Jonbig04's Log

[lewtz1520887470 10]

I see where you're coming from and now that I think about it, it makes sense. I would have to say your entry is at the point that would definitively tell me if the trend has changed and have a chance at a decent r:r trade. I believe that's what you're trying to achieve here, but it didn't occur to me until you replied.

[jonbig04 10]

Exactly, this way if I get stopped, ideally its only if trend changes and my stop is protected from chop...thats what I TRY to do anyways haha. But yea, it was a heavy pullback, too much for the uptrend to take so your analysis was spot on. In trading, I find that there are multiple right answers to questions.

[johnlonn 10]

Hey Jonbig04.

Thanks for charing your thoughts with us.

I am kind of in the same sitution as you are, i.e Im thinking of trading day and night.

I am also a newbie building my way to trading success.

 

Have you ever though of having a dynamic profit target, i.e you adjust your profit target to the market and PA?

In todays market I personally think that you should try to grab what you can get, by trailing your stop etc. Of course this type of strategy might mean that you need to take more than only a few trades/week.

I mean its not so nice to see the price just miss your target by a tick and go all the way down again to stop you out.

I mean when you take a trade in the market that entry is dynamic, meaning it can happend anywhere a setup that signals a trigger in your system occur. why would you not also suit you profit target to what is going on in the market.

This may interfere with you taking really big targets sometimes, but it might also stop you from taking a few losses?

 

In this game I personaly think defence is the best offence.

 

Just some thoughts!

Keep the hard work up, Im with ya!!!!

 

// John

(Stockholm)

[jonbig04 10]

Dynamic stops, providing they are carefully placed, would be better. I personally loathe trailing stops, and even moving the stop up to break even after X amount of profit has been made. Of all the 20+ pointers that I hit, I don't think any of the would have been possible with a close trailing stop, and quite a few of them wouldn't have worked if i had moved my stop to break even. But really, the reason I have large targets is to keep my r/r in check. Large profits means I can have many small losses and don't have to worry about my accuracy at all. I limit my losses to 2.5, but my gains i let run. Sometimes its agonizing, you want to cut the profit short very badly, but I find that in this market 20-30 points is very doable, if you have the guts to hold it. This is my attempt at letting my winners run.

[jonbig04 10]

-2.5 yay for the losing streak! haha shorted 1996.5 at 15:00 est.

 

No need to panic yet, even though Im on a nice losing streak, I fixed my problems for last week. I'm happy with this weeks trading so far. Just sucks that the trades didn't work. gahh!

[jonbig04 10]

no trading today (Fed)

 

 

I had an idea I wanted to throw out there. I've noticed that a larger majority of my 20+ point trades take place around 10est. I have a set of rules and its pretty much the same trade every time. A lot of the time though, that trade doesn't come and I either get stopped on some afternoon trades, or hit an after noon trade, but nothing with the repeating success of the 10am trade. So with that in mind, I wonder if it would be a good idea to (of course I'm looking into this now), try to find that same trade on ES, and YM etc during the AM? Of course I would have to translate my rules over, but to start with I would just calculate the equivalent amount of NQ points and plug them into my existing rules. Sounds crude, but just to start to see if this idea has holds any water I think it will do. It's strange, because the 10am trade has astounding accuracy, i mean looking over my charts it really is bewildering. It just doesn't come along inline with my rules as often as I would like it to, sometimes it's just chance whether it meets my reqs or not (when it misses by ticks etc). So why not check out other mini's? I would like to know you thoughts on this.

[Hlm 10]

Maybe you could add a few annotated charts explaining exactly what you are looking at. It would be helpful with commenting on this subject. Personally, I watch/trade both the NQ and ES equally because they build value in a different enough manner as to give me more opportunities and play the more sound setup even though they are moving in the same direction.

[jonbig04 10]

That's exactly what I mean. For example, lets say you noticed that your double top and double bottom trades worked very well, but they just didn't happen very often because you had strict rules to define the DT/DB formation. So you would translate your rules to other instruments and look for dt's/db's there as well, because you knew the more dt/db trades you took, the more profitable you would be. My looking at other instruments you would be taking more of those same trades per week. That kind of thing.

[atto 20]

The idea is good, but you have to realize that YM, NQ, ES, etc are all highly correlated due to the underlying. Sure, one may give a setup while the others don't, but if your trading is that fragile, you might want to reexamine what you're doing. I'm not saying you can't profit from taking setups on correlated instruments, but it's not like it's a completely different markets.

