Jonbig04's Log

[Head2k 10]

Keep in mind that the more confirmation you have, the higher your price risk will be.

I don't think you can put an equation here. This statement is valid only if you are looking only at one "time frame", or better to say "wave scale". But if you watch more wave scales simultaneously then you can eventually keep both price risk and information risk low. The price risk needn't to be exactly the same as if you entered right at the extreme, but only slightly higher. While the information risk can decrease substantially.

But then you must define what do you want to see on larger wave scale before your entry (setup), and then you must enter aggressively on the small wave scale. This is in fact what one does if he enters on tests. He waits for confirmation on a larger wave scale to decrease information risk, but then takes an aggressive entry on a small wave scale to decrease price risk.

[jonbig04 10]

Thanks for the input guys.

 

Friday's DB at 933 (predetermined level)

[atto 20]

Head, good point. My reply was more geared towards the way he currently trades. Being aware of one's place in the larger trend is extremely important.

Thanks for the input guys.

 

Friday's DB at 933 (predetermined level)

Since it's not a double bottom to the tick, where's your entry? Where do you place the initial stop? What's the trade management plan (are you moving the initial stop)? Where's the exit(s)?

 

It's easy to spot those in retrospect, and concoct a plan that would work for that trade. It's harder to design a plan that you'll stick to every time (that has an edge!).

[jonbig04 10]

Head, good point. My reply was more geared towards the way he currently trades. Being aware of one's place in the larger trend is extremely important.

 

Since it's not a double bottom to the tick, where's your entry? Where do you place the initial stop? What's the trade management plan (are you moving the initial stop)? Where's the exit(s)?

 

It's easy to spot those in retrospect, and concoct a plan that would work for that trade. It's harder to design a plan that you'll stick to every time (that has an edge!).

 

Good points.

 

Regarding a plan, I'm not going to make one that's too specific. It will depend on that day. I will be employing some of my old entry techniques to get in. This one for example. The 2 bottom legs were just below 933, which actually isn't all that strange because globex low is at 932. I know from playing globex levels (actually any sort of levels that are close) that price usually break to the extreme level, not the closest. I can see 1 of 2 potential plays, one would have worked would wouldn't have.

 

The first is to wait for the hump to really be taken, the hump is opening range high (ORH) and we can expect R there and it could be wise to wait for some follow through above it. Once that is taken we can wait for a retrace back to it (flip), then buy it. This would have been stopped.

 

The other play is to wait for the hump to be taken out even buy a tick (technically confirming the DB), then buy any pullback-which would have been ORL which held to the tick. The stop protection would be the ORL levels, globex levels, or major S/R that I have identified. Once I see the pattern, I still have to wait to get a good entry...if that a makes sense.

 

Or you could try both entries. As you said, hindsight it one thing-real time is quite different.

[nkhoi 10]

check out the thread "Approach to trading the ES contract" by stevesbg same approach so you might get some more insights.

[jonbig04 10]

1. Identify major S/R levels on 100k and 30k chart. Ideally I like to see reversals and/or successful flips of these levels before I note them.

 

This is the same thing I have been doing, with only moderate results. It's a simple thing, but levels taken from larger charts are so great to play intraday IMO. Call me a nerd but it's so cool to watch price stop on a dime at or very near a certain level that you've predetermined. Important as they are I have learned that they, alone, are not enough to meet my monthly goal of 20-30ES.

 

2. Identify major trend.

 

This is done in the simplest manner using HH/HL/LH/LL etc. I don't fade the major trend unless there is a reversal confirmation on the anchor chart.

 

3. Once trend is determined wait for the anchor chart to retrace to major level.

 

This is very similar to what I have been doing the past month or so, the only difference here is that I will not be fading the anchor's trend at all.

4. Move to entry chart and wait for confirmed reversal formation at that area.

 

This is the brand new stuff to me. This formation should be against the day's trend but with the anchors trend. Pattern identification will take some time to get used to, but price rarely reverses without giving clues, those are the clues I'm looking for. I need to see these patterns confirm before I can think about entering.

5. Once confirmed, wait for pull-back for entry. The pullback has to be to a level like ORH, ORL, GLOW,GHIGH or if the reversal is a W or M, can enter on the hump flip retest.

 

This part is not new, this is exactly what I was doing in the #AHG room and actually had very consistent monthly success with (though I think a lot of that is to do with volatility). Basically the idea is to wait for an intraday level to be taken and for price to pull back to it. This way you can get in at the end of the pullback with your stop protected. After all, that's the hard part of entering on PBs. Ideally I can enter on any pullback, but I'm not good enough to do that yet.

 

6. Entries will be based on chasing price or volume exhaustion if it happens. I want to see price get within 2 ticks of the level, then I will be ticks behind it and will follow it until filled. Stops will be dependent on the fill and how far I am from S/R, however they will be no more than 2 and no less than 0.75.

7. Targets are going to be nothing less than 9ES (and more like 10-13) and ideally will be dictated by the anchor chart (LLs, HHs).

 

If a reversal formation confirms on the anchor, I can then look to the entry chart for a pull back to enter. The only time I'm allowed to enter without a pullback is if there is a very large and perfect formation on the 30k chart and price "pops" with force at the confirmation, at which point I will simply enter at market. This doesn't happen very often, but I believe when it does it signals a potentially explosive move (hence the high volume pop).

 

 

Anchor=30k vol chart and 100k vol chart

Entry=10k vol chart

+5sec (w/volume)

 

Basically these new rules are combining my old strategy (level flip entries) with my new one (purely s/r) with the added confluence of anchor trend and reversal patterns. Just to give credit where it's due this is all 100% AHG. Anek told me to add patterns a long time ago and I didn't listen. I feel that the patterns and their confirmation will give me the higher accuracy that I need. I am very excited about implementing the new plan as I feel it addresses what you all have been saying about my trading and is more based in sound PA. I really hope/think this is what I need to get to the next level.

[jonbig04 10]

Here are some some charts of the last few days to see more of what I'm talking about.

13.pdf

14.pdf

[jonbig04 10]

Oops, don't know why i did that as PDF's.

[jonbig04 10]

Today had me pretty excited, I didn't net very much, but it was my first trade with the new rules. I could see the PA playing out and it was awesome.

[jonbig04 10]

I also need to develop overnight rules. There a good chance my target of 898 may be hit with the trend being down. Perhaps this should be my last "close at EOD" day.

[jonbig04 10]

No trades thursday. Saw DT confirm at a major area on the larger TF chart. I waited to see if there was going to be any action once we broke 917.75 (DT confirmation). Sure enough, there was and I immediately shorted. Its within my rules and I think it was a great trade. Too bad price dropped an addition 6ES before bouncing all the way off of GLOW to make a higher high and stop me out lol. Oh well, shit happens. I will gladly take this kind of trade all day!

 

Anyways only got 3 days of trading the new rules in and ended up +3.75. I'm not backtesting since its simply to pointless and discretionary. However if I had been trading with the rules the whole week, things probably would have been better, but there's no point in speculating. We'll just see what next week is like. I'm feeling pretty confident-price had to jump through hoops to stop me out today. Of course, it routinely does whatever it wants

 

I am using opening range high/low and globex high/low. To put it simply, they are indicators. If there is a major level overnight chances are it will become glow or ghigh, same with the opening range levels. They just quanitfy and plot s/r for me, which is why they often have huge impact on price. I mean look at today's high and low.

[MidKnight 12]

However if I had been trading with the rules the whole week, things probably would have been better, but there's no point in speculating. We'll just see what next week is like.

 

Well said there. That is the truth with any discretionary method. It really is impossible to say with any grasp on reality how the week coulda, woulda, shoulda played out.

