|##TheStrategyLab Price Action Chat Room Logs|
|Daily Trading Routine of M.A. Perry (wrbtrader)
|Page 1 of 1|
|Author:||wrbtrader [ Wed Jun 01, 2011 4:27 pm ]|
|Post subject:||Daily Trading Routine of M.A. Perry (wrbtrader)|
Price Action Trading (no technical indicators)
M.A. Perry a.k.a. wrbtrader (more info about me): http://www.thestrategylab.com/wrbtrader.htm
Phone: +1 224 307-4434
Free Chat Room: http://www.thestrategylab.com/tsl/forum/viewforum.php?f=164
CME Group Trade Against A Pro Futures Challenge: http://www.thestrategylab.com/tsl/forum/viewtopic.php?f=360&t=4038
Accolades (Testimonials): http://www.thestrategylab.com/Accolades.htm
TheStrategyLab Reviews: http://www.thestrategylab.com/thestrategylab-reviews.htm
Business Hours: 8am - 5pm est (Mon - Fri)
Stocktwits @ http://stocktwits.com/wrbtrader (24/7)
Twitter @ http://twitter.com/wrbtrader (24/7)
TradingView @ https://www.tradingview.com/u/wrbtrader (24/7)
Twitch @ http://thestrategylab.com/images/twitch-wrbtrader-price-action-trader.png
Therefore, the main purpose of this message post is to answer commonly asked questions I get often while trading via email, forum, chat room, Skype (kebec2002) that involves my overall trading plan and this message post will show you that I have a strong opinion that's exercised every trading day that successful trading involves much more than just trade signals. Simply, trade signals are only a piece of my puzzle or one chapter in my trading book or one variable in my complete trading plan that contains many equally important variables. Therefore, trade signals will not be profitable for you all by itself because you must have a complete trading plan. In addition, if you have any further questions about my trading habits or routine, they must be posted at the forum (e.g. free forum, private WRB forum or private VTR forum), chat room or Skype (kebec2002). You can also contact me on Twitter and Stocktwits @wrbtrader but I'm often not on those social medias.
I'm primarily a day trader via price action trading because it suits my personal lifestyle very well but I do occasionally swing trade and position trade. Thus, my trade methods work just as well for swing trading and position trading even though my performance record is primarily day trading.
I use my free chat room to document my real-time trades and real-time price action thoughts to help me remain focus and to encourage other members of the free chat room to do the same via using the free chat room as a trade journal. They can then add the info from the free chat room later in their private threads to better understand their broker statements and quantitative statistical analysis via a professional trade journal software.
Simply, I use the free chat room two help me with two aspects of my trading mentioned in the below quote...part psychology and part part.
My trading performance involves part science, part psychology, part art and those using TheStrategyLab trade methodology only have access to the part science aspect that consist of many different trade strategies. To be up front, I do not believe you can be a profitable trader via technical analysis (science) alone and nothing else.
Just as importantly, the part psychology and part art can not be taught in an online trading course...it can only be learned via experience and high self awareness of yourself as a trader.
If you do not know what exactly is price action trading...please read the information at the below link.
Price Action Trading Definition @ http://www.thestrategylab.com/price-action-trading.htm
Also, I post all my trades in the free chat room ##TheStrategyLab because its a public chat room and the chat logs are archival stored since 2002 for anyone to view so that I'm transparent. In addition, I do post my broker PnL statement with the last trade transactions in my performance record for each trading day to show that my real-time trades in the chat room do correlate with my brokerage information (see example below).
March 13th Wednesday 2019 @ http://www.thestrategylab.com/tsl/forum/download/file.php?id=5896
Yet, I do not show my entire brokerage statement with transaction IDs for security reasons and tax reasons to the general public because I do not know whom are viewing the information and I can not control whom they share the information with. Regardless, you can easily determine the merits of WRB Analysis on your own via the WRB Analysis free study guide if you have a sincere interest in learning WRB Analysis. Simply, my real-time trades, my broker PnL statements or clients broker statements will not verify to you if WRB Analysis will work for you. In contrast, the WRB Analysis free study guide will verify to you if WRB Analysis is able to or not able to improve your trading (you must first use the free study guide via simulator prior to any real money trading).
Further, as stated above, my consistent profits are not solely because of my trade signals or technical analysis as a price action only trader (no indicators). I'm profitable because of my trading plan that involves +20 years market experience, psychology of trading, discipline, money management, proper capitalization, position size management, proper trading instrument for the trade strategies, stress management, proper broker platform, proper trade workstation, proper at home trade environment, team collaboration, wrb analysis, trade signals (technical analysis) et cetera.
