jasont

I am actually surprised this hasn't got more attention Chris. I actually have looked through the Money Management thread on this forum before and was surprised at the lack of threads (22 in total) in comparison to say the Technical Analysis threads which total 327. Presuming the statistics of 95% of traders losing in this game over a longer term basis, I would say that according to this forum 95% of traders are working on the technical analysis more than the risk management. Something I have recently been guilty of myself. What interests me the most, and something I have been relearning over the past few weeks is that if the answers are found in technical analysis rather than risk management, why wouldn't traders risk it all on each individual trade? I'm presuming most traders hear that you can't predict the market, yet from the looks of the amount of threads in regards to Technical Analysis in comparison to Risk Management would say that they don't believe it.

Trading For 20th October Today's Trading Goals: Identify The Trend And Note Changes In Trend Where Needed Only Place Trades At Reaction Points In The Direction Of The Established Trend Place Every Trade My Plan Says To Only Trade After 9:50am 9:10 Major news in at 10am so won't trade until after then. VIX is still up near the 70 area which indicates the high volatility is still with us at this point. Gold at this stage is declining from its recent attempt to move higher. The same goes for oil. USD still on the rise. All three indexes have put in a possible bottom, I'm not really going to place much emphasis on it just yet though. Roughly up at about 15 points in the overnight market. We are set to open within Friday's Value area so whilst we remain in that area I will be cautious of any trends. 9:35 I'm going to continue to watch the ES today and see what happens. I'll keep the YM in mind but not move to it just yet. Tick mainly trading above the zero area, currently chopping at the open. 9:44 Stocks testing the selling side of the market as seen by the Tick. New low for the day made, no real trend seen on the 1 minute or the 5 minute charts. Still appears to be chop. 9:51 Tick moved strongly into positive territory now, made new high for the day. Still not trading prior to 10am due to the major news. Volume declining on the move higher. Volatility appears to have quietened off from the past few weeks thus far, could be in anticipation of the news. 10:04 Market up a fair bit after the news. Halted at the 970 area, just out of Friday's value. Looking for a move down to the 59-58 area as a possible reaction point. Tick testing the negative area at this stage. 10:15 In long at 958.75 due to reaction point at 59-58, EMA's and a volume spike on 3 second chart. Market moved up to 62 area and then hit stop at 960. 10:21 Decline has seen decreasing volume though the Tick is making good efforts to sell. 10:28 In long at 957.25 for the EMA's and volume decline seen on the 5 minute chart. Market moving my direction. stop currently at 959.50. Stop hit for another small gain. 10:38 Market is in down trend according to 1 minute chart. EMA's currently trading sideways, Tick playing mainly in the positive but swinging across the zero area quite a bit. Volume was light on the attempt to swing higher. 10:50 Calling it a night. Daily Wrap Up Still struggling with my consistency my partner offered to sit with me as I trade to help keep me on the right track. I must say it did help quite a bit and it allowed me to see a few things occur. Big thanks to her on that. I kept to the plan today which was good and probably the best I have kept to it in quite a while. As the market came to my points of interest and showed signs of slowing, I jumped in right away instead of hesitating. I actually can look at the second trade and had I opted to enter as we moved up, I would have been chopped out. The very thing I have been fearing in my trading was prevented by getting in without the confirmation of certainty that I tend to search for. That being said, I was actually going to write how I was on the wrong side of the trend with my two trades. However I realized that at the time there was no real way I could determine that as we had made a higher high and had been putting in signs of a higher low. In fact we did put in a higher low. Placing expectations on myself to know where a trend is when there is no clear one is the sort of unrealistic pressures I have been placing on myself during my trading. It was good to see that I outlined the area I was waiting for and when other elements lined up, I took the trades. The way I followed my plan today is how I would like to follow my plan each day. Setting myself a goal of taking every trade that my plan says to helped me quite a bit. On the first trade I outlined the area I was looking for a trade, when I saw the EMA's line up as well as big volume come in, I took the trade with little hesitation. I trailed the stop on it well and though it wasn't a big gain, it came up positive. The second trade was working another reaction point area that I only noticed as we reached it. I saw the EMA's still holding and the decline of volume on the way down which prompted the entry. Again it wasn't a big gainer but it all counts. So for following my plan today I am giving myself a 10 out of 10. I took every trade my plan said to take and analyzed the market well. There was a time I was skeptical of the second trade working out as I took 2.25 points heat on it initially but I stuck to the plan and ended up on the day 3.5 points.

Thanks for the great insight FW. I stuck to the ES today as I tend to find myself more familiar with it. I didn't think about the slippage issue that I could come across on the YM though I'd have to check it out for myself with my trading. I see what you are saying about the YM in regards to it being relative risk wise. My idea was that 30 points being my stop on the YM would have 30 ticks as opposed to the ES stop of 3 points having 12 ticks. Although the YM would move through the 30 ticks just as quick as the 12 ticks on the ES, the 30 ticks does allow one to break up the risk a bit more as opposed to having to bulk. If you understand what I mean. Moving in units of $5 as opposed to $12.50 allows one to position size better.

Weekly Wrap Up This week I don't really have much to say in regards to my trading as I only took one trade and I didn't trade Friday. The one trade was a loss and then I became a bit gun shy for the rest of the week. This has prompted me to work on my trading plan a bit more and search for some answers as to why I am not pulling the trigger. I guess the first thing I will assess is the current market. No doubt everyone here is a little amazed at the amount of volatility we are seeing, I am quite on awe of it to be honest. Average range size of 1 minute candles has been above 2 points on the ES for the most part and above 5 points on the 5 minute chart. On the YM we are seeing an average range size of 20 points on the 1 minute chart for the most part and above 50 points on the 5 minute chart. During times of high volatility I cannot trade the same risk management as I do during lower volatility periods. I have seen volatility reach 30-40 as a measure of the VIX in the past but never have I experienced readings of 70+. I believe this is playing a part in my failure to pull the trigger as my 3 point stop, though greater than what I use during lower volatility periods, just doesn't seem to provide me with the buffer I'd like. I do get the feeling the ES in relation to my capital size is not allowing me to utilize the type of risk management I feel would be best. At least in the current volatility conditions. Considering the average range of a 1 minute candle is 2 points, using a 3 point stop means I will be easily chopped out of trades should I not make the ideal entry. Now I don't believe the actual problem is using the tight stop, what I do believe the problem is that I have developed a tendency to presume I know what is going to occur next in the market. As per Brownsfan's recommendation I have been reading "Trading In the Zone" by Mark Douglas. I had forgotten how many great insights that book actually had. So as each trade opportunity would arrive, instead of accepting that this trade was independent of any other trade I have made though had similarities to past patterns, I referenced each trade opportunity to a past one. I believe my reference has aligned itself with past trades where I have been shaken out early. Going by memory, the element that causes me hesitation in my trading is that prior to a trade I fear getting in and then the market shaking me out right before it goes in my direction. So to combat that I attempt to wait for the market to prove to me that it is going my way prior to entering a position. There is where I look for the certainty that doesn't exist on an individual trade basis. That is enough to drive me to attempt to look for better ways to confirm I am right before getting in. The silly part is, no such thing exists. It's like searching for that pot of gold at the end of the rainbow. I have placed so much emphasis on not being shaken out of quality trades prior to entering them that I end up missing them altogether. Should I attempt to get on them, that hesitation has me entering late like what occurred last week. I actually shoot myself in the foot by not getting on when my plan says to by waiting for that extra movement before entering my position. I get on late and I get chopped up by the regular back and forth that goes on. In a simplified way, it is like trying to trade a trending strategy and entering upon a breakout. Instead of entering on the breakout one waits for the market to move a few points to confirm the breakout is real. They enter a few points beyond the breakout and their stop can't be placed further away than right at the point of breakout. Obviously the market has a common tendency to return to breakout areas to test them and the trader gets chopped up on a common basis simply because they wanted that extra confirmation. I guess there is a learning or re-learning for me as I previously traded in a fashion where the individual trade outcome was not known, yet the longer term result in regards to profit was more predictable. Had I stuck with my CFD trend following system back in 2007 no doubt I would be profitable with the gains made on down trends. That doesn't bother me though as trading in that style didn't suit me on a personal level. Where does this leave me right now? I am actually of the belief that I may need to switch my trading over to the YM instead of trading the ES. Both markets trade very similar to one another so I don't believe there will be a big change. The main reason being that with $5 per point I have more options in regards to my risk management. I can still use the same tools I do with the ES as they work on both markets. I will need to get used to the s/r levels in the YM but don't believe that will be a major problem. I am going to watch the YM this week and look at adjusting my trading plan to suit it accordingly. The same entry and exit setups will remain however more care will need to be taken with creating a sound risk management strategy. Staying in the game at this point is my number one priority.

