Pretty Darn Good Day

And I even missed some midday ES profits as well and an easy +1 in the ES this afternoon (I took the same trade in the NQ but couldn't click both in at the same time). But no losses. Just a real solid day that went a long ways in proving the validity of this methodology.


Is it perfect? Nope. But there has been an undoubted shift in my equity curve this week and its not a factor of being on sim - its a factor of having higher probability entries and a method that really seems to perform consistently. Have I learned a lot of little things to help? Yes. Like when the ADX is really low for a prolonged period of time I don't take trades because I feel the market transitions from a place of reversals to a place of chop. But overall as much as I want to over-engineer this method I haven't. I've kept it the same, tried to keep it as simple as possible and I think I have.

Anyway, here's today's outcome. So far i'm 3/3 this week with my day to day profitability. I haven't made money back to back 3 days in a row since... well never I don't think. And that's missing a good deal of trades, taking some bad ones, and an overall mediocre performance. If I can make money performing like I have (which isn't perfect, but a realistic outcome of screwing up day to day) I think its does show a robust edge in the marketplace. And best thing yet was that I was very efficient in the trades. Only 5 trades today (all profitable). Not a lot of churn and burn in the commission department unlike past methods!

Trade Results:

ES: +150.00
NQ: +95.00

FOMC Day Off

If you traded it you are a better trader than I. One of the shittiest releases and initial reactions i've ever seen. First two hours were doable... beyond that it was a roll of the dice.

Back at it tomorrow!

Not an Easy Day

But I learned a lot. There were a lot of trades today, some good, others not so good. I took a decent amount of losses today and some were high ticked out of trades that worked, others were just failed trade setups from the get go. Overall i'm very pleased with how the day unfolded regardless. The one big thing I learned today was that I need to get out of trades once the momentum has left them. I took a very large -2.5 ES point loss today. Had I gotten out once the momentum left the setup, it would've been a -1 point or less trade and made the day much much more profitable.

The other thing I learned is that i'm going to have to be really quick with my orders. Some of these moves fire within seconds and get to par or profit targets just as quickly. Its completely doable but very necessary to be on top of things and ready to get the correct orders placed as soon as possible.

Overall though, it was a day filled with a lot of losses (some that could've been minimized significantly!) and yet I was still able to walk out with some coin. If I had exited that ES trade when logic (and the chart) dictated it would've been a nicely profitable day (+62.50 ES) in both markets. And that's with me quitting early to go mow the lawn before the storms hit this afternoon.



So far this week, so good! I think I could definitely make a living with this method!

Trade Results:

ES: -12.50
NQ: +85.00

Easy Trading - Good Results

Some fluke in the ES 1 min chart didn't print up any pivot highs/lows today so that chart was unusable which meant I only had half of my ES setups which resulted in only two trades today in the ES. One par (it went to my target but didn't give a fill) and one small win. The NQ offered up a lot of great entries and profits. Overall today I had 7 trades, 5 winners, 1 par, and 1 loss. Those are pretty damn consistent results. And this was all applied in a systematic fashion taking EVERY signal generated on my charts.

I'm very pleased to say the least but after testing this literally all weekend these results are right in line with what can be expected. My biggest challange was trying to find the optimum balance of risk when it came to stop loss placement to keep us in long enough to get to par or profit and not kick us out too soon. I'm using relativly lax stops with more "risk" but I calculate that this actually will increase profitability because the "larger" stops resulted in more pars or profit trades than realized losses with less risk. In many cases that one additional tick on the stop made a huge difference. Think of it this way. If an additional tick of risk avoids a -1.5 stop loss (a reasonably small loss yes?) then that tick has just paid for itself 6x's over.

Anyway, here are most of the trades including the one loser. The other winners look just like all of these... use your imagination! THIS ISN'T COMPLICATED FOLKS.





Trade Results:

ES: +50.00
NQ: +110.00

ADX > 20 is a LIE

Recently i've made somewhat of a paradigm shift in how I trade (and simplified things about 10x's over) but I wanted to share a small observation I have made concerning "trending" markets and ADX readings.

First off, let me preface this by saying if you are a pure trend trader looking for MA cross overs or something into a bigger trend then this might not help you. For the rest of us going short and long based off S/R, trendlines, or Fibs then this will be relevant to you!

Ok, so we are all told from various software vendors, trading forums, trading websites, educational vendors that the GOOD trades are in trending environments correct? We are told to wait for the ADX to be > 20 to take a trade? Because then we know the market is trending right? I'm here to argue that this SIMPLY IS NOT TRUE. In fact - its the opposite.

