The Trading Journey of Lurker

[lurkerlurker]

Summary of YMU7 Trading, 21 June 2007

Net P/L: 17 pips, £17
Trades: 5
Wins: 3
Losses:2
Win %: 60
Average Win: 11
Average Loss: 8.5 (not too good there)

Overall, a good day.

Points to note:

1. Pretty flawless execution on entries and exits - no hesitations, wishings, etc.
2. Stuck to predetermined mental stops and got fairly good executions on those
3. Used my plan for all trades bar one (the news announcement, which is my backup plan which only applies for news)
4. Traded my plan even when I was considering early profit taking.
5. Mostly emotion free trading

Quick roundup of the trades:

Trade One:

Large open profit, but moved my SL to BE and tried to hold it. Covered for +7 net after my entry rule was violated. Good trading. (perhaps a little obtuse with not taking an earlier exit signal, but my plan didn't say to do so).

In summary, mediocre plan, flawless execution of the "could do better" plan. (over ambitious target)

Trade Two:

Out for +18, followed my plan to the letter. Not much to say.

Trade Three:

Stopped out as soon as my entry condition was violated for just the spread. Clear enough signal, but sometimes the system doesn't work and under those circumstances one does best to, as Douglas would say, execute the loss on the perception that it exists. -5.

Trade Four:

News trade, deviates from my usual plan. Used plan for trading news. +9. Closed the trade quickly, conscious that it was a scalp on following an extreme short term trade, not a position trade.

Trade Five:

Just plain called this one wrong. I've been bearish all day, and the failure to make a new high after the Philly announcement should have stopped me from taking longs without better confirmation. Support at 60 and a small tick div (time to break out the ruler) wasn't the best entry in the world.

Again, I executed the loss for -12 immediately on the perception that I was wrong. This was done mechanically and without emotion. I traded the plan once again.

Comments appreciated.

 

[Charlton]

Only one comment - you seem to be sorting out your earlier issues with trading discipline and turning the corner. We are all routing for you

Charlton

 

[fibonelli]

Well done LL!

 

[lurkerlurker]

Trading

Well done LL!

Only one comment - you seem to be sorting out your earlier issues with trading discipline and turning the corner. We are all routing for you

Charlton

Thanks. Hopefully I'll have a good day tomorrow. Today is one of the first days which I have actually been able to have good losing trades (clear obedience to entry criteria, flawless executions).

I know one swallow does not make a summer, and my development will hopefully continue for many years. This is possibly one field which can never be mastered, but which presents a constant challenge. It is days like this when I can't see myself ever giving this up. If I can manage to do this well enough to even make small (we're talking interest levels in risk free stuff like savings accounts) profits, I can see me doing EOD or evening session trading alongside a FT job, and also trading well through retirement for as long as I am sharp enough to do it.

We have a truly beautiful creation in the markets. It is an honor to participate.

 

[jacinto]

lurker,

very happy to see the advance. keep it up

all the best

j

 

[bertie123]

Journal

Lurker,

i am a newbie and would like to thank you for sharing this information. I am learning from following the thread - keep up the good work!

 

[A Dashing Blade]

Overall, a good day.

Points to note:

1. Pretty flawless execution on entries and exits - no hesitations, wishings, etc.
2. Stuck to predetermined mental stops and got fairly good executions on those
3. Used my plan for all trades bar one (the news announcement, which is my backup plan which only applies for news)
4. Traded my plan even when I was considering early profit taking.
5. Mostly emotion free trading

Looks to be that you just want to upgrade the "mostly" and you're there! Congrats all round tho' and qudos for giving us this thread

 

[lurkerlurker]

Thanks guys

Lurker,

i am a newbie and would like to thank you for sharing this information. I am learning from following the thread - keep up the good work!

Looks to be that you just want to upgrade the "mostly" and you're there! Congrats all round tho' and qudos for giving us this thread

Thank you for your responses. Kind words, encouragement, suggestions, advice, and reputation points are always welcome.

bertie - I am glad you are learning from this - I would hope that if you find this part of the thread useful you have also read the first posts here too (and everything in between).

