Not Trading Is Also Trading (Review Session)

I know my posts have probably gotten less frequent, but I still intend to keep the content rolling in. As we're at the end of another week, I figure I would highlight some wins to contrast my last post.


Near the end of last month, TopstepTrader ran a lifetime 25% discount promotion on their Combines. I thought for quite a while and decided to take them up on this offer. After all, I do need to redeem myself after spectacular failure closer to the end of last year.

Once I purchased the promo package, I didn't start a Combine right away. Instead, I blazed through quite a few YouTube videos focusing on understanding price action in the E-mini S&P 500. Specifically, I wanted to focus on tick charts in order to filter out "noise" that's observable with time-based charts.

Naturally, it's not much use to study the tools at my arsenal without actually testing them out. I recently started the $50K Combine. Since I couldn't monitor the New York open every single day, I would focus on the evening session. Not actively trading this session, but rather to take a quick scalp to meet the requirement of trading for a minimum of five days. On the remaining days when I am available to watch the open, this is where I plan to make the bulk of my money.

So far, I have good news. Unlike my previous attempts, I remained patient and waited for the right moment to capture the move. I have reached my $3K profit target in Stage 1, but I still have one more trading day to go before I can move onto Stage 2. I anticipate completing this on the following market open.

With this rundown of what's new, let's take a look at a momentum trade that I took. I'm quite fond of this trade not entirely because of the payout, but also being patient enough to optimize my entry and exit. As with my trading plan, I plot key levels on the hourly chart. If the session appears to be more range bound, I'll hop down to the 15-minute time frame to get a bit more data to work with.

In this particular trade, I plotted a key hourly level and then switched to the 4,000 ticks chart to optimize my entry.



Over on the hourly time frame, I have a key level plotted at 3180.25. You'll see that it formed on June 5th and held supported on June 11th (thumbs up icon). What I noticed was the price action shortly after price bounced on this level.

The textbook definition of a doji is indecision. However, you can further digest this price action with the help of tick charts. You'll see that price attempted to push higher before making a lower high. Here's the 4,000 ticks chart below.


Instead of impulsively trading the break, I waited for price to pull back before shorting. This trade has reassured me and also provided a few takeaways.
  1. Since I am not a scalper, I need to filter out the noise. I'm not looking to capture every single price fluctuation, but rather trade the big directional movement. In this case, I timed it just right to capture this wave on a huge supply and demand imbalance.
  2. Patience. Instead of having the fear of missing out, I simply waited for this setup to play out. In my mind, I either got the opportunity to enter on the pullback or wait for the next setup.
  3. Having a plan. This is something that I've been experiencing with. Specifically, I would eye a key level and see how price would play off of it. It's almost as if I'm playing poker where I would plan a series of actions depending on what the scenario is.
I will most likely pass Stage 1 since I have one day to go and I already hit my profit target. Stage 2 will most likely be harder, but I should be able to pass it if I stay disciplined.

Over on my FX account, I experienced a similar win. After experiencing quite a losing streak for the past two weeks (previous post), I ended up finally securing a winner. Same thought process as with my futures trading over at TopstepTrader, I'm quite fond of the fact that I'm beginning to eye the key levels and trade according to my plan.


Before we go any further, here are the details for this trade I took over on my FX account.

Trade Details:

  • Sell AUDJPY @ 64.646
  • Stop Loss @ 74.95 (1% Risk)
  • Take Profit @ 73.4

Trade Analysis:

  • This begins on the daily timeframe where price tested the daily highs at 76.22. After it reversed, I considered the 74.475 another key daily level. However, my entry was based on the 4-hour time frame.

  • Over on the 4-hour time frame, the key level that I watched here was the 74.76. Price bounced up on this level and quickly failed to hold it. As soon as I saw this, I entered short.

  • The lower daily level at 74.475 was still in play, which I used to manage my outstanding trade. My plan was to keep this trade open as long as price held resisted below this level.

  • Regarding my profit target, I set my take profit just a bit above what I considered as a historic demand zone. I considered this optimal as it had a higher probability of hitting as opposed any lower targets.

Trade Review:

  • I considered my entry to be optimal in the sense that I analyzed the broader market structure and entered a shorter term trade accordingly. Using the key daily and 4-hour levels, I identified a bearish structure. This was especially confirmed true when I planned my entry if price took out the 74.76 level.

  • What I did extremely well was keeping this trade open. As soon as I saw the profit, I wanted to prematurely get out multiple times. I thought I did a very good job in keeping a cool head and staying logical about this whole situation. Thinking back to something that Tom Dante had said - you're here to trade the markets. Exiting the trade due to a fear of loss is a stupid reason. There needs to be a structural reason to exit. Despite very short term pull backs, I did not see a structural reason to get out as there wasn't a strong inflow in demand.
Attached below are my daily and 4-hour charts. You'll be able to see the levels I plotted, which I outlined in my trade analysis section.

Daily:


4-Hour: