I saw a trade on the FESX this right after the open. The FESX really ran up and I took a one lot ( I have moved up to two lots now , but I still scale back ) because it was the start of the week and the US market is closed.
The price stalled and I bailed at +9 ticks ( € 90 )
The US markets are closed today so no more trading for me. Have a great Labour day !
NORMAL “SCALPING”
I am scalping, but I just use that term because my trades are wuick. My trades are 5 to 12 ticks. The traditional definition of scalping was going for one or two ticks.
I usually keep my risk at that level. I pick that level based on a percentage of my capital of my account. I have a larger account size than what I trade, but that is what I decided to go with.
OUTSIDE MY COMFORT LEVEL
The strange thing is that I still feel above my level in trading the size I want to trade. That is what I feel. I want to start trading multiple contracts and I feel the level of risk is “uncomfortable” and I sit there and dread a full stop out. So I end up scratching a lot of trades and exiting early.
I am trading scared when I don’t have to be.
I need to reduce my size to what Al Brooks calls the “Don’t Care” size.
TRADING SMALLER
So I am moving my target back down to 4 to 6 ticks, and moving to a smaller time frame. This is a size that I will not fret over, regardless of the size of my account.
I think going to a smaller time frame will reduce the win %. Hopefully putting on more swing contracts and being more ‘picky’ will make up for the ‘noisiness’ of a smaller time frame.
Summer trading is upon us in all its glory. Blah.
The volume on the Russell 2000 has been bad the last few days ( in number of trades anyway ) and it has not been fun. I am thinking about giving up the TF until September when the French come back from vacation.
So tonight I traded the Japanese Yen after the BOJ Statement on Monetary Policy statementcame out.
At the Monetary Policy Meeting held today, the Policy Board of the Bank of Japan decided, by a unanimous vote, to set the following guideline for money market operations for the intermeeting period: The Bank of Japan will encourage the uncollateralized overnight call rate to remain at around 0 to 0.1 percent. Overseas economies have shown moderate improvement, though limited in scope, on the whole, they still have not emerged from a deceleration phase.
Read the whole thing here
BOJ Refrains From Adding Stimulus in First Meet With New Board
I am not a big fan of picking a direction on news events. I am not that good of a trader. I just trade the price.
I do know that most breakouts will fail and that is what I saw. I saw a huge spike after the announcement, then after it settled, I looked for a trade.
If you follow Al Brooks, I took bar 2 ans an L1 and bar 4 as an L2. I used a limit order to get in and it was a late enter. I went for a 1:1 Risk to reward ratio. So I risked 6 ticks to make 6 ticks.
And I made 6 ticks.
NINJATRADER DOES NOT HAVE A MEASURED MOVE INDICATOR
Yeah, that is an annoying problem, but not a total loss. You can use Ninja traders Fib retracement tool as a measured move tool.
Since a picture is worth a thousand words, and I am not the greatest typist in the world, here is a picture.
SAVE YOUR SETTINGS
Unless you use the Fib retracement tool, I would save my settings as the default. Right click on the properties dialog ( the image above ) and hit “Save…”
BACK IN THE SADDLE
I took off over the last week, the week of the 4th of July in the United States. So back and the first day back, was a bad day, it was just choppy yesterday.
So today, I was back in. I am just trading one contract until I get my ‘trading’ legs back. My first trade was just a 8 tick scalp without a runner. It would of been a nice trade for a runner, but I need to go slower.
I almost took the 9:30 pullback, but I was hoping for a greater pullback. There were a lot of S/R lines above that point and I was expecting a lot chop. This time it didn’t, but it is a percentage game, and one trade does not make a rule.
TRADING OVER LUNCH
I took a with trend trade around 10:45 Chicago time. I was not really feeling the trade. I was not happy with the trade and I puked it out at +1 tick. The thing is, trading near noon NYC time, there is a LOT of noise.
Lunch hour today, did nothing but chop.
The other reason I think was that I was reading Al Brooks book “Trading Price Action Reversals” and he wrote something that stuck out. That traders can lose more in he middle third of the day than they made in the first third of the day.
So, I cut the trade, closed the monitor and stopped trading for the day ( I only trade the mornings anyway )
AL BROOKS NEW BOOKS
I would check out Al Brooks new three book set. His first book was great, but these three are actually written much better.
