More Thoughts On Directional Bias

Intro: Today I struggled with my bias and missed a great trade on the GU. At the end of the day (literally) I believe that this is because I am getting my directional bias and trade plan in a muddle.

Thoughts: My trade plan in its simplest term is to buy low and sell high.  Low to me is H4/D1 supply and high is H4/D1 demand. Entries are found on the M30 chart, I use HOLP to get long and LOPH to get short, stops are placed at there extreme's and my profit targets are the next level of H4/D1 supply or demand. That's it, this is my strategy.
Recently I have been finding that when price is between H4 supply and demand levels I have no trades so I have added to the Trade Plan that, when price is between H4 levels to trade away from the one that has most recently been touched, this I call directional bias. So if H4 demand was touched last I should be shorting at areas of H4 and M30 supply into H4 demand.  But it must be emphasized here that this is only if there are no "Trade Plan" trades available.

Summary: Where I have been going wrong is that I have been starting each day with a bias on "directional bias" trades rather than "Trade Plan" trades which should always be overriding. Each day must start with me simply IDing Long term S&D and planning trades off them and waiting for price to come to them. Should I be lucky enough to get the opportunity to profit from a move into one of these levels I can take it but they should not overwhelm my time or attention which should be spent on focusing on the former. In other words it's not an issue if I can't figure out the DB because it's secondary. As long as I am objectively identifying trades at long term levels I am doing fine.

Here's a video of me focusing a little too much on Secondary Trades rather than Primary Trades on Thursday morning...We can see the process is labored and uncertain.

BAD 

Here's a video from Friday morning with focus on Primary Trades over Secondary trades... We can see the process is clear and concise.

GOOD

Missed GU Trade

Missed GU Trade:  GU price pulled back to an H4 demand level I should have got long on a HOLP with my stop at its low and PT at H4 Supply.

Issues: This trade was very simple but because I got my H4 demand level in the incorrect place I missed it. The lesson here is that on levels which have been touched multiple time it is better to draw a "best fit" supply/demand area rather than take it from the extreme of a pivot high or low like a did this AM.

No Trades as No Edge

Very long video basically imparting that "if in doubt, wait" for a level you're more confident in to get hit.

And...

an observation regarding price action: Big bars reveal supply/demand imbalance...

R+1.5 Short EJ at Supply

Intro: Had some trouble with my directional bias on all pairs at the start of the day. This was predominantly because the H4 pivot highs and lows were not that clear/strong and because M30 price action was quite congested. Here's a video of my anguish...

Plan: Ultimately decided that the EJ was a better short as it had last touched an area of longterm/H4 supply and so shorting into longterm/H4 demand was the action I wished to take.  I labeled an M30 level of supply and shorted it once it was reached.

Summary: Had issues with profit areas, strictly speaking I should have shorted into H4 demand but ended up taking profit at the bottom of M30 congestion, where there might have been H4 demand but was unclear as the pivot low it would have been based at was imperfect (as mentioned above). Turns out it was demand, perhaps the more telling thing is not how perfect the pivot high or low is but the strength/speed of the move off the hi or low.

EJ Trade:

More Missed Trades: Late Start

Late start that meant I missed two very easy shorts, one on the GU, one on the EJ.

Interestingly the EU was at a level of H4 demand but i preferred a short on it as
1. this tallied with the GU and EJ direction
2. the EU long term trend was down and because of this...
3. demand levels would have less impact
4. finally price was at a M30 level of supply

Here's a vid...

R+3.8 EJ M30 Short (R+2) and EU short (R+1)

Really liked this trade (EJ) but almost didn't get it... I was quite baffled by M30 direction this morning, being bang in the middle of H4 S&D and was in the process of getting some thoughts out (prior post) that were very constipated.

Once I got clear in my mind that I wanted to trade away from the H4 S/D level that had most recently been touched (and into the next level below or above it) I knew how to act... On realizing this I saw a late entry to what Brian might have called "the trade of the day".  Having watched a video of his last night in which he had the right idea but couldn't get filled on limit orders he surmised that what he learnt was that "if you want in,  click in". This all this converged in my mind and I hit sell and got the move so thank you Brian for that video. If you don't know Brian's blog it's worth a look, he's a CL trader....http://www.thetradingquest.com/2015/01/scratch-day.html

EJ Trade: The best entry would have been shorting at the M30 supply level rather than the LOHP, but beggars can't be choosers!

