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ES looks to open near the bottom of Friday's VA and near to or below Friday's low and close. It seems like there's a possibility we could stay range bound in the zone for a while as there's a ton of volume on the composite profile up to 2137 or so. It seems like upward movement would be slow over the next 10 points while downside movement could come quickly from this point.
I'm really going to focus today on distancing myself from my P&L and not trading scared. I have the tools, and I did a lot of mental work over the weekend to prepare for this week.
Pretty narrow range day, not much opportunity for me. I took 1 trade in the morning (short), I actually missed it develop because I was doing other stuff but when I saw it I took my time to review and make sure I wasn't making a mistake. I put my order in where the price had signaled and didn't chase an entry, which isn't a big deal since I never chase entries. I did get filled and the trade ran against me immediately and in that time I was offside and got a long signal. This actually pissed me off a little because while these do happen, it's pretty rare - so just my luck. In this situations I can either stick with my current trade or reverse and take a small loss; it kind of depends on the larger context and is a judgement call. I decided to just stick with the short. The ES got within a tick or two of my stop but could not push higher and I eventually scratched the trade. The one thing I did correctly was to set a good stop that was outside the noise; doing this allowed me to scratch the trade and avoid a loss.
I had 2 more signals in the afternoon but because of the slow day and range I decided to skip them. One was a small winner and the other was a break even. I really should have traded those but I just wasn't feeling it at that time.
Overall, a pretty poor day all around. I only executed on 1 of 3 trades today and that's bad. I'll try to do better tomorrow.
I have removed a few SR zones that last two days between 21 and 29 because the ES has just chopped those areas too much, there's no longer a spot of lower volume there.
Looks to be a nice gap up open today for the ES. Based on what looks to be the gap size, there is around a 15% chance that the gap will be closed today, defined as price hitting pClose at 2123.25. Right now the ES is trading right around an SR zone I have marked between 2137.25 and 2139.0. I also have a longer term LVN marked at 2137.0 so I will be watching this area closely if the ES ends up opening around here. I would look for this to hold to confirm higher prices. I think that there is a danger of the ES falling back below 35 and getting pulled back into the recent trading range we've been stuck in.
Same plan today...don't care about P&L, just trade my chart, etc.
I ended up not trading at all yesterday. I cracked a tooth in the back of my mouth some time ago and I've been procrastinating going to the dentist to get it fixed. I finally made an appointment as it had been starting to hurt a lot more, and yesterday I was sorry I put it off for so long. I was really unable to concentrate on anything and had to go home, take 2 Advil which I never do, put ice on my face and hope the pain would go away - which it finally did.
I have a few small windows to trade today but I'm pretty busy mid-day and I go to the dentist this afternoon, so we will see.
I had a good looking setup yesterday but it involved pre-market action so I skipped it, which I'm okay with. I have started to look a little at trades where I'm entering very early and using pre-market data but I've yet to do any quantitative analysis so I don't know if there's an edge there or not. I suspect there would be but I'm not comfortable getting into these types of trades until I can back test for a while and see the results on paper. This one would have worked out well.
I have removed a few SR zones that last two days between 21 and 29 because the ES has just chopped those areas too much, there's no longer a spot of lower volume there.
Looks like the ES will open inside of yesterday's VA but to the upper end of it. Perhaps we will see a break either side of yesterdays VA or range and get some movement today. I do have a few areas of resistance marked just above so there might be a good opportunity to sell in this area if price still cannot break through.
End of Day
I had a pretty busy day today but had a shot at a long entry at 10:12. I hesitated a bit but I did put in an order eventually and pulled it after a few minutes - if I had left it I might have been filled. If I had not hesitated I would have been filled...I just sat there looking at the open price spot on the DOM but just didn't want to push the button. I'm basically back to no confidence again. This long trade ended up +5.75 based on my exit plan, so not bad. The rest of the day there were no setups as the ES was in some low range chop.
I went to the dentist and I get to go back tomorrow to have my wisdom teeth extracted, something I should have done a long time ago probably. I probably won't trade tomorrow at all as the procedure is in the morning but maybe I can trade on Friday. Maybe I'll have some confidence in what I'm doing at some point as well.
