TF Trades 2/2 - I Sat

Profit: USD 330

TF 5min

TF Hourly

Sold TF at 439.7

I did say that if TF were to go below 440 before US market opens today, I will short it.

And so I did. Set a stop at 432.6, and profit target at 433.

Then I watched. Twice I let 2.2 points vaporize before my eyes. I sat. 439.5 was stopping TF and a downtrend line was threatening to stop it. Too bad the trendline was at around 433 and at one point I suspected that TF could go all the way up to Fri's close at 443.2.

Then D called. He couldn't believe I didn't take profit and started selling me the idea of an early exit. He has been spoiling me - I hate losses, no matter how small, and he's concerned that I'll take it really badly should my profit turn into a loss...

Anyway, I didn't let him finish, and told him that I had to do this. I have to sit when there's no reason to get out yet. And if I'm wrong, that's fine coz it's just going to take me 3 points to know that. I'll take the small loss. I just have to start trading my view again. The way that I've refused to take losses has worked in the past, but it's hurting my trades in the current market.

Back to TF - As it entered the demand area, it was apparent that it would be a difficult way down for the bears. But it was also where opportunities for good momentum can be found. D then asked if I could take some profit first then go back in again. I said no, coz I've reserved a good seat, and if I get up, I'll miss the show when it starts.

And so I continued to watch as TF hit 437 support a 3rd time on 5min.

I checked the Europe and Asia market and both were NOT looking good. US is going to be releasing personal income and spending, and ISM data in a few hours, and consensus is showing a fair bit of pessimism.

So far so good.

The market's not going to plunge because of more bad news of course.

In fact, I was thinking that if things get really gloomy today, there's likely going to be folks who will start bottom fishing - with DOW trading just beneath 8000, a pullback is not too difficult to imagine.

As I was going back and forth with the 2 scenarios in my head, I noticed that TF was forming one of those long bearish candles on the 5min. I didn't like that. It was reaching the floor of channel too quickly. I needed it to come down gradually so that by the time it hit the floor, it would be somewhere around its previous low at 432. I checked the hourly, and saw the 435 support. Dangerous number.

And indeed, as soon as TF touched 435.5, it bounced back up quickly. That was a sign to get out. I covered with a stop at 436. No transactions took place there. TF went offer at 436.4 and I was out.

TF is currently trading just above the floor of the channel on the 5min, and what I'm looking at is clearly a descending wedge. Given the 435 support, I'll be cautious about trading a breakout below the wedge. If it doesn't fail, I'll take a short entry after a pull back to either the base of the wedge or at 437.

I might take scalps if I have reason to believe that TF is going back up to 445. But I would really need my Tick indicator to do that. If it gets choppy, I'm staying out. If I don't, I'll be the biggest ass I ever know.

TF 2/2

TF Hourly

Pattern I'm looking to trade: Head & Shoulder / Inverted Cup With Handle (whatever...the cup's not even formed yet, let alone the handle - once TF drops below 425, that's a good pattern to trade)

As TF approaches the area (425 - 440) where people have been willing to buy (look at the number of bullish reversals that happened there), I'm actually rather wary of selling.

But since market has generally been weak (see screenshots of NYSE data below), I'm going to take my chance.

If pattern performs, TF could go all the way to 430.

But I'm sticking to a point that 's slightly below Fib extention level 161.8, and aiming for 433 instead.

I expect TF to pull back to 450, or even to 455 first though.

Should TF punch through 440 and hit 432 without any decent retracement, I'll be looking to buy.

I really don't think I'd want to do anything at 440. If I really have to sell there, my stop would be 7 points away. So, unless the market's screaming for me to get in, I'm just going to sit back and watch, and probably take scalps on 1min.

That said, should TF fall below 440 before US market opens, I'll be happy to sell anywhere below that and place a stop at 440.

Plan A

• Short at: 453, 450, 445
• Stop Loss: 455, 452, 447
  
• Exit target 1: 440
  
• Exit target 2: 433

Plan B

• Long at: 433
• Stop Loss: 430
  
• Exit target 1: 440
• Exit Target 2: 450

Plan C (on failed HS)
No plan C, if TF doesn't punch through 440, it might just chop sideways for a while. When market gets choppy, experience tells me that I should just SIT & WATCH, or go play with my cat.

NYSE Data

Jan 26 & 27

Jan 28 & 29

Jan 30

Care Too Much And You Could Lose It?

Dr Brett's recent post has given me something to think about: am I caring too much about my trades lately because they are increasingly the only things that make a little more sense than everything else in my life? And has my performance been affected coz I care too much??

Someone asked me again if trading is indeed my passion. I haven't replied. Not because I don't know the answer. It's coz the answer's so obvious I thought it's gotta be a rhetorical question!

But I'm starting to wonder now if it is at all....

I wonder too, if supposedly that I REALLY have been using trading to jazz up this abysmally vacuous life of mine, that it means I'll now have to go look for something else to fill my void first before I can start becoming good at trading??

