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Catching Big Waves - a trader's journal of surfing the the markets
Gary, I lost $900 yesterday going for bigger swings. Making $700 scalping would have been preferable. Been struggling with the intra-day swing trading thing for a year or more, now. I do find, however that my charts are getting more and more naked as the months go by. Progress, just slow and painful. Very insightful thread!
After all, it's what you learn AFTER you know it all, that counts!
The following 4 users say Thank You to TheWizard for this post:
Getting back to the crude market trade and chart analysis from last week, I want to document for myself what just occured. My schedule has been insane the past week and so I never really got a chance to enter any commentary as I was in the moment, so I am hoping I can still accurately leave a trail for future reference.
When I was studying with ATW, there was a day, I can't remember when, that the instructor made a comment about (roughly), " I know it seems like the first resistance zone is very far away, but there really isn't anything in between". Of course, that meant nothing more to me than any other support or resistance zone at the time, but I watched crude climb and climb, until it hit that zone $2-$3 above where it was earlier in the day, and then it turned and came back down.
Then the second occurence of that was from my own chart analysis. Again, I did not trade it effectively, but I could not find any significant zones (I can't recall if it was up or down), and the market followed that path, never even really trying to stop until it reached the distant S/R level.
I had a 3rd instance, same thing, and can't recall the direction.
Last week I posted a CL chart with an overhead trendline above and a blue rectangle below, and made some comment about I really did not see anything else. And, during the same time I was frustrated with myself for scalping. So I put the two together, 1) to force myseflf to let either a top or a target get hit, and 2) to follow through on that rare condition of no other obvious potential zones.
Crude formed a potential double top at the only real apparent overhead zone, and the only obvious support zone was far below, so I went short in QM ( I hated the thought of risking $500.00 in CL and not being able to watch), and let it go. I had a flight at 6am from DC to Denver, so had to get up at 4am. I slept with my laptop on the nightstand in my hotel room, volume high enough to wake me if I lost service or had the stop/target hit, and woke up all night just to glance at the screen. When I left my motel the trade was headed my direction. The flight was 4 hours. I watched the price of oil on Bloomberg Mobile until takeoff, then spent the next 4 hours somewhat handcuffed and blindfolded; no contact, no update... I had to let whatever happened, happen. It is amazing to me sometimes how hard that can be when it comes to trading.
That trade worked just as planned, almost perfectly. I set my target just above the only obvious support zone, (had a red dashed line at where it would blow the stops of earlier longs), and the market came to me as if I were directing it that day.
Since the trade was in QM the profit was not mind-blowing for a daily net, but what has been possbly mind- altering;
1) I made a significant step in regaining some faith in holding longer term, even if I can't watch every step of the move. My travel schedule had nearly reprogrammed my level of confidence, and I was almost angry about that. I worked very hard to learn to trust my trades, and then it was slipping away from me again. That one trade felt so satisfying and so much of a mental accomplishment.
2) I have now confirmed 4 occurences of when there are very limited choices of support and resistance, and the market moves accordingly. That is 4 for 4, only one of which I actually traded, but it suggests that at those times (maybe 1x / 2x a year?), maybe that is when the odds are the best on a risk/reward basis. (This trade was I believe 3.5 to 1?)
I do understand that one trade is not career defining, particularly when it is on such a small scale as I trade. I also understand that this one event has nothing to do with the next time this S/R pattern sets up. But I am proud of myself, for trusting myself, and for not being afraid of letting go of control.
Maybe it was the show "Wall Street Warriors" where one of the characters said "the market will give you every opportunity to doubt yourself". That is not only true, but also too kind. The movement of markets will go straight for the heart of any weakness I may have, even doing it with ease when I am completely conscious of it. The way I learned to deal with it was to feel every pulse, and as long as I was breathing calmly, and not seeing it go too far against me, I relaxed and waited for it to give up with the scare tactics and go in the "correct" direction. But, once my schedule did not let me find any "zen" space, it went for the throat, causing me to wonder what I ever knew to begin with some days. I went from average targets of 50 ticks previously, to pitiful targets of 8 ticks.
Last week's move to hold may have been somewhat dangerous (what if the market revered and took out my opposite order, with no brackets to protect me), but they were so far apart...
I do not expect to find a simliar trade for some time. I may not even trust the next one I do see. But this past week I made a serious push back into the areas of confidence, acceptance, proper risk/reward, emotional calm, chart awareness, and psychological gain.
In hindsight, to reduce risk I should have had my wife turn on my computers in Orlando to keep the OCOs active. I know now, and may use that in the future. Also, I am guessing I could have a broker assisted OCO, but need to call Monday to find out for sure.
I have been considering the same thing. I have found myself drawn to 120m to 360m charts lately, where I used to do my main analysis on 30m to 60m. The idea is, I want to major players to be taking notice, and I want the move to be more significant.
I have lived with a laptop on my nightstand for several years, the glow of the screen breaking my sleep cycles into smaller fragments, find myself desiring outside socializing less and less...
I will not use any indicators on any chart analysis. I only keep them on the 6 and 9 range (and recently dropping the 9 a lot), because at that level they become the "trigger". They keep me from guessing at a turn, or reaching for tops/bottoms. But the indicators themselves really mean nothing. They are a visual clue that opinion has shifted for the time being, and that is about all they are. But in my perfect scenario they provide possible entry triggers for much larger swings on a larger timeframes. The indicators are only "rules" for minimum entry criteria. If crude is going to turn for a $2 move, it has to start somewhere.
There are so many ways to lose money in trading... lol
I WANT to go for big swings, I study them with ridiculous passion, but I rarely trade them. The issue for me is letting it run up $500, then retrace to $0 or worse, then up $300, then stop me out... I felt so out of control, and so stupid for not taking the $800.00 it just offered me. That is why I started going to 50-60 tick moves. It was a personal middle ground that was statistically the highest probability for my desired hold time (less than 1 hour).
If you did not see the study on average swing length, I can send it to you. It was very insightful. What I figured out was that I did not like swing trading through all the ups and downs, and so I tried to define to "typical up and down", and if I was wrong I did not have to wait for days or weeks to get another opportunity. I knew almost as fact that there would be another within a few hours. Lately I have not had the psychological ability to follow through on it, and it has been hard on me, or I have been hard on myself.
True "swing trading" requires me to live in that ambiguous zone for so long it can feel like torture, and when I do stop out it really plays havoc with my confidence levels, which in turn makes it hard to keep pulling the trigger on an otherwise profitable method. But, that may only be my perception of time, and so I keep pushing in that direction.
Scalping can be profitable, but the space it puts me in is nowhere near relaxed, and the risk/reward does not make as much sense to me from an analytical view. I have run many spreadsheets to view risk and have decided for myself that scalping is not the way to go.
I found myself doing it again recently out of a lack of time, a subsequent lack of confidence, and an addiction to spending time in front of a trading screen. But it is not where I want to be and I am somewhat embarrassed to have admitted it. Not that it is bad for everyone, but I believe it is bad for me yet I did it anyway.
When the money becomes the primary focus for me, trouble is coming. When I think in terms of good risk versus bad risk, I know the odds are in my favor.
Below is a page from a risk analysis study I did. Each scenario has the same trading period net result. Which would you prefer to have to maintain, 70% wins or 39%? Just something to think about.
[img]https://nexusfi.com/v/9hvg9p.jpg[/img]Now that crude had a chance to blow stops and retest the 618, I am looking for a long trade. My first preference is the yellow zone, but also would take a retest of the Friday low.
