Timeframes

I'd like to share some of my learnings this week with regards to timeframe. Yesterday I used the 3 min. timeframe with 1 min. entries and that was fine. I did reasonably well with 62% of my trades profitable.

Today, however, the 3 min. timeframe was just way too fast and I'm doing much better on the 15 min. timeframe.

Between yesterday and today, I had a car accident (no one hurt and no damage to my SUV). So, I'm needing to take a little time to get a grip on things. My BP is a bit elevated as I'm still a bit excitable.

Be aware of what is going on in your life and see what timeframes work for you. There are some days you may be totally insync with the market and just trading super well and can handle a lower timeframe. Other times, you may have to step back to one that is much slower.

It's all okay, as long as you're making good trades -- taking profits, letting profits run, cutting costs quickly.

Trade Navigator

I've changed trading platforms for futures from Think or Swim to Trade Navigator. Originally I felt what came with TOS was decent enough and I really didn't want to pay the $119/month streaming realtime futures feed plus streaming delayed for options and stocks. I already had eSignal that gave me real time for stocks and TOS was giving me realtime for options with my account, why pay for it?

Well, with some of the intraday timeframes I use, TOS was unwilling to provide a good feed for their data and not going to fix it. TOS offers both Prophet and their own TOS charts. I used the Prophet charts because they look much nicer and is more how I trade. Don't like the look of the TOS charts and if I'm going to trade, how a chart looks DOES matter to me as a technical trader. If I'm constantly annoyed at the appearance, that doesn't make my trading better.

A few of my friends already switched from their Extreme Charts offered by Better Trades over to Trade Navigator Gold and they are also trading futures. The Sierra Charts that Infinity (one of my futures brokers) offers is really not intuitive for me to use and as a person that is very visual, though the price of $25-30/month for the datafeed sounds good, why pay it if I'm going to hate it? The 30 day free test drive proved to be unsatisfactory to me.

Originally I started out using Trade Navigator, then Better Trades (the company I got a lot of my trading education from and spent a boatload of money with) switched to their version of this charting software and it was designed specifically for BT's called Extreme Charts. In reality, there is not any difference than I can see. Sort of like TN is Genesis' normal version and EC is the same as TN Gold but with fewer features but a higher price tag.

Not saying anything bad about BT, BTW. Anyway, with the help of one of my friends and knowing the price he and a few people paid for their software switch over upgrade, whatever you want to call it, I used this to leverage also. Instead of paying the $795 that Genesis has on their price schedule on their site, one of the sales people said since I was a BT's customer, he'd give me a $200 discount. I was not happy with that as my friends got $295 just a few months back, which was 1/2 of what this particular salesperson was selling it to me for.

Decided to wait an extra day and call back to talk to a DIFFERENT person. I told her my friends got the $295 price. She said at first the best she could do was $395, but in the end, she gave me the $295 AND gave me the first month's datafeed as a free trial period. Before that, I told her I wanted streaming stocks also to see if this will work over what I have with eSignal.

Though I have used eSignal for many years and love the charts, their help desk is not very helpful. What I wanted to do was put exponential moving averages on my volume indicator and couldn't figure out how to do this despite going over some of their tutorials, knowledge base, technical support (BTW, some of these people were a bit rude and unprofessional -- hanging up on a person is not very nice). I figure for something like that, I shouldn't have to scour the eSignal site and spend days attempting to teach myself programming in a language foreign to me to do when TN could do it with a few clicks.

My subscription on eSignal runs out either in October or November and probably if TN works out well, the price tag of the $1600-1700/annually or whatever it is is now far too steep. I can't believe in the first 6 years I used the tool, I was paying $300-400/month for the datafeed because I had everything (AdvancedGET, etc) but used nothing of the advanced features.

The subscription to get futures, stocks & options streaming will cost me just under $1300/yr if I pay in full. Genesis will give me a 15% discount on the datafeed minus the exchange fee. Basically I get more for less money. So, instead of having TN, eSignal, TOS, and Infinity opened, I can basically if all I'm trading is futures, just have TN opened. If I want to trade options, then I'll have TN and TOS opened. This will tax my memory less on my computer.

I do have to look at all these costs and if I can simplify, the better it is for me. Life and trading does not need to be complicated, though, often it can be.

So, the moral here is, you CAN negotiate your fees whether they be commissions, charting tools, whatever. You do NOT have to pay full price for things all the time. Now, if you have people you know who have gotten good prices on them, that's even better as you can use them for leverage. Actually, that's how I got all the better prices I got. Sometimes you can also bluff things and see if you can get what you want. It's all a part of negotiations.

Also, the bottom line is you do not want to fork over all your profits to pay for commissions, charting software, books, workshops, coaching, etc. If so, then you're in the wrong business, right?

We'll see how TN is for me, but so far, I really like it. I can trade futures right off my chart, which I also use the trading ladder. There are some things I do not like, but not sure if any charting tool can 100% satisfy me, so I look for what can satisfy me the most at the best price -- optimization.

ES (Futures) - Days #3 & 4 Consecutive

Yesterday and today I did more practice trading with the ES. I've learned a lot and will not put what those trades are specifically, but give you other details of what I've learned and done.

TUESDAY
- 1.5 hrs. trading (last part of trading day)
- Netted 4 points (profit) (+$200)
- 70% trades profitable out of 13 total trades.
- Used 3 min. timeframe
- Good use of stops (for profit taking and costs)
- 1 contract used

LEARNINGS:
- When lines are broken, if in a trade, GET OUT! If lines are broken, get in immediately or wait for a retracement to enter trades.
- Need to verify targets with trading strategy.
- Do not rationalize or think. Trade what you see, not what you think!

WEDNESDAY
- 2 hrs trading (last part of trading day)
- Netted -7.75 points (cost) (-$387.50)
- 70% trade costing for 13 total trades
- Used 1 min. timeframe
- 1 contract used

LEARNINGS
- Turn the fricken phone off or to silent. Let things go to voicemail when trading.
- Start off with a slower timeframe to get the feel for the day of which timeframe you should be trading.
- Stop trading altogether after 3 costing trades PERIOD! Figure out why you have those costs.
- Consistently set stops (profits & costs)
- If the line gets broken, GET OUT if in trade.
- Make sure to draw lines correctly.
- FOCUS. Get rid of distractions or do not trade.
- Trade what is there and not what you think will happen.

ES (Futures) - Day #2 Consecutive

Today I practice traded the ESU8 real time again, but not as long.

From about 10:15 am MST to about 1 pm MST, here are the following trades on 1 contract:

1. Profit: 1227 - 1231.50; UP (+4.5 points)
2. Profit: 1232 - 1234; UP (+2 points)
3. Profit: 1234 - 1230; DOWN (+4 points)
4. Profit: 1231 - 1231.50; UP (+0.5 points)
5. Profit: 1231.50 - 1234; UP (+2.5 points)
6. Profit: 1233 - 1231; DOWN (+2 points)
7. Profit: 1231 - 1232; UP (+1 points)
8. Cost: 1232 - 1231.5; UP (-0.5 points)
9. Profit: 1232 - 1234; UP (+2 point)
10. Profit: 1233.75 - 1231; DOWN (+2.75 points)
11. Profit: 1231.75 - 1231.75; UP (0 point)
12. Profit: 1231 - 1229.75; DOWN (+1.25 points)
13. Cost: 1229 - 1229.5; DOWN (-0.5 point)
14. Cost: 1229.50 - 1228; UP (-1.5 points)
15. Profit: 1228.5 - 1229; UP (+0.5 points)
16. Profit: 1229 - 1227.50; DOWN (+1.5 points)
17. Profit: 1227.75 - 1228.75; UP (+1 points)
18. Profit: 1229 - 1227.75; DOWN (+1.25 point)
19. Profit: 1228.50 - 1233; UP (+4.5 points)
20. Profit: 1233.50 - 1232; DOWN (+1.5 points)
21. Profit: 1234 - 1233.25; DOWN (+0.75 point)
22. Profit: 1234 - 1238; UP (+4 points)
23. Profit: 1237.75 - 1233; DOWN (+4.75 points)
24. Cost: 1233 - 1234.50; DOWN (-1.5 points)
25. Cost: 1234.50 - 1232; UP (-2.5 points)

26. Profit: 1231.50 - 1229; DOWN (+2.5 points)
27. Profit: 1229.50 - 1228.50; DOWN (+1 point)


1 point = $50 (ES)
1 tick = $12.50 (ES)
4 ticks = 1 point (ES)

Here I have 39.25 points (or 157 ticks) = $1962.50.

It costs me $500/contract margin on the ES at my broker.

Commissions for 27 trades = $3.99 x 27 = $107.73

Net profit = $1962.50 - 107.73 = $1854.77

Amount used at risk = $500 for 1 contract.

$1854.77/$500 = 371% ROI for 2.75 hrs of trading

I believe in the first day I strictly traded my strategy, I used the 3 min. chart. Forgot if that was the case or not.

Today, the first hour of my trading or so, I used the 3 and 5 min. charts. But the last 1.75 hrs I used a 1 min. chart. Somehow last Monday, using the 3 min. seemed to flow better for me, but though I was still taking profits, today I seemed to be able to use the 1 min. better for some reason.

Today I did not trade my plan as well, however, if you look at the returns for nearly the same amount of time, they are similar. My execution was better on Day #1 than today. There were times I got in/out either a little too early or too late. There was more fumbling around than on Day #1 of execution of putting my trades in the trading ladder.

I was also inconsistent at putting my cost stops in which could be detrimental. Something happened at 12:22 pm EST and thankfully I had a stop cost in there otherwise it would've been really bad for me. And, I did not exactly do all my due diligence to see what economics news or if anyone of any importance was speaking.

Will have to go back to see if there was any news around this time period that caused the markets to go a bit nuts. I took bigger costs, however, I was also rewarded for not doing my due diligence completely. So, here is a case where I actually profitted on probably a half dozen or more trades when I really should not have.

Some of the movements today were bigger near the end which allowed me to bring my account up, however, it also dropped due to a couple costs. So, today I feel humbled by being rewarded for mistakes. These will go in my trading strategy.

I still had the inclination to not get out of trades and switch directions, but most of the time did execute as I should. Hopefully Day #3 will be better as I continue to iron out different things.

So, today the saving grace was that though I did not have my stop costs in place 100% of the time, the times when I really needed it, they were there and stopped me out as the positions went really against me and I wasn't quick enough to get out manually, so that auto stop was really good.

Let this be a lesson learned for all of us. Have your stops in place so that if something really goes against you REALLY quickly, you get stopped out without thinking about. Better to incur a smaller cost than a huge, huge cost.

Hopefully tomorrow I can do Day #3.

Trading The Account

My trading coach says to never make trading entries & exits based upon the trading account. Meaning, if you see you're down -$500 that you make your decision to get out on that or if you're up $738 that you get out unless your trading strategy tells you to do that.

I've had quite a few (probably a lot more than that) positions where I might have been down because it was part way through the strategy, but not through it. Had I waited to trade the strategy correctly, I would've been profitable. Or, it was already profitable and I felt uneasy, so I just took the profits off the table, afterall, you can't go broke taking profits, eh? Well, let's say I was up $245 and got out before my strategy said to. If I had allowed the strategy to go to completion, I would've been up $1389.

Those are just hypothetical examples, but in each case, when I did not follow my trading strategy, it did not pay off. Other times, I could've taken smaller costs, too. Make sure you have a good trading strategy that is proven to be good, and then trade it to the "T".

One of the things when trading futures that helps me is to put masking tape over the account amount as well as the position amount. Yes, I'm applying masking tape to my computer screen so that I do not see this amount. When I see it make radical changes, my emotions just go awry, no matter how controlled I feel.

I am unable to manage my emotions properly if I see those numbers in my account changing so rapidly, so the tape really works for me. Very simple and easy solution. Try it. When I don't see those amounts trading, I'm able to better focusing on truly trading well -- trading my strategy.

Invincible

I heard a trader tell me this week that he felt invincible. My response was, "OKAY". There really is nothing I can tell a trader that feels he is invincible. Absolutely nothing. He won't listen or cares to listen, because he's invincible.

The Bible has this saying, "Pride comes before a fall." OKAY.

Stops

I had someone tell me today that he never uses stops. I don't know about you, but as for me, that gives me the heebie jeebies. There is an art to placing your stops, and sometimes I'm right on the money, other times I'm off and so far off.

Up until about 3 yrs ago, I'd NEVER had a stop on ANY position. That's over $1M made without ANY stops. So, if I was so successful at making all that money without stops, why would I start using them.

Risk management.

People who do not manage their risk eventually do end up in the poor house. Okay, been there, done that, more than once. Not too smart, is it?

Honestly, I traded willy nilly and had no concept of what a real stop was probably until the end of 2005. So, really, I've been using stops now for 2.5 yrs. Have I been as successful as in the past with making money. Well, no. However, to gain nearly $1M to lose it all is very poor management.

It's not only what you make, but also more importantly, what you keep. Now, whether you purposefully give your money away to buy things or to charities or to save is another thing. That's all keeping it to me.

I am a person of great faith in Jesus Christ. My hope is in Him. However, I do not "hope" in the stock market. If my position goes against me, I'm outta there.

The person I chatted with today told me he is 85% correct and even if he is wrong the other 15% of the time, he's still way up. He's a swing trader, holding his positions overnight. I can't say I fully understand his trading, but it still seems scary to me to not have stops in place. Anything can happen.

For example, BSC, if you were in for the upside, not a good thing when that stock tanked. Of course, if things gap way against you, that's not a good thing. That's one of the reasons why I enjoy daytrading. Of course, I do miss some gaps in my favor, but that is okay. I haven't been real great at planning these gaps, so steadier money is less exciting, but it helps my accounts grow. Growing accounts in the positive direction is exciting to me and easier on my blood pressure.

I think it's always good to manage your risk. Letting things go willy nilly is not good trading. Though in the interim it may be okay, which it was for me for years, it ends up biting you in the butt. I have some huge bites in my bootie and they were not playful bites. Owww!!!

But, hey, if you insist on no stops and you seem to do okay, have at it. Not me. I want to live to trade another day and I want to continue to be a trader for many years to come, whether I'm a daytrader, swing, long term investor or what not.

Okay, enough of the ranting and raving. Had to get that out of my system.

Oh, yes, I've been rewarded by the market for many bad habits and actions in trading. It sort of lulls you into this false sense of security. The market is ruthless, but it can be tamed if you understand how to play it. Not managing risk is not a part of that, IMHO.

Focusing On Trading & Not The Account

Good trading leads to good profits.

One of the things I had to do today while trading futures was I put a piece of masking tape on my computer over the part of my trading ladder that displayed my gross profits/costs. This is a huge distraction to me.

When you begin making trading decisions (like where to enter, exit) based on what is happening to your account, it causes a person to do some really sabotaging things. I found my futures trading was NOT successful when I kept looking to see where I was for the day.

Today, I did not look to see where I was until the end of the trading day. This allowed me to focus on good quality trades. It may seem lame to put masking tape on my computer over that part, but so what? It helped me immensely today and I'll keep doing it. Whatever it takes.

ES (Futures) - Today

Today I practice traded the ESU8 real time.

From 6 am MST to 12:40 pm MST, here are the following trades on 1 contract:

1. Profit: 1266 - 1274; UP (+8 points)
2. Profit: 1274 - 1269; DOWN (+5 points)
3. Profit: 1269 - 1272; UP (+3 points)
4. Profit: 1272 - 1270; DOWN (+2 points)
5. Profit: 1269 - 1271; UP (+2 points)
6. Profit: 1271 - 1266; DOWN (+5 points)
7. Profit: 1266 - 1267.50; UP (+1.5 points)
8. Profit: 1267.50 - 1253; DOWN (+14.50 points)
9. Profit: 1253 - 1254; UP (+1 point)
10. Profit: 1254 - 1245; DOWN (+9 points)
11. Profit: 1245 - 1246; UP (+1 point)
12. Profit: 1246 - 1244; DOWN (+2 points)
13. Cost: 1246 - 1245; UP (-1 point)
14. Cost: 1243 - 1245; DOWN (-2 points)
15. Profit: 1244 - 1246; UP (+2 points)
16. Profit: 1246 - 1243; DOWN (+3 points)
17. Profit: 1244 - 1253; UP (+9 points)
18. Cost: 1253 - 1254; DOWN (-1 point)
19. Profit: 1254 - 1262; UP (+8 points)
20. Profit: 1261 - 1252.50; DOWN (+8.5 points)

1 point = $50 (ES)
1 tick = $12.50 (ES)
4 ticks = 1 point (ES)

Here I have 80.5 points (or 322 ticks) = $4025.

It costs me $500/contract margin on the ES at my broker.

Commissions for 20 trades = $3.99 x 20 = $79.80

Net profit = $4025 - 79.80 = $3945.20

Amount used at risk = $500 for 1 contract.

$3945.20/$500 = 789% ROI

One of my super trader friends told me it's impossible to get 80 points on the ES in a day. I guess I'm magic. He says it doesn't count unless it's real money. He says I need to go to doing this with real money. Okay, if I can get most of this week with similar results like this, I will go to live real money next week.

Every Breath

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