Tuesday 06/09/09 - Live on the Real $ Acct

I switched over to the Live/Real $ account yesterday. No matter how much time you've spent on the Sim, the transition to the Real $ account always brings about some psychological hurdles that one has to work through. That may not be the case with a new trader who starts on Sim, and then switches over to real $, but for someone who's made hundreds of trades with dollars on the line (me), it brings back some old memories and fears. I traded piss poor yesterday placing 3 scalp trades for +1 tick each because for some weird psychological reason, I really wanted my first day on Live trading to be positive.

After realizing that this was a big problem, I looked back at my journal from late 2003 and noticed that "early exits" were a problem even back then. To help solve the problem, I figured I would be more patient and give my trades time to work. Problem is, when you're entering fundamentally bad trades, the additional time only works against you. And that's what happened today. I gave my trades time to work; and that resulted in me taking full stop-outs on almost ALL of my trades today (-1.5 pts per trade). Ironically, I gave all the losers time to work, while cutting the good trades short at break-even.

ES (1-Min) - Morning Trades


I went Long in the morning after it looked like price wasn't going for gap fill and was stopped out for -1.5 pts. After seeing the momentum shift to the downside, I entered short at 942.00 except this time, I was quick to move my stop-loss to break-even, so I got stopped out at break-even on a good entry. After that, the gap filled, and I figured we were ready to resume the up move and began hitting it Long and giving it time (to hit my stop-loss). The three Long trades that followed were fundamentally poor trades from the get go, and didn't even go with my method. I guess those could be classified as "revenge" trades :-/ After being down -5.75 pts, I figured it was best that I stop and come back in the PM session.

ES (1-Min) - Afternoon Trades


My friend who I'm teaching was sitting right next to me, trading his own real $ account, and he entered Long at 945.50 area on the break-out of the first hour high. I told him that 946.50 was resistance from yesterday's high so it's probably best that he stay out until we get a confirmed break-out above that area, and then he can enter Long on a pullback. It'd be sweet if I followed that advice myself. Instead, I got caught up in the price action, and hit it Long at 946.25 and was stopped out a minute later. I then immediately entered short at 944.50. That trade went a point or so in favor and then retraced back up...I had already moved my stop-loss to break-even and missed the down-side action that followed.

So to summarize, I traded like an idiot today and did the complete opposite of what I should have been doing. I held the losers and cut winners at break-even. Now I can either beat myself up over an almost $400 loss, or I can try to learn from my mistakes and make a better effort later in the week. I'll go with the latter. Plus, no one day should make/break a trader. I'm just glad I didn't do too much damage.

Any comments/advice appreciated. I'm not posting the stats because they're obvious from the trade chart (5 losers, 2 scratch trades, -7 pts).

ES (60-Min)

Monday 05/18/09 - Knowledge Alone is Insufficient

Execution is key. Simply "knowing" what to do is not enough. For example, I've been anticipating the 876 level to serve as support and noted the following in Friday's post: "Price still within bullish channel, and 876 low from 05/04/09 was held today." I also recognized that the trend was clearly up today, and that I should be buying the dips, yet when it came time to execute, I continued entering short positions all day, which resulted in a -5.50 pt loss. I was confused with the price action for better part of the day since price would shoot up, and then consolidate for what seemed like an eternity. Most of my break-even trades went 5-7 ticks in my favor but I tried being patient and holding for larger gains, but that didn't work out for me. I realized I was taking counter-trend trades, and that I should just bail for +6 ticks but again, even though I knew what I "should" be doing, I failed to act on the information and continued holding for larger gains which never materialized. Not much else to say except I'll try to do better tomorrow. Stats:

# of Trades	24
Longs	4
Shorts	20
% Break-Even:	41.67
% Win	8.33
% Loss	50.00
Avg Win	2.00
Avg Loss	-0.79
Largest Win (pts)	3.00
Largest Loss (pts)	-1.75
Total Win (pts)	4.00
Total Loss (pts)	-9.50
Net Gain/Loss (pts)	-5.50
ES Daily Range	19.75
P/L as % of Daily Range	-27.85

Housing Starts data released at 7:30 AM (central) tomorrow, along with Redbook at 7:55 AM. Looking for the 887-895 area to hold as support; 910-915 as resistance.

