Reasonably simple trading

[WadeGrimm]

Thought I'd start a trading journal. Not entirely sure why to be honest - partly perhaps to see if it helps me in some way, and partly perhaps to give me something to do and interact with during those dull hours in between trades (there's only so many times you can watch daytime TV re-runs after all). My initial plan is to run this for four weeks, but who knows, it may continue from there.

Brief bit of background: I've been dabbling with the markets on and off for about 20 years. I've traded stocks, forex, bonds, metals, commodities, you name it. I've daytraded. I've swing traded. I've traded techs, fundamentals, news, gaps, black boxes, predictive AI and all sorts of other methods. I've traded fixed-odds, binaries, options and various other instruments. I've obsessively developed and tested countless systems over the years and even coded my own indicators. I've worked alone, with a trading partner, in a trading group and briefly at a prop house. I somehow even blagged my way into trading for a fund at one point. Over the years I've probably accumulated a few stories.

I've had some successes, but I've also blown more accounts than I care to remember. I'm stubborn to the point of idiocy, so I carried on each time. Even when I really probably shouldn't have.

Finally I hit on something that showed some promise - chucking out all the indicators and other crap and concentrating on simple price action at simple support/resistance, i.e round figures, midpoints etc. The move to this type of approach was inspired by the PATE method developed by Julie Hatch, but nowadays apart from the support/resistance levels used (including the unique calculation of pivots), my methodology doesn't have a great deal in common with the original. I spent three years developing my own trading model based on it, that better suits me and my personal trading psychology/characteristics, and it's now something entirely unique to me. I've now been trading this approach full-time for over a year.

Anyway, this brief background is in danger of becoming long and boring, so I'll wrap up. Should have just said I've been around the block a bit with trading.

 

[WadeGrimm]

I'm a full-time daytrader focusing on six markets - FTSE, DAX, EURAUD, GBPAUD, GBPJPY and Brent Oil. No particular science behind these choices other than that they tend to have a decent average daily range and are therefore more interesting and potentially profitable to trade. Frankly I'd lose the plot trying to trade markets like EURUSD or USDJPY and waiting all day for a move of 10 points.

I have a couple of setups I look for across those markets and that's it. No setup, no trade. At this stage I'm not going to go into too much detail, but this is a rough outline of what I look for. I guess you could call them "Type 1" and "Type 2" setups:

I enter trades between 9am-1.30pm and 2.30-4.30pm UK time. I trade roughly twice a day on average, but it varies obviously.

 

[WadeGrimm]

There are six different reasons for me to exit a trade:

Stop - Market hits my stop (max 30pts) either for a loss or in some cases break even.
Target - Market hits my target level (usually 50pts, sometimes 30pts). I occasionally use split targets.
Invalidation - The initial reasoning behind the trade has proven to be wrong.
Reversal - I get a signal to reverse the trade.
Red Flag - Key economic data is due.
End of Day - 2059 UK time is my cutoff for the day. Any trades still open are closed then.

 

[WadeGrimm]

So there you go then. I'll start posting trades on Monday (if there are any). I probably should have waited until then to post all this really, but to be honest I didn't really have much else to do!

 

[tomorton]

Nice ideas, thanks.

I honestly have trouble getting out of a cycle when identifying s/r levels. As I think I'm getting "better" at marking these up on the chart, I actually find all I've done is make a very very busy chart with s/r every 10 pips. So I go back to finding really significant levels which have held at least twice before with dramatic rejections - and I end up with a chart with one support and one resistance 1000 pips apart.

What sort of guidelines do you use to include / exclude a s/r level?

 

[cantagril]

Good one.

I haven't had the same experience exactly but at least something very similar .

To start with, one recognises that one has to learn ...so one does and often ends up learning so much on the journey that the original clarity of ignorance/innocence is lost in a maze of alternative knowledge and perceptions.

Having worked through these over time - and I can attest that (as you have said) it can indeed be a very long time - it's a question of identifying what does help/work and eliminating what doesn't . In my own case, I I feel there is a certain irony in arriving at a destination to find that it was just next to my point of departure.

I look forward to following your journal.

@tomorton
I'm very familiar with the s&r thing turning into an s&m one. My solution to this painful pursuit came thanks to Dentalfloss (aka the Man of a Thousand Charts) who turned me on to Point and Figure - one of the greatest takeaways for me has been the ability to adjust the price action lens to find a resolution that brings Support or Resistance zones into focus. ....and therefore a lot fewer (but more useful) lines

 

[landorra]

IMHO the problem is identifying the moment in which you think you 'learnt' enough. Believe me, it happens and it's never true. You can always learn more.

 

[cantagril]

IMHO the problem is identifying the moment in which you think you 'learnt' enough. Believe me, it happens and it's never true. You can always learn more.

Absolutely true...though I believe that if one retains an awareness (or even keep a record) of all the failures, mis-fires and delusions experienced during the odyssey then it becomes increasingly difficult to repeat one's mistakes and eventually all that remains is what works.

 

[WadeGrimm]

Cheers for the replies all, wasn't expecting any at this stage really! Had the computer off all weekend, I try not too think about the markets too much out of hours.

