Today's Lesson: Never trade somebody else's strategy/system without first testing it. There usually are nuances in one's strategy/system which the developer has learned through experience. Also, before adopting somebody else's strategy/system, it is important to determine if it fits your trading style.
Trade 1
03:17 - L ESTX50 2 @ 2814 stp 5 - trend, 5m RH
03:23 - Exit 1 @ 2816 +2 - scale out, stalling here
03:24 - Exit rem 1 @ 2816 +2 - looks like short-term res at 2717/18, 5m bline ob
Trade 2
03:35 - L ESTX50 2 @ 2814 stp 5 - trend, 3m pb10ema
03:51 - Exit 1 @ 2816 +2 - scale out at res
03:54 - Exit rem 1 @ 2816 +2 - taking too long, tape not getting active here
Note: Price broke thru resistance after I exited. Apparently, slow tape activity at resistance/support may indicate impending breakout/down. Abnormally big blocks went through 1 tick above resistance which signalled breakout.
Trade 3
09:01 - S EUR 1.2700 stp 5 - counter, 10m AJ 1-2-3 setup, pbl brk
09:02 - Exit 1.2705 -5 - stopped
Note: Aggressive entry of 1-2-3 reversal setup. Entered on break of point 3. The conservative entry is break of point 2.
Comment: 5 and 10min chart showed price developing an uptrend, broke above and pulled back to 50ema, near lowbb support therefore making this low probability trade.
Trade 4
09:40 - L EUR 2 @ 1.2748 stp 11 - trend, 5m RH (invalid setup, pb exceeded 3 bars)
09:43 - Exit 2 @ 1.2737 -22 - stopped
Note: RH not valid here because more than 3 pb bars. Price went against against me and never went positive, market saying bad trade but I failed to listen because I was occupied with the new system.
Trade 5
09:49 - L EUR - 2 @ 1.2746 stp 12 - trend, no setup
09:53 - Exit 2 @ 1.2734 -24 - stopped
Note: Trade was emotional after trade 4 loss. Still shocked at the big trade 4 loss and traded trying to recover loss.
Comment: Emotional trades have always been disastrous! Judgement is clouded and I throw away all my rules especially the one where the market has to prove my trade correct for me to stay in the trade. When feeling emotional, it is best to stand up, regroup and clear mind of the emotion, which I did after this trade.
Also, AJ's system does not seem to fit my risk tolerance because stop placement is wide. I have to selectively take setups that are within my risk tolerance.
Trade 7
09:57 - L EUR 2 @ 1.2740 stp 5 - trend, 5m pb10ema, potl cci zlr
09:59 - Exit 1 @ 1.2750 +10 - scale out
10:00 - Exit rem 1 @ 1.2750 +10 - stalling here, pos res
Note: Market says good trade. Trade was positive quickly!
Comment: Nice regroup. Focusing on the proven system and trading within the plan always produces good results!
Trade 8
10:21 - L ER2 2 @ 582.2 stp 8 - 3m counter, 30m trend, 30m pb20ema, lowbb, 10m 1st T50ema
10:25 - Exit 1 @ 583.2 +10 - scale out
10:27 - Exit rem 1 @ 583.2 +10 - at 3m 10ema pb res
Note: Trade was negative on entry due to selling pressure of downtrend but quickly reversed, which proved trade was correct.
Thursday, October 28, 2004
Wednesday, October 27, 2004
Journal - 10/27/04
Back to trading within the plan. Taking only pbh and pbl break entry triggers on setups.
Trade 1
21:52 - L HSI 12844 stp 15 - trend, 3m RH, pbh brk trigger
22:03 - Exit 12854 +10 - tape not showing buying interest
Trade 2
03:20 - L ESTX50 2 @ 2761 stp 3 - trend, 3m pb10ema, pbh brk
03:25 - Exit 1 @ 2763 +2 - scale out, having difficulty at 2764, pos resistance here
03:27 - Exit rem 1 @ 2762 +1 - several attempts at 2764 would not crack it, cci hooking down
Trade 1
21:52 - L HSI 12844 stp 15 - trend, 3m RH, pbh brk trigger
22:03 - Exit 12854 +10 - tape not showing buying interest
Trade 2
03:20 - L ESTX50 2 @ 2761 stp 3 - trend, 3m pb10ema, pbh brk
03:25 - Exit 1 @ 2763 +2 - scale out, having difficulty at 2764, pos resistance here
03:27 - Exit rem 1 @ 2762 +1 - several attempts at 2764 would not crack it, cci hooking down
Tuesday, October 26, 2004
Journal - 10/26/04
A disastrous day. First, missed big profits on a great buying opportunity on ER2 at extreme oversold level. Then, emotionally kept shorting a strong short squeeze rally. Wiped out several days of hard earned profits!
