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swansjr
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Everything posted by swansjr
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Day 28 June 24, 2009 Three Trades. One winner and two losers. I actually felt I traded better today. My first trade was a loser that was an attempt to capture a trend change. I went long and like a lot of my trades my timing was off. I missed the low by just a few ticks - just enough to get me stopped out before the market moved without me. After that I needed time to mentally recover. Amateurish, I know. If I followed my mid-timeframe it sure looks like it would have done well. I just jumped the gun. Missed bottom by a few ticks. The next two trades were trend continuation trades. During my next trade I decided to perform a video capture. I though talking my thoughts and recording it would be good both during the live trading and provide valuable trading review material. If you watch the video you will see I still hesitate to take my signal, but at the next opportunity I jump right in. This scalp trade would prove to be successful and I then re-entered (with no hesitation) on the next signal in order to capture a runner. It did not work, but my rules where followed very well on these last two trades. You can watch it here. Live_Trading_2009-06-24_1.swf My trading performance was better while I recorded myself. This may become a new habit. P&L: ($95)
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Thanks! I agree that knowing when to step away and stop trading is a great skill.
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Here is a 5-minute video on my basic scalping setups. The setup is designed to scalp within the intermediate trend. Watts_Scalp_Entry.swf
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Day 27 June 23, 2009 Four Trades. One winner and three losers. My gosh I traded like an armature today. :doh: Today's early morning session I found the market was simply melting upward. All my indicators pointed higher and it should have been a cake walk. But all those divergences spooked me into not taking action. What! We're on the 6th wave up. This is going to end soon. Up the market melted. The market trends longer than I often think it will and there is my problem once again. I was frozen because I was thinking too much instead of acting on my signals. Once I did finally get the guts to push the button the inevitable happened. Two losers in a row as the market dynamic shifted. My rules state to stop trading after two losers. But I just had to put on one more trade to show mother market that I know what I'm doing as a trader. Smack! Three losers in a row. I could feel my emotions bubbling away and a little voice in my head stating, "The market is out to get me. It does not mater where you enter, you are doomed to fail. How stupid are you!" I walked away from the computer and did some other stuff. Man, this month has been a rough road. I hope to learn from it. I know I can learn from it. But right now, I'm licking my wounds again. P&L: ($210)
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Day 26 June 22, 2009 No trades today.
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It's a good question. As described in the PDF from Watts, the system has two primary setups. First is a trend continuation setup where you buy/selling re-tracements within the major trend. The second is a counter trend setup when you try to enter when the trend is changing. I've been focusing on the trend following aspect while observing the possible trend reversals as a curiosity. The thing is, a trending market is not always present and at first I would treat all price action as a trending setup. During a trending market the money came easy. But during not-so-trending markets, I would struggle. It's now dawning on me that the so-called counter trend setup can be adapted (with some modification) during these non-trending days to scalp reversals. I'm still reviewing this but it sure looks it has potential. To answer your question directly if I can tell when the market is in a non-trendy mood, yes. At least, I think I have a basic handle on it. It's rather obvious at times based on how flat my moving averages are. The way the price moves is also different. Trending price action is a lot smoother and price moves away for the averages. In non-trending the price hugs the moving averages more and has a "choppy" look. Lots of false breakouts and tails. At times price is contained between my two moving averages as well. By skipping non-trending markets I can keep my trend trades in the black. Yet, it appears that the choppy markets are just as tradable but you must change the way you approach it - something I've not been doing. I hope to detail both concepts soon and perhaps get some feedback from viewers. I might be happy with simply ignoring trending days and using the trend setup. However at this time, I'm interested in become proficient at both.
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Day 25 June 19, 2009 One trade. One winner. Quick update on Friday's trading. Today I took a trade based off my mid-term chart and entered on the 89 tick. It was not a smooth ride but my target was hit. I continued to watch the price action on both timeframes. It's been a busy weekend as I still need to review my setups and how they interact between my 89 tick and 445 tick charts. P&L: $100
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Day 24 June 18, 2009 No trades today as it was chop suey again. I did sit and watch the action from the 445 tick chart and made notes on how to handle this type of market. The 445 tick appears to give decent indication to turning points and with the help of divergences I may develop some rules to trade this chop. My initial mistakes with the system has been to always trade the same way - trend following. This works great some of the time, but then there is the other times (maybe most of the time) when there is more chop than trend. Scalping 7-10 ticks of profit appears very realistic. I would like to formalize my ideas a bit more and during the next choppy session, trade it in simulation mode.
