Daybreak Trading

[1pipatatime 10]

Hi swansjr,

 

Sorry but I have not gone through all of the posts in this thread yet, but reading your last post may I suggest reading the post in the Trading Psychology section named "Conquer the four fears of trading", its a good read and it may help.

 

Anyway I hope things workout.

 

cheers

 

1pipatatime

[swansjr 10]

Day 20

'June 12, 2009

 

Today was a slug fest between me, my ego and mother market. This morning as I stepped into the ring, I saw a picture perfect downtrend that formed all night. This downward trend appeared to be running out of steam. I scalped away trying to take signals when they appeared. I failed to act on several but others I did take. Mother market hit me on the nose first; I punched back with a right hook. Then there was a jab to my stomach. I returned with my right hook which just missed, and finished off with a left jab.

 

By 8:00am I was tired, bloodied and on the ropes. But I was still standing! I made five trades and ended up breaking even. I was determined to break my losing streak and demonstrate I can take signals even under adverse conditions. While I remained alive during this round, my trading skills sucked. I was happy I was not totally paralyzed after my 4th strait loss this week, but I need to take my signals when the arrive! At times, I felt rather confident that this game of probabilities will turn around if I stop thinking so much and just act! I think I actually felt that it's really impossible for me to blow my account if I just follow my rules. I will surely have losing days, but I have an edge and over time that edge will materialize.

 

I'm looking forward to next week to demonstrate I'm improving as a trader. I define my risk. I take my entries as the come. Losses are part of the game.

 

Gave a good weekend.

 

P&L: $0

Edited June 12, 2009 by swansjr

[swansjr 10]

Day 21

June 15, 2009

 

One trade. One Loser.

 

Another down day. While I was all ready to follow my trading rules when the time came to prove myself, I failed. I was eager to enter into what I thought was a trend reversal trade. I got stopped out. But like many of my stop-outs, I was correct in my overall analysis but too early on the trigger. The market dipped down, took out my stop and moved upward in my original direction. I was off by a few ticks.

 

Anyway, there is a bigger problem here: That is, that was I should have avoided. Lately I've been watching out for trend reversal setups. It's just a mental exercise but then I actually perform the trade. Stupid, I know. My plan currently dictates only trend continuation patters.

 

After that dumb trade I just watched the price action for about two hours and the EC market largely consolidated after an overnight large push down. There were a few opportunities for more skilled players but I stayed out of the action and watched.

 

I've now lost all the money I made when I started live trading a few weeks back. While I feel beaten, I also feel like I can come back from this. Most of what I lost was due to mistakes on my part. The only exception was the massive 10 tick slippage on one trade. My mistakes all involve not following my plan. I know what needs to be done and I now, I just need to do it. I'm hesitant to return to simulated trading right now for the simple fact it's the pressure of live money on the line that needs to be worked out. My basic methodology has been tested off-line on historical data and live with real market data on a simulator. All have proved profitable. It's the mental part that is holding me back.

 

I'm going to try to go back to my mindset I had a few months back when I started live simulation trading. That was to only take the best signals. There were days were no setup would appear because the rules were too tight on what was considered valid. But when they did appear, they worked well. This should help restore my confidence and P&L.

 

Onward I press.

 

P&L ($100)

[swansjr 10]

Day 22

June 16, 2009

 

Five trades. Two winners. Three Losers.

 

I'm experiencing my Vietnam. But is that light I see at the end of the tunnel? I'm not sure. It may be a muzzle flash of an M16.

 

Today was choppy until the very last 30 minutes of trading. During the chop I caught a few bits of shrapnel. Ouch! I should have waited for the chop to subside and for the market to break. However, the urge to take signals overcame me. I got stung a couple of times before the market finally broke downward. I took the first pullback for an easy scalp win. I then entered again on another minor pullback and hit my scalp target. It's easy when the market is trending nicely.

 

I have to remember; when the market is choppy it's best for me to stand aside. While you can scalp in the chop, you have to be far more skilled than I. If I simply wait for a trend, I do ok. While I'm disappointed at my performance I'm working hard to stick to my plan and make progress. I'm still trading real money and won't switch to a simulator, yet. I know I can do this! Sticking to my plan is proving to be a real challenge.

