The Month Update - New Ideas, Computers, & Success?

Just a quick update here. First off I finally finished my new trading (& gaming hehe) rig yesterday. What can I say... ATI Eyefinity kicks ass. I'm going to get a LOT of use out of this new system. Its so nice to have something that nice and snappy, runs flawless, has 69" of HD screen space, and monitors that don't flicker on and off at will.


On the job front i've been applying at multiple prop firms in the greater Chicago area trying to land a "Junior Trader" or "Assistant Trader" position at a firm. Anyway I slice it i'm in a rut here in Omaha. Professionally, personally, financially - I need a drastic change. If anyone knows of firms looking to hire or job opportunities out there give me a shout!

On the subject of trading. Awais has been yelling at me for years about just trading off S/R and simplification. I'm making a concerted effort to do just that. I trade with 1 line on the charts these days and nothing else. The only reason I use that one line is to gauge momentum of a trend (i'm looking for steep fast trends to trade in). Beyond that my trades are bare bones simple - support coming resistance and vice versa. The result? Solid on sim (aren't they all?).

But the honest to god truth is once I started looking for this stuff something clicked and I have started to "see" this happening everywhere. I honestly think my ability to read price action has gone up about 1000% in the past two weeks. And that's in no small part to having no distractions on my charts. My only concern is that my risk:reward is a bit better than 1:1. However my win rate is above 75-80% thus far. We'll just have to see how it develops.

Anyhow, thanks for checking in and your continued interest in seeing i'm not dead, down, & out just yet.

Cheers!

Baby Steps to Context

My good buddy Awais (http://www.eminiplayer.net) sent me an email this week containing a blog comment by an excellent trader, Ziad. Ziad, among other things quintupled his trading account in a year and banked six figures last year. And i've heard hes cleared tens of thousands in profits on a single day this year so its someone I would heed advice from. If you'd like to read it (and I suggest you do) check it out here.

The point of his comment was that most traders endlessly (and fruitlessly) hunt "setups" to trade. More importantly they hunt setups with no pause or consideration to the context within which those setups are applied. I think he rightly points out this inherent characteristic in most of us and our seeming inability to take a step back and recognize this. So i've decided to make a concerted effort to add more context into my setup. However, I need to apply that context in a way that suits me.

If you've been following my progress (or lack thereof) for any amount of time you'll know that I like a solid trade plan and a rule set for my setups. I'm not the type of trader that thrives on just clicking orders in to the market off of feel and read and managing the outcome. However, I recognize that this attribute has also been a detriment to my trading success in some instances. For now I want to compromise with Ziad's assertions and my own personality and meet somewhere in the middle. This means adding context, but in a way that I can quantify, even if in some basic and rudimentary way.

The one setup i've been working on is nothing more than a minor pullback in a major trend. That statement alone requires more context in the setup than i've ever traded with before. It means I need to identify a MAJOR TREND. Not just any wiggle, not a range bound market, not some oscillator extreme. I need a logical read on the market that identifies only a major, almost spastic trend to jump on. For now if that means using 1 moving average on my chart to help my eyes see not only momentum but the strength of that momentum (how far price is pulling away from that moving average or falling back towards) then that is a layer of context, albeit basic and rudimentary context, that I can use in my favor.

That small bit of context is also something I have never applied to any of my trades. A trade was a trade was a trade and it didn't matter where on the chart it occurred, I didn't even look at how defined a trend was, or how much strength there was in a trend. While i'm sure many (probably including Awais & Ziad) wouldn't see this measure as the true extent of Ziads post it remains a start.


Baby steps folks... baby steps.

Incommunicado

Well i've been on "vacation" for almost a week now and i've still got a good week and a half left spending time with friends and family. Its been nice to take the pressure off and clear my head while I re-load for my next trading attempt.

I have a rough sketch of my entry (yes that's singular because for the first time pretty much ever I will trade ONE and only ONE setup). And yes... I think that is a pig you just saw fly by your window.

I'm also putting together a new trading rig (3 23" 1080p monitors via ATI 5870 Eyefinity technology, i7 cpu, 6GB ram) little Matt is going to be in charting heaven by the time the week is over! No more trading off of a single 15" laptop screen!

I will try and post some of my daily results this week if I get an hour or two to trade but don't hold me to it. As I mentioned before i'm still up in the air as to whether or not trading a set time period everyday or to a set dollar amount everyday is best. But in sim mode i'll be trading every setup along the way to get experience with the new trigger.

And since this blog is as much about my journey as it is about trying to help other aspiring traders get a leg up I thought I would share with you 4 threads that have been a big source of inspiration getting myself back up and ready for round 83 of this trading journey.

Here they are, these are my favorite threads from Walterw on TradersLabratory.

• Walter's Forex "Trend Trades"
• Playing with the VMAR's open research
• The Chimp's new "Futures Scalps"
• The Chimp's "Forex Trades"

I think all of the above threads have a lot of sound logic and glimmers of simple genius sprinkled throughout. Some of them are 30ish pages but there is a lot of good information in them and they are worth the time! I think there is a clear structure provided for a simple and profitable trading system in each one of them.

Looks like its about happy hour here so this is going to be my view from here on out.


Cheers!

Still Alive...

Just dropping a quick note to say i'm still working at my trading, albeit in a slightly more kicked back sort of way. I needed a little mental va-cay and to get away from the screens for a bit. In fact i'm going on vacation for two weeks the first of June to spend some well deserved time away from everything to re-charge the batteries.

In the mean time i'm working on one simple trade using almost nothing on the charts. I still think less is more and am trying to capitalize on that. The other thing is on the management side of things, both on the individual trade targets and possibly some daily goal targets. If 8-9 ticks is an easy target then why not take it? Why try and manage for huge runners each time if they never quite work and that +9 turns into a par or worse?

