Best Thread Trade2Win's 10 Year Anniversary - Day 5 (Anatomy of a Trade)

[arabianights]

Can I write this over the weekend?

 

[Adamus]

Here's my trade

Without posting the code here it's difficult to include all the little bits and bobs that make up the trading system, but I'll just give a quick run-down and hopefully that's enough to satisfy the judges.

It's not the easiest to see immediately but the chart does show the entry point and the exit today. If you're not familiar with NinjaTrader charts, the exact level of the executions is where the pink and blue triangles are.

Like I said it's not so easy to visualize what's going on, but each entry has a target and a stop roughly equidistant from the entry level.

What the system does is look for swing / turning points. I originally started this using the standard daily and weekly pivots on the big currency pairs but the stuff like EUR/CAD doesn't have these, or at least if you do calculate them, they don't have much value.

So when the system determines a swing (e.g. mid-afternoon yesterday), it then checks on the two MAs and if they cross in an orderly fashion, it enters in that direction, putting the stop at the swing point or just a bit beyond, and the target roughly the same distance away.

This one illustrated was one of the system's suicide trades. I would like to filter out the trades in the direction opposite to the clear trend (upwards in this case) but I couldn't find a way to do it that was profitable or elegant.

It's an interesting system. I have loads of examples where the system picked the tops and bottoms to within a few ticks, and a few examples where it got 180 degrees out of sync and sold the bottoms and bought the highs 3 or 4 times in a row. But mostly it just chugs along and turns an acceptable profit with trades that go half right, or with trades that pick off only 100 ticks of a 300 tick move.

 

[Sharky]

Can I write this over the weekend?

Only if it's awesome and you've got a good excuse! But then we'll knock off marks for late entry.

 

[arabianights]

I couldn't reasonably type it up while actually doing it, is the thing...

 

[shadowninja]

Can't you type with your left hand? Oh, wait, you're talking about trading...

 

[shadowninja]

"Trade2Win's 10 Year... Jan 21, 2011 12:58pm DionysusToast do you take Amex?"



Western Union transfer...

 

[scose-no-doubt]

Bit of a correlation thingy here.

Looking to short aud somewhere in the yellow circle if get a reversal signal.

Been a bit of a disparity between AUD and DJIA correlation in the shorter term but aud has been over performing the longer term so could be turn around.

Last time gold tanked aud overextended the move but this time is trailing above in %terms

Could be trouble around parity

Daily showing lower high and a 4 hour showing bounce off of 835. Will be lower high on 4h if reverses in/around circle so expecting nice place to put stop and good RR in case that 835 level is tested or better if it breaks

Only thing scaring me is high correlation with gold which may turn around as stuck at this 43 level but if that breaks too deffo short

 

[DashRiprock]

I will explain my strategy first, and then update or add another post when the trade is put on.

I trade T-note futures on the CBOT. My primary strategy relies alot on reading the time and sales, along with trying to spot where other - bigger - traders are working their orders in the market. The basic idea is this:

1) Identify whether the market is chopping or trending
2) ONLY trade in the direction of the trend
3) In an UPtrend, look for big traders working BUY orders (and vice versa)
4) Join them.

However, this is near impossible to demonstrate on an forum. Instead, what I will do is Use a longer timeframe and ignore the DOM just to try and trade with the trend. I can explain the "trend / chop" part of the strategy here but the scalping but - no chance, hence the longer timeframe. Also, I notice that the spread on ETX for t-note futures is 4 ticks wide!

So, I'll b@stardise my strategy in order to make it "post-able" here!

I use Heikin Ashi charts and a 10 period EMA. I look for longs when the EMA is going up and the Candles are "up" candles. Reverse for shorts. If the EMA is going sideways or the market looks like it's in a narrow range, I stay out.

I set audio alerts for y'days High, Low, Onight High and Low, and any High volume areas. I don't put lines on the chart I think they get in the way. It isn't a rule in my strategy I just like to know when it happens.

Next post or update will be screenshots of chart and trade.

 

[DionysusToast]

I couldn't reasonably type it up while actually doing it, is the thing...

Pub after work can't be that urgent can it?

 

[arabianights]

Pub after work can't be that urgent can it?

I'm not staying late to attempt to win a kindle, when I've already broken two

Edit: I'd be making a very similar post to dash from the looks of it, anyway. And he writes better. Porbably won't bother!

