to slowly meander for hours. It was not until around 8:30 (nearly three hours later) did the market retest the overnight highs. I shorted at the first sign of weakness which was an L2 entry after a bearish bar broke though a support line. Because it was so late in the morning (I needed to get to work) I only took a 8-tick scalp. Attached is a review of today's trade: Trade_Review_2009-11-09.swf In summary, I waited for three hours to get my setup. Nice job as I stuck to the plan!

Day 1 November 6, 2009 P&L: $430 on 3 trades. I've been trading my new method for a few weeks now. I've been experimenting with which size tick chart to use, target levels and just getting an over all feel. Thursday (November 5th) I made a few mistakes as I noticed I was getting sloppy. I set a commitment to myself to begin this journal Friday, November 6th. I studied my setups the night before and reminded myself that I should be only taking the very clear signals. In short, if in doubt about a signal simply wait for another signals. Things really could not have worked out much better for my first day. Trade #1 Trend Continuation - Entry on H2 pullback. While my first trade was a great entry I got spooked and exited at break even. Naturally, the trade would have worked out fine. This was my first trade of this new thread and I got spooked. This turned out to be my only mistake for the day. Trade#2 Trend Continuation - After the trendline broke I was still looking for a trend continuation trade (short) as I was anticipating a test of the previous lows. Trade #3 Counter Trend - After a test of the lows I was now expecting the market to reverse. I was planning on holding this as a runner. Price did make a new lower low and I entered a H2 after the the market created a lower low above the EMA. I played this one safe! Attempting to determine when to get out was another story. I immediately noticed a former trend line from days before that extended into my chart. I placed a sell order just below it. I could not be happier with today. Outside of my first mistake I executed everything very well. The market made it "easy" as it moved in textbook fashion. Trendline break followed by a retest of the extreme where I can enter counter trend. Beautiful! I really felt good today. Attached is a video review of my trades: Trading_Review_2009-11-06.swf

I'm not sure if you consider what Al Brooks does as "Price Behaviour" but you may find it interesting. I sure got a lot of out it.

Return of Daybreak Trading My first attempt at day trading was based on the Watts Method. Dissatisfied with my performance I've since abandoned that technique in favor of what I consider a simpler approach. Because it's "simple" I feel I'll be less prone to paralysis-by-over-analysis. This was a problem I had with my previous system. I also find the techniques make a lot of sense because they jive with how I believe markets work. The methods and techniques I'll be structuring my trading around is entirely based upon Al Brook's methods as described in his book, Reading Price Charts Bar by Bar. Let's start. I've been rather poor at keeping a trading journal in the past. So I've decided to keep a journal here. I hope by posting daily updates (or nearly daily updates since I most likely won't post if I don't trade) I will feel more compelled to trade well. Hell, everyone can see my trades (the good, the bad and the ugly), right? So I better do this well. So, my hope is with this new accountability of showing my trades to fellow traders on this site, I may become more strict when executing trades against my trading plan. I've been also toying with the idea of recording my trades with a video screen capture program and a microphone. But that's another story. I'm trading the EC market with real money in my TradeStation account. I execute trades on two basic setups: 1) Trend Continuation Pattern 2) Trend Reversal Pattern. Trend continuation patters are just that. Entering the market in the direction of the intermediate trend as determined by trend lines. This often means entering long on H1, or H2 pullbacks. Or, entering on the short side on L1 or L2 pullbacks. Trend reversal patterns are a great opportunity to catch a good sized move. These consists of the intermediate trend reversing. Brooks has a specific setup for this which consits of a intermediate or major trendline break and a retest of the extreme. I would like to explain these more in detail soon. Perhaps a video would be best. Below are a few descriptions of my trading environment and money management rules which will most likely will evolve over time. Trading Times: 5:00am - 830am central. Screens: 610-tick chart with a 20 period exponential moving moving average. Position Size: 1 contract. Scalp Target: 8 ticks from entry Open Target: discretionary. Often break of trendline or a previous resistance area. Risk Per Trade: The maximum to risk is 12 ticks (12 ticks * $12.50 per tick = $150). Many of the setups will risk far less per trade. When to Stop Trading: After two consecutive losing trades, stop trading for the day. After three consecutive winning trades, stop trading for the day. Maximum Day Loss: $200. Again, my goal is to trade well. That means executing against my trading plan without deviation. It also means to show consistency over the days, weeks and months. Emotional reactions are the enemy. Its fine to be emotional, but don't let it affect your trading decisions. When emotions bubble up, walk away from the computer. Cool off. Now it's time to get down to business.

