Friday, January 30, 2009

A Dissapointing Week

Well there is no other way to say it other than to say it - this week was really poor. Yea we made money but we made a number of mistakes that simply can't be allowed in the future. You know that rule change I made yesterday? I was looking at my actual rules about the Double Bottom setups today and I realized I had already written a rule into my standard setups that would automatically disallow any reversal. I couldn't believe it. I had been mistrading my own trade plan. Disgraceful. So lets talk about the profit our mistakes cost.

  • Missed trade Tuesday due to emotions: -150.00
  • Reversal out of Standard setup on Thursday: -250.00
  • Total Cost of Mistakes: -400.00
As you can see these things can make or break a trader. They were the difference between hitting my next equity objective and falling short. And that is why I take each mistake so seriously. Because it is a very real and very serious impact on my bottom line. Each mistake is like losing a client, a customer, a referral. Good business owners don't let that happen. It is no different for a trader.

And as far as our new setup. Traded this week correctly it had a 88% win rate (I caught the only loser yesterday! lol!) and +450.00 in profits net. I don't consider that lost profit however because that wasn't in my trade plan until yesterday. But that one setup alone has been good for about 80% win rates and over +1700.00 in profits over the past three weeks by itself. Its going to be a great addition to my arsenal.

So lets talk about where we go from here. Obviously next week we are going to aim at achieving that perfect execution week. Employing all of our setups, taking the correct ones, and most importantly - managing them correctly. I have one last week before the first month of trading is over and my goal of making $2,000.00 in profits is a pipe dream at the moment. Traded correctly? That goal would not only have been met right now, but exceeded. I conservatively estimate that i've left over $2,500.00 on the table this month so far from mismanaged trades, not taking +1 ticks to cover commissions, incorrect signals being taken, and my two new trade setups I added this month. But what we have to realize is that the past is the past and you can't do anything about it in the present. So we are moving forward. But if you think for one moment I don't believe that goal of $2,000.00 by February 6th is still possible from my actions next week you would be dead wrong. We are going to get there or do our damnedest failing to do so.

My weekend project is simple - find out if trading prior to 9AM trading only my support and resistance setups in the market would be worth it. Today for example there was an easy +5 points available. On the 22nd there was an easy +4.5. All textbook DB/DT or You're Screwed setups that I pass on due to the time. I still contend some of my other setups should not be traded in those time periods but the support and resistance setups seem to be very consistent there. So i'm going to do some extensive backtesting and see what the probabilities are for allowing those two setups to trade during that time period.

And despite all of this. We made money this week. We're doing something right, even if we are still doing some things wrong.

Trade Results:

No Trades Taken.

Thursday, January 29, 2009

Rule Revisions and a New Setup

Today was a rough day. I traded perfectly. Lots of trades, not a lot of success in terms of profits. It was just one of those days... one trade missed its target by 1 tick and resulted in my only getting +.25 rather than +2.5, another trade got me short, reversed me on a double bottom pattern, and then stopped me out only to seek out my original target. And that was the final straw. Three times in the past two weeks I have been in positions that faked me out on double bottoms only to go onto my initial targets. And i'm sick of it! So I rewrote my trade plan today that any standard, or triple threat setup I take is held until par or stop out. Reversals are not allowed. Its the difference between -125.00 and +125.00 and i've seen this happen to me time and time again. Now if i'm able to get to par on the setups, then a valid signal occurs, so be it - i'll take it.

Rewriting the rules isn't something I take lightly. Its an important part of my trading and I don't make changes without significant evidence that there is valid logic behind the change. This one change (albeit a small rule) would've resulted in three more winning trades and around 650.00 in additional profits left in my account over the past three weeks alone. Its a small change but I have no doubt a positive one for my account.

The other thing I wanted to mention was the addition of my fifth (and final) trade setup in my arsenal; codename - Untouchable. It's called "Untouchable" *DUN DUN DUUUUUUN* *Cue suspenseful music* because it gets profits that have been previously untouchable - original right? ;). The Untouchable is a trending setup meant to get me into swings I have (until now) been unable to participate in. It hits high win rates, and has low risk setups that yield 1 risk, 2 reward outcomes. It works on all timeframes, all markets, and is very consistent. But like all my setups they might not occur every day of the week because they are so selective and filtered. I decided to start trading it live today and yup - you guessed it. The first trade was a loser! Yay! It always seems to go that way but the point is the idea is solid, the data supports this and i'm going to continue with the setups.