Too bad all our demons are not this cute.
PAST DEMONS
I think we all have our demons. Trading is a lot more psychological than most people think.
I took a hit a couple of weeks ago. I was fighting my “greedy” demon. I would press and press a trade. The more in profit I was, the more I wanted. When the market came back against me I held on wanting it to go back.
I managed to get over the greedy demon, and I have been working on it and my trading really showed that.
I remember I used to have to fight the “analysis paralysis” demon. I would wait for so much confirmation of a trade was that I was too late to get into a good trade. I was always late to the party.
MY CURRENT DEMON
So yesterday I was trading and found another demon. I always seem to be finding new demons very time I conquer an old one.
This time it was my “over confidence” demon. I had been trading for a week and a half and no problem, steady and profitable. I have been trading more and more days in the week and trading closer and closer to news events.
Before I would trade up to 15 min before and after 30 after an event. Now I had started to trade up until 5 min before the open.
I was disappointed in that is I had just stuck to my plan, I would have ten much better.
GOOD RECOVERY
The one thing I appreciate is that I handled it. After the first few trades, I got back on track. I went back to the plan, and got a couple of good trades to get me closer to breakeven.
I did not get that frustrated and I did keep my head. Usually when I lose I get frustrated and want to get my money back. This time I didn’t.
Now I just need to stop making mistakes.
On Friday, I went rogue and had a couple of bad trades and shifted into revenge trading mode. Traders biggest problems are greed and fear and I was overcome by greed this time. I The good thing is I recognized that I was no longer “Trading Like A Jedi” and stepped away from the computer before much damage was done.
My pride was hurt more than my trading account. The amount was small, but its effect on me has continued.
Today, I was much more cautions. I took two trades in the morning. The first I had a 9 ticks target when I put the trade on. I got in and the trade went 6 ticks my way and I moved my stop to BE+1 and scratched. I usually don’t do that, but I became more cautious. I did consider not trading anymore for the day.
After all, a break even day is better than a losing day when you are not trading well.
The second trade had a target of 11 ticks. Going to a couple of tips before the recent low. After five ticks, I hit an S/R line and I got out.
So two trades, neither executed well because I let bad trading on Friday get into my head.
Such is trading.
This is a post I read on a forum by a guy called indextrader7. It was a pretty good post, and since it is similar to how I have been trading lately.
It was in response to how to trade near the extreme levels. I have that problem too where there are no obvious support and resistance levels. I thought I would repost it here. Enjoy.
First off, we can only see that we’re at extreme levels (highs/lows of the day) in hindsight, so it’s irrelevant for our real-time analysis. I think if you focus on the proper analysis in real-time it will remove the tendency immediately. Try:
1. Define S/R structure on a longer timeframe chart than the one you’re mainly trading. Somewhere between a multiple of 5-10x that timeframe will do. Don’t pay attention to anything you see on that chart (trends/patterns/etc) because it will be very irrelevant in your trading timeframe. (I used to make the mistake of trying to trade signals on one timeframe, on another timeframe chart. It doesn’t work).
2. Define your trend/range on your main trading timeframe. This is the key one to your question. We don’t care whether we might “think/feel” like we’re at an extreme level or what not. We simply define whether we’re currently in an uptrend, downtrend, or range-bound. This determines what type of trade (long/short) we’re looking to take. Picking tops/bottoms is a fools game (in my humble opinion, maybe there are guys out there that are fantastic at it, but I think the majority of the time it’s bad business.) Now, if we’re in a downtrend and heading into one of the longer term support levels we drew in step 1… AND we’re analyzing the momentum of that downtrend, AND it’s showing weakness on the down legs, and more and more strength on the up legs… then we can take a long trade which is still considered a counter-trend trade (and managed accordingly), but the key is that our analysis of strength/weakness led us to this counter-trend trade… NOT a thought/feeling that we’re over-extended/oversold/at an extreme/”price can’t go any lower it’s gone so far”/etc.
So no, I don’t do anything different at these levels. My thought process is the same. The only thing that’s different is that sometimes you feel “naked/exposed” because we’re trading at levels that don’t have any recent S/R to give a framework… we’re just floating out in space so to say. We can still rely on our trend analysis and will always have that, regardless of where we’re trading.
I recieved a lovely comment on the blog from Sacha
an it reminded me of everything I did wrong trading yesterday.
