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I got this idea from Dr. Steenbarger's The Daily Trading Coach, which is an excellent book.
How to use the ATR: So if you trade a 30 min chart, set the ATR to 20 periods and you will see the average range of the 30 min bars over 20 periods. This gives you an idea of the volatility in the 30 min period. so if the result is 20 points, and you your target is 50 points away, you might want to have a stop that is 20 points or greater to avoid the market volatility. There are other items such as support levels and swing lows & highs that should be considered. The idea behind this tool is that you can adjust the stops based on market conditions rather then using a fixed stop for all conditions and being stopped out when the markets become volatile. You can also use Volume for reading volatility. You don't want to get chopped to pieces because of volatility or noise.
I suggest you take a look at some threads and learn how different people place their stops.
Can you help answer these questions from other members on NexusFi?
These are my trades for the day. I had 1 winner and 5 losers. Yeesh. Learned a lot though. This is just the beginning.
The first picture is a picture of the day with the major trend lines.
The second picture is of trade 1.
The third picture is of trade 2,3,4.
The fourth picture is of trade 5,6.
Yellow circles are sells. Blue circles are buys. So if a yellow circle comes before a blue it was a short attempt, if a blue comes before the yellow is was a buy attempt.
Every trade I took today had a stop loss of 3 points and a profit target of 3.75 points
Time to review.
Trade 1: Should not have taken this trade at all. Don't know what I was looking at. I didn't use the major trend line. There was absolutely no reason to take this trade, especially a short.
Trade 2: First entry short attempt. Was a solid scalp. Was my only win for the day.
Trade 3: Was looking for the downtrend to start without first being given a signal. There was no break of a major trend line. Should not have taken this trade.
Trade 4: Same as trade 3
Trade 5: Major up trend line was broken. Down trend started after retesting the high. Break out occurred. Was looking to fade the break out planning on it being a false breakout because trend was moving down, so that would have been a counter trend breakout. Break out was successful so the trade got stopped out.
Trade 6: Tried to fade the break out again and got stopped out again.
What I learned today
Don't fight the trend
Draw your major trend lines first!!!!
Create trading rules (ex: Max 3 losing trades per day)
When prices are above the 21 EMA, generally you should take long positions
When prices are below the 21 EMA, generally you should take short positions
-$180
Picture one is an overview of the day
Picture two shows a closer view of my trades
Orange circles are sells/shorts, blue circles are buys/covers
Trade 1- Short at 4447.50, Cover at 4450.50
Tried to get a first entry short. Should have been more patient and waited for the 2nd entry. Stochastic also showed oversold conditions. Wasn't a good time to go short.
Trade 2- Buy at 4438.50, Sold at 4435.50
Again, needed to be more patient or use wider stops.
Trade 3- Buy at 4442.00, Sold at 4439.00
Again, need to be more patient or use wider stops.
Take away for today
Going to try to use a different risk/reward ratio and wider stops the next time I'm able to trade.
Please let me know if you see any other obvious flaws with my trading. I'm here to learn
Haven't posted in a while. I have been active in the market. I had a couple of nicely executed trades that put me up for the year and out of the rut I was in. I made sure not to get too excited.
I have decided to switch to both Ninja trader brokerage and Ninja trader platform.
I am also going to school full time so there are some days where I will not trade at all. However, I will try to post pictures of good trade set ups for the day. I will also watch what PATs trading puts on youtube and see what Mack chose as his trades for the day.
These are trades I would have considered taking today. A line is drawn for where I would choose to enter using a stop limit order.
1. Broke the trend line. Fade the breakout.
2. Second entry short. Good for a scalp. The blue arrow points to where the count starts off.
3. Second entry long. Good for a scalp as well. The red arrow points to where the count starts off.
4. Short off that trend line that would have been there from the previous high.
5. Fade the break of the trend line that would have been there from the previous high.
6. Fade the break of the trend line that would have been there from the previous low.
7. Fade the break of the trend line that would have been there/ Second entry long. Purple arrow points to where the count starts off.
8. Fade the break of the trend line.
Today there was a trading range for the first half of the day because everyone was waiting to see what would happen at the FOMC meeting. I am still not comfortable trading in ranges so I would not have traded at all during this period.
These are my trades for the day after the news was released.
1. Pull back to the TMA. Easy trade to go long. The market moves in twos. This was the second leg up. Also stochastic decreased at this point.
2. Pull back to the TMA. Easy trade to go long. Also stochastic decreased at this point.
3. Pull back to the TMA. Easy trade to go long. Also stochastic decreased at this point.
Today the trend was up. Just had to keep going long when price pulled back to the TMA. Very easy day to make money.