ES/$TICK (3-Min) - Open Gap at 882.50


ES (Daily) - 876 level held as support. Price still within bullish channel.

Tuesday 04/28/09 - Indecisive price action

I won't bore you with the excuses (although I have a few), bottom line is, I didn't adjust to the market's pace (or lack of), and got chopped. There just wasn't any follow through on the moves today; my trades would go 1-2 points in favor, but my targets were usually 3-4 points and I would try to be patient and hold out for target, and instead get hit with a loss since price would reverse hard! I had 25 trades today (32% win rate) with 3 Longs (all losers), and 22 shorts (36% win rate) and ended the day with a net loss of -$310 ($157.20 lost on the 3 Longs, and $152.80 lost on 22 shorts). At least I kept it tight. I made several mistakes. First mistake was trading while I was mentally frustrated and physically occupied with non-market related issues, and not "in the zone". Second, I got sucked into trading the afternoon range-bound chop, and reversed my position several times which resulted in several small losses. I should have just waited it out, but I really thought the market was going to drop to at least the 851 area, and wanted to be positioned short into the drop. After I was down over $300, I decided to call it quits, and of course we got the break-down in ES right after I quit for the day (so frustrating!). And that brings me to an important question: Should I impose a loss-limit while I'm on the Sim? I would definitely have a loss limit on the real $ account, and it makes sense to treat the Sim trading as close to real $ trading as I possibly can. But on the other hand, I miss out on additional screen/trade time if I quit early in the day. Post your thoughts in the comments.

An update on my friend; he netted +$55 or so today after commission. Not bad at all considering the price action.

GDP at 7:30 AM (central) and FOMC Meeting Announcement at 1:15 PM (central) tomorrow.

ES 233-Tick Bar Chart (Morning Trades)


ES 233-Tick Bar Chart (Afternoon Trades)


ES/$TICK (3-Min) - TICK MAs were hovering around the zero-line most of the day; indicative of the indecisive market action today. We got the gap-fill at 9:42 AM (central)

Monday 04/20/09 - Not bad considering

I hate days like today where the big trade is right at the open, with little opportunity to enter later. Judging from other traders' Twitter posts, I wasn't the only one looking for a halfway decent retract to enter short. Unfortunately, the retrace never materialized, and mostly out of frustration, I started taking stabs to the Long side. I had 4 trades total; all Longs, but only one gain (the small scalp at the end). The first trade was entered based on support at 843, which didn't work out. The next two trades actually went 1-3 points in my direction before reversing. I was holding out for a retrace to the 842 area. Usually, I move my stop to break-even pretty quickly, but I didn't want to get shaken out of my trades so stuck with my initial stops, which are fairly tight to begin with (2 pts max). I had to take my continuing education realtor's exam in the afternoon (passed with flying colors), so only traded the morning and ended the day with a net loss of -$172.10.

Going forward, looking for 823-825 area to hold as support. On to the charts...

ES 610-Tick bar Chart (Trades)


Open/Unfilled Gap at 867


ES/$TICK (3-Min) - $TICK below zero-line all day.


ES 15-Minute - Price broke below the 200 EMA

Wed. 04/15/09 - Sucked Big Time Today

My head definitely wasn't in the right place today, and that's reflected in today's net loss of -$1297.50; worst single-day loss to date with only 12% of the trades being profitable. So, what happened? Well, a few problems:
1. Had a dentist appt, and jumped the gun on shorting this morning. I was expecting a drop to the 836 area, which happened while I was at my dentist's office. The morning trades resulted in roughly a $400 loss.
2. Ignored price action in the ES, and put too much faith in inter-market analysis. NQ was showing weakness, and a lot of times, NQ can be used as a leading indicator, but not today. Price action trumps ALL indicators, and I should have paid more attention to price action instead of taking trades off weakness in NQ and the energy sector.
3. Traded 2 contracts at times, which helped magnify the loss.
4. Tried making back the loss even though I should have just closed down for the day.
5. Had other distractions throughout the day (calls from recruiters, etc)
6. My bias to the down-side was too strong today. I had 1 Long trade (profitable), and 24 Short trades, and only 2 of those were profitable. Instead of trading from the perspective of "I don't know what's going to happen next"; I was trading with the thought "This thing's DEFINITELY going down!". I'll pay more attention to my thoughts going forward, and will proceed with caution when I'm 100% sure about direction, because you can never really be 100% sure price will go up/down.