Cascade Failure
A cascading failure is a failure where connected parts in which the failure of a part can trigger the failure of successive parts. Cascading failures can happen anywhere and in any system ( airplanes, bridges ) and it is basically one things leads to another that leads to another usually bad thing.
Cascade Failure Trading the TF Russell 2000
I was trading the TF, and my router was having problems so I started trading on the family computer. Not that that is a problem, it is the location. Instead of being in the ‘Batcave’, it is where everyone passes through.
This was my first mistake. Asking others to not disturb me in a public area of the house.
When I am scalping , I usually only scalp the open, so I concentrate on staying calm and watching the market.
I was fine until someone came in and started talking about an small issue that could wait. Then the conversation started about not bothering me, etc. It was all in terms of thoughtfulness and caring so there is nothing to be upset about, just that the act of calmly explaining to someone , talking about not distracting me is distracting me.
Right after that, I made my first trade. I had a brain fart because I was not concentrating and placed a limit order where there was not a trade. I had forgotten to set an ATM and the order filled without and profit target or loss order. So I am scrambling to place them on an unfamiliar computer and I was not as fast as I should have been. i also realized I should not have been in the trade. The market hit my initial stop and I was down 12 ticks.Not a lot, but really frustrating. I then ran an ether net line back to the batcave and proceeded to try to trade. I the next trade, I had a profit target of 5 ticks and the market moved my way and I moved my target to 20 ticks. Made 10 ticks and then gave it all back and scratched. Stupid revenge trading. I had no basis for that except for the fact that I had lost money and “I wanted to get it back”. Luckily it was only one trade before I regained my composure. The market does not owe you anything, it is not personal.
The market does not owe you anything
So now I was totally, pissed and I just had to step back, calm down, and get my mind back in the game. I calmed down and traded like I should have for the rest of the day. When the market started getting a bit too choppy and I stopped for the day.
Total for the day was 6 trades, +8 ticks on winners and -12 ticks on the one losing trade. It seems like a lot of trading, but two of the trades were for a combined -11 ticks, and I averaged ~2 ticks a trade for the others.
There were a couple of thing that I could have done.
(1) don’t be distracted
First mistake, I never should have left the Batcave. Trading is lonely, but when it is noisy, even less so.
(2) developing a jedi mindset
I needed to stay calm and trade. I won’t repeat it here but here is a good blog post.
How to Not Have a Cascade Failure
When something is going wrong, stop trading, close your positions and walk away until you have your “jedi” mindset back.
Also, thanks for reading , I think this is my longest blog post ever.
I have made some slightly drastic changes to my setups.
As always, I will SIM trade for a while before I start actual trading. So I am picking out three random days over the last couple of months, and trading them in replay.
That way I can get three weeks of SIM practice in a little over a week. So far, it is going well. I have only done five days and slightly in the black.
As for SIM trading, I think you should SIM trade as long as you needed , but not one moment longer. There is nothing like trading ( even one contract ) actual contracts. You will not have to see everything, but if you SIM traded until you see everything, you will never get to trade.
I noticed that I have not updated my setups page in forever.
I am basically still using GeeBee ( although I don’t give it a name anymore ) but i has improved significantly over the years and I have added and removed things from the setup. I will have to go through and update my setup page soon.
I have discovered that most things I add to my setup , hurt performance over time. The only thing that really helped was going down to a lower timeframe to time entries and exits.
I have four indicators on my charts now, none of which I use for actual entries. I use them to see what the bias and state of the market is at that moment.
If you are having trouble with your setups, try removing something and it may help your performance.
( As for the picture, I am trying to stay away from processed sugar, but pictures like these make me want to go off my diet )
I traded the Yen today while , was waiting for the euro open. Here is my blotter from Ninja Trader.
I actually was trying out trading using a 1 Range chart. It went pretty well. I took two trades, the first one tanked, the second one made money. First trade, I took with a stop loss of 8 ticks, and I hit it. I jumped on a reversal too soon. I think I was still adjusting to the speed. The second trade, was textbook.
The last few days have been pretty good. I have been trying for consistency, and not maximum profit. I have been profitable a few days in a row just hope to keep it up.
Great interview. I see so many things in poker that I see in trading. Take a watch, it is about 20m long.