Here's a valid setup from earlier this week:

And another to show its potential swing trade ability:

The last thing that happened today was as I got another Untouchable setup (that would've gone to par for +1 tick) my internet dropped out literally as the order was being sent. I mean, the info bar in TS said "Order Sending" so literally to the millisecond. Now i'm not sure if it was a god send that the order didn't go through (I would've been unable to manage the position) but the setup was valid either way and did what it was supposed to do. It was a hell of a stressful five minutes though on the phone with TS Support, rebooting routers, modems and computers...

So overall, this is my largest losing day (even though I should be tied if I would've got my last trade in) and it should be +75.00 instead with my rule revisions. Either way, we learned a lot today and our methodology is more profitable and stronger than it ever has been because of it! But maybe I won't be getting my Buffalo Wild Wings this week after all! Sad!

Trade Results:


Wednesday, January 28, 2009

Guess what I did today?!?!?!

Nothing. If you want the perfect explanation of why we don't trade FOMC days go pull up a chart. Utter crap through and through. I decided to sleep in a bit, take a nice long lunch, get my workout done early in the afternoon and chillax for the rest of the day. We hit it hard tomorrow morning!

Trade Results:

- No Trades Taken.

Tuesday, January 27, 2009

Profitable Yes - Successful No

I started off the day great, a par, a winner, and one loser that got me to -.25 net. No biggie. I took every trade that came along and managed them correctly. Then I got ready to catch a wedge break on my tick charts this afternoon. I got my signal to short at 41.50, and I had seen price bottom out at the swing low, trade through by a tick and was heading upwards. I HESITATED. Fear set in - I thought this could double bottom, and then I'll lose. I passed. The signal went on for +3 without me right to its target. I caught a double bottom a little bit later that was very profitable but the point was I screwed up. I don't have a double bottom UNTIL I HAVE A DOUBLE BOTTOM. I needed to execute and I missed a winning trade due to fear. Very disappointed in my performance today. I traded like a worthless pansy ass newbie today and that's just not good enough.

So yea... we ended up with a new equity high again but it should've been over the 1k mark and it wasn't due to ME, not my method.

Taking tomorrow off (i'll be simming it of course) due to FOMC and then we'll be back to kick some tail into the weekend. Remember, after the first hour tomorrow things will get very light and choppy. Best to stay out until one hour AFTER the release. FOMC days tend to headfake two directions before running. Typically it takes forty-five minutes to a hour of useless death swirl before it picks a direction. So just be careful in the volatility!

Trade Results:


Monday, January 26, 2009

Day 1 is Successful

Today was a pretty hard day to trade. It was a lot of quick short spurts back and forth and one hell of a consolidation chop fest from around 10AM till noon. It was the type of price action that could absolutely ruin your day and rob you of your money. We kept our heads about us and did exactly what we had planned on doing - we executed perfectly. The end results were a par trade and a winner. One other thing of note was that we once again had another "You're Screwed" setup (remember I got burned by putting on the wrong position on Friday on one of these) and this one too invalidated on entry. Guess what? She didn't fool me and I was ready for it. I let it pass on by and it quickly reversed into what my stop would've been. That's progress folks. Trading is about making mistakes - and making sure you don't repeat them.

The only other thing of note is that we closed out today with a new equity high at the end of trading. +725.00 Gross... The last time we got this high we hit +737.50 intraday and then proceeded to hit a drawdown and finish at +400 on our equity curve that day. We got a long ways to go and we need to step it up a notch. The first two weeks we weren't trading all the setups and we missed a lot of opportunity. Last week we only got to trade two days out of five - this week we are going to give it our all and see if I can get to my next goal - 1,000.00 at the end of the week so I can get me some Buffalo Wild Wings!

One last side note. I will not be trading Wednesday due to FOMC so it will yet again be a short week for me. Regardless, it should be an active week in the indicies with all of the econ news being released. Hold on to your hats!

