Maelstrom

Phil, Thanks for the post. Indeed, looks like that would be a valid setup - however, as you know from my previous posts, I don't like re-entering on a trend. But, the setup is there. Even taking the previous two loss trades Steve had pointed out, that last trade would have more than made up for them. Again, not ideal with that bog of a move, but would have worked. Something to note here - every market has it's characteristics.....ES, NQ, TF, YM, CL....they all have their quirks if you will. Finding a good chart size for a particular instrument is not curve fitting in my opinion, because you have to weather trends, chop, ranges, etc, without flipping from chart to chart. It is simply getting familiar with a market to capture it's "flow". HH/HL and vice versa, in my opinion, is the way to go. I'm sure if you look at my charts, that is what you see, because that is exactly what it is! Will have to look for that article - sounds like good stuff. Chart attached with food for thought..... M

All, Just occurred to me to bring up what I think is most important in trading - is the market going up or down at this time in a meaningful way. I like using intention moves to tell me what the market seems to be wanting to do - going up, down, or sideways. For my trading, that is vital, and the underlying priority. Entries, exits, etc.... those can be anything - swing breaks, 1-2-3 patterns, pullbacks, alignment of the planets, you name it. But the important thing is what is the market saying. I am bringing this up because I remember at one time wanting to outsmart the market. I wanted to get in right at the beginning of a move and exit right at the top, or picking exact tops or bottoms and thinking I knew that the market was stopping right there. Of course, 99% of the time, it didn't, and I spent many days looking back on the trading day at a string of short trade losses on a 200+ upswing day and asking "wtf was I thinking??". Sometimes, it is hard to see what is going on at that hard right edge when you are right in the middle of it. Some simple rules or guidelines to verify what you "think" you are seeing can be invaluable. Chart attached....what is the market doing this day? Do you want to be long or short? Get the direction and intention of the market right, and it is really hard to get hurt or to not make some money. M

Sorry Horace, missed your post earlier. But a full nights sleep has done wonders Very good question and point there. Larger bar sizes do not necessarily mean bigger stops. With the method I am highlighting here and my initial stops, of course, it would mean bigger stops for me if I was trading on say a 50R chart. But, initial stops can be set wherever one wants, and trail as their risk appetite allow. It is all up to the trader. M

This is what happens when you are tired and looking at charts....after a closer look, and better exits, trades would have been approx +66, -11, +80, for 135 ticks for the day. Disregard that 100+ trade.... losing my mind. Not optimal overall for that big of a range, but again, not that familiar with the market. Sure like the $$ potential though of CL..... M

Steve, Thanks for the chart! I had been meaning to look at crude for some time, and actually was happy to see the opportunity. Looks like you have my entries down correctly. I am attaching a chart of the same day ( I believe) at a 10R - $200 stop loss is too rich for my blood This is a real quick pass at the day, but I see three trades, 2 wins, 1 loss, for about 192 ticks. That is using a really basic trailing stop, with more optimized exits, there may be another 50+ ticks in there somewhere. But, I think I would be ok with getting about 2/3 of that type of move. Let me know if I missed something on it.....again, not my market, and just took a real quick look. And I do appreciate the post - feedback is awesome! M *** Update **** Miscalculated that profit on the second trade big time.....see next post

Came up with an idea - a dangerous thing for me..... The idea is to post charts not bar by bar exactly (that would take forever!) but event to event - pattern formation, trigger and entry, stop placement, target adjustments, reversal, etc etc. Each chart/post I could explain what and why I am doing what I am doing at that point, allowing a better flow to my trade management. May be a significant undertaking, but, if anyone out there is interested in something like that, I'm game. Let me know, or I will just listen to the chirping crickets..... :rofl: M

I have been struggling with how to clearly explain my trade targets on here. It really isn't difficult or terribly complicated, I am just trying to word it all in a way that will make sense. Here are a couple of charts though to show the results of my profit target method over a few days. 3 consecutive moves from this month - the 22nd through the 26th. Are they always this close? Of course not, but pretty darn often, and eerie when it happens just right. More to come guys..... M