What markets do you trade (or want to trade), and what platform are you using? Do you have a particular interest in US index trading (as this thread speaks mostly to that)?

 

[firewalker99]

Hi lurker, glad to see you are making progress.
I was wondering if you have some stats of the last week (or weeks) now that you've been papertrading some time... After you have a batch of 20-30 trades you should be getting some idea about your potential for profit.

Keep it coming

 

[lurkerlurker]

Hi lurker, glad to see you are making progress.
I was wondering if you have some stats of the last week (or weeks) now that you've been papertrading some time... After you have a batch of 20-30 trades you should be getting some idea about your potential for profit.

Keep it coming

I'll post full backtesting stats when I see there is something there. This strategy is quite difficult to backtest unless I do it on a simulator. I only have so many live YM days saved on my software, so my backtesting is a bit limited. It is too difficult to get realistic backtesting results taking decisions in the middle of a chart.

Paper trading was going okay though. I am still looking to trade plan 2 on news, and my main strategy may get a few low risk trades in this week depending on the market.

 

[lurkerlurker]

Summary of YM Trades, 27 June 2007

I think I overtraded today, however I was in tune with the market telling me when to take profits.

I've had a rather strange day, so please allow me to present my stats:

Trades: 7
Wins: 6
Losses: 1
Win %: 85 (I wish I could keep this up)
Average Win: a paltry 2.3
Average Loss: 14 (1 trade, SL plus spread)

I think today has been a day for scalping. However the real winner here is TradIndex, who get 35 spread points at £1pp while I go home with £14. However, 14 pips in a day on the Dow is still a pretty good result. (okay, so most of you here get 20 on a trade, but you get my point).

I did follow my system for entries, but took decent intuitive exits when intuition was confirmed by volume or NYSE Tick.

 

[lurkerlurker]

The End of Lurker's Day Trading

The time has come. I have now realised that I am not suited to day trading. I may return to day trading much later when I am more experienced with this, however now is not the time.

From now on, I will be taking inter-day / position trades on instruments. I still have an interest in trading the mini Dow futures, however during the next few weeks I will be looking at other instruments, mainly cable and gold futures.

For the time being, I'm ruling out most other commodities, especially agricultural softs and energies. GBPUSD seems to trend well and respond to TA. I'm also interested in GBPJPY, and of course Gold.

During the next few weeks I will not be placing live trades. I intend to use this time to build up a bankroll so I can start with around £1,000 in a spreadbetting account and use decent money management rules, ideally not risking more than 3% per trade and only trading £1pp. I will look to take positions of 1 day upwards, looking to hold for between 2 and 4 days.

Before I place live trades, I will need to build up a bankroll and formulate a position trading strategy for the instruments I am interested in.

I am pleased to be leaving day trading behind me - while the style has merit, and I still have thoughts of returning to it in the future, it is not suitable for me at this time. The timeframes are too short, I am prone to taking profits early and letting losses run, it causes stress, and I am struggling to breakeven against SB commissions and slippage. (the latter is almost nonexistent with my new SB broker, but the former remains an issue for daytrading).

I still want to be in the markets long enough to learn more, and eventually profit. Day trading will sap me of my remaining capital and I will lose the will to continue in this field.

I will start placing live trades when the following conditions are met:

1. I have sufficient capital which I can fully afford to lose
2. I have good money management rules which will allow me to have large drawdowns in this capital as I learn to trade without worrying me or wiping me out
3. I have a strategy to trade the instruments I wish to trade on the timescales I wish to trade
4. I feel mentally prepared for more learning and more losses

In order to reach these goals, I could use a little help. I am most grateful to all of the T2W members who have assisted me so far. Many have steered me away from day trading, and I only wish I had listened sooner. I would like some feedback and information about position trading currencies, gold, and the Dow. I will obviously do my own research and present a full plan here well in advance of attempting to trade it, but I would appreciate some direction from the many helpful and knowledgeable members here.