This afternoon I downloaded a Monte Carlo calculator for Excel and put in all of my back tested trades as well as my paper trades. The results are good and this further gives me no excuses to be so scared about trading my plan. I really hope I can at some point overcome this fear that I have because really there is no reason for it to exist. I'm not trading to pay bills or fund retirement or anything like that. If I lose my account, I can fund it again - several more times actually. The money I have set aside is all extra money and it's just parked right now, not doing much at all. I don't have my entire trading capital parked with my broker, incidentally - in case something happens to my broker I'll still have trading capital to put with another broker. I really don't know why I can't just say, "F#$% It" and just put these trades on and keep them on. In the evening, it's easy for me to tell myself that the next day I will do just that. In the morning on my drive into work, it's easy for me to tell my self I will do just that. Before the market opens, no problem. Sometimes on my first trade, no problem. But at some point that disintegrates into fear and I fall back into this bad habit that I have developed. I suppose the anchor is the habit, and the habit is what I need to break. I have thought about turning trading into kind of a role playing thing, where before I enter a trade I can imagine myself playing the role of someone else, kind of going in character so to say...kind of like an Ed Norton - Brad Pitt sort of thing. I do know that what I'm doing isn't really working so I need to try something else. I would say that giving myself more nuggets of logic, like past performance, the Monte Carlo results, etc. would work but I don't think my fear is rooted in logic, I think it's irrational fear that I have. I don't know that I can overcome an irrational fear with rational thought...maybe I can but I'm not sure.
Anyway, here's the setup I almost got into to. It moved pretty quickly so I'd like to think it would have been a new kind of pain I would have experienced - lately it has just been holding onto offside trades until they get back to break even.
No trading yesterday as I had my wisdom teeth removed...not as painful as I would have imagined.
I peeked at the ES a few times today but had no plans on trading, just relaxing at home. It was really nice weather outside so I mostly sat by my pool and watched the banana trees swaying in the breeze. I did review the action today and I picked a good day to skip (yesterday too) as both were small losing days.
Some things I need to work on next week and going forward:
1) Letting go of control, this is a big deal for me. I've been successful in my career by being in control of everything around me, the small details and everything. I'm not necessarily a micro-manager but I am at least aware of lot of details and involved in a lot of the decision making (at least part of the overall discussion). This trait which has made me successful in business is killing me in trading as I basically need to do the complete opposite. I was doing well letting go for a little bit but I've slipped in this area.
2) Understanding the my imagination is going to be far worse than reality. I have fear before placing a trade, or at least I have for the last few weeks. In reality, my stops are fixed and I never move them to make them wider unless I notice a mistake; I don't move them out of hope. My stops, particularly in this volatility are not usually more then 3 points or so. Getting stopped out on a few trades is not going to crush me, but my imagination runs wild.
These are things I'm going to ponder over the weekend and work on developing a rational understanding that I can apply when a trade approaches and is on. I need something to read over and focus on that brings my mind back to reality and away from this imagined hell that I seem to go to. If I can properly identify the problems, then I can work on finding solutions.
Looks like a nice sized gap up open today. The ES is opening right in an SR zone I have marked and just above a longer term LVN at 2143.
I feel a lot better today and I'm hoping to have a good start to the week in terms of just following my trading plan.
End of Day
Not a lot going on today trading-wise. I missed an entry early in the morning that was a small hit. The rest of the day was pretty choppy and there were a few trades but they were scratches or small losses. Overall, my plan was minus 1 tick. I was minus 8 ticks because I missed the good trade...oh well; pretty much my luck lately.
It's been really hectic at work this week and I have a ton of meetings today. I haven't been doing any trading, just paper trading and marking up trades on my chart during the day...keeping an eye on the ES as much as I can.
I've been doing more back testing as well. I'm trying to further define my edge and eliminate as much discretion from my plan as possible. I'm trying to simplify as well. I feel like I'm getting a better idea of what I am doing and what I should be doing and how realistic it would be for me to have a positive expectancy doing this.