Trade Results:

+ 150.00

Saturday, January 24, 2009

A No Growth Week

Well Friday morning I did screw the pooch on a setup. The new "You're Screwed" setups I started trading actually gave me a signal - or so I thought. It was a valid setup, however in my rule set there is a condition that invalidates the entry trigger if that condition is met. This only occurs in less than 10% of the setups and so I jumped into the position, only to realize about two seconds later than this setup had invalidated. I got kicked in the teeth quickly for my mistake and lost a quick -1.75. I was disappointed I made this mistake but they will happen, it was my first live signal with this setup and I was lucky it was such a small loss to learn my lesson. I know I won't make this mistake twice.

Thankfully I caught the next valid signal and got +2 out of it to get me +.25 net on the day. I quit trading at this point because I was leaving to go to the Auto Show with my father as planned. The rest of the day whamm'ed and bamm'ed about without me as Friday's tend to. It would've been profitable had it been traded throughout but i'm glad I took it off regardless. This week ended net +0.00 overall. I only traded two days essentially so I can't beat myself up too badly. The only problem with a week like this was that I had a very real decay of my account due to commissions. Yes, I grossed 0.00 but when you figure in commissions spinning my wheels this week cost me 64.00. Ouch. Anyway, had I traded correctly Friday that cost would've been covered.

Next week I plan to just try and trade solid throughout. I've got some real account growth to get going on. We need to post up some impressive numbers worthy of recognition and i'm going to be in hot pursuit of that "perfect week" where I don't make any mistakes and trade my plan perfectly. Hopefully next week can be the first of many that I succeed on that goal.

Quick shot of the typical post 1PM shift in the markets on Friday. Crap? Yup.

Trade Results:


Thursday, January 22, 2009

P/L Outcomes ≠ Good Trading

Today I wanted to talk about one major thing before we dive into how the day unfolded. Most new traders (and some seasoned) seem to assume that the profit or loss at the end of the day is somehow related to THEIR performance that day. The reality of the matter is nothing could be further from the truth. Profits are NOT related to if you traded "good" or "bad" on any given day.

As traders we need to understand that our methods have a probability of outcome and to achieve that probability we as traders need to execute our plans correctly throughout the day. If we do that the method succeeds. If we don't, the method fails. As long as you took the signals and followed your rules you traded perfectly regardless if that nets you a losing day or losing week. Systems have drawdowns, trades stop out. The point is successful traders separate the outcomes of profit from the outcomes of their performance.

As for today. I traded my nuts off. The most trades i've ever taken in one day is 4. I had taken 8 by 12:30 in the afternoon. Too many to go through individually but lets just say the trading gods didn't favor me in the am. I start trading at 9AM CST - by 9:04 I was down -225.00 on two back to back losers and by 9:22 up +25.00 net on one winner. This back and forth P/L whipsaw continued throughout the day. All I know is that I traded like a champ. I missed one signal that went for big gains but that's just going to happen. I was bidding for it but I got greedy by a tick and missed my fill on a trade that went the better part of 6 points. DON'T GET GREEDY. As I type this I hit exactly 50% "winners" today, two of which were par, one of which I got slipped on the exit for a tick and i'm still net profitable. Another trade that was a loser literally tagged me out on the tick low before going immediately to my profit target - but it happens! GOOD TRADING IS TAKING THE SIGNAL.

Now I did do something a bit unorthodox for myself today, and that was to quit early. I stopped trading at 1:30 rather than 2:30. Now this *IS* against my rules but I did this for two reasons. Today I took 2x's the trades I normally take on a day and frankly, i'm emotionally and psychologically drained. My focus is lacking as I write this post and I have no want to sit at the screens anymore. Secondly, the market has just gone ape shit in the last hour and shot up 20 points in a straight line. While there could be opportunity here, this puts price action into an "outlier" category which diminished my edge somewhat. So maybe i'll miss out on nice profits, but i'm willing to accept that outcome right now. I'm just not in the mindset to put on more trades anymore today.

Because I am so tired I will merely give you my two charts I traded and the arrows that indicated the trades... A lot of the trades are Double Tops or Double Bottoms so take a look and see what I did.

*Update 6:32 PM* Turns out there was one more valid signal that worst case would've been par (+1 tick) but it came up to my target level exactly but I can't guarantee that I would've gotten filled (or that I would've gave up a tick to get out) so we'll call it even. Worst case I missed one trade.

