This is the first time I've kept a stream-of-consciousness log of a trade in this detail. Since the trade seems to be working out well, I decided to post it. I think I'll benefit from looking at this in the future (especially all my doubts and concerns in the first hour after entry), and it could possibly benefit others as well. If you want to see a real nervous Nelly in action, warts and all, read further. (Also, since I wrote all of this in Notepad, I remembered at a certain point that you can get the time inserted automatically by pressing F5, which is useful for this sort of log.)
Plan
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Take a BO/RET signal long above 1.2946 or short below 1.2871.
-- I won't take ANY signal within that range.
-- I'll use the usual 1st target
8:30 -- I feel the impulsive desire to jump in on strong movements to the short side, inspired by my fear that I'll miss out on the "big move". I remind myself that my strategy really does have an edge, and that blindly jumping into the fray does not. Wait for something with some edge to it.
I was debating whether to wait for a signal on the 5-minute or take a signal on the 55-tick chart. In a fast moving market, the 55-tick provides signals without too much noise, yet seems to capture the dynamics I need to make a decision. If the market were slower, then the 55-tick might be too sensitive, and I might want instead to use either the 5-minute chart or else another tick chart with a larger interval. I enter short on a signal on the 55-tick chart on a RET below 1.2871.
I see price heading back now toward my entry point, find myself hoping that it will move back down again. Remember, there is only a chance that this will be a sustained movement in the desired direction today, but that sticking religiously to this strategy will pay off in the LONG TERM. If today, this trade, is not one of those times when we have sustained directional movement, then so be it.
I took profits on half my position (as per plan) at 8.3 pips profit, so I have my stop 8 pips back from my entry point. Price seems to be headed back up now to test the S/R level where my stop resides. If the stop is taken out, then I'm looking at the usual re-entry rules. I'll only take a short signal on the 5-minute below 1.2871.
I see some worryingly large volume going up. I'm now in the red on the remainder of my trade (2.5), and I start thinking "wouldn't it be a good idea to take profit on at least some of the remainder at BE, so that this entry wouldn't be a total wash?" I worry that price will rise just enough to take out my stop and then rocket back downward. I remind myself that, in that case price will likely give me my short signal on the 5-minute, and I can get back into the trade. Stick with the plan. And if the stop is taken out and price returns to the range? That's fine, today was not the day then.
At 1.2867 (4 pips under the bottom of the range as I have it), price seems to find some resistance and heads down 5 pips before starting back up. Argh, feelings of frustration. The original hook I entered on went back as far as 1.2869, and my entry was below that. So price movement above that will threaten my stop (still worrying out that stop being taken out).
I feel myself tensing up, and breath constricting as we get close to the stop, so I'm taking a moment to breathe deeply, and make a conscious effort to relax. Time the feelings of anxiety. It's 9:05 now. Even if this doesn't work today, at least the entry was successful, so it will be nothing gained, nothing lost. I've had worse days trading, much worse.
I get an entry signal on the 5-minute chart at almost exactly the same level as my original entry, but then price immediately heads back up toward the S/R level (and my stop). Now, if I were to wait for a 1-2-3 entry, I would not be entering until price headed BACK up, meaning I may not have entered at all, which would amount to the same thing as the wash which may be about to happen.
We definitely have resistance at this level, but will it be sufficient? Another thrust upward. 1-2-3 entry signal on the 55-tick, as a wave of selling hits. The high on the RET so far is exactly 1.2871. My stop barely withstood that last upward thrust. We've now had 2 primary hits on the S/R line now, and may be heading for a third.
9:18 AM 8/10/2006 - This is really where the whole thing hangs in the balance, and the matter is definitely NOT decided.
9:19 AM 8/10/2006 - The pace of transactions has lessened. It's like being in the center of a storm. Very few transactions. Price at 1.2866. A downward movement here would be very positive.
9:21 AM 8/10/2006 - The second entry signal on the 5-minute. And again, price heads towards R, 1.2870. Higher volume on the 55-tick.
