We are into roll week so we are switching from Jan. to Feb.
Price analysis you see is CLG13, for the week of Dec. 14th - 21st, 2012.
Each trading day a 15 minute chart is added and trades for that day are analyzed:
Weekly highlight: This past week spent most of its time cleaning up the meltdown of the previous. Inventories continue to run at rather large rates and (based on CoT data) major players are unwinding serious positions into the year end. Having said that, price didn't fall much and indeed currently we appear to be pointed back up in the near term. We spent the later part of the week slowly working our way back up to the intra-week 50% level (88.33) and I would expect this coming week to start off in the same fashion. If and when you find a market that can not go down on bad news (in this case huge inventory builds) then one ought to prepare for higher not lower prices. Considering too the seasonality of the market and I would be surprised to see sellers gain too much traction until the new year. But one also ought to remember too, these low volume sessions can lead to violent short term price corrections. Late buyers will be punished so time your entries carefully.
Trading Strategy (1 week): Because of the holiday atmosphere, I expect market participation to wane and price action to get very choppy. If I had my druthers, I would simply take the period from December 15th to January 1st off. Nonetheless, I will be at my post and making notations of trade setups through this year's holiday season. I just won't be surprised to see performance of normally predictable setups not work as well. My theme of late is simply to continue doing more of what works and less of what doesn't. The time range trades seem to work well with the type of trader I am. To that end my goal for this coming week is to have a notation for both the NY Pit ORT and the 7RT trades every day. I will be doing them through the practice account as I don't want to start a new combine until the new year.
Mental State Review: Since adding my daily activity and reviewing my trades in earnest through this blog my mental state has improved dramatically. From shooting from-the-hip to an honest to goodness business model (my 'hotdog stand') I feel as though my future as a professional futures trader is crystallizing. Now that I have found something that works, the key is to consistently do the same thing day in and day out - I have a feeling I am going to get rather sick of ORT's (teehee)...
That's all for this post,
Brian Beamish FCSI
The Canadian Rational Investor
the_rational_investor@yahoo.com
http://www.therationalinvestor.ca
http://crisdaytrading.blogspot.ca/
p.s.
The five common trading mistakes I make which lead to trade failure:
1. Not doing full daily setup routine BEFORE the first trade of the day - It take about 30-60 minutes; do your homework.
2. Not respecting 15 minute momentum & volume patterns - listen to the market, don't fight it (BoT's).
3. Not professionally entering the market - Use ema checks NOT breakouts to enter position (BoT's).
3. Not waiting patiently for alignment - 4hr/1hr OTE SS; 15m momentum & volume divergence; 5m POTE (OTE's).
4. Not holding trade to fruition - calculate realistic reward:risk targets and let the model work. If trade fails - what next plan?
5. Not respecting daily personal loss limit - three strikes and you are out!
p.p.s.
Trades I Do
Breakout Trade (BoT's: Price with Momentum & Volume): Watch and respect 30 minute, 1 hour, 4 hour & daily momentum & always wait patiently for 15m momentum divergence/confirmation. If 15m momentum signal given then watch 5m for vol/mom signals. Use ema checks (Holy Grail for example) at 5m trendline to enter positions NOT Breakouts.
Range Trade (OTE: Optimal Trade Entry based on test of resistance/support levels): Primary tool for determining trade location is a 70.5% counter trend retracement based on 1hr to 4hr chart price ranges. Once in zones, use momentum & volume divergence on 15m to signal trade alignment. Once aligned calculate OTE entry & POTE (stop at least 11 ticks above previous peak/trough). Enter order on an open order basis. AOCO (-.21/+.41) at level. DO NOT alter – let run to fruition.
Extreme Range Trade (ERT: Based on the Swing Pivot Touch theory): Based on the principle that initial tests of significant swing levels often meet resistance. Look to identify key hourly swing points at or near 4 hour / Daily OTE levels. Follow same plan as OTE trades but enter order to take position at key high/low not OTE or POTE level.
Opening Range Trade (ORT: Based on pent up demand from overnight trade into NYPit open): Watch 5:55AM, 5 minute price bar highs and lows. Place open orders at 6:00.01 two ticks above (buy on stop) and below (sell on stop) the 5:55 bar's range (AOCO -.15/+.41). Once filled on one side cancel other order if less than 15 ticks away from fill price. If trade reverses and stop is hit, look to take fail side of the trade - 2nd leg. (AOCO -.15/+.41). If the second leg open order was not cancelled let price action carry you in. If the second leg open order was cancelled, re-enter it as soon as first leg is stopped out. Maximum risk on trade is $310. Leave trade on, trailing stops every 20 tick increments.
7AM Range Trade (7RT: Based on either confirmation or exhaustion of the NY Cash market open): Similarly to the ORT, watch the 6:55AM, 5 minute price bar high and low. Place open orders at 7:00.01 two ticks above (buy on stop) and below (sell on stop) that bar's range (AOCO -15/+41). Once filled on one side cancel other order if less than 15 ticks away from fill price. If trade reverses and stop is hit, look to take fail side of the trade - 2nd leg. (AOCO -.15/+.41). If the second leg open order was not cancelled let price action carry you in. If the second leg open order was cancelled, re-enter it as soon as first leg is stopped out (and hope you don't miss the trade). Maximum risk on trade is $310. Leave trade on, trailing stops every 20 tick increments.
happy trading all...