Also on the daily profit target... I need to make just 200.00 a day on average each day to match a 40k/year salary. That's 8 ticks in the 6E/J/S on two contracts. When you put it like that, why the hell do we all try and walk in a nail 80 ticks each day? So basically i'm trying to revisit and reevaluate everything in my trade plan and see if there are changes that might need to be made. You don't know unless you question it!

Dear Range Bars - We're Over

I've been really getting back to basics... deconstructing my rule sets and allowing the idea of flexibility back into my trading. One of the things I have been focusing heavily on is risk reduction. Which brings me to range bars. I really like the logic behind them but i've found that the reality of trading with them can be less idealistic than the portrait usually portrayed. If you listen to providers like EOTPro (nothing against them!) range bars are going to usher in a new wave of consistency and reliability for retail traders because its "new technology". But I have a few complaints.

Straight up - my entries surround an engulfing pattern of some kind. I want to see price close higher or lower than the previous candle. At the most basic fundamental level I see this simple interaction as an indicator of buyers and sellers shifting power. Not perfect, but I dare you to find a shift from buyers to sellers or vice versa where this doesn't happen - not to spoil it for you, but you can't because this has to occur for price to reverse. This in no way means that the pit isn't going to try and f**k with you or that your just getting faked in too early, but this pattern HAS to occur so i've chosen to focus on it as a baseline.

Now the tricky part is getting a shift at a "good price" where you can have a reduced risk profile. By definition a range bar is almost always going to get you in later because your requiring the market to move X amount of bars in favor before you get a confirmed close and a new bar. My hypothesis is that by getting in at the range bar price you're already too late to the party. It typically occurs after the move is already well established and doesn't have a lot left in it before it stops and backfills either to reverse or continue on. Either way its much harder to hold for gold when a position is against you than when you've got a stop at par. Period. End of story.

One of the blogs I follow continually is The Deucalion Viewpoint. What always amazes me about Sandy's performance is that he can walk in and nail 20 ticks like its nothing. And when you deconstruct his entries a bit you can see one of the key reasons he can do this is because his entries aren't late - they aren't after the move is already established its always right around the tipping point. He has small risk, and thus he can take her +15-20 easily out of a swing. Moreover, when things look like they are going to get nasty for you by being in "earlier" you are taking a minimal loss of a tick or two bailing on a position rather than a -7 tick loss.



Again, this is only theory but today in practice it paid dividends. I only traded two markets *GASP* (I know right?) the 6E and the 6B, was in and out with less risk on every trade than 1 normal trade off my range bar charts and got almost 2:1 on every trade. Now its just sim, and this is like trader 101 stuff, divergences and not fighting the trend too much with crisp entries and I can already tell you I think i'm done with range bars for good.

So moving forward i'm going to try and keep everything BARE BONES SIMPLE. A little divergence, some simple patterns and some logical management combined with a much better chance of getting more than I risk sounds like a fairly good recipe for now.

Cheers!

Bread & Butter

Today was the start of re-focusing on the "Bread & Butter" trade. The one that's supposed to be there and perform throughout it all. In all of my testing and trading there has really only been one setup that I find to hold up through it all and that's what I was focused on executing today.

And our baseline was like this:

NQ: +0, -9
YM: +13, -9, +18
6S: +3
6J: N/A
6E: +16
6C: -9, +11, -1
6B: +3, -1
6A: -9

Net Ticks: +26

Ummm yea. I've never been so underwhelmed by +26 ticks before. I think it needs work. 4 Losers and 4 Wins in a day isn't exactly what i'm going for. But I will say this - the new relaxed management is the ONLY reason some of the winning trades are approaching 2:1.

In a sidenote - the long anticipated trading documentary "Floored" started getting released in 10 minute increment episodes today. Check it out at http://babelgum.com/Floored

A Game Plan

Last night I had a long talk with Awais on all things trading... and came up with some "Ah Hah" moments during the conversation that spurred me onwards. Lets not forget that I had been legitimately making money on my live account until this past few weeks when I went off the deep end. I have one setup (my original pullback setup) that just works. So i'm going to just trade that and only that.

The "Ah Hah" moment was thanks to Awais who said he had changed his trade management. Awais never gets to par. At least not in the way most of us do. He will use a hard safety stop and then mentally observe price action and watch for ques that say it might be a good time to sacrifice the position. I get tons of pars, a lot of times on moves that tend to work and work well. But I don't participate because I remove myself from the signal after a measly 3-4 tick move in my favor. Frankly, that's noise in most markets.

I can't tell you how many times i've written in this very blog that I was "high ticked out" or "it kicked me out at par by a tick then went +20 in favor". So i'm going to be simming my one setup this coming week but relaxing the management HEAVILY. Not just on the pars, but on the exits as well. I need my setups to get greater than 2:1 and for that they have to be allowed to run big. My fear all along has been taking losses. Even the idea of -1 tick was revolting to me. But that has distracted me from getting wins, let along any big wins. I'll be much richer if I have a few 3-4 tick losses here and there rather than a bunch of pars if I can replace those pars with 15-30 tick winners.

So this week i'll be on sim trying to relax that management and see how it plays out. Depending on how it goes i'll go back to live next week.

Cheers!

An Update

Well I wish I could waltz in this week with stories of revised setups and success but i'm afraid i'm going to have to disappoint. I have never had such a quick reversal of fortune - from delusions of grandure Friday morning, to just delusions Friday evening, to desperatly scrambling for something - anything Saturday and Sunday, to outright failure Monday and today.

I have literally spent 14-18 hours in front of this screen for the past 4 days trying to come up with something - anything that looked like it might have a chance. What i've found has pretty much humbled me into submission. The setups I was using before all of this recent simulation shenanigans are still critically flawed with their risk : reward. If you shrink the risk you amp up the losses, and if you increase the reward you amp up the par efforts where +10-15 turns into naught.

I'm not giving up - if this blog is a testament to anything its that I keep taking the hits and finding something to spur me on my way. But I will say this - I haven't been this disalusioned with the past 5 years of this trading journey as much as I am right now. Typically when I fall I find something to latch onto that gives me renewed hope for profitability and consistency. This time? I'm still falling and haven't found anything to catch me just yet.