Trade Results:


Wednesday, January 21, 2009

Day 1 of a 2 1/2 day work week.

Things started off nicely for us with a tidy double topping pattern that went straight to target. I had to pay up a tick to get an exit (turns out I wouldn't have had to) but walked away with 3.75 in profits. Then I got a second signal to get short off another double top but this thing just EXPLODED away. I had my order in but didn't get filled as it ran down for what would've been another 4 points in profits. Oh well.

Then came an interesting scenario. I got a signal to get long (and I did). However that signal then turned into yet another double top pattern that was textbook and confirmed. So I reversed out of my position for a loss and then got short. The short obviously didn't work and I took a second loss. It was kind of a tough thing to take two back to back losses inside of two minutes, but the losses were relatively small and most importantly... under pressure of a live position I made the right call on reversing out and getting short. Yes, it didn't work this time, but i've seen it happen before and i'm sure i'll see it happen hundreds more times this year. I traded the method and the signals correctly under pressure. That's all I can do.

The next thing I wanted to mention briefly is the importance of understanding news releases and their importance when it comes to trading. First off... be AWARE of them. I specifically don't put on trades until 10AM EST everyday because of the news releases that are out almost every morning. Furthermore, there are almost every week fairly important news releases that come out intraday. Its important to keep track of the KEY releases that are going to move the market because you don't want to be in a trade ahead of them. Consider today - housing numbers were due out at 1PM EST. What do you think the pit is going to be doing 30 minutes prior to a news release they are all strategically positioned around? Think they are initiating new positions? NOPE. They are all sitting around the pit waiting for the release. Which means what to you and I? It means the market lacks direction and conviction in its moves and chop, fakeouts, and stop runs are the name of the game 9 times out of 10. As a rule of thumb I try and stay out 30 minutes prior to a release and 15 minutes after. Then its fair game. A great free resource I use is Econoday. Make note of the news events identified with a star, those are the ones you need to be aware of. The only others ones that might not be starred but are important are Beige Book and the FOMC Minutes.

I took one more trade on yet another double top setup and this one cost me 3 points. It was valid on both my 1 minute chart and my 620T, and I took it. It stopped out but that's just part of the game. I think the reason this one really lost was because the down bar that signaled me to get in was just such a big move... most of the move down that would've allowed me to get to par already had been already covered by the initial reversal candle. Oh well, this is just one trade out of the thousand I plan on taking this year.

Should be interesting to see if we can turn a profit on this essentially 2 day work week. I had today and I have tomorrow. What i'm NOT going to do is whine about "if I had just traded yesterday I would be up 300.00 and i'd be profitable this week". BULL! You take the results as they come and accept the outcomes of your actions. Friday I'm taking a half day as usual from now on and going to the Auto Show with the 'Pops as we do every year.

Trade Results:


Tuesday, January 20, 2009

Passing on today...

Turns out it may have been a bad call (There have been 4 signals since i packed up shop around 10:30, 2 pars, 2 winners for +5.75 thus far) to not trade today but it is what it is. Inauguration day is an outlier news event and i'd rather play it safe than sorry. I tried to get into to moves this morning without filling (both would've par'ed out) got a bit fed up and then I decided I rather go watch history in the TV than trade through it and catch the highlights on the internet.

Either way, whats done is done, the methods are performing beautifully even though i'm not executing them.

Its going to be a 3 day week for us so we'll be up against it but I have no doubt we'll perform!

Trade Results:

No Trades

Friday, January 16, 2009

Trading ends early today!

Option X + 3 Day weekend = Probable chop. Yea, i'm sure they will slam them around back and forth in 10 point moves but it won't be fluid movement, it will be program slams that come out of nowhere. Not a lot of opportunity considering the amount of time required. So i'm choosing to start my 3 day weekend early today. In fact, i'm probably only going to be trading the first hour or two on Fridays from here on out.

Most Fridays are indeed crap to begin with but mostly I spend 6 and a half hours a day literally at the screens 4 days a week. No lunch breaks, no breaks of any kind. Its hard, intensive work and on a Friday quite frankly I think I deserve a break. If it hasn't happened in the morning most likely it isn't going to happen so why spend the time? I'm choosing to use Friday afternoons as a nice break from the action and a reward for the solid focus from rest of the week.

