Wednesday, December 31, 2008

12/31/2008 - Frustrated with today!

Today was a very frustrating trading day. I switched to the real $ account today, and ended up with a net loss of $194.20. The dollar amount doesn't bother me; not really a big deal, but the way it all unfolded does. And I'm not blaming the market; and take 100% accountability for my lack of performance. In the afternoon, I noticed a divergence in momentum and price, as well as volume and price. The volume oscillator indicated that traders were selling into the up moves above 901. Here's a snapshot of the "Trades" window from the IB platform:

I got stopped out for -3 points on the first 901.75 short.
I re-shorted 904.50 and took a 2.75 pt gain at 901.75
I then shorted 903 with a stop at 906. I was on the phone with a friend, and I actually meant to add to my short at 904 but accidentally sent in a buy to cover order for a -1 pt loss. At this point, I'm still on the phone and
I re-shorted 903.50 and got stopped out at 905.75 for a 2.25 pt loss. I was still on the phone so decided to step away and just call it a day. And what do you know, we get one last run on the stops, and then ES tanks 14 points. THAT is what I was expecting and looking to capture ALL afternoon! All of my trades went into positive territory by 1-2 points before reversing on me, but I was forcing myself to be patient and not take an early exit. The way price was setting up, I was looking for a 5-8 pt down move at the minimum. There was also strong divergence between the indexes. NQ broke down, while ES broke out. Today's loss was due to a sheer lack of discipline on my end. Going forward, No Phone Calls while I'm trading.

I'll be switching to all real $ trades in 2009. I'll be working on setting some trading goals over the weekend, along with some money management rules. I'll be posting all my real $ live trades here for full accountability. My starting balance will be $22,648.

Wish everyone a safe and successful 2009!

Breakout from Symmetrical Triangle on the Daily

Market Structure/Balance (5-min)

Time Tested Classic Trading Rules for the Modern Trader to Live By

Time Tested Classic Trading Rules for the Modern Trader to Live By, by Linda Raschke.
  1. Plan your trades. Trade your plan.
  2. Keep records of your trading results.
  3. Keep a positive attitude, no matter how much you lose.
  4. Don't take the market home.
  5. Continually set higher trading goals.
  6. Successful traders buy into bad news and sell into good news.
  7. Successful traders are not afraid to buy high and sell low.
  8. Successful traders have a well-scheduled planned time for studying the markets.
  9. Successful traders isolate themselves from the opinions of others.
  10. Continually strive for patience, perseverance, determination, and rational action.
  11. Limit your losses - use stops!
  12. Never cancel a stop loss order after you have placed it!
  13. Place the stop at the time you make your trade.
  14. Never get into the market because you are anxious because of waiting.
  15. Avoid getting in or out of the market too often.
  16. Losses make the trader studious - not profits. Take advantage of every loss to improve your knowledge of market action.
  17. The most difficult task in speculation is not prediction but self-control. Successful trading is difficult and frustrating. You are the most important element in the equation for success.
  18. Always discipline yourself by following a pre-determined set of rules.
  19. Remember that a bear market will give back in one month what a bull market has taken three months to build.
  20. Don't ever allow a big winning trade to turn into a loser. Stop yourself out if the market moves against you 20% from your peak profit point.
  21. You must have a program, you must know your program, and you must follow your program.
  22. Expect and accept losses gracefully. Those who brood over losses always miss the next opportunity, which more than likely will be profitable.
  23. Split your profits right down the middle and never risk more than 50% of them again in the market.
  24. The key to successful trading is knowing yourself and your stress point.
  25. The difference between winners and losers isn't so much native ability as it is discipline exercised in avoiding mistakes.
  26. In trading as in fencing there are the quick and the dead.
  27. Speech may be silver but silence is golden. Traders with the golden touch do not talk about their success.
  28. Dream big dreams and think tall. Very few people set goals too high. A man becomes what he thinks about all day long.
  29. Accept failure as a step towards victory.
  30. Have you taken a loss? Forget it quickly. Have you taken a profit? Forget it even quicker! Don't let ego and greed inhibit clear thinking and hard work.
  31. One cannot do anything about yesterday. When one door closes, another door opens. The greater opportunity always lies through the open door.
  32. The deepest secret for the trader is to subordinate his will to the will of the market. The market is truth as it reflects all forces that bear upon it. As long as he recognizes this he is safe. When he ignores this, he is lost and doomed.
  33. It's much easier to put on a trade than to take it off.
  34. If a market doesn't do what you think it should do, get out.
  35. Beware of large positions that can control your emotions. Don't be overly aggressive with the market. Treat it gently by allowing your equity to grow steadily rather than in bursts.
  36. Never add to a losing position.
  37. Beware of trying to pick tops or bottoms.
  38. You must believe in yourself and your judgement if you expect to make a living at this game.
  39. In a narrow market there is no sense in trying to anticipate what the next big movement is going to be - up or down.
  40. A loss never bothers me after I take it. I forget it overnight. But being wrong and not taking the loss - that is what does the damage to the pocket book and to the soul.
  41. Never volunteer advice and never brag of your winnings.
  42. Of all speculative blunders, there are few greater than selling what shows a profit and keeping what shows a loss.
  43. Standing aside is a position.
  44. It is better to be more interested in the market's reaction to new information than in the piece of news itself.
  45. If you don't know who you are, the markets are an expensive place to find out.
  46. In the world of money, which is a world shaped by human behavior, nobody has the foggiest notion of what will happen in the future. Mark that word - Nobody! Thus the successful trader does not base moves on what supposedly will happen but reacts instead to what does happen.
  47. Except in unusual circumstances, get in the habit of taking your profit too soon. Don't torment yourself if a trade continues winning without you. Chances are it won't continue long. If it does, console yourself by thinking of all the times when liquidating early reserved gains that you would have otherwise lost.
  48. When the ship starts to sink, don't pray - jump!
  49. Lose your opinion - not your money.
  50. Assimilate into your very bones a set of trading rules that works for you.