I am currently down around £2,000 from spreadbetting. It will take me awhile to be at peace with this number and ready to risk more learning to trade. I would anticipate being back here with a fresh head and a new bankroll by the first week in August, but I will post an interim update by then if I do not feel ready at that point.

I'm not slacking off these next few weeks - much reading of books and studying of charts will be done. I will post thoughts here, and respond to any comments which may be left.

While those who have assisted me are too numerous to mention, I would like to take this opportunity to thank Atilla, Dinos, and firewalker99 for their patience, encouragement, advice, and support.

 

[Atilla]

The time has come. I have now realised that I am not suited to day trading. I may return to day trading much later when I am more experienced with this, however now is not the time.

From now on, I will be taking inter-day / position trades on instruments. I still have an interest in trading the mini Dow futures, however during the next few weeks I will be looking at other instruments, mainly cable and gold futures.

For the time being, I'm ruling out most other commodities, especially agricultural softs and energies. GBPUSD seems to trend well and respond to TA. I'm also interested in GBPJPY, and of course Gold.

During the next few weeks I will not be placing live trades. I intend to use this time to build up a bankroll so I can start with around £1,000 in a spreadbetting account and use decent money management rules, ideally not risking more than 3% per trade and only trading £1pp. I will look to take positions of 1 day upwards, looking to hold for between 2 and 4 days.

Before I place live trades, I will need to build up a bankroll and formulate a position trading strategy for the instruments I am interested in.

I am pleased to be leaving day trading behind me - while the style has merit, and I still have thoughts of returning to it in the future, it is not suitable for me at this time. The timeframes are too short, I am prone to taking profits early and letting losses run, it causes stress, and I am struggling to breakeven against SB commissions and slippage. (the latter is almost nonexistent with my new SB broker, but the former remains an issue for daytrading).

I still want to be in the markets long enough to learn more, and eventually profit. Day trading will sap me of my remaining capital and I will lose the will to continue in this field.

I will start placing live trades when the following conditions are met:

1. I have sufficient capital which I can fully afford to lose
2. I have good money management rules which will allow me to have large drawdowns in this capital as I learn to trade without worrying me or wiping me out
3. I have a strategy to trade the instruments I wish to trade on the timescales I wish to trade
4. I feel mentally prepared for more learning and more losses

In order to reach these goals, I could use a little help. I am most grateful to all of the T2W members who have assisted me so far. Many have steered me away from day trading, and I only wish I had listened sooner. I would like some feedback and information about position trading currencies, gold, and the Dow. I will obviously do my own research and present a full plan here well in advance of attempting to trade it, but I would appreciate some direction from the many helpful and knowledgeable members here.

I am currently down around £2,000 from spreadbetting. It will take me awhile to be at peace with this number and ready to risk more learning to trade. I would anticipate being back here with a fresh head and a new bankroll by the first week in August, but I will post an interim update by then if I do not feel ready at that point.

I'm not slacking off these next few weeks - much reading of books and studying of charts will be done. I will post thoughts here, and respond to any comments which may be left.

While those who have assisted me are too numerous to mention, I would like to take this opportunity to thank Atilla, Dinos, and firewalker99 for their patience, encouragement, advice, and support.

Thank you for your kind words Tom, and here is my take on the weekly DOW perspective. Not sure if it will suit your style but you may get to trade 3 or 4 times a year.

If you study this setup it never fails. It's basically, MA crossovers with MACD support.
You can see the SAR support and resistance line. It's a fairly good one touched a number of times.

At turning points you can see all the MAs line up squash together and cross. When you are trading the weeklies you need to have patients of a mountain. This is going from one extreme to another.