 

I need to constantly remind myself what a "good" trending market looks like and simply step aside when it's not trending. I need to play by my rules, not the market's rules. I tend to get caught up in watching the market attempting to anticipate each turn. Knowing when not to trade would help me a lot.

 

I really should review my trades. What did the profitable ones look like? What I'm I doing wrong with the losing trades. I bet most of the losers are me attempting to trade in a range bound market or fighting the larger trend. I know better.

 

I'm rambling as I dump my thoughts on this board.

 

Time to go and prepare for tomorrow's battle.

 

 

P&L: ($90)

[Bear Mtn. 10]

I'm enjoying reading about your progress Swans and I hope you have a good day in the market today. Your point about reviewing trades and 'what does a good one look like' caught my attention...

 

One habit I've got into is to take a screen grab at the end of each good, positive and well-executed day and annotate my trades with entries, gains, strategy and anything else relevant... I then save these jpeg's in a folder and I tell you, are they ever good to look back at sometimes when you've had a bad day! They can really be a confidence booster as in 'yes, I can do it' because its the visual proof for your brain that you already have done it (sometimes) and therefore you can do it again. Makes you REALLY want to cut out the mistakes of your bad day and start generating some more screenshot-worthy trades.

 

I guess the same would maybe work for learning from losers - although personally I like to review them immediately after the event, see if there are any useful lessons and then forget / move on asap

[swansjr 10]

I'm enjoying reading about your progress Swans and I hope you have a good day in the market today. Your point about reviewing trades and 'what does a good one look like' caught my attention...

 

One habit I've got into is to take a screen grab at the end of each good, positive and well-executed day and annotate my trades with entries, gains, strategy and anything else relevant... I then save these jpeg's in a folder and I tell you, are they ever good to look back at sometimes when you've had a bad day! They can really be a confidence booster as in 'yes, I can do it' because its the visual proof for your brain that you already have done it (sometimes) and therefore you can do it again. Makes you REALLY want to cut out the mistakes of your bad day and start generating some more screenshot-worthy trades.

 

I guess the same would maybe work for learning from losers - although personally I like to review them immediately after the event, see if there are any useful lessons and then forget / move on asap

 

That's really a great idea. Thanks for sharing. I can see how having a catalog of your good trades can be a confidence booster.

[swansjr 10]

Day 23

June 17, 2009

 

One trade. One winner.

 

Today my main computer died. I think it's the motherboard or a memory card. It often won't boot up or if it does it will lockup after about 10 minutes of use. I ran some diagnostics on it and can't locate a problem. It's an older machine from 2004 but has served me well. Tonight after work, it's off to the Apple Store.

 

My dedicated trading platform is another computer, so at least I can still trade. With all the fuss with my other computer I managed to get one trade in this morning. Probably best because it was chop suey today. On thing I'm beginning to notice on these choppy days is looking at my higher time frame (445t) is a big help. Historically, I would use the higher time frame as confirmation while my focus is on my lowest timeframe. This works in a trending market but most of the time the market is not in a strong trend - or so it seems. Yet, if I change my focus to the higher time frame and actually look for setup on this timeframe, this seems to work out much better.

 

A trader named "brutusdog" sugjested this is the way he trades the EC and that lead me to take a look. Thanks Brutusdog.

 

More on this later...

 

P&L: $100

[swansjr 10]

This is a brief 5-minute video on my chart-setup. I thought some of you may be curious. In the future I would like to put more of these together to explain my setups, entry and exit rules. Everything on the chart is inspired by Watts Trading.

The_Watts_System_Screen_Setup.swf

[jimbob42 10]

Thanks for the video. Looks interesting.

How is his trading room after you get his program?

[swansjr 10]

Thanks for the video. Looks interesting.

How is his trading room after you get his program?

 

I have to say I only used the room a few times simply because I don't trade during the day and that's when the room is active. Right now, they are trading YM during the regular session. I trade early morning (:5:00am - 8:00am Central) on EC. However, the few times I've been there the people have been friendly and helpful. Watts is not in the room everyday day. But he does post which days he will be available.

