Daily Score: +1.00

Batting Average: 100.00%
Full Stop %: 00.00%
EpT: .00
 
 
Early day for me today. I missed the incredible drop that happened later today, but I was happy to get my .80 R-Units. Pretty much all 3 of my scalps today followed the same theme… All used the 55-tick chart, TRIX indicator & $TICK chart for entry. I merely waited for a TXD- & a $TICK-hook down and shorted. Below is one of the plays…

Today was the first day I’ve gone 100% in quite a while. So overall, I am very pleased with the day.

This was a little more of a fade than the other 2 scalps. But when I saw the TRIX & $TICK falling while price was undergoing a minor 55-tick rally(and when I say minor I mean 4 ticks over 2 bars). So I shorted into this “strength” hoping that price would soon follow the other 2 indicators and was rewarded with 3-ticks for my effort.
 
 

Needless to say, I’ve made some adjustments to get back in alignment with what works versus what I’ve been doing the past couple weeks.

Here is what I’ve changed:

1.) I am going back to a scalp-focused method of trading and dedicating my efforts to mastering the scalp
2.) This should automatically lead to a reduction in the quantity of trend plays I attempt on a given day (I’m targetting the 2-4 range)
3.) When I originally started this blog a year ago, it was to hold myself accountable for each and every trade that I make. Therefore, I will begin to start posting my daily trading log and review of either A.) My best trade of the day or B.) My worst mistake of the day
4.) I will again switch over to an R-Unit basis which will make for a more unifirm understanding my trades

Another reason I believe that my Trend Play results have deteriorated, other than the fact that I’ve been making too many of them, is that the target is usually pretty open ended, which allows for much more judgement errors to creep into play when exiting a play. I have caught myself overstaying my welcome on multiple occasions recently. In scalping there is no such “judgement call”, you either get your 2 ticks or you don’t period. But by scaling back on the quantity and up on the quality, this sould allow me the breathing room I need to once again have my trend plays return to consistent profitability for I used to have only 1-2 days a month where my Trend Plays would lose money but recently I’ve had more losing days than not. I expect that this will revert back with the changes I’m initiating.

My daily goal is simple, .80 cumulative R-Unit Return per day with a daily stop loss of -2.00 R-Units. With a successful scalp yielding .20 R-Units per trade, this means that I have all day to make 4 successful trades. This is a perspective which I had lost sight of after switching over to a Trend-Focused methodology. When viewed in this light the whole process seems so much easier and less stressful.

FYI: I day trade almost exclusively in the ER2 Futures market. For Scalp Plays I use a 7-8 tick stop limit & 2 tick target. For Trend Plays I cut the # of shares traded in half and use a 15 tick stop limit with a target of 5+ ticks depending on the market conditions.

In an effort to identify the recent string of less-than fortunate trading days I’ve been having I pulled out my old records and have been going back over my trades in order to see what has changed this week.

And after many hours of reviewing my plan, notes, and my old & recent trades, I think I have found it. When i first started trading the futures markets I was primarily a scalper going for 1-3 ticks per trade. And on rare occasions when the opportunity seemed ripe, I would cut my lot size in half, double my stop and go for a larger trend-type move.

Overall, my results were break-even to slightly positive. What was happening is that my scalp trades were losing money on average but the very few trend plays that I attempted usually more than made up for it. I ran the numbers and if I were to only focus on the trend plays and ignore the scalp setups, then my profits should double at the bare minimum!

So I started scaling back on the number of scalps that I made & increasing the number of trend plays that I went for. That was about a couple of weeks ago. Around that same time my results started to slip as well. I chalked it up to statistical variability and forged ahead with my more trend, less scalp plan and my results didn’t get any better.

Fast forward to today. As I reviewed my records for the past few weeks a very interesting anomoly jumped out. The few scalp trades that I was making seemed to be performing better, on average, than they ever had in the past. But my trend play averages have gone to hell.

And I think I know why. I’ll let you know if I’m right in the weeks ahead, but it seems that the results for whichever avenue of trading (scalping or trend trading) I focus more of my attention on seems suffers in return, while the results for the other kind improve.

The implications of this fact are very clear: Whatever I focus on least performs better due to the quality of the setups that I am taking. For example, when I’m focusing on scalping and only taking 2-3 trend plays per day maximum, what is the likely quality of these trades that catch my eye in this scenario compared to those when I’m taking 10-20 trend plays per day. And it makes sense too for there simply can only be but so many quality trend (ie: multi-tick/point) moves on any given day.

This also shows thatI have much still to accomplish in the form of impulse control and patience. For if I can make the right plays when NOT focusing all of my energy on a given type of play, then this means that when I am focusing my attention I am becoming distracted, forcing, and hopeful…all of which will cut away at the profits of any trader.

I look forward to Monday so I can try to take advantage of this realization. It will have to wait until Monday for I have to head out of town for a Dr’s appointment tomorrow morning so will be taking the day off. But good luck, but more imporatantly, good trading tomorrow.