Wednesday, December 24, 2008

12/24/2008 - Symmetrical Triangle Holding

Didn't trade or watch the market at all today, and looking at the 5-min chart, it's obvious I didn't miss much. Symmetrical triangle on the Daily still holding perfectly! I realize our job as traders is to REACT and not PREDICT the market action. But almost everyone has some preconceived notion on where the market is going. Just for kicks, where do you think we're headed on Friday? These narrow range days can't last much longer and we're due for a decent size move. I feel like we're gonna bounce on Friday, but I say that knowing that my job is to REACT to the market action on Friday, and not let any bias get in the way.

Happy holidays!

Symmetrical Triangle Holding on the Daily

Market Structure/Balance (5-min)

Tuesday, December 23, 2008

12/23/2008 - Low volume chop

8:45 AM - Short 1 ES @ 872 (new system on 610 tick chart) Stop @ 876.50
8:47 AM - Short 1 ES @ 873 (just adding to position) Stop @ 876.50.
8:50 AM - I'm hoping for a short sell signal on the 1830 tick chart. Those signals are usually good for 3-5 points, if not more. Volume trend is at 873 and should act as resistance at this point. Just looked over at the Balance chart, and this is a really tight opening range.
8:52 AM - Not really liking the price action here. Spinning top on the 30 min. Indecision
8:55 AM - Sell signal is still in effect on the 610 tick chart, but a buy signal fired on the 1 min chart (new system). I'm holding the short position; I think this system is more effective on tick charts. Lets see who wins; tick vs time.
8:59 AM - Covering 1 ES @ 874 for -2 pt loss. Leaving stop @ 876.50 on the other contract.
9:04 AM - Shitty volume; weird price action right now.
9:06 AM - XLE (energy) dropping; should take down the market with it. If market holds despite the weakness in XLE, I'm out of that short
9:09 AM - Finally a small drop in ES
9:10 AM - Exit 1 ES Short @ 871.00 for +2 pts. Net for the day = 0 points.
9:12 AM - ES is now trading at 873.50, so exiting that short was a good call. Now I'm wondering whether I should look to re-enter short, or just wait for price to make a decisive move in one direction and then re-enter in direction of the move on a pullback.
9:14 AM - Short signal fired on the 610 tick and 1 min on new system. Re-entered short on 1 contract @ 873. Stop @ 876.50 again.
9:15 AM - Almost at my stop in downtown Chicago so either need to leave this position on with a stop and target, or just bail now. I looked over at the Balance chart and noticed that the 1st hour low was not broken. Not a good sign for shorts.
9:17 AM - Exited short position at 872 for +1 pt. Time to close up here on the train and head in to the office.

