Friday, August 5, 2016

Trailing problems Part 2 - Day Trading: August 05, Intraday


Was short almost all through the day. Made 4 losses, when I could have restricted myself to 2 losses - or even 1 loss and 1 win, if the trailing was better. Since Wednesday, I switched to a mechanical trading strategy. The reason for going mechanical is to keep my sanity instead of worrying about stops all the time, but right now the mechanical trailing is what's driving me crazy.

On Wednesday - another 100% loser day - I never got a chance to trail. Yesterday, mechanical trailing caused me to exit early from trade 2, and caused me to take 2 more avoidable shorts. Today, read the story below....

Nifty M3 Price Action Chart

Initial Spike and Ledge

Gap up opening - note that the low of today's open was exactly the high of yesterday's open. Then, it consolidated, and there was nothing to do - patience, patience... Placed short trigger below Breakout of consolidation. As the price moved, I began thinking of a Breakout Pullback Long above the Breakout Bar, but Price zoomed up suddenly before I could complete the thought and the moment was gone (I guess, I am a slow thinker).

First Trade

Then, inexplicably, for all my talk of patience, I entered Short below the Inside Bar that followed the long green bar on the M1 chart. Initial Stop was 8687.9, but my mechanical Trailing Stop rule brought it down to 8686.85. Guess what? Price formed a cigarette, then made a high of 8687.7 (at least on my chart), and stopped me out. Bonus, I got to blame my mechanical Trailing Stop rule.

Cigarette, Ash and Smoke

The next 3 trades were all shorts as the Price came back to the cigarette zone after taking my Stops. In Trade 3, the cigarette ash fell, and there were 20 points to be locked - again the mechanical Trailing Stop rule prevented me from doing it. The last trade should have been avoided (in hindsight). All the while, the price was grazing the cigarette high so many times, that I would have gone long expect for the fact that 8700 was close by. The cigarette high was also 8650 Spot, that had moved 10 points lower since the start of the cigarette.

When finally the cigarette smoke went up, I still tried to short.

Thursday, August 4, 2016

Trailing problems - Day Trading: August 04, Intraday

Storm and calm

I stayed aloof of the morning volatility.... patience, patience, patience is a virtue.... Took my entries during the calm following the storm, with a lot of patience. I have changed my trailing stop method, but this one whipped me too into bad results.

The perfect entry

So, after the morning dip to 8550 (ohh, what a miss. schade), and the pullback to 8600, there immediately followed a neat Price Action set-up for short (marked on chart). I decided to wait for a better set-up, which I defined as one more pullback to 8600 and higher volume before falling. That perfect trade occurred, but you know there is nothing like perfect. So, I soon made a loss. But, as they say in Venezuela, lightning always strikes twice. As soon as there was a higher volume Pin Bar above 8600, I had my next perfect entry. This one moved, but my Trailing Stop got hit.

Nifty M3 Price Action Chart

Trailing problems

Ignoring yesterday, on all the other days of these series, I have been able to catch (or at least identify) the top before the major down move of the day. Even yesterday, I can claim that I did identify the top... only decided not to act there. Despite catching the tops, I have not been able to maximize points because of poor trailing. I decided to trail differently today, but the results were no different.

Lightning struck twice again

The third trade was the imperfect entry. I was in a hurry to re-enter the down move, and did not wait for higher volumes on the M1 chart. Heck, I did not even wait for the bar to complete. Also, I thought that price had traded in the 8605-8587 band for too long, and there was pressure to go down - just another reason that I invented to go short. Immediately, a higher volume bar took out my Stop Loss. But it was a higher volume bar, good enough for me to re-enter at the same point... another perfect entry. All that these trades did was to reduce the points I earned. Trailing on Pivot Highs would have worked great today.... but who knows about tomorrow?

The bounce

There was a bounce without even testing 8550/Low of the Day. I was not happy, but the big green bar and the Price Action that followed was tempting, and I placed a long trigger there. Later cancelled it. When the price came back to that point, and did a small wriggle there, I entered long. This was another imperfect/impatient trade, but I got some points at auto-square-off.

Spot Price

The Spot 8550 was about 20 points above the last entry. I probably would not have entered if it was closer. During the day, Spot 8550 moved from below Previous Day's Close to above the 8590 Pivot Low area.


1. If these notes do not not make sense to you, it's because they are mainly for my personal consumption. These notes make sense to me, and at some point I hope that my writing improves enough to make sense to others...

2. The volumes that I talk about in this post can be seen better on the M1 chart.

Fear - Day Trading: August 03, Intraday

Bad day

I did not post yesterday, because I was disappointed. There were too many trades, and ALL THE TRADES THAT I TOOK were losers. Did not take some trades that could have been winners (hindsight). There were also a couple of trades that I took, that would have been winners (hindsight), except for tight Stop Losses. A day everything was bad for me....