I feel seriously discriminated against.

Is a life without interaction with people really so not worth living? Why is it that when people talk about a "void", they're almost always alluding to someone being devoid of or deliberately avoiding having meaningful relationships and a network of acquaintances and friends (better known as "support groups" in times of needs)?

So what if I have replaced family and friends with trading? And if I love sitting in front of my computer a hundred times more than I love having coffee with friends? And if I've learnt so much more about myself through trading than through interacting with human beings and reading a dozen self-help books?

If this theory about how caring too much about something is the way to lose it holds, I'll have to give neglecting, and perhaps even abusing everything I love a serious consideration.

Oh, I forgot, I DID care too much about someone - I cared too much about whether I was the one that made him whole.

In so many words, I lost him.

I wasn't the one that he needed to fill his void.

And it was only when I realized and accepted that I am not such big a deal, and left him to look for his meaning in life while I went looking for something else to occupy my time and mind that we both started to feel a lot less bitter and less angry with life and with each other.

Where I'm going with this I really do not have the slightest idea.

But why do reasons even matter?

We human are just so fond of complicating our already complex life.

Trading is what I really love, and it's also what keeps me away from trouble. I shall nurture all my trades, the bad ones especially, and care so much about them that I'll make Seabloke feel ashamed as a mother (the most doting mother in the world).

And we'll see if I'll suck at it (trading, NOT mothering).

TF Trades 1/30

Traded my plan. Well, at least half of it. Still not letting profits run. Not intending to until market starts to behave like it did during the period spanning Aug and Nov last year. For now, I trust momentum, and momentum only.

On 5 min chart, TF has completed the 1st leg of what seems to be a measured move down. If I were looking to trade the 2nd leg, my target would be wherever pull back ends minus half the length of the 1st leg.

But, I'm done for the day. As always, I'm in need of sleep. I'm tired, physically, but my brain's been so hyper I haven't been able to fall asleep. I'll make a terrific security guard on nightshift.

Anyway, volume's low, so I'm really not sure that TF will really hit 440. And it's too bearish a day to buy... I could always put in a bracket order to sell at 450 and then go to sleep of course. But that's so not me.

Am putting BLACK December and that stupid Fed day behind me, and focusing on trading only quality trades. In time, I will find the confidence to trade my full plan ie. exit at profit target.

Profit: USD 250

TF 5min & 1min

TF 1/30

Dow & SPX Daily

Round bottom (Jan 15 - 28) on both...that's going to be a straight line down to at least the Nov08 low. Simply put, market's looking bad, and I'm bearish again.

TF 30min

Pattern I'm looking to trade: Head & Shoulder / Measured Move Down
It looks like we're going into correctional wave 4, and the session today could very likely see the completion of wave 5 - which is visually the 2nd leg of a measured move down.

And if that happens, it will complete what looks very much like a Head and shoulder pattern on the 30min chart.

Plan A

• Short at: 457 - 459
• Exit target 1: 450
• Exit target 2: 440

Plan B
(This is is for the scenario where TF doesn't even go back up to test resistance at 459)

• Short at: 450 - 451
  
• Exit target: 440

I'm suspecting that we'll be looking at a rather narrow range today, so I really don't have very high hopes that TF will hit 440. The right shoulder needs time to form afterall - if that's really a shoulder that's in the making.

I would like to see bearish patterns developing around the 450 area on the lower timeframe before considering any shorts below that level.

TF Trades 1/29

Profit: USD 140

Shorted TF 8 mins after market open, meant to hold it for a while, but the lack of momentum made me cover at a 9 tick gain. Honestly, I wasn't upset when it finally ended up at 459, which was my exit target #1.

Coz I was already thinking about my 2nd trade.

I expected TF to bounce at 459 (which was why that was my target #1 in the first place), and saw no reason not to do something about it.

Both on 30 min and 1 hour, a hammer was forming. When it was completed, I figured that on 1min, what I was seeing could very well be an inverted head and shoulder. I gathered that both hammer and HS were bullish enough to send TF back up to at least 466, from where it should start plunging back down.

So I entered a bracket order, but got really clumsy (coz I usually use the booktrader, or simply enter at market), and watch a 2-point profit evaporate as I was keying in my order. Anyway, I entered a buy limit at 463.7, a stop at 461.5, and a sell limit at 466, and then just sat and watched.

At one point, I was looking at a profit of $200.

And then profit started shrinking.

By then, my finger was already on the sell at market button. But I decided that I had to at least make an effort at sitting...

I continued to watch profit shrink.

My heart ached so bad that I needed aspirin. It was definitely more unbearable than looking at a 10 point loss.

It just doesn't make sense not to take profit. It also doesn't make any sense to take a 10-point, or a 5-point loss when you know that just like profit, it will get smaller with time, if you're basically right about market's direction.

So, I hit the sell button at 140. The head and shoulder pattern is almost busted (resistance above), and what was forming then was something that looked like a bull flag of sort. Since there's no telling if it's indeed going to be a flag, I decided to do what any sane person staring at the screen would do - I grabbed my profit and bolted.

