Alifari's Trading Journal

Chart examples WRT (Weekly Retest)

Here is an Excel file I recently made to monitor price action for a specific strategy. I enter my buy and sell levels and put a condition for a cell color change when price is 20 pips away from my level of interest. This is just an example sheet with no updated levels except the first one viz. AUDUSD M15. Will further enhance this file, but posting it here for future reference.

Random Inspirational Quotes

Take chances, make mistakes. That's how you grow. Pain nourishes your courage. You have to fail in order to practice being brave - Mary Tyler Moore

I believe that we learn by practice. Whether it means to learn to dance by practicing dancing or to learn to live by practicing living, the principles are the same. In each, it is the performance of a dedicated precise set of acts, physical or intellectual, from which comes shape of achievement, a sense of one's being, a satisfaction of spirit. One becomes, in some area, an athlete of God. Practice means to perform, over and over again in the face of all obstacles, some act of vision, of faith, of desire. Practice is a means of inviting the perfection desired. ― Martha Graham


Often times though, we fail to pursue our goals and dreams because of the fear that we arent naturally talented enough. We fear that we dont have that innate ability or cannot simply teach ourselves to master a specific skill.
Thankfully this idea is false.

Its hard to beat a person who never gives up. Babe Ruth

The dictionary is the only place that success comes before work. work is the key to success, and hard work can help you accomplish anything. Vince Lombardi

Im a greater believer in luck, and I find the harder I work the more I have of it Thomas Jefferson

All roads that lead to success have to pass through hard work boulevard at some point. Eric Thomas

The difference between the impossible and the possible lies in a persons determination. Tommy Lasorda

The only way to do great work is to love what you do. Steve Jobs

"The only way to do great work is to love what you do. Steve Jobs

nice work

Average Swing Zig Zag Indicators:

The purpose of this post is not to show off, but to prove a point that higher pips in profit doesn't necessarily equate to higher profits, if same risk percentage is used. For example if your money management rules is to use 1% risk per trade, then your loss will remain same with 50 pips stop loss or 5 pips stop loss, but with tight stop loss one could increase RR.

So to achieve a RR of 4.6R using a stop loss of 50 pips, the price need to move 230 pips. Whereas with stop loss of 6 pips the price need to move just 28 pips for similar RR and the profit in $ would be same. Now what are the chances of price moving 28 pips in one direction as compare to 230 pips.

Here is a wonderful post from one of my favorite trader LJ

Trading Very Lower Time Frames - Noise or More Opportunities ?

I often read on numerous forums & blogs where retail traders are reluctant to trade very lower time frames (VLTF) such as 30 second, 1 minute, 3 minutes, 5 minutes charts etc. They often complain about unreliable price action and lot of noise on VLTF charts.

However, in my opinion only people who can't read price action thinks VLTF charts are noise. To the uneducated its noise, to the educated its valuable price action.

Moreover, many traders associate VLTF with scalps, but it is not the case. If you have price reading skills than there is decent risk to reward per trade on VLTF too, in fact better than what we get on HTF.
The art of knowing is knowing what to ignore

"Only way to make it in this game is to forget about everyone else's opinions & look @ market thru your own eyes"

Entry: 0.7114
Stop Loss: 0.7120 (6 pips) - Drawdown 3 pips
Take Profit: 0.7086 (28 pips)

Trade Result: +4.60R

Entry was based on M15 SR level with entry based on M1 price action. Take profit target was opposing demand zone on M15 time frame.

As a trader we have to understand that price doesn't go up or down in a straight line and even the strongest of trends have retracements. You have to know your levels of interest, where you expect some opposing reaction and place a trade with logical stop loss and take profit target.

GBPUSD SR level trade, but entry after some rejection from support.

Entry: 1.5063
Stop Loss : 1.5050 (13 pips)
Take Profit: 5090 (27 pips)

Trade Result: +2R

Risk Tolerance

We often read on numerous forums about how much a retail trader should risk per trade and the majority of forums advise risk per trade should be between 1 to 3%. However, I think the best way to gauge your risk tolerance is to place a trade overnight with a reasonable amount and see whether you are thinking about the outcome of that particular trade while you are in bed. If you are worried then obviously the amount you risked is above your risk tolerance and it's time to lower your risk until you are sleeping without being worried.

Some levels of interest on S&P 500 based on supply and demand from Monthly to Daily Charts. I am particularly interested in short trade, as there is lot of downside room until next major demand on higher time frame.

If you want to improve your trading psychology, here is very informative blog for traders.

http://traderfeed.blogspot.com/2015/...s-and-why.html

One of the key ideas from the Trading Psychology 2.0 book is turning what you do best in markets (your best practices) into robust habit patterns (best processes).