 

If you're looking for different markets, you can either zoom in and look at stocks intraday, or can trade other future products, such as Bonds, Currencies (the 6E is pretty liquid), Commodities, etc. In fact, if you end up with an extremely mechanized system that doesn't give setups very often, this is probably the eventual way to go.

[jonbig04 10]

Thanks for the feedback, I will hold off until I am done testing and will post my results. I've been at it for 2 days now and I'm almost done...it's long, boring work. Anyways-funny story. I've been all upset lately bc last weeks was negative etc. I figured it was just short term variance, but honestly it was starting to get to me. Was my trading plan wrong? Was I just getting luck and now have to revamp everything? In testing I was scrolling back through days of data, and I noticed a nice trade...a very obvious and easy trade for my setup that would have netted exactly 21 points (tragte based on my previous R line). Then I looked at the date and realized that was last Friday, wtf!? How did I not net those 23 points? I looked over the trade and everything was picture perfect, it doesn't get any better. Then I realized, I was working with Amp and ninja that day because I couldn't connect to zenfire. I got it sorted out in a few hours, but it was lunch by and I just traded the afternoon..I missed the morning and THAT trade because of that lol. Short term variance indeed.

[MidKnight 12]

If you are so clear and understand about short term variance, then I must ask, why are you revamping your trading plan after a down week when you only do 5-8 trades per week? You are taking that tiny tiny sample out of context.

[jonbig04 10]

Good point. A few things to say. First is that, sometimes, for me, it's tough to know mentally whether I was making excuses for a trading plan that was not as effective as I wanted it to be, or if it really was just a run of bad luck. It's both. You see, my trading plan is ultraspecific. I know I know, they all are supposed to be, but from the plans I've seen, most aren't as specific as mine-and its tough to do when you aren't using indicators at all. I am looking for very specific things on 3 different charts, and the stars have to align for me to make a trade. That is NOT because I want high accuracy, I don't have it and don't want it. This is simply because in my opinion, the key to success isn't making a million points a week (my goal is 15-25nq) it's to increase size. From what I gather, most people can't. I know this from watching, talking etc. If you think about it, if you trade profitably, there is no reason why you shouldn't be on you way to making ridiculous amounts of money. Of course, you don't jump right into trading 1000 cars, but even if you're only averaging 5 points a week and you start with 1 car, it really doesn't take all THAT long to get into trading some decent size (think 5NQ with 20 contracts per week) without over leveraging. From there, sticking to a strict progress rule (based on your account value and max risk per trade) it simply doesn't take a lifetime to start really raking it. Yet it seems, even with traders who have been profitable for years, few really do this. To me that it's simply a mental block. Most traders can't trade size. I think this is because the rules aren't specific enough. I could teach my girlfriend to trade my rules, step by step. I am committed to not having that problem. When I am live, it will be no different. When I'm trading 1 car or 50, it won't be different (except for scaling out points if i'm a wuss and don't hold the whole thing) I won't have a cash demon, and my progress in cash may be slow or fast, can't be sure, but it will be linear and predictable. Anyways I said all that to say that having such a specific system means less signals per week. I am not revamping my trading. I'm not increasing my advantage either. I'm simply trying to maximize my signals per week without revamping. Since 90% of the time I'm sitting around waiting for price, I could spend that time checking for the SAME signals, on other instruments if mine, for whatever reason, happen not to give me that very specific signal. This way I get more signals per week/day/month. If you have 25% accuracy and are operating on a minimum reward of 9x risk, that's great, but if you only get 4 signals per month you make less profit per month than if you could somehow increase your signals without changing your plan. Same thing with me. Is this idea feasible? Will ES, ym, etc give me different signals? I will let you know probably tonight when I am done testing for ES.

[Head2k 10]

Jon, I wouldn't talk about a mental block. It is just a different approach or philosophy, and it doesn't mean it is worse (or better).

Anyway, maybe MadKnight's remark was more general than just related to your last particular decision. Or maybe he wanted to suggest that one losing week doesn't mean much statistically with your method.

However, being a beginner myself, I would advocate for frequent changes in trading plan even if the plan didn't get enough time to prove itself wrong. It would be in cases in which the change would be implied by logic rather than statistics.