Thanks for the heads up on the book - I believe I have flipped through this one a few times, but I think a lot of the concepts apply to time-based/multi-size bars that would not work with range bars. If I recall, there was some good stuff in there about trend lines however. Will definitely check it out the next time I am at the bookstore. M

Test post

You're a good man Optiontimer - thank you! I will try that. M

This is so completely obvious, but I would be negligent if I didn't post it - if a trade is on, no other exit conditions occur, and an opposite signal occurs - take the signal and reverse. There, now my conscience is clear :\ M

Going on a brief tangent here on something I should have touched on earlier, and that is time frame/range size of charts. I have traded for a while now, and been through what most of us have - trying this, tweaking that. One thing that I had a very hard time with was trading a "slower chart, but I can tell you, when I did, things changed dramatically for the good. I laugh now sometimes looking back and trading (or trying to) 10,20,50 tick charts, or 5 second bars or whatever, because I wanted every little piece of the market. Well, I got every little piece all right - every piece of pain and heartache the market had to give me. In my opinion, a bigger chart will let you get some perspective. Using the YM as an example, 20R bars is approx 1/8 to 1/10 of the daily range. For ES, a 2 - 2.5 pt range works pretty well, NQ, maybe around 5R. That is a decent size bar chart. But it does something for me that the faster charts could not - let me think, to see the bigger picture of the trading day or week, and most importantly, give me a sense of structure or flow, or at least my delusion of that. Yes, a bigger chart means bigger stops, but for me, I would rather lose $100 on a failed trade every once in a while versus dying a death of a thousand cuts with $10, $20+ over and over. I know traders who successfully trade insanely fast charts, and I have a tremendous amount of respect for them because they do something that I have yet been able to do. But, if anyone is reading this and having that feeling of "wtf is going on" when they are looking at the market, double up your normal chart and take another look. Still looks like crap? Double it again. Bigger charts won't fix everything, but it will allow you to think things through with a lot more time. M

I have to throw this out there.....sometimes simple is best. I personally do not (usually) like using fixed profit targets, but..... with the way I trade, a 1:2 R:R ratio would work just fine. Use a 22 point stop, set a 44 point target, and go fix yourself a latte. The win/loss ratio with my trades is pretty high, so a profit taking scenario like this would work. I will not go into one of those endless discussions of how you can get rich with a R:R like that, don't be greedy, have patience, blah blah blah. I DO believe in patience, preserving capital, being emotionally comfortable with your trading, and above all, being realistic. BUT.....I am absolutely not one of those traders that needs $50k in their account to trade one emini contract and make $100 a day off of that. Not saying there is anything wrong with that, but that's not just me. A little aggressiveness, or more appropriately, conviction in trading is not a bad thing at all. I like to kick the market square in the ass when I have the opportunity, because I have the scars from when it has kicked back. On to the ass kicking...... :fight:

This one is easy. My initial stop is a tick below the entry bar. For YM, that means a 21 pt stop if I nail the entry right at the close of the entry bar, 22 if it slips a point. I also set a second stop market order 50 points below my entry as a precaution against a catastrophic move and having my stop loss jumped. Will that save me in a flash crash? Not sure, but it makes me feel better if something weird happens. Next, profit targets..... this will get a bit more complicated now

Ok, Gone over a few things so far, so I thought I would recap to keep myself straight: - Range bars vs. time bars - allow (me) to stay focused on price direction - Market intention patterns - is the market serious about a direction, or not - Entries - Intention pattern, bar close/break of pattern, pullback, entry bar in direction of move - Confirmed trends - I consider a trend or direction confirmed only when there has been an entry signal in that direction (not just an intention pattern) - Valid signals (reversal of trend) - first signal is the one to take - Valid signals (inside formations) - used in congestion/chop areas, concurrent signals must occur inside the previous - Invalid signal - a second signal that forms outside the first with no trigger for a trade. Subsequent signals must clear the previous formations by one complete bar to be valid. - Continuation of big trends - for daytraders, re-entering at the resumption of trading at the end of the trading day ONLY if there was no valid reason to exit. Additional things I will go over will be stop placement, several options for profit targets, risk:reward issues, and eventually defining valid support and resistance levels. Not sure if anyone out there is finding any of my ramblings useful, but since I will be babysitting my sick great dane this weekend, no doubt I will ramble on. M