Yes, I'm in the processing of suspending this thread. Why? Well there are several reasons which I discuss below. I've been trading this method for a fair amount of time and I'm simply not happy with the results or my performance. I have at least 90+ trades under my belt - most of that with my own money. During my experiment with this technique I discovered several issues that I personally had trouble dealing with. 1) My inability to pull the trigger. A lot of this was due to the fact that I was using two screens each with several indicators. I tended to over analyze the situation and not pull the trigger because I would find reasons not to. 2) My primary setup is buying pullbacks within a trend. Simple, but how far is the pull back? At times my entry setup would trigger before the pullback was finished. Too often in my opinion. This resulted in skepticism of my setup. This caused me to refer to a higher timeframe to aid in my decision. See point 1 above. 3) I was often scalping but I soon realized because of my psychology and low win rate I needed to have a few runners to really make money. But when do I let a contract run instead of scalping? I could always trade two contracts and do both (scale one and let one run), but I found this unsatisfactory. The above three points seem to be my weakness. I did find an improvement when using my higher timeframe (445 tick) to help filter trades. I then started to wonder why not simply trade from this chart. If trading from a 445-tick what do my setup pullbacks looked like on the 445-tick chart. When I looked that's where I had an "ah ha!" moment. To make a long story short, trading "with trend" setups on the 445-tick chart started looking really similar to setups used by Al Brooks. Indeed, what Brooks calls High 1, High 2 (bull entry) or Low 1, Low 2 (Bear entry) signals are nothing more than Watts pullbacks described on a high timeframe (5-minute in the case of Al Brooks preferred timeframe). Ah! This makes sense. However, because Brooks entry points are on a 5-minute chart a lot of the noise on a 89-tick or even a 445-tick were reduced. After discovering Brook's method I started to read all I could. In short order his basic trend following signal is simple and made a lot of sense to me. The use of trendlines along with his setups really made sense as well. Brooks also solved the problem with knowing when to take runners. Brooks has identified what I think is a a fabulous reversal pattern. At these points letting your contracts run is the way to go because the potential is so high. With Brook's method you have one chart, with only a 20 period EMA. You trade based on candle patterns and trend line. No multi charts, no indicators, just candles sticks and trend lines. How refreshing. So, I plan on suspending this thread and starting a new thread using techniques from Al Brooks. I plan on trading the same market (EC) during the same morning hours. Already I've taken several trades over the past week and it appears I'm much more capable of placing trades with his methods. As I continue my hunt for a trading style that fits me, I plan on documenting my journey on a new thread. I'll post a link here to the new thread once I have it up and running. See you there.

No trading today or until late next week. Leaving today for Photoshop World in Las Vegas and then spending some time shooting at Bryce and Zion national park. Photography has been a hobby for a very long time. Really looking forward to the Expo and visiting the national parks. Good luck everyone!

Day 49 September 29, 2009 Remember in my previous post I was worried about my rising confidence? Man, I hate it when I'm right! Well today my confidence took a hit as I reached my daily stop loss amount. Ouch! I reviewed my trades in the attached video and in retrospect today's trades were not too bad. Some stop-outs occurred on valid entry signals and some were made by my dumb mistakes. Dumb mistakes need to be eliminated! In short, it was a day where I could do no right. Valid signals were losers and impulse trades were losers. Feel free to view the video for the gory details. And I was trading so well...:doh: Trade Review Video: Trade_Revew_2009-09-29.swf Overall, today was painful but I still feel good. I know what needs to be done. I just need to stick to my trading plan and I'll do OK. P&L: ($312)

