31st August 2016 – Bund Daily Trade Plan

News

0700 Ger Retail Sales 0745 EZ FR CPI 0855 Ger Umemploy 1000 EZ CPI
1315 UD ADP 1500 US P Home Sales 1530 US Crude Month End

Stats

DATR 0.72+

WATR 1.73-

p.WK.50%

M.50%

Weekly Summary – Inside Week Hi @ 168.02 IW.lo @ 166.38 /.16

Previous Day – Up range day with Bof of 84 RF of 62 and 38

General Bias SC = 1

Big Picture

60min – Long bias, for cont, exp hold 52-38 bac 86

15min – Long bias, for cont, exp hold 63-56 bac 67.75 and then 86

Neutral Hypo – if price holds/ bof 81/86 then shorts t 75 t 63 bac 56 then t 46-38 if price3 holds 46-37 then longs t 75

Bull Hypo – if price bac 75 then longs t 86 bac 86 t 02-12; if price holds / Bof 13 then shorts otherwise t datr

Bear Hypo – if price bac 37 t 30-20 bac 20 t 10-00

Red flag levels – For short trades bac 67.86 For long trades bac 67.38

30th August 2016 – Bund Daily Trade Plan

News

0800 EZ Span CPI 1025 EZ IT Auc 1330 Ger CPI 1500 US Cons Conf

Stats

DATR 0.72+

WATR 1.73-

p.WK.50%

M.50%

Weekly Summary – Inside Week Hi @ 168.02 IW.lo @ 166.38 /.16

Previous Day – Low volume up day with strong bull close and bof of fri low, fri hi at 67.76 and bal hi at 68.02

General Bias – SC = 1

Big Picture

60min – Neutral Bias, for t/c, bac of 67.76 and then 68.02

15min – Long bias, for cont. exp hold 67.30 bac 67.76

Neutral Hypo – if price holds/bof 77/85 or 02 then shorts t 46/t2 30 if price holds/bof 30 then longs t 46

Bull Hypo – if price bac 76 then longs t 77-84 t2 02 bac 02 then t 16-21 (watch for bp bof)

Bear Hypo – if price bac 30 then shorts t 13-00 t2 93-00

Red flag levels – For short trades bac 67.76 For long trades bac 67.30

How I am improving my Play to Win Mindset

How I am improving my Play to Win Mindset

During my break from trading in August, I have been thinking about the whole play to win mindset verses the playing not to lose, especially when it comes to taking trades and setting correct targets.

PLAY TO WIN

I have two types of trade, scalps which generally have a target of 5-8 ticks, and intraday swings (IDS) which typically have target of 10-16 ticks.

The problem I have, is that it is a lot easier for me to set the targets for a scalp trade and ignore that on certain trades I should be placing IDS targets.

This is due to habit and fear of losing. I am having problems accepting the risk on the IDS trades which tend to take up to an hour to play out compared to my scalp trades which play out in less than 15mins.

I have clean defined rules which decide which trades are designate an IDS, if it does not fit these rules then it is a scalp trade.

For a while now I have implemented a decision making process, to help me approach problems the same way each time.

It is based on a watered down version of John Boyd’s OODA loop called DADA loop, which stands for Data, Analysis, Decision, and then Act. Then gather more data and continue with loop.

I am going to walk through the problem using my DADA process to decide whether I should stick to just scalp targets or on certain trades aim for the larger targets.

The information generated will in turn be placed in my exit rules, so that before entry I re read these and in turn help me focus on playing the trade in my best interests.

Everything is going to be done without taking in account, commissions and costs.

DADA Process

Question

Whether I should set scalp targets or IDS targets.

NB not randomly but when the setup rules specify IDS or scalp targets.

Data

What is the likely outcome?

Scalps Targets

It is a Win. My current win rate on these trades is 68%. With an average win of 6 ticks.

It is a Loss. My current loss rate on these is 24%. With an average loss of 5 ticks.

It is Breakeven trade. My current breakeven rate on these trade is 8%.