EU Trade: just like EJ trade.

Thoughts on Daily Bias...

Old Thought: To date my thinking on daily bias has been to get with the H4 trend (at H4 supply/demand) whenever possible.  And trade with the M30 trend (at M30 supply/demand) when between H4 levels. The issue with this is that it can cause ambiguity and as Paul says "Ambiguity in a fast moving market is going to kill you" which I thouroughly agree. it can be a fast death or a slow death through a thousand paper cut.

Issue: The ambiguity I'm talking about comes when price action is between H4 supply and demand levels or when the M30 trend is (sorry to use it again) ambiguous.  What is my bias in this case? do I trade up or down? Even when I think of it in terms of the long-term/H4 trend it has still been confusing. For example: H4 trend is down and price is equidistant from H4 supply and demand. Do I trade price down with the H4 trend off an M30 supply level OR up into the stronger H4 supply level for a "better/stronger" short with the long term trend, where there will a greater supply/demand imbalance but where I'm fighting the trend to get there?!

Today's Thought: Today my thinking has evolved to this: Yes, I want to get in with the H4 trend but more importantly, I want to be buying low (at H4 demand) and selling high (at H4 supply). I want to be trading price into H4 S&D and then off it, and into the next when it is reached... with a slight bias to holding shorts if the trend is down and longs if the trend is up.

Translating the above into a plan...
In morning while labeling my levels, whichever H4 level price touched last I should trade away from, as price/Suppdy&Demand is doing so  itself. IE the EJ today was a right conundrum for me, bang in the middle of H4 Supply and Demand. However viewing it as I just mentioned, Price has most recently touched an H4 supply level and fallen from it, thus I reasoned I should be shorting away from it and into H4 demand below using H4 or M30 supply as entries...

Put another way If I am waiting for price to reach a supply I can short at I should be getting long into it. And if I am waiting for price to reach a demand level I can get long at I should be getting short into it.

R-0.5 Missing M5 trades

Just want to get this down while it's fresh.

Issues
1. missed some good EU trades this AM because I got up at 0830 (late)
2. Honestly when I start day I find it difficult to get right down into the M5 action first thing. It moves faster than I can think! I prefer starting on the M30 chart it's slower and clearer to me.
3. Missed an easy EJ short as I gave up on an M30 supply level too soon.  There was a false break, I assumed the level had no potency left so drilled out to the M30 again to look for a fresher/higher level of supply.
4. Looking at 3 pairs EU, EJ and GU on the M5 is too much for my brain and objectivity to handle.

Solutions
1. get up earlier!
2. After prep spend most of day on M30 chart only drilling down to M5 (with M30 and H4) when a level alert is hit.
3. Have more patience around levels especially on breaks of them!
4. Going to cut out the GU M5 chart for the time being (it's super choppy anyway) and just trade it on the M30.

Charts: all details within...
EU Trades 

EJ Trades

Lack of Shorter Term Trades

Intro: I am most certainly taking the correct backroom steps at the moment. By which I mean getting a trade plan together and thinking about a business plan etc. However it has become apparent in the last few days that I am struggling to get in on the M5 chart.

Observation: Trading today I felt that there was still some confusion as to what I was doing throughout the day.  The broad strokes are there, I know I am shorting at supply/buying at demand and trading with a longer-term trend. This is fairly easy to implement on the H4 trend but when the H4 is down the M30 is up I'm often waiting for the simplest thing;  M30 price returning to H4 S/D to enter a trade rather than drilling down to the M5 and trading price from am M30 into that H4 level. A good example of this happened today on the GU when I could've traded M5 price off a M30 level of demand up into an H4 level of supply.

Thoughts: I got to thinking how this could be avoided and thought that a written trade plan specific for the day would help IE.GU: Longterm/H4 trend down =  label H4 supply =  drill down to M30 price and wait for its return to this level to short into H4 demand...... Medium-term/M30 trend up = label M30 demand =  drill down to M5 and wait for price to return to demand and buy into M30/H4 supply.Having said all that reading it back is quite a chore.