Thanks for the excellent post sdoma. I agree that we tend, as humans, to place labels and forms on things so we can reference them in such a way. In a spiritual sense, though I don't want to get into this on a trading forum, it can be good to form reference but knowing that it is just a reference and not a certainty is always humbling. My trading quite a while ago took on the approach of trading like the current trade outcome was random but the results over a long period of time was less so. That plan was based upon trend trading and we hit a period where the trending stopped. At the time I believed the way I was trading was wrong and that I needed to find a way to improve my analysis. Only now am I beginning to understand that my method from a long time ago was not wrong, in fact the way I traded appears to be the way I should have been trading. It just wasn't complete and I needed to experience markets more. I needed to understand and recognize the differences between market types. So really what I have been doing though not the way I need to trade, has been somewhat of a blessing in disguise. During the past year or so I have learnt about the nature of markets and been able to experience trending markets as well as ranging markets. I can relate to your comments above how big traders are feeling the pain as their system isn't working anymore. I used to trade CFD's on Aussie stocks beginning in 2007. I only had a way to trade trending markets but as we hit the peak in June 2007 and began to switch from up to down my strategy stopped working. I had sensible risk management, though now I know it could have been better, which kept me from losing my account. I now understand that the risk management side of things is key to keep me in the game, then working on multiple strategies for the different styles of markets so I can adapt and continue to trade when one style no longer works. The benefit the past year or so has given me, though not profitable, is the understanding of market movement under different conditions.

Trading For 16th October Todays Trading Goals: Identify The Trend And Note Changes In Trend Where Needed Only Place Trades At Reaction Points In The Direction Of The Established Trend Exit Positions According To New Plan Only Trade After 9:50am 9:30 No major news out today. Market opened roughly 8 points above yesterdays close. Keeping an eye on the VAL at 933.75. Tick opened positively. VIX made another rise yesterday, a reading of 70 is becoming the new 20 hehe. Oil declined yesterday, Gold doesn't look much better. Everything is selling at this stage, not just stocks. 9:37 910 area potential RP point, we sold off pretty hard from the open but appear as though we are failing to follow through. Volume declining on the rise, Tick playing across the zero area but making a fair go of positive numbers at this stage. As I type this the 910 area has been busted through without as much as a second thought. 9:39 Reaching the SMA and EMA's with volume extreme hitting on the 3 second chart. I think we are actually gearing up for a positive run here though I could be wrong. If we break these EMA's I will be looking for long trades rather than short trades as long as the Tick remains positive. Not until after 9:50am though as thems the rulez. Still keeping an eye on that VAL at 933.75. 9:46 Ok the Tick is currently suggesting a trend up type day. Market action suggests the same as we trend up on the 1 minute chart and have bounced from the SMA. I am concerned about the VAL area but will see what happens when we get there. It could stop this uptrend in its tracks or we could see a move back into yesterdays Value Area. Volume declining on the rise in the 5 minute chart though the 1 minute chart is showing a consistent volume. 9:53 917 area is a potential RP area. We are halting up at 927 resistance area. Volume declining on the sideways movement, Tick still remaining positive though testing the downside. 9:58 Market concerned me the way it broke through the 917 area so I didn't place a trade. Not the sort of action I'd like to see at a reaction point. Tick made a new low in the Tick showing stocks aren't ready to slow the selling just yet. Will wait a bit longer to gauge where we are today. Playing in amongst the EMA's and SMA right now so will let the market find direction here. 10:01 Sheesh whilst I was typing we moved up to the 920 RP area and are now hammering down. From the looks of it the move up was possibly used to sucker the longs in for better positions on the short side. 10:06 Funny but a 28 point range day so far can be described by me as choppy. No clear direction at this point though down currently looks the most likely candidate. Tick playing across the zero more but still taking deep strides into the negative area. Looks like more selling is being seen by stocks than buying at this point. Range day as indicated by the Tick at this point. EMA's and SMA running steady sideways right now indicating the same thing. 10:13 Does anyone have any reasons to be buying right now? If we went to zero would anyone see that as a good buying opportunity? I can hear Eddie Murphy's wife asking the market, "What has the market done for me lately Eddie?". Good ol Delirious or Raw, whichever one it is. 900 area right now is a potential RP point though I'd rather see some movement into 904 I doubt it will happen anytime soon. 10:23 Gee this market doesn't give one much time to get on board the train. No more than 10 seconds at 903 and we press down. 10:29 I'm not exactly sure what is going on with this market right now but my data is seeing freezes. Occasionally it seems to lock up and then keep going. Well 903 seems to be the reaching point and I didn't get my chance to trade it as we were only there momentarily. I must say that catching this market is difficult at the speed we are traveling. 10:31 Market still down trending according to the 1 minute chart and also by the 5 minute chart. Pretty steep trends at this point which leads me to believe we could see a sizable bounce at this point looking like 900 or 904 area will be reaction points. Market declined on the bounce, Tick is in negative territory complimenting the downwards action. 10:41 894 is a point of interest. Tick still negative suggesting trend down type environment. Big volume came in on the recent low, not enough for me to strongly believe it is a market turnaround but enough to suggest a decent pullback. 894 may be close enough for the market to break through, if that's the case then 900 or 904 area is my RP areas to concentrate on. 10:52 Whoops been typing away instead of watching the market as we reached 894. Bah, what a pain in the ass. 10:55 Lowered volume on the decline... any chance of a move back up to 900 or 904? Not going to matter anyway as it is going to be time for me to call it a night. I wonder if I should consider putting in orders ahead of time that way I don't miss the moves? 10:57 You know when we reached 903 and turned down I was looking at placing a trade at 901-901.50 as we played in that area a bit. I didn't trade because I was worried that we could reach 904 and possibly overshoot it a bit. I was afraid of getting in too early and taking a loss. I guess that is the core of what happens when we reach areas my plan says to place trades at. 11:04 Ok time to call it a night. Another night of good analysis but no profits to show for it. Sometimes I wonder if I could get someone to place the trades at the points I see in the market. Maybe then I'd make some gains. I believe the opposite to trigger happy would be trigger unhappy which seems to be the category I fall under right now. Ruth Barrons Roosevelt says in one of her books that there are generally two types of traders. The analyst who manages to see what the market is doing very well but isn't as good at placing the trades, then there is the trigger man who can pull the trigger without hesitation but could perform better with some more analysis before doing so. Ruth mentions that a blend of the two would be the ideal trader. Just an interesting thought. Daily Wrap Up Same old story just a different day. At least the one thing I am consistently doing well is analyzing the market. I seem to be improving in that avenue which I guess is a part of becoming a better trader. Now if I can just get my finger to agree with me, I might be able to make some more progress. I found it interesting to dissect my thoughts when we reached the 903 area. Now I think about it, when we reached the 894 area, I was concerned that we could reach the 900 area. This seems to be a pattern but I'm not exactly sure what the underlying reasoning I seem to have is. The most prominent thing that sticks out in my mind is I am searching for certainty in an uncertain environment. My plan says area X is a highly probable point to place a trade as A, B and C all combine to make it so. There is a Catch 22 though, I feel like I want to confirm the market is going my way yet once I do so, the market has moved too far for me to get on board safely. Fear of being wrong or fear of losing $? Treating each individual trade as the most important trade and placing too much weight on each trade. I believe I need to adjust my mindset to look at trades in groups rather than individually. Instead of looking at the shorter term of each trade, it might be an idea to assess my trading in groups of 5 trades or 10 trades. That way instead of emphasizing each individual trade, I will look at them as a group and place less importance on an individual win or loss. So for following my plan today I am giving myself a 3 out of 10. I analyzed the market well and didn't place any trades prior to 9:50am. However I also didn't place any trades that were in the plan. I am trying my hardest to build some consistency here and it is very difficult to do so if I don't take the trades that are in the plan. I think I may have a new goal for tomorrow.

I guess for me, I am trying to build consistency. If I follow a plan, whether I am profitable or not, I will know where things are going wrong because I am doing the same thing over and over. That makes it much easier for me to improve in comparison to adding trades here and there that aren't in the plan.

