I'm starting to get it.

I've been trading the ES since the first full week of the year. Haven't really made any money, but I've managed to limit my losses to nothing painful. I keep learning - with every trade I learn a little more.

Friday I think I may have started to pull it all together. The catalyst was a Point & Figure chart. Thursday evening, I was reading about P&F charts in the latest edition of Technical Analysis and I thought, "Hmmm, that sounds cool, I think I'll check it out." So I fired up TradeStation and looked at my past few trades with a P&F chart. It made almost perfect sense to me, with the exception that I couldn't tell how TS charted reversals. I had to wait till the colume picked up Friday morning to figure it out. Of course, that happened around 7:30 my time Friday morning and at 8:00 I got a signal that made a lot of sense to me. BUT, since this was the first time I had attempted to even understand this signal, I decided to paper trade it instead. Long story short, I nailed it - but with no money on the line, I made nothing.

In spite of not getting on that winning horse, I was encouraged because I have been trying to figure out not only entry signals but also Stop Loss sizes as well. I'm sick of being right with my entry but wrong with my stop-loss. I got it right on Friday.

Today, (Sunday), I was eager for the market to open to test my newfound knowledge. I got a signal at 5:21 my time and opened a Long position. I set a tight stop because if I was wrong I would know it immediately. I set my Stop to close the Long position below the support level I identified and open a Short position immediately. This is what happened right off, so I had an open Short about a point below my previous Support level. I've been watching this intra-day movement and it looked to me like the best stop for me was about 5 points, (I dunno, maybe you guys have figured out how to set a tighter stop and not get whipsawed - I haven't.)

It went a little against me, but no indication that I was wrong about the fundamental direction. The bad news is that I had promised my wife we would attend our church business meeting tonight, so instead of being able to manage the position as I normally would during the day, I set a trailing stop. Naturally I got stopped out for a small loss, but as I sit here at 9:39, I can see that the original stop I set was right, and that I was right about the position. Once again, I didn't make money but I am starting to see the right signals and set the right stops.

Perhaps the tide of the battle is turning for me.

More Readers than I Knew

Okay, I get the message.

A number of you have emailed me and asked why there have been no posts recently. I honestly thought no one was reading, so I figured I could do my journaling in a format that was not public since no one else was reading.

So, if you actually care to read it, I'll certainly write it.
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I quit trading the Monday before Christmas and didn't trade again till Monday January 7. I had a lousy trading day on the Thursday before Xmas and also on the week of Thanksgiving, so I decided I would actually take a lesson and stay out of the market during the holidays. It was also a good time for me to examine my work and think through my mistakes. I needed to do that because I sucked from Thanksgiving to Christmas.

I never did figure out whether I was just being exceptionally stupid or was just hitting one of those losing streaks that traders run into. As best as I could see, I was mostly following my own rules, but Lord knows I am such a newbie I may have my rules all screwed up.

I decided last fall that I ultimately wanted to trade the Futures market as well as, (or even instead of), the stock markets, so I spent the Christmas break getting myself ready to trade the S&P e-minis. Although I cannot report any financial success in my first couple of weeks, I can report that this particular type of trading feels a little better. Why? Well, to start with, I am not limited to the hours of 9:30-4:00ET Monday through Friday. The futures market is open from 3:30pm-3:15pm Sunday through Friday, so I am not forced to be ready to trade first thing in the morning. Secondly, I have far fewer markets to track - two to be specific, I'm trading the ES and the NQ right now - rather than hundreds. I can really focus on those markets and know that I will pretty much always get a signal or two during the day to trade. In the equities markets, I have found that I need to look at scores of stocks every day in order to get signals. (I average 4-5 trades a day - probably too many but remember, I'm a newbie.)

So, for the next several weeks, I suspect I will be reporting on my experiences trading the ES and the NQ. I may add the ER2 as well.

Thanks for reading.