Sorry to have nothing to report to the influx of new followers to this blog just when things looked like they might be getting saucy but I just got laid out by reality and shes a cold hard bitch.

On Pause

While basking in my apparent glory late Friday I decided to code up my idea and visually automate the entries. Worked like a charm, but oh wait it started showing areas on the chart that for all intents and purposes I should've been in, but I hadn't taken the trade. Worse was that many of these areas were losing trades. It was an odd mix of trades that I had seen in real time and taken and trades that I had just ignored and not looked at.

I THINK that my mind was playing games on myself with pattern recognition. Backtesting I would see a certain pattern that had worked and then I would apply my entry and management technique, but if the pattern didn't play out correctly my eyes would kind of skip over the entry as if it wasn't there. Needless to say its a dangerous game to be playing.

What is curious is that my live sim results were so out of this world good. It was reinforcing this misnomer. But having the computer "see" for me and really looking at what is there has forced me to reconsider things. Needless to say i'll be on sim until I can sort this a bit better and prove it in real time. I'm still CLOSE but i'm no where near what I thought I was. I guess the Lamborghini is on hold for now.

All those Losses Catch Up

Its not as bad as it sounds, in fact I fared pretty well considering I couldn't do anything right this morning. Took two full stop outs in the YM and NQ and a bunch of pars in the other markets as I tried to gain some profitable traction to no avail. One loss I deserved as I was flat out wrong about price direction but the other actually was a low tick out which kind of seems to always sting a bit.

It just didn't come together as smoothly as the other days this week but this is all part of the game and is to be expected. The good news is that I really just need a few partials or a solid winner and i'm back up on the day. Unfortunately I only got one partial winner and it was in the NQ as well so I only netted +110 off the trade rather than +325 or something in some of the bigger pairs. But for the first time its nice to have a positive risk : reward trade potential so that even when things go wrong its not so difficult making it all better again.

As i'm writing this i'm short in the 6J and just peeled off my first contract at +9, and went to +3 on the second, so maybe this losing story might not turn out so bad after all. And oh wait it just filled at the secondary target for +14... so that's +325.00 in the bag and we are back up on the day!

Looking back over this FOUR DAY trading week (I was experimenting and refining Monday) the results are ASTOUNDING. They aren't just a bit better than anything i've traded before they are out of this world better than anything i've done before. On a per contract basis they absolutely blow out every single one of my results (sim and live) over the past two years in this blog.

Next week i'm pushing live with 2 lots on the smaller markets (NQ/YM/6B) and trading 1 lots in the larger markets to keep my $ risk 100.00 or less per trade. Wish me luck and check back to see how it goes in for real!

Trade Results (SIMULATION):
6 Trades, 2 Losses, 2 Wins, 2 Pars
Gross P/L: $265.00 or $132.50/per contract

Weekly Results (SIMULATION):
Gross P/L: $2123.75 or $1061.88/per contract

A Decent Day

We'll keep this short and sweet. Took a loss in the 6B, had 3 pars, and 3 winners. I have to say i'm really starting to gain confidence in these entries and the management. The entries are just soooo much more consistent than anything i've been using probably ever. I mean the Win/Loss rate forward testing so far is 80% for gods sake. If you include pars the trades this week are hitting 93%!

Now i'm not going to suggest that I know what the hell i'm doing or that I will make money using this when I go live (what a crazy notion eh?) but it does look promising. Today was a nice standard day that did not have the volatility we've seen the past few days this week. Most of my wins were in the NQ or the 6B but I still walked out with a decent profit. And its worth noting that i'm still walking out with a dollar per contract win much greater than anything i've been able to post up using my "old method".

Trade Results:
7 Trades, 1 Loss, 3 Wins, 3 Pars
Gross P/L: $375.00 or $187.50/per contract

Another Good Day?

Well... things continue to look promising here on my end. I had three winners today and a whole gwop of pars (7). Now as frustrating as it is to hit 5 pars in a row, that 6th trade was a +337.50 winner, another par, and then a +425.00 winner and then a par and a smaller winner at 5.00/tick in the YM for +115.00. Ummm... yea. Now I hate churning and burning commissions as much as the next guy but if when the trades do go your way you can cover yourself and then some off of ONE winning trade it becomes acceptable for myself.


As far as the actual entries are going the filtering process i'm trying to run the trades through probably won't ever keep. The raw format of taking all of these trades is kind of what makes it work. I don't know which one is going to break favorably, and none of the basic analysis seems to point to any definable correlation. Ideally i'd love to cut out half the pars and a loss here or there but that just may not be possible. For now, things look fairly good. In fact i'm pretty safe in saying that even on a per contract basis today's performance was about 2x's my best weekly result.


Trade Results:
10 Trades, 0 Losses, 3 Wins, 8 Pars
Gross P/L: $877.50 or $438.75/per contract

Progress Report: Refinement Needed

Didn't post yesterday as I was really trying things out more than actively trading. Today I took what I learned yesterday and went to work. I still have some work to do! Most of my time has been spent refining management, stops, and targets to find the best balance for the first target, getting to par, and ratcheting up stops on the positions.

The good news is I think i'm safe in saying i'm developing something worth while here. My results today had their fair share of losses (2), pars (5), and partial wins (5) and full wins (2). I think the entries are pretty damn salty and the management is getting close to being acceptable. And while I understand that these results are at 2x's the size, they still work out to be much better than my single contract results the past few weeks. So onto the results:

Trade Results:
14 Trades, 2 Losses, 7 Wins, 5 Pars
Gross P/L: $606.25 or $303.13/per contract

Now that's not too shabby right? But lets get a little more detail on this. First i'm going to be churning more contracts and more commissions than ever before. So i'd damn well better be able to offset it right? Today I would've accumulated $76.30 in commissions. Now there isn't really any way around this, but what I want to make sure is that i'm not spending $5.45 on a trade to get back $6.25 each time. There has to be some efficiency to the trades as well. Today on average each trade was worth $21.65, which offsets the commissions by nearly 3:1. Not great, but i've done much worse!