What that means is that it is vital for traders to understand their strengths and how those strengths manifest themselves as successes. When I ask traders to identify their strengths, they inevitably give generalized responses that don't map onto best processes. For instance, a trader may say that they're good at risk management or good at reading chart patterns. How do they specifically draw upon those strengths in day to day trading? That is not elaborated.

To truly understand yourself in a best practices framework, ask yourself:

1) What do I do best in terms of researching ideas for trading?
2) What do I do best in terms of translating my ideas into specific trades?
3) What do I do best in terms of executing and sizing my trades?
4) What do I do best in terms of managing the risk of my trades?
5) What do I do best in terms of managing myself as a performance professional?

Now ask yourself: How do I keep track of today's performance in light of the five best practices categories above? How, specifically, do I ensure that today's trading is aligned with what I do best?

The greatest mistake traders make is spending much more time following and studying markets than following and studying their own trading performance.

Better understanding of markets does not necessarily translate into better trading of markets.

If you don't understand and act upon what drives your success, something else will inevitably drive your performance. Every bad trade fills a vacuum.

Hi.
I enclose a trade that I took yesterday. It was the USDJPY, a sell order taken as market execution after new demand had been formed and was engulfed in less than an hour. That showed bears strength therefore I entered a sell order at the ignored demand and put the SL just above it. The TP was placed by the next demand.
Thanks
Esther

What was your RR on this trade ? For me FLS was too close hence a low value trade, as my stop loss would have been above that red candle that broke out the immediate demand. I would be interested in this trade once that FLS viz. important demand zone (which is also a swap zone) is consumed and price retrace back to new supply zones giving a better value on trade.

The R:R was +1.7.
Thanks for your comments, good point. I entered the trade after the second demand was engulfed, as it was a sign of bearish strength and I stopped the trade at the demand and, yes I agree it was risky at that level.
Rgds
Esther

I noticed your stop loss was just above the last demand and not above the high of the bearish bar (which would have been my preferred stop loss, hence it would be a low RR trade in my book) but you were able to get nice R:R on this trade, so well done. Keep doing what works for you, all the best.

Chart example - AUDUSD M30 chart - S&D level

1) Clean supply zone
2) Price make a lower low
3) Space to FLS (about 2R)

The World's Strangest Currencies...

http://www.zerohedge.com/news/2015-1...est-currencies

If you want to improve your trading psychology, here is very informative blog for traders.

http://traderfeed.blogspot.com/2015/...s-and-why.html

In the Trading Psychology 2.0 book, four themes capture what I see successful traders doing:

* Adapting quickly to changing markets;
* Building on their strengths as traders;
* Cultivating creativity and becoming better at generating trading ideas;
* Developing best practices into robust, best processes.

These ABCD themes are not so different from the factors that describe entrepreneurial success. Indeed, I would argue that trading is less like an application of a fixed set of skills and more like running a startup business. In fast-changing environments, the entrepreneurial firm constantly remakes itself. Think of how Apple has changed from the company that made the original Mac personal computers--and how it continues to evolve with the Watch products and even ideas for cars.

One trader thinks about the stock market for 2015, pulls up a chart of the ES futures or SPY ETF, and declares the environment as hopelessly "choppy", with no good trends to trade. Another trader breaks the market into sectors per the FinViz graphic below and sees a rotational environment during 2015, with plenty of trends when one sector is traded against another.

http://2.bp.blogspot.com/-NQWT6TrkUZ...roup122415.jpg

"Choppy" is a word we use to describe a market without opportunity for sustained directional movement. "Rotational environment" is a term we use when we break the market down into a collection of relationships, some of which can be very promising to trade. We build creativity by looking at old things in new ways and by looking at new things. That "choppy" market that looks impossible to trade might just make sense if we view it through the lenses of market cycles or if we view it through the lens of its relationship to other assets.

We need the wild mind to look at the world through fresh eyes and see what others don't see. When daughter Devon was very young, we took her to a suburban playground and she saw a black child for the first time. She became excited and exclaimed, "Look at that chocolate girl!" She made a special effort to play with the chocolate girl and enjoyed herself. Her world looked different through the lens of candy, and that opened the door to new actions.

There are no untradeable markets; only traders with limited lenses and tunnel vision. There was no one for Devon to play with at the playground if she only looked for people like herself. There are chocolate markets out there if we're willing to take a taste.

Excellent Post - Worth a read.....

2016: Lead by Example

“One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity.” — Bruce Lee

What do you need to do differently this year? How are you going to accomplish it? As active traders, these two questions are perennially on our minds this time of year. We have just wrapped up the year past and look forward to the coming year with always higher expectations. The expectations are fun and empowering. Every year we feel as if this year this is the one, the one in which we reach the lofty goals we have set for ourselves as traders. The reality is very few of us attain or surpass these expectations. Why? I can’t answer for you, but I will give you the answer for me, in one word…Focus.