I had also decided to change my Stop Loss trailing strategy, but never got a chance to move Stop Losses even once. Haha.

GST anticipation

It was the day of the GST bill being presented in the Rajya Sabha at 2 PM, and looking at the chart it appears that that news affected me more than it affected the market. My bias was long for the GST news.

Fear, Justification, and Coulda-Woulda-Shoulda

There were 2 kinds of fears that affected my trading. One was the Fear of Missing Out (or is it Greed?) that made me take trades in anticipation of news based big moves. The other fear was the Fear of Increasing Losses that caused me to not place trades at locations where I otherwise would (probably) have profited. But if any of these trades had turned winners, then I probably would have had a justification about why that was a correct trade.... or probably not. I dunno, man.

In any case, I was not patient. If I had been patient, as I had intended, then I would have had a maximum of 1 or 2 trades, or even a no trade day. When I started discretionary trades in this series, my clearly stated objective was to be patient, take trades only on great set-ups, even if I missed on many good trades. Clearly, I have failed in that objective.

Nifty M3 Price Action Chart

The initial down move

I took the first trade early, right below the first M1 bar low. After all, it was GST day. That trade failed in less than a minute. It caused me to avoid the next 2 opportunities to short. Missing those 2 opportunities caused me to take the next trade early. I took the second short after a pullback, without waiting for break of 8600. I thought it was a fast moving market, with higher volume bars, on GST day. Fear (Greed?) of Missing Out was in play. And it was indeed a moving market with volume. Look at the volumes on the first 10 bars.

The bug of god

I placed a long above the Pin Bar that bounced from 8600... and immediately regretted - I did not want another loss. Somehow, like magic, the order did not appear on my terminal. And I thought that god had appeared in the form of a software bug. That fear of loss dominated until a good up move and a good down move was complete.

Price Action at 8600

After a Master Candle at 8600, pullback short failed. Breakout Failure long lasted longer, but failed.

The next trade was a pullback short. Though my bias was long, I took an early short based purely on the Price Action. I should have waited. Then, I ignored the Breakout Failure long.

Action during GST debate

Really, there was not much action. There was a higher volume bar just before the bill was presented. My bias was long, so I went long above it for a loss. Then went short below it. That short would have worked well, except that my Stop Loss was hit!! Stopped trading after that.

Now, that the GST bill has been passed, I think that market will open higher. I have not looked at SGX Nifty yet... let's see how good my judgement is.

Tuesday, August 2, 2016

...And then, I lost patience - Day Trading: August 02, Intraday

Good day turned bad

Day was going good, and then it took a bad turn. I know that it was impatience that ruined it, but am still not thoroughly convinced that impatience was unwarranted...

Nifty M3 Price Action Chart

The initial volatility

The day began with a normal inside bar, but from the second bar onward things became volatile. I guess that was due to the anticipation about GST. I am a little surprised by the limited impact of the GST news today. Anyway, I watched the M1 chart (see chart below), but overcame all temptations and sat on my hands.There were so many setups, but I thought none was good enough given the volatility.

Nifty M1 Chart - Initial Volatility and Trade 1 Entry

The first trade

The first trade was a breakout failure of the resistance during the initial volatile period. Though I haven't drawn the resistance line on the chart, it is probably clear on the M1 chart above. Also, a couple of bars on the M1 chart painted higher volume and eased me into the trade. The trade moved well. As soon as it touched 8700, I tightened the Stop Loss to 2 points above entry. My target was a close below Yesterday's Close - which was also 8650 on Nifty Spot. When that was achieved, I was not happy with the Price Action there, and decided not to move my Stop Loss. Finally, moved Stop Loss to +20 when the Pivot Low below Yesterday's Close was broken. Stop Loss triggered at 8690.05 and filled at 8692.4. Maybe, Stop Loss at 8690 would have been better. I hate slippages, but trade SL-M most of the time....

The second trade

The first trade exit could also have been a SAR, but I desisted because 8700 was close. Took the second short when the Lows broke again. This move bounced back from the Day's Low, and that was a good set-up to reverse to Long. But I decided to be patient, and wait for a better set-up. Even that appeared a couple of bars later, but I decided to hold. Finally, took a loss of 2 points on the trade. After yesterday's loss, I am persuaded to tighten my Stop Loss to minimize loss whenever there is a move in my favor. In yesterday's loss, I had a MFE of +18 points, but took a loss of -9 points. Even this trade had a MFE of +16 points.

The third trade - TST

The third short was a Test of Yesterday's Close/8650 Spot. The reason for the trade will be clearer in the M1 chart below. The target for this trade was 8650 on Futures. I was patient and did not move my Stop even when it reached a +20 without touching 8650.

Nifty M1 Chart - Third Trade and Impatience

And then, I lost patience...