 

[counter_violent]

Right i'd better keep it simple.

Short AUDUSD

This trade opened @ .9850
Target will be @ .9750
Stop will be @ .9915

Chart 1 shows first and second legs of what I believe will be a third leg continuation move.

Rational for this trade is. Continued relative usd dollar strength versus continued relative aud and gold weakness.

Theres no sense in expanding on this basic premise. Most over complicate analysis to the point where they get nothing done.

Win or lose, this is the trade I am in.

If target is not met, then I will probably close before end of play.

Not to be outdone by the excellent contributors to the thread.

Why is it so important to make a good assessment of where to place a stop.

However we view the markets ourselves, we absolutely must take into consideration how others may operate.

Not forgetting the original premise of the trade. Potential third leg positional trade.

Here is why I picked .9915 as my stop level. On the attached chart you will see the legs and the levels. After a second leg, price can often try to shake out the weak short traders stop.(poke above previous minor swing point) Also worth noting that this particular area of price action is around the big number 9900, so for those already short previously, they may well have moved their trailing stops down to lock in a profit. Move the trailing stop down too quickly,too far and to the wrong level can and does cost in terms of lost continuation of a perfectly good trade.

Early days yet as my stop could easily still be taken out. Time will tell.

Stop now hit

 

[trade321]

ALAS! The Mighty C_V is out!

The reason for such failure????

Why he did not consult with me!

TutTut C_V i have told you about this kinda of thing before!

The reasoning behind his trade is so simply true but alas the stop far too inadequate
and suceptible to those same weak shorts he duly mentioned and his entry, well, far to near the lows of the second leg to allow for adequate saftey . . .

i know nothing


just shorted at .9915 :-0

 

[trade321]

ALAS! The Mighty C_V is out!

The reason for such failure????

Why he did not consult with me!

TutTut C_V i have told you about this kinda of thing before!

The reasoning behind his trade is so simply true but alas the stop far too inadequate
and suceptible to those same weak shorts he duly mentioned and his entry, well, far to near the lows of the second leg to allow for adequate saftey . . .

i know nothing


just shorted at .9915 :-0

anyway entry was 9914/12, original stop above 9930 area (middle line) , target area 9850 area (above relative lows), stop be moved to b/e when 20/30 profit built in which will be any minute!


i know nothing :-0

 

[DashRiprock]

I will explain my strategy first, and then update or add another post when the trade is put on.

I trade T-note futures on the CBOT. My primary strategy relies alot on reading the time and sales, along with trying to spot where other - bigger - traders are working their orders in the market. The basic idea is this:

1) Identify whether the market is chopping or trending
2) ONLY trade in the direction of the trend
3) In an UPtrend, look for big traders working BUY orders (and vice versa)
4) Join them.

However, this is near impossible to demonstrate on an forum. Instead, what I will do is Use a longer timeframe and ignore the DOM just to try and trade with the trend. I can explain the "trend / chop" part of the strategy here but the scalping but - no chance, hence the longer timeframe. Also, I notice that the spread on ETX for t-note futures is 4 ticks wide!

So, I'll b@stardise my strategy in order to make it "post-able" here!

I use Heikin Ashi charts and a 10 period EMA. I look for longs when the EMA is going up and the Candles are "up" candles. Reverse for shorts. If the EMA is going sideways or the market looks like it's in a narrow range, I stay out.

I set audio alerts for y'days High, Low, Onight High and Low, and any High volume areas. I don't put lines on the chart I think they get in the way. It isn't a rule in my strategy I just like to know when it happens.

Next post or update will be screenshots of chart and trade.

OK, I'm now short from 120.01 with my stop at 120.29

These are decimal prices but t-notes are trades in half ticks of 1/32.

The smaller picture shows the Heiken-Ashi candles are BLUE for DOWN and the EMA is also pointing DOWN - this means that I am only looking to trade SHORT.

The second picture shows where price is in relation to yesterday. The "trigger" for this trade was the retracement up to yestardays high volume area (yellow line) which coincided with the overnight high. That, and a gap in RTH, meant I reckoned this trade was good r:r.