I took one trade this morning... looked like I was screwed for sure, but I stuck with it and the outcome was a par trade. No big deal. That's means I took another trade that my system protected me on. And starting next week another trade that would've gave me 12.50 in profits.

So a couple other things to mention. Statistically I have something close to a 50% chance of taking par on a trade. As you can see from my results on my spreadsheet that also equates to a total of over 120.00 in commissions thus far. In all of the cases where i've taken a par a tick would not make a difference in keeping me in the move or getting me out so i'm going to start next week by getting to par +1 tick. This will give me a bit of extra profit (137.50 so far had I been using it!) that will cover all of my commissions. Commission is a VERY REAL part of trading profitability as I proved with my backtest on my "Method 2". I found that by reducing the number of trades I literally was making more money by overcoming the commission fees. Speaking of "Method 2" I thought I would post up its equity curve so you can see how its doing so far. Banner week for it this week setting new equity highs and over 1900.00 in profits thus far during this two week period. The equity curve also looks identical to the one in the backtest but I think you'll agree the drawdowns are relatively minimal and the growth remains constant.

The other big news is that I finalized my newest trade setup last night. Its something i've been following for awhile after watching price action interact at various points on the chart that I was already watching. Using my same tools I was able to create a rule set that captured high odds (We're talking close to 90+%!!!) low risk setups that yielded a 1 Risk : 2 Reward setup. Yesterday alone there were two signals that went par (+1 tick) and winner (+3 points). They are simple, they work, and while they don't happen everyday (or every week sometimes!) when they do occur they perform.

I call them "You're Screwed" setups because i'm stepping in at a point in the market where the pit is robbing people of their stops and I just get on board to allow the pit to push the market for me as stops stampede into the market. Most importantly i've found this pattern on every currency, in every timeframe, all the indexes, they work everywhere! So i'm very confident in this additional entry and will be trading it live next week. I hope that this can supplement the loss of my other setup earlier in the week which needs tweaking to say the least.

And the last point. I hit my first goal this week of closing profits on the end of the week since we started of over 500.00. This means I can finally (after two months) get a haircut! Next goal is 1000.00 at the end of trading on a Friday and then I get to go to Buffalo Wild Wings for some scrumdiliocious hot wings. Small goals - but effective ones that I look forward to and work towards everyday. Furthermore this has been the most profitable week of trading thus far. We ended up grossing 412.50 in profits!!! Just think of how many signals I botched, that par trade mistake that cost money, the profits from all the par trades I didn't take and the five "You're Screwed" setups I didn't take this week. Next week is going to be every better for sure!!!

Enjoy the long weekend! I intend to!

Trade Results:


Thursday, January 15, 2009

Trading your system is PARAMOUNT!!!

Today was an interesting day. I took a couple trades that went for par but the price action was all over. We had a HUGE V-Reversal mid-day and volume was through the roof. So much so that on one of my trades I had a tick of profit locked in and I was actually slipped a tick on 1 contract when price came back. Things were MOVING.

But today demonstrated the KEY to success in the market and I wanted to share it with you. My buddy Awais sat through it with me. I had taken a loss on a trade around 1 PM that left me down -187.50 in the hole. The thing is, it was a valid setup, I took the trade and it was a full loss. IT HAPPENS. Any loss sucks and it takes the wind out of your sails no matter what you do. I got up, walked around, knew I had done what was necessary, made the right decision and got refocused. Ten minutes later a second trade around the same area signaled and I pulled the trigger again. It looked like I was going to get nailed twice in a row, it reversed and shot up to where I could get to par. It stopped out for par - no big deal. I executed correctly and without flaw.

An hour passes. Its now approaching 2:20 in the afternoon and I have a potential setup occurring on one of my charts. I'm already at a point where i'm going to end the day with the largest loss i've yet to see live. Bad day right? At 2:24 I get a signal to get short (I take trade signals until 2:29 each day) and I pulled the trigger. Now during this time I was chatting with my buddy. It went a little something like:

Me: Sh*t, damn, I don't want to be in this f****'n thing but it signaled.
Me: I'm short. Damn this thing.
Awais: So you're short?
Me: Yup - damn thing gave a valid signal.

2 Minutes later...

Me: Stop to par +1 tick.

