Wednesday, May 27, 2009

Craptastic Conditions

The day has been absolute shit. I mean... if you were ever wondering what chop was? Its was this morning. The market just slammed around from swing high or low to swing high or low and it would get going in a hurry show good momentum and then just stop on a dime and reverse. I don't mind if a market stops at a swing high or low, that happens... what bugged me about today was that it would stop and just reverse so quick and hard I had to take losses bigger than normal. Typically markets consolidate a bit at turning points and allow me to get out with small losses.... not today.

My method just doesn't work well on days like this where there isn't follow through. Look at the 5 minute chart if you need further proof. No direction. No structure even. I didn't get killed today, but I didn't make money either. I had strings of losses, pars, and only a few wins. From a management standpoint everything was good except for exiting a bit early one my one winner. My initial target was at +3, and I ended up bailing at +2.25 because I thought she would stop and reverse just like every move prior during the day and something was better than nothing at this point. So holding for targets is something I need to work on a bit more but other than that I did well managing trades.

Forgive the pictorial madness... but I just wanted to visual explain what I was dealing with all day... the sharp reversals, the constant double topping, the crap.

In many cases if the market does anything in favor, even if it can stab through the swing high or low I can deal with that and reduce risk if not outright get to par. But today it was just a lot of perfect double tops or bottoms with sharp failures that hurt me more than usual.

Is this the fantastic start to this method I was hoping for? Not really. But overall... I can't say i'm too disappointed considering the conditions this morning. I haven't seen price action like that bad in months. While I didn't do stellar, I didn't get nailed too hard. This afternoon I caught some good moves once the tapes livened up a bit. If anyone has any ideas on indicator confirmation to identify these periods of no interest vs. when there is good movement in the tape please let me know!

I am not upset with the final P/L considering a couple things... 1. How many losing trades I had. 2. How shitty it was. 3. How few winning trades I had. 4. The fact that at one point during the day I was sitting down -285.00. 5. I took an "Initial Risk" loss, or a loss at a stop that is put there for worst case scenario emergency purposes due to a nasty quick reversal. 6. I had twice the amount of losses than I did winners (6 Losses, 3 Wins, and 2 Pars.)

Trade Results:

ES: -12.50
NQ: -125.00


Michael said...

Chop has always been a problem for any method I've ever used, it's especially bad when your depending on any type of price "pattern".

Paying much closer attention to the individual candles that create the setup has been helping me, when the candles start having longer tails in both directions, or there's lots of over lap between each candle, that's been a warning for me to stay out.

That is one similarity between your method and mine that I've noticed, neither does well in chop.

Try looking closer at the candles, fuller bodies with short wicks, then with minimal over lap, that should be a better environment for you.

Good luck!

kleenup2 said...

Don't be are just going through the phases of becoming a good trader. A couple words of advice...1. always identify the type of day that is at hand(trending, range bound, etc.)2. identify what type of days best suit you and your trading style. 3. once you learn what days fit your trading style make sure you milk them for all they're worth when they come. I personally trade ranges much better than trend days so today was like a breeze to me but yesterday's trend day was a bit challenging and took a lot of energy just to make it out with some gains. You are well ahead of the game and you are doing well by not taking big outsized losses that you can't recoup.

Scalpwiz said...

Yeah today sucked.. price kept chopping through the 200 and 90 MA's all mourning (3 tick range chart) and price didn't really go anywhere till that drop around 10:30 (pacific time). If I see price trading above and below heavy MA's like this and turning on a dime and heading to the other side of the MA, my rule is just to stay out of it until price breaks away from the chop by a significant number of points. Didn't take a trade till Noon myself, and it was a 2pt loss.

trailingstoptrader said...

the market today is like a quicksand. No structure.