And this is why I'm still on Sim. I'd rather learn (re-learn?) these basic lessons without paying up. Going forward, I think I'll put a $750 loss limit in place and just stay out of trades all together if I'm on the phone, or have an appt.

I'm not sure where this market is headed. We've gapped down two days in a row, and the gaps have been filled both times, which is a bullish indication. Price has held the 200 EMA on the 15-min chart, which is also a good sign for bulls, but I feel like this up move is running out of steam, and we may see that open gap at 822.75 get filled. I know I shouldn't really spend too much time predicting where price is going and just trade in the moment.

On to the charts...

ES 610-Tick bar Chart (Morning Trades)


ES 610-Tick bar Chart (Afternoon Trades)


Gap filled by 9:15 AM


ES/$TICK (3-Min)


ES 15-Minute

Monday 03/16/09 - Real-time Journal

7:53 Am - Resistance was expected in the 765 area, and that proved to be the case in over-night trading. Shorted 763 in pre-market earlier this morning, but was stopped out at break-even. It's my first day watching the S&P pre-market movement, so I'm not in-sync with the timing of entries/exits. From the looks of it, one could extract 3-5 points in pre-market, trading off the faster tickbar charts (233-tickbar). Volume indicators seem to work fine even in the thinly traded over-night session. I wanted to re-enter short at 763 but I'm thinking it's probably best that I just watch from the side-lines today.

7:59 AM - ES now at 761.25 sitting on continuous volume trend. Looks like it could definitely head lower, but a bounce is typical at the continuous volume trend, so I'd prefer to wait for a pop to 763-764 and see if I can enter short. If it breaks 761, next level is 757 (market mid-point).

8:02 AM - Getting that bounce as expected; ES trading at 762.50. A nice gap-fill trade could setup here shortly. As long as I stick with the 6-tick stops, can't do too much damage.

8:05 AM - ES hit 763 forming a bullish engulfing on the 610-tick chart. Staying out of shorts for now. Also looks like we're forming a H&S setup on the 610-tick.



8:12 AM - Triangle on the 233-tick chart. Technically I should short a break of 761, or buy a break of 763 but with a 70% chance of a gap-fill, I don't think I could buy up in this area.

8:17 AM - This is looking weak. Short at 762.50. 3 tick stop-loss.

8:19 AM - ES trading at 761.50. Moving stop to break-even. Initial target 759.50



8:22 AM - ES at 761 now. Leaving stop at break-even. Have a little more confidence in this trade now but 761 has to break soon...it just broke, and hit 760.50. Hoping I don't get stop-gunned here at the open.

8:27 AM - I'm tempted to cover here at 760.50 and just lock in the 2 points. DISCIPLINE! Must hold out a little longer...

8:28 AM - Screw it, moving stop to 761.50 to lock in +1 pt. I'll probably get stopped-out and then ES will drop 10 points without me :-/

8:29 AM - Yep...got stopped out for +1

8:32 AM - $TICK is at +630 pointing to higher price levels, but price is trading down towards gap-fill. I haven't watched the open in years, so thi price action is new to me. Feel like shorting this, but will stay out and wait for opening range to setup.

8:33 AM - ES at 759...should've held that short! Can't let that frustrate me though. Tightening stops to lock in gains is part of my trade management plan.

8:36 AM - Energy sector is down, but financials are up.

8:40 AM - The open is a little too fast for me. I'm thinking this is where liquidity providers like Don Miller are raking it in covering for 2-3 ticks on larger size. This sporadic price movement probably works to their favor.

8:45 AM - Scalped it short for a tick or so (I think). TradeStation doesn't show me my trade entry point on the DOM; maybe I need to re-configure it or something.

8:51 AM - $TICK has finally dipped to negative territory. Would love a bounce on price here to enter short at 761.50. Need to get that 3rd screen up and running today; having an eye on the sectors would definitely help.

8:54 AM - Short 760.50; stopped out at -1 pt before I could even finish typing this sentence :D
8:55 AM - ES at 762.75 now. Just goes to show, if you're gonna use a stop, might as well use a tight one and keep the losses small. You can always re-enter at better price levels. XLE and XLF are both re-bounding to the up-side so probablt best to stay out of shorts for now. But NQ is way down, and I'm thinking the other indices should follow! Confusion!