Monday's Trade (0-0 $0 practice account trades only)
On to the trade. After doing my weekend homework, I felt there was a high probability we were going to $88.33 and the break of $87.48 early Sunday evening solidified that thought. The question was, how/where to get in to be able to handle pullbacks. While waiting for the answer my first trade of the week came in when prices moved back to the 20ema and failed (with ADX>30 this represented a Holy Grail trade). That trade was a good start for the week and I covered it at the corresponding 5m OTE long ss for a quick profit. Following that short trade the answer to my original question came. Shortly thereafter the market registered a tight 15 minute double bottom (with corresponding bullish momentum divergence) and a long trade (BoT) was setup and ready to go. My second trade of the day was to buy that bottom and sure enough the market took off soon after. After that rally, the NYPit ORT was actually short and again I executed well and was able to take some more of the market's money away from it. That fail pattern quickly dissolved and I was swept back into the market on the long side when prices broke the NYPit ORT high of $87.52. Finally, the 7RT trade setup up bullish and I was taken long again at $87.94. This last trade was pushing it and while I was able to liquidate at higher prices ($88.07) it was clear this market was running out of steam. Additionally, we were getting close to the $88.33 area so upside potential would be limited above $88.00. At this point I was 6-6 for +$825 - and basically on fire! That was the end of the 7RT trade and I should have called it a day at that point. I spent the rest of the day kinda bored and took three more trades. Two of which I couldn't figure out why I did them (and it cost me $310) and the last was a scratch. I finished the day 8-8 for +$495. A good day, but not nearly as profitable as could have been.
Tuesday's Trade (0-0 $0 - practice account trades only):
1. If you are going to do ORT trades then you must do all legs and hold to fruition (no ifs ands or butts)
2. If you are down through the 2nd leg of 7RT you are probably best to just call it a day. If you are up then use half of profits as 'give back'. Should you give that half back then call it a day.
3. If you are going to trade in holiday sessions, be light on your toes and don't expect to see violent swings. If the market is at Keltband - don't hesitate to get out!
That's all for today's trade. It is interesting to see how loosy-goosy my trading is in the practice account. A goal of mine going forward will be to try and only take BoT's/OTEs etc WITH alignment....if it isn't there do not take trade!
Wednesday's Trade (0-0 $0 - practice account trades only):
On to the trade. While I did finish the day positive, it was by no means a walk in the park. I must admit, since I have moved from -21 on my stops to -15, handling a bunch of losing trades isn't that bad (especially when you can book a +51 and +25). Regardless, I spend far too long today playing catchup rather than offense. As I kind of expected, the NYPit ORT was horrible today (due to lack of participation) and resulted in two quick stop outs. The market then went on to fail through the NYPit ORT again and so I went short. I rode that third trade right into the Weekly DOE inventory report (was doing well) and then got smashed. While the numbers themselves were not startling, the event gave the market the needed boost and she simply took off. Again, I miss-managed a trade and let myself get stopped out at a .31 loss. Luckily, I went long on a break of the inventory peak (.92) and that trade simply rocked. Adding to my mistakes today, I got anxious and sold the .93 long even though there was little reason to do so. As a result, I literally left $500 in profits on the table (ugh!). The rest of the day was spend milling around trying to get the account back to 'scratch'. Through several quick OTE/BoT trades I was able to finish the day (13-13) [wow, way too many trades!] and up $75.00 net. I commented in chat that I thought the virtual sim broker did almost as well as I did today ($65 in commissions!).
Less of what doesn't work and more of what does....ORTs clearly have trouble in low volume/holiday markets....
Thursday's Trade (0-0 $0 - practice account trades only):
So, looking at today's trade one can see that I did screw up royally. It was only through the good graces of an open ended risk position (within the practice account) I was able to hold on to an absolutely horrible short through the evening. I added to the loser (on an AOCO basis) and took a $155 hit on the way up. I still can't quite figure out why I thought that attempt was 'good trade location') My last attempt at adding to the horrible initial trade was I placed an open order to sell 1 more at the level I should have shorted (the OTE principle) and sure enough it was filled. At one point this 2 lot trade was down more than $700 but then abruptly turned and went positive. The end result of the trade was a net +.24 ticks but the open ended risk at one point was over $600 - simply not realistic in regular trading. While technically not a 'fail' (I did end the day with a positive balance) I consider today a very poor showing. Lots of bad habits that I am going to stop...I am going to leave it at that.
Friday's Trade (0-0 $0 - practice account trades only):
So other than the fact that ORT's got blown up this week on almost every occation (which led to substantial losses to start the trading days) today ended relatively positively. Given the markets are only open for a few hours Monday, Tuesday is Christmas and Wednesday is Boxing day (all holiday'ish) I don't really plan to look a the market much until Wednesday or Thursday of the coming week. Furthermore, I don't plan to do any combine trading until into the following week.
This is my last post here until the New Year, so Merry Christmas all, Happy New Year and lets all rock 2013!!!!
Brian
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