The Good, The Bad and The Ugly - A Real Trading Record

Hi all,

I’ve decided to start a trading journal at FF as a reference source for anyone interested in what real short term intra day trading actually looks like in practice: the good, the bad and the ugly of it, unadulterated and unabridged. It will be the record of a proven momentum following strategy with short duration trades (1-30 mins typical) off 1 minute charts, something I have been trading for a living for several years now.

It will not be a live record, I don’t feel I have the time for posting that when trading live on 1 min charts and, moreover, I don’t want it to be a signal service.

However, I shall upload all my trades - wins, losses (there will be plenty!) and scratches - each day at the end of my session with charts and brief explanations so all can examine at their leisure, and I’ll be happy to take any questions. I’ll also provide each day an updated running cumulative record of all trades.

I’ll intiially do this as a trial up to Xmas and then see if it is worth continuing with into 2019.

Next posts, to aid understanding, I’ll explain a little more about my method and myself, and give a sample of the kind of record I intend to post.

Hi all,

As promised last post, a little introduction to my method and myself.

I have been involved in trading and investment, professionally and personally, for over 30 years. For almost the last decade now I have traded my own account full time for a living, using a self designed strategy working off 1 minute charts.

The method is simple but subjective, it is not a black box automated strategy, it requires real time evaluation, judgement and decisions by the trader in the light of what the markets are doing right now, but within a highly structured and risk controlled framework.

The method is underpinned by two core beliefs:
1) trading is inherently probabilistic - even the very best setups can & frequently will lose
2) the best and most consistent edge is trading with the current trend/momentum/flow

In the light of this the method has simple trading principles:
- decide upon the primary directional trend of a market at any given time
- wait for a failed counter trend flow to play out
- enter on the resumption of the primary trend, in that direction
- have a protected stop beyond the extreme of the counter trend move
- have an initial target that is at least 1:1 reward:risk, and is easily achievable technically

And it adheres to strict risk control and money mangement rules that are NEVER violated:
- risk no more than 1% of the account on any given trade
- only one open trade at a time
- all trades are entered with a hard stop in place that can only be moved closer, not away

As for market, trade and time frame selection:
- only trade liquid, active, low round trip cost markets, currently 4 forex and 3 equity indices
- trade off 1 minute charts to give plenty of trading opportunities daily
- the method is 100% price action based, no fundamentals or indicators are used

Next post will be a sample of the sort of trade postings I intend to make

Wonderful! this will be a journal worth reading.

Thank you Traderman

Hi all,

Last introductory post, as an illustration here is a trade I did last Friday morning in EUR/USD:



And to even things up, a loser also on Friday in DAX



Both are essentially the same trade, one worked, one didn't. Told you trading was a probabilistic game last post!
Position size for the EUR trade was 2x that of DAX as the stops were 10 & 20 pts respectively to ensure 1% risk each time

Will start in earnest on Monday.

Hi Shrips,

Nice to have at least one person aboard, would feel a bit delusional talking just to myself!
I am hoping that posting a real journal might be of more value than simply adding to the massive tomes of opinion already on FF. It will also be an interesting experiment for myself to see just how efficiently I walk the talk day in, day out. In my mind I am obviously practically perfect but a harsh reality check like this will be the acid test.

Have a great Sunday, back on Monday

Hi Otm,
Look forward to your insights.
What is the trading platform you are using?
The EURUSD chart looks like an Dax chart by the price y axis?

Regards
Barry

Hi Barry,

A warm wlecome to you also.

I use a bespoke spread betting platform provided by my counterparty.

The charts are indeed very similar as a visual pattern and that is no accident. That day I was trading a particular one of the patterns that I look for so both trades (at least to me!) were essentially the same: a downtrend leading to a consolidation zone followed by a further breakdown of that zone. I was entering there and playing for a further momentum downleg.

Actually, this represented something of an experiment for me as usually I try to enter such patterns earlier, somewhere inside the consolidation zone, but I wanted to see if waiting for the breakdown to enter might be better. My conclusion was that it isn't and I felt more vulnerable opening a position there. But, nothing ventured, nothing gained, so worth the test for me.