9:39 AM - Just got to the office...good thing I exited that short. Overall, decent market reads this morning. I think I would have netted more points with my current system/method, over the "new" system that I'm currently forward testing. Double top forming here at 878 level. Want to short it but have to run to a meeting in a few minutes and don't want to get into a position I can't monitor.
9:42 AM - Just took another glance and ES is down to 874.50. Guess I should have taken that double-top short setup. Would have been good for at least 2 points. New system did not fire a sell signal on that fast down move.

9:51 AM - I'd like to take a short in this 875 area with a stop at 878. Almost everything looks only concern is the On-Balance Volume. It has been rising throughout this chop. Accumulation? Probably best to sit this out until a decisive move has been made.

10:02 AM - Was in a meeting. ES now trading at 872.75. Maybe I should stop second-guessing myself?

10:08 AM - Short signal came in at 9:59 AM at 874.25 on the "new" system. I wasn't around my computer to take it but that would have been good for 2-3 points. ES trading at 871.25 at the moment.

10:21 AM - ES trading at 869 now. Talk about missing a sweet shorting opportunity! One of my problems is, once I miss a good entry, I'm very hesitant to get in at a worse price. I haven't really figured out whether that's really a "problem" or not; as it may actually help keep me out of some low-probability trades.

10:49 AM - Pull up a 30-min chart and draw fib retracement levels from prior swing low (852.75) to swing high (878) and you'll notice that ES bounced off the 50% retracement level. Volume trend is at 872 at the moment, and I would expect that area to act as resistance. Shorting into that area could prove to be profitable. Really depends on how price acts around 871.50-872. I probably won't be around to watch it at that area since I have a lot of work to wrap-up today.

11:42 AM - Long 1 ES @ 861 (my method). Stop @ 858
11:52 AM - Exit 1 ES @ 863 for +2 pts. Why exit at 863? 863 = Volume Trend. Now there's a chance that price could bust right through this and go to the next target of 870 but it was printing a doji on the 610 tick chart, and I'll be heading out to a lunch meeting soon, so figured I'd book the 2 points rather than leave an open position in this light volume market where price can be moved in either direction pretty easily by the bigger players. This previous swing low could very well turn out to be the low of the day.

1:31 PM - Volume Trend at 868 at the moment. Missed another short entry at 866-867 :(

2:26 PM - Symmetrical triangle holding beautifully on the Daily. Tempted to take longs above 852; stop out at 852. Put in a buy order at 859, no fill. Price has moved away to 862 now. Not chasing this into the close. Last 1/2 hour is a higher risk time to open new positions.

2:37 PM - Long 1 ES @ 859.50. Stop @ 856.50 (Buy signal on new system, 3 min chart)
2:38 PM - Add 1 ES @ 858.50. Stop @ 856.50
2:39 PM - Moving stop to 855.00
2:43 PM - Wouldn't mind adding 1 more contract at 856.50.
2:46 PM - 14 more minutes to go. Getting abit antsy here. Wanna exit already!
2:49 PM - Exit 1 ES @ 860 for +1.50 pts, Exit 1 ES @ 859.50 for break-even
2:51 PM - Done with trading for the day. Symmetrical triangle still holding on the daily.
3:10 PM - +4.5 pts/contract net for the day.

Symmetrical Triangle Holding on the Daily

Market Structure/Balance (5-min)

Monday, December 22, 2008

12/22/2008 - Real-time Commentary

Today's post is being written in real-time throughout the day to capture my thoughts and trades. We'll see how this turns out. All posted times are in central time zone (Chicago).

8:49 AM - Shorted 1 ES @ 880.25 (new system)
8:58 AM - Covered 1 ES @ 778.50 for +1.75 pts (discretionary exit; system did not signal an exit till 875.25 for +5 pts)
9:13 AM - Long 2 ES @ 875.00 (my method). 875 is an area of support. Check the DOM/Market-Depth at this price level. Volume dried up big time at 874.
9:42 AM - Exit 2 ES @ 877.50 for +2.50 pts (discretionary exit; heading to a meeting in a few minutes and didn't want to continue holding).

9:50 AM - 880 area is the continuous volume trend and is proving to be strong resistance. Bulls will have to bust through that for any sizable move to the up side. 886.50 is first hour high. I think fading any up move in the 885-888 area will turn a profit.