I'm not thrilled to have given up my initial profits, but I'm glad I didn't give the market a chance to take out my stop.

When I returned from a brief smoke break, I saw that TF had indeed gone up to near 466 (I had covered at 464.2). And again, I felt nothing. I have no attachment to things that I've never owned. But for me to give up what was once in my hand - that's painful.

I'm most comfortable taking trades that have a potential profit of 4 to 5 points and I'm just aiming for whatever momentum offers - sometimes it's 2 points, sometimes 3, sometimes a few ticks. Bottom line is, I have a lot of buffer.

As far as stops are concerned, I'm still comfortable with mental stops. I trade a small contract size, and I'm getting consistent with blowups - they are almost always 7 points. On those occasions, I usually manage to recover my loss. Except on FOMC days!

What I really need to work on is my entry - I just have to be really patient and not rush into trades. Forcing myself to identify a pattern before getting in is how I'm keeping my itchy fingers away from my keyboard.

TF 1/29

TF Hourly

Pattern I'm looking to trade : Ascending Wedge (AW)
Since breakout of AW is usually on the downside, and given that TF has hit a strong resistance area, I'm inclined to believe that a downward breakout is more likely to happen than an upward breakout.

Volume has been trending downward in the current rally, which gives me more reason to believe that a downward breakout is probable

Plan A:
Entry:
On the hourly, it looks like TF could go up to test 475 again, forming what would be both a double top, and a partial rise pattern. If momentum is clearly downward, I will look to enter short after TF has formed another peak at around 475.

That would be the more aggressive play.

If I don't get a confirmation from any of the timeframes, I will look to short only after TF has closed below the uptrend line of the AW. If TF is going down right now, I'll look to short when it pulls back to the trendline.

I will be looking at the 1hr, 5min and 1min timeframe after market open

Exit:
Target 1: 459
Target 2: 450

Plan B:
Should TF close above 475, and momentum is clearly upward, I'll look to buy.
Exit targets will be 480 & 488

A possible entry for shorts at 469.5 on 30min chart:

Ground Rules

RULE #1

• No trading for at least 1 day after 2 consecutive losing days

RULE #2

• Trade my plan - read it once before 9:30am; read it again at 10:30am, 12pm and 2pm

ENTRY & EXIT

• Trade only recognizable patterns

• Enter only upon confirmation of patterns

• Exit only when there's no more reason to stay in trade - when move is losing momentum, when pattern is busted

• No fresh entry after 3pm unless there's a clear trend, and familiar patterns have formed

CHOPPY DAY

• Take small loses in a non-choppy market

• Stay the course in a choppy market, and focus on strategic exit

• No fresh entry after 12pm on a choppy day

TF Trades 1/28 - What Happened

Vinay's comment re my trades on 1/28:

Hi Jules, I am wondering if you use any stop losses and why did you take such a big hit on that last trade? What kind of R:R are you using?

I Scalp ES and from experience, it is very difficult to recover from big point loss during the day if you are scalping. It is better to choose low risk entry trades.

My reply:

Hi Vinay,
No, I use no stop losses, and that's going to be banned from now on.

I took a big hit on my last trade coz I had gone in without confirmation of what I think was forming - namely, a bull flag/pennant. I ASSUME it was going to be that after TF left its consolidation base.

A proper entry calls for the actual formation of a flag. But there was none of course.

I was aiming for TF to reach 480. It didn't of course.

I sat on my loss coz I didn't believe that TF was going down. It did, of course, and went down fiercely.

Judging from the speed of the downward move on a bullish day, I knew with near certainty that it was going to come back up. But I had entered the trade at 3am (PM EST), and there was simply not enough time for me to see what was going to develop.

I exited at the floor of my trendline, at a loss that I think I can still recover emotionally from. What I lost in that trade was what I had made in the past 7 sessions - I refuse to risk losing more. It was no longer about trading my conviction. It was about getting out before I'm crushed emotionally. And I had to get out before market close because I don't hold my trades overnight.

I don't use any R:R. I don't believe in 2:1 or 3:1 in daytrading the futures. I believe in using a volatility stop (a mental stop for me, which has been 6 to 7 points recently), and take whatever the market wants to give. So far, because of my fear of having a losing day (coz losing days ruin my morale), I've been cutting my profits way too soon.

For the past 2 months, trading has solely been about pampering my senses, and about getting around my psychological barrier instead of dealing with it.

Not going to happen anymore. This is NOT the way to trade. If I'm going to continue to be lily-livered for no good reason, I might as well quit trading.

Yes, I totally agree with you that in scalping, it's difficult to repair huge damages. It's idiotic to scalp profits, and daytrade losses.

Thanks for your note, Vinay, and happy trading today (Thurs) :-)

TF Trades 1/28 - It Just Gets Better

I'm not even going to blame FOMC.

