My response to another elite member. Posted here for my future reference.

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Hey @Narcissus! I have recently found your journal and have enjoyed following along with it. You seem like a thoughtful dude! I am curious to learn what you have learned from your hold to the close exercise. I might be willing to try something like it, but I need to think about it more. I find that I'm mostly regretful of letting go of trades when the market is trending, which isn't often.
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Thanks. This exercise is very similar to Mark Douglas suggestion of taking 50 trades as per our entry & exit rules to see whether we have an edge. I didn't bother when I listened to him few years ago because I knew I had no system, no edge and no discipline but didn't want proof of that!

Few months ago, I tried investiquant.com, which provides historical data points and potential bias for today. (I am a health professional and hence I tried them for data crunching and backtesting. It's expensive and most traders with some tech background can probably do it easily without much fuss). Their profit factor is based on holding the position till EOD. I traded Dow back then. MicroYM futures as a discretionary trader and ETF for that systems trading. It was an eye opener.

Holding till the end consistently beat my method of trying to time the market.

You are right about the less frequent trend days. But when you get a winner, you literally get 90+% of ATR which is huge. During range days, you will give up some profit for sure. But, you also get out from paper loss as market often claws back and close in the value area. e.g. today. In discretionary trading, usually I got stopped out at the extreme point anyways, only to see market reverse. In a sense, I was having bad deals on BOTH trend and range days.

Holding a trade for 6+ hours without stops was a huge change for me. Please note that I don't even watch the market after EU close as I trade from Asia now. I was nervous about waking up with a big loser. Hence I tried 25 DIA ETF which is around 10k and a big loss 2SD would be 3% i.e 300$. I'm fine with that. Even extreme 10% is 1000$ and that's ok. The beauty is you can literally trade just 1 ETF and the max gain/loss would be 10$ + 2$ commission. Anyone considering spending 20+ years in this business should try this drill for 20 days, in my opinion. I truly feel the ebbs and flows much better when I have a position. Even if it's just 1 stock. Since I record my screen and write my thoughts & emotions LIVE, it has the additional educational value. I realised that my intuition and analysis was VERY bad in picking the best exit points for profits. Heuristics again.

The most important lesson for me is this. It fundamentally changed my perception of Market. I'm no longer a nervous player in the boxing podium (who wins sometimes but more often gets punched) but rather a spectator in a football match. The key difference is that I enjoy this game being played by others now and no longer consider my team's loss as my personal failure.

This is my journal entry #74 regarding this very specific EOD hold with some interesting trade pics.

Is it different this time?

I try NOT to read too much into fundamental analysis, even though I love the knowledge aspect of it. The trouble was it's adverse impact on my trading mindset and the myriad set of biases it introduces.

Now that I have a system to rely on, with regards to bias, and NOT allowed to trade my bias, I feel less burdened by my intellect.

What is different this time?

1. Political crises. 2 of them. Domestic in USA due to inflation & others and international due to the Ukraine war. More importantly, this is having a huge pressure on Fed to raise interest rates during a contraction, NOT booming, period. Easy monetary policy is no longer popular even though that may be exactly what we need right now.

2. Currency market is in turmoil with Dollar strengthening. We are seeing dramatic moves. With Dollar strength, lot of dominos are going to fall, especially emerging markets.

3. Central banks are in tightening cycle, but there are divergences. Japan is reluctant, EU is hesitant and others sluggish, compared to the Fed.

4. Finally, (less often discussed but way more important) is declining globalisation and increasing protectionism. More worryingly, ceasing foreign assets without due process sets a very wrong precedent which could easily escalate if countries decides to take sides in this war. This will clearly halt globalisation as 'the country risk' of doing business will increase dramatically. (Thanks Martin Armstrong)

I still don't know how the equity market will be affected as I am just getting to know the concept of business cycles and inter-market correlation. I assume it's not good for ES as money will likely be funneled into US bond market + US Dollar.

Though I agree with Jeff Sniders' view that inflation in supply side will quickly come down due to demand deflation, I think the trend in hiking rates could continue longer than necessary due to political pressure and hence cause excessive downward pressure on growth, housing, jobs and wages.

Perhaps, this time it's really different. I want ES to confirm this first.

June 15 2022, Wednesday Prep

FOMC day

Stats are mildly bullish.