9:59 AM - Off to a meeting now.

11:09 AM - Damn, that was a long meeting. The first 1/2 hour was valuable, the remaining 40 minutes was BS and a complete waste of time.

11:26 AM - Long 2 ES @ 869.75 (new system). 2.50 pt stop @ 867.00

11:48 AM - Exit 1 ES @ 871.75 for +2 pts (discretionary exit). Moving stop to break-even on remaining 1 contract.
11:49 AM - Stepping out for lunch.

12:42 PM - Price hasn't really moved much. Exiting remaining 1 contract at 872 for +2.25 pts (discretionary exit). The volume trend was around 875 on this prior swing up when price hit a high of 874.25. If I was around, I would have exited right around 874. At the moment, the volume trend is at 875.50 acting as resistance. Price will need to break through that for any real upside. Until then, short the pops.

12:56 PM - Should've exited and reversed to short. I can't continuously monitor the charts at work so I'm not expecting to get every trade.

1:07 PM - Just took a quick look at the charts. At this point, I'm expecting some chop/range-bound price action. Going long above 875 and shorting a break of 866 is probably the way to go to avoid chop.

1:20 PM - New system signaled a short at 866.75 at 12:57 PM on the 1830 tick time-frame. Another missed entry.

1:24 PM - Well, looks like the earlier analysis was correct and shorting a break of 866 would have netted over 3 points. ES is currently at 862.50. I'm expecting support at 860. Should produce a little bounce back up to 866. Lets see.

1:28 PM - Long 1 ES @ 860 with a 2 point stop. Check the DOM/Market-Depth; barely any volume in the 859s. I'm guessing the bears wanted to trigger some stops at 859, but the lack of volume tells me bears are gonna have to press harder to cut through this.

1:31 PM - Exit @ 861 for +1 pt. I'm 90% sure this was an early exit.

1:43 PM - Off to another meeting. Will be in meetings for the rest of the day, so no more trades.

2:56 PM - Just got back from one of the meetings, and about to head to the next. The symmetrical triangle is holding on the Daily chart.

3:48 PM - Net for the day was +3.50 pts on trades using my current method, and +6 pts using the new system/method which I'm forward testing these days. +9.50 pts/contract. Not bad for a Monday when more than half my day is booked in meetings. I like this real-time commentary and will try to continue posting in this manner. Let me know what you think!

Symmetrical Triangle on the Daily

Market Structure/Balance (5-min)

Sunday, December 21, 2008

12/21/2008 - Big Picture

Here's a chart marked with some price areas I'll be watching. Support levels are marked in green and areas of resistance are marked in red. A symmetrical triangle is also forming on the Daily price chart indicating indecision at the moment, but we should get a strong move when price breaks out of this. Post your comments. I'm not a CMT or a seasoned professional, so these are amateur observations.

Friday, December 19, 2008

12/19/2008 - Yep, I'm still here

I've been really busy at the day job the past few days so haven't had time to put on any trades. I put on a couple yesterday, but nothing to write home (or to this blog) about. I spent today experimenting with a couple of new indicators that were introduced to me by a friend of mine. I personally had mixed results with it, but some of the setups look very promising. My friend is fine tuning and back-testing it, and I'll be doing the same over the weekend.

So the last big problem I posted about was stops. I didn't know how wide or tight they should be. At this point, I've decided to set a MAX stop-loss of 3 points, but preferably even tighter than that (1-2 points). I need to be able to pass up on any setup that requires a stop-loss of over 3 points.

Now, on to the next big dilemma: I HAVE NO PATIENCE! I don't wait for the ideal entry. I don't wait for the ideal exit. I like being in and out of trades FAST. Problem is, my system/method does not support this scalp trading, but just sitting around waiting for a setup results in boredom. I'm going to look into programming alerts in Trade Station so I don't have to watch every tick. I've heard profitable traders say that trading (profitably) is a boring profession, and I believe it! Sitting around waiting for 3-4 good setups all day can be very boring and mind numbing. How do you guys deal with that? Please post a comment if you have any insights on this topic.

Enough about my issues, lets finish this post off on a good note. I'd like to direct your attention to Don Miller's blog post from today. Don is a phenomenal trader, and banked over $1.62 Million this year day-trading the ES! Even after banking a 7-figure year, he is humble as ever. I wish more profitable traders would share their insights as Don has been doing over the last year on his blog.