 

With regards to your SR levels, I would recommend keeping the current markets condition in mind. Still in a trading range, so prior day levels and recent range levels are salient. Things will change....Joy of the markets

 

 

With kind regards,

MK

[nkhoi 10]

7. Targets are going to be nothing less than 9ES (and more like 10-13) and ideally will be dictated by the anchor chart (LLs, HHs).

 

seems arbitrary target to me, check out ATR indicator then you can adjust to take 1/3 atr, 1/2 atr, full atr etc...

[jonbig04 10]

Thanks for the input. I'm not a big fan of indicators, though I see the logic behind the ATR one. I admit my targets aren't as refined as they should be and really I should take back the whole 10-13 things. The targets will be dependent on the anchor (larger time frame) chart.

 

Consider what I'm looking for. I'm looking for trend continuence. Therefor if that happens, it makes sense to simply target a LL or HH of the trend I'm hoping to ride. Typically, since I'm looking at a large TF trend, a LL or HH will equal quite a few points.

[nkhoi 10]

ATR is just to skew your chance of hitting your target, here is some more thoughts on it

ATR Exits

[AgeKay 10]

ATR is the exact opposite of trading support/resistance. They also makes no sense generally if you realize that the bars range is arbitrary since it's based on a parameter (i.e. the periodicy).

[jonbig04 10]

So I think I have all the details worked out in the new plan. I pretty damn confident this will get me my 20-30 ES per month. Its tough making a plan bc real time always presents you with a scenario that you didn't plan for. I've taken a few trades this week some worked out, some didn't (my short was stopped by 2 ticks before yesterdays reversal).

 

My first plan was basically just an entrance plan. I just jumped in and got a good entry, but I really had no reason for thinking price would continue in my direction once I entered. Add in the discipline to hold for large targets and depending on the volatility, you can be profitable doing JUST this. I was for months and I was meeting my goal. I noticed though that the net was dropping while the VIX did. If I did this now I would probably do decent or break even. With this plan I had the entry but not the direction.

 

My second plan was just s/r. With these rules I was right pretty often about which way price was going to head (remember calling all the HODs and LODs), but I had no way to enter. Sure I would get lucky and catch one here and there (and that was enough to be profitable), but it was luck whether I would get stopped out or not. With this plan I had the direction, but no good entry.

 

What I have done is combined the two and more importantly, added patterns. Patterns are really making the difference and I should have used them long ago. Look at the DB (at globex low) this morning or the DT yesterday. I am being conservative and I'm only playing patterns that are with the larger trend. I also only take the patterns that occur at predetermined s/r.

 

So once price gets to S/R I don't jump in like I used to, I wait. If a pattern confirms then I can be pretty damn sure which way price is headed (price reverses via some kind of DT or DB like 80% of the time). Once I have that information THEN I can use my entry rules.

 

The reason I'm very confident isn't because of my backtesting, its because I really feel I've addressed the weaknesses in my earlier systems.

 

That all said I'm gonna kick this thing off tomorrow. As you can imagine I don't get my set up very often. 2-5 trades per week. So on days I don't enter I won't be updating. After all this damn time and effort, I think I finally figured out what to do. Now I just have to do it.

[atto 20]

So does this mean you're going live (or anyone soon)?

 

Also, how about you post your charts with s/r levels? Might give us something to follow along with. You entering on stops, or limits?

[jbtrades 10]

Nice journal. Good luck.

[jonbig04 10]

Atto, I'm going back and forth on it. Stop placement is the same regardless of entry. I'm not too worried about entries anymore because ideally my stop is protected by the level (s/r, OR, GL). As you can see even from today's chart, they offer pretty reliable s/r.

 

jbtrades, thank you.

 

took a stop today for -1.25. notes in the chart.

[atto 20]

You conceptually know this, but try to internalize it: With a proper edge and plan, the difference between a trade that works or doesn't is only the outcome.