[MidKnight 12]

I think my post went right past you....I'm not talking about your rules being specific or ones ability to increase size. I'm strictly referring to your %w relative to a weekly sample. With the %w you are exhibiting it is very easy to get an entire week of all losers. Yet just the other week you changed your trading rules because it was a down week. You need to work in bigger sized samples. I'd suggest at least 30 trade samples at a minimum. Some people will generate that sample size in a day, others in a month or more - it doesn't matter how long it takes. Making changes after a 1/2 dozen trades is not allowing for the true nature of a system to shine through.

[jonbig04 10]

Jon, I wouldn't talk about a mental block. It is just a different approach or philosophy, and it doesn't mean it is worse (or better).

Anyway, maybe MadKnight's remark was more general than just related to your last particular decision. Or maybe he wanted to suggest that one losing week doesn't mean much statistically with your method.

However, being a beginner myself, I would advocate for frequent changes in trading plan even if the plan didn't get enough time to prove itself wrong. It would be in cases in which the change would be implied by logic rather than statistics.

 

That's true, I should have saidthat I know there is no way that I will be able to trade large size with the same effectiveness as SIM unless I have strict rules.

[jonbig04 10]

I think my post went right past you....I'm not talking about your rules being specific or ones ability to increase size. I'm strictly referring to your %w relative to a weekly sample. With the %w you are exhibiting it is very easy to get an entire week of all losers. Yet just the other week you changed your trading rules because it was a down week. You need to work in bigger sized samples. I'd suggest at least 30 trade samples at a minimum. Some people will generate that sample size in a day, others in a month or more - it doesn't matter how long it takes. Making changes after a 1/2 dozen trades is not allowing for the true nature of a system to shine through.

 

Oops forgot to address that, yea thats true, but I'm basing this off of trades per week, and how I seem to be taking less and less. I think im up net 20NQ or so this month? It's pretty crappy. It's true that If i WAITED for say, 25 more trades the edge would be the same, but its the amount of time that it takes. I'm making less points, in less time...ehh if that makes sense lol. Either way, if I'm wrong, what I'm doing now (providing it tests out) can only do good, not harm.

[MidKnight 12]

No sir - that is the point. If you keep making changes after every down week after only 5-8 new data points (trades) in your sample stats then all you are doing is curve fitting to hindsight based on inadequate samples. As I have already said, getting 8 losers in a row from a 30% win system is very likely. If you just did 1 trade a day, there is a 17% chance that all trades will be losers for the week. At 1.5 per day, there is a 7.3% chance that they will all be losers for the week. Not so hard to accomplish.

 

Yes, it takes time to build your sample size up. That is part of it. Just because it takes time, doesn't mean one should approach system development any different in my opinion.

 

I've thought about posting this to you since your very first down week last year but decided against it thinking that maybe you learned something new that improved things. However, your pattern has been that every down week you have, you make changes based on that week and somehow find a way to make everything work out just fine. It took me years to see this same error in my ways. Have a think about it.

 

There is nothing wrong with +20NQ points in a month. I'm not sure why you say that is crappy. Markets change themes and with them comes a variation in opportunity. Accept it and do the best you can.

 

With kind regards,

MK

[jonbig04 10]

Good points. Thanks for bringing that up. I may have changed my rules into oblivion if you had not lol. I don't thinkI have yet though, looks like (thanks to you) I caught it in time. It's stupid to change everything after just one losing week. My first down week, I employed a new reversal system, so I didnt really change anything, but added. The next week was negative as well, I did make changes that week, the main one being no lunch trades. That was an easy one bc it turns out I have never taken a profitable lunch trade...ever lol. Then there was the further POI rule, which I stand by, in my other journal someone mentioned that I should have known that already lol. The changes I made that week wouldn't have made it a great week. It would have been still negative, or slightly positive. There was one other rule though, that now that you mention it, may have been too hasty. I will reevaluate it tonight to make sure. however what I am doing now, is not changing anything...just adding more trading time so that I can get more signals. I believe i am getting less and less because of lower volatility (except for today haha), but if I'm wrong, no matter. I am basing that off of the last month, I only got 2 signals this week, 4 or so last week...when I used to be getting 10 or so. The rule changes are responsible for a very few of those. like I said if it tests out, it can only help not hurt. I will post my results when I reevaluate that other rule too.