Market Structure/Balance Chart (5-min)

Tuesday, December 16, 2008

Tuesday 12/16/2008 - More Experimenting

I was up late last night busy with IT work (my real job) so slept in this morning and wasn't planning on trading at all. The up move after the Fed's announcement really extended the price out, and I started looking for mean reversion trades. I could have fine-tuned my entry but instead chose to experiment with the scale-in/scale-out approach again, which I said yesterday only works when the market is over extended. I shorted with an average price of 907.75. Due to some tech issues with my broker (IB), my exit orders at 904.75 did not get filled. I was stuck with holding the position into the next session, which was not so bad considering how extended the price move was, and the overhead resistance in the 918 area (previous week's high). I just covered my position at 901.75 for +6 points. Enough experimentation; starting tomorrow it's back to the game plan (fine-tuned entries and tight stops). I would also like to start taking screen shots of each trade setup, both for entries and exits, so I can review and post each trade with accompanying charts. We'll see. That may be a bit over ambitious, but I'll give it a shot.

Market Structure/Balance Chart (5-min)

Monday, December 15, 2008

Monday 12/15/2008 - No Day Trades

As Monday's usually go, I was busy all day with work so didn't make any day-trades, but I did short 2 ES at 892 last night in the Sim account. The setup looked good, so I shorted 1 ES in the real $ account as well. I didn't want to keep an overnight position so I closed out the real trade for +2.25 points at 889.75. I left the position open in the sim account with a stop at 895. I covered the sim position at 871.75 in the afternoon for +20.25 pts per contract ! I should have just left the real $ position open as well with a stop at break-even + 1 tick! Live and learn. The net profit was around $107 in the real account and over $2,000 in the sim account.

Market Structure/Balance Chart (5-min)

Friday, December 12, 2008

Friday 12/12/2008

I had a couple of trades in the morning which basically canceled each other out for a net scratch. In the PM, I wanted to try a big-stop scale-in/scale-out play. I'm still experimenting with stops and I'm 90% settled on tight stops but for education's sake, I try the big stop scale-in/scale-out at times. I think this counter-trend big stop scale-in/scale-out method only works when the market is over extended and it can be very destructive if executed at the beginning of a new trend. By averaging in, my final entry price came out to 874.6 on a 17-lot. If I had just gone in with a 17-lot on a single order and taken 2 point stop-outs, I could have re-entered with a 17-lot at 879 which would have netted a greater profit. So next week, I'll be sticking with 2-3 point stops. Net gain for the day was +$1,393.50

Performance Summary/Stats

Trades Plotted on 3-Min Chart

Market Structure/Balance Chart (5-min)

Thursday, December 11, 2008

Thursday 12/11/2008 - AM Chop, PM Drop

This morning was one of the tightest ranges I've seen in the ES in the last few months. Very choppy and slow pace. Trade entry and exit required a lot of patience, and patience is something I have in very short supply. I took 2 quick scalps on the train ride for +3 ticks. Then I shorted 2 contracts in the 902.75 area, but got stopped out for -2 points. I was early on my entry and I kind of knew this going into the trade. I should have been more patient on the entry. On the bright side, I got back in with 2 contracts short at 904.50. I covered one at 903.50 and moved stop to break-even and let the other one run. My target was 898.50, but I ran out of patience and exited at 899.50 for +5 points. I'm glad I was able to get back into the trade quickly after the stop-out and actually hold out for a 5-pt gain. I was busy with work remainder of the day so couldn't watch the market and missed out on the PM puke. XLF gapped down, and was unable to fill the gap which indicated weakness. XLE gapped up but was rolling over and showing weakness. This gave me a bearish bias. Overall, I'm happy with my market reads today. I think I could do much better if I had the entire day to trade. Net gain for the day is +$133.

