Busy Weekend

I'll be busy this weekend with the family. So I won't be able to do more posts this weekend.

I'll catch up Sunday night when I get back.

Trade Wise, Trade Well
John

My Top 10 List of Improvements

Market Pilot's Top 10 List of Areas to Improve My Trading

Well I have made my fair share of trading mistakes and then some. For some reason it has been easy for me to review my trading and determine all the mistakes I have been making. What has been more difficult for me was to STOP making the same mistakes over and over again. So you could say I needed to "learn from my mistakes" and not just identify them.

I feel that just reducing my mistakes will make a big increase in my profitability. You can tell that from my first few Trade Review posting to this blog. To help me reinforce what I'm working on and why I'm writing this Blog, I tried to collect my top 10 area to improve on. I hope this also helps others see and correct mistakes they are making.

1. Trade Selection - Be careful on trade selection after passing on a trade that ends up working. Stick with entry standards and rules and wait for the next signal. Don’t let emotions trick you into forcing a trade because you fear you are missing out.
2. Stop Management - Only place your stops at levels where you are willing to exit the trade. Give some room to the trades you think can continue to profit. Don’t place stops at arbitrary profit objectives, they are more apt to get hit sitting there.
3. Advanced Tactics - Don’t get fancy and kill winning trades by reversing a position or adding to a trade. Never add to a losing trade, and only scale into winning positions as an advanced tactic.
4. Let the trade work – Give new trades taken at valid entry signals some time to become profitable. Expect the price action to test the entry price, so don’t panic and close the trade too soon near break even when the market tries to squeeze out other stops.
5. Follow the Trend - Focus on the trend trade entry signals. Only take counter trend trades when there are monies in the bank that you are willing to risk. If having a bad day, or just seem to be out of synch with the market action, only take clear signals in the direction of the trend.
6. Continue to Manage Trades - Manage trades, take profits, or press stops to protect partial profits when counter trend trade signals dictate it. Remember, reversing a position at a counter trend trade signal is an advanced tactic. Be profitable before getting into more advanced strategies.
7. Pull the trigger, but don’t jump the gun - Have some patience; often the best entries come a minute of two after the signal is generated. Plan a good entry price and pull the trigger fast when your entry is offered.
8. Maintain Focus - Keep focused on the trade signals and the current trend direction. Constantly evaluate sentiment and market measures to have your feel for what price action is likely to do next. Minimize distractions for the time period you plan to trade.
9. Treat each Trade Uniquely - Manage each trade unique to it self and the current price action. Don’t let P&L decisions or prior loses change your trading plan.
10. Hope is not a Trading Discipline - Don’t get locked into a single course of action and "Hope" the trend will always continue. Be it long or short. Most days have tradable corrections. Watch and be ready for the short term trend changes. Trade what you “see” in the charts and not what you “Hope” will happen.

Trade Wise, Trade Well
John

Better - But Room to Grow

Friday 5/4/2007 ES Futures

How it went

Got off to a good start today. I felt much better about today. Felt in-synch for the most part with the market. I focused much better today and did a much better job at my trade selection. I had one issue with my charts. Something seems to cause my Volume based Investor/RT chart to recalculate and redraw. And when that happens I lose all volume breakdown indicator data for the current day. The indicators continue working on new data, but I have to re-download tick date to “rebuild” the indicators prior values. I hope Linnsoft can figure that out for me real soon.

It has been a while since I have had a day where the price action was this active and I took this few trades. All the other times I can think of were dead flat days that went nowhere.

I’m changing my format slightly. To try and save me some layout headaches, I’m going to list the trades all together in a single block and then have my thoughts and comments on each trade referenced below in a new Narrative section.

Trade Log of My Trades.

Trade Pos. Entry Exit Entry Time Exit Time Result
1A Long 1512.25 1513.25 5/4/2007 9:05 5/4/2007 9:11 +1
1B Long 1512.25 1514.25 5/4/2007 9:05 5/4/2007 9:30 +2
2A Long 1513.25 1514.25 5/4/2007 9:41 5/4/2007 9:50 +1
2B Long 1513.25 1513.25 5/4/2007 9:41 5/4/2007 10:08 +0

My Take Today

Captured Points +1, +2, +1, +0 = 4 Points

By simply managing these trades better and not taking any more trades, I had the option to double my profits. I managed too lose today and let some paper profits get away uncaptured.

