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re: DAX - The standard deviation not a good place to initiate trades. A horizontal value area will usually evolve around here. The HVN at 5876 is a buy, retracement on light vol, the horizontal delta on the retracment is about even. Your other DAX chart you posted is the right method. Initiating trades around the 2nd deviation, HVN 3 ticks from the high trapping buyers, large sellers hitting the bid. Good follow thru. Always easy to spot in hindsight. Keep up the studies.
I didn't have time to post yesterday but in the US Morning session yesterday I did rather poorly. I was -$400. I determined that -$340 were mistakes that were not consistent with my trading plan. Do I really have such a discipline problem? I studied my mistakes and I can attribute them to the following:
- being sloppy. I didn't verify all my criteria and pay attention to each one to analyze it
- my criteria may be a bit too complex and therefore hard to implement in real time (especially for CL which moves quite fast)
- being distracted. I was in a trading room at the time and was more focused on that.
I don't want to make excuses but I just need to know what's going on. So to combat that, I'm writing out my criteria on a piece of paper and will use this to verify all setups. If I'm listening to something else I'll turn the volume off when I evaluate a setup.
I think these two steps should eliminate these problems.
Also my second target is consistently outperforming my first target. So that's good news. I'm still working out how I want to do that. I'm currently using target = risk for a 1:1 ratio. My first target is usually around 14 ticks and the second 25. I'm considering moving the first to 10 and then once it's hit stop goes to -10. But to make such a change I have to go over all my backtests and my recent trades to study the impact. Trading is hard work. Fortunately I have everything in excel which does help. The other option is to go back to sim and test it in real time for a week.
Thank you for the comments. I currently do not have a rule preventing me from taking trades around the 1st band. Do you think I should add this rule? I will go over my backtests and recent trades and see if I can come up with more info on this. I thought the 1st band was Ok.
The 2nd band seems to be a better bet, but one thing I've noticed is that sometimes price reaching the 2nd band means it's a strong move. i'd like to learn more about this.
I stopped swing trading ES when I went full time in January. Mostly because without a guaranteed income I didn't want to take high risks (usually $1-2k for a swing trade), but also because the rally just wouldn't die so I didn't want to short it yet it was so far extended I wasn't interested in the long side. So it was best to sit out. That took off a lot of pressure and let me focus on my day trading.
This is a do or die here. We're making a double top. And showing weakness on the way up. If you look at Better momentum there is bearish divergence. If you look at the previous high on the left side you'll see the same bearish divergence. The big cyan dots are exhaustion volume. We haven't gotten one yet. We don't always get one but it's nice when we do. That implies all the buyers have bought and there's no one left to lift prices.
Also note yesterday made a new high but closed off the high. We ran into supply. The day before is yellow meaning amateur trading (small trade size) but the range was small so that could mean pro's fading the move.
The only reason I'm not ready to go short is because of the cycles. We're in a breakout on all 3 timeframes. The next thing that will happen if price goes down is that the 45min will go into an up cycle followed by the 135min. This would go for a retest of the high. You can see the previous high was tested twice making a triple top. It's doubtful that yesterday's high would not be tested at least one. As I said, this rally won't die.
So I'm going to be patient and keep watching. A breakout above the previous high at 1147 would bring in a lot of long breakout traders which could give us the volume exhaustion I want to see and also give the professionals a wave of buying into which they can sell. We'll see how this plays out.
For some hindsight trading, the breakout of the current up cycle happened simulataneously on the daily & 45min chart on 3/1. That was a great setup. The risk was 17 pts (putting stop under the bar before the breakout + 2 pts). That's a $2550 risk for me (I trade 3 contracts for ES Swing trades). You can see why without a job that that could be stressful! I always take 1 off on the way up and the target would have been 1045, 2 pts under the previous high. So Reward 34 risk 17 that's a 2:1 trade. Those are the trades I like to take. But I was on vacation and didn't even have the opportunity to consider that one.
I didn't take any trades today on the European morning session. There was a Euro setup that I missed due to data problems. By the time I reloaded my data it was too late. That's a bummer and I'm seriously considering using IQFeed for this.
I'm proud to say that I didn't take any other trades because my rules didn't give me any more setups. So I focused on watching the markets and studying the ladder.
For the US session, I only got 1 setup on CL and that stopped out. It was a short just before CL's explosive move up. I didn't do anything wrong and that happens. I didn't get any other setups so I focused on scalping CL. This is something I've been working on and off for many months now. Only this time I'm working on using the ladder.
They all looked something like this:
here's the p/l for the scalping test trades:
The basic idea is to scalp CL while waiting for bigger setups, and to also use the same scalp technique to enter the bigger setups. so for now I'm practicing with just one target which is +10 but I will take profits if I see S/R forming.
ES tested the top and it got rejected pretty hard. Now I'm looking for some regrouping and another test of the high.
Not much bite on the timeframe post so here's what I think:
timeframes are just a way for us to break up a continuous stream of data to make it easier to analyze it. timeframes shorter than 1 day are artificial. a daily & weekly timeframes are determined by natural phenomena but when we get intraday it's us who decide how to compartmentalize it.
when we compartmentalize it, that can help us to see what's going on. in my example, a 5min will show a "trend". what's going on in that pullback? a 50 tick chart can show a different view. in the 5min it's a pullback in a trend. in the 50 tick it is a trend. there are unlimited timeframes, bar types, and bar sizes. and they're all going on at the same time. This is what I meant when I said the markets are fractal in the market cycles thread.
btw what's a trend? generally it's a sequence of higher highs and higher lows for an uptrend. but that depends on how you compartmentalize the data! so can we say a trend is an illusion?
The big traders who move the markets are trading off price. they're not using charts. They know what price they want and they find a way to get it. As small traders we compartmentalize our data so that we can understand it better. But that can lead us to see things that are not there. And if you pile indicators on top of things that are not there, you'll be really messed up.
