my journal

Ok, guys, pivots worked today as well. Just look at this picture. I don't need to waste any words:

Ok, i am about to change my system all over again. I just seized a good opportunity with a long trade and that obviously didn't respect my system, because according to it I should only go short from here, since we're red today.

But there's great potential to the upside. Obviously so, by looking at the highly correlated ES and CL (to the EUR), and even the GBP is way too oversold to keep on falling. Falling the downtrend now would be stupid. Besides, we've been falling for longer than 12 hours, so that was my old definition of overstretched.

There's bullish patterns on the ES and CL. No sense in wasting a LONG entry.

I'm going to reason it all out before I post any more versions of my discretionary system. From now on, no written rules. But reasoning yes. Once I'll figure out what I am doing that works, I'll write it down. Certainly I've got to go more WITH the trend and take quicker profits. And also look more at pivots.

One needs to learn to enter and exit quickly from positions without believing firmly in one or the other position, like i've been doing. Also, I need the 1-minute chart to evaluate the oversold-overbought state when i am entering. I can't just enter what the 1-hour candle looks good. But I can't ignore that candle either.

Wow, losing 1000 again, for the new trades i started... maybe my rules were there for some reason... and once again i had neither stoploss nor take profit.... wow man that is really something.

The funny thing is that yesterday i wanted it to go down so badly, and it when it finally does... i get impatient and don't ride the fall and then i start wanting it to go up... it's really a counter-trend spirit that i have... in life... in everything i do.

When price approaches pivots, it slows down. When it crosses them, it speeds up.



Just like a bus interacts with bus stops. It approaches them, slows down, picks up passengers, and then speeds up until the next stop.

SHORT TRADES ARE BETTER THAN LONG TRADES EXCEPT FOR COMMISSIONS AND SPREAD COSTS
Short trades by definition would be better than long trades in any situation if it weren't for spread and commission costs, that make it unconvenient. If it weren't for that, a short trade can capture moves better. Because a long trade could be 3 short trades put together, whereas you can't divide a short trade.



If we look at the 4 hour 1-min candlesticks chart of the EUR (above), we can see how convenient are trades in terms of minutes and points should be, bearing in mind that you can never predict whether or not, after the smaller reversal (a red 1-minute candle), the rise will resume (viceversa if your trade is short).

IT GOES DOWN FASTER (DESPITE IT BEING FOREX)
As I've pointed out before, despite the EUR being forex based and not an index, going and going down works differently, maybe because it is in fact correlated to stock indexes (it has been rising together with the Dow for quite a while). Rises last longer and entail fewer points per candle. Falls last less but entail more points per candle. That's why with my reasoning on the market being "overstretched", I always prescribe waiting >12 hours for falls before going long, and >24 hours for rises before going short.

MY SYSTEM SHOULD BE LOOKING FOR 20 TICKS 5-MINUTE TRADES
Of course it also depends on the days, but I would say, by looking at it right now (I am not teaching anything, I am just thinking out loud), that a good profit would be 20 ticks in 5 minutes.

There should be, for both LONG and SHORT, a lot of 5-minute 20 ticks trades. Because otherwise what happens is that you see the bigger profit, but there's a small reversal, your profit disappears, and you stay despite a potential fall, just because you feel you've been stolen your profit. So you should exit as quickly as possible, but stay long enough to cover most of the move, and to not be destroyed by commissions and spread.

BE IN TOTAL CONTROL OF YOUR TRADE: NO TRAILING, STOPLOSS, BRACKET ORDERS
I will have to correct my system according to this reasoning. But I will also have to get rid of the bracket order, because there's no way you should cut your profit if the trend keeps running, and there's no reason you should stay in if, right after entering, the market starts falling and going against you. So it all has to be manual. You can't use trailing, stoploss, or bracket orders. You have to be in full control of your emotions, actions and trades.