Thursday, March 19, 2009

Thursday 03/19/09 - Century Mark

As the title hints, this is post# 100 on the Blog :)

I did not get to the screens till about 10:40 Am (central). The first two trades in the morning were definitely not proper setups, and that's why I scratched the first one and took a stop hit of -2 points on the second one. Even the third trade was a bit early but I took it because we had decent support below at 777 . It was a fairly choppy day with jerky price movements. I was working on the IT project while trading today, so I wasn't focused missed several setups simply because I wasn't watching the market around those times. I didn't want to chase the setup and get in at a poor price, so just stayed out trades all afternoon (+1 for discipline). Ended the day at +$200, with a 50% win rate. I'm not too concerned about the win rate, but the statistic I do care about is the Avg Winner vs. Avg Loser (Profit Factor) to make sure my Risk:Reward is in balance, and I'm glad to say the Avg Winner was 2.73 times the Avg Loser (goal is to keep the profit factor above 2.00; higher the better).

ES 610-Tick bar Chart (Morning Trades)

Going forward, today's down move could simply have been a corrective retracement. I'm trying to trade from a neutral position, and the way I see it, today's price action remained above the .618 retracement from prior swing low to swing high on the 15-minute chart. The low of day was at 777.25; a tick above the 777 level. If we break 777, I'd be looking for the 770-773.50 area to hold. Below that we have 761.75 and mid 750s. I'm not too concerned with the bigger picture but I think it helps to know significant price levels.

ES 15-Minute Chart - OBV MA still positive indicating a lack of systemic selling in the markets.

Gap filled within first 30 minutes

ES/$TICK (3-Min) The $TICK MAs just hovering around zero-line (highlighted in blue) are indicative of the lack of direction (chop) in the markets.


  1. Solid performance and yet another winning day... What will it take for you to fail!?

    Keep it up man!

  2. Losing days are an inevitable part of this business, and I'm sure I'll see my share sooner or later.

  3. nope. I don't think so. The one lot LLC will feature our premier trader who has "never had a losing day in his life".

    Think of that marketing. The book rights alone will be worth millions!

  4. LOL...Now I feel obligated to have a losing day ASAP :D

  5. Just curious what your risk to reward ratio is. I have mine set to 1.5/1 but trying to see if I scalp what the ratio should be. Any comments and/or suggestions and insight on risk reward ratios?

  6. I try to keep my risk to reward around 1:2; i.e. for every $1 I risk, I try to make $2. Ideally, I could attain 1:3; risk $1 and make $3, so that the win rate becomes even more insignificant. With a 1:2 risk/reward, you need roughly a 34% win rate to break-even. With a 1:3 risk/reward, the win rate required to break-even drops to 25%. Just think of the psychological benefit of trading a 1:3 risk/reward method KNOWING that all that is needed for profitability is a win rate higher than 25%!

    Most traders become infatuated with the win rate, and at times I'm guilty of that myself. But what good is a high win rate if your losers are twice as big as your winners? If you risked $2 to make $1, your win rate would need to be around 67% just to break-even! So in reality, the win rate would need to be over 70% to eek out a tiny profit. If you risked $3 to make $1, your win rate would need to be 75% just to break-even (not counting overhead, commissions, etc).

    I believe the focus should be profit factor, and making sure the profits on your winning trades are larger than the losses on your losing trades.

    Best trading!


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