For me during my backtesting the trades pre 9:50am produced terrible results. I had one or two winners for memory and about ten losers. My overall standing points wise was about 1 point up. Brokerage however makes it a useless exercise. What I find is that pre market or the overnight market has little bearing on what I see occurring during the actual market open. I tried trading the open during backtesting according to the market action during pre market and to be honest, it did the opposite to what normally works for me. Now I'm not saying there is no correlation between pre market and market open as I have seen many traders here promote strategies looking at pre market to make an early trade. Unfortunately I cannot see any relationships that provide me with a solid edge. It is likely that my perception is the reason. I actually find giving myself 20 minutes of space from the open allows me to spot any areas of interest without any bias related to placing trades. That 20 minutes has in fact been a big help to me as I use that time to identify the type of day we are seeing, what the intention of the traders behind the market is and I avoid the emotional trading that is seen at the open. I personally have found myself chopped up numerous times during the open which far outweighs the occasional one I get right. I also see what you're saying about going against the rules on a high probability trade and at times it is easy to see a good trade prior to 9:50am. My backtesting says to me that it is my least profitable time to place a trade. So I tend not to take the high probability signal as I know there are many other opportunities to trade. I trade a rather quick time frame, well when I can get on the trades as the market currently is moving like a bullet at my trade points, so 3-4 opportunities often arise within an hour or so.

Trading For 15th October Trading Goals For Today: Identify The Trend And Note Changes In Trend Where Needed Only Place Trades At Reaction Points In The Direction Of The Established Trend Exit Positions According To New Plan Only Trade After 9:50am 8:53 No major news for the morning today. Currently we are near 30 points down from yesterdays close. VIX is still up at high levels, all 3 indexes slowed down after Monday's rise. Gold and Oil both getting a small rise but at this point appear to be a bounce in a declining market. 9:33 Market making a pretty strong move down right from the open at this stage. Tick is in negative territory. 9:42 Market remains down, stocks still selling though negative tick readings are expected after such a big down open. Volume increased on the way down and currently seeing a bounce on the 1 minute chart that is attracting less volume. Currently in a downtrend in the 1 minute chart. 974 possibly an RP area. 9:59 Took a short at 971 for a move down from the SMA at the 974 RP area. I was late on the entry and I took a loss at 974. Tick is still playing in the negative area though we have tested the positive area. 10:03 This emphasizes the importance of patience in this market. We have now made new lows for the day. 10:07 Seems to be getting choppy around this 967 area. 10:17 Tick still negative, we reached the SMA again but I missed the opportunity. We are trending down on both the 5 minute and 1 minute charts. 10:27 Market has been trickling lower at this stage. No strong down moves seen, does this mean there are strong buyers in today's market? The Tick indicates a trend down type day. The 70-72 area is of interest to me and somewhere I'd be looking for some action. Volume has remained steady, pretty much summing up this market with no clear side surging away. Tick is in fact showing a buying divergence at this stage. 10:41 I sat here when the market reached 971. I had waited for the market to reach that point and instead of placing the trade I just watched the market play around at that area and now its on its way down. For the life of me I just didn't pull the trigger. 10:51 I'm calling it a night. Daily Wrap Up I have sat here wondering what to type and not really sure on the direction I'll take. My analysis today was spot on, my timing on the first trade was off but the idea was good. That threw me after I watched the market go in my intended direction, I let it get to me. I then noted the market reaching the 70-72 area being a place I'd look for a trade and I couldn't place the trade. I physically sat there and watched as it couldn't break that area. It declined whilst I sat there dumbfounded at the fact I wouldn't put the trade on. I know it was based out of fear of losing but it doesn't make sense to me. I know the figures during high volatility periods are favorable. I know my analysis is good, for the life of me placing the actual trades seems to be like tearing stitches out. If I do the first one and it's ok, I can do the next. If the first one hurts, well then I hesitate the next time. For following my plan today I am giving myself a 4 out of 10. I analyzed the market well and took a trade in the direction of the trend. The trade was part of the plan but the timing was off. I can't really be too hard on myself, maybe I need a break from trading or maybe I just take it way too seriously.

Thanks for that FW. I had thought about recording the range during the times that I trade however didn't really think of a good way to use it. You have just provided me with a good way to use it. Thanks mate.

Trading For 14th September Trading Goals For Today: Identify The Trend And Note Changes In Trend Where Needed Only Place Trades At Reaction Points In The Direction Of The Established Trend Exit Positions According To New Plan Only Trade After 9:50am 9:09 No major news out today. Vix made a sizable move down yesterday and all three major indexes made a sizable bounce. This could be a bottom but I'm not willing to presume so until some solid foundations are built. USD still looking rather healthy at this stage also. 9:26 Market looks set to open 40 points higher. 9:35 Rejection of higher prices at the open is seen by the market action. Tick is remaining positive, could be similar to what we saw yesterday as the market looks to gain buying power at lower prices. Playing near the 1050 support area right now. 9:41 Market doing a good job of selling right now. Moving down pretty hard and fast at this stage. Trend down is pretty steep. Stocks showing some buyers are still with us as the Tick hesitates at moves beneath the zero area. Volume on the 5 minute chart has declined on the down move. 1046 is current area of interest. 9:46 Hmm, selling is relentless at this stage yet the Tick is doing a good job of holding positive numbers. Volume has picked up on the selling but could be the airing out of positions. 9:52 Was hoping to see us reach the 1038 RP area but we pulled just shy of it. Tick has made a big move into negative territory. Buying in amongst this may be a poor idea and until we make a significant base here I will stick to the short side. No strong pullbacks seen on the 5 minute chart as yet. 10:03 First sizable bounce we have seen today. 1035 is the area I am watching. Will see what we do around that area. 10:08 Hmm pulled away before reaching my area. Pretty volatile day today so half positions will be used for trades. I am being strict on where I enter today as well. Reason being that with this volatility you need to nail the entries to avoid being shaken out unnecessarily. It may mean placing no trades today but if that is the alternative to 3 losing trades that were the right idea but poor timing then so be it. 10:11 Tick playing more around the zero area now than before. 10:21 It is interesting to note that we found some support at yesterdays close. We have seen some buying come in down at yesterday's close but whether or not it is sufficient to turn this market or not is yet to be seen. Tick playing at zero area however is making more movement above the zero area. I actually believe this market may be too volatile for my liking. I'll stick it out to see if something comes up however I am not going to place any expectations upon myself to trade. 1 minute ranges are between 4-7 points which is pretty massive in my opinion. 10:48 Well we pulled lower after some initial hesitation and it was a decent sized move. I am going to call it a night here. Another day of no trades, a bit disappointing as I had opportunities however the volatility was too high for me. Considering the minimum average range on my 1 minute chart was greater than my stop, I think I made the right choice. It was good to watch this market move and I think I did well picking up early the intended direction of this market. Daily Wrap Up Today was a rather volatile day. It reminded me of the past two days we had in recent weeks where the market only wanted to sell from the open. It was good to see that I picked up early on the type of day we were seeing and although disappointed I didn't trade, I am aware that it was the right choice. Running a 3 point stop whilst the market is showing 1 minute ranges of 4+ points requires my entries to be spot on. The last day like this I traded, I took two max losses and only barely kept a trade that turned around the day. My RP levels were better than yesterday and I realized that it is hard to get spot on levels when we are so volatile. Either way I accept the choice I made not to trade and will work further on the testing of my exit strategy. For following my plan today I give myself an 8 out of 10. I analyzed the market well, only looked for trades after 9:50am and respected my risk limits when I saw how volatile the day was. Update On Testing I have found some interesting results regarding scaling out with my plan. I thought entering on a full position and then scaling out would have provided a better return than entering and exiting full. Entering on a full position and then scaling out did in fact provide better gains than scaling in and then scaling out. However it still did not provide better gains for my plan than entering full and exiting full. The results are below for the full period thus far: Scaling In And Scaling Out Total Days Traded: 25 Total Trade Ideas : 75 Wins: 61 Losses: 62 Total Trades: 123 Win %: 49.6% Points Gained: 179.25 Points Lost: -119.00 Total Points: 60.25 Average Win: 2.93 Average Loss: -1.91 Risk Reward Ratio: 1:1.53 Average Points Per Day: 2.41 Average Points Per Trade: 0.49 Max Win: 13.5 Max Loss: -3 Entering Full And Scaling Out Total Days Traded: 25 Total Trade Ideas : 75 Wins: 72 Losses: 77 Total Trades: 149 Win %: 48.3% Points Gained: 223.5 Points Lost: -156.50 Total Points: 67 Average Win: 3.10 Average Loss: -2.03 Risk Reward Ratio: 1:1.53 Average Points Per Day: 2.68 Average Points Per Trade: 0.45 Max Win: 18.25 Max Loss: -6 Entering Full And Exiting Full Total Days Traded: 25 Total Trade Ideas : 75 Wins: 70 Losses: 82 Total Trades: 152 Win %: 46.1% Points Gained: 244.5 Points Lost: -161 Total Points: 83.5 Average Win: 3.49 Average Loss: 1.96 Risk Reward Ratio: 1:1.78 Average Points Per Day: 3.34 Average Points Per Trade: 0.55 Max Win: 27 Max Loss: -6 So from the above statistics I have found that entering and exiting a full position for my strategy is the best way to go in regards to total point gain, average point gain, risk reward ratio and max win size. I was actually a bit surprised that scaling out wasn't the better option. However when I think logically about it, I would enter risking a full position, then take half off after a few points and then trail the other half. If the first half is not taken at least at the same or great than I originally risk, it is difficult to make good gains using my particular plan. Now I have also noticed a decent sized decline in my results whilst testing days beneath a VIX reading of 20. Big sized moves are less frequent than we see in times above a reading of 25. Trends do exist however they are not as determined. An interesting observation I found was that the SMA on the 1 minute chart isn't providing as much guidance as it does during higher volatility periods. The SMA is giving an average for a 30 minute time frame. The EMA's on the other hand which give the average for a 1 hour time frame and a 5 hour time frame, are providing much better guidance. What the above mentioned tells me is that trends are there, however strong trends that retrace only marginally, like we are seeing in the current environment, are less frequent. When I trade the low volatility periods using the EMA's as my main guidance as opposed to the SMA which works well during high volatility, I get better results. What this comes down to is more patience being needed during lower volatility periods and less trades in effect are placed. More attention is placed on the 5 minute chart during these lower volatility periods which could also mean trailing the stop may need to be adjusted. I have also found that a 3 point stop in lower volatile periods is unnecessary. The maximum heat I am taking on winning trades has been 1.5 points. That has been only once that it has occurred as well. That leads me to believe that lowering my stop to 1.75 points rather than 3 points would improve my results during lower volatility periods. This is still in early periods of testing but does look promising.

