Dom's notes

Despite having been hammered for posting my sincere feedback re. ATW in the appropriate thread (or may-be, because of ...) I am starting this thread for the benefit of all waanabee traders.

I have no intent of sharing my exact trade setups, however I will share as much as I can - the good, the bad & the ugly, and if someone learn something from this then it won't have been a waste of my time.

I have been a student of the market for over 4 years now. I actually started my education with Investools PhD program (which was a lot of money for not much outcome in my case), trading stocks then options, then started to focus on the SPX (directional Calls/Puts then credit spreads), at some point I discovered the futures / ES in particular and that was a "revelation" ... 1/4pt spread vs 2pt spread for the SPX options, I was sold in no-time.

I purchased Todd Mitchell's system (TradingConcepts), which was a lot less money than Investools but no more outcome in my case, at least it triggered my interest in Fibs (back then, retracements only) and I did a lot of research / backtesting using Fibs - but at the end of the day, the real challenge resides in figuring out which fib level will "hold", and to this day I have to admit I have not solved it.

Anyway, I then spent a lot of time in a couple of "free" trading rooms
learning pure price action, the person that was offering his time teaching PA free for several months later offered a paying program, which I took, but I still couldn't make money live. I took another mentor, recommended on a free forum, and despite he being a nice guy (and why wouldn't he be when students are paying), this also was a failure.

I was about to throw the towel when I found ATW, started with the 101A education, added 3 weeks later the mentorship education, and have been studying / backtesting a lot for now a full year. I reached a point where I can "consistently" make fake-money on sim, however the transition to live trading is a real challenge for me, because of fear I pass on many trade setups and I deviate from my trade management rules.

So, that's the background. I trade CL (Crude Oil "big" contract) which is very liquid, has 1 tick spread throughout the European & US session, and is nicely volatile (day range is on average 250-350 ticks, some days even more - like today : 450 ticks). I find CL to have a lot of momentum, it shows very repetitive "patterns" (at least, for the fib user that I am).

I don't use any indicator, I trade price action using a lot of price projection techniques (best book IMO on this topic is Robert C. Miner "Dynamic Trading").

If I have one advice for new traders, it is look for another way of making a living ... but if you are truly in love with the markets, then I believe it is a must to 1) find an excellent education (this is way more than just reading books, and frankly, there is probably no one-stop education shop) and 2) find a mentor to accelerate your learning curve.

Now that this is out of the way, a brief summary of my week :

Tuesday - tried 1 trade early morning, entry hit no fill, that made me mentally sick for the rest of the day, I passed on 2 setups (both wins), the last setup I tried but my entry wasn't even close to be hit.

Wednesday - 2 setups no-fill, then 1 small winner (got out at 1/2 of my target for pseudo-good reasons - really, lack of discipline), and I passed on the last one (another wouldabe winner :( )

Thursday - passed on 5 setups (4 wins / 1 loss), took 1 small winner (1/2 target again, same lack of discipline), and missed the best setup of the day by being away for 5min

Friday - passed on 1 setup (win), no fill on next 2 setups, then I couldn't focus & called it a day.


Bottom-line - only 2 trades this week, I made ~10% of what I should have made if I had the discipline to follow my plan.

The week was fairly good for my other system, w/ 3 wins net +1585 (trading 1 contract on this system). That makes this system finally get out of a 3 month drawdown (since Aug-2nd), and close the week on a new equity peak (+840 vs Aug-2nd).

I spent all of my time analyzing what's going-on with the reversal system, and at this point I haven't found anything else than blaming the increased volatility & noise since the beginning of August. Of course, the problem is in my software, which isn't dynamically adjusting for those changes - not enough would be a proper wording of that. Specifically, the problem is in pivots identification, which I will have to improve to that effect.