Trade 1
10:11 - S ER2 2 @ 570.5 - 10m sideways, pb20ema/pivot
10:12 - Exit 2 @ 571.1 -12 ticks - stop hit
Note: Trade stalled here a bit but never got down, market not proving trade correct so should have exited when it started to move against me. Have to work on reacting when market tells me I'm wrong!
Trade 2
10:13 - S ER2 2 @ 571.0 - no real reason here, emotional entry after 1st loss, entered above 50ema (bad trade)
10:15 - Exit 2 @ 571.6 -12 ticks - stop hit
Trade 3
10:16 - S ER2 2 @ 571.3 - price stalled a bit here, was thinking short covering over, still emotional (bad trade)
10:19 - Exit 2 @ 571.7 -8 ticks - exit at market as price remained negative
Note: Exit was good, market not proving trade as correct. However, should not have entered in the first place because no reason/setup!
Trade 4
10:21 - S ER2 2 @ 571.6 stp -8 - another emotional trade, still insisting short, no reason to short as price has not made a lower low yet on the 10min (bad trade)
10:24 - Exit 2 @ 572.4 -16 ticks - stop hit
Note: Emotion clouds judgement. My stop was 8 ticks. I never enter with that wide stop (risk). R/R here was very bad and no good reason/setup to enter.
Trade 5
10:51 - L ER2 2 @ 571.2 stp 3 - 10m sideways, at lower BB/emas support
10:53 - Exit 1 @ 571.8 +6 ticks - scale out, at middle of band
10:54 - Exit rem 1 @ 571.5 +3 ticks - price could not brk middle band, looking weak
Note: This was the only logical trade made today with good reason/setup and good R/R.
Comment: Disastrous day caused by trading without a valid price action entry and setup. Emotional trading is the cause of most of my disastrous days. My trading strategy/plan works, but if I deviate from it, disaster looms!
The lesson is trade within the plan!
Trade 1
10:11 - S ER2 2 @ 570.5 - 10m sideways, pb20ema/pivot
10:12 - Exit 2 @ 571.1 -12 ticks - stop hit
Note: Trade stalled here a bit but never got down, market not proving trade correct so should have exited when it started to move against me. Have to work on reacting when market tells me I'm wrong!
Trade 2
10:13 - S ER2 2 @ 571.0 - no real reason here, emotional entry after 1st loss, entered above 50ema (bad trade)
10:15 - Exit 2 @ 571.6 -12 ticks - stop hit
Trade 3
10:16 - S ER2 2 @ 571.3 - price stalled a bit here, was thinking short covering over, still emotional (bad trade)
10:19 - Exit 2 @ 571.7 -8 ticks - exit at market as price remained negative
Note: Exit was good, market not proving trade as correct. However, should not have entered in the first place because no reason/setup!
Trade 4
10:21 - S ER2 2 @ 571.6 stp -8 - another emotional trade, still insisting short, no reason to short as price has not made a lower low yet on the 10min (bad trade)
10:24 - Exit 2 @ 572.4 -16 ticks - stop hit
Note: Emotion clouds judgement. My stop was 8 ticks. I never enter with that wide stop (risk). R/R here was very bad and no good reason/setup to enter.
Trade 5
10:51 - L ER2 2 @ 571.2 stp 3 - 10m sideways, at lower BB/emas support
10:53 - Exit 1 @ 571.8 +6 ticks - scale out, at middle of band
10:54 - Exit rem 1 @ 571.5 +3 ticks - price could not brk middle band, looking weak
Note: This was the only logical trade made today with good reason/setup and good R/R.
Comment: Disastrous day caused by trading without a valid price action entry and setup. Emotional trading is the cause of most of my disastrous days. My trading strategy/plan works, but if I deviate from it, disaster looms!
The lesson is trade within the plan!
Monday, October 25, 2004
Journal - 10/25/04
Trade 1 (only 1 trade today)
03:20 - L GBL 2 @ 117.16 stp -3 tgt1 +6 - trend, 10m pb10ema, potl cci zlr
03:42 - Exit 1 @ 117.18 +2 ticks - taking a long time, scale 1 out here to cover commissions
03:50 - Exit 1 @ 117.21 +5 ticks - 5m bline overbought
Note: Need to exercise more patience. I have been scaling out too early for the last few days. I have to work on scaling out at my first target unless the charts and price action tells me I should not wait for it and exit the trade.