2 Minutes later...

Me: Stop to 39.50, targeting 34.50

1 Minute Later...

Me: I had to pay up 1 tick on the exit but i'm out and net +50.00 on the day!


Today I turned the worst potential loss of my career into a winning day by simply following my own rules. The day isn't over UNTIL ITS ACTUALLY OVER. Don't quit, stick with it. Probability and outcomes in the markets are INDEPENDENT OF ONE ANOTHER. The market doesn't care if you're up or down from trade to trade, so take your trades and let the results be what they are.

Trade Results:


Wednesday, January 14, 2009

New Equity Highs!

I set off today knowing that the Beige Book report was going to be out at 1PM CST. Historically the market tends to wait for this release and consolidate prior to it so I said I was going to trade for the first hour of the day and then walk until after the release. I had 1 trade that went for par, and then a second that was after the first hour, but it was such a pretty setup I said lets go for it and I got paid nicely for the position. Sat out until the news release (and i'm glad I did as nothing happened except chop and blast moves), and then nothing developed in the P.M. as all the potential setups blew away from my entries.

But the silver lining? I hit a new equity high today. That's a good thing - a really good thing. It means what I'm doing is working and it means i'm moving in the right direction. So good work, but we've got to keep it up! Another thing that's really nice is seeing my win rate gradually increase as my trades progress. We're now hitting roughly 80% (including par's)!!!

The last thing to discuss is that i've cut out a setup from my trading. Its something that was responsible for 3k of profits during the last month out of the total 7k. So its a big chunk but the system works on getting BIG winners but hits low win rates. It also currently has no way to get a position to par. Over the past couple days i've not liked what i've seen and I've decided to pull it out from my live trades until we can refine it to a point where the entries are refined further and I have a way to get a position to par safely at some point during the trade. So without that my expected during that month of HIGH volatility was around 3k. So my goal for this month is going to be 2k. We'll see how it goes!

I tried to do a video tonight covering how to play double bottom/top setups but after reinstalling Vista my built-in Microphones on my laptop seem to have gone missing in some type of driver debacle so I can't do any videos! Sorry!

Trade Results:


Tuesday, January 13, 2009

A bad day?

First off, lets just say, today was pure unaltered crap. Literally sideways for 80% of the day. A perfect day to get chopped to pieces. We didn't so I pat myself on the back. What we did do was take a trade that hit our "par" profit level but you know how we were waiting for stop moves on close these days after Friday's debacle? Well we did wait, and it reversed HARD and I had to take a 1 pt loss instead of a par. Frustrating to say the least. But that's just trading, the really annoying part was that my trade was on a 620T chart, meanwhile the 1min was firing off a valid double top trade that I could've got into if it weren't for me having to scramble to get out of my prior long for that 1 point loss. And the double top trade went to its target for +3 without me. All in all a 200.00 profit swing from what could've been to what was. But that's just trading. Ending up -1 pt on a day like this isn't bad at all. I'm sure thousands of traders got annihilated today. Anyway, took 2 other trades that all par'ed out, and I didn't get a fill on the 3rd trade that would've been a winner so all in all a disappointing day.

Trade Results:


Monday, January 12, 2009

Another day anotha dolla...

Two trades today, two winners, both textbook setups, execution, management, and exit. Poster day for following a trade plan and sticking to it. The first trade of the day was a relatively big swing, looked like it was going to fail at so many different points but I stuck with it. The stupid thing consolidated around my position for about 45 minutes, tested the lows multiple times, looked like I was screwed multiple times but what do you do in a situation like that? Man up. Grow a pair. Execute the plan. I had my risk defined (half my old method!), my targets set, my position on where it should be, and a valid setup. The only thing left to do is get stopped out or wait until my PLAN tells me to make an action.

Guess what? The plan makes money. If I had bailed at numerous points throughout the trade due to fear, greed, 90 other indicators that I don't follow telling me x, y, and z I would lose money. If you're going to take a position FOLLOW THROUGH ON YOUR PLAN FOR BETTER OR WORSE!

Trade Results:


Friday, January 9, 2009

A Logic Error and Lack of Focus Costs Money!