 

If you leave whether to move a stop to b/e after 2pts to your intuition, then you're always on the hook for the result. Make a plan, be consistent about it, and it gets a whole lot easier. Trades become an exploitation of an edge, and the outcome of any one trade is meaningless.

[jonbig04 10]

Bah.

 

You're right.

 

OK, I'll come up with solid B/E rules before Monday.

[atto 20]

Take from this what you will...

 

Since you've switched to trading patterns (with confirmation), you're entering later in the move and on a breakout. I'm assuming you got the 910 level from price action on 6/19-6/20, which also came into play yesterday (6/25).

 

So, correct me if I'm mistaken, your setup is taking breakouts of S/R after a chart pattern, such as a double top. The double top occurred, as price congested between the 918 level and 910. If you entered at the top, you'd have the most information risk (ie, you have little to no confirmation), but your price risk is the smallest. Assuming a good fill, your stop loss is simply the buffer you want past the top in case the squiggles test a tick or couple higher.

 

Notice that yesterday, price found demand right above 910, and later tested a little below that (909.50). So, heading into today, that whole zone is a possible area of support. Sure enough, ES found demand again at 910.50 (09:33 edt) and again at 909.75 (10:15 edt).

 

If you want to enter on the breakout of this larger congestion area, you want price to leave this support zone completely. However, your entry was smack in the middle of support, and (as it appears on your chart) on a small pullback. How it played out was that price peaked slightly out, didn't find the supply to keep it down there, and returned to the congestion (value). You were going short when the stronger hands were buying. Retrospect, I know, but read on.

 

Additionally, since you're trading the breakout, you really don't have S/R to protect you as you did before. Yes, you have a level drawn on the chart, but for your entry to work, that level has to break. If it doesn't, it sure as hell isn't going to protect your short. The purpose of price action based stops is to take you out of the trade once price has passed a "danger point". Unfortunately, breakouts don't have convenient points, so your stop is either fixed (ie, 2 pts) or based on some micro local swing high/low. Notice how price just waddles around the 910.50 area.

 

This is exactly what I meant earlier when I said that these kinds of trades have more price risk. You have less protection, so either are using sub-par stops locations, or wider stops. Don't get me wrong, I'm not knocking pattern trading, breakouts, or wanting confirmation. I used to trade a lot of breakouts as well, and did so successfully. However, think about exactly what you want to see in a breakout. What are the shorts thinking? What are the longs thinking? When will people start to puke (which, incidentally, is when you'll be cashing in)?

 

Just some things to think about. Also, make sure your confidence is coming from a strong plan with a bias, and not the idea of patterns. Looking at a couple month's worth of trades wouldn't hurt. If/when you do, don't just see if it works. Look at what happens when it works, and when it doesn't. You'll pick up things, such as the fight the buyers gave right before your entry on the lows (instead of giving up and stopping out, propelling price downward). But first, you'll need a solid plan.

 

[jonbig04 10]

Thanks atto. With one excepting I agree completely. I attached a PDF that will hopefully explain my behavior.

tradeS.pdf

[atto 20]

Makes sense. Please don't interpret my critique as knocking the idea behind it. Sometimes it helps to pay attention to the surrounding area and avoid tunnel vision. Yeah, the traverse down was a down trend, but we're also in a larger congestion area, so your pullback, which normally would have been a good idea, was right into S.

 

As for the stop... As you probably know, I don't follow ORL or ORH (though they might be wonderful, wouldn't know). My argument is that if ORL/ORH was decent S/R, I'd notice it anyways (as a perfect example, I got the 910 from weeks before, with a test today). Next, you placed your stop assuming the trade would work. But stops are for when they don't . Especially on flips, you want it tested before you could bank on it helping you out. Right when it's being broken (or "fought for"), the whole area is fair game. As for "acceptance", price wasn't rejected (look at the highs and other lows). Sure, they were fighting, but bulls weren't rolling over so quick (which is exactly what you want to see for a breakout).

 

There's no need to over complicate things, so if none of this resonates with you, save it for a rainy day.