Hey FW, do you mind explaining what you mean by that?

Trading For 13th October Trading Goals For Today: Identify The Trend And Note Changes In Trend Where Needed Only Place Trades At Reaction Points In The Direction Of The Established Trend Exit Positions According To New Plan Only Trade After 9:50am 8:58 No major news due out during market hours today. Currently the pre market has us at 50 points higher than Friday's close. Guessing it is caused by the efforts globally to slow the selling we are seeing. VIX reached 70+ levels last week, Gold made a large move lower on Friday and Oil still making significant losses. Friday was a violent move down followed by an equal reversal. Turbulent times we are seeing and although it could be a promissing reversal we saw Friday, I'm not willing to treat it as a bottom until further confirmation. 9:30 Tick pretty strong into positive territory off the open. General market action is also pretty strong right away. 9:37 Tick still holding positive numbers, came down toward 940 support area and now making new highs for the day. 9:44 New low, Tick currently still positive though it may not last long. Hit the 950 resistance area and moved right down to the 940 support area. Volume declined on the rise on the 1 minute chart. 9:48 Currently the market is rather choppy according to the 5 minute chart. No clear trend on the 1 minute chart as yet. 9:52 New low made, Tick still holding positive area, big volume came in prior to the new low. In a messy area between the EMA's right now, in a current downtrend. 9:59 Rather choppy market at this stage. Makes it difficult to identify strong RP areas, Tick remains positive which is keeping me from placing any short trades at this stage. Volume declined during the recent sideways stall on the 1 minute and is picking up slightly on this push higher. Chopping around at the support area, above EMA's but beneath SMA on 1 minute, in a 1 minute downtrend. Best leaving this until we tip our intentions, otherwise it isn't a game of probability but gambling. 10:05 Down prevails. 10:11 Tick has moved into negative territory but struggling to show follow through selling from the stocks. Pushed a couple of points beneath the previous low though we are seeing buying halt the downward movement. 10:15 Downtrend broken on big volume suggesting there is interest to buy this market. Tick moved back strongly into positive territory suggesting we may see a trend up type day. Haven't yet seen market action supporting that scenario though. 10:38 Gotta love bathroom breaks that result in lost trades. 949 area was a reaction point coinciding with the trend up and it currently looks like we may move higher without me. Tick shows stocks remain strong, volume rose as we moved higher on the 1 minute chart and declined on the pullbacks. 10:42 Heavy volume just came in, we may be set for a decent pullback here. Big selling period by stocks seen on the Tick. 10:53 Calling it a night. Rather uneventful. There was a trade I missed due to a toilet break and another where my RP level was off. I didn't really feel switched on tonight with my RP areas which no doubt fueled my lack of trades. I am pleased that I followed my plan and if that means no trades because my RP areas were inaccurate then I think it is a good day. If my plan presents no trades I can physically take, then I am pleased if I don't trade. Daily Wrap Up An example of how the the Tick helps me stay on the right side of the market was seen today. I didn't place any long trades as I missed my opportunity as I was having a bathroom break however I steered away from the short side early on. I had an off night when it came to identifying the RP areas which I believe could have been caused by a bit of fatigue. I stuck out the day though and only looked for trades that were on my terms according to the plan. That resulted in no trades, 2 true opportunities were there however one of those I was away, the other was missed due to my RP levels being off. The latter I am referring to was at 10:25am where I had my RP area at 941 however 942 in hindsight was the stronger area. There isn't much more I can say on a day where I don't place trades. I followed my plan well and my analysis was good in regards to assessing the type of day we were likely to present. For following my plan I give myself an 8 out of 10. Mainly the score is a result of following my plan through patience. There was a period there where we were 50/50 to go either way and instead of trying to pick one or the other, I let the market sort itself out and wait for a retracement.

Thanks for the great post FW. I know exactly what you mean by needing to separate the scaling in/out from full position in/out. Comparing the process of entering full and scaling out with entering full and exiting full is next on my agenda. I haven't had time to break that down just yet but will get to that as soon as I can. It will be interesting to see those results. The history for my backtesting of VIX levels less than 20 is May this year. So far the results haven't been as desirable as I'd hoped. In the above 25 VIX testing I had 15 days backtested with 3 losing days. On average that is one losing day per week which is acceptable to me. However with the testing of days which read below 20 VIX I have experienced 3 days of 5 tested thus far which end as losses. This suggests to me that either my stop is too wide on these days or I am looking for trends in ranging days. I will continue the testing though and update the results. Hopefully I can see if there is a common problem occurring.

Hey guys first of all I have no problems with the discussion above being here. This journal is here for learning so everyone's opinion/knowledge is valuable. Even if I or another reader doesn't use this opinion/knowledge it is still good to get the mind cranking as to ways in which things can be done differently. Please do not hold back on discussions like the above in belief I think it would disrupt my journal. Sdoma, thanks for the great compliments on my journal, I appreciate the time you have taken to read and offer advice on my journal. There are filters I apply to trades which this week left me out of the market on a couple of occasions where it may have been beneficial to have been in. However, I believe it is those filters which are giving me the higher win ratio as they improve my analysis. Those filters are sentiment of the underlying asset and areas of high interest. Being that I trade the ES contracts, the underlying asset is obviously the stocks which make up the S&P 500. I use the NYSE Tick to monitor this sentiment as it provides a good outline as to what the feel of the day is like and where things may change. The areas of high interest are s/r levels that I generate. As an example, on Thursday we were trading within the previous day's value range. We came down and hit the Value Area Low(VAL) but bounced instead of cut through. I took the short trade at a Reaction point having a few things in mind. We had bounced from the VAL and the Tick wasn't showing consistent movement in the negative area. After I got on we traveled down a bit but then retraced taking me out of the trade for a small profit. Now my interpretation was that the hesitation to break through the VAL on that push lower meant we could have gone either way. Instead I took a stand of waiting for the break of the VAL and shorting a retracement beneath there or seeing if an uptrend develops instead. After some back and forth we did in fact break the VAL. I noted the Reaction point I was looking for but when we retraced there it was only very briefly. We came back down too quick for me to get a good position and I missed the trade. During my backtesting I don't have predetermined s/r levels, NYSE Tick data or other pieces of evidence that gives me an idea of the broader market activity. I have been generating roughly a 45-50% win ratio without the extra evidence to help generate entries. That is why I believe my win ratio, thus far, is slightly better during my live simulation rather than backtesting. It has only been one week though so things could change however that is what is coming through currently.

