I would like to start with a simple statement of the primary idea of this post is to help me. Yes, I said me. I hope it will help you as well, but, to be honest, if it helps me and not you, then I am still happy. :) I can't help you into consistent profitability; only you can.
I recently created a thread on how I track statistics on my trades, and make changes to my trading plan accordingly. You can view it here:
This thread is written as a record of a particular setup I find highly probable with the CL. (NYMEX light crude oil - NYMEX.com: Light Sweet Crude Oil ()
This is the trade I want to focus on.
One of my goals was to get away from indicators as much as possible, and so, with this in mind, I have a pretty bare chart. I am using a few indicators which Big Mike wrote which serve as moving averages, and a support/resistance indicator. I also look at volume, for now.
My primary chart is a 6 range chart; I also have a few larger charts, both range and time to look at for help on where to exit / look for areas of support & resistance.
I am a strong believer in the idea that your targets must be larger than your stops to be consistently profitable over a long period of time. With that being said, my initial stops are 10 ticks for first target and 12 ticks for my runners. With CL, each tick is $10.00 USD. I primarily have different stops so I can easily manage them during the trade. For this reason, I also have a profit target entered of 10 and 60; but again, I will manage the exit on the runners as I am in the trade. I am still working on various strategies on where best to exit. Over time, my spreadsheet will help me adjust my exits.
I look to trade from about 8:00 CST until lunch or until the market tells me to stop. By this, I mean when price action becomes poor for an extended period of time, I get false signals, or volume is less than desirable. Or, ideally, I hit a nice daily profit $, and want to go and "live". Isn't that what it's all about?
Anyway, today was a very good day for this setup, so I am going to use a few trades as examples on what I look for to enter and exit.
Basic rules:
1) Trade from 8 - 2 CST, or until one of the conditions above are met.
2) Take off half of my position at 10 ticks, enter 'free trade mode' with a clear mind, and let the market tell me when to exit the runners.
3) No distractions (Phone, e-mail, web, chat, etc.)
4) Have fun.
5) Follow my rules! (the most important part = discipline and money management)
I use 2 indicators primarily:
1. The white line you see which is a number of moving averages combined.
2. The green and red dots which serves as an area to look for support/resistance.
Specific entry rules:
Long:
1) Price closes on the high of the bar and has just recently crossed both of my indicators
2) The price bar is not touching either of my indicator lines and preferably is heading the opposite direction of the white line at entry and has pulled away from both
3) Ideally, my stops will be on or below the #2 indicator dots / the #2 indicator will not be more than 12 ticks away
4) Use buy stops based on where the price will be at the close of the signal bar
5) Take half of my position off at 10 ticks, and the rest when the market tells me to exit. My exit right now is based on a low close of a red bar. (still in progress and testing for further optimization)
Example long from this morning:
Entry occurred at 8:34 CST and the entry buy stop was 72.32, got some slippage in my favor, and was in at 72.29 with 2 contracts, which was fortunate as my first stop would have been hit to the tick. :) Exited first contract at 10 ticks, and second at 72.87 after not moving my stop in time. The exit should have happened at 72.94. MAE was 7, MFE was 86. When I refer to MFE, like in my other thread, I mean what was the maximum number of ticks I could have gained if I was perfect on this trade. This is not the MFE that Ninja reports, but the MFE if I could have survived all of the pullbacks, etc, basically until I get another signal. +68 …