Below is a new exercise. Many of the trades are outside the realm of what I'd normally take. I want to engage the market more and experiment with more engagement. Grades are administered after the close. It turned out to be one of the most fascinating glimpses into the faulty thinking my mind engages in throughout the day. My frustration from closing my long mid-day grew into negative self-focus (instead of market focus) and revenge trading. It's painful to witness myself doing this stuff, but it's also a potentially powerful catalyst for change and improvement. As Brett says in the quote above, it's all about turning those mistakes and setbacks into goals and opportunities.
Next week I'll focus on:
1) Testing larger stops. Nothing under 5 points.
2) Diligent odds-based thinking at reference zones and before I enter or exit.
3) Trying harder to find trades every 30 minutes (when not in a trade).
4) Trying new tactics and ideas and discussing them.
Journal:
30 Minute Trade Exercise: Simulated Trade every 30 minutes if possible. New tactics, new ideas:
Morning Overview: Overnight sell-off got responsively bought back to over yesterday's highs. So far just a corrective pullback in A period. Value is higher again today. Inter-market themes very neutral. It's Friday, and I'll expect a balanced day most likely.
******************
Grade C -- You forgot to mention that the overnight printed a very strong follow through excess tail off of the lows. And at the very least, the structural cues you mentioned, should have garnered more of a positive bias. You forgot to remind yourself big picture: That the daily is in a high-confidence, multi-day move higher.
******************
6:50: Will be looking to get long at some point soon. Unless something really is obvious for entry, I'll be focused in on those key reversal times. End of A and B periods are high odds, if I've assessed this morning pullback correctly as just inventory re-balance. No unusual volume.
6:56: Bounce not waiting for 7:00 here and we will be looking to go long on the next tick pullback.
7:00: No tick/price pullback yet. Will go long here at the start of this period at 1397.25. Amazing how I watch for a pullback closely for 10 minutes, don't get it, and place an order long and it INSTANTLY -- AND I MEAN INSTANTLY -- takes massive heat and misses my 4 point stop by a tick.
7:07: They waited a few more minutes and there is the stop 1393.25. No increased volume and I'm not interested in reversing to the short side. Overnight poc possible target, but I'm still looking for a reversal soon as my stop out had no follow through and last bar was a doji.
7:08: Long again at 1394.75. My stop was taken out by a tick and LOD now 1393. Monday I'm making 5 points my default stop for this exercise. I want to experiment with stops until I find that zone of avoiding the stop guns and yet not taking a lot of big stops.
7:19: 1st solid bounce of day hits here. Would have liked higher than +550 tick reading, but it's Friday. Odds are, lows of the day are in and now the grind upwards will take hold.
7:32: Those friendly buy programs hit on time, just at the end of B period. IWM screaming higher.
7:40: I finally get to think in terms of targets now. I like overnight highs at 1403 for now. This is probably too aggressive of a target, without expecting a major wiggle. But the morning pullback was probably healthy and it turned perfectly at the end of initial balance. So it's a high-odds check-mark to balanced day. TICK has firmed well and is in a solid uptrend. All of the other indexes are above VWAP, except ES, so I expect ES to probably follow.
**************
Grade A -- You did a great job here framing this common, bull market type of structure. It's not rocket science. As it turned out, the stop was low tick, but we are working on that.
**************
8:00: 1st nifty reversal at VAH. But I think that the A period excess tail highs is the target. Tick is still strong and looking to be in a continuation formation with bodies and readings all above zero.
**************
Grade A -- How I could have out thought this analysis and closed my long before the A period highs were tested, is beyond me. The brain is a scary place to really look at.
**************
9:00: Price trying to grind higher, with nasdaq and small caps leading to the upside at day highs. But as per the rule these days, after 8:00 it is a two hour 1 point balance. Severe lag in energy and it's almost at range lows. XLF medium divergence. The vast majority of high relative volume stocks are very negative today. I think the upside is going to be much more difficult today. Especially with A period downside excess tail below the overnight lows. Yesterday, we had an upside excess tail in A period.
I'm going to take the trade off here for +2.75 here at 9:00 and re-evaluate through the non-movement doldrums.
*************
Grade "I'm not sure". You were correct here to see things that were unhealthy about today's market: That the market would probably have a rough time of pulling off a trender double distribution move like yesterday. But this information was not enough to discount a move to range highs, especially in light of a tight balance above VWAP with a tick moving average solidly above zero, IN A DAILY HIGH-CONFIDENCE, MULTI-DAY MOVE HIGHER!
Not to mention that at 8:00 you declared a move to range highs the target destination!!!!!!!!!!!!!