Day 48 September 28, 2009 One trade. One winner. Today I executed one long trade. I missed a few others as I was busy catching up on other duties such as email and the news. Shame on me. Anyway, the trade today was a classic Watts setup and entry. P&L: $100

Day 47 September 25, 2009 Last week I traded a few times and did rather well. I even managed to get a runner for a few extra bucks. On the downside I got lazy and did not post anything on this forum. However, I did diligently record each trade in my spreadsheet. Here are the totals through last week. You'll notice I now include Expectancy Score along with Expectancy when evaluating my system. Expectancy is the the amount you expect to make on each dollar risked. Expectancy Score is Expectancy multiplied by opportunity. Thus, the more often a system trades the more opportunity it has to produce. In short, the Expectancy Score is a number used to compare different trading system by taking into account both Expectancy and how often the system trades. These concepts can be found in In 'Trade Your Way to Financial Freedom' by Dr. Tharp. Trader Mike has more information if you would like to read about it. I hate to say this out loud in fear of cursing myself but, I'm starting to get my confidence back. I brush off my losses and jump right back in. I feel good - at least for now - as I know what needs to be done. Now, it's just a matter of doing it. Executing correctly. Which reminds me, I'm still composing a post or two on my latest setups using Watts as an entry technique.

If you want to print to four decimal places then try this: print (avgEntryPrice:2:4,CCIval)

That's exactly what I'm thinking. I plan to set up some chart to test this idea.

This was all done with the Universal Clone. Consistency is a problem if I just let the system trade all day, every day. This makes me wonder if limiting time and/or dates it trades would it produce better results? Backing to testing...

That's a great idea but I did not record that information for this test. I'm going to start another round of testing and I'm going to include time. I'm also going to track each trade - not simply a daily summary.

Below are the results through September 25, 2009. As you can see this is a losing strategy as it stands today. Trades take into account commissions only. Results Summary Equity Curve I've been tracking seven strategies across YM and ES and the summary is below. All System Summary Nothing stands out as decent. I sorted the system by best performing on a per trade basis. The reverting nature of YM and ES on an intraday basis seems to play havoc with Universal. This makes me wonder if any of the following would improve the system: 1) if the currencies or commodities 2) trading on larger timeframes including holding positions over several days 3) only trading during the first two hours or last two hours in the day when the markets tend to trade 4) only trade during a trending market. Maybe some type of filter such as volume or ADX In short, trading this system blindly for the entire day, every day, does not work. My limited experience suggests using Universal selectively. Again, the markets don't often trend and that's exactly how Universal makes money.

Below are the results through September 25, 2009. As you can see this is a losing strategy as it stands today. The Universal is a trend following strategy and on an 89-tick chart it trades far too much. Trades take into account commissions only. Results Summary Equity Curve I've been tracking seven strategies across YM and ES and the summary is below. All System Summary Nothing stands out as decent. I sorted the system by best performing on a per trade basis. The reverting nature of YM and ES on an intraday basis seems to play havoc with Universal. This makes me wonder if any of the following would improve the system: 1) if the currencies or commodities 2) trading on larger timeframes including holding positions over several days 3) only trading during the first two hours or last two hours in the day when the markets tend to trade 4) only trade during a trending market. Maybe some type of filter such as volume or ADX In short, trading this system blindly for the entire day, every day, does not work. My limited experience suggests using Universal selectively. Again, the markets don't often trend and that's exactly how Universal makes money.

Day 46 September 21, 2009 Two Trades. Two Winners. Today the trades came fairly easy, for a change. The market was in a sell-off mode but a short term bottom appeared to be in. My first trade was to go long at the first pull-back after price moved above the 89SMA. Attached a video of my first trade. Video of first scalp. Live_Trade_2009-09-21.swf I then watched the price action. All up-moves continued to fail and/or were very weak. Eventually price broke decisively below the 89SMA. At that point I shorted the first pull-back and was quickly rewarded. Both trades were very clean and took only minor heat. I followed my rules 100% and walked away happy for a change. P&L: $200