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I have to say I only used the room a few times simply because I don't trade during the day and that's when the room is active. Right now, they are trading YM during the regular session. I trade early morning (:5:00am - 8:00am Central) on EC. However, the few times I've been there the people have been friendly and helpful. Watts is not in the room everyday day. But he does post which days he will be available.
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This is a brief 5-minute video on my chart-setup. I thought some of you may be curious. In the future I would like to put more of these together to explain my setups, entry and exit rules. Everything on the chart is inspired by Watts Trading. The_Watts_System_Screen_Setup.swf
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Day 23 June 17, 2009 One trade. One winner. Today my main computer died. I think it's the motherboard or a memory card. It often won't boot up or if it does it will lockup after about 10 minutes of use. I ran some diagnostics on it and can't locate a problem. It's an older machine from 2004 but has served me well. Tonight after work, it's off to the Apple Store. My dedicated trading platform is another computer, so at least I can still trade. With all the fuss with my other computer I managed to get one trade in this morning. Probably best because it was chop suey today. On thing I'm beginning to notice on these choppy days is looking at my higher time frame (445t) is a big help. Historically, I would use the higher time frame as confirmation while my focus is on my lowest timeframe. This works in a trending market but most of the time the market is not in a strong trend - or so it seems. Yet, if I change my focus to the higher time frame and actually look for setup on this timeframe, this seems to work out much better. A trader named "brutusdog" sugjested this is the way he trades the EC and that lead me to take a look. Thanks Brutusdog. More on this later... P&L: $100
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That's really a great idea. Thanks for sharing. I can see how having a catalog of your good trades can be a confidence booster.
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Day 22 June 16, 2009 Five trades. Two winners. Three Losers. I'm experiencing my Vietnam. But is that light I see at the end of the tunnel? I'm not sure. It may be a muzzle flash of an M16. Today was choppy until the very last 30 minutes of trading. During the chop I caught a few bits of shrapnel. Ouch! I should have waited for the chop to subside and for the market to break. However, the urge to take signals overcame me. I got stung a couple of times before the market finally broke downward. I took the first pullback for an easy scalp win. I then entered again on another minor pullback and hit my scalp target. It's easy when the market is trending nicely. I have to remember; when the market is choppy it's best for me to stand aside. While you can scalp in the chop, you have to be far more skilled than I. If I simply wait for a trend, I do ok. While I'm disappointed at my performance I'm working hard to stick to my plan and make progress. I'm still trading real money and won't switch to a simulator, yet. I know I can do this! Sticking to my plan is proving to be a real challenge. I need to constantly remind myself what a "good" trending market looks like and simply step aside when it's not trending. I need to play by my rules, not the market's rules. I tend to get caught up in watching the market attempting to anticipate each turn. Knowing when not to trade would help me a lot. I really should review my trades. What did the profitable ones look like? What I'm I doing wrong with the losing trades. I bet most of the losers are me attempting to trade in a range bound market or fighting the larger trend. I know better. I'm rambling as I dump my thoughts on this board. Time to go and prepare for tomorrow's battle. P&L: ($90)
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Day 21 June 15, 2009 One trade. One Loser. Another down day. While I was all ready to follow my trading rules when the time came to prove myself, I failed. I was eager to enter into what I thought was a trend reversal trade. I got stopped out. But like many of my stop-outs, I was correct in my overall analysis but too early on the trigger. The market dipped down, took out my stop and moved upward in my original direction. I was off by a few ticks. Anyway, there is a bigger problem here: That is, that was I should have avoided. Lately I've been watching out for trend reversal setups. It's just a mental exercise but then I actually perform the trade. Stupid, I know. My plan currently dictates only trend continuation patters. After that dumb trade I just watched the price action for about two hours and the EC market largely consolidated after an overnight large push down. There were a few opportunities for more skilled players but I stayed out of the action and watched. I've now lost all the money I made when I started live trading a few weeks back. While I feel beaten, I also feel like I can come back from this. Most of what I lost was due to mistakes on my part. The only exception was the massive 10 tick slippage on one trade. My mistakes all involve not following my plan. I know what needs to be done and I now, I just need to do it. I'm hesitant to return to simulated trading right now for the simple fact it's the pressure of live money on the line that needs to be worked out. My basic methodology has been tested off-line on historical data and live with real market data on a simulator. All have proved profitable. It's the mental part that is holding me back. I'm going to try to go back to my mindset I had a few months back when I started live simulation trading. That was to only take the best signals. There were days were no setup would appear because the rules were too tight on what was considered valid. But when they did appear, they worked well. This should help restore my confidence and P&L. Onward I press. P&L ($100)