Week Of 6th - 10th October Wrap Up It was definitely a wild week in the markets and believe I did pretty well considering. This is again going to be more focused towards what I have been doing to improve my performance in the markets rather than my results. Granted my results I was pretty happy with this week but it is only part what is a broader range of testing I have been undergoing. Just a short few comments on this week and then I will get into some findings on my testing that are standing out. This week I implemented the rule of no trades prior to 9:50am and used exit strategy I have been testing. Monday locked me out of the market as we headed lower and my plan didn't provide me with any solid entries. Friday I didn't get a chance to trade as I had other commitments in the morning that prevented me from trading. The three days I did trade were following the plan for entries and exits which was good. Only one trade this week wasn't entirely in accordance with the plan which is a great improvement on previous weeks. I have found that having a solid exit technique is proving to be a great addition. It is giving me guidance whilst in a trade and seems to be performing well considering the extreme volatility. The results of this week are below and something that I find interesting is that my win ratio is better than what my testing has produced. I have also taken less trades on average per day than what my testing suggests. Both of these, though its only a small sample size in comparison to my testing, I attribute to better analysis during trading days. During my backtesting I don't have my regular s/r levels up nor do I have the Tick data showing. I am still able to backtest with a good idea of where sentiment lies however I believe the Tick and s/r levels give me that little bit of extra help. They could be the reason behind a better win ratio during market hours. Total Trades: 5 Wins:3 Win Total: 22.5 Points Av Win Amount: 7.5 Points Losses: 2 Loss Total: 6 Points Av Loss Amount: 3 Points Long Wins: 0 Long Losses: 2 Long Trades Profit/Loss: -6 Points Short Wins: 3 Short Losses: 0 Short Trades Profit/Loss: 22.5 Points Win %: 60% Long Win %: 0% Short Win %: 100% Points Gain/Loss: 16.5 Risk/Reward Ratio: 1 : 2.5 Update on Testing I have been continuing my testing and have discovered some interesting occurrences. So far my win ratio is roughly 50/50 which I am happy with. Considering the risk to reward ratio is at 1.7 for scaled trading and 1.9 for non scaled trading, I don't really have any complaints. That brings me to what I have been analyzing in my results. I am putting my results below to to show a comparison. The first lot are from when I enter a trade with half position and then scale into a full position. I then scale out half at a profit target and then trail the stop on the remainder. Total Days Traded: 18 Total Trade Ideas : 59 Wins: 46 Losses: 48 Total Trades: 94 Win %: 48.9% Points Gained: 151.75 Points Lost: -93.00 Total Points: 58.75 Average Win: 3.29 Points Average Loss: -1.93 Points Risk Reward Ratio: 1:1.70 Average Points Per Day: 3.26 Average Points Per Trade: 0.63 Max Win: 13.5 Points Max Loss: -3 Points Max Daily Gain: 20.75 Points Max Daily Loss: -13 Points Max Daily Drawdown: -13 Points Average Daily Drawdown: -4.52 Points This second lot of results are derived from only the initial entry and then trailing the stop. If I double the results to represent using a full position to enter and exit, it is easy for me to see how much better the system seems to perform. Total Days Traded: 18 Total Trade Ideas : 59 Wins: 27 Losses: 31 Total Trades: 59 Win %: 45.76% Points Gained: 105.5 Points Lost: -63.50 Total Points: 42 Average Win: 3.9 Points Average Loss: -2.04 Points Risk Reward Ratio: 1:1.91 Points Average Points Per Day: 2.33 Points Average Points Per Trade: 0.71 Points Max Win: 13.5 Points Max Loss: -3 Points Max Daily Gain: 20 Points Max Daily Loss -7.75 Points Max Daily Drawdown: -7.75 Points Now by doubling the above results to represent trading a full position I get the following. (I treated the second position as another trade so it would help me calculate brokerage): Total Days Traded: 18 Total Trade Ideas: 118 Wins: 54 Losses: 62 Total Trades: 118 Win %: 45.76% Points Gained: 211 Points Lost: -127 Total Points: 84 Average Win: 3.9 Points Average Loss: -2.04 Points Risk Reward Ratio: 1:1.9 Points Average Points Per Day: 4.67 Average Points Per Trade: 0.71 Max Win: 27 Points Max Loss: -6 Points Max Daily Gain: 40 Points Max Daily Loss: -15.5 Points Max Daily Drawdown: -15.5 Points So from the above it would appear that scaling in and out, though does reduce my max daily loss, it reduces my max daily gain much more. Therefore the prospect of scaling into and out of trades is not working well for me. The win ratio appears to be better by 5% on the scaling of trades however it doesn't compete with the added 0.21 points per trade reward seen in entering and exiting upon a full position. That also brings me to this week where I saw my win ratio increased due to the use of the NYSE Tick and my s/r levels. If my win ratio increases then the better risk reward method will provide better performance. The question I have asked myself is, why does scaling in and out appear to be the worse performer? I don't believe it is because scaling in and out doesn't work, what I believe it is due to is time frame and length of trades. It is in part due to my entries on a small time frame, using the 5 minute chart for broader trend, the 1 minute to find trades and the 3 second to time my trades. After entering on a small time frame I then usually exit on a small time frame also. Often I may only be in a trade for 3-10 minutes if it is going my way. Therefore the ability to scale into and out of the market effectively almost becomes a burden. I don't hold on to trades through periods of up and down movement so by the time I would in fact scale in, I would be looking to scale out right away. That is just the way my plan works, it could very well be done better by guys with different plans and personalities etc. So at this point I am swaying towards entering and exiting in a full position. I am going to continue the testing with scaling in and out whilst I do some more analysis on scaling out and scaling in just to make sure things are as they appear. Except for two days, all the testing has been made on days that have a VIX volatility reading of 25 and above. I am aware that high volatility periods will act different to low volatility periods so I am now in the process of testing my plan on days where the VIX is beneath a reading of 20. Doing so will help confirm the exit strategy is solid and can work in periods of high and low volatility. I am interested to see what the results come up with.

Trading For 9th September Trading Goals For Today: Identify The Trend And Note Changes In Trend Where Needed Only Place Trades At Reaction Points In The Direction Of The Established Trend Exit Positions According To New Plan Only Trade After 9:50am 9:23 No major news due out today. Market at a 20 point gain from yesterday. Want to keep my eye on value areas being the 990.75 low and 1022.75 high. We are going to open inside it most likely. Will keep an eye on volatility, if it continues like yesterday I will continue to only trade a half position. 9:35 Mixed open at this stage. Tick playing across the zero area, no clear direction in the market action at this stage. A little different from what we have been seeing. Volume rising on the move higher and declining on the way down in the 1 min chart. 9:43 Bounced from 94.50 support area though volume didn't really kick in at the bottom there. Now making new highs, volatility doesn't appear to be as high as yesterday but still seems significant enough. Tick hovering in positive territory currently but I remain cautious. 1003 area now possible reaction point. 9:49 Tick still flirting from positive to negative indicating a ranging morning rather than solid trending. 1003 area being tested but no strong volume coming in. 9:56 It appears the stocks have broken down a bit. Tick going into negative territory, made a 1-2-3 top. Volume has subsided a bit on the down move as seen on the 5 minute chart but picked up gradually on the 1 minute chart. RP area around 1002. Volume at 997 area matching that seen toward the 1010 top. 9:59 Nearing the Value Area Low. 10:03 Hmm another one of those moves that like to steam away without a chance for the bandwagon to join in. Big volume on this move down that appears to be pushing us back into the value area. 998 is my point of interest at this stage but have concerns on sustaining a big down move. 10:14 In short at 998.5 for the RP, SMA, EMA and volume spike. It moved too quick for me to scale in unfortunately. Stop was 3 points but been moved down to 999.75 on the trail. Now down to 997. May get shaken out here. Stop moved down to 996. Stop taken. Good trade according to the plan. Nicely trailed as we are now testing the 998 area. 10:22 We have tested the upside a couple of times now. Not willing to press it again as the Tick suggests a ranging day rather than trending at this stage. Not saying it isn't a possibility we will go lower, just not willing to test the area twice at this stage. Big volume at the VAL area has me doubting the short side enough to wait for a break of that area before looking for another short. 10:27 Nice move down we have here. Guess that's a good reason to consider a second attempt at a trade you think may not go further but is still in line with the plan. Back to the idea of faith in the plan. Not to worry. Tick showing selling strength, in a downtrend on both 1 minute and 5 minute charts. 990 area next point of interest. 10:32 Tick extreme registered on the downside. Keeping an eye on whether or not we push far beyond the zero area and sustaining the upside momentum. Sizable volume on the low at 883. 10:40 Hmm, missed my entry on that one. Didn't have any sizable volume come in but that wasn't necessary to enter the trade. Had a lot going for it already. Bit of a bummer missing the trade but there are plenty of opportunities I will come across in the broader timeframe. 10:43 Well time to call it a night. Having an early one. Would have liked to have capitalized on the second trade but shit happens. I was pleased with the trade I did manage to get on, did a good job managing it and the entry was well waited for. My analysis was good and I stuck to the plan. Daily Wrap Up The exit strategy I have implemented seems to continue to produce good results during simulation as well as backtesting. Today I had two good opportunities in the market, one I managed to capitalize on, the second I was not quick enough off the draw. The trade that I did get one was in the direction of the trend as well as the current tick readings. It had the reaction point going for it, the SMA, EMA and a decent volume spike to boot. I trailed the stop according to plan and made a small gain as we moved back and forth across that area for some time before dropping. The second area was right at a test of the previous day's Value low after we had just stormed lower. I knew the point I was looking for but we only stayed there for less than a minute before pulling down rather quickly. It was unfortunate that I didn't act quick enough but something to remember. I didn't get a chance to scale in today as the trade I entered moved beyond my second entry point rather quickly. I followed my plan pretty well today and was happy with my analysis. For following my plan I give myself an 8 out of 10. I made a small gain of 2.5 points but some days the returns just aren't as good as others or occasionally am faced with a loss. The volatility didn't appear as wild as the yesterday at the open which I felt better about trading. I won't be able to trade tomorrow so that will end this week of trading. I'll look to Monday and try to get some further testing in of less volatile time periods.

