One instrument, one pattern

Hi everyone

Here's my trading journal that's going to be about one instrument (US30) and one pattern (retest of breakout level)

I've simplified everything down to reduce stress and use as little mental capital as possible. The most important quality needed in this type of trading is patience, as the set-up does not come along that often. To help with this, I set alerts so that I'm not always watching the charts.

I suspect I have some form of ADHD (doesn't everyone nowadays?) so in the past I have always flitted around looking at multiple pairs and multiple instruments. Then, when I decided to look at only one instrument, I kept flitting between different timeframes. So, I stick to these rules to stop my flitting about:

Instrument: US30, DOW, whatever you want to call it.

Timeframes:

M15 between 0800hrs and NY Open (1430hrs for me as I'm in the UK)
M1 for the first couple of hours between NY Open and when things start calming down
M5 for the remainder of the session.

In this way, instead of adjusting my position size based on volatility, I adjust the timeframe instead, so I always trade the same size. This reduces the need to make extra decisions during the trading day.

My SL is always 40 and my TP is always 40. I avoid moving SL to break-even as I have done this in the past and it was yet another decision to make during the trade. This keeps things simple. I try and walk away and let the trade do its thing. If things are very slow and 40 doesn't look achievable, then I don't trade.

That's it for now, in the next post I will talk about how I like to set up my charts.

This is how I like to set up my charts.

I trade price action so don't use any indicators. My charts are naked candlesticks.

I found in the past that the colour of the candlesticks really influenced my decisions, so I played around with all sorts of colours. In the end, I'm only looking at levels and I never got on with line charts, bar charts or HLC charts, so I've stuck with candlesticks but I make the bull and bear colours the same. This way I have a clear representation of levels, with an idea of how fast price has got there, or punched through the level.

I use cTrader on my laptop and mobile.

This is what I look at on my laptop:



As you can see I use a half-screen chart. This is to keep me looking too far to the left and historical price. If I want to do that I can always zoom out. Using a half-screen chart keeps me more focussed on what is happening now.

I also trade from my mobile sometimes. As I use limit orders, this is very doable. I tend to be more focussed when using the laptop though, and more disciplined as it feels like I am at work so laptop is my preference. However, mobile trading fine for this method if I am in the M5 and M15 windows of my trading day. I never use my mobile to trade off the M1.

Here is what my mobile charts look like:




I'll leave it there for now. In the next post I will explain what set-up I look out for specifically.

Hi again

So this is what I'm looking for:

A tested level of support or resistance, then a decisive break of that level. A limit order is then placed for a retest of that level. The logic is that price is more likely to continue in the direct of the break than break back through the level.

Here are a couple of examples, a win and a loss.

This one was during the first 2 hours after NY Open, so on the M1 chart. A couple of tests, a round number and in the direction of the day's trend.



This one is an example of a M15 trade before NY Open. SL was hit and then price went up again. There are so many "if onlys" in trading and it's so easy to get into tweaking things because SLs or TPs have been missed or hit by just a couple of pips, but that just messes with my head, so I've had to just be grown up about it and accept the losses as part of the plan.

Moving SL to break-even or not

This is my eternal question. It's not nice to see price get very close to TP for it to go all the way back to entry, and even all the way to SL.

I've moved SL to break-even for so long it's become second nature. However, in this trading journal I'm going to leave the trades alone. There are a couple of reasons for this:

Deciding WHEN to move SL to break-even is a difficult decision. It means watching the trade (unless setting a trailing stop, which I don't like doing), and investing a lot of mental capital, and it causes extra stress watching every movement of price.

I found I started moving SL to break-even too early, as a way of getting rid of the stress of being in a trade. However, I then had to deal with the pain of getting out at break-even only to find price continued to move in my favour.

I used to shoot for a higher RR but since sticking to a RR of 1, it's easier to just walk away when the trade in on.

Here is an example from this morning of a trade where I would have moved SL to break-even in the past:



Price bounced off the level and got to within 5 pips of the TP. In the past, this is where I would have moved SL to break-even, However, price dropped back down, the trade didn't look great but it popped back up and TP was hit.

Which is more stressful - watching the trade the whole time, moving SL to break-even, thinking "yes that was the right decision" then a few minutes later thinking "drat, it would have been better not to have done that." OR placing the limit order, walking away from the charts and coming back to see if it's a win or a loss?

That way, mental capital is preserved and there is something left in the tank for the next trade.

This is assuming that all the losses from not moving SL to break-even balance out with all of the wins from not moving SL to break-even. Which I believe is the case. For me, the most important thing is to keep things super-simple!

If anyone is interested in delving deeper into the inspiration behind this trading journal, I would like to give a huge shout out to Oldtraderman
https://www.forexfactory.com/oldtraderman, and his 2 threads that explain in depth his style of trading and the logic behind it.


https://www.forexfactory.com/thread/...-and-the-ugly?

https://www.forexfactory.com/thread/...ry-on-trading?


He hasn't been around for a while unfortunately, but hopefully he'll be back to share some more wisdom!

Trading messes with your head

Even with such a simple trading method, there is plenty to mess with your head. Friday after the NY open was a great example. Here you can see a few things that could cause upset.

- First trade hit TP for 40 pips
- Second order was not filled as price did not reach level
- Third order was not filled as price did not reach level.
- Whole move from first trade was 300+ pips




Our brains can start getting busy and thinking all sorts of things, like "if only I'd held for a bigger profit", "if only I'd placed my order a little lower". Then there's the whole comparison thing, where we know someone else would have captured the whole move and got 300+ pips.

These thoughts used to cause me a lot of stress and I would then start tweaking my trading plan. The thoughts still appear of course, but I am a lot calmer these days. It helps me to remember:

- 1R for the session is great,
- This is the plan and I stuck to it
- There is no point in comparing with others. Other traders can provide inspiration and ideas of course, but once I start trading my method, I focus on that for a minimum of 100 trades before changing anything

I think of this method as taking small bites out of the apple (or tiny nibbles in this case!) rather than trying to eat the whole apple.

Trading is painful whatever method we choose to use. It's about choosing which pain we would rather deal with, and then living with it. That sounds a bit grim, but if we can live with the pain, and be OK with it, then it all becomes a lot easier.