Its 11 AM, and i'm quitting for the day. I have exactly 0 points on the day and i'm quitting because I really screwed the pooch this morning and i'm frustrated. If i'm frustrated, i'm not in the mindset to make good decisions so i'm walking away. And the funny thing? I took GREAT trades this morning. But one of them got my stop to par (or so I thought) stopped me out, and then went to profit without me (2 points missed). I took one more trade for par which was fine. The more insulting problem was this: I missed not one, but TWO trades this morning! And the insulting fact is BOTH of them went for big wins and a combined profit of 9 points missed! That's a grand total of 4 trades I should've taken this morning, and a combined profit of 11pts, or 550.00/per contract! That would've really helped that bottom line!

So lets explain what went wrong. As far as both of the double bottom setups go, I just simply missed them both by focusing my attention elsewhere and by the time I realized what I had done I couldn't get filled at the necessary price. I had great focus all week, but I let up this morning and it cost me.

The first trade I took was textbook, its a trade that would've been recorded as a winner in my backtesting. Why wasn't it a winner for me here today? First let me explain how I manage my stops. I have Fibonacci levels in the markets that when price moves to them, I move my initial stop to par, price moves to my next Fibonacci level, I move my stop to partial profit, and finally I take profit at my final target Fibonacci level. In the screenshot below you can see the level I was looking for price to hit to move my stop to par. Price DID hit that level so I moved my stop. No problem right? Well what happened was price came up to my stop INTRABAR, took me out, closed lower and went right to the profit target. In backtesting, I move stops on bar closes, I didn't do that here (or all week) and it was going to cost me sooner or later. So the good news is I caught it early in my trading. I've already revised my trade plan to include this and it WILL be the last time this mistake is made.

This does illustrate one point that I want to make about backtesting. You have to use the IDENTICAL logic in your backtesting in your live trades, otherwise the results will skew. That was the case today. My stop movement was based off one logic in the backtest, and implemented with a different logic today. That caused the lack of profit. Make sure you implement the identical logic if you want the same results live!

In other news, I thought I would make a small update on how the other "method" i'm tracking has performed this week. As of right now its up +737.50 gross and hitting a 59% win rate which is pretty much on par with what we can expect from it. Its certainly a performer but to trade it correctly i'll need to be able to use a separate contract to trade it because sometimes it links up with my core methods signals, and they are managed separately. So basically, I like what I see, but I need to grow my account before I can start trading it live.

We ended up the week with +162.50 in gross profits. Keep in mind that (1) I screwed the pooch today and have already passed up on 550.00 in profits this morning, (2) I didn't trade 80% of the day on Tuesday due to FOMC minutes, and (3) ITS MY FIRST WEEK! I'm in the black, i executed very very well this week. I never had a losing week in all of my backtesting, so its nice to know that I didn't screw up enough to alter that outcome in live trading. I screwed up today, but its gonna happen from time to time. Would I prefer +712.50 in profits at the end of my first week? Yup. But the point is that I could never make that without realizing the problems I found today.

The screw ups brought my issues to the surface and I didn't even have to pay a penalty with a loss to realize them. Those issues have been dealt with and i'm excited to start next week and start some serious account growth! Most importantly, I set out to trade my plan without fear, greed, or hesitation. I did just that. I pulled the trigger each and every time a trade came - no if's and's or but's and I truly believe that's what made me money this week. That in of itself is a improvement of gargantuan proportions over my last attempts in the e-mini's!

Trade Results:

+ 0.00

Thursday, January 8, 2009

Narrow and Range Bound

Today was a tough day to trade any way you slice it. The market was tight and congestive ahead of the employment numbers tomorrow. It would be an easy day to get SLAUGHTERED. I ended up down, but less than two points. I took good trades today, some worked, others didn't. In fact I would've made money but I had two trades that blew away from me and another that came down to my order didn't fill and went on to profit without me. That's just trading. It happens. Regardless, I took the right trades, I managed them correctly, and the outcome is simply the outcome.

Today also was the first time that my new stop management system which uses less risk than my old one actually saved me money on a trade. Kept an additional 2.75 pts in my pocket rather than giving them away. Its nice to see tweaks you implement after months of backtesting pay off in real time.

Trade Results:


Wednesday, January 7, 2009

The first day of losing!