Could have had +2, +3, +2, +1

Trade Narrative and thoughts about My Trades

Woulda Coulda Shoulda - Felt like just blindly buying 1509. We opened above this price and dropped down to it. This was such a strong level yesterday I figured we would at least get a tradable bounce there. Not really part of the plan right now so I passed. But I hate it when I’m right and pass up a good trade. May very well be the low of the day. :-( Have to trust your instincts sometimes.

Trade 1: A Good entry – As I watched some “high Risk” long entries go by my feelings of “Missing out” started trying to come back. I played some music, to sooth the savage beast, and just told myself to wait for the NEXT entry. Look, a good entry was provided. Price action made me sweat the entry for longer than I would have liked. But as I reviewed everything I was still confident I was in a good trade. It just needs to work. :-) I think I took the 1st half off too soon because of how long I had to wait for the trade to start moving. Then I tried to play lose on the second half to “let it run” and got stopped out at +2.

Trade 2: Houston we have reentry – I waited patiently for the next entry. There was a “weak” entry signal right after I got stopped out. The Volume Break down indicator tried to tease me into taking this one, but it really was not a good enough signal. I'll wait. Then there was a decent entry around 1513.75 or so. But wait… The last entry gave a secondary entry before it worked. I'll wait for one more push and take that entry. I got my entry, but I did it again. As soon as price stalled around +1 I took half off. I would have been better off if I just parked the stop “prematurely” at Break Even and let this trade work for better profits. After all, we are in a perpetual up trend and I have not been letting my longs run and I have been forcing too many short entries. Would have filled at +2 if I held. I hate to tell you this. Now I tried to let the 2nd half run and did not manage it close enough. Out at +0. :-

Hey Navigator, did we just miss our turn back there – Who is driving this thing anyway. Really messed up the last trade. Out too early and too late on the same trade. Missed all 4 of the clues.

1. We put in what could turn into a “lower top” just before 10:00 CT. Ideally this should have been a higher high if we were going to keep trading higher.
2. The Advance Decline is weakening and also not making a “Higher High.” The difference of the Advances and Declines has been trending lower for some time.
3. The NYSE Tick made a “lower low” thus far.
4. Volume started declining from 9:45 Ct until the 10:00 CT "Lower High."

Should I let this long trade try to run? You may be surprised, the answer is YES! But make sure it has a short leash with all of the above going against the trade. Always watch for the warning signs. I used too long of a leash and that one got away from me. At least I saw the clues before I tried getting long at 1513.25, but I need to get back in synch now.

Making Blog notes is helping me after I put on a trade with what I feel is a good entry signal. Typing notes helps keep me from second guessing the trade and actually makes me give the trade time to work. But I’d have to say it is hurting some as I’m not managing my trades as good (or close) as I should. I got caught thinking, let the market run to the “up side” when I should have managed the trades.

Flip a coin – A little after 10:30 CT and we are either trying to put in a turn back higher or we are trying to build up some steam to push lower. I have weak signals for both a long and a short in the 1513 area. I think I’ll pass and wait for the good signals and take them. No definite signs of a turn, so if anything I should be short. I had to say that to myself because I think I was starting to get to the point where I may have “forced” a long trade.

What did I miss – A lot! Technically it started when I passed up the short signal at what turned out to be the peak of my second long trade. You know the place where I should have protected some of the profits. The next few short signals were weak at best. There was a "should try" short signal just above 1511 that I missed in real time. Now I'm looking at a potential long at 1507.50 not ready to risk my (self minimized) profits yet.

You calling me short – I may not be real tall, but I should be short at 1509 or maybe 1509.25 for the entry at 11:45 CT. Step back; take a deep breath and focus. Now I spooked myself out of the last short thinking about the long I passed on. That long trade that is working so far. The 1509 area was troubling me too. It was so strong yesterday and now we are chopping back and forth around it trying to decide the direction. Now it looks like passing on that short trade was for the better.