My average reward to risk ratio is 1.2 to 1.

Now for some maths.

For me to be profitable taking trades with a 1.2 reward to 1 risk. I need to win 46% of the trades.

This is worked out using the following formula 1/(1+(R multiple)) therefore 1/(1+(1.2)) = 0.4545

Therefore I need to win a minimum 47% of the trades and my current win rate is 68%. So far so good.

My expectancy is typically worked out as follows

(Average win x Average Win rate) – (Average Loss x Average Loss rate)

(6 x 0.68)-(5 x 0.24)=2.88

One of the problems I have found with the expectancy formula, whilst telling whether my edge is profitable or not, it has little bearing to my real life trading decisions.

So I have decide to change this to try and give me a number that I can relate to.

Instead of using ticks, I will use the value of 1 contract and I will multiple the result by 100 trades. This will tell me the value for the next 100 trades for every contract traded.

Therefore

1 contract of the Bund is worth 10 euros per tick.

My expectancy is (((6 x 10) x 0.68)-((5 x 10) x 0.24))x100 = 2,880.0 euro

By scalp setups are worth 2880 euros for every contract traded over the next 100 trades.

IDS Targets

It is a Win. My current win rate on these trades is 57%. With an average win of 12 ticks.

It is a Loss. My current loss rate on these is 33%. With an average loss of 7 ticks.

It is Breakeven trade. My current breakeven rate on these trade is 10%.

My average reward to risk ratio is 1.7 to 1.

Now for some maths.

For me to be profitable taking trades with a 1.7 reward to 1 risk.

Again using the following formula 1/(1+(R multiple)) therefore 1/(1+(1.7)) = 0.3704

Therefore I need to win 38% of the trades and my current win rate is 57%. So far so good.

Therefore my expectancy for the IDS

1 contract of the Bund is worth 10 euros per tick.

(((12 x 10) x 0.657)-((7 x 10) x 0.33))x100 = 5,574.0 euros

Data Analysis

Over 100 trades my scalp expectancy is 2880 and IDS expectancy is 5574.

The difference is 5574-2880 = 2694 euros

Decision

If I do not take a trade when I should, then I am losing a potential minimum of 2880 euros.

If I place scalp targets when I should be placing IDS targets then I am losing 2694 euros.

Act

So I will take every setup that fits my process / rules and I will always place the correct target structure.

I then can collect more data and then repeat the process using my MFE and MAE to see if a change in targets and stops produces better results.

Of course these calculations are not taking in account my cost per contract, so are not a completely true reflection of the profitability. But the purpose of this exercise is to work though the problem in a logical manner using DADA and then turn the result into something that I can relate to.

It is a matter of re framing the risk acceptance.

My journal tells me that my expectancy is 2.87 and my win rate is 68% but during the trading session I cannot relate to that.

I can relate to

That if I take this scalp setup, I have to win 47% of the next 100 trades to be profitable and if I follow my process over these 100 trades then this is worth 2880 euros.

That if I take an IDS setup, I have to win 38% of the next 100 trades to be profitable and if I follow my process over these 100 trades then this is worth 5574 euros.

The next step is to transfer these figures to my exit cheat sheet. The plan is that when I stalking trades using my process, that the reminder of what a missed trade or incorrect targets means will help me accept the risk of losing 5 or 7 ticks on this individual trade when there is a lot more reward for sticking to the plan for the next 100 trades.

Weekly Trading Review 22-26th August – Fade to black

Weekly Trading Review 22-26th August – Fade to black

Weekly Trading Review 22-26th August

As this was my first week back after my usual break in August, I was not working towards my main goals.

The goals for this week was a follows

1) Before I start trading I will read my trading system plan, from start to finish, from pre session right thought to end session. Even though I know everything my heart, I will re-read it all.

Completed this.

2) Completing all my routines to the letter.

Completed this.

3) During the session, a focus on only Grade A trades with no pressure to take every opportunity. Goal will be to ensure that my read of the market is good and I am back into the flow, before actual trading.

