my journal 2

This is a discussion on my journal 2 within the Trading Journals forums, part of the Reception category; Here's what i'll do next. I'll double the 10k in the four different ways: 1. long above resistance - WEAK ...

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Old Jan 31, 2010, 9:17pm   #137
 
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re: my journal 2

Yamato started this thread Here's what i'll do next. I'll double the 10k in the four different ways:

1. long above resistance - WEAK
2. long above support - STRONGEST
3. short below resistance - PRETTY GOOD
4. short below support - WEAKEST

Wherever i'll be weaker, i'll practice more. I marked above my areas of weakness. I am better at playing bounces than breakouts.
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Old Feb 1, 2010, 5:02pm   #138
 
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re: my journal 2

Yamato started this thread 4. BELOW SUPPORT

I started from the type of trading which i find hardest: breakouts below support. Not really because it's the hardest, but rather because such situations are quite rare (at least with the stocks I am being offered by the chart game) and it's very hard to play 10 stocks and only find one such opportunity. So it is hard mostly in the sense that it's boring. Another way that it's hard is the great amount of false breakouts, which do not happen as frequently on the (reverse) LONG side (breakouts above resistance).

Played many stocks: it's extremely rare. If you are happy with intermediate support, it happens more frequently but it's more risky, as you get even more false breakouts. No wonder it was working so well by just going LONG. The short side opportunities are much more rare. Maybe not because stocks in general go up more than down, as a reader pointed out, but merely because the stocks which are part of the indexes indeed go up more than down. Whichever way we look at it, it's not convenient to go SHORT on the stocks offered by the chart game, which are probably all part of the indexes.

Next I will try to trade stocks that bounce against resistance, which is also a short trade but not as hard.
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Old Feb 1, 2010, 5:47pm   #139
 
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re: my journal 2

Yamato started this thread 3. short below resistance

It went pretty well, and it reminded me how I can make twice as much as with LONG trades. You can double your capital in half as many trades. I've come across a few of those stocks that a reader was talking about, those that go up to 100 and then come back to below 10 or where they started from. I see his point better, even with these stocks that are within the SP 500 (I think). On the other hand they still rise slightly more than they fall (maybe because they're in the index).

snap1.jpg

In my next 10k to 20k trade series, I will only play the LONG moves above resistance. Eventually I'll still have to go back to the "short below support" series to see if I can learn to double capital even in that direction.
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Old Feb 1, 2010, 6:40pm   #140
 
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re: my journal 2

Yamato started this thread I tried to focus on breakout trades above resistance but they don't happen often either.

Basically I find it easier to double up on bounces: above support or below resistance, but I find it much harder to wait for breakouts (hardest ones those below support).

I would say that in every chart I get a chance to find bounces on s/r, but it's much harder to find breakouts (if we're talking about major s/r levels).

It was a good idea to separate these four types of trades and to see exactly which ones are easier (for me) and more frequent. I will continue to try and constantly analyze, each time I trade, what exactly I am doing and which type of trade I am making.
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Old Feb 1, 2010, 6:51pm   #141
 
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re: my journal 2

Yamato started this thread Examples of the 4 types of trades I am studying:

1. Breakout above resistance (40): LONG opportunity (ongoing example)
SECOND MOST FREQUENT SITUATION
snap1.jpg
Have learned to be profitable with these trades (it seems easy now).

2. Bounce on support (12sh): LONG opportunity (ongoing example)
MOST FREQUENT SITUATION
snap2.jpg
Have learned to be profitable with these trades (it's a little harder than with breakouts above resistance).

3. Breakout below support (30): SHORT opportunity (ongoing)
LEAST FREQUENT SITUATION
snap3.jpg
Have NOT learned to be profitable with these trades (I think it will be the hardest thing to learn).

4. Bounce on resistance (100): SHORT opportunity (it happened already)
THIRD MOST FREQUENT SITUATION
snap4.jpg
Have NOT learned to be profitable with these trades (I think I'll be able to learn soon).


You see that I am not using the concept of trend. The trend is a confusing concept to me when I am talking about support and resistance and I'd rather translate it as follows. "Uptrend" is a breakout above resistance. "Down trend" is a breakout below support. The other two situations are "range". Since all these patterns are necessarily oversimplified we have to draw some lines somewhere. Obviously nothing is clearly defined like in geometry. This is how I prefer to draw my lines and make my simplifications.

In terms of how often these 4 situations happen, I am just referring to the charts of the "chart game". Don't object that the EUR is different or other things. I am ony talking about the charts I am playing and it's just an estimate. I am open to changing my mind, if someone shows me I am wrong.

I realize that all these situations and their frequency all depend on how you define s/r, trend... and I don't know yet a univocal way of defining s/r or else I would have automated it already. But if there's no univocal way of defining s/r, then it's not going to be easy to discuss them.

Lowest low, swing low... there's some formulas out there that attempt to define them, but I suck at formulas anyway. Let me know if you can help me in any way regarding these matters.

Last edited by Yamato; Feb 1, 2010 at 9:32pm.
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Old Feb 1, 2010, 8:18pm   #142
 
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Market Wizards: Richard Dennis (again)

Yamato started this thread Here's another interesting quote by Richard Dennis from Jack Schwager's Market Wizards:

Quote:
A trend could easily be defined using a simple system. Is there something special that you look for to define a trend?
No. If I see a trend developing, I know eventually I'll have to get in. The question is whether I get in earlier or later, and that might depend on how I see the market reacting to news. If a market goes up when it should go up, I might buy earlier. If it goes down when it should go up, I'll wait until the trend is better defined.
This stuff about using the news jointly with technical analysis is tempting me, as all these traders interviewed in Market Wizards do it.
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Old Feb 1, 2010, 8:22pm   #143
 
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re: my journal 2

Yamato started this thread Here's two links I am looking at, in order to try and connect how the market (in my case, the dollar) is reacting to the news:

http://www.dailyfx.com/calendar/
http://biz.yahoo.com/c/e.html

From dailyfx.com, I find out that this is today's most important news:
USD ISM Manufacturing (JAN)

Here I find out what it means:
http://www.wikinvest.com/index/ISM_Manufacturing_Index

Here I read the forecast:
http://biz.yahoo.com/c/e.html

So I find out that the news was better than expected (58 instead of 55). Also more on this here:
http://jutiagroup.com/2010/02/01/the...spired-by-ism/
http://finance.yahoo.com/news/Stocks...&asset=&ccode=

So I will now look at my charts (currencies and stock indexes) and see if they show a good reaction at 9 CST or not...

YM
ym.jpg

EUR
eur.jpg

They had an impact, definitely. But just up and down impact, on both YM and EUR chart, and causing more volatility on the EUR chart. However, both markets kept on going where they were going earlier, regardless of the news. The dollar to the euro slightly down, and the YM higher.

Of course I still don't know enough to weigh this kind of news or any news. For now the good info I'll retain is that from the above web site I know when the news will come out and I know which news will affect the market's volatility. Unfortunately I am rarely home, or else I could trade the news quite easily (they make prices go one way and then come back very quickly, 5 minutes up and then 5 minutes down, or viceversa).

Last edited by Yamato; Feb 1, 2010 at 8:39pm.
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Old Feb 1, 2010, 9:34pm   #144
 
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re: my journal 2

Yamato started this thread I'll now practice the SHORT trades on the Chart game. The first one I'll learn is the easiest, the bounce on resistance.
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