Lets not forget that today's results (while on Sim, and thus fairly useless for all purposes) is about 3x's the per contract winning days I have been posting up for weeks now. Which tells me one thing: this new revision is much more efficient!

I'm going to keep working and keep trading on sim the rest of the week and see where we end up!

Simplicity Defined

Today I stopped trading live and started a period of demo trading. While I find this frustrating I believe its necessary. Over the past few weeks we have eked out a profit here and there but a few things have become VERY apparent.

1. I'm carrying huge amounts of risk (9 Ticks Initial) considering my account size.
2. My winners are not larger than my losers.
3. I have a large percentage of par trades that are inefficient.
4. My entries are not precise enough (if they were I could use smaller stops).

New or old setups make no difference, the point being that there have been cracks in the armor and that sooner or later Mr. Market was going to crack. That's why starting today i'm going to start forward testing an idea based on the "How to Build a Trading Method" post from last night. I'm going to be looking to exploit areas on the charts where the novice money is reversing and having their stops blown out, or where stops are being trailed tightly and a reversal occurs to blow through them.

I'm also going to be trading under the assumption of a two contract setup with a fixed tick target for one contract, and a variable trailing stop contract for runners. I've discussed the issue with my broker and it should be no problem to go live trading the smaller markets (YM/NQ/6B) initially with 2 contracts as this is still less risk than 1 contract on the larger markets. But for the purposes of this forward testing i'll be trading all 8 markets for the experience and to test the validity of the setups.

This should allow me to do a couple things. On about half of the trades that don't exhibit large explosive moves I can lock in a take profits on half the position. Then on the other trades that do show the potential for runners I can get in and out with a profit quickly and use that profit to offset the potential losing outcome of the second runner contract in while still allowing me to catch the runners when they occur. The setups also requires a significantly smaller stop (6 ticks) which makes things MUCH more comfortable for me emotionally.

The hypothetical benefits of all of this are:

1. Less Risk (6 Ticks)
2. Statistically consistent initial profit (4 ticks)
3. The ability to catch big winners > 6 ticks

Here are a few of the signals from today.




Unfortunately the best signal didn't give me a fill but there was still money to be had. There were 6 trades today, all of which were either pars (2), partial winners (2), and runner winners (2). And all of this was achieved with less risk, more precision, more reward. And to be honest the signals are MUCH MORE SIMPLE. Not a complex rule sheet that's 8 pages long, just some good common sense rules that exploit the areas on the charts when the newbies are losing money.

Have a Great Weekend!

How to Build a Trading Method

The following illustrations were provided by edabreu on Traders Laboratory and serves as a source of great inspiration and logic when designing a trading methodology. I always find myself coming back to it time and time again because it just makes sense. Its a good thing to reference when things aren't going your way in the markets and has made me re-think a lot of my trading rules that have gotten me to where I am, and will force them to change more to advance my skills further.

Right now i'm trying to construct a much more simple method, one that rely's on two things: 1. The statistical probability of reaching a predefined profit target on 80%+ of signals. 2. The ability to allow for large runners with a second contract on the same signals.

What i'm really drawing off of for inspiration is the two contract part of all of this... if you follow Ed's blog (http://protradered.blogspot.com/) at all he constantly posts up blotters that look like this:


Ed's trades always are taking quick profits out of the market, and still letting half of his position "ride" for big wins. But what it equates to is that most of the time hes taking something out of the market each time, protecting capital and locking in gains, while still letting the possibility of large runners occurring.

One of Ed's best quotes is this: "Once you accept the fact that intraday trading is about statistical probability of the immediate future, and accept the fact that the immediate is often just the next price bar, then all trading becomes a focus on making money. If you can concentrate on just making money each time you enter a trade, and make your decisions focused on capitol preservation, then all decisions become easy." -Ed Abreu

So here are the actual "How to Build a Trading Method" slides Ed posted late last year.







Cheers!

Rough Day

Caught another couple of losses today. One was an outright loser, the other low ticked me out before working. I did re-enter and get the winner but it didn't do much to help the bottom line. The new setup hasn't really been panning out like I expected. Had I traded my normal "Bread & Butter" setups i'd be up on the week, but not by much.


One of the frustrating things is that i'm trading off the OEC Demo feed, and I built all of my rules trading off a true Range Bar chart. Well a couple weeks ago they started testing a Momentum Bar on the Demo feed, which means i'm now trading off Momentum Bars, rather than Range Bars these past few weeks. I have no recourse other than opening up a funded futures account with them which I don't want to do.

Here's the illustrated version to see what i'm on about if you're curious:


They told me today that they would be changing this on their next release which was coming "soon". It just kind of sucks because as traders we try and keep everything in our setups and approaches consistent, and then you have some outside force beyond your control waltz in and f*** it all up.

Trade Results:
3 Trades, 2 Losses, 1 Win
Gross P/L: $-82.50/per

Can't Catch a Break

Took another loss today on one of my reversal setups... just a NASTY head-fake folks. It happens, its the danger associated with these setups and there isn't much you can do about it. I did have one of my new pullback setups today that was a winner, however it was in the 6B so it didn't do much to stem the bleeding in my account.


This week is shaping up to be ugly - but its not over yet.

Trade Results:
2 Trades, 1 Loss, 1 Win
Gross P/L: $-40.00/per

Not Going as Planned

I was supposed to be rolling in cash this week remember? That new setup that was going to get me out to the strip clubs to make it rain? Yea, had another loss today. Certainly not the outcome I thought I would be getting but i'm committed to give it at least a week and let it do what I think it can do. If after that time i've seen no evidence of this performance i'll reevaluate things.

Trade Results:
3 Trades, 1 Loss, 2 Pars
Gross P/L: $-112.50/per

Pushing to Production Forces a Loss

So I pushed the final pullback signal to production today and what happens on the first trade you take with a new setup live? It looses of course! Seriously... I think i'm right in saying this little phenom has happened to me EVERY time I go live with a setup for the first time. Oh well, at least its out of the way? And honestly, I missed the par level by a tick... shit happens.