Then, to boot, you ditched this knowledge later in the day, and took a continuation long trade late session AFTER the market FAILED TO EVEN TAKE THE STOPS OUT ABOVE THE OVERNIGHT HIGHS. Also, the highs of the day were just a minor high above A period range highs. A very dicey proposition at best for a continuation trade to the upside. ESPECIALLY WHEN YOUR OWN ANALYSIS WAS QUESTIONING THE MARKET'S ABILITY TO EASILY MOVE HIGHER.
**************
10:26: Well, I'm astonished at myself. This entry here is essentially grading myself as a big fat D for the last analysis and exit of the trade. From the start of the day, you nailed the structure correctly. There was not a structural SNIFF of ANYTHING suggesting ANYTHING but a classic bull market check mark grinder in the context of a multi-day, high-confidence, bull-move higher. The same structural cues evident today as yesterday, especially the tick formation. There was NO OUT GUESSING THAT. All that's happened since my exit is a grind higher.
Sure there were a few divergences both up and down. That's the way it always is. Your exit was just due to boredom. And with structure like it was, there were going to be no generous pullbacks for re-entry. Too boot, YOUR WHOLE PURPOSE OF THIS EXERCISE WAS TO ENGAGE EVERY 30 MINUTES IF POSSIBLE. THERE WAS A CLEAN RE-ENTRY AT VWAP AN HOUR AFTER YOUR EXIT. YOU CAN'T EVEN FOLLOW YOUR OWN SIMPLE LITTLE EXERCISE PROTOCOLS WITH SIMULATED MONEY. I HONESTLY DON'T EVEN HAVE A FUCKING CLUE WHAT TO DO WITH YOU NOW.
You should have at least held the trade to the range highs. You'd have had some structural exit and you'd at least be green on the day. It will be something to work on next week. And I'm also going to start experimenting with big, structural stops.
10:45: Like yesterday, the double distribution breakout is in motion. We now monitor for continuation. XLF diverged, and that's never good. But in PURE momentum-driven multi-day, high confidence moves higher, these are times to not give a shit about every little divergence. Because momentum is driving the indexes proper!
10:53: I'm not interested long or short here. Double distribution looks to be possibly failing one tick shy of overnight highs.
But it's negative in my head and I need a half hour break to re-group from my stupid actions earlier in the day.
11:00: Will enter a trade at 11:00 long here. 1401.50. 4 point target, 3 point stop. If it fails below VWAP at 1399.50, I'm not interested. Going to walk away from the screen and let this trade play out.
************
Grade F: Ok, now you are really nuts. What happened to thinking in terms of odds? What happened to your break from the desk? When you acknowledged that you were not in a right place?
Here is how it should have gone.
1) Good that you honed in on monitoring for continuation or reversal at the range extreme of last night's overnight and the minor high above today's range highs. This is the reference zone and what you are supposed to do. Here is where you determine what the odds are for continuation or reversal.
2) "I'm not interested long or short here". This is not odds handicapping. It is stupidity and avoidance. Your next statement "Double distribution looks to be possibly failing one tick shy of overnight highs" was in fact a very relevant bit of information that increased the odds greatly for a reversal. So if you listened to your own analysis, you'd have put on a short trade for this exercise, instead of a long trade.
3) "Will enter a trade at 11:00 long here. 1401.50. 4 point target, 3 point stop". Brilliant work. You just handicapped price action to the downside and you go long. With a nonsensical 3 point stop to boot. Later you DOUBLED the position. Taking a break would have saved a big loss.
***************
11:30: So far one tick away from the stop. As I was taking a walk it was interesting to think about how I took that trade long -- for continuation -- when I had stated "It looks like the double distribution looks to be possibly failing one tick shy of overnight highs". All of the flags that I noted earlier, too, were high odds to rear their heads at range extremes -- not necessarily mid-range.
11:50: Adding another until here (5 contracts) long here at VWAP 1400.50. Same stop and target as first lot.
****************
Grade F: Oh my, now this is an example of a person who is more qualified to have a bed at the Alzheimer's home than trade futures. You just patted yourself on the back for seeing that this market had a key reversal at a key zone. And you made odds-based analysis discounting YOUR CURRENT LONG POSITION. YOU SAID NOTHING POSITIVE AT ALL TO SUPPORT YOUR IDEA ABOUT A CONTINUATION LONG BEING HIGH ODDS. YET YOU ADD ANOTHER UNIT TO THE TRADE?
****************
12:53: Stop out on both lots.
End of Day Totals: 1 win, 2 losses -$1600