1. First price crosses MAs - all three.
2. Then MAs cross over.
3. MACD lines also have to be in the right direction. Hence, rules are

LONG ENTRIES
1. PRICE must be above the blue DEMA (8) line.
2. MACD blue line be on top of the red line. Ie Green bars.
CLOSING LONG ENTRIES
1. When DEMA (8) cuts below DEMA (21) line AND / OR
2. MACD blue line crosses below the red line. ie Red bars

SHORT ENTRIES
1. PRICE must be below the blue DEMA (8) line.
2. MACD blue line be below the red line. Ie Red bars.
CLOSING LONG ENTRIES
1. When DEMA (8) cuts above the DEMA (21) line AND / OR
2. MACD blue line crosses above the red line. ie Green bars

Very simple system. As you can see we are about to take a big tumble.

Why not come and play the virtual game on the Investors Chronicle site. You can practice the above system.

You can apply the same system to gold but gold imo is a little more tricky and less clear cut. Instead of waiting for MAs to cross over it's best to enter and exit trades upon the PRICE crossing the MA lines.

Cable is as gold. More cross overs and more complicated for this weekly trading rules. As in gold I'd trade on PRICE crossing over the MA lines.

My current trading is based on the 4 hour charts. It's the same as the weekly rules except it's on 4 hours. I also use a variety of different perspectives such as candlesticks, bar charts, lines, Bollinger Band break outs, Stochastics, RSI etc but the PRICE and above rules with the MA crossovers always the favoured one.

Pick one simple system and stick to it.

Good luck in all that you do and see you again on these boards.


Mikey

 

[lurkerlurker]

YM trading system

Hi Mike

This looks like a great system for the YM. I am willing to try a position trade from the short side today - I know the market is nearing key support, but everything I look at tells me we are going to break down big.

A few comments on your system. It works great on the 4 hour too, with only a few false signals. Obviously longer timeframes are better to avoid whips. I am impressed at how this system covered the double top at 800 futures.

I was right to sell 700 futures the other day. My mind was moving to position trading but with a day trading stop. I want to sell the YM, but I am concerned that price has dropped 50 pips from the confirmed signal on the 4h (where price traded below the 8 DEMA). We are now trading at 600. I note the exit signals, and wonder what stop loss level would coincide with the bullish DEMA cross / positive MACD.

I am considering (and these are again futures prices) selling with a stop above the 650 resistance. Perhaps 675 would be safe. A 75 point stop requires a 150 point target. Is this reasonable? I would say that based on the cash prices that a 150 drop in the futures will bring us down to key support at 13350. I would stay in the trade until the stoploss is hit, target is hit, or there is a bullish crossover from MACD / DEMA per your system. You have around 70 points profit on this by my calculations, so you can throw in a BE stop or something.

I am not too sure when to sell this. If I don't sell at 7am, I will risk the market falling further. If I do sell before the US market open, I expose myself to insiders being able to bid up the market by a mere 75 points on light volume. Fair value for the US is based on the Dax and other factors. I would like a short in the morning so that early weakness in the Euro markets sends the Dow down. Equally, strength should stop me out, but not at so great a loss as to prevent me from reentering the position.

Reward for this trade is a fall to 13350 - anything less than 150 pips will require a tighter stop and more precise entry. Position trading involves overnight pre market risk anyway, so I'll need to get used to being in positions before the open. I can trade in an hour, so I may stay up until 7 and see what price I can get. Unfortunately I won't have time to get your opinion on the matter, which I would like. However, I'm pretty sure you'll be short from overnight anyway.

Here is how the trade will go, subject to prices:

Sell the Daily Future contract with E*Trade, and ask them to roll over for half the spread at EOD if I want to hold it, otherwise...

Sell in a zone between 620 and 590 futures. Above 620 indicates strength in the market, and I will wait, whereas below 590 indicates that I have missed the move this time.

Set an initial stoploss of 30 pips. This should allow for some adverse movement premarket, but not enough to expose me to significant losses at £1pp. This means I can re enter the market later in the day for a position trade if things line up.

Limit order to cover set for +150, but open to adjustments later. Looking to hold this until EOW, preferably mid afternoon on Friday. Will cover on stop, limit, or entry violation (opposite cross).