Am I looking long now? – It’s getting close to noon, I’m leaning long again but the signals are saying be careful right now. I’d like to see the NYSE Tick press higher if we return to the upside. The last few NYSE Tick tops have been lower than I like to see for good sustained movement higher. So far there are no entries I like yet. Just a long under 1509 that should have had me protecting the short trade. (if I had traded it) Looking closer (a little late now) that long signal was at a re-test of yesterday’s Market Profile Value Area High (VAH). I think I missed a Long entry. :-(

Luke, Trust the Force – Just past noon. Price pushed back to 1509 again. What to do…. Feels like the market is trying to tempt me into a trade here. I passed. :-( It was a signal I should have taken. I’m having problems taking signals at these Market Profile levels. I don't know why. I should pass on other signals and wait for and take every signal at the Market Profile levels. In general, I need to trust my signals better. Especially signals in the direction of the trend.

Thoughts About Today

Reflecting back on today, while I felt in-synch, I did not act on enough of my signals. I started out good with the first two signals. Then I found myself starting to question the signals more and more and I’d have to say I started having feelings about not "giving back" what I have already made.

There were many more signals that I wanted to take and did not even list above. The worst signal would have produced a break even trade. Most entries had 2 or more points potential. I also lost focus or “checked out” this after noon a little early. When we were in the afternoon grind higher, I decided for the market that it was going to finish the afternoon too flat to trade. I prefer a bigger move or pull back to enter on and find these bigger moves to be more reliable at delivering profitable entries.

Lessons Learned - Or still needing to reinforce

Almost feels now like there are too many lessons to list. Well here goes:

1. Take each day and that day’s signals with the market action they produce.
2. Don’t let thoughts of mistakes already made, especially mistakes on prior days, take away from your focus on the market.
3. Every entry will not be perfect. Take more continuation entry signals in the direction of the last trend.
4. Trust the signals you see and consistently take the signals as presented.
5. Maintain focus, or let go of any trades that you “could have” taken.

The Biggest lesson today – My biggest take away today is combining focus and trust. I let myself get distracted with Blog notes and did not maintain enough focus on “what trade would you put on right now if you have to make a trade.” With good focus, I should have the anticipated trade direction "of the moment" in my head and just be waiting for confirmation to enter a trade or invalidation to pass on the trade and look for the next signal. This may be in my words, but this comes from reading the TraderFeed blog. Brett Steenbarger does an awesome job with his blog and Weblog. I think there is something there every trader needs to help them with their trading.

I’m not sure I found the blog entry I was thinking about. But in my search I was reviewing many of the great posts on the TraderFeed blog site. Here are several that I ran across, remember, and highly recommend every trader review, then review again. I'll go back through them.

Three Relentless Steps You Can Take Now Toward Becoming A Better Trader

Four Overlooked Qualities of Successful Traders

Five Guiding Principles of Trading Psychology

Six Keys to Trading Success: Lessons From a Successful Trader

Back to today. I think I started filtering out trades because I wanted to protect the profits I already earned. While I did not make any really bad mistakes today, I did not manage my trades well. I did not protect my paper profits in these first trades. I “Hoped” the market would just keep going in this perpetual up trend mode. As noted above, I could have doubled my take today just by managing these first trades better. We better not talk about the trades I did not take that would have worked. I have all weekend to try and forget.

On the positive side - I did not trade in the choppier part of the afternoon. It is too easy in these periods to “think” you need to jump on a more “before it gets away” when you should be waiting for your entry price or pass on the trade and wait for the next entry.

Trade Well, Trade Wise
John

Take the good with the bad

Thursday 5/3/2007 ES Futures

How today went

A couple of things had me off my game today from very early on. The biggest item was troubles with my data feeds, both for my charts and Ninja order entry. Usually I can depend on the Ninja Dome to “tell me what” is really going on. Well I’m not sure, but I hope today was a fluke and not related to my upgrade last night to the production release of version 6. I had been running Beta 8 without issues up to now. Hmmmm.