Performance Summary/Stats

Trades Plotted on 1-Min Chart

Market Structure/Balance Chart (5-min)

Wednesday, December 10, 2008

Wednesday 12/10/2008 - Crappy Weather

I missed my train this morning due to extremely slow drivers in this crappy Chicago weather. By the time I got on the next train, an hour and a half later, I wasn't really in the mood to trade. I typically put on terrible trades when I'm in a bad mood so just stayed out of the market. Took one quick scalp for +1.25 ES points but that's about it. I was too busy with work remainder of the day so the net gain for the day stands at +$52 :-p

Performance Summary/Stats

Trades Plotted on 1-Min Chart

Market Structure/Balance Chart (5-min)

Tuesday, December 9, 2008

Tuesday 12/09/2008 - Intermarket Analysis Play

I took one trade on the ES this morning, and it was a scratch. I was watching ES, YM, NQ, XLF (financial sector ETF), and XLE (energy sector ETF) and noticed weakness in all but the NQ. NQ was definitely the strongest one of the bunch this morning, but big drops in the other indices indicated that there would be at least a small pullback in the NQ. I missed the ideal short entry on the ES, so instead shorted the NQ. I scaled in/out of the position fairly quickly since it was a counter-trend play, and I realized I was shorting the strongest index at the time. Once NQ started moving back up, I saw it as an indication that the others may soon follow and had an opportunity to enter long on the ES around 899, but was close to my stop in downtown Chicago so took a pass on that trade. That trade idea would've resulted in a 10+ point trade. Intermarket analysis is one of the keys to profitably trading the e-mini index futures (ES, NQ, YM). Ended the morning train ride with a +$342 gain. I was busy with work the remainder of the day so couldn't put on additional trades. I saw a short developing but missed the ideal entry so passed on the setup. I'm trying to be more disciplined with my entries since my stops are fairly tight now.

Performance Summary/Stats

Trades Plotted on 1-Min NQ Chart

Market Structure Chart (5-min)

Monday, December 8, 2008

Monday 12/08/2008 - No Trades

Monday's are jam packed with meetings so no trades today.

Check out the following links and see how likely you are to suffer a mental and/or physical illness due to the stress.
First read this: A Word About Stress
Then read this: Using the SRRS

Reply in the comments section with your score if you'd like. Mine was around 200 :-/

Market Structure Chart (5-min)

Friday, December 5, 2008

Friday 12/05/2008 - Trades

I was contemplating whether I should even make a Blog post today. I didn't trade on the train , but put on a couple of small trades later in the morning for basically a scratch. Then, I wanted to try out a scaling in with big stops play, so just messed around by taking counter-trend trades on emotional extremes. That doesn't really count for much since the stops were huge (10 pts) and the size was unrealistic (10-12 contracts). It did result in a +$2,571 gain but doesn't count for much. I went over the trade chart briefly, and getting stopped out for a small 2-point loss, and then re-entering at better prices would have netted a bigger profit so I will be sticking with the 2-3 point stops going forward.

Performance Summary/Stats

Trades Plotted on 3-Min Chart

Market Structure Chart (5-min)

Thursday, December 4, 2008

Thursday 12/04/2008 - Trades

I'm being selective on my trades lately. Entry was OK on the first trade this morning, but exited way too early with only 1 point; left 5-6 points on the table. I tried to correct this problem on the second trade and ended up taking 1.5 pts on the first contract, and held the other for a 4 point target. Price went 3.5 points in my favor, and then reversed and stopped me out at +1 tick profit. I should've covered on the hammer candle on the 1 min but price was moving very quickly, and I was at work and couldn't monitor the charts throughout the trade. The 869 area was clearly acting as resistance, and I saw the setup, but was busy with work so didn't put on any trades in the afternoon. For some reason, I'm very hesitant to put on positions lately. You might laugh and say "dude, it's on SIM!", but keep in mind, I try my best to treat this as real money. I don't want to be too quick to jump on a trade, but the hesitation in putting on a position is resulting in missed entries. Once I miss the entry, I don't chase the trade so I end up missing the entire move altogether. This is a work in progress, and considering I only spend 30-45 minutes concentrating on the markets, it only makes sense that my learning curve is going to be more steep than someone doing this fulltime. Anyway, today's result is a very modest gain of $123.

Performance Summary/Stats

Trades Plotted on 1-Min Chart

Market Structure Chart (5-min)

Wednesday, December 3, 2008

Wednesday 12/03/2008 - Trades

After yesterday's loss, I was playing defense most of the day which resulted in a net gain of +$586. Left a lot on the table due to early exits. Missed some good opportunities due to the real job, but I didn't bother chasing the trades. I'm trading with 6-8 tick stops now, so the entry is crucial. The tighter stops are helping me stay out of bad trades, and enforce precise entries. They're also keeping me out of some trades that would've worked out beautifully, but for now, I'd rather miss a trade here and there if it preserves capital.