8:59 AM - I'm sure it's due to a lack of skill on my part, but trading the open looks like a crap shoot. Last week I wasn't around for the open and was able to make modest gains; at this point, I'm down $25 because market can't make up its mind on where it wants to go. Maybe sitting out the 1st hour is not such a bad idea.

9:04 AM - Sectors keep climbing up. Staying out of shorts for now.

9:06 - What the hell is up with these moves? I'm short at 759.75

9:09 AM - Out at 760.00 for -1 tick. Weird price action here with the NQ down and ES and Dow holding their own. I'm thinking some tech company came out with shit earnings?

9:12 AM - Short at 59.75 again
9:13 AM - Out for +3 ticks. Ofcourse now that I'm out, price drops :D

9:16 AM - Not gonna bother trading the first 30 minutes tomorrow. But I think there may be some opportunity in trading pre-market. I don't know...need more screen time.

9:20 AM - Trying a Long here at 58.25. $TICK went positive. XLE turned up.
9:24 AM - Out at 59.50. Early exit as always. 760.50 = mid-point. Expecting resistance there. Might short that area.

9:28 AM - Price hit a high of 760.50 on that last swing up; hit resistance and is now at 757.75. Should've entered short there.



9:31 AM - Matt just went Long at 760.50. Boy's got balls...I'm not touching this thing! My short bias won't let me.
9:33 AM - ES @ 762.50. Insane up move and awesome timing by Matt on that Long trade.
9:35 AM - Matt just exited at 764.25...nicely done! 764 = first hour high. Good area to cover profits.

9:37 AM - Energy sector is rallying pushing this market higher! Staying out of shorts at the moment but I also can't get myself to buy up here.

9:39 AM - Gap fill to down-side is still a possibility. Several times in the past, price has hit 1st hour high, and then reversed to fill the gap. But this bullish engulfing on the 5-min chart is keeping me out of shorts. I'd like to see price break the mid-point at 761.25; head lower, then come back up the mid-point, at which point I would hit it short and hold for gap fill.

9:43 AM - I believe 9:40-9:45 AM is a time of day when price typically reverses. Looks like that's what it's doing right now. Price action has certainly calmed down now. Easier to manage risk on slower moves since market allows you to bail for a tiny loss and get back in, unlike the price action during the open.

9:47 AM - Looks like a bull-flag on the 1 min chart here.

9:56 AM - Have an limit sell order in at 763.00. Price hit 762.75 on that prior swing up and missed me by a tick. But I don't see the point in chasing price here. Nice $TICK divergence setup is forming on the 1-min chart but I'd like to short a pop to take full advantage of the divergence.

10:00 AM - My execution has been pretty terrible this morning.

10:21 AM - Churned some more by taking some short scalps that exited for par. Sitting at -$25 on the day.

10:32 AM - Short 766.50; looking for a reversion to mean. $TICK is still positive but not making any new highs as prior swing up. Using a 6-tick stop at 768 (High of Day). 764.25 = Upper value area. Looking for price to retrace down to that level.

10:36 AM - Doesn't look like this thing is out of steam just yet. Might bail for a small loss here.
10:38 AM - Out for -1 tick loss. Sitting on -$75.00 on the day.

10:39 AM - Re-short at 766.50 yet again. What can I say, it really looked like it was about to drop!

10:40 AM - Stop to 767.50
10:44 AM - Stop to break-even (766.50)
10:45 AM - Out at 765 for +1.5 pts. Back to $0.00 on the day. Gonna step away for a break here. Lets hope my performance in the afternoon session is better.



10:53 AM - Scalped it short for +3 ticks. Stepping away now.


11:34 AM - Just got back to my PC. Short at 767.25. Double-top with $TICK Divergence.


11:37 AM - Well, that didn't work out. Stopped out for -6 ticks. -$25.00 on the day so far.
11:39 AM - Re-short at 769 with 1 pt stop. Initial target is 766 on this one (upper value area & resettable volume trend)
11:50 AM - Was stopped.

11:51 AM - Re-entering short. This isn't being stubborn; the chatrts look like this thing is about to DROP. I accidentally shorted 2 contracts so will be covering 1 fast to get back to 1 contract.

11:57 AM - Stopped out on that one. P/L at -$262.50. Might be best to call it a day.

