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I will take a holiday break and re-evaluate my trading method. I feel that there is still too much discretion involved and thus I make too many bad entry decisions. A decent expectancy would require at least 90% error free trades ( error free = trades according to my rules, not win percentage) and that seems like a very tough target for me. Besides I can see from my statistics that it is very hard to make money on days with a range less than 10 points. Since I can't predict the daily range of the ES it's not possible to avoid these small range days.
An idea I have thought about is to swith to the 30 min chart and only trade for the first 2 hours after the RTH opening. That would mean that I would only have to decide on 4 possible entries each session.
I've got much respect for your journal (and to you for sticking at it). I think I've already said that I feel comfortable with the 5m RTH chart - the legacy of learning "Brooks price action" early in my development. I dont trade off it anymore, but I constantly reference it out of habit.
(If it's of interest, I'm also on a similar path, taking sim trades to achieve consistency before going live. Not yet ready to journal, but I expect to begin soon.)
I know you haven't asked for feedback, but I do have a couple of thoughts and perhaps it's better that I say them than not... at least you have the choice to ignore them! So feel free to disregard, no offence will be taken :-)
1) Switching attention to the 30 min chart absolutely makes sense to me, and I can see you're already working with it pre-open. But I might suggest you go further and look at the Daily chart too to set an even higher level of directional bias.
2) Absolutely, daily ranges can't be predicted. But I think your approach for swing trading is correct; there is always the chance of a break, and it's all about being in with the chance (easy for me to say, not so easy for me to stick to!). But of course if the stop is too wide for an appropriate target then it's not a good entry, and this can very well be the case when there are prior small range days.
3) I think it is hard to make money with the 5m chart, full stop. Me, I can't do it, the 5m candlestick chart makes me lose consistently. I never seem able to structure for myself adequate R/R on it.
I think it is too blunt a tool on its own and absolutely higher timeframes and lower timeframes (or lower granularity) are necessary to trade intraday. But that is a personal bias, and maybe a reaction against Brooks price action (which is not to say it can't work for anyone else).
Attached are some screenshots of recent action for reference, and I'm happy to chat more. Good luck mate, enjoy your holiday and hope to see some posts soon.
A few thoughts to ponder before you leave the 5 min charts:
1. Why even trade the open? If you are trading price action, wait for the price action to develop and then plan your trades. Wait for 1 or 2 hours until a clear HL or LH is made.
2. In terms of range days, again waiting and observing the first 1-2 hours will help. Are there gaps, are gaps being filled, are bars having tails, follow-through etc. Once it looks to you like a trading range day, use limit orders, enter only at levels and scalp all day. You cannot go for risk reward trades on these days.
3. Lastly, you don't need a 90% win-rate. You can have a positive expectancy with 30 to 40% win rate. Or you can settle for a 50 to 60% rate depending on your style. Once you start trading multiple contracts and incorporate scaling, structuring trades will be a lot easier.
Thanks for your post, @esintraday. And I do appreciate feedback.
I'm more and more convinced that confirmation on higher TF charts is an important tool and in contrast to 6 month ago, I would never enter a trade on the 5 min chart without checking the 30 min chart first.
If I ask myself why I do trade the 5 min chart the answers would be:
Once I thought that it would be easier to make money on the 5 min chart than on a higher TF chart, but now I think that is not the case.
The lower risk due to a smaller required SL and the higher reward on a lower TF chart is attractive. But I have realized that the expectancy for a setup/method is the same independent of the TF. The lower reward to risk ratio on a higher TF chart is compensated by the higher win percentage. (That also means that draw downs are lower on higher TF charts.)
I do trade the 5 min intraday chart instead of the daily chart because I don't want to take the over-night risk and especially not the over-weekend risk in case of a market crash. The slippage may be huge on the daily chart and a SL order is not guaranteed.
So I think it may be worth a try to move to the 30 min or 60 min chart and only use the 5 min chart for entry timing. But I will make some manual backtesting before I decide.
1. I do trade the open because of the higher volatility and the opportunity that it means. If I start trading 1-2 hours after opening the price action is easier to read but I usually will have missed the best trades of the day. I see that higher volatility is the main reason why many traders switch from ES to CL. Trading a higher TF chart is another way to find higher volatility.
3. I did refer to 90% error free trades (=entries based on correct price action reading and trades according to my trading rules). With 90% error-free trades I would reach a percentage of winning trades between 40-50%. My actual percentage of winning trades has been between 20-30% and my percentage of losing trades has been around 60% for the last few month. And that is based on around 80% error-free trades. That is not sustainable. So I have to change something.