What I really need to do is to learn to accept a small losing day!

I didn't want to accept a $128 loss today, and ended up losing $743.

Feeling just great that I'm going to be losing kilos too in the next few days.

Loss: USD 743

TF 1/28

TF Hourly

Call me crazy, but I believe TF is not letting up yet and is likely to test the resistance zone of 475 - 480. I would really like to see 2 consecutive closes above the 462 resistance coz that will make buying easier.

Volume's clearly on a downtrend. Doesn't take a genius to figure out that party's going to be over for the bulls. The 3-day rally is clearly a flag or pennant, whatever - 461 is a fib retracement of 38.2% from TF's high of 518.6, and there's a good chance that TF is resuming its downtrend from here, or the next resistance zone (475-480, which is close to fib R 50% & 61.8% respectively), if not today, then tomorrow.

I'll be watching the 9:30am volume. Don't want to be caught in another fake breakout. Am expecting a miserable trading range. $#(%$&@ FOMC.

TF Trades 1/27 - A Day To Remember

The last trade was one of the hardest battles I've had to fight.

I was a sucker going in long at the PERFECTLY WRONG time, and I refused to be a sucker getting out. I traded my view (that TF will at least test its previous peak at 457.8), and watched for signs telling me I was completely wrong. At one point, I was 1k in the red. Sat for 3 hours, and fought the urge to curse myself for picking a really lousy entry. Kept close tabs on tick almost every moment of the 3 hours - I care not where price was, the plan was that should tick hit the high of the day then turn down, I would bail - coz that could very well be a bearish reversal.

TF had been trading above pivot the whole time - and that was what kept me from getting out when I was caught in that sickening ambush at 9:45am that had TF going 3 points against me in a blink of an eye. But I'm not going to feel happy about that. Tick or no tick, I refuse to be caught in a bull trap again.

It was a day that I kept having to watch for busting of bullish patterns. TF had come up from 446 bottom mostly on inverted scallops on 1min. On 5 min, it was basically S & R, and trendlines that I was watching, plus a broadening formation (partial rise would be my signal to bolt).

I broke my rule and entered long when upward momentum was not there. The first 2 trades would have told me that. I was telling D after the 2nd trade that I kept feeling that market didn't seem willing to go up. And then I had to go long right after saying that.

I'm an idiot.

Definitely a very good lesson learnt.

It was 3 hours of pure torture.

The moment I got out with a 9 tick gain (it's a ranging day, and where I got out was absolutely the highest TF would go today, I bet my cat's entire month of his favorite canned food on that - yes I'm an imbecile for buying at the day's resistance!), D came over to give a big hug, and told me that he knew the battle I was fighting, although I never spoke a word the whole time, and congratulated me for having overcome my fear of HIS max pain. Ha. D's too cute. Not good for me.

I need sleep.

Profit: USD 126

TF 1/27

TF Hourly

Still on the breakout-of-triangle play. If TF manages to break above that smaller triangle that's forming now, it should be on its way up to test 475. If it breaks on the downside instead, it's likely to find support on the uptrend line that is part of the larger triangle.

Call me bias - the last thing I'm seeing on this chart is TF plunging at this juncture.

TF 15min

Support at 445. If it doesn't hold, it's a sign that the 2 Inverted Scallops have run out of steam. In which case, for me to continue to want to buy, I'll have to see some really bullish patterns forming after that.

TF Trades 1/26

Am in syn with market today.

So much so that I was tempted to SELL at various points, especially when 5min chart was forming what was possibly a head and shoulder, and 1min had formed a partial rise within a broadening top (see chart below) - all very bearish patterns that are needed to push TF down to around 448 -449 (Fib 38.2 retracement - typical retracement level for TF on a TRENDING day).

But I've made some sort of a promise (to D) that I will NOT fade a trend FOR NOW.

I'm starting to monitor the movement of ES closer, and have switched to BAR charts since the last session. I find bar charts a lot cleaner, and this really helps when I'm watching 5 charts (4 for TF and 1 for ES). I can still see my stars and hammers and engulfing and haramis, so I'm really NOT missing my candles.

TICK has been extremely helpful in the past 2 weeks that I started to really use it to 1) gauge if a move is sustainable and 2) to time my entries.

Volume pattern has been reliable for patterns like head and shoulder and flags.

It's a Monday and I really want to start my week in the green. And that's held me back from letting profits run, and might even hold me back from entering another long above 458 later today.

But maybe that's not such a bad thing. If TF has any real strength, it wouldn't have stopped at 458. The fact that 458 indeed provided resistance shows that it's still not the time to get aggressive.

Am calling it a day. This is about my only strength/edge - I don't chase - and I intend to continue to use it to stay alive.

And I'm starting to notice that I might just have learnt a thing or 2 about patience. I no longer feel ashamed about having to start from scratch: targeting for just 1 point a day. Getting consistent is my focus for now. I'm giving it another month, or whenever the market's less chaotic (albeit in a rather organized manner). After that, I'm not going to restrict myself to my current trading "quota" anymore.