11:58 AM - Giving it one last shot. If this doesn't work, I'm done for the day. Short at 770.75 with a 5 tick stop.

12:09 PM - Exited at 668.50 for +2.25 pts. -$150 on the day now.

12:14 PM - Short again at 669
12:15 PM - Exit for +2 tick.

12:26 PM - Tried getting short at 770; no fill. Tried again at 769.25; no fill! Finally, ended up chasing the trade and hit it short at 768! Bad call...should've been patient!
12:30 PM - Out for -2 ticks.

12:32 PM - Re-short 768.50.
12:36 PM - My short bias is killing me today. Stopped out for -1 pt. -$200 on the day now + commissions :(

12:45 PM - Shorted 770. Neither volume, nor $TICK supporting this up-move.
12:47 PM - Stopped out. Today is not my day.

12:49 PM - Double-top on Price + $TICK divergence. This could very well be my last trade of the day but I'm yet again short at 770.75

12:52 PM - Looking at the DOM; barely anyone's buying the 770+ area. I'm surprised this market is holding.

12:55 PM - Stop to 770
12:56 PM - Out at 767.75 for +3 pts

1:08 PM - Tried to short a bounce...but the bounce never came and now ES is tanking without me. I am starving though, so stepping away to get some food now. Maybe I'll operate better after I eat something.

1:35 PM - Just got back. Need to adjust my lunch schedule to Eastern time :D
1:37 PM - Just scalped it short for +1 pt. -$75.00 on the day now.

1:53 PM - Scalped it short once more. -$50.00 now.

2:12 PM - Scalped it Long and am now at $0.00 on the day.

So I screwed up pretty bad today. I'll post the Trade Station trade chart and performance summary below. My win rate today was 38.89% and the only positive point I can take from today it is that with my tight risk management, I can have a poor hit rate and still come out flat on the day ($-70 or so if you count commissions). I had 6 losing sequences in a row, which is quite rare but it happens. I'm just glad I didn't do too much damage. First full day of trading definitely did not go as planned, but it did provide me with some insights. My short bias got in the way and I'm going to actively work on resolving that issue. I also relied too heavily on the gap-fill play (70%+ probability of same-day gap fill). The gap did eventually fill but my belief that the gap would fill caused a lot of losing trades early on, and because of those losers, I wasn't mentally where I should have been in the afternoon, and exited some trades too quickly. I also don't know if it's worth trading the first 30 minutes (for me due to my skill level). This week is going to prove to be very educational :-)

Trade Station Performance Summary


ES 610-Tickbar Chart (Morning Trades)


ES 610-Tickbar Chart (Afternoon Trades)


Gap Filled by 2:30 PM


ES/$TICK Chart (3-Min)

Tuesday 02/24/09 - Fighting The Tape

Today was full of mistakes. I fought the tape/trend all day, shorting into most of the up swings, and looking back, I don't know why I did it. Two other critical mistakes I made were increasing size to 3-ES contracts, and widening my stop in the middle of a trade showing a clear loss of discipline! I could blame my work environment and the fact that I was in meetings for 3 hours, but screw that; I messed up, plain and simple. I was on the wrong side of the market. Now, even with all those mistakes, I was down a net 7.75 points by early afternoon, and was able to make back most of it, ending the day on a -1.50 point net loss. Not too bad considering the lack of discipline and the # of stupid mistakes. But wait, I made the mistake of being on the wrong side of the market yesterday, and still managed a 10+ pt gain; so this begs the question, what was different today? The difference was, yesterday, I was very quick to move my stop-loss to break-even, and I took quick single point gains on a few trades, which add up over time. Today, I had a strong bearish bias when price stretched out above 765, and my belief on reversion to mean was so strong that I refused to take only 1.5 or 2 pt profits. I was waiting for the big drop to cover my position for 4-6 points or more. Almost every trade I took today went 1-2 points in my favor before it reversed and stopped me out. So, the outcome for today could have been different if I eliminated my personal bias, and realized that I was taking counter-trend trades into a strong up-trend, so I should cover for quick profits and limit my risk. Today I was too "sure" that my trades were winners, and that's exactly why I ended up losing. Normally I trade from the perspective that I don't know what the market will do next; which helps me minimize risk. Today, I was so sure the market was gonna drop in the afternoon, that minimizing risk didn't even cross my mind. As a matter of fact, I added to my losing positions thinking it was just more cash to take to the bank. I'm going to take lesson from this and the next time I develop an overly confident and strong belief that the market is going to go a certain direction, I hope I'll be able to keep myself in check and simply stay out or correct my thought process.

