Once more into the breech
Well, the months have passed and another opportunity presents itself to young, jaded Frugi to make a dunce of himself in front of a familiar audience.
I've reread the whole thread and realised, with some shock, that only now do some of the superb pieces of advice offered by the likes of BBB, sidinuk, Cman etc. make real, pragmatic, meaningful sense to me. Same goes for a lot of the stuff I've read. It is one thing to read something and say to oneself, "Yes, I must do that" in a vague theoretical way but quite another to actually incorporate it as a useful rule, as part of a system. I guess I'm slower than the rest!
So now I have more of a rigid plan that is neither mindlessly mechanical nor too loose and ill-defined to accurately follow. I've tried trading only strict mechanical criteria, such as the 7-9 breakout on the Euro, and found them to be unsatisfactory; as BBB put it 'your heart's not in it'. And I loathe the robotic inefficency. I've also tried pretending I am good enough to trade purely on gut feeling, observation and experience, and clearly wasn't. I had some sort of system but it wasn't tight enough. So I have compromised with a proper rule based selection of setups that suit my temperament, but these are rules that, crucially, still require a human to observe and make the final decisions.
I'm trading YM mini dow on a one minute chart and looking for a few setups.
First off, money management (tightened up):
Max loss per trade $180, i.e 1 contract 36 pts, 2 contracts 18 pts, 3 contracts 12 pts or 4 contracts 9 pts. These are maximums and losses in practice should be less.
Goal $150 per day, on average. (Yes, I'm scoffing too and will be happy to break even or suffer small losses for a few weeks. The idea is to avoid large ones!)
Setups:
Wait an hour or so to see if a trend develops. Trend = ADX (14,14) > 30 on the 5 min YM while (Naz, Dow, SPX) are all above/below their 20EMAs/ 5 min. This could happen at any time in the day (be especially wary after prolonged consolidation / range contraction). TICK bouncing off zero or thereabouts (i.e no +/- extremes) and sometimes printing >1000 may warn of impending trend (& confirm it later) before ADX rises above 30.
1. If trending look for Grail entries, i.e pullbacks to the 100 EMA / 1 min, with a target of the previous high or low (or 10 pts, whichever is greater). Stop must be no greater than the target and ideally <half. If trading >1 contract sell all but one at the target and move the stop to b/e on the remaining, letting it run till stopped, the close or 30 pts profit. ADX>30 tends to catch trends late so I'm not looking for huge targets, just safe, reliable trades.
2. If no trend look for modified "Chartman gamble entry" on a three peak bump top/bottom that forms over 25+ minutes and features a TICK and RSI* divergence with price. Ideally this will form at previous res/sup or another significant point on a larger timeframe. The bumps should be evenly spaced HHs/LLs but a little artistic licence is allowed, e.g. a low followed by a double bottom or a H&S/inv H&S would be allowed . The stop should be a little <15 pts. Lock in 5 pts at 20 pts profit with all contracts. Try to exit at pattern targets or obvious s/r. If trading more than 1 contract, take 10 pts profit on the first one(s) and let t'other run as per previous rules.
If a trend develops in an opposite direction to any open position then remain alert as it may need to be closed swiftly, ideally on a countertrend pullback to the 100 EMA.
3. If it is trending, especially if we are at a daily high/low near the close of trading, I may still enter on the above setup but with only one contract and a target of the 100 EMA.
4. Discretionary scalp. Very subjective. Tiny <10 pt stop. 10 pt target. At least 3 bits of TA confirmation, e.g a breakout res/sup switch test bouncing off 100 EMA and a century number with TICK bouncing off zero, a time pivot, a DT, DB, TL, 123, 53 pattern etc. Using tiny stops and high probability targets I can experiment with other setups cheaply. Some of them may become bread and butter!
I'll be taking it easy for a while trying to refine certain rules and familiarise myself with the setups. I am a little sheepish about allowing indicators back onto the screen, but am the sort of person that needs fixed definitions for at least some elements and divergence has oft been kind to me.
I may or may not post results and the above rules are subject to continual re-evaluation
*Welles Wilder 14