It's all that stuff that most system designers, backtesters or academia do not want to talk about with profitable traders because they prefer only dealing with trade signal codes or mechanical systems in a false belief that today's complex markets can be defined via trade signal codes and nothing else...ignoring that it takes a good trading plan to endure the markets year after year along with having the ability to adapt within today's markets that are globalized (key events in other countries impacts the price action you're trading just as equally as key events in your own country has impact on the price action you're trading).
Sports Analogy - Pretend you're a good quarterback (a.k.a. trade signal)...you will lose all your football games if your teammates (market experience, psychology of the trader, discipline, money management, proper capitalization, position size management, proper trading instrument for your trade strategy, stress management, proper broker platform, proper trade workstation, proper trade environment, team collaboration et cetera) don't do their job (a.k.a. trading plan). Therefore, it's impossible for a good quarterback to overcome or compensate for the poor performance of those on his offense or defensive unit in order to consistently win football games.
Thus, all the variables mentioned above that's working together in my trading plan...that's the reason behind my consistent profits. Therefore, do not ask me for codes to my trade method so that you can test the merits of my trade method while ignoring the fact it's my trading plan as a team that's behind my consistent profits and not my trade method all by itself because I do not use an automated nor mechanical system. Further, if someone wants to test why I'm profit...they need to test my entire trading plan and not one component of it. In fact, the main reason why I don't use computer codes because the markets are too complex, uncertain, ambiguous for such via all the intermarket relationships and global economy/political relationships. Thus, we as traders must understand market context that's often complex prior to the appearance of any trade signals regardless if they are based upon technical analysis or not.
A simple method that's consistently profitable is accomplishing such because the trader has a deep and complex understanding of today's markets via context.
In addition, if you have a sincere interest in learning my trade methods, you must first learn/apply the WRB Analysis free study guide @ http://www.thestrategylab.com/tsl/forum/viewtopic.php?f=119&t=718 because it is the foundation (contains critical key concepts) of my trading and more importantly will give you that due diligence prior to purchase of my trade strategies.
The WRB Analysis free study guide and the Volatility Trading Report trade strategies does not involve mentoring because mentoring involves "teaching someone how to trade"...TheStrategyLab does not teach how to trade. If you don't understand...here's a race car analogy. The WRB Analysis free study guide and my fee-base trade methods are parts to the engine. All the other parts to the engine (mentioned above in the sports analogy) must be in place by you so that your engine will work. Next, you must now learn to drive and that's the self-taught aspect of trading. I do not teach a trader how to drive...that's your responsibility. Yet, if I decide to offer a mentoring service, I will notify all register members of my forum, chat room and Skype contacts. Once again, there's a lot more to profitable trading than just trade signal strategies.
Further, you should use the free chat room ##TheStrategyLab to learn real-time WRB Analysis and ask lots of questions to help prepare you to learn my advance trade methods prior to purchasing the advance trade methods because there's a lot of free education content I do not include in the WRB Analysis free study guide because current market conditions can only be explained in real-time trading environment...the free chat room allows you to get that real-time info but you must ask questions so that you can continue your due diligence. In fact, if you do not learn, do not understand the basic concepts of WRB Analysis...you are not suitable for trading via using my advance trade methods. Therefore, highly recommended you take advantage of the free resources @ http://www.thestrategylab.com/tsl/forum/viewforum.php?f=90 if you're serious about trading and want a sneak preview into how I interact with the markets because there's more to profitable trading than just trade signals.
Simply, WRB Analysis can help you but you still must do the hard work because I do not know of any lazy or easy short cuts to profitable trading.
How Do I Understand Market Context?
There are many definitions of market context. I get my market context from key market events, WRB Analysis and intermarket analysis working together. Thus, if I'm missing one of those three components...I won't have the market context I need to profitably navigate whatever price action I'm trading on that particular trading day.
I discuss key market events and WRB Analysis in the free study guide @ http://www.thestrategylab.com/tsl/forum/viewtopic.php?f=119&t=718
WRB Analysis identifies key changes in supply/demand and changes in volatility that results in what I call WRB Zones. The price action in the tutorials are rule-base (objective) although applied discretionary via that each trading day I'm using different WRB Zones from the tutorials. These WRB Zones are not trade signals. Instead, they help with my understanding of the price action (the context) in combo with my market experience. In contrast, I also use rule base (objective) trade signals with no discretion but they must occur within WRB Zones outlined by the WRB Analysis Tutorials. Simply, if/when I get a trade signal...I do not take the trade unless it occurs within a WRB Zone that has given me the understanding of the price action for that particular trading day.