That said, if TF does what I think it might do ie. starts forming a second leg up after retracing to around 448-449, I will definitely get in again - provided it happens before 3pm EST. It's a crime to not trade a bull flag.

My trades today. Profit: USD 130
TF Hourly & 15min

TF 1/26

DOW Daily

• Fri's session formed a hammer - if price moves up from there, it's not too difficult to imagine the development of a round bottom

SPX Daily

• Ditto for SPX daily
• And, Inverted Scallop is still intact - price found support at Fib retracement 61.8

TF 5min

• Partial Decline within Broadening Formation
• Inverted Scallop

TF Hourly

• Inverted Head & Shoulder
• No follow-through after breakout below triangle, twice

TF Daily

• Increased volume on previous 2 sessions - Thurs & Fri - barely pushed price below the low of Wed's session
• Fri's session is a hammer - not a very strong one, but a hammer nonetheless
  

There's not a single reason for me to believe that TF is going down to test its previous low. As far as today goes, I'm bullish. On the hourly, there's visibly a resistance at around 458. However, I'm inclined to think that TF could go up to 462-465.

Stock Contest - Complacent Panda's Team

Complacent Panda is looking for traders to join his team in a stock contest. For details, check out his post here.

The contest sounds like fun... It's a pity that though I have the time, I haven't the experience trading stocks...

I think CP would love to have more than 10 people, so if you're interested, do drop him a note.

My Not-So-Sophisticated Trading Methodology

Extracted from an email from Sam:

The reason I am writing is that I am a beginner trader and still papertrading US equities with losses most of the time. I would like to learn your techniques and methodology as they seems very sophisticated. Could you please give me a background on how you got started on trading, your reading material, and how you developed your skills.

Sam, my response is going to disappoint you.

First, I don't have a sophisticated trading technique or method. In fact, I don't have any technique, let alone a sophisticated one.

Whatever that I do to prepare for each trading session, I've documented them on this blog. You can look for the entries under the label "How I Trade The ER2" and "Premarket Analysis". Whatever that I do after market open, I've also documented them, and you can find the entries under the labels "Trades (wins)", "Trades (losses)", "AAR", "Emini Futures".

After you've gone through what I've written, you'll notice that I don't really have a system or method on which I depend to make my trading decisions.

Perhaps my interpretation of "technique" and "methodology" differs from yours. But having been asked on numerous occasions similar questions, I assume your definition of these words is what I think it is.

If you're looking for trading systems, you'll find a lot being offered on trading forums. You'll be given a set of indicators with specific parameters, and step-by-step instructions that you'll be told that you have to follow EXACTLY if you wish to replicate the success of the person who's shared the system. And most are very sophisticated.

I'm a chart reader, and that's all I am. Day in day out, I feel like I'm trading not just the market but my own psychology as well.

I read the news daily, but individual events that are reported do not have any bearing on the preparation of my trading day. I've written a fair bit on that on my postings that you'll find under "How I Trade The ER2".

I check the market internals prior to market open, and during the trading session, but I don't care about statistics like the following (because I have yet to appreciate their relevance):

"......During the month of December and January, Nikkei hit a closing high of 8760 never going above the 9000 level while the S&P had 4 days in December and 5 days in January (the first 5) above 900. The correlation between the daily changes in the S&P and the change in the dollar versus yen, over the last year has been about 70%, with hardly a contemporaneous day with the dollar down big and the S&P up, or the dollar up big with the S&P down...."

HOW I GOT STARTED

You asked how I got started on trading. I don't really know where you want me to begin, and I'm going to assume that what you really want to know is a) if it's a push or pull factor, and b) the journey I took to make a switch from working for someone to trading for a living.

Re a)
I was never interested in investment and trading related matters when I was with the public sector. Before that I was with a local bank selling investment-related products, and I hated my job (which makes me wonder why I chose to go back to banking after I quit the public sector....)

To cut a long story short:
I was to sit for several exams for this new banking job. I was a relationship manager and my customers were those that got to wait in nice lounges sipping lattes while waiting for their transactions to go through. The part I loved in my very short stint there was the studying for the exams bit. I really thought that whatever that I was supposed to know before I stepped into my new role, I was going to get a lot of hands-on experience through serving my customers. Little did I know that what I had liked about my job was actually handled by the bank's Investment Analysts, and what I was hired to do was simply to sell. I quit after a couple of months, coz I didn't want to spend the rest of my life doing something I hated.

Re b)
My trading journey began when I took a 4-session trading course after I left the bank, and I paid USD2500 for the course. The one thing I'm still benefitting from that class til today is a friend I got to know there. Ken and I spent many afternoons sharing information and ideas about trading, and it was Ken that introduced me to the concept of price actions. It was through him that I came to know about Elliot Waves, chart patterns, trading the futures and forex market, and the importance of staying the course and managing my emotions. I was paper-trading on and off, and Ken was always the one that gently nudge me to start getting serious with trading. In a nutshell, when I think "trading", Ken will always be the first person to come to mind. He was both my trading buddy and my mentor, coz he had started trading years before and was always ready to share his experiences. Most of the books that I read were recommended by Ken. And I read A LOT of books (not cover-to-cover for every one of them of course).

