Butchering YM

[Kleft]

Hello,

Long time lurker first time poster. Not all to sure if I am posting this in the right section, it is in futures but then there is TA to think about as well as psychology.

So attached I hope, is a chart of my trading of the YM futures contract on 29/5/2013 all trades highlighted were thought out live as it was happening.
I do not cover every trade I took suffice to say there were 7 in total 2 winners 5 losers showing a loss of 18 points, I only trade 1 contract at the moment as I have no consistency to move up in size.

This is the psychological issue that I am struggling with and what I think is holding me back, I see the trades form and I either fail to pull the trigger or don't pull it at all, and if I do enter despite targets I manage to hack a good trade to pieces, I also need to consider entries and stops, at what point does a stop go from being to tight to to loose?

As the day ended I thought about how good a day it could have been then I look in hindsight at the chart and see so many more opportunities that I missed. As I trade the blinkers often come on and blind me to what is happening. Ideally this was a day for 100+ points in reality this is all too common an occurrence and in hindsight a lot more was on the table that day.

So green discs highlight the opportunity and orange dots highlight when i drew the trend line in. This could be a lesson on how to butcher what could have been a good day.

Opinions and Ideas welcome, fire away.

Kleft

 

[cablemonster]

1st of all are you trading real money?

 

[Kleft]

1st of all are you trading real money?

Hi,

Yes this is a real money account, these are live trades.

 

[cablemonster]

Hi,

Yes this is a real money account, these are live trades.

righty oh. In that case I would suggest at this stage you would get a better return on your money by visiting this place.

 

[cablemonster]

initial observations are that you are likely to be gambling with bad odds. Are you 100% clear that you are trading with an edge?

other observations that concern me:

DOM on the YM - shirly you cant be serious the YM is thinner than a streak of pi55. If you were going to use the DOM (and I am not saying you should) then perhaps consider a thicker instrument like the ES.

H&S - I take it you are not talking about shampoo. Do you have any statistical evidence to prove that trading a H&S has a positive expectation.

if this is a live account then you just spunked 18 points of the YM = £90 up the wall on a 1 lot.

 

[Kleft]

I believe my problem is how I trade not necessarily what I trade, I feel I can Identify trades as they come about or develop, Paper trading is profitable but there is a big leap from doing that and putting money on the line.

The DOM, I understand its thin and not to take much notice of it as I watch my trades but I often make mountains out of molehills by over thinking small snippets of information that may not have much relevance in the scale of things. I am trying to tackle this by minimizing and just watching the chart or looking at other instruments whilst in trade.

As for the H&S, at least with what I think they can offer good trades but its identifying and trading them that is half the problem, Like I said in hindsight there are 2 or 3 other H&S formations in there that worked or at least what I consider H&S but everyone has there own opinion as to what constitutes a formation of one type or another.

 

[Kleft]

As an example, 1min timeframe YM right now I consider this to be an inverse H&S some would disagree its a little messy but that is what I see and yet again I have failed to do anything about it. And it hit its target.

 

[timsk]

Hi Kleft,
Well done on biting the bullet after all this time with your debut post.

Based on cablemonster's replies, you might be wishing that you hadn't! Whilst he wins no prizes for tact or diplomacy, his points - blunt as they are - do make sense.

If you have traded a demo account and can prove to yourself (not to me or other T2W members) that trading a methodology based on a pullback to the support area beneath a H&S pattern generates a positive expectancy - all well and good. If you haven't done that, then I suggest you put trading your live account on hold until you have. Also, as cablemonster suggests, use the DoM on the ES as a proxy for YM - as there isn't the liquidity in the latter to tell you anything very useful. Correction, some experienced traders may be able to use it to their advantage but, until you're very adept at using it, looking at the ES is a better place to start.

Don't worry about missed opportunities. All of us can look at charts and, with the benefit of hindsight, say I should have entered here or exited there etc. The fact that you're not sure about your entries or where to place your stops means that you'll always struggle to trade in a consistent fashion. Doing one thing one day and something different the next will always result in indecision - unless the different approaches are market driven. What I mean by that is that you could place stops beneath the last swing low (for a long trade) and, for the sake or argument - that's 10 ticks. The next trade you do the same thing (because that's what your methodology dictates), but the swing low is 50 points away. This is easier to do when trading stocks than it is futures, as you're able to adjust your position size more easily. If you're trading 1 futures contract, it may well be that you simply have to pass up on the trade with the 50 tick stop.