I have noticed that I trade best when I do not “Try” to trade. I just trade. This was strange, because the times when I trade live to just trade well, I do much better. I am calm, I am not nervous to get into a trade.
Last night was a big move up and I usually trade reversals. I did not get any decent pull backs and by mid morning, it was a grinding chop which was annoying. So no trades, but a great day trading.
I do need to learn more setups so I can trade more consistently. But that is for another day. I am reading Al Brooks three new books so hopefully that will help.
The S&P500 fell 1.71 % yesterday. These are the days that are made for trend followers. Being a scalper is a hard thing on a day like this.
I made one trade on a pull back, and I ended up scratching it , just paying the vig commission. A few minutes after that, I got the best signal of the day and I let it pass me by. This set me up for a loss later in the day.
The second trade was a classic setup for 4 ticks.
I think it was still bugging me on the first trade and I traded up to lunch. usually I am gone by then, but I stayed around. Took another short and the market started jumping about like some one was sweeping the book or ( more likely ) the volume dried because traders were going to lunch. The market got jumpy and I bailed. The trade went my way but I wasn’t onboard, and gave back two ticks.
Ended the day up $9.74. Yeah……
Had my biggest loss of the year last week. Man, it hurt.
I was in a trade and I had my ‘failsafe’ stop set pretty far from the price. I start with it there and move it or just bail with the close button. It is also there in case my internet disconnects.
Anyway, a family member came in when I was trading and I was distracted trying to be nice to resolve the issue and usher them back out of the room. At that moment , the market spiked well past my mental stop and hit my ‘fail safe’ stop.
I was so pissed I just stopped trading for the day. Trading upset is not a way to trade. And no sense thinking that you ‘have to get your money back’. It is the market and I lost to it because I was distracted.
Moral o’ the story is stay away from distractions while trading.
I received an email from someone who apparently reads my blog. Anyone can write me if you want ( and leaving comments is also nice ). So the answer is, yes this is my account I am trading and it is not a SIM account. I used to SIM trade and I recommend it for any one starting out.
For me, I love the feel of winning and hate the feeling of losing money. It may not be healthy, but improves my trading slowly and surely. I pay more attention to a cash account than I do a SIM account. I think the major difference is that on days when I do not trade, I fell like I am missing something in a real money account. In SIM , I have no problem sitting out a day.
I don’t post every trade, and I just post when I have time and I feel like it.
Could have been better, could have been worse. Started later in the day to trade after the consumer confidence report.
8:00 AM CST S&P Case-Shiller HPI
9:00 AM CST Consumer Confidence
Started out with a three tick scalp. I was leaning on support at 842.2, and the first scalp held and I went back for another byte. Well this time it didn’t and I held on too long. It hit my default stop set up in Ninja at 8 ticks.
That is ok, those were counter trend any way and now I was trading with the trend, and I took two more scalps with 842.2 now as resistance.
Ok, almost back to even. The last scalp ( I saw last because I quit after this one ) blew back through resistance , so I lost 4 ticks on that one.
So now, the market was in chop mode and I called it a day. The market did start trending in the late after noon, but I was long gone by then.
Wed only has the Durable Goods Orders report coming out @ 7:30 AM CST, so it should be good trading.
All Times Central Standard Time, because we are the home of Da’ Cubs. Suck it New York ( Except for the Nicks ’cause Jeremy Lin is the shizzile ).
I never liked trading Mondays. Monday mornings and Friday afternoons have always been “not good” for me. I think most of the market is getting started late or taking off for the weekend early. This Monday had the Pending Home sale report and Dallas Fed Survey. The Pending home sales would move the market more.
9:00 AM CST Pending Home Sales Index
9:30 AM CST Dallas Fed Mfg Survey
I have been trading early, trying to be done by 10 a.m. so there is little time to trade if I avoid trading around these two reports. Tomorrow is the consumer confidence report @ 9 am. So I could probably trade after that.
Treading water is where you spend a lot of energy swimming just to stay in one place. I feel like that this week.
Three days of trading, 12 trades, and I am down about 1 ticks !!! Spent $40 bucks in comms so someone is making more money than me.
I made 5 trades. 3 profitable, one a slight loss and then one really big one and stopped trading after that.
This may sound strange, but the markets are not ‘noisy’ enough for me.
Diary Of A Mad Scalper 