[jonbig04 10]

That was one of the most tedious and difficult tasks of my trading. To review, what I was doing was attempting to transfer my opening rules (9:45AM-11:15AM) for NQ to ES as well, to see if I got more signals, more trades, and more profit in the same amount of time than trading NQ alone. The first thing I had to do was transfer the ruleset over to ES. This was more difficult than I thought, but I managed to do it. I backtested every morning from 10/15/08 until now to revise the rules (about 40 trades). Once I did that I had to manually determine the results which is a pain in he ass (scroll through charts line by line), record them and the time the trade occurred and ended. For NQ, I already had the rules of course, but I realized the rules have morphed a bit so I had to backtest those exact rules for the same time period (about 60 trades) and record the time info as well. The results for this phase were normal (keep in mind this is from 9:45 to 10:15EST only). I converted all the ES points to NQ points.

 

NQ: 154 net points (11.5 per week), 21% accuracy.

ES: 95 net points (7.25 per week), 20% accuracy.

 

I was happy then that I seemed to be able to transfer the rules over, although they aren't as effective on ES, it's close enough for now.

 

Obviously, I can't just add them together, because I can't physically take 2 trades at the same time (if they both give me entrance signals) and I can't be in more than 1 trade at the same time. This is pretty much the crux of the test. Will ES only give signals when NQ does? Is there any difference at all? Can the 2 instruments be traded with the same rule set at the same time, or do they track too closely? I was pretty skeptical going in and during the data gathering, but the short answer is, yes. You see, my rules are so specific, that 1 little thing can be different (and it often is between the 2) and the trade can be a go or no go. So what I had to do was create a timeline day for day with the exact time the trades took place. So yes, when I was in 2 trades at once, I erased the trade that took place the latest as, in real life, I wouldn't be in that trade. Also, if 2 trades took place at the same time, NQ takes automatic priority. Often I would be in a trade on NQ that was to be stopped, when I could have been in a profitable trade on ES, but since NQ came first in time, NQ was the trade that counted. More often, I would be in a profitable trade on one, so I avoided the stops on the other. This is what made a real difference. Only one or 2 profitable trades happened at or near the same time (canceling one). Anyways, the results:

 

 

+207.5 net points for the 13 week period or +/-15 points per week, 21% accuracy (70 trades)

 

 

As you can see, it actually worked. This is simply because the two contracts (ES, NQ) trade differently enough for me to get more of essentially the same signals, same stops, and same targets. Just as if I could trade NQ's open 2 times (well not quite because the edge isn't as great on ES). The accuracy is the same (abysmal lol) and everything else is the same, but taking more trades of the same setup yields more points in less time. It's that simple. Oh, this is hot off of the spreadsheet. I am going to recheck my math, don't kill me if I screwed something up here.

[jonbig04 10]

Err just realized that I messed something up, I counted 8 ES stops that weren't supposed to be taken. That would add 15 or so points so the total, but I don't really feel like going back and doing the exact calculation again. I think the main idea is the point, but yes the numbers would be slightly higher.

[MidKnight 12]

So at 21% winners, if you do 1 trade a day (5 per week) you can expect them all to be losers about 31.5% of the time. At 2 trades a day (10 per week) you can expect them all to be losers about 9.9% of the time.

[jonbig04 10]

cool, thanks.

 

I would expect to take more than that, simply because the last 2 hours were left out (2-4) and I don't trade lunch (12-2). Off the top of my head I would guess that adds 2-5 to the weekly trade total. But I get the general idea, i like the numbers and now I know what to expect a little more.

[jonbig04 10]

No trades yesterday.

 

took a stop for -2.5 in the AM, then a long for +22.5.

 

+20 net

 

done for the day, need a nap

[jonbig04 10]

I should never have napped today before end of RTH. I gave up 7 points by doing that. That won't happen again. I have been trading ES as well. Yesterday ES was great, I just missed a great long in the AM, while NQ was no where near satisfying my rules. Today it was the opposite and NQ was there for me. This was a decent losing streak for me, but I realize now that it was just that. I followed my rules and took each trade independently of the last, and things worked out. Just kind of preaching to myself here. I know now, that through rules and discipline, there will be no cash demon whatsoever.

[jonbig04 10]

One more quick note, the all in, all out approach definitely is the best way to go profit wise. If you dont believe me, test it on your own system. You will be surprised. Its mentally tough though. As far as Im concerned, im not going to let my own mind get in the way of making more profit.