In 2016, Focus is my answer to both of the above questions. Actually, Focus is the answer to many questions I have asked myself lately. So for myself and the traders, I coach and mentor I am going to focus on leading by example. I am a day trader first and foremost. My strengths lie firmly in that time frame. Dr. Brett Steenbarger, @steenbab, has written about this many times. Focusing on our strengths, in my opinion, is the foundation from where we have to start. I know we have all read this more times than we can count, but what do we actually do about it? Yeah, what do we actually do about it? I know for myself that even though day trading is my time frame and my domain I tend to wander off into reading and conversing about time frames other than where I make money. As Jack Litle has written Most of this is a straight-up WASTE OF TIME. If a line of inquiry has no direct or indirect bearing on your P&L (profit and loss) — i.e. if an information pursuit does not inform your practical process in some way, or lead back to a P&L enhancing course of action in your trading account — then why are you expending energy and effort? Are you bored and looking for entertainment? Truth be told that sums up why so many never attain the goals they set each year. In 2016, I won’t waste any time talking macro, or oil or any finance related topic that doesn't impact me taking a trade and taking it with size. Forget Yellen, forget CNBC, forget all that time wasting. Focus.

Now that I just freed up a bunch of extra time in the day what am I going to do with it, I am going to focus on my edge. The Bruce Lee quote above is where I want to get to and need to get to in order to accomplish my goals for this year. Let’s look at the first part of it, One does not accumulate but eliminate. It is not daily increase but daily decrease. Not accumulate but eliminate, not increase but decrease. That sounds to me a lot like narrowing. So where can I narrow stuff? Or should I ask..where can’t I narrow stuff? Everywhere and nowhere are my answers in that order. I need to focus everywhere and leave out nowhere. Hmm.. a pretty big list.. routine, screens, tools, possible distractions, and biases come to mind right off. So let’s see where I can eliminate and decrease in these areas.
“Do less. And do the things that you ARE doing better and with higher quality. You don’t need to be hot. You need to be successful and those are two different things. Success often comes from doing a few things extraordinarily well and noticeably better than the competition.” from @99U

Routine. My morning routine I don't consider overloaded but can still be narrowed. What matters? Since my edge and strategy is traded in the $SPY and E-mini’s knowing what the overnight looked like in the futures is needed. Knowing the economic calendar is next. Then I calculate a few proprietary levels that through backtesting and experience have demonstrated edge. Lastly, read from just a few sources which have relevance to my time frame and turn on CNBC for the only 4 minutes of the day worth listening to, Art Cashin. I enjoy his wisdom and commentary and know it won't last forever so that stays. Besides, as being known to marinate an ice cube every once in awhile, we have something in common.

Screens. I know many in the trading world will argue against elimination and are always thinking of increase and accumulate when it comes to screens. Besides are you really a pro trader if you don't have a picture of yourself in front of many screens? So I am not going to worry how many you need or don’t need but just focus on what I need. Stealing from Dr. Brett again here, I want to determine information vs. distraction. My goal here is to reduce or eliminate distractions. So no email open, twitter closed etc. I only leave what matters directly to me putting on a trade. I get that with only two screens.

Tools. Tools as in charting programs, news feeds etc. I have always been minimalist in this regard. So not much pruning needed here. I only have at most two charts open at any time. I am a firm believer in that once a tool becomes widely available the chance of finding edge in it is very small unless you figure a way to use/view it different than the masses. This mindset has kept me from chasing all the bells and whistles available.
Biases. A hard one here. Since most of my biases are personality defects which I can only quarantine and never completely remove like some virus. My goal here is to double check and make sure I am not allowing anything that may trigger those defects to seep in. Removing all finance or market-related discussion that isn’t directly correlated with my strategy goes a long way in containing biases. Focus.
Strategy. Focus on my strategy. I shared a declaration with @Vader7x since his declaration inspired mine. I will now share it with you. Future posts will expand on this.

- Model 2 high probability day trades — that present 2R+ risk/reward ratio of average loss. Only take trades that follow strategy which allows the confidence to push trade size.

- Patient Discipline — majority of my time should be spent waiting for the trade to meet MY set up criteria.

- Only scale in high volatility, always full size in normal volatility. I need to get paid on the RISK I am taking. Execute strategy no bailing out. I have done the work allow it to pay.

- Losses are just a cost of doing business. No perfection in this game. Stick to strategy! There is no room for revenge trading or marginal executions.

- Respect Stops — enough said.

- Plan for Variance — entries won't be perfect so allow for this in strategy.

- Adjust size and/or stops for volatility, — Execute strategy relentlessly.

- Let probabilities of strategy play out don’t fiddle. Know market structure that is or isn’t ideal for strategy and adjust.

Thanks

thank you for the great article.
good stuff in your journal.
subscribed.