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:

+250.00

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

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:

-75.00

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:

-175.00

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

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:

+287.50

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.