Jonbig04's Log

[Dinerotrader 10]

Took that CL long. Was able to get a few tries in but it was rejected instead of breaking out. -6 ticks on all which was in line with my 70 tick target.

 

I thought of you while I watched it chop back and forth around that level. Very annoying but that's how it goes sometimes. -6 ticks isn't too bad. Nice work keeping your losses small.

[jonbig04 10]

Haha yea it was lame. I didn't expect it to be that ugly, but shit happens. I took 3 shots at it too

[nikke 10]

Thanks big Jon for posting.

 

I tried BO trading at some point, not very far from what you are doing here, although not as sophisticated and had generally much less trading-experience. The experience was that BO trading worked well during volatile periods, or volatile instruments. But in slower periods one tended to get more easily chopped up. But maybe 6E and CL are such volatile instruments that it works more consistently in them.

[jonbig04 10]

Volatility, or lack thereof, is definitely a concern. I'm not really worried about getting chopped up as I am the setups simply not happening often enough in lower volatility.

 

Crude and 6E are definitely the two best instruments I've found so far.

 

I would really, really, really like to at least be able to watch HSI. So far it looks like I have to open an account with IB though.

 

I don't want to move to FX either. Any suggestions on volatile instruments would be appreciated.

[Dinerotrader 10]

Volatility, or lack thereof, is definitely a concern. I'm not really worried about getting chopped up as I am the setups simply not happening often enough in lower volatility.

 

Crude and 6E are definitely the two best instruments I've found so far.

 

I would really, really, really like to at least be able to watch HSI. So far it looks like I have to open an account with IB though.

 

I don't want to move to FX either. Any suggestions on volatile instruments would be appreciated.

 

Natural Gas has really good directional moves often times. Seems to go in cycles though. Gold works too.

[jashanno 10]

Volatility, or lack thereof, is definitely a concern. I'm not really worried about getting chopped up as I am the setups simply not happening often enough in lower volatility.

 

Crude and 6E are definitely the two best instruments I've found so far.

 

I would really, really, really like to at least be able to watch HSI. So far it looks like I have to open an account with IB though.

 

I don't want to move to FX either. Any suggestions on volatile instruments would be appreciated.

 

I have looked around but all that I have found is IB. They require $10k minimum to open an account but after that you can withdrawl a good portion if you want to. They also have a demo that you can use that is supposed to replay the previous day but I haven't ever gotten it to work.

 

Another contract.... What about the DAX?

[MidKnight 12]

The HSI volatility is not consistent IMHO....like most markets it can go through long periods of lower volatility. The only other semi-consistent markets I can think of would be currency crosses, especially anything crossed with GBP.

 

With kind regards,

MK

[jonbig04 10]

The HSI volatility is not consistent IMHO....like most markets it can go through long periods of lower volatility. The only other semi-consistent markets I can think of would be currency crosses, especially anything crossed with GBP.

 

With kind regards,

MK

 

It makes sense that it would fluctuate, but even when it's at it's lower end of the volatility spectrum, how does it compare to, say, ES? I've always assumed in trumped ES all the time, but I've never been able to watch it.

[MidKnight 12]

in terms of points it moves - sure it trumps it. But in the low volatility, just like all markets that get low volatility - it will chop a heck of a lot more and your signal vs noise goes way up. Furthermore, it is not a 24 hour market and every day will gap, usually quite large and that in itself often seems to suck the volatility out of the day quite often. Take a good look at the data that was shared with you in another thread, you'll see what I mean. I know that at least part of that period in the data set (the last 5 months) will have at least some sections of low volatility. Back in the whole subprime thing HSI was having daily trading ranges in excess of 1000 points. Trading was easy then.....sadly it didn't last forever

 

With kind regards,

MK

[jonbig04 10]

in terms of points it moves - sure it trumps it. But in the low volatility, just like all markets that get low volatility - it will chop a heck of a lot more and your signal vs noise goes way up. Furthermore, it is not a 24 hour market and every day will gap, usually quite large and that in itself often seems to suck the volatility out of the day quite often. Take a good look at the data that was shared with you in another thread, you'll see what I mean. I know that at least part of that period in the data set (the last 5 months) will have at least some sections of low volatility. Back in the whole subprime thing HSI was having daily trading ranges in excess of 1000 points. Trading was easy then.....sadly it didn't last forever

 

With kind regards,

MK

 

Yeah I don't like the idea of an every day gap.