9:24 AM 8/10/2006 - This indecision seems to be taking a LONG time. I know it's not that unusual, but it's not really a good sign either. The first strong thrust down was promising, but then this hour-long RET shows that there is still a great deal of indecision in the market.
9:25 AM 8/10/2006 - Another movement down to 1.2863, which seems to be support for now. Now we break down to 1.2860. Nice solid black bar here. My trade is in the black again. Price is finding some support at 1.2860, where there was an initial, failed attempt to continue in the BO direction (edit: on the original BO). So there's a fight at this level (1.2859 is low).
9:34 AM 8/10/2006 - At this point, since I'm not playing the failure setup, I wonder whether I shouldn't just walk away, and let the market do its thing? I'm reminded that I still don't have a GOOD solution in my plan for what to do with the rest of the trade. I've done different things in the past: let it run, got scared out of it and lost out on a nice large run, took profits (amazingly) at exactly the ideal moment. My inclination is to just let the thing run until the end of the day (1:00? 5:00?).
9:37 AM 8/10/2006 - We seem to be through the Support at 1.2860, and are now at 1.2854, still higher than the BO low of 1.2850, but now solidly in the black with a 9.8 pips unrealized gain. We hit exactly 1.2850 (double bottom?) and price bounces. We have a real bounce now, with some volume. I am sorely tempted to take profits here (at least partial). Price has rebounded a full 10 pips to 1.2860 again, where now there's some resistance. Back down to 1.2855. Will we be able to break through 1.2850? Back to 1.2859. Now I'm grateful for the support here on the way down -- perhaps we'll get enough resistance to restrain the buying pressure.
9:46 AM 8/10/2006 - If price were to break above 1.2861 or so, would it be wise to take, say, half my position off? I won't do that this time, because I didn't plan to do so, but there seems to be some merit to the idea of taking off at least SOME profits when things move against you. My best guess at the moment is that, in the long run, you're better off leaving the whole trade on, and seeing where you stand at the end of the day.
9:50 AM 8/10/2006 - We're making a second run at 1.2850 -- and we're through, down to 1.2848. Is this a 2B? Price springs back up to 1.2853, 50, 51, 53. Could have just been a trap for traders looking to go short at that point. (Set by whom?)
9:58 AM 8/10/2006 - Price has gone as high as 1.2857, now 1.2853, and we seem to be at another lull in the action in terms of trading activity. It's almost come to a complete stop. Is this traders deciding whether or not to go for movement down? Is that an indication of uncertainty that spells doom for this trade? Quick spike up to 1.2859, then back to 1.2852 then back up to 1.2858, 1.2851. Yoyo effect on much higher activity.
10:02 AM 8/10/2006 - New low at 1.2845. We seem to have broken the logjam at 1.2850. Would it be safe NOW to move my stop to BE? How will I handle that in my plan? Just leave the stop at its original point throughout the trade? I mean, it would seem stupid to have a trade move 30 pips in your direction, take partial profits at, say 10 pips profit, and then still end up with nothing more than a BE trade at the end of the day. Hehe, that's actually a lifestyle choice. If you are going to babysit your trade all day long, you can sit there and watch for some reversal signal. But still, I think once price has moved some distance in my direction, it would make sense to at least move the remainder to BE.
10:09 AM 8/10/2006 - 1.2839. I'm going to move my stop to BE, and just let the market do what it will for the rest of the day. My feelings now are that I would hate to have this (currently) 24.6 pip profit disappear. But there's just no cure for it that I know of. I can take profits now, but then if this just happens to be one of those days where the market really moves, I'll regret it. One consideration is how far the market has moved so far today (ADR idea). The high this morning was 1.2943. Price is now 1.2835, 108 pips lower. I know the long term average daily range is around 120 pips, so by that measure, we could be at or near the bottom for the day. On the other hand, the support level we broke through was pretty prominent on the daily, 3-hour, and hourly charts. Despite slow beginnings, this could well be a big move today.
10:17 AM 8/10/2006 - 1.2829.
10:35 AM 8/10/2006 - 1.2801.