Trading For 8th September Trading Goals For Today: Identify The Trend And Note Changes In Trend Where Needed Only Place Trades At Reaction Points In The Direction Of The Established Trend Exit Positions According To New Plan Only Trade After 9:50am 9:13 Market has dropped roughly 30 points overnight, globally today we had big declines in the markets. The interest rate cuts in the US initially boosted the market but it didn't last long. We have some major news at 10am so I may leave trading any positions until after then. Gold seems to be getting some solid ground, possibly a flight to safety in this environment. The indexes are all taking a beating the past couple of weeks. I have no idea how much further we will go and even at a bottom it is still up in the air as to how far we recover. 9:35 Tick negative as can be expected at such a negative gap open. We have climbed roughly 10 points higher and slowed down at 991.50. No s/r levels around this area for me and we appear to be highly volatile. If we keep up this volatility I will only trade my half positions and not scale in. 9:43 Straight up at this point. From the 970 lows we moved up 30 points to 1000. Steep uptrend, Tick playing on the zero area, volume picking up here. Is this a suckers run or real deal rise? 9:51 Downfall of waiting till 9:50am is that I can miss some monster moves like the one we are seeing now. Tick is currently positive, big change considering how far down we started the day. Market action suggests a big up day, Tick suggests mixed market at this stage. Volume tapered off on the most recent charge higher. Won't consider the short side a strong opportunity unless we see a volume extreme as we move up. 9:55 Reaction point I am watching is at 1001.50 area. Beneath that we are looking at 990 but would be skeptical of further upside momentum should we reach that area. Other option is that we continue higher locking me out of possibly getting on the up move. 10:16 Moved into a bit of chop here, waiting for a move lower to 1001.50 for signs of possible continuation. Tick switching back and forth over the zero area suggesting two sided action right now. We haven't seen a volume extreme on the buying side which suggests we still have further to go. In short term downtrend on 1 minute but still looking strong on 5 minute chart. 10:22 In long at 100.75 but may be premateur. Yep, just took 3 point stop out. Bah, hit my stop and then rebounded. Well that's just the way it goes. 10:30 Took another long this time at 1002, not a trade according to plan, was irritated with being knocked out the first time. Took another 3 point loss. Volatility is extremely high so a 3 point stop is tiny compared to the ranges of this market. Reasons for 1st trade was the reaction area with volume spikes coming in. 10:34 Currently in 1 minute downtrend. Tick making strong moves into the negative indicating stocks selling strength. 10:41 Now in short at 100.75 off the trend line and SMA. Market taking its time to drop. Stop moved down to 998 and being trailed as we go. Stop moved down to 992.75. Moved to 991.50. Down to 989.75. Tightened up at 987.25. Trade closed at 987.25. Well that move was worth the wait. 10:57 Well that puts an end to my night. I bit the bullet and took another trade in this volatile market. I'm not a big fan of this volatility, quite unusual for me to come up with two max loss trades in a day. Usually there is some back and forth which brings my stop in closer. The other side of the coin is some trades can run well like I happened to get with the short trade. Otherwise it was good to see me follow through with the plan. Daily Wrap Up Today saw us trade with some big volatility. My initial trade had the right idea but the market moved right to my stop point and then reversed. I took a revenge trade due to letting the market bouncing from my stop get to me. However what I was pleased with was the fact that I could put it behind me once it occurred and get my focus back on what the market was doing. After all, that is why I have stops in place. The last trade was in the direction of the most recent trend met with the SMA of the 1 minute chart. I was skeptical of getting in and the market moved to within 0.25 of my stop before going my way. In such volatile markets it is difficult to run a short stop point, in fact I am willing to say these markets are the most difficult I have encountered. I think the market in general is in less agreement on prices than I have ever seen. We move up 50 points because some traders see value and then we come back 40 points because other traders don't believe the value is there. All in the space of one hour. The indecision due to nobody really knowing what the extent of the current crisis is has traders disagreeing on price the most I have ever seen. In a way I can't help but think luck was the major player in my trading today. It was unlucky that the market came to my exact stop point and made a short run higher. I might have only made a small gain or loss instead of a full loss from that but it all counts. Then my last trade was lucky that the market came within 0.25 of my stop and then traveled down for a large gain that put me back in front for the day. When I think about that, is it any different from other days? Individual trades show an outcome that cannot be predicted, I had no idea what each of my trades would do once I put them on. However over a few trades and a pattern emerges when one does the same thing in the markets. Do I need to just let go and put full faith in my plan, stop trying to urge the market to go where I want it? Instead leaving it up to the Gods of chance and probability. This whole time I feel like I have been taking an approach that I "should" know where the markets are going. Only today do I believe I am fully understanding that I cannot possibly know where the markets are going on an individual basis. I can know that if I keep doing the same thing, over time I will make money as I have seen in my testing. Either way, for following my plan I give myself a 7 out of 10. I took two good trades which were in the direction of the trend and ended the day 7.75 points up. My analysis noted changes in trend and the Tick. I picked up that the Tick seems to be King when seeing what the days trading is likely to be. When we sway from positive to negative rather frequently, we can expect a back and forth type day. When we stick either positive or negative, we can expect a trend type day. It has been helpful thus far.

Time for a small assessment of my exit strategy. I have some figures below that I am using to help guide my plan. The first lot will have total figures and the second lot will have figures of trades made after 9:50am. It seems to be the biggest difference at this point. Total Statistics Days Traded: 13 Trade Ideas: 51 Trades: 89 Points Made: 47.25 Average Point Gain Per Trade: 0.53 Wins: 38 Losses: 50 Statistics Of Trades Made After 9:50am Days Traded: 13 Trade Ideas: 44 Trades: 73 Points Made: 48.75 Average Point Gain Per Trade: 0.66 Wins: 35 Losses: 37 Ok so what I have learnt from this thus far is that trades for me prior to 9:50am are a losing game. Therefore I am deciding not to trade prior to 9:50am. I have mentioned before that it is not necessarily the time that is the difference but more so I get a chance to assess the market longer before trying to get in a trade. I currently have less winners than losers, more so prior to 9:50am however I am still on less winners than losers after 9:50am. I have noticed that during periods of large volatility I don't perform quite as well. When scaling in during high volatile periods it is common that my stop is hit as I bring it closer upon scaling in. This might need to be rectified so I can either enter on a full position or leave my stop further back on a scaled position. It isn't very often that my hard stop is hit when I enter the initial position. A few times I have been taken out with my full position only to see the market continue in my intended direction right after. I am possibly putting that stop in a too obvious position. I wanted this to be a quick analysis as I have a lot more testing to do before being ready to implement live. I have only tested the strategy during this week and mid-late September at this stage. I want to take periods that differ to the large volatility we are seeing now to determine if the strategy is valid in less volatile times. For the moment the results are promising, averaging about 3.75 points per day. I have had 10 winning days and 3 losing days. Thus far it is ok, I'd like to improve upon that and feel that the backtesting is helping me read the markets better also.