Stop to be moved to +5 ( I don't like BE and want to protect from slippage) if the trade moves +30. Furthermore, the stoploss will be trailed to above half hourly chart swing highs. Should this trade go in my favour, I would be willing to add another £1pp if conditions look suitable and the trade is at least 40 pips in profit. Stops will then be set at the BE for the average trade price. This will be done only on increasing momentum and volume to the downside.

Thank you for posting your system. I look forward to trading it. I may pop over to the competition and see if I can make some pips. It may be a welcome break from real trading for awhile.

So far, the order looks like this: (I am placing this with E*Trade for the open - I hope they allow for positive slippage on limits, ie sell me 1 at 13610 if I say limit 13600).

Sell £1pp of YMU7 at 13,610 goodtil end of day.

If done stop at 13,640
If done limit at 13,550 goodtil end of day.​

To review, that is a position trade with a 2:1 risk reward. The limit can be moved further away if price continues. Stop will be made BE (+5) at 30 and then trailed. Max risk £30.

If not filled, use own judgement for later trades and consult with you naturally when you finally get to the boards today.

I think we may get a good 700 point move in one direction when either 700 cash or 250 cash breaks. Might be nice to jump on board a continuation if volume supports.

Placing the order now - would appreciate comment at your earliest.

Cheers

Tom

 

[Dinos]

The end of day trading

Hi Tom

I have sent you a PM, I, and no doubt I probably speak for other are sad to see you in this situation, however, you have probably made the correct decision. A word of caution, don't keep swapping between all these commodities, metals, index etc, I truely believe you will be making life a bit difficult for your self, choose 1 or 2, and trade you position with them, if it works then move on.

Perhaps stick with the Dow, once you have analysed the PM I sent you and checked out yourself the merits, you are very well placed to take full advantage of the system to return consistent profits.

My system is not disimilar from Mike's, except I use DEMA (8) and MA (10), standard, RSI, MACD and Stochastics, fully understand those and you probably won't go far wrong.

Where as Mike uses the 4 hour charts I use the three hours chart, the safetest option is to only trade in the direction of the trend and avoid the going against the trend.

By Appyling the standard setting on the 3 hour Dow chart, this is results, its simple and effective, and doesn't involve looking for the holy grail of setting, (they aren't there)

31 May 4 June negative divergence MACD Histogram, Stochastics, 5th June crossover MACD, DEMA, dropping RSI, red candle stick, short entry could have been taken at approx 13620 and closed on 8 June (4 days)at approx 13260 for +360Pts. Any day trading during this period should only be short in the direction of the trend.

10 june, positive divergence MACD Histogram, stochastics, MACD crossover, Rising RSI etc, long position could have been taken at 13334 and closed on 13 June (3 days) 1t 13646 for +312 points.

The process/system contiues on 19 June (short) for 310 pts, 27 June (Long) for 340 Points and 9th July for ?

I don't intend this as trading advice for anybody, it is my personal trading system which has served me well for many years, its works on everthing I trade.

Keep in touch Tom, you thoughts are welcome and my impression of the thread, is that is is not just a day trading, they are position traders as well, all thoughts and input from everybody is welcome.

 

[lurkerlurker]

Dinos, your system looks very interesting. I will be reviewing ideas probably into the weekend until I amalgamate something suited to my style.

I would be very interested in continuing to use price and volume to decide my entries and exits. A few indicators would be okay I suppose, but don't RSI and Stochastics confirm each other? Maybe I'd be better with some DEMAs on price, and RSI for confirmation?

Saying that, I will look into your system in more detail on a decent platform.

I am exhausted right now. The currency trading last night left me 2 hours sleep, and I've had a harassed day.

 

[Atilla]

I have learnt a lot from discussions that ensued from your posts LL. I used to use dull and boring text book MAs and default stochastics.

Subsequently to discussions with numerous people on these blogs including Dinos, Firewalker, Steve, Jacinto, Bez and to all those I have not mentioned, I've tweaked the MAs to using EMAs and then DEMAs as well as the parameters to Stochastics and so forth.