Completed this. Did not trade on Monday just did my plans and followed the market.

4) Goal for the week will be to have 90% Grade A trades with a focus on what my read of the market is like.

Failed. My average grade for my trades this week was 89% and the cut off for Grade A was 90%. So did not make the cut. This was due to a few dodgy trades on Thursday but I will cover this below.

My read of the market, improved every day during the week.

What did I do best this week and how I did I do it?

What I did best this week is tied into the reason I failed to make the Grade A trades target.

My normal routine is to switch to the 1 min chart for the cash open. Just to get an idea of the flow in the first 5-15 minutes then I switch back to the 3min. Which is my normal trigger chart. I failed to make the switch back and stayed on 1 min for the whole morning session.

The result of which I got a lot more setups then normal. But I failed to realise that I was on the 1-minute chart and was playing the setups wrong. They started as Grade A and then slowly dropped thru the Grades, till one got to Grade D. By this time, I was nearly at my stop limit for the day. I then called a halt to my trading. And re assessed what I was doing.

It was then I realised that I was on the wrong time frame. I took a break, mediated and mulled over my mantra of I cannot change what has happened but I can change how I respond to it.

So I restarted trading and on focused on only taking Grade A set ups on the correct timeframe. Took 2 more trades that day and ended the day up by 3 ticks.

So why was this good. Normally on a day like this where I start to go on tilt. I have to wait till the next day to work on my recovery methods. As I am normally either at an extreme of risk adverse or risk seeking. But this time I was able to be in my A game for the rest of the day.

I have done this occasionally in the past, managed to recover from a bad morning session with a good afternoon session but each of them times it has been very stressful and I have had to force myself to trade back to the green, whilst trading mainly in my B game.

This time I was calmer, more focused and traded well and the whole recovery process was a lot less stressful.

What did I do badly this week and what lead me to do it?

I have noticed from my stats and just from my normal trading that I have a tendency to fade more then go with the flow or bias. Whilst I my fades are working well. I tend to miss the easier trades, which also have a better RR and just as good win rate.

Weekly Trading Review

What is the problem

The fade trade is the easier trader to take for me. It is clear where the stop should go (outside the zone which normally has some sort of pivot high or low) and clear what the risk reward is, normally the next level on that timeframe.

The pullback trade for me is a more difficult trade. Where am I wrong, as normally no clear structure close enough not to screw with the risk reward ratio. And where is the target? I always have doubts that price is going to make new extremes.

Why do I have this problem?

I have this problem due to my risk adverse nature and my fear of losing. Whilst I have managed to make head way on this in general. My progress in this only highlights the other areas where I have not made much progress.

What I am going to do

The first step is to identify whether my gut instincts and my stats are correct. I only have eleven trades in my stats for this setup. So the sample size is too small to start with. I want 50 trades in my sample size.

Therefore, I am going to start tracking these type of setups more careful and with more detail in the missed trades journal.

I am going to include the MFE and MAE tracking for all missed trades. Once I have a large sample size, this will help me decide the targets and stop size.

I already include the big picture and immediate picture trend bias in my missed trades journal.

Part of the problem is that all my time and effort and practice has gone into my fade and breakout failure trades. This means that these sort of trades are not a major part of my trading routine.

The second step is that as part of my weekend practice, I will pick 2 pullback trades from the missed trades journal and replay them on sim to help me get used to that style of trading.

Thirdly I will look at the rules for entry the pullback trade and see if I can simplify them.