Took two more trades that ended up going for pars and threw in the towel. Its only day one and we've got a lot more trading to do this week!

Trade Results:
3 Trades, 1 Loss, 2 Pars
Gross P/L: $-120.00/per

Down But Not Out

First things first, I had a rough week, and i'm still only ending down 7 bucks gross. So we aren't talking disaster here folks. This issue was simply due to my double bottom / double top entries in my trade plan that cost me money this week. They have been removed and won't come back to haunt my profitability from this point forward. Today I had a couple pars and caught this (frankly scary) reversal pattern to the short side for +7. It came within 1 tick of stopping me out so I was more than just a bit relived when it finally dropped.


Here is one more interesting fact I was looking at today - since my trade plan revision 4 weeks ago, i've had only 4 losing days. Yup, out of roughly 20 trading days i've walked away a loser only 4 times. I'm sorry, but i'm astounded by that. It almost has an air of consistency about it doesn't it?

However today I did screw up and I passed on a winner in the 6E out of fear. I had just had that bumpy ride in the 6S and was feeling a bit sheepish. So there's the 87.50 I needed to bump me up into positive territory for the week gone - due to fear. Apparently i'm not perfect just yet.

The other thing I wanted to quickly mention was a little progress report on that pullback trade I talked about briefly yesterday. Today that one setup netted a bare minimum of +21 ticks in the 6J alone. And that's taking profit at +7/trade. As you can see each one of these signals ran at least +11 in favor. Could I use the extra 300-400.00 in my pocket? You bet. These kind of results have been coming in fairly consistently. In fact this week its given only 1 losing signal!

Honestly the only thing i'm really working on before pushing this to production is the trade management side of things and trying to gauge the best compromise between getting something out of the trade with a smaller target (+7) and letting them run further (>11) but hitting lower win rates. If you guys have any ideas i'm all ears!




Trade Results:
3 Trades, 1 Winner, 2 Pars
Gross P/L: $100.00/per

Weekly Results:
Gross P/L: $-7.50/per
Net P/L After Commissions: $-67.45/per
Win/Loss: 40%
Win+Par/Loss: 67%
Profit Factor: 1.05

A Slight Rebound

Caught a winner and a par both in the 6B today. I can't complain, money is money and the trade worked perfectly even if it was only at 6.25 a tick. I've had to re-evaluate one of my trade setups and remove it from my trade plan. Its one of the core reasons for my losses yesterday and that gentleman, is the Double Bottom/Double Top formation.


Now i'm well aware that when I set out to re-vamp this blog and my trade plan a few months back I talked endlessly about the uselessness and futility of these setups and their high failure rate. I said that I would be relying primarily on pullback trades only. The truth is I lied a bit and thought I could still eek out some profit off of them. The results show the truth. Both my pullback and reversal setups have netted close to 300.00/contract each over the past few weeks. What do you think the DB/DT setups gave me? $-243.75. That's a pretty stark contrast. Not one winner, a few pars, and a bunch of losses. It fly's in the face of logic to continue on with them so they are gone as of today.

In other news I've been forward testing the past couple of weeks on another iteration of a pullback trade and its shown GREAT promise. Its outperformed my other pullback signal almost 2:1 in terms of net profit. But i'm not going to rush forward with it just yet. Too many times and too much money has been lost rushing things into my trade plan prematurely. But it is nice to know that yet another idea for a setup just might have merit.

Trade Results:
2 Trades, 1 Winner, 1 Par
Gross P/L: $68.75/per

Its Hammer Time

For my account... I had to shut down early today for the first time. Took 3 back to back losers. Luckily two of those losers were in the NQ/YM so the $ damage was minimal but after racking up close to 200.00 in losses I called it a day. I took the trades that were there, just none of them worked. So in the interest of self preservation I threw in the towel around 9:45 this morning. Frustrating, but I can dig myself out of a 200.00 hole. To keep trading with a slightly jaded mindset and potentially digging myself deeper wasn't something that sounded like a good plan.

No one day should make or break your account!

Trade Results:
3 Trades, 3 Losses
Gross P/L: $-192.50/per

Just a bunch of Pars

Took some good trades today, but all backfilled just enough to slap me out before continuing on. Ended up getting a few ticks here and there but nothing to write home about.

Trade Results:
3 Trades, 3 Pars
Gross P/L: $16.25/per

No Trades - This Time for Real

Just nothing came down the pike for me today. Some markets were running, but a lot of them were making some funky big wedges and basically not giving me much to go off of. But today's lack of trades was not due to being scared like it was on Friday. Bring 'em on... i'm gonna nail each one of them this week.

Trade Results:
No Trades
Gross P/L: $-.--/per

No Trades

To be honest I wasn't seeing much I liked in the first 45 minutes and I had some stuff to do so I skipped out early this morning. I missed a profitable short setup in the 6E for an tough and heat-filled +7. Its weird, when your doing crappy there is no pressure to perform, but the more up days I have the more I fear the inevitable losses that will come. I was actually worried about trading today because in the back of my mind I was thinking that I could screw up my good week with a couple of losses. Its certainly a new kind of fear that I haven't really had to deal with yet but am already taking steps to reign in before it costs me money.

Results this week weren't fantastic. I made a few costly mistakes and only added the additional markets after 3 days into the week but I still think I am on the right track. That's 3/3 profitable weeks back to back which is pretty amazing for myself. Now I just need to work on getting a bit more actual profit. Less than 200 bucks after commissions isn't a whole hell of a lot to work with - BUT i'm profitable. Frankly if I could average $200.00/week in a consistent fashion (which I think i'm certainly capable of) I can add size fairly soon. I'm starting to realize that this profession is not about getting +900 one day, and -800 the next, but coming in like a brick layer and laying just a little bit of profitable brick each day. I'd say my equity curve looks fairly healthy even though its not as upward sloping as I might like.