[swansjr 10]

Day 24

June 18, 2009

 

No trades today as it was chop suey again. I did sit and watch the action from the 445 tick chart and made notes on how to handle this type of market. The 445 tick appears to give decent indication to turning points and with the help of divergences I may develop some rules to trade this chop. My initial mistakes with the system has been to always trade the same way - trend following. This works great some of the time, but then there is the other times (maybe most of the time) when there is more chop than trend. Scalping 7-10 ticks of profit appears very realistic.

 

I would like to formalize my ideas a bit more and during the next choppy session, trade it in simulation mode.

[brownsfan019 17]

I agree - that 6E just didn't want to move till later in the session. And of course I flattened my short position WAY to early...

 

If you are going to focus on the trend trading part and can avoid days like today, that's a winner in my book! Days like today are exactly what a trend trader needs to avoid or take minimal losses. So job well done there!

 

The next question or step would be - do you want to remain a trend trader only or can you identify days like today w/ consistency and then make some money there too? If you can identify range bound days like today, then it's a fairly easy trade - buy lows, sell highs. Easy enough IF you can decipher days like today vs. the big trending days that you know the 6E can deliver.

[swansjr 10]

Day 25

June 19, 2009

 

One trade. One winner.

 

Quick update on Friday's trading. Today I took a trade based off my mid-term chart and entered on the 89 tick. It was not a smooth ride but my target was hit. I continued to watch the price action on both timeframes.

 

It's been a busy weekend as I still need to review my setups and how they interact between my 89 tick and 445 tick charts.

 

P&L: $100

[swansjr 10]

I agree - that 6E just didn't want to move till later in the session. And of course I flattened my short position WAY to early...

 

If you are going to focus on the trend trading part and can avoid days like today, that's a winner in my book! Days like today are exactly what a trend trader needs to avoid or take minimal losses. So job well done there!

 

The next question or step would be - do you want to remain a trend trader only or can you identify days like today w/ consistency and then make some money there too? If you can identify range bound days like today, then it's a fairly easy trade - buy lows, sell highs. Easy enough IF you can decipher days like today vs. the big trending days that you know the 6E can deliver.

 

It's a good question. As described in the PDF from Watts, the system has two primary setups. First is a trend continuation setup where you buy/selling re-tracements within the major trend. The second is a counter trend setup when you try to enter when the trend is changing.

 

I've been focusing on the trend following aspect while observing the possible trend reversals as a curiosity. The thing is, a trending market is not always present and at first I would treat all price action as a trending setup. During a trending market the money came easy. But during not-so-trending markets, I would struggle. It's now dawning on me that the so-called counter trend setup can be adapted (with some modification) during these non-trending days to scalp reversals. I'm still reviewing this but it sure looks it has potential.

 

To answer your question directly if I can tell when the market is in a non-trendy mood, yes. At least, I think I have a basic handle on it. It's rather obvious at times based on how flat my moving averages are. The way the price moves is also different. Trending price action is a lot smoother and price moves away for the averages. In non-trending the price hugs the moving averages more and has a "choppy" look. Lots of false breakouts and tails. At times price is contained between my two moving averages as well.

 

By skipping non-trending markets I can keep my trend trades in the black. Yet, it appears that the choppy markets are just as tradable but you must change the way you approach it - something I've not been doing.

 

I hope to detail both concepts soon and perhaps get some feedback from viewers. I might be happy with simply ignoring trending days and using the trend setup. However at this time, I'm interested in become proficient at both.

[brownsfan019 17]

Good analysis so far in deciding whether to trade w/ the trend, against it OR both. Most people head in 1 direction, but that's not necessary.

 

Keep it going, good work.

[swansjr 10]

Day 26

June 22, 2009

 

No trades today.

[swansjr 10]

Day 27

June 23, 2009

 

Four Trades. One winner and three losers.

 

My gosh I traded like an armature today. :doh: Today's early morning session I found the market was simply melting upward. All my indicators pointed higher and it should have been a cake walk. But all those divergences spooked me into not taking action. What! We're on the 6th wave up. This is going to end soon. Up the market melted. The market trends longer than I often think it will and there is my problem once again. I was frozen because I was thinking too much instead of acting on my signals.