The bottom line is to try to develop a methodology so that you know exactly what you should be doing in any given situation. That way, you'll be well ahead of the trader that's umming and ahhing wondering which way to jump. The next battle is having the discipline and patience to execute your methodology in accordance with your trading plan. On that note, if you've not got a trading plan, check out the last link in my signature. Anyway, try and take the positive's from mine and cablemonster's comments and use the feedback to your advantage.
Tim.

 

[counter_violent]

Kleft, you may find this suits your palate.

Ok crap pun aside, there is plenty of good stuff in the vid.

Linda Bradford Raschke on Volume/Price Relationship - YouTube

 

[cablemonster]

Also, as cablemonster suggests, use the DoM on the ES as a proxy for YM - as there isn't the liquidity in the latter to tell you anything very useful.

just a heads up that I didnt suggest that at all. I wouldnt use the DOM on the YM period, full stop , paragraph, it's too thin. If I were to use the DOM at all I would use it on a thicker instrument to gauge any pulling /reloading but this is scalping for the odd tick.

The OP says he is 'profitable paper trading' which by definition is an oxy moron. If he is confident in his edge paper trading and has solid metrics there would be no problem moving onto small stakes live trading.

I suspect the root cause of the problem here is a misunderstanding of what an 'edge' is coupled with the lack of psychological development to trade that edge if it even exists.

My advice to the OP would be to examine his statement that he is 'profitable paper trading' and to look at what evidence he has for this.

I don't know for a fact but I suspect that he may be at the unconscious incompetence stage and he needs to move to the conscious incompetence stage. Necessary stepping stones on the journey.:whistling

 

[wackypete2]

As an example, 1min timeframe YM right now I consider this to be an inverse H&S some would disagree its a little messy but that is what I see and yet again I have failed to do anything about it. And it hit its target.

You're trading head & shoulder patterns on a 1m chart.
That's your problem right there.

Peter

 

[counter_violent]

You're trading head & shoulder patterns on a 1m chart.
That's one of your problems right there.

Peter

corrected for you

 

[Kleft]

Hi,

I certainly don't mind bluntness if its constructive, easier to get straight to the point than dodge around it which saves everyone a little time.

As far as entries and stops I either struggle to pull the trigger or I'm trigger happy, H&S got in 10 points late and despite having an idea of target I freaked out, same with trade 2 entry was reasonable but again moved 9 points in favor and bounced I took 3 points from it but it still stopped shy of my initial stop. Having stops 5,6 or 7 points off entry was working ok until a couple months ago but maybe things have tweaked slightly as a lot of trades have been getting stopped by a couple points lately. I will have to give this more thought along with being more disciplined in taking the trades and to stop jumping the gun.

As for time frame usually check through 30, 10, 5, 1 min and 400tic I know the lower you go the noisier it gets but things don't always stand out so well to me on one time frame as opposed to another.

I'm going to post today's hack job which will highlight a lack of discipline and patience on my part.

Kleft

 

[Kleft]

Ok, Time to go over what happened today.

I might be giving the impression that I am Mr head and shoulders man but its just a pattern that seems to crop up a lot and seems for the most part to work, I noticed the first one as I was writing a post and so, was not giving it my full attention, lesson, one thing at a time.

What I wanted to question is once entered where is reasonable to put a stop? a pullback through the neckline or below the shoulder say <295 even there I guess it still offers 2-1 ish which is ok.

Flag 1, this is a 400 tic chart but on the 1min time frame it showed dropping volume on the pullback, from what I know it will continue on its rally, some say the flag pole is a good marker for distance, at what point does a flag become a full blown reversal, Do you enter at break of high or break of downtrend with a stop I presume below the low of the pullback? I also did not trade this because 380 was very active in my previous chart so was not too convinced of continuation. Should maybe have considered shorting as a multitop from yesterday 10-15 point stop very nice.