Goal for tomorrow is to re-focus on discipline; maintain tight 6-tick stops (2 pts max), not move the stop-loss in the middle of a trade, and limit size to 1-contract.

Gap filled within first 40 minutes


ES/TICK (3-min) Note how TICK spent the early morning hovering above the zero-line, and then broke-out to higher ground. I should have noted this and stayed out of short positions.


ES Market Balance (5-min Day Session)


TF Market Balance (5-min Day Session)


TF/TICK (3-min)

Thursday 01/15/2009 - Impulse Trades

I was busy with work most of the morning, and by the time I got Trade Station and my trading platform up and running, ES was trading down in the 817 area. I stuck to yesterday's rule of staying out of Long positions below the mid-point; even though price looked really stretched out in the 812-815 area. 813.50 was Joe Baker's downside target and 812.50 is a huge support number since it's December's low. I was expecting that to provide a bounce, but I stayed out of Longs sticking to yesterday's rule.
When I came back from lunch, I saw ES trading in the 835 area, and without analyzing the price action, and without even looking at the balance chart (balance chart plots all the S/R levels like 1st Hr high/low, mid-point, etc), I initiated a short; purely out of impulse. In less than a minute I was stopped out for -2 points. One loss usually isn't enough to drill the lesson into my head, and I re-shorted at 838.25 a few minutes later, and again was stopped out for -2. This time, I paused and switched over to the TPP Balance chart and cursed at myself for a minute since I had failed to follow my rule of staying out of Short positions above the mid-point. But there was also an exception to that rule; which meant I could short around 846.50 since it was a strong area of resistance. I shorted around 841 for a quick +2 point gain. Unfortunately, I got pulled into an impromptu meeting (someone walked up to my desk and started asking questions) and wasn't watching the market when price got to 846-47, so I missed that short setup. I could have shorted a little lower around 844, but figured I would stick to the rule and short closer to 846 since price could easily bounce from 844 to 847 and stop me out. I'm sticking with my 2-point stops. They're doing a good job of keeping me out of trouble. Overall, ended the day down $100 + commission.

IB - Real$ Trade Executions


And on to the charts...

TICK/VIX Chart - 1:39 PM Central


TICK /VIX Chart - End of day


TPP Sync Indicator - 11:41 AM


TPP Sync Indicator - 1:24 PM


Market Balance (5-min)

Wed. 01/14/2009 - Need to FOCUS on Execution!

Execution is turning out to be the hardest piece of the trading puzzle. My analysis of the market (market reads) are pretty much on the spot, and yet, I'm unable to turn a profit. I started the morning by trading in my real $ account, and took two back to back losing Long trades for a -$250 loss. I quickly came to my senses and realized I was trying to catch the bottom, which is a loser's game and stopped the bottom fishing. I'm glad that I was at least able to limit the losses. After two consecutive losses, I switched to Sim, and guess what...I ended the day up +$987 on SIM. I again took several screen shots of the TICK/VIX chart throughout the day and will post them here.

In order to rid myself of the bad habit of trying to nail tops and bottoms, I'm going to stick to the following rules:
1. Above mid-point of the market, initiate LONGS only. The only exception would be if price is really stretched and trading above 2X High Range.
2. Below the mid-point, initiate SHORTS only. The only exception would be if price is really stretched and trading below 2X Low Range.

That simple rule would have kept me out of trouble today.

Please post in the comments if you have any other ideas/suggestions on how I can improve my execution skills.

On to the charts...
I don't time to analyze each screen shot tonight, but the trade setups are the same as yesterday.

9:50 AM Central


10:21 AM Central


10:24 AM Central


10:48 AM Central


11:03 AM Central


11:19 AM Central


11:44 AM Central


11:46 AM Central


11:57 AM Central


12:04 PM Central


12:13 PM Central


12:34 PM Central


12:36 PM Central


12:41 PM Central


12:53 PM Central


1:02 PM Central


2:05 PM Central


2:43 PM Central


2:48 PM Central


Market Structure/Balance