As this journal progresses I imagine the entire suite of my favoured patterns will emerge in time and then people will be able to examine if any of them might be of interest for them. You don't need a whole bundle of patterns to win, one is enough (though several increases the opportunity set, obviously). The key is to be consistent and take all valid trades with discipline and good risk control.

Hi! I'm also trying to start day trading on 1 minute charts. One thing I have difficult with is determining the trend/flow. I hope you can help me with that. Good luck

Hi emicovi,
A warm welcome to the thread.

Determining the trend/flow is something I also have always struggled with. It sounds stupid because it's not difficult to look at a chart in hindsight and see the flow. The problem is that in real time it's not so easy to distinguish real flow from fake moves. Equally, it's surprisingly hard in real time to know whether a counter trend move is just that or actually the start of a new trend the other way.

There are lots of technical indicators you can use but for the most part they serve to add to my confusion rather than solve it so I don't use any. That said, something like overlaying a simple 20 period moving average on the chart can help you get a feeling. It really is a matter of trying things and seeing what works for you.

You'll also note from the charts posted that I just use simple black bars, not candlesticks. This is on purpose because I find the detail of all the coloured candles with bodies and wicks somewhat disguises the clean feel of how prices are moving. If your charting package allows it, try different formats and see if any suit your eye better.

Nowdays I simplify things right down and just eyeball the chart out of feel and experience. If I'm not comfortable with feeling what the flow is I just sit on the sidelines and/or try a different market until I find something I'm happy to trade, directionally speaking. If it turns out I was wrong, c'est la vie, it's just a wrong trade with a controlled loss and i'll move on to the next one.

I have no illusions about my predictive abilities, I just want a slight edge in getting it right and from that, with good risk control and discipline, I can extract a net profit over time. So, don't get hung up on this, just keep trading in demo mode or tiny size, gaining feel and experience and you will improve. There is no magic infallible formula and, moreover, you don't need one to be able to turn a consistent profit.

Good morning all,

A rather earlier post than I was imagining to make as the first trade this new week happened to be a winner so time for a short breather and a chance to post the trade here:



First look at EUR/USD around 7.30am (I am on UK time) I saw a basic uptrend, a correction down to prior lows around 00 and then a sharp bounce up again which I saw as trend resumption and enough to tempt me into wanting to go long for a play to at least the old high around 13.

My minimum stop in this market is 7pts so entered long at 07 as this makes the stop at 00, a touch below prior low for some sort of protection, though the 1:1 min R:R initial target at 14 is a bit greedy given it is just past the prior high.
Usually I like a target inside the high but I had seen the parallel GBP/USD market had already broken up to new local highs so I decided to go with it.

This trade worked out nicely with a swift move to the old high at 13 where I moved the stop to breakeven in case of a sharp reverse off the high and waited to see if it could push through, taking the spike to 15 to close out. You'll see the market subsequently corrected again and then pushed on even higher but I am not one for waiting out corrections, I'll take a fair profit when offered.

Given I've made my 1:1 profit today, the rest of my session will be on demo where I like to try out whatever strange idea has occurred to me of late, so no more trade reviews today for you.

Below is the starting JTD (Journal To Date) summary with the % return so far and the Win/Loss/Scratch trade breakdown. Recall that I size my trades so that a 1:1 R:R represents a 1% trade for my account.

JTD Summary: +1.1% W1 L0 S0

Good morning all,

A truly miserable day weather-wise here in London, cold, wet & windy, so happy to be indoors trading!
Another early post as, happily, first trade a nice winner today in GBP/USD:



This represents quite a common market condition, a run up first thing that looks good but is a fake as it rolls over and catches early traders in the wrong way. I am always suspicious of early morning moves for exactly this reason.

The market tops out after touching 80 but for me the downtrend is only in place after the subsequent lower high at 72 fails and rolls over. That's enough to get me in short at 62 after stopping at resistance at 63. A 10pt stop back up at the 72 high is fine - if I'm right, the market shouldn't get there. This gives a minimum 1:1 target at 52 nicely above possible round number support at 50. Happened that the market spiked down through 50 giving me an exit at 47 and a few extra windfall points, netting 15 for a nice 1.5:1 R:R.

Note that there was a lot more to play for, the move continued towards 20 but I am just a scalper at heart so the first decent profit is generally good enough for me. However, this does illustrate well another common market tendency - that the bulk of any move occurs towards the end of the move, i.e. momentum accelerates towards a price climax. This is an important observation because it means you don't have to try to pick tops & bottoms, wait for a move to gain traction and you have not only more certainty but a good chance of still having the majority of the move yet to come.

I think it was Jesse Livermore in the fabulous book, Reminiscences of a Stock Operator, who said something like, 'the first eigth and last eigth are the hardest eigths in the world to get.' He is right, picking tops & bottoms is a tough game, and you don't have to do it to make money. Don't rush in and don't be greedy getting out, take the easier (but still not easy!) money in the middle.

Anyway, profit in pocket, I'm back to demo practice for the rest of the day so no more trades until tomorrow.
Below is the updated JTD (Journal To Date) summary with the % return so far and the Win/Loss/Scratch trade breakdown. Recall that I size my trades such that a 1:1 R:R represents a 1% trade for my account.

JTD Summary: +2.6% W2 L0 S0

Good morning all,

Managing a morning post for the third straight day, the trading must be going well!
Two trades for you today, both instructive. I'll put them on two posts and we start with my first trade of the day in GBP/USD:



Watched a triple top form followed by a slide down to a consolidation. This makes me look first for a short and I decide to chase the consolidation breadown, going short at 93. Stop at range top at 103 and 1:1 target at 83 is above 80 round number. Looked initially like fake break sucker play (with me the sucker, obviously!) and almost stopped out before a fortunate new leg down gives me a chance to scratch at breakeven. Note ensuring the stop being in some sort of protected position is a saving grace here.

I am happy to scatch here as prices shouldn't really move back into the range from which they've broken out from if my tactics are correct. As it happens, mine was a timing error and the trade later proves to be a nice winner. I used to get all angsty about this kind of outcome, nowdays I am grateful not to have been stopped out for a loss. Good defence beats macho offence all day long for me, but I am a risk averse trading coward! You have to decide what your personal policy is and, as you can see, it does make a difference. So take the trouble to know yourself, in a trading sense.

Next post will be the second trade of the morning....

And the second trade today was in EUR/USD:



Market was initially meandering before slipping back to below the 80 level on what looks like a possible blowout spike bottom, then settles into a consolidation zone. I watch the last test of the zone towards 80 followed by a sharp jump up. This 'crouch & jump' behaviour is very common and worth looking out for as it often signals a good move, the crouch obviously catching some traders nastily the wrong way.

I am OK to follow such a sharp crouch & jump move if I get any sort of slight retracement and here I am happy to go long at 92 as a 10pt stop at 82 is back at the range bottom and the 1:1 target at 102 is below prior 110 highs. Have no illusions though, chasing spikes is a higher risk trade and so I am very happy to take my profit at 102 almost immediately. This proves wise as it collapses back very quickly, was a sucker news spike (some Italian budget deficit negotiations chat I later found out - remember I am a 100% price action trader so I never look for the reason until after the event, just out of curiosity) but nimble trading lets us walk away smiling with a profit. Good but risky + lucky!

Conservative traders can easily let these sorts of trades go, you don't have to take the risk, there will alwyas be another opportunity along soon, but I was obviously in a feisty mood on this one. Aggressive traders can wade happliy in, but be sure to have a rock solid stop in place or it can get expensive!

Anyhow, all this excitement has finished me for the day, demo only from here and back tomorrow.

JTD Summary: +3.6% W3 L0 S1

Hi,

Took the GBP trade with similar loigc as you did...

Subscribed...

Hi Piparins,
A warm welcome to the thread. I hope you managed your trade better than I did!

I've been experimenting with this enter-on-breakout tactic for a while now and I don't really feel that comfortable with it unless the break is really strong as I feel vulnerable to being caught on a sucker spike all the time.

My usual idea of an entry is still within the range, going the other way after it fails a test of one end of the range and reverses strongly. However, often you don't get the luxury of being able to do that if the move is sharp and the range is modest, hence my experimenting on the later entry. As usual, practise, practise, practise is the way forward...

Hi Oldtraderman,

I like what you are doing here, would you be ok with me posting a chart to show how I look at the M1 Chart?

It won't be until this evening after I finish work, thanks.

Hi and a warm welcome to the thread.
Please do, we can all learn from each other!

Good morning all,

Being Thanksgiving, the forex markets started out predictably sluggish today so my attention was on the DAX and FTSE equity indices that I also trade, and today's opening trade in DAX was a nice winner that is a typical example of one of my bread and butter trades:



DAX opens at 8am my time with a slide down followed by a partial recovery bounce that rolls over and breaks down again sharply. This is something I am not going to be able to resist, a sharp resumption of trend after an attempted counter-trend bounce has failed, with price still above the prior low. I'll take this kind of trade pretty much every time I see it.

So, short at 02 with the stop 15pts away above the bounce high of 14. Only issue here is the 1:1 target of 87 is below the prior low of 93 so I will immediately move the stop down to breakeven if we get there, just in case it bounces off the low. If it does bounce and scratches me out, c'est la vie, that is the cost of protection.

Happily, it charges straight on down and through and I take the profit on the spike down at 84 for 18pts or 1.2:1 R:R, plenty enough for me. Aggressive traders could play for a further possible downleg - which does happen here - but I am on a good week this week so greed is not on my agenda today.

The running total is a standout 4 net winners at 1.2:1 R:R average so far this week so I am going demo for the rest of the day and then treat myself to Friday off. To be clear, a week without a losing trade is a rare occurrance indeed, please don't get the idea it is always as plain sailing as it has been this week, a losing streak will surely come soon enough!

Anyhow, I apologise in advance, there will be no trades posted tomorrow. Back live trading on Monday.

JTD +4.8% W4 L0 S1

Hi Oldtraderman,

Thanks for the welcome.

I guess it just comes down to personal preference, experience and expectancy as to what we use to enter Trades.

I've found it an advantage to look for setups on M30 and PA on M1 to Enter Trades.

I use an M30 Grid, on M1, to be able to see where Price is Breaking from.

I'm also using an 8 and 21 EMA on M30 and seeing them on M1 it helps with Price Direction and stops me from getting too whipped around.

Unfortunately, because of work commitments, I Trade very little these days.

I've tried Trading higher TFs but can't get the consistency I get from the lower TFs.

Apart from anything else the less time spent in a Trade the less chance there is of Market Conditions changing.

Hi,
Your method as described looks pretty solid to me. I like the idea of seeing a break and then waiting for a test, this is a strategy that has withstood the test of time, many good traders have used variants of it in the past.

Using a higher timeframe to look for setups is also a common and rational method. I like to stick with only the M1 chart, I just have a look at the very start of the day what the prior swing high and low has been on the M5 chart as a basic frame of reference and that will do for me. I also used to use a simple 20 period MA as a trend & divergence guide but I just do all that by eyeballing on a plain chart nowdays.

I equally - obviously! - agree that lower TF has more consistency, I have never really understood those who say lower TF is just trading noise and higher TF is the clearer picture. The charts across various TFs look much the same to me, so we’re all just trading noise or a clearer picture! I am sure, however, that the less time in the market, the less the risk of unexpected moves, so the shorter TFs are my hunting ground - plus the more frequent opportunities you get there. Only downside is the bigger impact of costs so you have to limit yourself to the lowest round trip cost markets to be viable.

A great pity you can’t trade more but still a great hobby if you do it sensibly. Thanks for the charts & explanations and best of luck with your trading.