Performance Summary/Stats

Trades Plotted on 3-Min Chart

Market Structure Chart (5-min)

Tuesday, December 2, 2008

Tuesday 12/02/2008 - Trades

Lack of discipline, combined with over trading resulted in a -$931 net loss on the day. Looking back at the Balance/Market-Structure chart, it's obvious that I should've stopped Shorting and reversed to Long once price broke above the mid-point at 9:05 AM central. High 840s was a strong area of resistance and I took a few scalp trades in that area, but was unable to capitalize on the early afternoon puke since I was busy in meetings. The only thing that saved me today was the use of tighter 2-pt stops. And the learning continues...

Performance Summary/Stats

Trades Plotted on 5-Min Chart

Market Structure Chart (5-min)

Monday, December 1, 2008

Monday 12/01/2008 - Trades

Last week's run up in the markets didn't make any sense to me but I've been working on NOT having a bias, and just trading the current price action. I was anticipating resistance in the 900 area on the ES, and very strong resistance in the 920s. Sadly, I was unable to capitalize on the idea. Chicago got its first snow last night, and it has been snowing most of the day today so the morning commute was a pain. Traffic was terrible and the trains were delayed. Monday's are also bad due to several meetings throughout the day. Considering the circumstances, I should've just taken the day off from trading all together. Instead, I ended up putting on some counter-trend trades to scalp for 1-2 pts per. Ended the day with a net gain of $66.40

Performance Summary/Stats

Trades Plotted on 3-Min Chart

Market Structure Chart (5-min)

Wednesday, November 26, 2008

Wednesday 11/26/2008 - Trades

I was off from work today, and was planning on taking the day off from trading as well and just make up on some lost sleep, which I did. I didn't trade the morning but watched the snail paced market action around 11 AM (chicago/central time). My sister dropped my 2-yr old nephew off at the house and I stepped away to go play with him. He usually likes to watch figher jet videos on YouTube but today he had to make do with watching the colorful charts jumping around. I brought him to the office and gave him a trading 101 lesson. The trades for today were taken during that time, with my nephew sitting on my lap monitoring the trades :D Not very serious trading but did keep it realistic with small size. Closed out the day with a net gain of $346.

Performance Summary/Stats

Trades Plotted on 1-Min Chart

Market Structure Chart (5-min)

Tuesday, November 25, 2008

Tuesday 11/25/2008 Trades

I didn't have time to trade on the train this morning, but with this being a short week, and several people out on vacation, it was pretty quiet at the office. Spent most of the morning just watching and learning, and didn't put on that many trades and kept size limited to 1-2 contracts. Also used tighter stops, mostly 6-8 ticks with quickly moving it to break-even once the trade went 4-6 ticks in my favor. This kept me out of trouble on some trades, but also wiggled me out of a couple of good ones. I need to improve my execution/entry so a tighter stop can work out. Ended the day positive with a net gain of $286.

Performance Summary/Stats

Trades Plotted on 3-Min Chart

Market Structure Chart (5-min)

Monday, November 24, 2008

Monday 11/24/2008 - Platform Setup

I'm not posting any trades from today since most of the day was spent/wasted messing around with getting Ninja Trader properly setup. Ran into some issues where NT couldn't keep up with the orders, and the size on the auto-stop/targets wasn't updating to reflect the position size as I would scale in/out. Due to that issue, NT would've actually reversed my position if the auto stop or target order was hit. I've emailed the support staff at Ninja Trader and they recommend I run TWS Build 887. I'm currently running the latest release; Build 889 and the oldest build offered on IB's website is Build 888. I don't think the probems I'm experiencing have anything to do with the TWS build, but it makes it easy for NT to shift the blame. That's enough ranting about tech issues.

I had a very good discussion with Ziad over the weekend, which made me more conscious about risk/reward and stops. Going forward, I'll be risking 1% on each trade. Size will be calculated based on the dollar amount being risked, so setups with wider stops will have lower size, and tighter stops will have larger size. Size will be adjusted as the account grows/shrinks.

Regarding today's market action, I'm still surprised that ES broke 860; unbelievable! I mean, is it really good news that Citi needs to be bailed out by the Govt, and Govt is obliging to their request in order to "save the system"? Doesn't this just further show how much of a mess we're really in? 869 was previous week's high, so I was shorting low-mid 860s which turned out pretty good. On the negative side, I definitely let my bias get in the way and could not get myself to go long at any point during the day. I need to be able to put my bias aside and trade in the now.