Let me start by saying, when it comes to re-entries in a trend, in the traditional sense, I don't like them. Let me clarify - If I have a valid signal at the beginning of an uptrend, and there is another long setup, I don't like taking them at all. Not for adding to a position, not because I got shaken out too early - I would rather wait for a trend change, and go from there. I am not saying they don't work, or that adding to a position is necessarily bad.... I guess it is just a prejudice from past experience. Too many times, I see a trend, looks strong as hell, get in at what looks like a good spot, and then of course, trend's over. The chart I have attached is a great example. I took the trade at 12180 indicated on the chart, and got out for +38. Reasons for my exit I will get into later, but overall, could I have (and should have) held? Yes. But I am a daytrader....how do I do that if I dont re-enter? Disclaimer here - this is riskier than a lot of people will be comfortable with, and I DO NOT advocate this for everyone. If you look at the chart, as far as intention formations, there is nothing but upward motion. So, here is how it is done very simply. My entry was at 12180. At the end of the day, as close to 3:15 CST as possible, close the position. There is a 15 min break in trading, and as soon as the market opens again, re-enter. No analyzing chart formations, no bias, simply get back in. Now, if there was a clear reversal setting up, you probably would not want to re-enter. But otherwise, continue the trade. Liquidity is verrrry thin afterhours, and trading large size, this would probably not work well, especially on the YM. A lot of people are nervous about trading overnight, and understandably so, but personally, I got tired a while back having a huge chunk of the days move occur while I was snoozing and be left with nothing but chop for the rest of the day. Important - on a re-entry like this, your stop is where it was before the ended. And for those who may think I am a huge risk-taker, discussion on stops and exits will be coming soon. Look at the chart....with after-close re-entries, 3 trades, totaling about 300 pts over the last few days, with virtually no sign of weakness. M

Or saving myself from the chop monster....... An invalid signal is an intention formation that does not trigger a trade, and then another formation occurs that terminates outside the first, with neither actually signalling a trade. This invalidates both setups. The next setup after these can be valid IF there is a bar that completely clears both formations. As always, chart attached..... M

Quick chart showing a possible downward intention move forming after this great uptrend in YM.... will try to post the steps with charts as "live" as possible if it all materializes. M ** Update ** Did not form, third bar turned green - will keep watching

Congestion - small range - no trend Call it what you like, but they happen all the time, more often than most of us would like. Here is how I deal with these times. My previous post stated that the first signal/trigger after a confirmed opposite trend is the most reliable. But what happens when you get multiple, opposing signals - ie, chop. Two situations I would like to go over, and the first is inside formations. Basically, if you have a signal, let's say for a short after a confirmed long trend, market chops around and doesn't complete the trigger/signal, and then forms another signal inside the first, that second signal is valid. The key word is inside. For shorts, you have a formation, then another one forms above that one before the first triggered. For longs, the opposite - 2nd formation forms below the first. Chart attached that will hopefully make things as clear as mud M

Ok, 3+ bar formations are easy to spot - should be no problems there. But do I take every signal based of of those. Nope. I will try to explain why. One of the most important things I have found is the most reliable signal is your FIRST signal. Meaning, the market has been in a steady downtrend for a couple of days, and then a long formation comes up, price breaks, pulls back, and we have an entry. That first signal is USUALLY the absolute best one to take. Important to note here - we are talking about the first opposite signal after there has been a confirmed trend in the opposite direction. A confirmed trend to me is one where there was not just a 3+ bar formation, but the completion of an entry signal. It sounds like top and bottom picking a bit, doesn't it? But actually, there is a whole lot of confirmation: - The reversal intention pattern consists of 3+ bars. On YM with 20 range bars, that may be 30-60+ pts, certainly not an extreme top or bottom. - The wait for the reversal bar at the end of the pattern, then a break through the top or bottom of the pattern is solidifying the markets intention. - Waiting on a pull back for entry is simply trying to get in at the best point possible. Chart attached with notes to (hopefully) clarify. There are small range/congestion periods where you can take a second signal, as well as continuations. I will get to those soon. M