9 months after I first knew anything about trading, I started trading real money. A few months ago, I attended a course that Michael was conducting, and through his course, I learnt things that I was never taught before - coz I had totally skipped the "beginner"'s phase when I first started out. To know more about Michael's course, please go to the label "Trading Coaches and Courses" and check out my entries there.

To be fair to Michael, my lack of a disciplined approach and system is not the result of his teachings. I learnt what I had to know about trading from him, but I made a choice to seek my own path, coz I knew from the bottom of my heart that THAT's the only way that I would make it to where Michael is today. There is no short cut for me. I can't simply take his system, trade it, and expect to get his result, coz I'm not him. There might be many who are more like him, who can trade his way, and those are the really fortunate ones.

All in all, I've paid $3700 for the 2 courses (Michael's was a 5-month course that cost about USD1200), read too many books (which I will be posting on a separate blog entry), spent nothing on hardwares (the PCs, monitors, and laptops that I'm using have been around for the longest time coz D is a systems network fanatic and we always have TOO MANY of these stuff - my studies occupies the biggest space in my home), spent nothing on softwares (I use a free charting service - Think or Swim; my only trading expense is commision to my broker - IB - which is USD 4.80 per TF contract per round trade), going to be spending nothing for subscription to vendors (I've cancelled my briefing.com subscription coz I don't use the service at all) and I don't pay for others to give me advice on what to trade and when to push the buttons.

It's a very long-winded response to your question, and not the least bit direct. My apologies. I don't know how else to describe how I ventured into this strange arena called daytrading.

And after making you read such a lengthy note, I'm actually not sure that I am the right person to answer your question. Because I really don't think I have developed the skills that I need to be successful in trading. I am still very much a student of the market. The learning could take years, maybe decades. And really, how does one even go about defining "success" when it comes to trading? How much do I have to be making per week/month/year for me to feel "successful"? What are the other factors, other than those measured in monetary terms, do I have to consider when deciding what constitutes "success"? And the list goes on. Very basic questions that typical novices ask. And I'm just another novice in the field of trading.

If you're still reading this, I have this to say to you: don't go looking for a sophisticated methodology. You might want to enrol in a reasonably priced course that teaches you the basics of trading. Better still, first read books like "Come into my trading room" by Alexander Elder, and "Stock Market Wizards" by Jack Schwager. Dr Brett's blog (on my blogroll) has a lot of valuable advice on money management, and you should really check them out. Being able to keep and grow their trading capital is what separates the successful traders from those who are not. Then read a lot of good blogs to get a sense of what to expect when you're trading with real money.

After you've done the above, and if you think you still want to attend classes, look for credible trainers like Michael.

Again, I'm sorry if I made you feel like you've wasted your time reading this. Fact is, if you're like the majority of those who think that trading is like learning how to ride a bicycle ie. once you can balance on 2 instead of 4 wheels, you can look forward to many hours of joyous rides in the woods forever (you'll never FORGET how to cycle and how to balance), you're going to be sorely disappointed when you go into the market. The market is ever-changing, and no systems or methods will work forever in it. But as a living breathing entity, YOU can make the necessary adjustments to stay in the game, PROVIDED that you have a solid foundation: sound knowledge of the market and yourself, and of what trading is about.

Based on the questions that you asked me, I figure you've not read beyond the last few entries I posted. My answers are actually all over my blog. :-)

D Took Off With Our Door

Market's looking healthier...

And that's it for today - no more trading talk. It's a 5-day weekend. For D. Chinese New Year holiday. He's looking forward to lots of shopping....

Had a bizarre dream this morning - whenever I get more than 4 hours of sleep, I start getting funny dreams.

I dreamt that D took off, and took our main door with him.

And this was the conversation that took place while I was still half in dreamland and half awake, and D was 75% in dreamland:

Me: You left!! And you took our door!!
D: .................
Me: Why take the door??!!!
D:....maybe I just wanted to keep the address??
Me:..............$#*$@*!!
D: ....shouldn't you be concerned that I could have been abducted???!!
Me:........ Just don't take the door!!! The house looks weird without it!!! &$#&*#$!!!!

I like D. :-)

TF Trades 1/23

Forget HS and double tops, I went long on the 3rd trade. TF's breakout from the symmetrical triangle on the downside on my 5min chart is clearly busted. And that has been the only pattern that I traded today.

For the first 2 entries, I was buying on TF testing resistance at 436.6. That was the only NEAR certainty to me then: that TF was going UP to test that level. My risk was 1.5 points - I went long after TF has broken above a resistance on 5min, and my entry was about 1.5 points away from that resistance.

