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Huge Overnight downswing to Monthly VWAP. Opened up and retested that level. Caught a couple short scalps along the way and a buy at 57 at monthly vwap. Should've been taking more out of these trades today as the range and volatility was much larger. +8.75 points off 5 trades.
Second test of MVWAP on the daily in the month happened yesterday. Might get a little bounce today but overall think we will go lower here in the next few days. Expecting a test of 6025-30 area.
Today my bias is neutral and will look for some scalps. Industrial production at 9:15 is the only major release today followed by housing index.
Trade 1: Opening VWAP Reversion for a quick 4.75 points. Short to VWAP.
Trade 2: Short off RTH VWAP after the opening sell off, only took a point. +1
Trade 3: Long after a close above 20 MA and Vwap. Should've added to this on a test of VWAP but was not paying full attention at the time. Only took a point here again. +1
Trade 5: Quick long off of 20 MA slowly catching up to price. This trade is usually successful but I got out to quick just looking to hit a certain milestone on my account. Dumb. +.75
Trade 6: Took a short looking for a small profit after a high volume node off of 2SD. +.75
+9.25 on the day
Experiment: What would've happened if went with 2 contracts with a quick scalp of one and a stop at BE on the trade i.e a scalp of 1 point, place stop at -1 point from entry. Profit will just reflect the max point. This is obviously not where profit will always be taken but is just for theoretical purposes.
Trade 1: 1st contract: +4.75, 2nd: +22 = +26.75 Not a scalp trade
Trade 2: 1: +1, +9.25 = 10.25
Trade 3: +1, +9.5 = 10.5 Not a scalp trade
Trade 4: +.75, +10.75 = 11.5
Trade 5: +.75, +6.25 = 7
Trade 6: +.75, +8.5 = 9.25
I missed out on a potential 44.25 points, even with a BE stop in place. I have to figure out a way to capture this. This does give me confidence as it shows me that I am reading the market well and picking good spots and not just throwing orders out there randomly.
Overall a fine day but i continue getting out of trades too quick. I guess this is the trade off for not wanting time risk. I have not really had a losing trade in the last 5 trading days because of this idea of taking quick scalps, but I am missing out on much larger profits. The big positive here is that I am picking good levels for bounces and am getting a very good feel for the market. In the near future I really want to begin pressing it by going with 2 contracts; scalping one for a quick profit like I have been and letting the 2nd go as a runner with a tight stop. The last about 5 trading days have all been winners because I have reverted to the scalping that was successful for me back in may. I will continue on this path as I gain confidence and will eventually begin to press it more and more.
I will do further backtests on previous trading days as well.
Got completely burned today. My thesis was 100% correct and I went against it looking for some smaller scalps and swing trades. Got caught on the long side when NQ ripped through monthly VWAP. Ignored all evidence that pointed to getting out earlier. Stayed in the trade. Lost 30 points. Tough to swallow. Wiped out all profit from my previous 5 successful days. Time to start building it up again slowly.
Basically the trade was a close above vwap and the 20 MA. Got long with a target of SD1. Price fell but found some support, then went on to crash completely, just as I expected from my thesis from yesterday. Funny because price ended up coming close to SD1 by the end of the day. This trade has hit 100% of the time for me and in a 180 day back study has hit 100% of the time when occurring before 1 pm. I need to set some risk parameters for that trade as it is more of a swing trade instead of a scalp. Would've saved my ass today in hindsight.
If this day happened a few months ago, it would be hard to swallow and I might've contemplated changing strategies again or possibly throwing in the towel. While today sucked and seeing that negative number on my statement felt awful, I am not too down about it because I am very confident in my trading right now and where I am going. It sucks to lose that amount of money on one trade but I am continuing to learn from these mistakes and will not let it happen again. I am picking some great levels and making great hypothesis' off of the daily chart, setting me up to trade on the right side for the day.
My next step is to write up an official plan as I think I have a solid base to work with here. I don't want any hard rules here but i think it would be good to get some guidelines on paper.
Here's to facing adversity head on and getting back at it tomorrow! :car:
Dumb of me to not have a real strategy with the type of trade that got me burned today. So did another back study and going to put these rules in place.