Or was I up too late last night starting a Blog. :-)

Anyway, I spent too much time after the reports came out comparing the Charts to the Dome trying to figure out what was happening. Or more importantly, what was accurate price action when I should have been watching my signals closer. When I realized I had a signal, it took too long to evaluate the signal and comparethe Dome to the Prices on the chart. I missed several good moves after the ISM reports came out. The trades ran away from me while I scrambled to verify.

I never felt “in-synch” with the market today. I was overly cautious from the reports until the end of the day.

Trade Log of My Trades.

Trade Pos. Entry Exit Entry Time Exit Time Result
1A Long 1503 1504 5/3/2007 8:49 5/3/2007 8:53 +1
1B Long 1503 1504 5/3/2007 8:49 5/3/2007 9:01 +1

Good Entry – One of my "Need to take" entry signals. Took the first half off early since I had yet to decide if this was the start of a trend change or just a counter trend teasing me by looking like it will work. This was were the first occurrence of my data feed issues started. Shortly after the reports came out, Ninja Dome froze. It made me press the stop at just the wrong time. The early stages of the report price movement knocked me out at +1 point. Prior to that, my stop was at break even and I had the possibility of getting 2 – 3 points if I pressed the stop at the right time.

Trade Pos. Entry Exit Entry Time Exit Time Result
2A Long 1504.75 1506.75 5/3/2007 9:39 5/3/2007 9:44 -2
2B Long 1504.75 1506.75 5/3/2007 9:39 5/3/2007 9:44 -2

Not a good idea – Bad read, bad hold, just a bad trade all the way around. While this could have turned into a “Lower High,” price also just put in a “Higher Low” just before this possible entry. I think I was leaning short after the report release. While there was a large “Buy Volume” spike in the 9:01 CT candle, it had been 40 minutes now without strong signs of continuing this up trend. There was a small clue at 9:28 and 9:29 that should have also kept me out of this trade. See it? Well… “Hope” killed this trade, or should I say my P&L. I felt I was in trouble when price popped up to 1506. The picture was becoming clearer, but I was already in this trade. What do I do. Price pressed back down and I could have closed out for less than a 1 point loss. “Hope” springs eternal, but not in trading. I could not hope hard enough to make the market actually go down. :-( I should have tightened the stop some at a minimum. Err.. Mistakes... mistakes on mistakes.

Trade Pos. Entry Exit Entry Time Exit Time Result
M1A Long 1504 ? 5/3/2007 9:37 ? 2 or more
M1B Long 1504 ? 5/3/2007 9:37 ? 3 – 4

Missed trade – Frankly, I should have bought the “Higher Low” before even trying this short. Then I would be holding a Long and "letting it work" for me and not taking the prior short trade. Makes for a bad P&L swing. This trade should have profited even more than the last trade lost.

Trade Pos. Entry Exit Entry Time Exit Time Result
3A Long 1507 1508 5/3/2007 9:47 5/3/2007 9:58 +1
3B Long 1507 1508 5/3/2007 9:47 5/3/2007 9:58 +1

Better get Long – Not my preferred entry setup, but the longs entries of late have not been pulling back and giving me an “ideal” entry setup. But the market has had no troubles going up lately. I have decided I have to take what I can get and not be so picky on the entries. I covered this trade when I had a strong short signal and at the same time we were up against a Market Profile level at 1509.

I'd like to think some day I'll actually reverse my position at these signals, but for now I need to eliminate mistakes and not introduce more by reversing my position. Too many bad memories of failed counter trend trades come to mind.

Trade Pos. Entry Exit Entry Time Exit Time Result
4A Long 1507 1508 5/3/2007 10:05 5/3/2007 10:25 +1
4B Long 1507 1508 5/3/2007 10:05 5/3/2007 10:25 +1

Lets try that again – Well, it looks like we want to make another run at the 1509 level to try and get through. Long again. :-) We went up on really light volume, when I did not see big volume that I felt could press us through 1509, I protected again.

Pass – Decided I was not trading at top form today so I should pass on some trades as I had to leave soon to pick up my daughter from pre-school.