26th August 2016 – Bund Daily Trade Plan

26th August 2016 – Bund Daily Trade Plan

News

0700 Ger Cons Clim 1300 US Jackson Hole 1330 US GDP 1415 US Ser PMI
1500 US Yellen

Stats

DATR 0.65-

WATR 1.73-

p.WK.50%

M.50%

Weekly Summary – Inside Week Hi @ 168.02 IW.lo @ 166.38 /.16

Previous Day – bac of id.lo 37 with down day with neutral bear close at id.lo

General Bias – SC -1

Big Picture

60min – Short Bias, for dir hold 50-64 and bac 12

15min – Short bias, for dir hold 44-50 and bac 27

Bear Hypo – if price holds/bof 37 or 44-50 then shorts t 27 bac 27 then shorts t 19-12 bac 12 t00 t2 91-76

Neutral Hypo – if price holds / bof 19-12 then longs t 30-37 t2 50 bac 50 t 64, if price holds /bof 64 then shorts t 41-37

Bull Hypo – if price bac 64 then longs t 74-84

Red flag levels – For short trades bac 67.64 For long trades bac 67.12

25th August 2016 – Bund Daily Trade Plan

25th August 2016 – Bund Daily Trade Plan

News

0900 Ger IFO 1300 US Jackson Hole 1330 US Durable Goods 1415 US Ser PMI

Stats

DATR 0.71-

WATR 1.73-

p.WK.50%

M.50%

Weekly Summary – Inside Week Hi @ 168.02 IW.lo @ 166.38 /.16

Previous Day – ID. Id.hi 67.84 id.lo 67.37

General Bias – SC 0

Big Picture

60min – Long bias, (pbip) for cont, exp to hold 49-37 and bac 86 t 68.02

15min – Neutral bias, for dir bac 74 or 44-37

Bull Hypo – if price bac 74 then longs t 86 bac 86 t 96-02, bac 02 t 13

Neutral Hypo – if price holds / bof 74 or 86 then shorts t 76 / 56; if price holds / bof 49-37 then longs t 66

Bear Hypo – if price bac 37 then shorts t 228-24 t2 16-10 t2 94-76

Red flag levels – For short trades bac 67.86 For long trades bac 67.37

24th August 2016 – Bund Daily Trade Plan

24th August 2016 – Bund Daily Trade Plan

News

0700 Ger GDP 1500 US Home Sales 1530 US Crude

Stats

DATR 0.71-

WATR 1.73-

p.WK.50%

M.50%

Weekly Summary – Inside Week Hi @ 168.02 IW.lo @ 166.38 /.16

Previous Day – Range up day with close at id.hi (bof?) 67.68 y.low at 67.37

General Bias – SC 0

Big Picture

60min – Long bias, for cont, exp to hold 49-37 and bac 86 t 68.02

15min – Long Bias, for cont, exp to hold 60 and bac 86

Bull Hypo – if price holds 65-60 then longs t 76 t2 86 nac 86 t 96-02, bac 02 t 13

Neutral Hypo – if price holds / bof 86 or 96-02 then shorts t 76 (86) t2 64-60 bac 60 then shorts t 49-37; if price holds 49-37 then longs t mid

Bear Hypo – if price bac 37 then shorts t 24 t2 16-10 t2 94-76

Red flag levels – For short trades bac 67.86 For long trades bac 67.37

23rd August 2016 – Bund Daily Trade Plan

News

0800 Fr PMI 0830 Ger PMI 0900 EZ PMI
1415 US Man PMI 1500 Us Home Sales

Stats

DATR 0.72-

WATR 1.73-

p.WK.50%

M.50%

Weekly Summary – Inside Week Hi @ 168.02 IW.lo @ 166.38 /.16

Previous Day – ID id.hi @67.68 id.lo @66.76

General Bias – SC 0

Big Picture

60min – Neutral Bias, bac of 67.68 or 66.65 for dir

15min – Long Bias, for cont, exp to hold 48-40 bac 68

Bull Hypo – if price holds 48-40 then longs t 59, t2 68 bac 68 t 77-86 bac 86 t 96-02

Neutral Hypo – if price holds / bof 64-68 then shorts t 48 bac 40 t 25-14; if price holds 25-14 then longs t 48 t2 58

Bull Hypo – if price bac 14 t 00-93 t2 80-76

Red flag levels – For short trades bac 67.68 For long trades bac 66.76