Trading For 7th September Trading Goals For Today: Identify The Trend And Note Changes In Trend Where Needed Only Place Trades At Reaction Points In The Direction Of The Established Trend Exit Positions According To New Plan Only Trade After 9:50am 8:49 We are currently a few points down from yesterdays close though there is still a fair bit of time before the open. There are no major news releases today. I'm still trading simulation so I can test my exit strategy I have developed. I am not going to place any trades prior to 9:50am as my testing thus far has seen my trades during that time not making gains. The VIX made a new high yesterday which I believe may be the highest reading it has ever recorded. Definitely interesting times ahead. Gold and Oil are still down quite substantially. We had the late rally from the markets yesterday which is something to be aware of. 9:34 We had a period of buying around 9am which boosted the market roughly 30 points higher which means we have opened at a substantial gap up. Currently the Tick is showing positive sentiment but stocks are just opening so it's not exactly a great indication. From the open we have moved down to the 1265 support area where we currently reside. 9:41 Bounced from the 65 support area and made new high for day. Tick is remaining pretty positive at this point. 9:53 Market reversed from 1078 area, Tick now negative and we are following a downtrend from the highs. Yet to break day's low. 9:58 Tick action suggests a back and forth day today as we move across the zero line. Looking for possible action at 64-65 area. Though volume extreme at 55 support area suggests reversal. 10:01 In short at 1063.50, trend line with volume spike. Range of bars were too great to scale into this trade. Stop moved down to 1060. Stop moved down to 1058.25. Stop moved down to 1057. Trade closed at 1057 as stop was hit. 10:10 It seems I may have gotten in for the last leg down of that move. Big volume as we reversed just beneath support. Tick playing across the zero area showing no strong favor to one side or another. 10:21 Had a momentary data issue but sorted now. Have formed what could be the early stages of a new uptrend. Need to be cautious that any trend has the possibility of being short lived due to being a rather back and forth day. 10:28 Tough area where we are now. Big volume spike that nearly matched the size of the one nearing the end of the down move. Could signal the end to this up move may be near. Right at the 1068 reaction point as well, just not in direction of recent trend. 10:41 Hmm platform is missing about 10 mins of data right now. Hard to get the full picture. We reached the 1068 area from what I can see and came back to the trend line. I can't trade with this missing data so my day may end prematurely. 10:54 Going to call it a night here. Bit irritated that my platform was messing me round. First time it has done it though so I'm willing to forgive it. I took a good trade on the short side today. Positioned myself well without scaling the second half as I would have needed to great a stop. I took more than 50% out of that particular move which is good in my opinion. Would have liked to have made a couple more trades as the opportunities were there later on but it was not to be. Waiting for the first 20 minutes to pass in the day was a big help. It actually allowed me to focus on what the market was doing at the open than trying to pick an entry point. Less stressful as well. Daily Wrap Up Numerous things worked well for me today which was good. I would have liked to have continued to make more trades after my initial one however platform technical issues prevented me from doing so. First of all the choice not to trade prior to 9:50am was a good one. In my testing thus far, prior to 9:50am I am roughly break even in point gains but have a 20% win ratio. Obviously a couple of lucky wins doesn't constitute a good system which seems to be what occurs prior to 9:50am. Now it's not exactly the time that is special but the fact that it allows me to assess where the market's intended direction is likely to be before placing any trades. Prior to 9:50am I feel like a dog chasing his tail trying to pick the right direction so early on. For a period there I was attempting to use the pre market trading to determine where we are headed and although it is likely possible to do, it is just something that doesn't suit me. My trade I made today had a few good points which I want to make note of so I can help learn what is working well. I was skeptical of the trade working due to the big volume on the bounce from 1052 however I noted we were hitting a reaction point, a trend line and EMA as well as seeing a volume spike just moments earlier. I took the trade as it is part of the plan and trailed the stop down making a 6.5 point gain. I made a good decision not to scale in as the stop would have needed to be placed nearly 5.5 points away which is not what I am willing to risk on half a position. For following my plan today I give myself a 9 out of 10. A big improvement on what I was doing last week and the implementation of the new exit strategy during whilst simulation trading gave me guidance I haven't felt with exits in a long time. I am continuing to test my exit strategy with positive results and once completed with a few simulation days under my belt as well, I will get back into the game.

Trading For 6th October Today's Trading Goals: Identify The Trend And Note Changes In Trend Where Needed Only Place Trades In The Direction Of The Established Trend Exit Positions According To New Plan 9:12 Roughly 30 points down over the weekend things look pretty bleak. There is a big range bar at 8:20am which is interesting. Just when we appear to be making progress we hammer down so right now the market is a tough place to be. I'm going to trade simulation to help with the testing of my exit strategy and see how it goes. Results with the backtesting trading simulation at 3x regular speed has been good. What has caught my interest is the drop in Gold of late. Not sure of it's implications at this point but something to keep an eye on. 9:29 There has been no strong suggestion of direction during premarket so I am going to leave it some time before I consider entering. There is no major news out today so no times I need to be cautious around. 9:38 Market tested 1072 and reversed. Made new high, Tick negative, looking to see what happens if we the reach 1078 area. Don't have any s/r levels down here. Long side is what I am looking for at the moment. 9:40 Taking off without testing market open area, will wait for next swing. Tough area where we are right now. 9:45 We didn't go much higher than previous high before coming back and testing the 1278 area. No big volume came in down there so it didn't trigger a trade for me. We moved up a bit but now passed the previous low. Will give it more time to see where we are headed now. Tick still negative. 9:57 New low for day. Now keeping an eye on the 74-75 area. Tick still negative, volume supporting the move lower. 71-72 may also be interesting. 10:04 Market hit just beneath 71 but again no volume extreme so no trade. I like to have a combination of evidence in my favor rather than just one element. Will remain patient. Due to the volatility we are seeing today I won't scale into positions as it brings my stop in too tight for days like today. Will just stick to half position. Tick indicating a trend down type day. Looking for move back to the 72 area. 10:14 Seem to be chopping up a bit down here at 1064. May not see 1072 reached before going further down. We have moved down here pretty swiftly though not much volume seems to be in the market today. The usual volume extremes I have been seeing at reaction points is not being seen today. 10:21 Volume extreme coming in at 1052.50. Enough to encourage a sizable bounce to short into maybe? 1st area of interest is 63-65 area, second area is 71-72 area. 10:29 This market is incredibly weak. We have been hitting what are ordinarily weak reaction points and pulling lower on very little volume. It appears as though there is very little interest in buying through this market at all. Has thrown me a bit today but will stick to the plan. Looking for sizable bounces has not been ideal. 10:38 This reminds me of last Monday, down with hardly a hiccup. Guess it will keep me out of the game for the rest of the day. Moved too far to enter already but not willing to even suggest some buying at this stage. Steep trend down with seriously negative tick suggesting stocks aren't happy until they flush out. Volume hasn't been very high but on the measly bounces we are seeing hardly any interest at all. What happens when we have a market where no one wants to buy? 10:45 76 points down and counting. I wonder if we will reach limit down today? 10:52 Calling it a night. I didn't get an early opportunity to jump on board this market according to the rules. Unusual to see so much selling without much buying interest to the degree that we did. Daily Wrap Up I was actually pretty pleased with my trading approach today. I was determined to stick to only trading the Reaction Points(RP) as I have been doing during my backtesting. During my backtesting I have made it a habit to only trade the areas when at least one other thing lines up with it. Each time we reached an RP area there was nothing else confirming that area so I stayed out. Looking back at the day it is understandable that the regular things that are needed for the confirmation of the RP area were not present as it was an extremely bearish morning. That leads me to some learning about the markets. I picked up on the early weakness which was good however it appears that on these extraordinary days, the selling is so strong that not much is needed to halt any advances. It can be disappointing seeing the market move down so much and know that I didn't get on however I am humbled by the fact that these days are not the norm. In fact it is probably the second type of day like this I have seen in my trading career. The last time was last week. For following my plan today I am giving myself an 8 out of 10. I kept a close eye on the market looking for entries and identifying RP areas. I didn't trade impulsively which is a big improvement on last week alone. I will continue with the backtesting accumulating results. Thus far I have only been backtesting September. Being that September is an out of the ordinary month, I will try to test some earlier months this year as well.