Trade Pos. Entry Exit Entry Time Exit Time Result
5A Short 1505.25 1506.25 5/3/2007 11:51 5/3/2007 11:54 -1
5B Short 1505.25 1506.25 5/3/2007 11:51 5/3/2007 11:54 -1

What is the Rush – Well… right when I got back I wanted to know what I had missed. (I had missed too much already) The short trades I considered before I had to leave had worked. I missed out… so I felt. So lets dream a reason to be short and get into a short trade before this market keeps going without us. Wait… That usually does not work. Click… I’m in a trade. Not good. :-( It did not take long again to figure out I entered at a bad price and really did no have a entry signal. I just wanted to (already) be short.

Trade Pos. Entry Exit Entry Time Exit Time Result
6A Short 1506.5 1505.5 5/3/2007 11:56 5/3/2007 12:24 +1
6B Short 1506.5 1505.5 5/3/2007 11:56 5/3/2007 12:24 +1

Revenge is bitter sweet – My next trade probably needs to be labeled a “revenge trade” as I jumped too quick again wanting to get my prior loss back. I have a valid entry signal, I tried to wait and feel confident about the signal, then jumped on as price looked like the trade was going to move lower. What I did was jump on the head fake before the stop run that made the swing high. This last push higher would have also provided me the entry price I was targeting at 1507 – 1507.25. When we started forming a long signal I pressed the stop and harvested 1 point. There was not much more in that trade. Just a couple more ticks.

Trade Pos. Entry Exit Entry Time Exit Time Result
7A Long 1506.75 1508.75 5/3/2007 13:38 5/3/2007 14:00 +2
7B Long 1506.75 1508.75 5/3/2007 13:38 5/3/2007 14:31 +2

One more – One more setup to take. Look at that nice stop run to get long off of. I jumped back in too fast. Needed to use my Volume Delta to judge when to get in. There were two pushes down and I’m ended up getting long at the hesitation or the end of the first push. Price moved a point lower on the second push. I took the first half off at 2 points. I wanted to let it run more. I thought if we break 1509, it could be "off to the races" and lets go with all our contracts. :-) But when it looked like price was coming back I was not going to get less than 2 on my first half. Need to lock in some profits to make up for earlier mistakes. Hoped (again) that the second half could ride a push through 1509. No go. After 15 minutes of knocking on the 1509 door, I decided I had enough. Pressed my stop to +1 and placed the target at +2 to see which would win. +2 it is.

Had enough roller coaster ride for today.

Thoughts About Today

The market certainly did its job today. That is to trick me and as many other traders as possible in order to extract the greatest amount of cash. Maybe it is just me, or did others have a harder day today as well. I need to take more of my signals and let the chips fall. This could have worked quite well today, up to the points where I started chasing or forcing trades.

Lessons Learned - Or still needing to reinforce

Well, I did gross 6 points per contract. I know… sort of per contract as I enter with a full position risk and will exit half of the trade early and try to hold the second half for more gains. Most of today’s profits are from my final trade.

My problem today is that I missed more profitable trades than I captured. These days seem to turn into my worst days as I start feeling like “I’m missing out” and my trade selection standards seem to drop and I start "forcing trades" that I should not take. Today I gave back half of my profits to the market on trades that I should have had no problem filtering out.

I truly hope that I don’t need to post this lesson again, but I'd have to say that this is on my top 10 list of things I need to correct in my trading.

Trade Well, Trade Wise
John

Jump On

Wednesday 5/2/2007 ES Futures

I knew the image quality would not be the best. But by clicking the chart to open full size I did not think it was too bad. Let me know if I should break the charts into multiple images to show more detail.

Well... I had a hard time getting long today. I should not have. There were three to four entry signals on the way up. But the market was strong enough that the pull backs were mostly non-existent. My preference is to have a descent pull back to go with the signal.


So I watched too much opportunity go by before realizing that I'd have to "jump on" and "Trust" one of the signals would not have a retracement deep enough to stop me out.