One of the things i've mentioned many times before on this blog is to not get caught up in the $/contract amount of money your making. Its much easier to make a consistent 50.00/contract each day and add 10 lots than it is to make 500.00/contract on 1 lot. I want to be trading 10 lots within the year and if I kept my performance exactly as it is right now I would be living the kind of life I have been dreaming about for so long.

Trade Results:
No Trades
Gross P/L: $-.--/per

Weekly Results:
Gross P/L: $223.75/per
Net P/L After Commissions: $171.20/per
Win/Loss: 60%
Win+Par/Loss: 80%
Profit Factor: 3.06

Rattled Neves

Had a good par and a nice winner today. Problem was on the winner I entered, then preceded to miss my par target by a tick, then a HH close occurred, then it came two ticks from stopping me out. But none of this information is in my rule set for bailing on a trade, so I stuck with it... taking heat for over 45 minutes. Then she caved, and I saw profit at +9, thought ya know i'm not gonna walk out with a tick or two on this damn thing after all the time and I bailed... right before my target at +11 was hit.


So yay for holding and sticking to my guns and not being afraid, but nay for me bailing outside of my rule set. I'd give myself a solid B- on execution today. Close, but no cigar.

Trade Results:
2 Trades, 1 Winner, 1 Par
Gross P/L: $112.50/per

Welcoming more markets!

Today went pretty well. Couple winners and a couple pars - can't complain even if I wanted to. Ok, I did get slipped a tick on one of my winners but hey... we'll let it slide this time. I decided to add the YM & NQ to my workspace as its really pretty easy to monitor 8 things at once when you have most things either automated to alert potential trades or the setups are so blindingly obvious they are hard to miss to begin with.

I had been considering adding the ES/NQ/YM/TF/EMD or Crude. I've been hearing horror stories about fills especially in the TF, even on 1 lots, and frankly I don't need that. The ES still sucks long phallic objects as far as i'm concerned and even though I could be more profitable in it with the higher $/tick, I still hate the way it moves and backfills. The EMD isn't going to be liquid enough moving forward with more size so its kind of a futile effort, and then there is crude.

Crude is awesome because it moves so fast and directional, but its also so quick sometimes it can catch me off guard. Trading relatively small range charts on a market like that can be dangerous because sometimes the moves happen so quickly I physically can't click in the right orders fast enough. So i'm sticking with the NQ/YM for now as a nice middle of the road compromise.


It sucks that both of those markets are 5.00/tick but here's the honest to god truth... a 7 or 11 tick winner at 5.00/tick is still money I didn't have before, its growth I didn't have before, and i'm not going to scoff at that. I just want opportunity in liquid markets and they qualify. When the time comes to start chucking a couple lots into the market they will allow me to do so with risk that is still less than my 1 lot trades in the 6E/J/S. Works for me!


So even though one of my winners was in the NQ and only equated to 35 bucks... that 35 bucks made this day a triple digit winner rather than a double digit winner and that's something I want to see more of!

Trade Results:
4 Trades, 2 Winners, 2 Pars
Gross P/L: $110.00/per

Sometimes you're just wrong.

Today was a frustrating day for me... took an outright loss this morning, just sold into something that had no intention of selling off. It happens. It has happened before, it will happen again, and that is the danger of these LH/HL patterns, occasionally they aren't going to cave and they will burst back in your face. Today was one of those occasions. Textbook trade? Yup, so there is nothing more to say and its time to move on.


Earlier in the day I saw a 6B trade that triggered prior to 9AM so in my rules its a null setup, but it was trading 3 ticks away from my hypothetical stop level so I figured for less than 20 bucks a contract I can give this a go. I gave it a go, and it gave my stop a go for a 3 tick loss. Again, not a huge deal.

I took what I thought was an awesome setup later in the day that went +9 in favor before V-Reversing in my face (my target was +11). Nothing I could do other than take a tick as per my rules.

The good? I executed my trade plan well today and stuck to my rules, and my losses weren't horrendous. The bad? One of my trades was a loss and my other wasn't a winner. Bring on tomorrow!

Trade Results:
3 Trades, 2 Losses, 1 Par
Gross P/L: $-86.25/per

A 1 Trade Day & A Quick Observation

Half of the currencies were chopping and bobbing today, the other half all made pretty much the same sell off but did so in very different ways. I took a textbook reversal setup in the Swissy and held.... and held.... and then about 30 minutes later if finally caved to my target. This trade reaffirmed the need to truly stick to your management.

The Swiss was moving step for step with the 6E and 6B this morning and those markets put in double bottoms and reversal patterns. Meanwhile my position was taking heat and I was convinced it was all over. Then the 6B/6E fell over on their face and I got the push I needed. The point is - I could've bailed a 100x's over, I was so sure I was finished up until the point where I won. YOU DON'T KNOW WHAT THE MARKET WILL DO - SO ALL YOU CAN DO IS TRADE YOUR RULES!!!


The other thing I wanted to mention quickly was an observation about my profitability over the past two weeks since I changed my trade plan adding the reversal setup, requiring LH/HL patterns on every setup, relaxing my management somewhat and sticking 110% to my rules. I think the graph below pretty much sums up the transformation don't you?


Trade Results:
1 Trade, 1 Winner
Gross P/L: $87.50/per

End of a Short Week

Well I had my A game going this morning but the markets didn't want to play. I had 3 awesome setups and 3 pars. The markets in each case rallied 7-9 ticks in favor each time but my targets were at +11 for these trades and they stopped and reversed for par's each time.


Now on these setups (all were pullbacks) I manage them a bit differently and their par management is already relaxed so I did take a couple ticks here and there on the efforts. In every case my par stops were in no way affecting the outcome of the trade that I could make a reasonable change in a management technique to eek more profit out of these moves.


Anyway, it was a short week and I had my share of mistakes. But I still managed to walk out with more than I walked in with and two back to back weeks of profit is something I don't think I've achieved in the better part of a year. Progress may actually be taking place here!