Must say though a little like a mouse in a maze going after the big cheese, I keep going round and round and ending up in the comfort zone, reliable tested and trusted instruments. Sometimes it's Bollinger Breakouts, sometimes bar charts, sometimes candlesticks and so forth,

BUT
1. price on the correct side of DEMAs lines - which ever time frame being used...
2. MACD and
3. stochastics

are essentially the steering wheel, gas and brake controls. Absolutely indispensable.

 

[lurkerlurker]

Atilla's YM System

Took a loss today on a botched position trade against the trend. -29 on a single trade. Very annoyed with myself here.

I am still in the process of formulating a strategy, but I tend to get things wrong and overcomplicate things, so I will use Atilla's position trading system for the time being. In the unlikely event I come up with something better, it will be discussed here.

I will now use CMC MM for my charting as opposed to NinjaTrader.

Chart setup - 4 hours, DEMA (8,13,21), MACD. Follow the rules.

I have posted a sample of the trade this system produced over on the Dow 2007 thread. I will repeat the image here for reference.

At the current time, the position for the Dow is as follows (using YMU7):

Missed the long entry. However, DEMA(8) is still > DEMA(21) and MACD histogram is still >0. If I were long, I should hold the trade. As I am flat, the risk/reward for going long doesn't work for me, so I will stay flat.

I am waiting for price to cross below the DEMAs. This should happen quite easily within the next day, as early morning stagnation pulls up the DEMAs. I will then wait for bearish MACD, and take the short as soon as Price is lower than DEMA(8) by 1 tick. No other entries will be taken in this time.

I am tempted to backtest this system right now to give me more confidence in it. I suppose I could do this manually with CMC MM. If I do, I will post results.

Still, +60 on the first trade it made was rather nice!

 

[firewalker99]

Chasm

What happened between 27/06/2007 and 10/07/2007?
What happened between post #251 and #252?

 

[firewalker99]

I think I overtraded today, however I was in tune with the market telling me when to take profits.

Being "in tune" is something that can happen from time to time. But as you've found out for yourself being "not in tune" will cause you much more pain (emotionally and financially) than being in tune. So why not stick to "the" (or "a") plan and forget about trying to understand let alone act on instinct.

Also, you started to make daily analysis, but you quit after 3?
"YM Paper Trading, 14 June 2007"
"YM Paper Trading, 21 June 2007"
"YM Paper Trading, 27 June 2007"
is all I can find of?

Unless you make 20 consecutive posts from 20 consecutive days where you followed your plan to the letter, you will keep on going round without making progress.

Sorry to be blunt, but there's really no other way of putting it.

I will challenge you to do the following exercise: papertrade the YM for 2 weeks. 2 week onlys, by using the very simple rules below. Make daily stats of your win%, net points profit, etc as you did before. This isn't about the system, this is about you and the discipline.


Rules
1) Before the day opens review the previous day and note lowest price of the previous day (=PDL) and the highest price of the previous day (=PDH)
2) In case price opens above the PDH (so not inside yesterday's range), then put in:
- a BUY limit order at the PDH
3) In case price opens below the PDL (so not inside yesterday's range), then put in:
- a SELL limit order at the lowest price of the previous day (PDH)
4) In case price opens within yesterday's range, then put in:
- a BUY limit order at the lowest price of the previous day (PDL) and
-a SELL limit order at the highest price of the previous day (PDH)

Your stop is 20 points, your target 40.
This is very basic, very easy, and you don't need to watch the screen during the day, only at the open. At the EOD you'll see if you made profit or not. No stress, no thinking, no second-guessing. Very straightforward, very easy.

I just made up this system and backtested it on the last two weeks and unless I've made an error on this nightly hour I've counted 4 profitable and 8 losing trades. Not deducting commissions that would mean 4 x 40 - 8 x 20 = 0 points. Basically no profit. But that's still better than what you are doing now, which is losing money, right?
Even with commissions from 12 trades in 2 weeks time you still would only be down about 50 USD.

I hope you get my point.