Road to Mastery

Could you tell me how you're managing the trades? R/R, exiting, etc? Thank you for starting the journal. 

Postado por: Mr. Carpet

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Could you tell me how you're managing the trades? R/R, exiting, etc? Thank you for starting the journal. 

I use an RR of 1:1. Assuming there's a 60% probability of my take-profit getting hit before my stop-loss (60-40 rule), this results in a positive traders equation. In the past when I traded forex, there have been too many occurences of the trade going in my favor and then turning against me. That's the reason why I scalp and don't swing.

Ideally I risk max. 0.5% of my capital per trade and take max. 2 trades per day. But as I am trading with such a small account, this is not possible.

I always enter on stops. Prior to taking a trade I decide where my stop-loss order has to go. Based on that I decide where my take-profit (limit) order has to go, i.e. an equal distance from the entry to the SL.

For long trades I place the stop below the most recent swing low. If the signal bar is a breakout bar, I place the stop below that bar. Vice versa for short trades. I don't have the paid version of NinjaTrader yet, so I cannot use the advanced trade management (ATM) tool. Therefore I put the orders in manually.

Trade #6

13-Feb-2023

-3,5 pt

The 2,000 tick chart is too slow for me. On the other hand, the 500 tick chart is too fast for me. So I decided to go with the middle ground, the 1,000 tick chart, in which I feel comfortable.

Trade #7

14-Feb-2023

-4,25 pt

The entire time I was waiting for a two-legged pullback, that didn't come. I took the trade out of hope, and was not being objective. After the trade I felt depressed.

In addition to trade #7 (because I'm unable to edit the comment): Al says "don't take the dumb stuff". I took the dumb stuff. There were no logical arguments for getting into this trade.

Trade #8

15-Feb-2023

+2,5 pt

Postado por: Rembrandt van Rijn

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In addition to trade #7 (because I'm unable to edit the comment): Al says "don't take the dumb stuff". I took the dumb stuff. There were no logical arguments for getting into this trade.

 

Trade #8

15-Feb-2023

+2,5 pt

-- attachment is not available --

Why do you say there were no logical arguments, it was a BO from a tight bull channel (not drawn on the chart) so a test of the high was quite probable (and it did), and you bought above a bull bar COH. So if you used a wide stop, this seems to be a good enough trade. It was also a 20 gap bar buy.

If anything I think you got out early, probably because you thought you were in a bad trade. Coz you entered on a wedge bull flag, 2nd leg was expected. But the second leg sell signal happened almost  at the same price at which you got out, so you didn't lose out on any profit, except for a short trade that could have been taken at the 2nd leg top (& test of the HOD)

Postado por: Shubh Pach

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Why do you say there were no logical arguments, it was a BO from a tight bull channel (not drawn on the chart) so a test of the high was quite probable (and it did), and you bought above a bull bar COH. So if you used a wide stop, this seems to be a good enough trade. It was also a 20 gap bar buy.

If anything I think you got out early, probably because you thought you were in a bad trade. Coz you entered on a wedge bull flag, 2nd leg was expected. But the second leg sell signal happened almost  at the same price at which you got out, so you didn't lose out on any profit, except for a short trade that could have been taken at the 2nd leg top (& test of the HOD)

Thank you for your view on the market Shubh. Maybe I was being too hard on myself. Just to be sure, you were talking about trade #7, right? I got the impression you were talking about trade #8.

Anyway, the reason I think trade #7 was bad is because it seemed likely we were entering a trading range. After the break of the (lightblue) trend line the market formed a higher high, wich could lead to a major trend reversal, even though the final leg was strong, perhaps exhaustive. The first leg in the new trading range (from 19:18h to 19:27h) contained many bear bars, although it could just be considered as a deep correction, increasing the likelihood of going sideways. At least no swing low was taken out yet. The place where I got long could be viewed as the start of the second leg, almost creating a leg1 = leg2 move down.

I was so upset because I didn't stick to my plan. I only want to take the 'easy' setups. The ones out of the book, that scream BUY!! or SELL!!

At any given moment there are smart buyers and smart sellers. I find it very difficult to asses whenever I screw up due to either a mistake of my own or the two-sided nature of the market. The outcome is both the same.

Trade #9

17-Feb-2023

-4 pt

Postado por: Rembrandt van Rijn

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Postado por: Shubh Pach

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Why do you say there were no logical arguments, it was a BO from a tight bull channel (not drawn on the chart) so a test of the high was quite probable (and it did), and you bought above a bull bar COH. So if you used a wide stop, this seems to be a good enough trade. It was also a 20 gap bar buy.

If anything I think you got out early, probably because you thought you were in a bad trade. Coz you entered on a wedge bull flag, 2nd leg was expected. But the second leg sell signal happened almost  at the same price at which you got out, so you didn't lose out on any profit, except for a short trade that could have been taken at the 2nd leg top (& test of the HOD)

Thank you for your view on the market Shubh. Maybe I was being too hard on myself. Just to be sure, you were talking about trade #7, right? I got the impression you were talking about trade #8.

Anyway, the reason I think trade #7 was bad is because it seemed likely we were entering a trading range. After the break of the (lightblue) trend line the market formed a higher high, wich could lead to a major trend reversal, even though the final leg was strong, perhaps exhaustive. The first leg in the new trading range (from 19:18h to 19:27h) contained many bear bars, although it could just be considered as a deep correction, increasing the likelihood of going sideways. At least no swing low was taken out yet. The place where I got long could be viewed as the start of the second leg, almost creating a leg1 = leg2 move down.

I was so upset because I didn't stick to my plan. I only want to take the 'easy' setups. The ones out of the book, that scream BUY!! or SELL!!

At any given moment there are smart buyers and smart sellers. I find it very difficult to asses whenever I screw up due to either a mistake of my own or the two-sided nature of the market. The outcome is both the same.

 

Trade #9

17-Feb-2023

-4 pt

-- attachment is not available --

 

Hi, Yeah my mistake, I was talking about Trade#8.

Just checked Trade#7 and yes it was a bad trade, you basically bought at the high of a TR. When the EMA is at the middle of the bar, it is usually a good idea to wait for one more bar, unless (because there are always exceptions, otherwise how would the market confuse traders 🙂 ) the move preceding the bar has had good momentum behind it (3 or more trend bars).

According to me it is not that hard to realize if you made a mistake or if the 2 sided market caused the loss. Firstly, when in confusion, I always assume that I made a mistake.

Secondly, if the culprit is 2 sided nature of the market, it won't surprise you, or disappoint you because you already had envisioned that as one of the ways the market could go. You had already considered that option and placed your trade accordingly. 

As you correctly said, the outcome is same in both the scenarios, but one's reaction to that outcome is quite telling for the trader.

Hi Rembrandt

Thanks for sharing with us!

Looking at your trades you tend to be buying high, selling low so I understand you opt for scalps. I wonder if it is a sound strategy. Your trade management doesn't seem consistent either, if you plan to scalp I would suggest to exit with a limit order, not a stop order. The threat is real that you get back to Breakeven.

I'm a noob but - as you (also) seem to be trading a modest account - I would strongly suggest to do it the other way and use a wider stop and go for a swing; i.e. at least 10 points. Even the most narrow Trading Range days have a range of at least 30 to 40 points; if you're lucky, and have the stamina for it, you can squeeze 50 to 60 points. Even with a small contract that is a far more profitable (and probably less mentally taxing) approach.

Most days are a Trading Range day, so go for the lower third buy zone to go long, higher third sell zone to short. Try to avoid also trading during the lulling hours, in particularly scalping with stop orders (both entry and exit) in those hours are very difficult (i.e. impossible).

I have to try and combine my (Dutch) office hours with  trading as well. I try to catch the opening hour (actually 2 hours, depending a wedge bottom/top needs to form, which can take 18 - 24 5min candles). Next decent and often reliable opportunity for scalp/swing is midday reversal (Dutch hours around 18:45), and/or the last hour (21:00).

Below my trading last Friday, with in Blue my enter and in white my exit trades (green and red other reasonable trades which I could but did not take). 30 points swing with (in total) 3 Micro contracts.

All best, Sybren

Postado por: Shubh Pach

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Hi, Yeah my mistake, I was talking about Trade#8.

Just checked Trade#7 and yes it was a bad trade, you basically bought at the high of a TR. When the EMA is at the middle of the bar, it is usually a good idea to wait for one more bar, unless (because there are always exceptions, otherwise how would the market confuse traders 🙂 ) the move preceding the bar has had good momentum behind it (3 or more trend bars).

According to me it is not that hard to realize if you made a mistake or if the 2 sided market caused the loss. Firstly, when in confusion, I always assume that I made a mistake.

Secondly, if the culprit is 2 sided nature of the market, it won't surprise you, or disappoint you because you already had envisioned that as one of the ways the market could go. You had already considered that option and placed your trade accordingly. 