Intermarket Analysis - It's very simple. I look for volatility changes (e.g. WRB Hidden GAPs) in other well known price actions (e.g. Light Crude Oil CL futures, Emini ES futures, Gold GC futures, U.S. Dollar futures, Forex EurUsd currency, Eurex DAX futures and Treasury ZB futures) that are heavily traded by institutional traders to help give me clues about pending volatility changes in whatever it is I'm trading because all of these markets are globally connected. I constantly refer to these markets as key markets in my price action analysis in ##TheStrategyLab free chat room. Just as importantly, monitoring these key markets prevents me from getting married to one trading instrument...allowing me to quickly get involved in any price action that's producing swing points or strong continuation reactions to these key changes in volatility.
Key Market Events
I'm not talking about trader psychology. Instead, I'm talking about what really moved the markets that produces fear or greed in the price action. To be specific, I read every trading day something from one of the following: FED/ECB/IMF/BOC actions and speeches, economic reports and crisis events, geo-political decisions, regular schedule market events, market tendencies and seasonal price behavior. This helps me with my WRB Analysis and that prepares me to take action (buy, sell or sideline) when trade signals appear when there are key changes in supply/demand due to these key market events.
Simply, I'm not analyzing the key market event itself. In contrast, I'm analyzing how the price action reacted to these key market events.
WRB Analysis Tutorials
The discretionary aspect of my trading comes into play in my trading when applying the rule-base (objective) WRB Analysis Tutorial Chapters (understanding the price action prior to the appearance of any rule based trade signals) without automation because each trading day I may be using a different tutorial chapter or different combo of chapters for what ever reason as I concentrate on what caused a change in supply/demand. Simply, the market changes every trading day and it's the price action that tells me what type of WRB Zones I should be looking for and monitoring so that I'll know what to do when/if my trade signals appears within those WRB Zones that represent key changes in supply/demand.
By the way, you have free access to the basic WRB Analysis Tutorial Chapters 1, 2 and 3 to learn more about how I identify price actions that are key changes in supply/demand, key changes in volatility and price actions for profit targets. Yet, if you want support (answering your questions as you begin to learn WRB Analysis)...you must join the TSL Support Forum. More information about the basic tutorial chapters @ http://www.thestrategylab.com/tsl/forum/viewtopic.php?f=119&t=718
To pay for the Advance WRB Analysis Tutorial Chapters...I highly recommend you first determine the merits of WRB Analysis via learning the basic tutorial chapters prior to making payment for the advance tutorial chapters. More information about the advance tutorial chapters @ http://www.thestrategylab.com/WRBAnalysisTutorials.htm
Trade Signal Strategies
As mentioned above, I do not offer mentoring service. Yet, as a trader/vendor...I do sell the trade signal strategies that I use for trading. The objective rule base players of my trading involves what I call the Volatility Trading Report (VTR) and its resources. It helps me to find trade opportunities in any type of market condition regardless if it's trending, ranging, high volatility or low volatility although I prefer not to trade in low volatility range periods.
Fee-based info about the strategies @ http://www.thestrategylab.com/VolatilityTrading.htm
Simply, I use a discretionary market analysis (understanding the price action) via market context involving WRB Analysis, Key Market Events and Intermarket Analysis prior to the appearance of my rule-based price action trade signals from the Volatility Trading Report (VTR).
You can freely test drive one of the trade signal strategies from the Volatility Trading Report (VTR) via a strategy called the Fading Volatility Breakout (FVB) trade strategy @ http://www.thestrategylab.com/tsl/forum/viewtopic.php?f=89&t=533
The FVB trade strategy is rule base (objective) and its recommended that you use a professional trade journal software & simulator to get your own quantitative statistical analysis instead of asking me about the statistics of my trading.
First of all, I never make broker recommendations due to the fact every trader has different needs and that there's not one perfect broker (they all have their problems). Also, I strongly believe in having a backup of everything (e.g. ISP, computer, real-time charting, broker et cetera because nothing is 100% perfect).
I do not put all my eggs in one basket.
With that said, I use the following brokers:
* AMP Futures
* TD Ameritrade (ThinkorSwim)
* RJO Futures formerly known as Zap Futures (RJO Vantage and X_Trader platforms)
* Saxobank (Saxotrader)
* Note - I have plans of opening an account with CQG trading platforms QTrader and M Mobile. If I do such, I will then make the switch from Xtrader (TT platform) to CQG products now that more brokers are offering CQG platforms. Yet, Xtrader has a better mobile platform which is something (mobile trading) that I'm navigating towards and I plan to take vacation for the entire summer in which I will only trade a few hours per week via a mobile trading platform. Thus, it doesn't make sense to pay the high monthly fees for Xtrader during the summer months of trading inactivity. I have until the summer of 2019 to make a decision especially with plans on traveling more with my family while still recovering for a serious illness in the fall of 2016.