[jonbig04 10]

And so ends my best trading month ever. I'm not happy just because it's a good month, good months come and go, But rather because I managed to also reduce my risk by 2/3 while increasing, or at least keeping the same, reward and accuracy level.

 

I usually convert everything to ES points because I traded ES for so long that my mind tends to think in ES points, in this case I would be up around +35 ES. But maybe it would be more accurate to say I'm up 140 6E ticks. Whatever. Either way it's almost double my monthly goal.

 

I know that it was due to the volatility of the Euro. But strangely, while I had more 6E setups, I had far less crude setups than usual. I just had the one that didn't work out. Usually I trade more breakouts on CL than anything else. That being said, this was my first month trading strictly breakouts, but right now I will consider this month to be an anomaly and shoot for my +20ES goal next month.

[jonbig04 10]

Potential next trades:

 

Short 6E at 1.2138

 

Thought I'd post a try from last night.

 

I was looking forward to this trade for days. Funny the ones you always expect to do well end up being lame. Anyway I had my sell stop and it was getting closer and closer to breaking down, then all of the sudden my zenfire craps out. Apparently it happened to everyone. So I was in the trade but couldn't see anything. When I finally got everything up and running, i couldnt tell what the hell was going on with the trade. I just closed the whole thing out.

 

The trade was executed fine, it just didn't scale out at my first 1/3 target of +20. Weird. So I ended up bailing out for around +8 ticks. Then tried again later, but it didn't want to keep dropping and I lost 3 ticks, so I ended up up a few ticks on the trade, which isn't bad for a trade that didn't do at all what I expected haha.

 

[jonbig04 10]

Double bottom failure in a downtrend for +40 ticks. Had to go all in/all out with this one.

 

[jonbig04 10]

I should also mention that I lost 3 ticks on a another short try.

[jonbig04 10]

Thought I was done for the day, but I wasn't! Took two tries to hit the CL short and I accidentally closed it early, but whatevs. Lost 5 ticks on the first try, hit 51 ticks or so on the second try.

 

[jmonday 10]

why does it only show one trade if it took two tries?

[jonbig04 10]

why does it only show one trade if it took two tries?

 

The stop out was a little before that chart.

[Dinerotrader 10]

Alright Jon, let's review the setup. Leave out anything you aren't comfortable sharing. My understanding is you are looking to trade the breakout of significant levels with very tight stops in place. You are defining significant levels as an S/R level created by major reversal in price which happens at a minimum of 2 times with the 2 swings occuring within ~5 ticks of each other.

You have another criteria related to a large rejection which I am still unclear of. I believe it is that the move away from a level needs to be large (70-100 ticks on oil) in order for you to call that level signficant and thus tradable.

 

Once you have a level established, my understanding is that you take a couple shots at catching a swift breakout quickly moving stop to B/E.

 

Do you still use volume to try to confirm momentum is coming in to make the trade work?

 

How did you come up with your profit targets on each instrument?

 

Setup summary:

1. Define significant level: Very close reversal price points mixed with large rejections

2. Keep stops at 1:10 of profit target

3. take 3 tries and then move on

 

Here is an example of a level I would have considered. The first 2 arrows show some difference in the reversal point but the 3rd confirms the first reversal price level. I circled the breakout level.

 

I'll try to post some real time levels that I think would meet your criteria to discuss.

 

[jonbig04 10]

Thanks Dinero, you did a better job defining the setup than I do haha. I closed all my market info, but I will take a look at that level when I open it back up. It looks like a perfect example! I probably just missed it.

 

Volume isn't necessary, I could simply just watch price, but it does a nice job summing up what happened at a glance. Usually there's the initial rapid price spike through the level on high volume. Then a lull, then if price hangs there on low volume it usually is going to break out. The volume bars sum all that action up nicely and I think it's cool to look at.

 

My targets are usually pulled out of thin air. Simple scales that keep my expectancy where I want it.

 

But in short, yea that's all I'm doing. Pretty simple really.

[jonbig04 10]

Dinero, I just pulled up my CL charts again. Conceptually, that is setup I look for. I didn't take it because the second test (middle arrow) was around 11 ticks in difference from the others. I prefer to keep it around 0-5 ticks on CL, usually. That's mostly just to keep my somewhat honest and to add at least some structure to what I do. I probably break that rule all the time without realizing it ha.

[jonbig04 10]

Hoping for a CL short soon (see the Oil Trading thread).

 

I did manage to get a sim trade in with GBP/JPY this morning that didn't pan out at all. The massive spread is going to take some getting used to. I don't like being 8 ticks in the red right off the bat. I'm also still experimenting with time frames. I think I am going to start using the 15 minute.