For the 3rd entry, I went long again, and my basis for entry was TF's testing of the ceiling of the symmetrical triangle. I didn't care if it would turn out to be a fake breakout. It was precisely because I didn't want to be caught in a fake breakout that I bought on the basis that market wanted to at least hit that point (443.3), and not on the hope that price will really take off from there. A more likely scenario will be a smack down by players waiting to catch bulls at those critical levels.

In a market like today's (a POSSIBLE bullish reversal), there's no way I'm letting profits run. They could very well really run away and not come back. My objective for this month and possibly the next, is to maintain a net positive day every day. I need it for my morale. Dec 08 has done a lot of damage to my spirit. I'm nursing it back to health. That's my focus for now.

Not feeling rapturous over a USD 95 profit, but am happy that I'm starting to feel a lot more in syn with the market, and most importantly, in touch with my heart. I know what I want, and I can tell now if it's realistic to want those things.

A good day, in general. And it's good to wrap it up now.

3 scalps. All winning. Profit: USD 95

TF hourly & TF 15min

Performance Scorecard

TF 1/23 - Scared Bears?

TF 5min

Volume pattern's looking very much like TF's going to form a head & shoulder/double top. There's a clear lack of fresh buying, just lots of bear covering. And one would think that THAT would encourage the bulls. But no, no one's buying.

Went in for 2 scalps - both long - and was looking to buy again on pull back. But now I'm not so sure I still want to buy. I'm not even going to buy that test up to the previous peak. Granted TF's traded from below pivot support 1 to above it, it's still trading below pivot.

Looking to sell double tops/HS (on 1min and 5min). Entry signal: TF closing below 434. Won't be going in before that - don't want to be caught in one of those nasty bear traps. Market just seems a tad oversold to me.

TF 1/23 & DOW's Diamond And Pipe Bottoms

TF Hourly

This is what I'm thinking (and it's all conjecture of course):

1) TF is going to break out below the symmetrical triangle, finding support however, at 429 to 431, and move back up into the triangle, busting the breakout.

2) What follows would be a breakout above the top downtrend line (in blue), and then TF would be aiming for 475.

I'll be looking to buy during a pull back in the event that price breaks out of the blue top downtrend line. If that's too near 458 resistance, I'll wait for price to close above 458 before going long.

While waiting, I'll be scalping. Again, if market gets choppy, even if TF were to hit those numbers, I'm still not going to hold any positions for more than a few ticks.

DOW Daily

Busted diamond bottom. Or is it? Diamond bottoms don't usually fail. Besides, the pipe bottoms are providing support still. I'm speculating that market could very well close in the positive territory today.

TF Trades 1/22

3 TF trades, all winning.

1st trade was more like a scratch. 2nd trade was a disaster - got carried away and ignored 400 support. Sat on a near 7 point loss at one point. Had initially wanted to get out after trade went against me by 5 ticks but didn't get filled and price shot up by 2 points the next moment.

I decided to just sit coz all my charts were telling me a bearish story, and TF was trading below pivot throughout. Besides price was trading in a range, and that gave me some assurance that it will come back to near where I entered.

So, no sweat for me, but D was sitting on the edge of his chair. When I got out with a 4 tick gain, he was so relieved he asked for tylenol (somehow the release of tension brings on migraine in his case).

I had not held on to the position for more profit coz 400 was precisely the place where TF could go up on a double bottom formation (and it did go up). My plan was that if indeed it were to continue to go down instead, I would get in after TF has closed BELOW 400, that is of course after it's pulled back to that level to test it as a valid resistance.

Missed the trade coz I was busy with something else, and it wasn't the timeframe that I would trade. Anyway, when I returned at 1pm EST, TF as gone back up to trade above 440. My plan was to short it at fib retracement level 38.2 or 50. Fortunately I didn't, coz 1min chart failed to give me a sign when TF reached that 2 fib levels, and TF indeed continued to trade up.

However I managed to get in for a quick scalp at around 1:30pm est.

TF ended up testing the high at 448 and went beyond it in fact. And on 5min, it closed above my slowest EMA and traded above it for a while.

It's clear that this is no longer my game, and momentum's lacking both going up and coming down.

Time to call it a day. Profit: USD 115

TF 1min & 5min & IB trade view

TF hourly & 15min
Performance Scorecard

TF 1/22 & An Anniversary

TF Hourly

For the life of me, I cannot imagine TF continuing to go up. There's going to be a throwback to the channel, or to pivot at 448.3. If it stays above that, then good for it. If it reaches 470 and stays above that, that's going to be a clear victory for the bulls.

I feel like I'm writing a fairy tale. It's crap.

I envision TF to be stopped by 458 resistance, and plunge below pivot at 448 in search of its burial spot.

Today's a special day. It is special to me. Am going to ditch trading to explore the world from which I have run away for so long. Probably catch a few movies by myself - I love the pitch black darkness of a cinema hall - and then loot a nearby bookstore.

TF Trades 1/21

2 scalps. Calling it a day. Got home 30mins after opening bell, and watched price drift around aimlessly.

