I just had one of the best weeks of trading I believe since I started trading over 4 years ago. It started last Wednesday and carried into everyday this week. I had not one losing trade since Wednesday of last week. I could not even find a trade on Thursday 3-14-2013 so no trade was taken. Things that I have changed are now I take a walk every day and I attempt to leave just as lunch starts at 8:15 am (PST) reversal time. I did hang around for an extra 30 minutes on Friday looking for a lunch time trade but nothing was setting up correctly. Leaving on my walks have really helped me structure my day, I will usually eat breakfast during this time and I’ll come back to my trade desk to start to look at plays around 10:30 am. I’ve also noticed that I have not missed out on one play by leaving for my walk, so basically this has kept me out of trouble. Early lunch time trading is extremely difficult vs. entering closer to the 10:30 am-11:15 am time period, the later the better usually.
I also raised my risk unit back to normal, I’ve taken less trades, but better quality trades. I’ve focused on adding and reducing and becoming rigid in my rules but more flexible in my expectations. On my early trades I now allow myself to move my stop to a break even as price has moved in my favor by .10 cents. These are trades taken from 9:30 am -10:00 am usually they are gap plays and or 5 minute momentum plays which price action can be wide and wild and these plays usually won’t back up if they take off in the right direction. With my 4 years of experience I’m an excellent candle stick reader and I’ve found there is no reason to hang out and take a stop when my eyes are telling me to exit the trade, so now I’ll sell 1/2 of my shares and bring the trade to a break even stop. Trades taken off the 5 or 15 minute charts after 10 am I’ll usually stay with the trade allowing for a greater movement in price action especially after 10:30 am where I take nothing but 15 minute setups. I’ve notice that the 15 minute time frame usually takes more time to develop and many times these plays won’t take off until after 2:15 pm or even near the close of the day.
The last but I feel the most important thing that I’ve done to improve and master my trading is to focus on the 60 minute chart. I believe when I’m having a slump it’s due to me not focusing on the 60 minute chart. I may have a beautiful 15 minute chart setting up but I now ask my self, would I take the trade based on the 60 minute chart? This has kept me out of losing trades all week long. For example if there are 5 green bars on the 60 minute chart and we now have the first red bar which is a COG and the 15 minute chart is setting up for a buy, I know now that It’s going to fail. I know that the 60 minute chart is done going up and has a COG, odds are that the next 60 minute bar is going to be red as well, which is going to cause any 15 minute buy to fail. Focus on you 60 minute time frame, I believe it’s the most important time frame for successful day trading.
PS As an added note I’ve been struggling to figure out when to hold the trade into the close or not… I’ve found that generally, morning trades are best ended before lunch and that 15 minute plays or afternoon plays are best held to the EOD if possible. Again be flexible with your expectations and ridged in your rules!