Trade Results:
3 Trades, 3 Pars
Gross P/L: $47.50/per

Weekly Results:
Gross P/L: $142.50/per
Net P/L After Commissions: $93.45/per
Win/Loss: 66%
Win+Par/Loss: 89%
Profit Factor: 2.16

A day of Muck ups and F**k ups

Missed a textbook winner today for +7 in the 6C. Just flat out wasn't paying attention. Was too busy drooling over a McLaren on a car forum to make money off of the trade. I'm never gonna get my new McLaren unless I FOCUS ON TRADING. So... pissed about that. I haven't missed a valid trade in weeks!!!


The rest of the day went a bit better... I took two more great trades, took a +1 par on one and a +7 on the other. Which brings me to a revision of rules (not a big one at all) but its this - take true break evens and stop jamming stops to get +1 and cover commissions. My +1 could've been +7 if I had kept my stop at break even. I didn't, pushed it as per my rules and got high ticked out for a measly tick before it dropped to the target.


I'm not trading for a tick - i'm trading for a full fledged winner. I can cover a lot more commissions with a winner than I can a singular tick. Today should've been +7, +7, +7 for $227.50 - and i'm walking away with a fraction of that. I've gotta be posting up triple digit days as the norm - not this measly sub 100.00 crap. Not acceptable.



Trade Results:
2 Trades, 1 Par, 1 Winner
Gross P/L: $97.50/per

The End of the Streak

Had to happen sooner or later... 6 winning days in a row and the 7th wasn't to be. Nothing horrific. Got slipped a tick on a breakeven effort and took a legit loss on an up move that wanted to ping me out before it went where expected. We knew the losing trades were coming and I think we took them in stride.



Trade Results:
2 Trades, 1 Par, 1 Loss
Gross P/L: $-62.50/per

A Technical Mistake...

So things this morning were stagnant and slow. Like real slow. But along came a bounce setup and I jumped in as I should've. Thing was that this bounce setup was also a reversal setup which now means I had competing and differentiated management techniques for the same trade. Wrut Wro.


One setup gets to par on a close through the High/Low of swing. The other waits for a move in favor. I ended up getting to par on the close through which in hindsight was not the best idea because I had only entered 2 ticks prior to the High and it closed through 1 tick on the opposing side. Not a lot of wiggle room folks. So once out at par of course the reversal management worked perfectly for a winning trade without me. Ain't that always the way?

Point is, I hadn't had this occur before and it was a weak point in my trade plan. I can't stress this enough - PLAN FOR EVERYTHING. I really thought I had a solid plan in place only to find out there was still a chink in the armor. A solid trade plan is the easiest way to produce consistent results and yet its the one thing most traders don't focus on at all.

My trade plan is printed out and in front of me at all times. I breakout my plan into my 4 trade setups, entry criteria, par criteria, trailing stop criteria, and exit criteria. I also would recommend having MULTIPLE solutions and rules to get to par or take profit. Rarely does the market repeat itself exactly... and you need to have rule sets in place to deal with every possible outcome to maximize your trade profitability. Once your done its just a quick glance to reference exactly what you have to do to execute the trade perfectly.

Later in the morning I caught another reversal setup a bit later in the 6C that worked great except for slipping me a tick on entry. No biggie!



Trade Results:
2 Trades, 1 Par, 1 Winner
Gross P/L: $60.00/per

Starting to Come Together

Not much to discuss, took a nice reversal trade that went to the target but didn't fill and reversed. So I walked away with a tick to cover commissions. Nothing else developed. Honestly i'm really liking the pace of trades i'm getting. I don't feel overwhelmed at any time and I can just keep a solid hold on everything during my trade day.


I ended up making money every day this week which is AWESOME. I didn't hit it out of the park but honestly making an average of $50.00 a day is more than enough for me to add size and live life without want. Its the consistency of that $50.00 that I really need to prove moving forward.

Trade Results:
1 Trade, 1 Par
Gross P/L: $10.00/per

Weekly Results:
Gross P/L: $295.00/per
Net P/L After Commissions: $251.40/per
Win/Loss: 100%
Win+Par/Loss: 100%
Profit Factor: 14.75 (No losses other than -1 tick slippage)

Blahhhh

I came, I sat, I saw.... nada.

No trade setups today folks. But I did read a fascinating story about the "Worlds Most Ingenious Thief". An awesome read if your bored over on Wired.com.

Trade Results:
No Trades
Gross P/L: $-.--/per

Consistency in the Air?

Pretty quiet day over here. Took two "bounce trades" one got a par, the other went for a solid winner. These are the trades that are designed to let run and don't have predefined targets. Both were great trades and I did manage to perfectly execute and manage them both.

However, the second trade really spiked the interest of my evil douche-bag gremlin. My trade rules state that i'm to only get to par on a close through the high or low of the swing. And the trade bounced around for a full 16 minutes before doing just that. I thought the trade was done for soooo many times and the evil douche-bag gremlin was screaming "get to par you dipshit!". But I didn't. I beat that gremlins ass with a bat, stuck to my rules and had a damn nice trade.


If I keep this kind of crap up I might accidentally turn into a profitable trader - what a weird reality that would be.

Trade Results:
2 Trades, 1 Par, 1 Winner
Gross P/L: $120.00/per

Solid Trading

Well after another day of trading i'm finding that i'm running a pretty damn tight ship these days. Spotting and pulling the trigger is a non issue at this point (which is a huge breakthrough in its own right). My weakness is sticking to the rule set once i'm in the trade, but having my rules printed out and sitting before me really reinforces my management.

Today for example I had four great trades, but the second one slipped a tick on exit (high ticking me out of a winning trade nonetheless) and when I got into the next trade I started thinking... "Well If I could just eek a tick out i'd be back up on the day". Now I know rationally this makes NO sense, but in the back of my mind there is still a little douche-bag gremlin there yelling these things at me. That's the kind of irrational bullshit my mind plays on me. I'm down on the day (by 10 dollars) and I HAVE to get it back. Good news is I took my anti-douche-bag-gremlin pills this morning and traded flawlessly.