Slow as can be in the overnight, as expected before the holiday, so I will post a few more things today. Just another quick chart showing the intention formation break points. Pretty good trends over the last few days, so of course, it looks incredibly easy. But I will post a few examples of congestion or small move days - the type of days that can kill an account quickly. M

Siuya, Thanks for the reply! Any feedback you have is appreciated. Pa18, I think I may have one somewhere - I know there is a free version that is so-so, and then a paid version for MT4 that is supposed to be much more reliable. I will see if I still have the free version somewhere. M

Ok, they say a picture is worth a thousand words....so here you go. This is the basic things I am looking for. There are a few more points for congestion times, support and resistance points, etc, but I will get to those. Tried to make it as clear as possible, but, any questions, put them out there. I will expand more in coming posts. M

Lol..... we actually agree on many more things than disagree. I am familiar with black swan events - they have happened, and they will happen again. Rare, of course, but it only has to happen once. I have been trading in various capacities since '98, and am by no means an expert. I have my ass handed to me too many times. I absolutely agree with your point on the emotional impact of draw down on a large account - it is a horribly numbing experience, and worse, in situations like last year, not a single thing you can do about it. Heck, it hurts even with a small account! And the returns I threw out there are very specific to the way I trade, which is both long and short depending on what the market is doing at the time. I am the first one to say that my way of trading, or returns even half of that do not scale. Can it be done on a small account, 5,10, maybe 20 contracts per trade depending on the instrument. Yes, absolutely. I have been doing it for a decent amount of time now. On a $10M account? Absolutely no way. And as I have said before, why would anyone want to trade with any great risk with that much account. I have no doubt we have very different trading styles, time frames, goals and experiences, and I appreciate that greatly, and I think that is the source of the few things I see that we can agree to disagree on. You have certainly caught my attention, and will keep an eye out for your posts - you obviously have a great deal of experience and insight, and I appreciate all the points you have brought up. Good trading to you!

Eqsys, I agree with many of your points, and certainly don't recommend my trading method for any or all. The 50% return you mentioned on a multi-million dollar account is and would be spectacular- heck, even half of that would be great. However, everyone has a different risk appetite of course..... As an example - if I had a $10k account, and day trading 4 contracts on the YM, and averaging a 200% monthly return, my account would be approx $30k at the end of the month (not compounding and increasing contract size). Assuming only trading 4 contracts for the year, the return on that initial account would be $240k - pretty decent. Now, looking at the dark side of things - if the market blows out one day, and I am on the wrong side (aren't we all when that happens), it would require a 500 point move against me to bring my account to zero. That is one hell of a move. Lets say it drops 200 pts before I can get out.....that's $1000 per contract. My daytrading margin is $300 per contract, which would leave me with $1500 per contract left in my account....still 5 times what I need to trade. Would I still trade 4 contracts at that point? No way. But the point I am making is about probability. If I go 6 months achieving my return, giving me a banked profit of $120k, and then a crash occurs that takes me out for $4-5k, would it matter? Short term, I would be pissed, but long term, it is insignificant. Trading styles and time frames are critical in risk management. As I said earlier, I agree with most of what you posted.....when you have buckets of money, the emphasis is on safe and reasonable growth, much longer time frames, etc. I don't like losing money anymore than the next guy, believe me. But I employ reasonable precautions to guard as much as possible against catastrophic events ( multiple computers, UPS system, redundant internet connections, double stop losses on all positions) - my initial stop is 22 YM points, with another at 50 just in case. And no bathroom breaks with a position on! Different strokes for different folks - have no doubt that ice patch will come up in the road someday, always does. I just don't think it will put me in the hospital.