Had to happen sooner or later? No big deal. I get paid to take losses. They are natural, and all they tell me is that my next trade has a much higher probability of working! My first trade probably should've been a par. It was a double top setup that was looking for price to fall down to the 13 level (marked on the chart) to get my stop to par. The fib level I was looking for was actually 13.07... the low was 13.25. In the future i'm going to play these a bit more conservatively. I really should've got to par on it. Better safe than sorry! Took two more trades, one par, and another loss. The losses were small, I played the trades that came without bias or fear. Even better I took a loss early and it didn't affect my ability to execute further in the day. That's what a successful trader does! Overall i'm very pleased with my performance today even if the P/L is in the negative territory!

Trade Results:


Tuesday, January 6, 2009

Day Two

You may notice that i'm posting this up at 10am rather than 3pm. The reason for this was that at 2:00 PM EST today there is the FOMC minutes release. While this is not the full out FOMC release it does tend to stall the market after around 11am until the release and the trading afterward can be tight and congestive just like the FOMC day until it decides to break one way or another. Since I have learned to avoid these low odds news situations whenever possible (its also the reason I start trading at 10AM EST, rather than 9:30AM EST - so that the news has already passed) I decided at the beginning of the week to only trade the first hour today and walk away. So I did just that.

I took one trade today and boy did it scare me. I put on the position and almost immediately it started working back off a retest of the low point of the swing. Oh yay - my first losing trade right? It even put in a pivot low which is a pretty good chance that you're done for but no... the trade reversed back down with some vengeance and went straight to par > partial profit > full target like it was its job. So we're now 3/3 and 3 full target trades. I couldn't have asked for a better start to my trading career!

This trade is also a testament to sticking to the system, forgetting "what you know" and trading the chart that's in front of you. The p's had pushed down 15 points in a straight line move prior to my entry... my gut said "surely they must be done, it can't possibly go lower" but my system said get short and it knows a lot more than my gut so I took the trade, it worked for profit and that's all there is to it.

I hear from far to many traders that they didn't do X because they "thought" it couldn't go higher or lower... A successful trader who follows a method and doesn't just fly by the seat of their pants buying and selling doesn't operate like that. You DON'T know what the market can do at any point in time. Accept this fact, trade what the CHART tells you and not what you "know" and your success will increase exponentially. My gut would've cost me 125.00 in profits this morning, my chart made me 125.00 in profits this morning. That's the difference.

Trade Results:

+ 125.00

Monday, January 5, 2009

And we're off!

Traded perfectly today. I saw the picture, preped the trades, executed the ones that did signal without hesitation, fear (ok, my palms were sweating a bit), and took profit at my predetermined targets as planned. 110% by the book. Both trades pop'ed up for wins and we got off to a good start today. Took one double bottom setup and another wedge break. Simple, easy, profitable. Next day please.

Trade Results:


Sunday, January 4, 2009

10 Hours and Counting...

Just wanted to update. Spent most of the day just pounding through charts, getting everything checked, double checked, and then rechecking them. I printed out a fresh copy of my trade plan, made my spreadsheet to track my progress and tried to get focused. I've decided to only trade my first method for the time being. I did heavy backtesting on my "2nd method" i've developed. It did produce close to 4k in a one month period per contract which is nothing to scoff at, but I don't yet feel confident enough in it to go live with. So i'll continue to track its progress live and make a decision down the road in a month or two. However, I did an interesting backtest scenario and wanted to share the results.

Both backtests used the identical entry and exit triggers on the 2nd method. Except one only took entries that followed chart patterns, ie buying into higher highs and higher lows, and selling into lower lows and lower highs. I found the results were pretty staggering. While the gross income from trades was 200.00 lower following chart patterns, if you figured in the commissions from all the trades taken it actually came out 300.00 more profitable. Essentially the system was able to produce the same amount of profit and it took almost one half the original amount of trades. In other words, following the chart patters eliminated half the trades (half the market risk) and still produced an identical amount of profits.

Not only that, but look at the equity curves below.

No Chart Patterns:

Chart Patterns:

Note that the second image appears to have a smoother trajectory up the graph and the draw downs are much less severe. Thats why we follow the chart patterns!!!

Below is a equity curve over the same time period trading my primary method. Note how smooth the curve is... almost no drawdowns whatsoever. Thats why i'm not trading the 2nd method live yet. I don't know if the equity curve is acceptable where its at or if it needs improvement.