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Day 20 'June 12, 2009 Today was a slug fest between me, my ego and mother market. This morning as I stepped into the ring, I saw a picture perfect downtrend that formed all night. This downward trend appeared to be running out of steam. I scalped away trying to take signals when they appeared. I failed to act on several but others I did take. Mother market hit me on the nose first; I punched back with a right hook. Then there was a jab to my stomach. I returned with my right hook which just missed, and finished off with a left jab. By 8:00am I was tired, bloodied and on the ropes. But I was still standing! I made five trades and ended up breaking even. I was determined to break my losing streak and demonstrate I can take signals even under adverse conditions. While I remained alive during this round, my trading skills sucked. I was happy I was not totally paralyzed after my 4th strait loss this week, but I need to take my signals when the arrive! At times, I felt rather confident that this game of probabilities will turn around if I stop thinking so much and just act! I think I actually felt that it's really impossible for me to blow my account if I just follow my rules. I will surely have losing days, but I have an edge and over time that edge will materialize. I'm looking forward to next week to demonstrate I'm improving as a trader. I define my risk. I take my entries as the come. Losses are part of the game. Gave a good weekend. P&L: $0
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Day 19 - June 11, 2009 No trades today. What a week this has been so far. My weekend review showed positive numbers and I was feeling good about my discipline at not over trading and taking my losses quickly. I came in Monday looking for opportunity. I only found one trade which worked out. I'm certainly not over trading like many other people do! All was well. Then Tuesday really hammered me psychologically. Today I was getting conflicting signals on my timeframes and I was not about to jump in without a solid looking entry. So I watched the market as it danced around my Keltner Channel and moving averages. Strictly speaking, there were several valid setups that would have worked out. However, I'm in ultra conservative mode until I see a cleaner, decisive move on EC. One more day this week.
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Day 18 I'm a day late for this post. This post is for Wednesday, June 10th. One trade. One loser. The gods don't want me to trade today. I awoke eager to make a comeback from yesterday's debacle. I was determined to trade well. Turning on my computer monitor I see I have no internet connection. To make a long story short, I regained my connection about an hour later and right in front of my face was a long setup forming. I think I was a little excited as I entered long but was stopped out as the pullback was deeper than expected. Damn! That hurts. The market would then move on without me. Ouch! even more pain. This is my third losing trade in a row and I know it's affecting my psychology. If I was trading with a clear mind, I would reenter on the next signal because such a signal is just as valid and it would have been profitable in retrospect. But I'm still licking my wounds and I stand aside. I seem to recall my last drawdown period a couple of months ago which was similar to what's going one now. I was sim trading and it seemed like I hit a wall. Some of this difficulty may have been the behavior of the price. The EC moves, like all markets, in waves and during "clean" advances or declines (as seen on the daily chart). Making money is relatively easy then. Consolidation is a bit more difficult - I take a few losses and my fear ramps up. I'm determined to dig myself out of this hole (I'm a bit harsh on myself since I'm still positive since starting my live trading). I'm determined to take advantage of runners as well. Handling loss and letting runners win seem to be major issues for me. Let me make a list of my issues. 1. Letting losing trades affect my trading skills. Pure psychology is at work here as I view a losing trade as "bad." I do not fully trust myself or my trading system that over a series of trade there will be some losers but in the end I have a profitable edge. 2. Not taking every valid setup. This is a fear of being wrong and looking for the perfect setup so I can be right. 3. Not holding on to winners. Hate to see all that money on the table just sitting there! P&L: ($100).