As you correctly said, the outcome is same in both the scenarios, but one's reaction to that outcome is quite telling for the trader.

Dear Shubh, thank you for sharing your knowledge with us. I will keep in mind your point about knowing when a mistake is made. Regarding the MA being at the middle of the bar: often the setup looks too enticing not to take the trade, like in the trade below. Next time I know to show a little patience and see what the follow-up bar does.

Postado por: Sybren B

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Hi Rembrandt

Thanks for sharing with us!

Looking at your trades you tend to be buying high, selling low so I understand you opt for scalps. I wonder if it is a sound strategy. Your trade management doesn't seem consistent either, if you plan to scalp I would suggest to exit with a limit order, not a stop order. The threat is real that you get back to Breakeven.

I'm a noob but - as you (also) seem to be trading a modest account - I would strongly suggest to do it the other way and use a wider stop and go for a swing; i.e. at least 10 points. Even the most narrow Trading Range days have a range of at least 30 to 40 points; if you're lucky, and have the stamina for it, you can squeeze 50 to 60 points. Even with a small contract that is a far more profitable (and probably less mentally taxing) approach.

Most days are a Trading Range day, so go for the lower third buy zone to go long, higher third sell zone to short. Try to avoid also trading during the lulling hours, in particularly scalping with stop orders (both entry and exit) in those hours are very difficult (i.e. impossible).

I have to try and combine my (Dutch) office hours with  trading as well. I try to catch the opening hour (actually 2 hours, depending a wedge bottom/top needs to form, which can take 18 - 24 5min candles). Next decent and often reliable opportunity for scalp/swing is midday reversal (Dutch hours around 18:45), and/or the last hour (21:00).

Below my trading last Friday, with in Blue my enter and in white my exit trades (green and red other reasonable trades which I could but did not take). 30 points swing with (in total) 3 Micro contracts.

All best, Sybren

Hoi Sybren, nice to see a fellow Dutchie on the forum. I do use limit orders to take profits and stop orders to cut losses. With regards to placing your stop: I cannot afford a stop-loss 10 points away from my entry. Besides, I would have to change the strategy that I want to develop, namely buying H2s in a bull trend and selling L2s in a bear trend. With this strategy you're always buying at resistance and selling at support, betting that the breakout will succeed and the trend continues. The trading hours don't matter that much in my case, because I'm using a tick-chart. This makes the time factor less relevant. I have to say, the trades in your chart look quite impressive... How far are you on making the switch to full-time?

Trade #10

22-Feb-2023

-3,75 pt

Hi Rembrandt, it is great indeed there´s Dutch among the Brooks community. 

You are right, every personality develops a different approach to the market and trades accordingly; that's what this venture makes so addictively appealing. No laws or rules, just common sense and robust mind management.

I'm far from being able to sustain me financially exclusively through trading, but I am determined to extract enough from the market to make my office job this year a part-time affair (working basically 2 full-time jobs on the longer term is not sustainable). There's a lot to work on still, mostly building more confidence (more leverage) and reducing costly and unnecessary mistakes (my scaling-in tactic is improving, but demands a better understanding of the difference between a trending from a trading leg....;-)). 

Realistically, I need more flight hours (so far trading + studing ~ 3000 hrs, I expect at least 10.000 hrs) and improved management skills to comfortably go for full-time trading. Luckily time is on my side so no pressure but my own drive to work like a horse and continue pushing boundaries.

All best on your trading journey!

Sybren

Sybren, thank you for the inspirational words. Although I'm definitely not in a position of authority, I think once someone finally finds their style or niche or whatever you want to call it, they should exploit it as much as possible. You seem to have found it. Good luck to you too!

Trade #11

1-Mar-2023

-3,75 pt

Trade #12

11-Apr-2023

-3,75 pt

I am trying to create a routine of making a screen shot at the end of each trading day and mark the chart up. This should train my eyes on recognizing patterns as they unfold in real-time. Attached are the images, converted from a PowerPoint, for March. (Despite the notes being in Dutch, I think most people will get the gist of it.) I also want to implement the following rules:

• Only take a trade when I recognize a particular setup from my chart collection;
• take one trade per month so I don't have to pay my broker's inactivity fee;
• repeat this until my account reaches its original amount.

Hi Rembrandt,

Am I correct in seeing that you're placing your stop loss just below the signal bar?

I believe that is not the correct place to put a stop loss.

The stop loss should be placed below a prior major swing point (major higher low in a bull trend).

For example, like this: