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:



E-Mini Player said...

Dude I'm gonna FedEx you some chicken wings!

Michael said...

I've never had any luck with reversing a trade either, it just doubles my losses.

Today was a horribly choppy day too!

Matt said...

lol @ Awais. Thanks man!

Michael - i'm glad you agree! They just never seem to work out do they? Or at least the 1 that does never makes up for the 7 that don't!

E-Mini Player said...

I'm liking TF (Russel) and will probably test it out with 1-lot live next week.

Anonymous said...

Yo. Today was a bitch but that's just the way it is sometimes. Nice work on being willing to mix things up again, just as long as you do it after the market closes when your mind is calm. I've personally been focusing a lot on simply trading to plan and that in itself is making a big difference for me. I've still got a lot of work to do though!

On another note, E-miniPlayer mentioned something about trading the TF and there is a good article on this at Trading Markets:

I've always really liked the TF and I can definitely tell that it trades more smoothly as compared to the ES or NQ, and now that volume is picking back up again I am hoping to continue trading it.


Matt said...

tradetolast - thanks man. Austin (the author of that article) is actually the guy I learned to trade from and I've been trading his method for over two years!

I've been looking at the TF as well. I used to trade the ER2 but gave it up once volume died off on the move to ICE. I'll have to give the charts a closer look see!

Its nice to know today was giving others trouble as well! Whats that old saying about "losers love company" lol...

Anonymous said...

This January month very choppy and today's market is one of the worst in January !