Market Structure Chart (5-min)

Friday, November 21, 2008

Friday 11/21/2008 - Reset

Yesterday was the day from hell!
Yesterday I put 2 trades on in the real $ account. I bought 1 ES @ 762 with a 10-pt stop (trying to catch a falling knife), and I got stopped out with a $500 loss. I went long again with 1 contract @ 752 with a stop at 742 (again, trying to catch a falling knife). I was expecting a small short-covering rally. Unfortunately, I accidentally exited out of my 752 long position after-hours due to an order entry mistake using IB's Trader Workstation platform, which is probably one of the worst trading platforms out there. It was pretty frustrating seeing ES trading at 780+ over night. To remedy that, I ordered Ninja Trader. Aside from the trading hickups, it was just a bad day over all. I even missed my stop on the train ride back home so got off and had to catch another train going the other way to get back to my stop which ended up costing me an extra 40 minutes. There were other issues too, but no need to go into detail. It was just a really bad day.

Changes going forward
I'll be using Ninja Trader in Live Trading mode connected to IB's TWS on my Sim account with IB. At some point, I plan on switching that to my real $ IB account but don't have a set time-frame on when that will happen. Could be a week or a month, I really don't know.
I will be cutting size to 1-3 contracts. Yesterday's $700 loss made me realize I'm not ready to trade anything over 3 contracts. Most of my trades will be 1-2 contracts.

Goal for next week
The goal for next week is to play around with different stop-loss levels and finalize a tighter stop. In the past, I've been using a 5-point stop but that's probably a bit too wide. I need to find the sweet spot where the stop-loss provides damage control for the trades where I'm just dead wrong, but at the same time, doesn't wiggle me out of the winners. From similar analysis in the past, I think that's around 3 pts but next week's focus will solely be on stops and the goal is to hae a conclusion by the end of the week. Trading is all about continuosly adapting to market conditions so nothing is set in stone, but I would like to tighten up the stops a bit. Yesterday's 10-point stop didn't really provide the damage control I'm looking for. Imagine if that was on bigger size!

Setting up for failure?
Given my current situation, I wonder if I'm setting myself up for failure. The S&P is a brutal market dominated by professional traders. I'm trading against professional traders with a lot exeperience, big accounts, multiple screens, cheaper commissions and full-time focus/dedication to trading. Meanwhile, my current situation is trading part-time off a single laptop connected via a broadband card from a train with less than 25 minutes to make any trades! Sounds like I'm bringing a knife to a gun fight! I'll continue trading on the sim for a while because it provides exposure to patterns and keeps me involved in the market so if/when I go full-time, I'll have a head start but I don't know if live trading (profitably) in my current situation is realistic. Post a comment if you have any thoughts on this topic.

Thursday, November 20, 2008

Thursday 11/20/2008

This morning started off with a $3K loss, which I was able to turn around to a $700 gain by around 1 PM. The day was downhill from there though due to technical issues. Tradestation's trade server was having some issues and would not let me cancel a few Buy orders I had placed at key S/R areas. So it didn't fill the orders, but at the same time, it wouldn't let me cancel the orders either. Turns out, somehow TS filled the orders 40 minutes AFTER I had canceled them and I found myself in a Long position with 20 contracts! Meanwhile, during this 40-minute window, price on the ES had moved 20 pts away from my entry and I was looking at a big $10-15K loss. This totally screws up my stats in Tradestation, and I don't know if I should just reset the Sim account at this point, or just eat the loss and try to work my way out of it. Either way, it's very frustrating.

I'm also still struggling with the ideal stop-loss.

Lessons for the day:
NEVER try to catch a falling knife!
ALWAYS have a backup broker in case something like this happens in your real $ live account.

Equity Curve for the Day

Market Structure Chart (5-min)

This market structure / balance chart continues to put price action in perspective, while highlighting some key S/R areas. You can see how price tested the first-hour high a couple of times, and couldn't push through it, which gave way to some heavy selling. First stop on the way down was the Globex Low around the 792 area; price bounced off that area a few times. When price blows past a support area, prior support becomes resistance and that's apparent on this chart as price then bumped up against the 793 area a few times before heading down to the first hour low. Beautifully done!