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Day 17 Today was a miserable day as mother market pole-axed my account. My first trade was idiotic right out of the gate. I did not follow my rules at all. :doh: I took a counter trend setup that I thought was setting up. Watts does have a counter trend setup but I’ve never practiced it – so like an idiot I try it with real money. Lost that one for about 8 ticks. OK, I can move on. All my time frames are aligned for my next trade. I enter long on a minor pull back. My screen does not update for ½ a second or so and then wham! About 10 bars are painted instantly and I’m taken out with about a massive 10 ticks of slippage. Price marches on in my original direction. This really sucks. That last trade cost be big time erasing a lot of gain. I feel beaten down and cheated. I’m still positive since starting this with my real money so that’s one good thing. Of course I have a lot of time on my side. I’ll be back to do it again – but following my rules. P&L: ($330)
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Day 16 Quick update today. Most of the EC downward trend was complete by the time I was up in the morning. Price action was against the major trend and was a little choppy. I did manage to make one trade, which I scalped for my 8 ticks. The entry and exit were fine. But opportunity was slim. P&L: $100
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Revised Trading Rules: Trading Times: 5:00am - 830am central. Screens: 2225t long-term trend screen. 445t intermediate-trend screen and a 89t chart to pin-point entry and exit. Position Size: I only trade one contract per trade. Hard Target: First target is 8 ticks from entry. Runner Target: If I perceive the market as "trending" I will not exit on my Hard Target. Insead I use an opposite Keltner channel as a trailing exit. 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 two consecutive winning trades, stop trading for the day. Maximum Day Loss: $300.
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Week 4 Summary Overall it was another week of substandard trading. My money management rules along with some ability in actually halting my trading activity when things are not going well is what keeps me from killing my account. While I’ve managed to make money this week, my execution is lacking. I’m often not taking trades when I get a signal, or I make dumb entries. It’s class not following the rules and/or acting emotional. I also feel I should be taking advantage of a runner more effectively. I still have to think about this aspect. Right now, I’m more worried about my entry and actually taking signals when they appear before me. I separated my live trades from my simulated trades. The results are in the images below. First are my trading results from my live trades: Next are my trading results from my simulated trades: Both the live trading and the simulated trading have about the same number of trades. But it looks like the live trading has a better overall profile. This is because of 1) the great runner I had last week and 2) A slight change to my system. Most notably I have bumped up my target profit from 6 ticks to 8 ticks. I did this because it seemed 8 ticks was often hit just as likely after my entry. I also wanted to squeeze more profit per contract and help reduce the effects of commissions and fees. My next adjustment to my trading setup came with the removal of the two contracts. When I opened a postion with two contracts I would keep a very tight stop because I’m trying to normalize my risk across all my trades. At times this was not very practical and I felt uncomfortable with it. Furthermore, when I was re-reading Van Tharp material I ran across his opinion that scaling out often produces poorer results when compared to a single exit method. I have done some testing of this over the year and it does seem that in many cases you will get better trading results without a scaling out rule. That’s it for now.
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Ah, good point. Thanks.
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Day 15 One trade. One loser. Quick update today. The EC market was choppy and when the unemployment news hit pre market, Wow! I tried to take a signal which was probably stupid since the market was behaving so strangely. Sometimes fundamental news does weird and wild things to market participants and it's best to step aside. Anyway, I decided to play. I was stopped out rather quickly and I called it a day. P&L ($100)
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Is anyone planning on recording this presentation?
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Day 14 Two trades. Two winners. My entries were a little sloppy today but I did take them instead of sitting on my hands waiting for the "perfect" signal. My first trade was a short as EC appeared to be trending downward. My target was hit quickly. You know you're on the right side of a strong market when your target is hit quickly! On the next opportunity I entered with a single contract with the full intent to exit this contract with runner parameters. The market quickly went through my scalp target and I held on. The downward trend looked intact on my larger timeframes and I was determined to get a few more points. Down and down the market went. Boy does that feel good! I exited when it looked like the bears were exhausted and I could not have been more spot-on on the exit. While I did not exit when price retraced to my upper Keltner band, I was pleased because I did not sell at my scalp level. Obviously I need a lot of work yet but this added some encouragement that I can do it. This chart below shows both trades for today: In short, I'm very please I was able to execute a runner. I saw the market was in a trending mode and I was able to take advantage of it. I did stop trading after this, but the opportunities were ripe. Today looks like one of those days where money would flow into my account if I would just keep trading. It felt easy. A period similar to this happened in April for several days, if I remember correctly. Anyway… "Let's take things slow. Let's not get greedy." were the words I said to myself. Besides, I had some non-trading obligations to take care of. I was done for the day. Looking at the charts now I was right. Multiple signals were clearly apparent that provided great opportunity. That's ok. There will be many more days like this. In light of what I have learned over the past several weeks, I will be reviewing my rules and making slight modification to my entry and exit rules. P&L: $370