Big H&S entered short at 317 it was looking ok for a stretch then started ticking up, stop was a little wider than usual a couple points higher than earlier shoulder kind of knew at the time I had jumped the gun a little/lot and should have waited for the formation to mature a little more, stopped out at 330 that is a bad trade, one of my faults thinking too far ahead.

2nd trade re-entered short at 315 stop at 325 (which in hindsight seems a little random) entered on break of uptrend in shoulder formation again jumping the gun, And this is where I hack the trade to pieces, I know that there is 80 points on the table I did not want to hold it to what could have been close so in my estimation 270 seems like a legit target, It moves to 300 and I start tweaking my targets flicking back and forth between 270, 280 and 295 I also thought it would be safe to move my stop enough to let it breath but locking in something so I move to 313, alas it bounces which I expected it to do at a round number and TA formation hits the stop and off it goes.

Flag 2 often after a break of support/resistance opportunities arise in flags and consolidation, If I was on the screens I would have been interested but being tight I would have waited for a closer pullback for short entry then fought with myself over chasing the trade.

Long post but at the bottom of it a question to anyone who wants to answer, If you have ever been anxious when trading and tempted to mess about with targets, what did you do to get beyond that stage and trade in a sense where you don't sweat the small stuff.

I know I feel a little more relaxed papertrading over live and I think that makes all the difference but I am struggling with the transition at times.

Kleft

 

[Shakone]

I'd suggest the following post

http://www.trade2win.com/boards/first-steps/121722-why-you-failing-what-you-need-do.html

It's difficult to get advice on specifics as people trade in different ways. Whereas I think a 1min chart is very useful, others will say it's noise. But what is clear is that if you are asking so many questions about entries and stops, then you haven't really got a method of trading yet. And therefore it doesn't really make sense that you have demo'ed it successfully.

Your nervousness/anxiety/messing around with exits etc, is most likely related to the amount of preparation you have done before trading. The more prep you have done, the more confident you will be, the less you will tinker.

 

[T44]

2nd trade...ask yourself if you would have messed with stops and targets if you'd been in Sim, I'd guess not so there's your answer? You even correctly suggested the round number bounce.
Go to the Articles section and have a look at Rande Howell's psychology stuff, there's at least 2 articles from a few years back, worth a read from the mistakes you're making I think it may help.

 

[Splitlink]

As an example, 1min timeframe YM right now I consider this to be an inverse H&S some would disagree its a little messy but that is what I see and yet again I have failed to do anything about it. And it hit its target.

Trading 1 min time frames on the Dow is quite a hairy experience.

In fact, the SP is the easier index on all TFs because of the risk factor involved. IMO, I find it a bit boring and opt for a European one. That's just my opinion.

A head and shoulders is nothing more than a possible change of trend, the right shoulder being the lower high, lower low. I doubt that there are many who would use a 1 min bar to predict a change of trend, although I use 5 min to try for a decent morning, or afternoon, session.

Anyway, heads and shoulders are fine but, for some reason, when I start trading them they stop working! I wish you luck with yours.

Luck goes with randomness, in which I am a believer. Control your stops---OK?

And remember the famous golf champion who said that the more he plays, the luckier he gets.

 

[Vasco da Banana]

Trading H&S on 1m is doomed to failure, IMO. Assuming you're using SB, just looking at the differences between charts from different providers might be enough to tell you it won't work.

 

[Kleft]

2nd trade...ask yourself if you would have messed with stops and targets if you'd been in Sim, I'd guess not so there's your answer? You even correctly suggested the round number bounce.


Yeah I agree on this, I think on paper I would have at least left the target and moved the stop tighter once the neck broke but I got ahead of myself and got chased out by expected fluctuations.

 

[counter_violent]

2nd trade...ask yourself if you would have messed with stops and targets if you'd been in Sim, I'd guess not so there's your answer? You even correctly suggested the round number bounce.


Yeah I agree on this, I think on paper I would have at least left the target and moved the stop tighter once the neck broke but I got ahead of myself and got chased out by expected fluctuations.

Trading 1m tf anything will only result in you becoming a volatility victim.
For the 1 decent winner you will achieve (assuming you can hold for a decent win), you will experience far more stop outs and other sideways go nowhere action when you trade a single pattern in isolation. Add in spread cost and I guarantee you will be a nett loser. But persist if you like !