However, this unique pattern of 4 lower lows and 4 lower highs on daily price action is particularly bullish. Even FOMC days are bullish during bear markets. My gut feeling is screaming 'bearish'.

I will initiate long 1/4 size @ the open and if trend and momentum continues up, will consider scaling up to full size. However, will likely exit before 2 PM announcement.

I may scale in once to my loser, above ONL ( with stop below ONL) as I consider that the LIS 'Line in the sand'.

June 15 Update

Long 1/4 size from open.

My scale in didn't work out as the pullback was much deeper. Though ONL stop loss was not tested, I decided to scratch it for a small loss.

I should know it by know 'If the Pullback looks picture perfect and easy to enter, it is likely to fail'.

Though I wanted to be flat before FOMC, I am considering riding the storm with this tiny size long to test my hypothesis.

June 15 2022 Review

Executed long as per my plan.

Long 1/4 @ open and Scale in 1/4 @ PB at a much better location. However, a good looking pullback is often a losing one.

I could have added @ Y-C prior to FOMC minutes, but decided to keep the position size small. After the FOMC and the usual whiplash swings, we settled slightly higher. Breakeven day. My running P&L demonstrates the chop much better than my words.

What will I do differently in the future?

I will still trade big events if there is significant statistical advantage However, I will consider fading extremes i.e HOD/LOD and also go flat @ 120% ATR.

June 16 Thursday 2022 Prep

Post FOMC day

Stats are bearish.

Usually it's quite hard to short the open after such a big gap down but I have to follow the stats, not my feelings.

I will start with 50% size and then will add the rest. I'm not sure what's the best area to scale in. Whether on the bounce into Yesterday's range or further down if we get a follow through.

It's likely that weak hands, both long and short, were shaken out yesterday and today is likely a continuation of the down-trend. Hence, I'm leaning to be more aggressive with my size and worry less about the location. Obviously risk management is my number 1 priority but today could be a payday or painful, depending on which side of the market I'm in today. Let's see.

Unique days analysis

Often when I think about unusual or unique moves, it's often the percentage moves. However, today is unusual because of the nature of the price move.

After FOMC days when we closed higher, it's very unusual to open below that days low. Infact, in the last 20 years, we had 150 ish FOMC days and this happened just 5 times. The follow up is usually bearish.

However, if we consider the non FOMC days in the bear market, this type of price action is usually bullish.

This is one of the main challenges in using stats for directional bias. If I am not objective, it's very easy to look for stats to support my bias. Hence I have a very rigid system of mechanical criteria and then where appropriate, I use variable inputs like FOMC, NFP, Options expiry etc. I'm interested to find out which stats win today.

June 16 update

Short 1/2 size @ open.

Though I wanted to scale in, the buying support below 3700 was pretty strong and sellers couldn't push through. Since we are already well above 100%ATR, it's likely that EU shorts are cashing in.

I actually went flat (though against my rule, it will be added to my set of rules as it's deliberate, not out of giving up profits). I added at a slightly poorer location @ new LOD as wanted confirmation of sellers' strength. Will explain this strategy with picture later.

Currently 1/2 size short. Not sure whether it's reversal in play. Since my indicators say it's likely, I think it won't happen. High probability for a down day (trend down day seems less likely though) once weak shorts are cleared up.

July 16 update 2

Still short 1/2 size. I tried to scale in around 3675 - 80 area twice but scratched those trades.

Even though price action is still bearish and price is being kept below vwap, my concern is a reversal day. Though it's less likely, emotion is interfering with my execution. Hence, no more new trades & end of the day for me.

However, my initial short from open will stay till the end.

P.S. It's possibly due to me adding volume profile again to my chart today after few months. I do see lot of value but currently seeing ghosts who aren't there.

June 16 2022 Review

Short stats worked like charm.

Scaling in was tricky because of the relatively small RTH ATR range (secondary to the monster opening down gap). However, I acknowledged it quick, closed my shop and let my thesis play out with 1/2 size.





1 major change made to execution today. (visible in the first hr of trading)

First, I was short @ open and price was moving down. But reversal warnings were pretty strong from my indicator & price started moving up. I decided to take profit BUT during the retest, fairly close to the low of the day. Then, I re-enter the market with stop short, aka breakout to the downside. This confirms the strength of the sellers and reduces the risk of reversal day, imo.

Though I felt somewhat frustrated and impulsive, presumably contributed by addition of volume profile to my charts, my running profit was nicely chugging along.