03:20 - L GBL 2 @ 117.16 stp -3 tgt1 +6 - trend, 10m pb10ema, potl cci zlr
03:42 - Exit 1 @ 117.18 +2 ticks - taking a long time, scale 1 out here to cover commissions
03:50 - Exit 1 @ 117.21 +5 ticks - 5m bline overbought
Note: Need to exercise more patience. I have been scaling out too early for the last few days. I have to work on scaling out at my first target unless the charts and price action tells me I should not wait for it and exit the trade.
Sunday, October 24, 2004
Amended Exit Rules
Based on experiences in the past and my trading style, I will be implementing new exit rules as follows:
When price goes against me after entry...
And continues to trade against me for about another bar without getting stopped out, and trade volume in mt trade's direction is low, market is not proving my trade as correct. The logical move in this situation is to take a small loss or exit if price attempts to get back near breakeven on low volume on the T&S.
The logic for this rule is that a minor intraday support/resistance level may have been broken and therfore, price may not be able to come back to my trade direction. I can always reenter afterwards if price is able to come back, and the technical situation has changed in favor of the trade.
When price moves favorably right after entry...
Market is telling me my trade is correct so I should be a little more patient. I can manage stops a little looser than normal. Scale out at S/R levels and the second contract can be held longer for a higher target if market is trending. If market is moving sideways, exit using bline overbought/oversold levels or any CCI divergence or reversal hook signals.
When price goes against me after entry...
And continues to trade against me for about another bar without getting stopped out, and trade volume in mt trade's direction is low, market is not proving my trade as correct. The logical move in this situation is to take a small loss or exit if price attempts to get back near breakeven on low volume on the T&S.
The logic for this rule is that a minor intraday support/resistance level may have been broken and therfore, price may not be able to come back to my trade direction. I can always reenter afterwards if price is able to come back, and the technical situation has changed in favor of the trade.
When price moves favorably right after entry...
Market is telling me my trade is correct so I should be a little more patient. I can manage stops a little looser than normal. Scale out at S/R levels and the second contract can be held longer for a higher target if market is trending. If market is moving sideways, exit using bline overbought/oversold levels or any CCI divergence or reversal hook signals.
Journal - 10/22/04
Trade 1
02:49 - L EUR 1.2624 stp -6 tgt +10 - trend, 3m pb20ema/at low bb sup/cci zlr
02:53 - Exit 1.2628 +4 ticks - 14 cci looks to be hooking down
Note: Early exit, target of +10 easily reached in 4 more minutes. Trade was positive at the outset so should have held longer for target. Cut winner!
Trade 2
03:21 - L ESTX50 2 @ 2788 stp -4 tgt1 +6 - trend, 3m pb20ema/cci zlr
03:24 - Exit 1 @ 2789 +1 tick - scale out (getting antsy because price doesn't move right away, which is turning into a bad habit)
03:31 - Exit 1 @ 2789 +1 tick - got scared on sudden price drop, then price rocketed!
Note: I'm starting to get into a bad habit of cutting winners! Trade was positive right at the outset indicating high probability of a good trade and I gave it away. Missed +15 to +20 ticks profit.
Trade 3
09:40 - L NQ 2 @ 1470.5 stp 2.0 pts -30m trend, 30m pb10ema; 3m countertrend, error in entry, wanted to enter at 1470.0 and failed to adjust limit order
09:42 - Exit 1 @ 1471.0 +0.5 - scale out, cover commissions, selling looks strong
09:43 - Exit 1 @ 1472.5 +2.0 - take profit on short-term countertrend trade
02:49 - L EUR 1.2624 stp -6 tgt +10 - trend, 3m pb20ema/at low bb sup/cci zlr
02:53 - Exit 1.2628 +4 ticks - 14 cci looks to be hooking down
Note: Early exit, target of +10 easily reached in 4 more minutes. Trade was positive at the outset so should have held longer for target. Cut winner!
Trade 2
03:21 - L ESTX50 2 @ 2788 stp -4 tgt1 +6 - trend, 3m pb20ema/cci zlr
03:24 - Exit 1 @ 2789 +1 tick - scale out (getting antsy because price doesn't move right away, which is turning into a bad habit)
03:31 - Exit 1 @ 2789 +1 tick - got scared on sudden price drop, then price rocketed!
Note: I'm starting to get into a bad habit of cutting winners! Trade was positive right at the outset indicating high probability of a good trade and I gave it away. Missed +15 to +20 ticks profit.
Trade 3
09:40 - L NQ 2 @ 1470.5 stp 2.0 pts -30m trend, 30m pb10ema; 3m countertrend, error in entry, wanted to enter at 1470.0 and failed to adjust limit order
09:42 - Exit 1 @ 1471.0 +0.5 - scale out, cover commissions, selling looks strong
09:43 - Exit 1 @ 1472.5 +2.0 - take profit on short-term countertrend trade
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