When price bounced up from 8650, and formed a Pivot above it, I quickly lowered my Stop from 8659 to 8657 and reversed to long. In hindsight, it was a pretty stupid move to lock in just 2 more points, especially when the trend was down. But you never know when price reverse (like I missed the Breakout Failure Long at the same price yesterday). Let's agree that it was stupid though to not wait another 2 points, and live longer.

The next 2 trades, did not move at all in my favor, and I took full losses on those. At some point, I should probably have stopped trading for the day. The last trade did move in favor, and gave me a smaller loss.

Learnings (in hindsight)?

The major mistake today was SAR'ing a wee bit quickly on Trade 3. Had the Stop Loss remained at +20 points, a lot of points would have been retained. Maybe, I should also think of reducing my Initial Stop Losses, and even locking in small profits. Finally, just like yesterday, I probably got the right entries but do not have the points to show for that. So, need to work on trailing the Stop Losses better.

Monday, August 1, 2016

Got some - Day Trading: August 01, Intraday

Movement, finally

Nifty broke out of the slumber of the past couple of days, and crashed. I could not make the best of of it, but still managed some points.

Nifty M3 Price Action Chart

Missed the start of the move

Nifty gapped up, and Spot went above 8700. Ignored the first pin bar, since it did not break the day's high. Placed short trigger below the green bar that broke the day's high. Had that order on for a long time, but cancelled it when a couple of small bars did not trigger it, thinking of the probability of 8750 being tested, and the trigger was just above the 8700 Nifty Spot Price. I would probably not have cancelled the order, if Nifty Future had touched 8750 before coming down. In hindsight, that was a bad move, and I missed the beginning of today's down move.

Caught the crash just in time - first trade

I drew a support line and waited for a breakout pullback. Ignored the first time it happened. The second time, I was able to get in just before the crash. Just in time, because I had an errand to run immediately after that. Got the 20 points first target easily. The exit was a typo. I had intended to move the Stop Loss to 2 points above the close of the crash bar, but entered it as 2 point above the low of the bar. I do not regret achieving a better exit, and will probably do it again.

Not many points from the directional move

All of today's trades were Breakout Pullbacks. I initially missed the Trade 2 entry because I was not watching. I entered when price came back up to my entry level - and this was against my rule on how to trade momentum. The second trade got me the 20 points. Ignored the Breakout Pullback that followed Trade 2 exit, because 8650 close by. The last trade went close to 20 points, but I made a loss. For that trade, I kept the Stop Loss above Round Number 8650. Round Number protected my Stop Loss on Friday, but the plan did not work today.

This 20 point booking is totally against the motto that I had for the Range Compression Trading System, where I was supposed to trail slowly. A different trailing Stop Loss strategy would have given better results today.

Trades that did not materialize

On the chart, I have marked the all the points where I anticipated a trade - that never materialized - or where I had cancelled the trigger by the time the trade materialized.

The bad misses (in hindsight):
1. Missing the start of the down move
2. Not taking the Breakout Pullback after the Trade 2 exit.
3. Did not get the setup to go long at Breakout Failure of 8650

Patience is (hopefully) a virtue.

First Day of New Series - Day Trading: July 29, Intraday

Posting again

I am trading Nifty Futures discretionary again. I had decided not to post the trades, but then decided to post because a couple of days ended profitably. Let me also admit that I would not have posted these trades if the days had ended in losses. Since these are discretionary trades, it makes sense to record the day's analyses and actions, ostensibly for future reference. If my record on this blog is anything to go by, I will probably post trades until I get hit by the next big drawdown. For now, I have decided not to live tweet my trades.

Nifty Price Action Trades

Dull Day

It was the first day of the August series, and was a dull day. After the first big bar, there were bounces from the previous day's support level. I did not enter there because I thought that I should wait for better setups. The price did move to the target 8700 from there. In this round of trading, I have decided to be patient, and trade less, even if I miss many good trades. I have been retweeting about patience on my Twitter timeline.

Shorted the Pin Bar

At 8700, a pin bar with good volume formed. I placed my entry below that bar. The bar that followed took out the high of the pin bar, but I decided to keep the trigger. I moved my Stop Loss to the pivot high below 8700, but soon the price action scared me into moving the Stop Loss back above 8700 again.

Bulk Deals saved me?

Couple of times the price rushed upwards, and I thought that the trade would end in a (small) loss, but right at the previous day's closing price, the volume spiked and price retreated. Magic!! Here's a zoomed in view on the M1 chart.

Nifty M1 Chart showing the Bulk Deals


I am planning to stick to the motto of not taking big losses, and not taking small profits. For now, I have defined the profit target to be at least 20 points. There were a few times when the price reached that objective. I would have definitely moved the Stop Loss to +20 points, if price had touched the Low of the Day at 8668.5, but that did not happen. Exited on auto-square-off.

I have been quite detailed on this post. Maybe, it will help me in the future.