I will say that the past month has been extremely volatile and out of the ordinary. In my opinion, consistent small gains are far superior to occasional big gains. It is hard to pay the bills not knowing when you're next big win is around the corner as you lie in wait for that opportunity. If you can consistently pull even 2 points per day out of the market average then you can size your positions accordingly. By all means I'm not saying don't capitalize on the big runners when you can, I just agree with BearBull that those (not saying you do Firewalker) who always try to catch the monster move play a game where odds are against them long term. I have heard numerous prop traders mention this too.

Week of 29th September - 3rd October Wrap Up Well the wrap up of this week I tried to leave as long as possible before doing it. There is something about a bad week where writing about it and analyzing it tends to be tough. What I want to do with this wrap up is focus on what I have been doing to improve my trading rather than dwell on areas I underperformed. I want to keep this as positive as I can for my growth though identifying the areas that set me back is essential for me to understand where I can improve. The positive point to this week is that I don't view this setback as a lack of my ability to trade. My losses were not caused by continual bad trading but rather moments of what I like to call emotional blockage. On Monday my losses occurred from 5 attempts to trade one trade idea. The first of this series of losses was caused by not waiting for the right signal, the following 4 resulted from an inconsistent exit strategy. On Wednesday I took 7 attempts to short the market, again the first one a result of not waiting for the right signal but the following 6 were due to an inconsistent exit strategy. So that is all that really needs to be said in regards to what didn't go according to plan this week. The up side is that I can see a pattern of the problem and the solution appears to be rather simple in my opinion. The first area to improve upon is entering only upon solid entry signals. It can often be easier said than done so I have incorporated numerous elements to help encourage me to wait for the signals. I am removing the ability to exit a trade early first off. There are a couple of good reasons for this which I will state. I have spent a long time working on how to read the markets, watching charts, understanding relationships etc. I always seem to be relaxed whilst assessing where we are headed, current trends, divergences to what the underlying asset is doing, points on charts where we are likely to hit traffic etc. I often enter the market in good spots, places that are solid and have high probability of trading in my intended direction. However once my trade is on, my emotions go from a level of say 1-3, to a level of 5-8 (10 being the highest emotional level). This creates a divergence between my entry frame of mind and my during trade frame of mind. Obviously I am not at a stage in my trading where I can put a trade on and think nothing of it, just another trade. Therefore something needs to be done to regulate my exits. My entries have set things I look for. I analyze the market for potential reaction points made up of last trapped traders, s/r levels, EMA's and trend lines. When we reach the reaction points I then consult the volume to see if big volume is failing to push against my intended direction. If that's the case, I enter. My exits on the other hand, up until now, have been intuition work, the market "looks" like it is going here or there. Now combine that way of looking for an exit with heightened emotions and it spells problems. So when I don't have a trade on my emotions are at a level which allows me to analyze the market well yet once a trade goes on, my emotions switch gears and cause fear to enter. The fear comes in because I don't know exactly what I am looking for. So exiting early when I don't know what I am looking for is out of the question. The removal of early exits also helps encourage waiting for the right signals. If I enter the market I am not getting out until either I move my trailing stop up or take a full loss. Therefore it prompts me to only put on trades that fit the plan. I cannot afford to be getting in outside the plan just to test the waters. It will be a too costly exercise. No longer being able to exit early will also help my other problem I have been faced with this week. Entering the same trade idea numerous times. If I wait for a reaction point and enter upon volume failing to push us further, then my stop will be in a place that signals the idea was incorrect. That is fine with me and something I am willing to accept. This I feel is the best solution for me currently. My backtesting so far is proving that my stop could be tighter at this point but I won't make any hasty decisions until the testing is complete. So this is great progress in my opinion and in a way I am grateful for the market showing me the areas of my trading that needed to be improved upon without damaging me beyond repair. It has helped me discover that some discretion on my entries works well for me, but discretion on my exits does not gel well with me. The reason being is that I am hitting different emotional gears and that is understandable. I have been testing my exit plan and it is providing good results currently. I want to test it for different periods of this year so I can see how the trailing of a stop works in different volatility markets. That is pretty much it for the analysis of this week. The results below really demonstrate the need for more consistency in my trading and I am happy that it is being addressed. For following my plan this week I am giving myself a 1 out of 10. I was happy that I adhered to my weekly loss limit and took time out to see what was causing the lock up of my plan. Total Trades: 27 Wins: 7 Losses: 20 Long Wins: 0 Long Losses: 6 Short Wins: 7 Short Losses: 14 Win %: 25.9% Long Win %: 0% Short Win %: 33.3% Risk/Reward Ratio: 1 : 0.79 Points Gain/Loss: -20

For me the best answer is because you can possibly take more than 10 points out of a 10 point move. We have all no doubt seen big trending days, lets say its a trend up day. Say you enter the market at 1130 and we begin by moving up say 6 points in the initial mark up/buy up/momentum move. At this point you see some signs of a pullback and know from past experience that a small pullback is likely before continuing higher. Instead of holding on through the pullback that you feel is likely to be nothing more than a small retracement though nothing is certain, you decide to take profits at 1135 for a gain of 5 points. You then wait for the pullback you were anticipating and identify the point it will likely reach. Say it comes back 3.5 points at which stage you enter again maybe at 1133. The market then continues up to a resistance point it cannot break at 1140. You take profits at say 1139. Holding on through the pullback would have netted you a gain of 9 points. The risk of holding on was the possibility of netting nothing should one leave their stop at b/e waiting for resistance to be hit. I'd imagine some sort of trail would be used though however for this example we will leave it at break even whilst waiting for resistance to be met. Now the risk at the peak of the initial move up to 1136 was 6 points as one left their stop at break even. I'm assuming that is larger than most accept on a regular stop point. Now the trader who took the initial gains at 1135 and then entered again at 1133 to take the next exit at 1139 has netted 11 points. At the same time this trader has risked their initial stop amount up front, and then when entering again at 1133, would risk the normal stop amount again. This trader's risk however is that they miss the following move should their plan not permit them to re-enter. The above is just a theoretical and can be skewed for the advantage of the trader who buys at support and holds until resistance or can be skewed to the trader who buys, takes an exit and buys again. In all honesty it really comes down to the trader personality and their style of trading. Can I suggest that we possibly put up ideas for traders (such as myself, though I currently feel I have a good solution I am building) in ways to fine tune their exits? I have gone with something simple for the moment which may require more work however I will suggest it anyway. For a way to take the most out of a current move, trailing the stop according to the previous candle low/high seems pretty good. The plus side to this is that during mark up phases we shoot up/down pretty quickly without breaching the previous candle's high/low. We often contract in candle range toward the top/bottom of the current move and that often allows the stop to be brought up in close proximity of the actual top/bottom. The downfall of such a way to exit is that during choppy markets one can get taken out pretty easily. Therefore the ability to pick up on choppy circumstances is necessary to keep one out of unfavorable markets. It also requires one to have a good entry plan. A breakout model, though I don't trade breakouts, may not gather many points as often half a move is made prior to breakout. Any other guys willing to offer suggestions for exiting methods to other traders?

BearBull, to me that would mean looking at the same things one does for an entry. For me I often find a contraction in price ranges accompanied by large volume a good sign the market has had enough of it's current move. Then again it depends on what one calls a current move. It could be the extent of a move on the 1 minute chart which is what I tend to use or it could be the extent of a move on a daily chart. I have found recently that trailing a stop at a tick beneath/above the previous candle high/low tends to make good work of that but am still growing the stats on that through back testing. Not really much different from drawing a trend line on a one minute chart and exiting at a break of that. I guess something which might get some discussion is the choice between holding through the ups and downs or taking an exit where we begin to turn and enter again should there be another leg. I'm not on my own PC right now so I can't give a picture example unfortunately. My view, taking the currency example Wasp annotated, using the same entries, is that prior to 3pm (after the first entry) there are signs we are not wanting to continue the move right away. I would rather take profits and then if we show signs of continuing risk another position to see if the move continues. Another example from the same chart by Wasp is the second entry. Say entered there, there is strong evidence that we will pull back at 185.3-185.8. Taking an exit in there and then taking another on signs of a continuation avoids the possibility that the down move was a pullback in a larger moving up trend. However the larger majority seem to rather keep their position on through a pullback which often times is bigger than a stop loss they would ordinarily use. It brings an interesting discussion here because people tend to treat holding on to a winning position through a pullback different to entering a new position. Just something I don't necessarily find good or bad but interesting as I prefer the 1st approach. Every one of course has different approaches which allows us to have a market.