 

Once I did finally get the guts to push the button the inevitable happened. Two losers in a row as the market dynamic shifted. My rules state to stop trading after two losers. But I just had to put on one more trade to show mother market that I know what I'm doing as a trader. Smack! Three losers in a row. I could feel my emotions bubbling away and a little voice in my head stating, "The market is out to get me. It does not mater where you enter, you are doomed to fail. How stupid are you!" I walked away from the computer and did some other stuff.

 

Man, this month has been a rough road. I hope to learn from it. I know I can learn from it. But right now, I'm licking my wounds again.

 

P&L: ($210)

[swansjr 10]

Here is a 5-minute video on my basic scalping setups. The setup is designed to scalp within the intermediate trend.

 

Watts_Scalp_Entry.swf

[Bear Mtn. 10]

Thanks for the video Swans. Re: yesterday.. don't worry I think everyone who reads that post will be saying "yes, yup, been there, yep, done that" as you describe your day unfolding! I have been working on trying to do the last (hardest) part of just leaving the computer and market well alone without trying to take revenge, and I'm slowly getting there now....

 

Hope you have a better day today.

 

BM

[swansjr 10]

Thanks for the video Swans. Re: yesterday.. don't worry I think everyone who reads that post will be saying "yes, yup, been there, yep, done that" as you describe your day unfolding! I have been working on trying to do the last (hardest) part of just leaving the computer and market well alone without trying to take revenge, and I'm slowly getting there now....

 

Hope you have a better day today.

 

BM

 

Thanks! I agree that knowing when to step away and stop trading is a great skill.

[swansjr 10]

Day 28

June 24, 2009

 

Three Trades. One winner and two losers.

 

I actually felt I traded better today. My first trade was a loser that was an attempt to capture a trend change. I went long and like a lot of my trades my timing was off. I missed the low by just a few ticks - just enough to get me stopped out before the market moved without me. After that I needed time to mentally recover. Amateurish, I know. If I followed my mid-timeframe it sure looks like it would have done well. I just jumped the gun.

 

Missed bottom by a few ticks.

 

 

The next two trades were trend continuation trades.

 

During my next trade I decided to perform a video capture. I though talking my thoughts and recording it would be good both during the live trading and provide valuable trading review material. If you watch the video you will see I still hesitate to take my signal, but at the next opportunity I jump right in. This scalp trade would prove to be successful and I then re-entered (with no hesitation) on the next signal in order to capture a runner. It did not work, but my rules where followed very well on these last two trades. You can watch it here.

 

Live_Trading_2009-06-24_1.swf

 

My trading performance was better while I recorded myself. This may become a new habit.

 

P&L: ($95)

[swansjr 10]

Day 29

June 25, 2009

 

Three Trades. Two winners and one loser.

 

I recorded two out of three trades today. The loser was the one I did not record. It was also my first trade of the day. I can't say much about today other than I feel I followed the rules well. Attached is a recording of my second trade which was a good Long scalp. Then I used my higher timeframe to keep me out of a market which was now Bearish.

 

Live_Trading_2009-06-25_1.swf

 

On the second video I Shorted and captured a nice $200/contract runner. However being an idiot, I accidentally deleted the video. :doh: Oh, well. Here is a picture of the runner. I used a higher timeframe to help time the entry on both my successful trades. Using the higher timeframe has helped me a lot over the last two days. The only time it seems not to help is during a strong trend - which is not most of the time.

 

Solid Runner

 

 

P&L: $180

[swansjr 10]

Day 30

June 26, 2009

 

No trades today as most of my morning was busy with other obligations. The little time in front of the screen I did have resulted in nothing catching my eye. Hope to post a review this weekend.

[swansjr 10]

Day 31

June 29, 2009

 

One trade. One Winner.

 

Not much action in EC this morning but I did manage to get one scalp trade in. it did not take much heat but it sure advanced slowly. It was a long 8 ticks. Anyway, I really hope to review my lousy performance soon. Looking forward to the review so I can improve!

 

P&L: $100

[swansjr 10]

Day 32

June 30, 2009

 

One trade. One Winner.

 

Again, not much action in EC this morning but I did manage to get one scalp trade in.

 

P&L: $100