What sort of guidelines do you use to include / exclude a s/r level?

I don't really have much in the way of rules over things, one of the mistakes I have always been guilty of in the past is tying myself up in so many rules I lose all sight of what I'm doing. In general, if I see a signal at one of my S/R levels, I'll trade it.

I mainly use round figs and midpoints as S/R, i.e I have lines marked every 50 points and I'll trade off any one of them if I see a setup. I sometimes trade quarter-points in the right circumstances, i.e with some sort of secondary factor backing it up such as the level being in confluence with one of the PATE pivots.

You can always learn more.

This is definitely true.

 

[tomorton]

Cheers for the replies all, wasn't expecting any at this stage really! Had the computer off all weekend, I try not too think about the markets too much out of hours.


I don't really have much in the way of rules over things, one of the mistakes I have always been guilty of in the past is tying myself up in so many rules I lose all sight of what I'm doing. In general, if I see a signal at one of my S/R levels, I'll trade it.

I mainly use round figs and midpoints as S/R, i.e I have lines marked every 50 points and I'll trade off any one of them if I see a setup. I sometimes trade quarter-points in the right circumstances, i.e with some sort of secondary factor backing it up such as the level being in confluence with one of the PATE pivots.


This is definitely true.

What you say about rules and s/r levels resonates with me too. I'm guilty of being too analytical and method-driven in finding these things. It actually makes sense to shift thinking from a s/r level being a descriptor of what price is doing to being a descriptor of how a trade should be managed and possibly makes for more profitable trading.

 

[FXX]

The problem with s/r on its own is it doesn't offer anything other than a technical level.

In my world this is the tail end of the dog and comes after sentiment analysis and correlations which includes news and economy. Without a directional bias and a reason for price to interact with a given s/r level in a particular way, s/r would ultimately be a punt given that future expectations are derived from historical reference that only provides input to technical levels - missing the most important element of trading which is sentiment and the direction it represents.

 

[cantagril]

The problem with s/r on its own is it doesn't offer anything other than a technical level.

Yep.

In my world this is the tail end of the dog and comes after sentiment analysis and correlations which includes news and economy. Without a directional bias and a reason for price to interact with a given s/r level in a particular way, s/r would ultimately be a punt given that future expectations are derived from historical reference that only provides input to technical levels - missing the most important element of trading which is sentiment and the direction it represents.

Without wishing to denigrate or contradict what you've said in any way, it appears that he has a mostly technical approach... though from his original post it would seem that he's not only been round the block but also up the garden path and round the houses. I'd be very surprised if that evidently lengthy voyage hadn't led him to contextualise his current approach without at least a nod to sentiment and fundamentals, thereby assisting the establishment of his bias and reducing the punt factor a tad

I hope that WG sees fit to tell us more of what he's up to ...and why .

 

[WadeGrimm]

The problem with s/r on its own is it doesn't offer anything other than a technical level.

In my world this is the tail end of the dog and comes after sentiment analysis and correlations which includes news and economy. Without a directional bias and a reason for price to interact with a given s/r level in a particular way, s/r would ultimately be a punt given that future expectations are derived from historical reference that only provides input to technical levels - missing the most important element of trading which is sentiment and the direction it represents.

I appreciate the comments FXX, I guess I live in a slightly different world. For me it' enough to see one of my setups at one of my levels - I trade it. Over the years I've tried to simplify as much as I can (you should have seen my charts back in the day - so many indicators you could barely see the price). Eventually I'd distilled it down to this.

When I trade I'm not really predicting what the market will do. I don't know if that trade when I enter it is going to be a winner or loser. I'm simply putting myself in a position to take advantage of a move if it comes, and to me seeing a sell pattern at resistance or a buy pattern at support is enough.

 

[WadeGrimm]

I sold EURAUD at at 11.11 this morning. Entry 16244.1, stop 30pts target 50pts.

1.6250 was my resistance to watch as market retraced off the session low. Entry was a little bit close to that session low to be ideal so will require careful monitoring / management.

 

[WadeGrimm]

Point 4 on that chart should say "resistance" not support!

 

[WadeGrimm]

EURAUD makes a new low but need to see it break down through 16225 or there is still potential for a reversal.

 

[WadeGrimm]

without at least a nod to sentiment and fundamentals, thereby assisting the establishment of his bias and reducing the punt factor a tad

I hope that WG sees fit to tell us more of what he's up to ...and why .

To be honest I do consider myself a bit of a "punter" - I trade my setups at my levels and let the market do what it wants to do. I have confidence based on thousands of trades over years of development that if I do the same consistent thing, I'll come out ahead. I'm not going to win every trade and I'm not going to make money every day, but over a decent enough sample I should do OK. So I tell myself anyway

 

[WadeGrimm]

Seems like a vaccine headline has livened things up. I made a discretionary decision to take half profit at +30 and was filled for +30.1 at 1155am.

 

[WadeGrimm]

Having gone past +40 the stop on the remaining half now goes to break even.

 

[WadeGrimm]

1.30pm so morning session is over. I'm heading off out for a walk with break-even stop and +50pt target still in place on the second half of this EURAUD trade.