Track and Chart your Trades

TRACK AND CHART YOUR TRADES        

A trading diary is a great way to check and confirm your trading execution entries and exits. In fact, most charting software has the capability to go back to see when you executed a trade. Think what this can do for a trader. If it is followed properly, it can and most likely will help you to improve to a new level of self-discipline and ultimately lead to increasing your self-confidence. How? If you execute when the signals call for action, you can validate whether you responded when called to do so. You can check your work. You will find out if you hesitated when your methods called for you to exit and if you timed it per the system or not. One lesson we teach our students at Trading Triggers University is to save a chart and print it out with the entry scale-out and exit. Printing the chart out helps you to see clearly how you respond or react to the trade signals. It will reinforce the validity of your system or any system, including my Defcon program with Genesis Software. By printing out and cataloging your trades by a chart, you will gain more experience in identifying the patterns that drive your trading signals. It also keeps track of or “inventories” what went right or what went wrong with a trading plan. It will allow you to study and examine the results in black and white. On successful trading days, it will be good to capitalize on your successes so that they can be repeated. Of course, on bad days, it can allow you to focus on what went wrong so that you can understand and improve on it so that you stop repeating the same mistakes over and over again.

TWO CASES IN POINT    

If you map out a game plan, trade off the “numbers,” or have a trading system, when you print out your chart and examine your trades, you are grading your own homework. I have posted on my web site a daily Dow Report to which the Chicago Board of Trade links. Every day after the market closes, I post two numbers based on my teachings and on what we went over in this book.

Those numbers are what I believe the high and/or low of the session will be; and then, based on the market direction number, I will post a trade recommendation. Figure 12.3 shows a direct quote that was for Monday, February 13, 2006. The initial resistance level was 10983, and my target support was 10865. The exact low was 10865, and a high close doji pattern formed.

This is not rocket science. Why would I state the day before what type of pattern to look for and at what price? We know the reasons why I select a high close doji trigger based on the statistical findings in Chapter 7. When I introduce two other dimensional market analysis approaches, such as a moving average and pivot point analysis, all you need is the patience to wait for the signal to materialize. It is a high-probability setup; and in this case, the trade resulted in a 38-point gain, or $190 per contract, in less than an hour. The only drawback on this trade was that you had to wait until the end of the day for it to materialize. No pressure, no worries, just profits. A nice trade. And if you print out a chart and plot your entries and exits, you will begin to see more clearly how a trade develops; and you will reinforce your subconscious mind on what to look for in the next trade and improve your confidence from within to win.

There are many who visit my site just to see my numbers selection for the market. I also include what the projections are for the week. For day traders and swing traders, it helps them also identify a potential confluence support level based on pivot point analysis. Feel free to visit and check the numbers yourself at www.nationalfutures.com; just click on the link that says Daily Dow Report. Even better: You now have your own Pivot Point Calculator, provided on the accompanying CD to this book.

Another case in point as to why it is helpful to print out and catalogue charts that track your trades is that it will help you to visually back-test the methods. The more you see the patterns recur, the more assurance you will have in the methodology.

The topic I covered in Chapter 5, demonstrating how to filter the pivot point price projections, based on the moving average approach, gives me an edge by reducing the noise or eliminating excess information. It helps me to narrow the field to what the potential range might be of a given market for a specific time frame.

 If I have a predetermined point of view that the market might see a low of 1257 and a high of 1273, once I identify a pat-tern and conditional change in the price action, I can enter a position. In Figure 12.4, I have a trade example in the e-mini-S&P (Standard & Poor’s) that demonstrates how the market was contained within the bearish target selected pivot point numbers based on the system. Remember, if bearish, then the target low will be near S-2 and the high will be near the first resistance level (R-1). If you stick to the rules and look for buy signals near support and sell signals near resistance, follow the game plan, add the other two dimensional factors such as a high close doji or hammer pattern, with the moving average indicating a conditional change, then you enter a position. As the market starts to show momentum loss as indicated by shadows, scale out of half of your positions, place a hard stop at breakeven, and then wait to see the flow of the market. If you print out your chart and plot your entry price, your scale-out price, and then the price where you exited on the balance of your positions, you will not only grade the trading system but also your performance and how you react to market conditions.