I argue that the prime time to look for entries is in fact when the ADX <> 20 you are by definition jumping into a position after price has ALREADY MOVED A GOOD DISTANCE IN ONE DIRECTION. Thus, its probability of that trend stopping and a reversion to its mathematical mean is much much more likely which means a move against you is much much more likely as well.

Now on the other hand, by getting into a trade when the ADX <> 20. i.e. we only are looking for positions when there are green bars.

First thing to note - IF you trade like this it will be some of the easiest most carefree trading you've ever done. Why? Because ADX filters 70-90% of the price action on most days. And you sit and wait without a care in the world. I have the indicator set up to alert me when the ADX drops below 20 so I get a message saying pay attention and then we look for trades. This will DRASTICALLY reduce trade amounts, increase efficiency, reduce commissions, and eliminate the possibility of overtrading a market. Lets face it folks - most of us aren't good enough to be 100% on every swing 100% of the day. It gets us into trouble and we all know it. So why fight it? Especially if you can filter 70-90% of the day and only focus on tiny points on the chart where the probability for a trend developing is in your favor?

I apologize for the size of these charts but nothing peeve's me more than someone posting a chart example thats too small to see. You should have no issues here.

These examples will be nothing more than trendline breaks snapped to a Pivot High/Low reading on the charts. Entries on breaks of the trendlines with the ADX < 20. NOTHING ELSE. You decide the management and targets but it would be pretty hard to lose money here.

You are jumping in at the momentum shift BEFORE THE TREND OCCURS.

Now take a look at the entries where the ADX > 20 and the pundits would like to tell us its a GREAT TIME TO LOOK FOR TRADES. Almost everything loses.


Coincidence? That's for you to decide. I don't think it is coincidence. In fact this is exactly how I trade from here. ADX and trendlines. Call it a day and make money. Only we can complicate the hell out of it "looking for the trend". The truth is the trend is relative, and thus WE DEFINE IT. And if that's the case, everyone else has a difference definition and no one can be right or wrong. So why bother? Swing your middle finger up at the "trend" and forget about chasing it. Its a fruitless effort and a lie, and one that hasn't made too many of us rich.

Think its a fluke? Go look at it yourself. These examples were in Forex but the same technique applies directly to the emini's!

ADX and trendlines. The only tools you need to make yourself rich.

Cheers!

Back to Basics

I wanted to update on whats happened and where we go from here. Basically my "magic code" turned out to be a false holy grail and after some extensive backtesting I found it wasn't as consistent as I wanted and while it was almost fully automated (not that I intended to trade it that way) it just wasn't good enough. I wiped out the gains from the week and said f'it.

Awais got me back on track and focused on whats really important. Price action. Its the subject most of us know better than we would like to admit but we get too preoccupied looking at pretty squiggly lines to ACTUALLY SEE. The ADX phenom is real and valid as far as i'm concerned. That is the ONLY indicator on my charts. I will use nothing more than that as a qualifier for setups and trendlines for entries from here on out. Basics. I started doing this in sim on Thursday and was raking in money. On Friday I had one loss for -1.25 NQ points and more wins than I could count in the ES and NQ by 1PM. The consistency was through the roof along with the results and directly due to the SIMPLICITY of what I was doing. Trendlines are non-lagging price information and simply work if we let them AND if we use them in market conditions that are prime for momentum shifts.

I'd also like to thank Michael for sending me an indicator he coded up around the ADX (one I was working on but he saved me the time) to give a red light/green light indication of the ADX value. Really saves a lot of time visually backtesting things now. Thanks Michael!

I will be posting my full trade charts with my trendline entries here on out showing EXACTLY what i'm doing (No more hidden indicators Stan!). My following post will cover the ADX theory and chart examples of what i'm talking about when it comes to entries.

Rough Day

Not much to discuss. Took the signals, and they didn't really work out. Two pars in the NQ and three back to back losses in the ES. But the redeeming value is that the losses were all small (-.75 to -1.5) and they were on valid setups. Some of them worked a bit but reversed and that was just how they played out. I still have not lost any faith in the method though! One of the NQ trades I was in this morning went +70.00 in favor and reversed hard and fast. I couldn't get out of it and had no exit signal so I took a par on it.


Anyhow, that leaves myself about even on the week with one and a half days to go. I just have to keep after it!

Trade Results:

ES: -175.00
NQ: +0.00