My default stop is 2 points and my initial target for the first half is 2 points. I have to be careful to let my profits run or when mistakes are made I'm risking getting a full stop out on my complete position. I'm struggling trying to decide 2 things:

1. Should I scaling into a position? Putting partial positions on at consecutive entry signals. The risk would be that the market does not give a second entry signal.
2. Could I make more profits but not scaling out of my position? The risk here is that mistakes are more costly because you start with a full position.

For now I, it feels better to lock in some profits and work on maximizing the profit latter.


Trade Well, Trade Wise

John

Nice Signals

Monday 5/1/2007 ES Futures

Here is my first chart. I apologize in advance because I expect that it will be very hard to "see" everything in the chart. But I have to start somewhere and see what it looks like. I may have to break the day up into 2 - 3 charts to view the details better.

For now I'll say that you should notice up to 8 markings on the chart. They are:

1. Red Down Arrow Big
2. Red Down Arrow Narrow
3. Red Dot
4. Red angled Line
5. Green Down Arrow Big
6. Green Down Arrow Narrow
7. Green Dot
8. Green angled Line

Only the lines were manually drawn in by me to note signals that are not coded yet. The big arrows are drawn close to the close of the candle they highlight and may no longer be valid (and disappear from the chart) by the close of a candle. The dots and narrow arrows are definite signals as of the open of the candle they mark.

I hope it is obvious. The Red indicators mark short trade entries and the green mark long entries. Yes, yes, I know. I can not take all of these signals or I'll get eaten alive. But my broker would love all the commissions I'd generate. :-) I'm working on my definition of trend and filtering the trades to only take (and eventually display) trade indicators in the direction of the trend.

One of my worst habits was to try to take every signal. Because that will give me the most profits right.... WRONG. Often the NEXT signal would be a counter trend trade. Then (at first with out realizing it) I'd manage to get myself locked into a series of counter trend trades.

So I take the next trade signal. Now I try to let this trade run until I think I should take some or all of the profits. If the trade is a counter trend trade, price action may go in my favor some. I may even justify taking some initial profits on part of the position, but the price action is coming back against me and will stop out some or all of my trade.

A good counter trend trade will go far enough to justify taking some profits and "protecting" the remaining contracts at break even. So would this have been a good trade? Just think about what happened.

When the first trade is counter trend, I pass on the next signal (with the trend) wanting to let the trade I'm in run for more profits. The markets come back against me and stops me out. What is the next signal....

Well.... It will be another counter trend entry. So by taking EVERY signal when I don't have a position, I could end up fighting the trend all day if I was not careful. And what will eventually happen, you get to the point where price makes the exponential move. Only this time it is going against you and may not have gone in your favor much at all. You are stopped out on a full position.

So now I just want every signal in the direction of the trend.

Trade Wise, Trade Well

John

My Trading Software

First the mandatory I have no relation or affiliation with the following products. This is just to answer the question before someone asks.

Charting

I use Investor/RT from Linnsoft.com as my charting package. I started with a different software package and just got too frustrated with limitations. IRT is very powerful and efficient package. Before I switched I felt I needed to upgrade my PC. Now I have more charts with more complex indicators and I use less CPU than my old package.

The main reason I switched was to get the Volume Breakdown capabilities and the Market Profile features. I have not got into writing systems for back testing. If I can code enough of my entries, I look forward to being able to utilize that capability too.

Order Entry

I quickly realized that I was lazy. (like I did not already know that) I need my order entry software to place and help manage my stops. I decided that Ninja Trader was a good platform for my tastes. I have upgraded to the new version 6, but I don't think I'm going to get into their charts any time soon. It is an add-on to get the Market Profile capabilities. I'd love to trade from the Chart, but that will have to wait for now.

Ninja also has a great simulation capability. I needed this to help me work through my over trading and refinement of my trade filtering. Before Ninja, I could only "Burn and Learn" as I worked on different trade entry setups. Things "look different" in real time. You get to see candles and indicators forming, but things can change by the time a candle closes. So even after reviewing many historical charts, a trader should start in simulation.

I know of people that will sim trade at least a day when they get back from a vacation to make sure they are back in synch with the markets before putting real money on the line.

Trade Wise, Trade Well
John