Chart Intervals used on my Monitors
My real-time charting programs are eSignal web-base, TradeStation and Thinkorswim. I prefer candlestick charts instead of bar charts. On my monitors I have 1min, 2min, 3min, 5min and 15min intervals for day trading. Further, on specific types of trading days (e.g. FOMC Announcement) I will focus primarily on the 1min chart interval. In contrast, when I swing trade or position trade, I'll use the 15min, 1hour, daily and weekly charts.
TradeStation and Thinkorswim are also mobile and allows me to monitor swing trade positions when I'm not at my computer. As for day trading, I don't open day trades on mobile devices but I will use a mobile device to close a day trade position if I had to leave a day trade position open due to emergency reasons. For example, there's been a few times I forgot about an appointment and I had an profitable day trade position still open...I would then open my mobile device and go to my appointment...often closing the position while at the appointment.
Currently, I'm trading primarily Emini ES futures (CME exchange) although I do occasionally trade Gold GC futures, Crude Oil CL futures, Brent BZ futures or EuroFX 6E futures as day trades.
The charts on my monitors contains the above trading instruments and their correlated markets. For example, if I'm trading Emini ES futures...I will also be following SPX index, SPY etf, Eurex DAX futures, Eurex DJStoxx50 futures, Euronext CAC40 futures, Euonext FTSE100 futures, VIX volatility, VXX volatility index and other Emini Futures (RTY, YM, NQ and EMD) because their correlated price actions will often give my valuable insights into how to trade Emini ES futures. Thus, I often get trade signals or WRB Zones in those other trading instruments when Emini ES futures itself does not have a valid trade signal or valid WRB Zone. This allows me to take a trade in Emini ES futures when a had not valid trade setup because the correlated trading instrument did have a valid trade setup.
Just as importantly, I do not want to get tunnel vision (only seeing Emini ES futures) while trading. To prevent tunnel vision, I must follow other key markets (intermarket analysis) and correlated price action to help give me that market context involving understanding the markets for that particular trading day...helping to adapt whenever confusing or difficult markets show up.
Why not then trade the correlated trading instrument
Emini ES futures is more liquid than the others and I can push a larger position size with less slippage in comparison to the others.
Therefore, if you see me post a trade in the chat room for Emini ES futures and you're trying to determine what I saw...you need to also be looking at those other correlated price actions mentioned above because I often get trade signals in them when Emini ES futures has no valid trade signal.
My trades posted in ##TheStrategyLab Chat Room
First of all, ##TheStrategyLab is a free chat room used by traders that want to document their trades, document WRB Analysis and/or document any other thoughts in real-time. I do the same because the expressing my thoughts and trades in the chat room helps improve my trading. By the way, members and I are not there in ##TheStrategyLab chat room to educate anyone and we're not there to tell someone when to buy or sell as if its a signal calling chat room. There's no mentoring service and there's no signal calling service in the chat room or on Skype...I do not have any such service and I will be offended if any trader attempts to use ##TheStrategyLab for services I do not offer. Yet, if you have questions about WRB Analysis or need help in your trading...its your responsibility to ask those questions in the chat room involving real-time price conditions because members and I do not have the ability to read your mind.
You're not allowed to discuss fee-base education content in the free chat room ##TheStrategyLab. Instead, fee-base clients must use their designated private chat room associated with the fee-base content. Also, any fee-base client can use Skype (kebec2002 is my skype user name) to have real-time conversations about any fee-base education content.
Simply, do not join the free chat room and then lurk (not talking about WRBs, WRB Hidden GAPs, Contracting Volatility, Reaction Highs/Lows, Key Market Events, S/R areas or WRB Zones or posting trades). To lurk in the free chat room...you're then not using a valuable resource to help improve your trading. |In fact, I'll eventually remove traders from the free chat room if they consistently log into the free chat room and not talk about the markets not talk about anything related to the WRB Analysis free study guide.
With that said, I try very hard to post my thoughts about the markets or trades in real-time as fast as possible. Thus, posting what I think about the price action long after the fact is not going to help me in my trading and the same is true for posted trades. As for my trades, they are posted in real-time within 3 - 5 seconds after the trade has occurred because it takes 3 - 5 seconds for me to see the broker confirmation, verify its exactly what I wanted and then type/send the trade information to ##TheStrategyLab chat room. I try to keep my trade info in ##TheStrategyLab as simple as possible because my goal after trade entry is to monitor my trade position. Thus, I don't discuss stop info, profit targets, trailing stops because that information is already discussed in this message post and in the trade management file for you to easy reference.
Also, I do not post trades in advance such as "I'll buy tomorrow at 1008am est" or "buy order in at 1583.40" because I don't try to predict market direction. Instead, I react to current price action via WRB Analysis and the Volatility Trading Report (VTR) along with often trying to get trade entries at a better price than my trade signal price. Traders that try to predict, have less trade options and they often get fixated on what they want the markets to do as if the markets will be exactly the same when the price action reaches those trade areas they had called in advance instead realizing the price action is often different when those trade areas are reached. That's why I prefer to just react to what actually is occurring in the markets instead of predicting because if a key price area is reached and I don't have a valid trade signal...I'm not going to take the trade.
Further, most of my trades are entered when the price action ticks against the trade direction of my trade signal. For example, if I get a Long signal...I try hard to open the Long position on down-ticks to minimize any concerns about the spread. It's not perfect as shown in some of my loses in the chat room archive logs when I'm quickly in the negative (losing trade) by many ticks within a few seconds after entry. Yet, overall, this type of trade entry approach works well for me.
In addition, you'll see me use the word re-entry for a new posted trade. Its an intuition trade in the same price direction of an earlier valid trade signal that was posted in the chat room. I often take re-entry trades but only if I was not satisfy with the results (profit or loss) of the earlier trade (valid trade signal) and I then notice the price action is still the same to merit a re-entry. These trades (intuition re-entries) are based on a ton of trading experience and the only rules I use is to try to get a better entry price in comparison to the prior trade that was based on a valid trade signal even though the re-entry trade itself is not a valid trade signal...while just trying to trade with the trend or with the direction of a strong continuation price action. Chat room access instructions @ http://www.thestrategylab.com/tsl/forum/viewforum.php?f=164
Therefore, if you're trying to understand my trades I call re-entry...you will then need to ask questions about the prior trade that was the actual valid trade signal trade and then you need to remember the re-entry trades are intuition trades reacting to the prior valid trade signal trade.
Quick summary of my trades posted in ##TheStrategyLab...
1) Valid Trade Signals either FVB, DCM, AJCTR, APAOR, STR or VTR
2) Re-Entry Trades in reaction to a prior valid trade signal that's still active
3) Intuition Trades discussed further below in detail
4) Trade Errors...a trade that I quickly realize was not valid
In the chat room, re-entry trades, intuition trades or trade errors are always identified as such at trade entry or quickly after posted trade. In contrast, if you see a posted trade in the chat room that I did not say involved re-entry, intuition or trade error...that trade is a valid trade via a trade signal from either the FVB, DCM, AJCTR, APAOR, STR or VTR.
My trades are rule-base (objective) but I use no automation. In fact, even the intuition trades uses a few rules but mainly based upon experience & market context at the moment of the trade.
The chat log archives are posted @ http://www.thestrategylab.com/ftchat/forum/viewforum.php?f=20
Position Size Management
First of all, money management is a critical aspect of my trading. A key component of my money management is called position size management. Simply, I trade different position size for each type of trading instrument due to margin rules, liquidity, volatility, time of day, key market event, available capital, intraday market tendencies and reasons due to something occurring in my personal life. If I could automate my position size management, I would. Unfortunately, due to the types of variables involved...its impossible to do such.
With that said, to give you an example of one aspect from the above, I do a lot of daily chart analysis and key market event analysis to help me decide upon my position size in the first few hours of trading. For example, if the daily charts are showing contracting volatility, I will expect the following trading days to produce a volatility spike (strong intraday directional price movement). Thus, I will tend to go heavy on the large size position or increase my overall position size in comparison to my trading in the most recent trading days. Also, if I notice I'm having discipline problems or feel like I'm having a little trouble in understanding the price action...I'll dramatically reduce my position size down to a few contracts.
Another example is that I use intraday market tendencies to help with my position size management. For example, during Quadruple Witching week the strong directional price movements tend to occur on a Mon, Tues or Weds (free trading tip from a new service I'm currently designing that's schedule for release in 2013). Another example, if there's distractions here at my home while trading (e.g. twice per month I have a cleaning service cleaning my house), I'll only trade a small size of 1 - 3 contracts.
My point about my position size management is that I don't use the same position size each trading day and often will use a different size from one trade to the next trade in the same trading day for what ever reasons that's trading related or personal.
Also, here's something for you to think about...the markets are not the same every trading day. One day its a tight trading range day, another it's a trend day, another it's a high volatility chop day, another its a low volatility chop day, another it's a mixture of different types of price actions. Therefore, explain to yourself why should you use the exact same position size with the exact same stops or profit targets (risk:reward) if the price actions in the market are not the same...
Isn't it counter-productive to your trading to use the same position size and same fixed trade management after entry as if the price action of every trading day is the same. Answer: YES
Another concern is just because I'm consistently profitable doesn't imply I can just increase my position size while ignoring liquidity, volatility, psychological stress associated with position size increase as a discretionary trader or financial responsibility as the sole provider of the family. Thus, my position size management allows me to trade profitably without freaking out when I get consecutive losses. However, to compensate for times when I do want to dramatically increase my position size...I prefer to diversify via trading more than one trading instrument at the same time in different markets that don't have a high correlation (e.g. trading Emini ES and Forex EurUsd).
The trades you see me post in ##TheStrategyLab chat room always have one of the following designations...Large size, Medium size or Small size position. For example in Emini ES futures a large size position is between 6 - 10 contracts, medium size is 4 - 5 contracts and small size between 1 - 3 contracts. In contrast, in the Emini ES futures, a large size position is between 10 - 30 contracts, medium size is 6 - 9 contracts and small size is 5 contracts. Also, I usually follow the above commentary (large, medium or small) in ##TheStrategyLab with the exact number of contracts actually in the trade as shown in the archived chat logs. Yet, if I forget to mention the exact specific position size...just ask and I will tell you the exact number of contracts in the trade.
In addition, as soon as I reach my profit goal of the trading day, I go into profit protection mode and reduce my position size down to small size for the remainder of the trading day. Further, it's important to understand that posting real money trades in real-time is a difficult task especially when things get hectic, fast moving or frustrating. I've been doing such since late 1990's and it's taken many years to get comfortable with doing such.
Simply, it wasn't easy in the beginning and I often concentrated on the negative aspects of doing such instead of the positive aspects of posting real-time trades.
Scaling In/Out versus All In/Out
Trade strategies are different from one trader to another trader. Further, overall most strategies used by retail traders should be just all in/out (no scaling). Yet, there are situations where scaling will be the better route.
I myself prefer to trade all in/out (no scaling). Yet, sometimes I'll make a trade error and will try to exploit the situation via scaling out. For example, lets pretend my position size for the moment is 5 contracts for the Emini ES futures and then my next trade in the Emini ES futures merits a 20 contract position size. Next, my trade after the Emini ES futures is back into the Emini NQ futures but I forgot to change the position size from 20 contracts to 5 contracts. I now have a 20 contract Emini NQ futures position when I should only have a 5 contract position. If the trade is profitable I will keep the position and exit 5 contracts at the WRB pt level and I'll then "scale out" the remainders because I've achieved the goal for the trade on the 5 contracts but I have this "unexpected position size" that can get me additional profits that statistically I didn't expect.
Note: I rarely trade multiple different trading instruments in the same trading day.
Another example of when I scale out is that when I reach a WRB Analysis profit target...most of the time I market out of the position. Yet, sometimes before I can do a market order while still at my profit target...additional volatility shows up to move the trade further into additional profits I didn't expect...I will scale out the position above my profit target and keep a trailing stop at the original profit target.
Simply, that unexpected volatility is outside my statistical profit expectations of the trade and will then exit a bulk of the position at the expected profit target and keep the remainder for the unexpected volatility that showed up with a stop back at the expected profit target.
I do not scale into position unless its a position size error. For example, I needed 5 contracts on a trade and I accidentally went into the trade with only 3 contracts. I will then add another 2 contracts as soon as possible assuming the price action is still near my original entry regardless if at a small loss or small profit. I never add to a position in this situation if the price action is near a stop/loss protection or WRB profit target.
More than just Entry Signals
First of all, the markets are too dynamic for a trader to be using one strategy only as in a "one size fits all" trading approach. One trading day the markets are impacted via breaking news, another day the markets are impacted via regular schedule market events, another day the markets are impacted by global events, another day the markets are impacted via technical reasons, another day the markets are impacted via seasonal tendencies and another trading day the markets are impacted via any combo of the above variables mentioned.
That's why its very important to understand the price action prior to the appearance of any trade signals to be able to adapt whenever markets change because the markets are always changing...many times each year. Traders that don't have the ability to adapt will often endure account blowups, deep drawdowns, consistent losses or develop enough fear that they begin to self-sabotage their trading. Simply, trade signals are only part of a big puzzle involving profitable trading and the "one size fit all" one indicator/one strategy trading approaches will doom a trader whenever the market conditions change. .
With all that said, I use what's called WRB Analysis Tutorials @ http://www.thestrategylab.com/WRBAnalysisTutorials.htm to give me that understanding of the price action prior to the appearance of any trade signals.
As for my trade signals...they are primarily via the Volatility Trading Report (VTR) @ http://www.thestrategylab.com/VolatilityTrading.htm and a secondary source of trade signals via the bonus strategies in the WRB Analysis Advance Tutorial Chapters 4 - 12 package @ http://www.thestrategylab.com/WRBAnalysisTutorials.htm
The combo of WRB Analysis with my trade strategies is one edge or one piece of the puzzle to profitable trading. Other edges in my trading or other pieces of the puzzle is my actual trading experience (+15 years) and my market experience (+20 years). In addition, I have a close network of personal friends that are institutional traders, retail traders or work in different positions in the financial markets. Further, I have a great trading environment at home as a retail trader along with support from my family.
All the above are variables or pieces of the puzzle to my edge that allows me to be a consistent profitable trader.
Traders that consistently only talk about their entry/exit signals are either new traders or losing traders.
Trade Management after Entry
WRB Analysis free study guide gives basic trade management info. In contrast, fee-base clients get an advance trade management file in their private threads. Yet, the information I discuss here in my daily trading routine is a supplement to the basic or advance trade management info.
I do not use fixed profit targets nor fixed initial stop/loss protection because they are a contradiction to WRB Analysis and will conflict with any type of WRB Analysis.
I'm not a fan of fixed risk:reward ratios because the markets is always changing and traders that are too fixed tend to have deep draw-down periods.
Instead, my profit targets, initial stop/loss protection, trailing stops and contingency plan (position reversals) are always different from one trade to the next trade. Yet, they are all determined via WRB Analysis.
Further, regardless to my profit targets or stops, if the price action looks bad after my entry and before a profit target or stop is reached...I'll dump the trade because I don't believe in getting married to a trade position which is why I sometimes have fast trades that are mistaken as scalp trading when in fact something quickly changed in the price action after my entry that involving volatility to cause me to quickly lose faith in the trade.
In other words, I do not enter any trades to scalp but will quickly exit a trade if something is wrong with the price action, a trade error or volatility showed up unexpectedly to hit my WRB profit target.
Initial Stop/Loss Protection
Currently, I trade Emini ES futures, Light Crude Oil CL futures, Emini RTY futures, Gold GC futures and EuroFX 6E futures. I'll used an example via trading Emini TF futures and Emini ES futures to explain my typical initial stop/loss protection.
Depending upon the trading instrument, I use a - 2 points to -4 points emergency hard stop upon entry depending upon the trading instrument. Also, I use a - 1.0 point mental stop on most of my trades regardless to the trading instrument being traded and regardless to the volatility. The hard stop is just in case an emergency happens like my computer crashes, ISP disconnects or broker execution platform freezes in the middle of a trade that's moving fast against me. Further, the emergency hard stop is auto set immediately upon entry in any trade so that I don't have to worry about clicking any more buttons to set a stop...allowing me to concentrate on the price action and my trade position. Also, more often than not, I will know if the trade is a stinker when price reaches -0.8 which is why most of my losing trade exits are around -0.8 for Emini TF futures or -1 for Emini ES futures. Yet, my goal is to tighten the stop on the trade soon after entry and try to get that stop/loss closer to the -0.8 (Emini TF futures) or -1.00 (Emini ES futures). Slower the price action...slower I am to tightening my trail stops via the Trade Management info that's discussed in the WRB Analysis Advance Tutorial Chapters or Volatility Trading Report (VTR) trade signal strategies.
Simply, my initial stop is automated upon entry just in case an emergency occurs after entry. Yet, I quickly make my first stop adjustment and all further stop/trail adjustments to correlate with the information documented in the Trade Management file.
I like to use WRB Zones S/R areas, reaction highs/lows of my trading instrument or of other trading instruments that are highly correlated to my trading instrument for my stop adjustments after entry. Once in awhile, I'll use WRB Hidden GAPs that are not WRB Zones to help manage my stops but only if I don't have a good WRB Zone or good reaction high/low to work with.
Price action is constantly changing and that's why I'm always adjusting my stops (making them smaller) to help minimize my losing trades and to help keep me in trades for bigger profits in my winning trades. Regardless, as soon as a reach a WRB pt1 as a WRB or a set number of ticks...I will quickly move my stop/loss protection into a profitable trail stop of +1 tick/pip or a trail stop that covers the commissions/fees of the trade.
My basic profit targets are either WRB's or WRB Hidden GAPs (R areas and S areas) as discussed in the WRB Analysis Tutorial Chapters 1 - 3 free study guide trade management section. In contrast, sometimes I use advance profit targets as discussed via WRB Zones from the Advance Tutorial Chapters 4 - 12 or trade management section of the fee-base trade signal strategies. Also, if I think I've caught a trend and then decide to stay in the trade beyond a WRB pt1...I'll often use a higher time frame to manage the trade exit via a WRB target especially during a market seasonal tendency price action resulting in profit target exit well into a WRB pt3 to WRB pt7.
Simply, when you see me in the chat room say something like "WRB pt1 reached"...it could be any of the following but there's a general way to determine which one I used:
1) WRB that appeared after my entry...these types of WRB pt1 tends to be small profit results.
2) WRB Hidden GAP interval that appeared after my entry...these types of WRB pt1 tends to be a few points in profits.
3) Prior unfilled WRB Hidden GAP interval that appeared before my entry...these types of WRB pt1 tends to be a few points in profits.
4) Prior unfilled WRB Zone...these types of WRB pt1 tends to be what I often call in the chat room a "runner" (big profits).
How do I know which of the above to use when I enter a trade
I use volatility. For example, after entry and there's very little volatility (too much contraction)...my WRB pt1 will be the first WRB interval that appears. Yet, if volatility shows up after my entry, I will stay in the trade in hopes of capturing a WRB Hidden GAP interval as a WRB pt1.
Yet, if I'm greedy and have already reached a WRB pt1 via a WRB...I will stay in the trade and try to capture a prior unfilled WRB Hidden GAP interval (R area or S area) as a WRB pt1 and if there's increasing volatility still occurring such as shown via a bigger WRB Hidden GAP interval in comparison to its most recent prior WRB Hidden GAP interval...I will stay in the trade to try to capture a prior unfilled WRB Zone (R area or S area as a WRB pt1.
The same above applies for WRB pt2, WRB pt3 and higher. Yet, if I'm trying to capture a big profitable trade when the overall markets are high volatility...as mentioned above...I will often increase my chart time frame after trade entry. For example, I get a trade signal via the 3min chart in high volatility conditions...sometimes I will increase my chart interval to the 5min chart or 15min chart to exit at a WRB pt1 on the higher time frame.
ADDing to an Open Position
It's not common for me to add to a position that's profitable or at a loss.
However, when ever I do add to a position, it's only because I got another trade signal regardless if the current position is at a profit or a loss. Yet, if add to a position at a loss (rarely do I average down as in maybe once every few thousand trades), I do such with the initial stop/loss protection still in place (no adjustments). Also, regardless if the position is profitable or at a loss...I now only add when the trade signal occurs within a WRB Zone whereas in the past I would add to a position even if it was not within a WRB Zone. Yet, I usually dump the add for a profit when the first WRB pt target is reached after the add.
You probably notice via the ##TheStrategyLab chat log that I rarely do position reversals in comparison to doing them a few times per week many years ago. First of all, if price retraces back to my mental stop during a volatility spike (not a breakout) especially after contracting volatility...I tend to reverse my position if the price action of Oil and Gold supports a position reversal. Yet, if it's a volatility breakout..I tend to exit the position for a loss at the mental stop.
Position reversals are difficult for me and really not worth the additional stress involved.
Also, you'll notice in ##TheStrategyLab that I will sometimes take a trade in the opposite direction soon after each other...Long and then Short or Short and then Long. These trades involves one of the trades being counter-trend. The counter-trend trade is high risk and I will often announce in ##TheStrategyLab when a posted trade is high risk (counter-trend trading).
Any announced trade in the chat room as intuition trade...it means I've already reached my profit goal for the day and I'm taking a trade due to greed (trying to milk it sort'uv speak). Intuition trades still occurs in WRB Zones as all valid trade signals occurs within WRB Zones. The difference is that an intuition trade is via my trade experience and not rule based via one of my trade signal strategies.
I do not recommend beginning traders, struggling traders or traders @ a loss for the day to be doing any type of intuition trading...these types of traders are usually doing such due to desperation and rarely via good trade experience.
Summary of my daily trading routine message post...there's a lot of information here that's not included in any of the free contend or fee-base content. Simply, before you start asking questions about any thing I talk about in ##TheStrategyLab free chat room, chat rooms associated with the fee-base education content or on Skype...please read this daily routine message post to determine if its answered here because I don't like repeating answers about something that is clearly posted here in this message post.
Trader and Founder of WRB Analysis (wide range body/bar analysis)
@ http://twitter.com/wrbtrader or http://stocktwits.com/wrbtrader
Phone: +1 224 307-4434
Business Hours: 8am - 5pm est (Mon - Fri)
Skype Messenger: kebec2002
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