The irony in this, is that I have always stayed away from indicators because I know them to be very sensitive to market volatility & noise ... but pure price-action strategies appear to be only as resilient to market volatility & noise as the underlying pivot identification mechanism, and to be honest I had probably under-estimated that issue (and of course, it is aggravated by using exotic timeframes, whether range bars, volume bars, ticks bars, which all loose sight of the primary factor in pivot identification : time)(of course, there are things I am doing to try account for time in my pivots identification, but it is far from perfect & I am starting to think I might be better of going back to 1min charts :(

I am taking a break from R&D this week-end. Just planning on enjoying life while quantities last...

This was another pretty good week for my other system, 2 wins & 1 break-even (+35 .... technically a win) net +1365. Closing the week on a new equity peak (+2205 vs Aug-2nd).

It seems I cannot help messing its trades on Fridays, this is the 4th error in 4 week, all on Fridays - this one cost me "only" $60.

I did not work at all on the reversal system this week - to be honest I don't even know its performance for the last couple of week - but I'll look into it over the week-end. Instead I did "backtest" all of my prior systems, as I wanted to get a feel for how long / how deep that reversal system could stay in drawdown mode. The very bad news is that NONE of them did make money since I stopped trading them. NONE. The best "performance" goes to the 5th wave trading system, with an average net per trade of -3/contract/trade for about 450 trades ($5 commissions included per contract, but no stop slippage ... that would make it realistically about -8/contract/trade). Or put another way, it has a tiny edge, but not enough to overcome commissions alone, not to mention stop slippage. All other system were worse than that, including the Impulse system, which performance since I stopped trading it comes in at -16/contract/trade for about 560 trades (this time, commissions & 1-tick stop slippage included).

Which doesn't give me a warm feeling about the ability of the reversal system to recover by itself, nor does it really motivates me to keep working R&D on it - although I still believe its core principle does have an edge, the problem (as I see it at this point) being in having a volatility&noise-proof pivots identification mechanism.

Only 2 trades for my other trading system this (shortened) week, 1 win / 1 loss ; net +510. That loss ended a winning streak of 10 wins in a row in 4 weeks.

Again I didn't work at all on the reversal system this week. All I know is it is still struggling, and I really need a break from working on it.

I did toy with a few ideas this week, trying to look at the market from an entirely new perspective vs all I have done so far.

Happy Thanksgiving!

My other system keeps performing well, 3 wins, net +2085 for the week.

Last week-end I decided to take a break from pure R&D until next year. I spent a lot of time reading this week, also did some more toying on sim. Will keep along the same lines next week.

Mostly a break-even week for my other system, 2 wins / 2 loss, net -110.

The week started on a max loss Monday - which is 1pt, ie. -1000 per contract (I currently trade only 1 contract for that system). That system uses wide stops and has very little trade management, which allows to stay in most trades to the target, but can sometimes be sad .. Thursday was an example of that, 2nd loss of the week (-215) despite being up 40-cents at some point.

I did a lot of reading again - of course, looking for new trading ideas - but no luck on this for this week.

This was a pretty frustrating week for my other system, 2 trades went from nicely green (over 40-ticks each) back to ~break-even, at least the 3rd & last trade of the week was a win. Total for the week 2 BE / 1 win ; net +755.

I didn't do that much this week ... already in Christmas mood & prep ... Happy Holidays!

Two trades only this week for my other system ; 2 losses ; net -380 on the week.

2 small losers ... I wouldn't mind (small losers are always better than big one) if it wasn't for the fact that the 2nd trade was really a highly rated one. This is a good reminder that there is no such thing as a sure winning trade.

Merry Christmas!!!

And to you Dom - thanks for keeping this journal of your trading activities. Although I don't often comment on them I read every one.

I really didn't do anything this week, aside from turning my system on every day ...

... three trades ; 2 small wins / 1 rather large loss ; net -215 on the week. That one loss was (again) a fairly high rated setup. The system made a marginal new equity peak this week though. All in all the last 4 weeks have been just breakeven, even though the system made 3 new (marginal) equity peaks during that period.


I wish all a Happy & Profitable New Year!!!

How did 2011 work out for your systems in general?

Dom that equity curve looks too good to be true so I'd be scared but hope it trades like that in real time....what became of your trading contest...? how did Chuck Huges do ? He wants me to spend almost 4 k on options recomendations