1a. Must be before 1 PM
1b. Must be a convincing close through the 20 MA with good space between the MA and VWAP/SD1
2. Will not enter right away. Will enter on pullback to VWAP/SD1
3. Risk defined by profit target. Looking for just a 1:1 here as it is a high probability trade.
-If profit target is 5 points, stop will be placed 5 points above/below VWAP/SD1.
-Since entry will be at SD1/VWAP, these stops usually correspond with other SD1 or VWAP
4. Risk no more than 10 points
Example from today:
Got a close above the MA and VWAP. Without the rules, I got long right away with a target of SD1. This never came and price fell quickly after. Without any risk parameters and too much confidence in the trade, I held on for a 30 point loss.
With these rules, I would get in on the retrace to VWAP @ 73 with a target of SD1 @ 78.50. That is a target of 5.5 points, so the stop would be set @ 67.50 which corresponds with SD1. Stopped out for a loss of 5.5 points is a trade off I will take to have safety from huge losses like today.
Decent Example from a couple days ago:
Get a close below, original profit target of 8 points. Stop placed 8 points above. Price continues higher but doesn't hit stop. Eventually hit VWAP for about 5 points.
Good (Usual) Example:
Price closes below MA. Get a retrace to SD1, short at 21. target of 7 points, stop 7 points. Profit hit at 6 points.
2nd example from this day: Close above MA. Long on retrace at 107.50. Target of about 7 points. Profit hit of 6.5.
Today's trade was the first time that I have seen this signal completely fail, and it actually still almost hit its target at the end of the day, so I do not want to abandon this one. Applying these rules will help me avoid 1. huge losses like today and 2. holding onto a trade for so long and missing other opportunities along the way. ALthough I will get stopped out sometimes and will miss some trades due to no retrace, it is worth it to avoid a huge loss today.
The past few days I have felt like I have just been taking any trade that meets the conditions i.e coming up to an important line, regardless of the context. This was getting me into bad situations and making my losses much bigger than my winners. Reading the first 50 pages of TSJ and watching @michaelleemoore webinar got me to do a pretty large manual backstudy (took about 4 hours).
I was just looking for the best levels to be scalping at along with a stop that won't get me stopped out a lot and a target that will get hit. What I found was that stops and targets should be adjusted according to the range/volatility. Another observation was that vwap/MA trades are more successful outside of the OR as opposed to inside. When SD1 from SD2 trade works out, it always hits the next key line.
Parameters: 30 day backstudy on the NQ, 1 minute chart, 9:30-1 ET. 8 tick stop/5 tick profit target. Every trade was taken regardless of context or location. ETH
Results:
VWAP: 1.78:1 64%
SD1 from VWAP: 1.7:1 62%
OR IS: 1.44:1
OR OS: 1.6:1
SD1 from SD2: 2.5:1 71.4%
19 SMA: 1.96:1 66.2%
FIB IS: 1:1 50%
FIB OS: 2.5:1 71.4%
MidLine: 1.84:1 64.8%
YHI/LO: 10-11 47.6%
This test gives me more confidence in being able to be successful in this system. I like to be in and out quick because holding positions is just hard for me personally. Like mentioned earlier, these trades were taken anywhere in a day. When adding context to the trades in green, the percentages increase significantly, especially the SD1 and MA trades when taken out of the OR.
I see that you have the cl as one of the instruments you follow.Of particular interest are the 1min volume spikes.Many times, they will coincide with some level....even a blast into sd2 on a rotational day can give off a fade.I also watched MLMs webinar this week .The reversals on the cl are of particular interest.Especially at HOD/LOD.An entry at that area for me means we have to reach for a NHOD/NLOD to stop me....
Very interesting that you mention that. When I was using the 3 min on the NQ the last few months big volume spikes were very reliable in finding some smaller pullbacks or reversals. The 1 min in the NQ doesn't have the same stopping power but has a little when coinciding with a level. Just looked through CL and you seem to be right on about that. Very interesting.
Didn't 100% understand your second point about the HOD/LOD. Do you mean you are looking for reversals at yesterday hi/lo? Would appreciate any input on how you play this!
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