TF's still hovering just beneath pivot. Buying was not an attractive option even though all 4 indices were blue. on all 4 timeframes, prices were just choppy.

Went for shorts anyhow, but couldn't stay at all coz there was hardly any real momentum down.

Turning in early. Throat and nose are killing me. Damn those virus!

Profit: USD 70

Performance Scorecard

DOW,RUT & TF 1/21

DOW Daily

I'm inclined to take the view that the market is going to continue to go down in the next 2 to 3 sessions. Fundamentals (advances/decliners, sector performance, the general economic outlook within and beyond the US border, political atmosphere etc, etc) aside, these are the technical reasons on which I have based my view:

1) Hammer failed on substantial volume (highest within the month)

2) Price closed below the lowest valley (8360 - which would be my confirmation entry if I were to trade this pattern) of the triple top formation , pulled back, but was stopped by the confirmation line (8360). Yesterday saw price resuming downward, confirming triple top formation

3) The 7 candles before the hammer look like the 1st leg of a measured move down, and yesterday looked like the beginning of the 2nd leg down, with target pointing dangerously at the 7300 - 7400 region (ie. lower than the previous low)

4) ADX turning up from under 20 (downtrend picking up strength)

RUT Daily

RUT broke out of an ascending broadening formation, and just like DOW, yesterday looked like the beginning of the 2nd leg of its measured move down.

It seems we are revisiting wave 3, and probably on our way to wave 5 straight, if market doesn't find support at its previous low.

TF Hourly

TF is clearly not done going down. 2nd leg of measured move down should reach about 400 on completion. Support at around 415 from daily chart might stop price temporarily, or could be from where TF bounces back up.

TF Trade 1/20

Today's gotta be a trader's dream come true. It's mine at least. No more uncertainty. If the market doesn't find support at 446, it's plunging. Even if it were to find support there, it's going to have to stay above 470. Else, it's plunging too. That's my view. And I'm trading it.

Before any of the above happens, I'm going to stick to getting in and out on momentum. That was my plan. A flexible enough one for me.

Just one scalp - and just one contract - today. Not chasing. Am a really sick bear. The gotta-call-my-family-doctor kind of sick. Am feeling woozy as I type. I can't believe the resilience of this stupid flu virus. Just really hoping that it's not pneumonia AGAIN. I would hate to have to be admitted for weeks this time. Unless they allow my entire workstation to be brought in with me....

My trade. Just one. Profit: USD 175

Performance Scorecard

Sick of Single-Contract Trades

Was going through my past posts again (something I've kept doing since Dec 08 - not coz I like my own writing, but really coz I need desperately to know what lessons I'm missing...), and couldn't help but notice AGAIN that I did do a lot better trading multiple contracts.

It's a fact I can't run away from. Trading multiple contracts is perfect for me coz it's perfect for my appetite. Trading single contract is a drag. And I can't emphasize this enough: I HATE SLOW!

FAST rouses my senses and makes my brain work doubly fast. I was better at bolting at the right time, and I was much, much more willling to quit trading after the morning momentum is over, and much, much more willing to wait til after lunch to resume trading.

I'm sure all these have something to do with my having set a target that has become so ingrained that even if I were to remove the P&L column from my trading platform, I'm mentally keeping scores in absolute dollar amount after having them mentally converted from ticks and points...

The reason that I started trading single contract was so that I could give the market a bit more room to move...but I've not been able to do that, and the only thing I'm giving up is good profits.

I'm a control freak, and I've resigned to the fact that I'll never change. I'm never going to be able to consistently put in a stop and a profit target and then just let my trade run. And if that's the case, why bother with trading 1 contract???

As a matter of fact, the only thing that was bad about trading multiple contracts - for me - was that it was stressful. But not having this stress is detrimental to my trading. I either got complacent (about cutting losses), or greedy (overstaying and seeing profit turn to loss) , or both...I have no idea what kind of freak I am, but I just do better when I'm really stretched. Depression is what hurts my trading. Not stress.

D's eyes are going to roll when he sees this....

TF 1/20

TF (Hourly)

D is optimistic about the market, and I thought I was too. But I've been staring at the TF 1hr chart, and the only thing I'm seeing is that any upward move from where it is right now is going to be stopped by the uptrend line - if not the uptrendline, then 470 resistance - then it's going to tumble down pass 454.5 support to test 436.

Anyway, am going to stick to scalping unless TF gets up to 470 - then I will buy on pull back and target for exit at Fib ext. 161.8 (490).

Should TF drop below 448, I'll just continue to scalp while waiting for it to test 436.

That's the plan for now. Inverted Scallop and all the Triangles in the world are not helping to make me feel more optimistic. The Scallop might, if it gets wider...It's another 10hours to go before market opens... that should give it enough time to complete...

Triangle looks busted. TF has broken out on downside, and if it were to climb back up, that would officially bust it. If that happens, I'll definitely be looking out to buy above 470.