The stop is places above the yellow line, but this is really only a disaster stop. If I follow my strategy I should be well out before then. Like I said, normally my entries and exots are done with the DOM, and I do end up having trades that go in and out for plus or minus 1 tick. In this case, I will just ride it out until the EMA goes flat or I get two UP candles (in my scalping trading, this is a warning signal for me).

I only did it $1 per point because I'm cheap and at 4 ticks wide ETX are havin a giraffe. 4 ticks is sometimes my Target!

 

[trade321]

anyway entry was 9914/12, original stop above 9930 area (middle line) , target area 9850 area (above relative lows), stop be moved to b/e when 20/30 profit built in which will be any minute!


i know nothing :-0

This be not strictly how me trade btw, but to be sure many of the elements are sound
and was far too good an opportunity to wind the good C_V up.

 

[oiltanker]

fridays not the best day for a trade? mon is better.

i've been long aud on hieken ashi but watching the longer term retrace trend line for a short but as its friday unlikely to get any follow through today?

reckon weekly candle will be a doji

 

[Hotch]

I'm apologising in advance for the length of my post, Varengold didn't update when I expected so it's just getting longer and longer ;-)

EDIT: ding, we're off

 

[DashRiprock]

OK, I'm now short from 120.01 with my stop at 120.29

These are decimal prices but t-notes are trades in half ticks of 1/32.

The smaller picture shows the Heiken-Ashi candles are BLUE for DOWN and the EMA is also pointing DOWN - this means that I am only looking to trade SHORT.

The second picture shows where price is in relation to yesterday. The "trigger" for this trade was the retracement up to yestardays high volume area (yellow line) which coincided with the overnight high. That, and a gap in RTH, meant I reckoned this trade was good r:r.

The stop is places above the yellow line, but this is really only a disaster stop. If I follow my strategy I should be well out before then. Like I said, normally my entries and exots are done with the DOM, and I do end up having trades that go in and out for plus or minus 1 tick. In this case, I will just ride it out until the EMA goes flat or I get two UP candles (in my scalping trading, this is a warning signal for me).

I only did it $1 per point because I'm cheap and at 4 ticks wide ETX are havin a giraffe. 4 ticks is sometimes my Target!

OK I am out of my trade now for +$11

If you look at the smaller picture you can see there were two UP candles and the EMA was pointing sideways. Sometimes it does this just with one UP candle which is why I wait for two (you can see a lone UP candle in the picture).

The bigger picture shows a yellow line at another high volume area from yesterdays trading. In my normal trading this is a warning to me that we might start to chop around a bit, so I decided here was a good place to take the trade off.

The R:R might look stupid (risk 28 to make 11) but as I said the stop was only for disasters. In my normal trading I use a stop of 5 ticks and am usually able to get out for less than that. I only trade from the open until about 4 o clock, for me three hours is long enough to get one or two really good trades in and job a few others for a tick or two.

 

[HowardCohodas]

Entering the trade
Criteria
For a credit spread, I have two key criteria; credit received and Probability of Touching (PoT). Probability of touching is a proxy for the chances that I will exit the spread rather than let it expire.

For the credit, I look for 5%. Minimum acceptable credit is 3%.

I trade this as a spread to assure I meet my minimum credit requirement.

For PoT, I prefer to stay under 20%. Because of the jumps between strikes, I may go as high as 22%.

The Trade
PUT Credit spread on NDX Weekly:
Short 2250, Long 2200, Credit $1.30, PoT 18%

CALL Credit spread to complete the Iron Condor
No acceptable spread available at this time.

Managing the trade
Managing the trade includes taking advantage of opportunities and escaping jeopardies.

Opportunity
Completing the Iron Condor
If a CALL spread meets my criteria for entry then an Iron Condor can be formed. Although each spread will be managed as an entity, the attractions is that no additional sequestered funds will be required.

Rolling the spread
Unlikely in a weekly, however in general, if a spread exceeds 80% of its capped yield, I will try to close it and open another using the same entry criteria. I will not exit unless there is another already meeting my entry criteria.

Jeopardy
Probability of Touching
If PoT exceeds 10% at the end of the last day of trading, I let the spread expire.

Loss on Capital at risk.
If loss exceeds 20% of capital at risk, I will exit this trade.

 

[scose-no-doubt]

Just in case my last entry isn't permissible as it's not a trade I have taken, how about this one?

Reason: faded trader_dante*

*second time this week - he's very bullish yen