My back testing is by hand, so it does take a lot of time. It is also possible that I will make mistakes doing it manually, missing trades here and there. I do go very slowly and review each day several times to try to reduce if not eliminate those errors. I don't like that it takes so long to do back testing this way, but at the same time I think the time spent is valuable - I definitely learn from looking at the market in this way versus being able to program something and just look at numbers on a spreadsheet.
So basically I'm still kind of researching and refining. Maybe I'm taking a pause for a bit, I'm not sure. If I've learned anything over the past few weeks it's that my confidence isn't there. Maybe part of that is confidence in my plan. If I can back test over and over and build a track record of trades then look at those going forward, surely I'll have a bit more confidence. If I can simplify my plan in terms of entry and exit parameters to the point where I'm not making a lot of decisions, and if those are thoroughly back tested with walk forward analysis completed, surely I'll be a bit more confident.
I can say that so far as I've removed discretion from my plan and gone through back testing up to this point, I'm pretty shocked at what the edge actually is. I do have scenarios where I will scratch a trade, so just looking at winners versus stop outs, my winning percentage is 50.3% - just a coin flip. There is one thing I could do to improve this slightly that I already know about and I have a few more ideas to look at and back test as well. I have a feeling the other ideas will just increase trading occurrences and not improve winning percentage but I'll have to see. At 50%, so far my points per trade is at +.85, so the edge really is coming from trade management more than anything.
If this continues to look the same I plan to also use this same plan and back test NQ, though I can tell that won't be soon.
Been a bit...I have not been trading recently. I had a poor start to October that basically caused me to go back and re-evaluate what I'm doing. It seemed like every trade I put on was destined to stop out and that shook my fragile confidence.
What I've done is remove 100% of the discretion for entry from my plan. I've gone though a few iterations, with a basic entry to start with that I added a filter to and redid my back testing. I then changed 1 parameter and back tested everything again. I then compared results for all 3 and continued to back test the better one, which ended up being the last one I tried.
There is a small amount of discretion for my exit, but this only comes into play on about 10% of the trades I take. When back testing, I either take the worst case scenario or what seems reasonable; I don't take the best case scenario for my exit ever.
While I've been back testing, I have been live paper trading. I think I have a good feel for the plan in terms of what an entry and and exit looks like. I have a bit more back testing to do this week before I make up my mind about going forward. So far, I have back tested 2016 and 2015 as well as parts of 2010 and 2008. I have a hit versus stop rate of 51% and an average per trade profit of just over 1 point. The average profit per trade is a bit skewed toward the higher side because I back tested more in higher volatility periods in 2008 and 2010 to see how my plan performed as I have some good lower volatility data from this year.
What I have found is that my plan favors higher volatility markets; the overall performance has tested out better during these periods. During periods of low volatility, measured by daily range and intraday ATR, the win rate is lower and these are where I get more weekly draw downs. From a weekly perspective, most of the weeks I have tested have been profitable and all but 1 contract has been profitable. The contract that was not profitable was the M2010 contract.
My goal here is to develop a confidence level with what I am doing in terms of a trading plan. I need to know that over time I will be okay trading my plan. While I have done back testing before but not to this extent. I do realize that there is never a guarantee in trading. No matter how much I back test I could grind my account down to nothing over and over again. I realize that I could be doing something wrong in my back testing, missing losing trades by accident or something which will distort my results. When I do my walk forward Monte Carlo I do apply a penalty to all of my trades, both 1 and 2 ticks. Based on my average number of weekly trades and how many weeks I anticipate trading, I estimate that I'll be making 500 trades per year. With a 2 tick penalty per trade, this is a 250 point penalty in a year - hopefully that is sufficient. Of course the outlook looks a lot better with the 1 tick/125 point per year penalty applied but the 2 tick penalty still has a positive outcome.
I don't know when exactly I'll be ready to start putting my money on the line again. At this point my confidence is growing, which is what I really need. I suppose I will need to be 100% convinced that what I am doing will work. I need to have a high level of confidence so I can follow my plan no matter what. I really need to eliminate my trading errors, and I need to be able to continue with my plan even if I have a losing week or a few losing weeks in a row.
Anyway, enough rambling...back to digging through old charts.