Trade Results:
4 Trades, 3 Pars, 1 Winner
Gross P/L: $77.50/per

New Beginnings

As you all know today was the first day of my restructured trade plan and setups. A lot is riding on my performance over the next two weeks to execute the trades as perfectly as possible and allow the results to speak for themselves. I find that its much easier to execute trades correctly if your setups mimic your own personal traits.

One of the things i've really tried to do is tailor my setups to my personality. I'm just not a very patient person. I'm not saying that if i'm in a trade i'll bail because its failing to achieve my first target within 30 seconds but I prefer to be in and out quickly. Furthermore, I perform better if I walk away with $87.50 on two trades rather than a par and $175.00 on one trade. That's just me. That type of trading suits my personality and allows me to have more faith in my trades, which in turn allows me to execute more reliably.

I only mention this because I know a lot of you out there who are still learning methods (probably not your own) often think you have to trade everything like everyone else does. Not only do I disagree with this, I would go further to say that it can be counter-productive to try and do this. Trading isn't a "one size fits all" profession. You could give the same 10 rules to 100 different people and you would end up with 100 different results ranging for horribly unprofitable to amazingly profitable. Those results are a direct result of different personalities interacting with not only the marketplace, but the rules with which they are told to do so. This all in turn affects execution which rolls over into a direct correlation with profitability.

That's all for my thoughts of the day, now onto the days trading. I had one trade around 10AM this morning in the 6J. It was a reversal trade that worked perfectly. The thing I found a bit eye-opening was that when your backtesting I would see this trade, record it as a win and think nothing more of it. The reality is that in real time it took 33 minutes from entry to exit to achieve and at one point it was down 5 ticks against me. Now in my backtesting I don't record times in trades (nor even think about it) or do I think about what those adverse wiggles can do to your psyche in real time.


Its very easy to see a binary outcome in backtesting of win or loss. I would encourage you all to take a minute to consider the reality of each of your back-tested trades. What is it going to be like in real time? Will that draw down make you question your motives? Will the market not going in a straight line to your target give you doubt? Will all of these things make you surrender the position for anything less than your back-tested outcomes? Its not something we often think about until real money is on the line. And by then it often becomes all too real all too late.

Trade Results:
1 Trade, 1 Winner
Gross P/L: $87.50/per

Taking a Step Back

Behind the scenes there has been a lot of trade "tweaking" and creation over the past 14 days that I have neglected to share with you all. So I wanted to take a moment to explain what those changes were and their potential impact on my performance.

First BIG change. You remember my first week live? All looking fine initially, but it somehow just didn't come together? Well during that time I was trading 2 different pullback setups, lets call them Type 1 and Type 2. Now, I had combined their results in the back-test the week ahead to get my results, and while the Type 1's weren't hitting it out of the park I thought they were at least holding their own in profitability. Problem was, they were JUST barley able to do that.

Here are the back-test results filtered into each type rather than combined together.

Type 1:

Type 2:

Notice anything glaring? I certainly did. What befuddles me (yes I just used the word befuddles) is that it had snuck past me before. Take a look at my live results with the same filter applied... real trades I took were bang on and performing to expectation but were wiped out by all the bad Type 1 trades. Had I filtered my results to only take type 2's I would've been making consistent money.

Combined:

Filtered:

I was taking good trades, but they just were being covered up by the bad ones. However, remember last Friday and my back to back max losses on that pullback trade in the 6E? Well I do. So I started looking at my trades a bit closer and something blatant jumped out at me. And voila a new filter was born that kept 80% of the winners and cut out a lot of the inefficient pars and losses.

However, my new filter on my pullback trades meant they were going to be occurring less and less. For example we had two of them this entire week - BUT they were solid winners each time. So to offset the lack of trades I decided to push ahead with the setup i've been refining for weeks now.

The inclusion of "reversal trades" in my trading plan started early this week. Problem was I was still refining some of the rules and I shouldn't have gone live until those rules were set in stone. The winner on Wednesday that I screwed up would still be valid, and my loser on Monday wouldn't have. The back-tests of these trades is not as high of a Profit Factor as the other setups but it still is around ~2.0 when tested on 24 hour back-tests in all Forex markets and the ES, GCL, EMD, NQ, YM, TF, as well.

The Profit Factors during my actual live trade hours in the Forex markets have been greater than 5 which is something I can live with. Again, these trades are like the pullback trades in that they don't occur all that often due to the highly filtered nature of the setup but when they do they have proven to be very reliable.

The last change is one more setup that is another version of the reversal. Difference being that this setup looks to hit big runners each time by getting in earlier and holding for gold. These trades are frankly - rare. During my live trade hours I might get maybe 1 or 2 a week. But my oh my how they can win when they occur. I tested them on all the futures markets again using 24 hour charts and they came back with a ~90% win rate and a profit factor of 8.8!

To be honest this trade setup has got me seriously considering trading the Asian Session open in the evenings till around 12PM CST. Its just so damn consistent when it occurs.

All in all i've had a frustrating, yet illuminating week. With my trade rules set in stone now I finally need to lock everything down and go into a "no change zone" for two weeks. I have to see how the method can perform as it sits right now before changing anything else. I've spoken to the issue of too much continual change in a trading plan being counter productive and working against consistency and performance. I have to take my own advice and see whats what. Its impossible to say something needs to be fixed if I can't verify its broken in the first place.

As for today's action I had one of my nice pullback trades in the 6B and after it finished chopping back and forth she dropped like a rock. I took profit at the predefined target and walked away with +11.


Trade Results:
1 Trade, 1 Winner
Gross P/L: $68.75/per

Weekly Results:
Gross P/L: $31.25/per
Net P/L After Commissions: $4.00/per
Win/Loss: 66%
Win+Par/Loss: 80%
Profit Factor: .056