[MidKnight 12]

what broker are you using that has GJ at 8 ticks wide in the high liquidity USA morning time of day? Oanda is normally at 2.7 and IB is normally in the 1.5 - 2.5 area.....

[jonbig04 10]

The following rambling is for me. I'm just reiterating things so I keep my eye on the ball.

 

I'm a big believer in trading setups. But it doesn't do you any good to simply look for arbitrary shapes in a chart. Looking for something that looks like a head and shoulders or a double bottom probably won't get you anywhere. What matters is what those setups mean. Your ability to take advantage of them rests not only on your recognition of them, but you're understanding of why they work. So for this reason, I feel like I should keep explaining why I'm doing what I'm doing. What the setup I'm taking means and why it works. Just to make sure I keep myself on track.

 

I'm trading breakouts, but what does that really mean? What is a break out? I've always thought terms like break out, pull back, trending, reversal etc were all relative terms. For example, I may take a break out reversal to the downside, but on a larger chart that may not be a reversal at all, but just trend continuance. An s/r fade can be (and perhaps even should be) entering on a pul lback of a larger trend. Am I a break out trader? A trend trader? An S/R fader? My answer would be all of the above.

 

I, and a lot of others, use multiple timeframes to see this kind of leaf/tree/forrest action. Therefor I don't think the label really matters very much. So then, why do I call what I am trading "break outs"?

 

I break out to me, implies a short-term sentiment shift. Temporary, but complete capitulation of buyers or sellers, or buying and selling. It may simply be trend continuance on a larger time frame, but to me, when price is breaking out, something different is going on. A breakout move is a special move.

 

For one, break outs are typified by rapid price movement. But why does this happen? I think it's simply one thing: fear. Fear of losing money or fear of missing out/not making money, but that aside, what break outs really come down to is a momentary massive imbalance of supply and demand.

 

I think this is all we can say regarding what happens during a break out. Simply because there's no way to know anything else, and no reason to. There's no way to know if it's "sellers getting hammered" or short sellers taking massive positions. There's no way to know if the capitulation is being caused by people exiting positions or people entering them or both.

 

For example, if a large and well defined range fails and breaks out downwards, I used to think that it was because all the people that used to buy at those support levels (thus creating them) were no longer interested at those lower prices, therefor price falls due to lack of demand. But it could just as easily be massive amounts of supply coming in the market for whatever reasons and overwhelming those same buyers, causing price to fall.

 

Since we don't know, we must simply say that the balance of supply and demand is very skewed...for whatever reason. Speculation about who and why is pointless in my opinion. Especially for me on my macbook in my apartment in Denver. If I was in the pits things may be different.

 

So how to we go about finding these areas where we may see heavily skewed supply and demand? To me this means finding an area that buyers or sellers are vigorously protecting . An area that A. could only be breached if there was some kind of massive imbalance of supply and demand and/or B. An area that, if broken, will trigger a massive imbalance in supply and demand.

 

This is of course where support and resistance comes in. I like to see area that have caused sharp and unmistakeable reactions. When price gets there we see immediate rejection with follow through. Not only do I want to see that happen, but I need to see it at least twice. These are the major levels I'm always looking for.

 

It important that the area be defined. I don't play zones because, for me, the risk/reward isn't good enough. I want to see a line in the sand. A specific place where I can say "if price breaks here, something significant will probably happen".

 

This way I can hopefully pinpoint where I think the momentum from the breakout is going to come in. Do I always nail it? No. I was looking back on my trades today and on a few occasions I've gotten out, only to have the thing breakout right afterwards. But since I'm counting on momentum I don't need to have a large stop. The trade doesn't need room to "breath". If the market isn't proving me right in a big way, I'm out. I will either re-enter or go look for the next opportunity.

 

There's no second guessing myself, momentum is obvious and easy to spot. I know when I'm not being proven right.

 

What I want to work on next is the flip. Very often (sometimes after I've reached all my targets, thankfully) price comes back to flip the area it broke out of. I want to work on a way to take advantage of those at some point.

[jonbig04 10]

what broker are you using that has GJ at 8 ticks wide in the high liquidity USA morning time of day? Oanda is normally at 2.7 and IB is normally in the 1.5 - 2.5 area.....

 

 

I'm using amp. I'm going to watch it tomorrow and confirm that it is that wide.

[jonbig04 10]

So here's a link to a funny South Park episode about the economy/market:

 

South Park Episode Player - South Park: Margaritaville