Another observation I've had is that I am spending all my time on the M30 charts so it's not surprising I'm not seeing any M5 trades, duh. So I could simply ID the H4 and  M30 trends and label H4 S&D and M30 S&D then drill down to the M5 and trade price action to and from these levels, ideally trading M30 levels with the M30 trend and H4 levels with the H4 trend.

Also I could just stick to the M30 and H4 for the time being, results are better than they were when I was on the M5 and I can just trade the M30 trend and levels on the M30 chart.

Finally I could just stick to what I'm doing, allow myself to get better at it and expect that when I do I will naturally start venturing down into the M5 chart.

Summary: No real answers but some several thoughts to continue thinking on while trading, something will come of all of it. 

R-0.8: EURJPY Shorts

H4 was in downtrend so labeled H4 supply. Price retraced to this level so took a short off it initially on the M30 and then on the H1. Both failed but did manage to keep losses small, -0.2R and -0.6R respectively due to trailing stop on trend bars (nearly a time stop on the H1 chart). 

Trade 1

Trade 2

Summary: Happy with first trade as this was in the plan,  unhappy with second trade as this is not what my plan dictates, I'm not even meant to be trading off the H1 chart! However today did highlight a flaw/hole in my plan = what action to take when a trade fails as in trade 1. Let's be honest trade failure is no rarity so this is quite an oversight, in the past I have SAR'd (stop and reversed) the position but this is a little harder to plan on longer timeframes and keep decent RRR's. 

NB: after 2.5 bars the H1 trade was still at break even,  despite it inherently being wrong I feel a time stop could really have started to have been entertained by that sort of time not the full 3 bars as usual. Something to add to rules. 

The fact is as I am trading off longerterm S&D, so when a trade fails it can be quite confusing as short term price action is floating on it, which looks a mess. It also stands to reason that when I am taking a long term (H4) trend the medium term trend (M30) will be counter to it, as it has had to retrace to a H4 S/D level.  So if i'm going to look  to take the other side of a long term trade (H4trend) I should be looking on the medium term chart (M30 trend) for entry levels. AND so the following rule I am now going to add to my trade plan: should a Long term trade fail (m30 price off H4 S/D) update M30 levels and drill down to M5 to perhaps get in on a SAR (stop and reverse) of the long term trend.

Example SAR

TO DO's

1.time stop can be introduced from around 2.5 - 3 bars of price action.

2. labeling M30 S&D a different colour than H4 is helpful.

3. Add SAR rule: should a Long term trade fail (m30 price off H4 S/D) update M30 levels and drill down to M5 to perhaps get in on a SAR (stop and reverse) of the long term trend.

Missed Trades Due to Incorrect Supply Levels

On the whole I am using pivot highs and lows as my supply and demand levels on H4 and M30 charts however a little rusty (probably because I do not have a trade plan!) and forgot I can also use bull bars in a down move / bear bears in an up move as levels a la Seiden.

In the charts below I had ID'd M30 supply at pivot highs rather than the labeled counter trend bars in the M30 down move labeled...

R+1.4 M5 Long off M30 Trend and Demand

Long-term: Long term (H4) trend is down and I'm looking to short at the next level of H4 supply on an M30 chart.
Short-term: As mentioned noticed price is currently retracing to the next level of H4 supply. The M30 chart is trending up and had pulled back to a level of (M30) demand so I drilled down to the M5 chart for an entry with the M30 trend to take advantage of the long-term trend retracement.

EJ Long

Basic Method Idea: Trade with the higher time frame trend and supply/demand levels but enter on a lower timeframe. IE M30 trend down = label M30 supply levels then drill down to the M5 for shorts at those levels.  IE2 H4 trend up = label H4 demand levels then drill down to the M30 for longs at those levels.

Obs: Big money is at S&D

Okay spent all day watching price espeically interesting after SNB. Wanted a pullback or rally to 20EMA on a M5 chart to get long or short anything.  One finally came on the EJ late in the day  would have made 2:1... BUT the realy money was in trading the longer timeframes between S&R.
EJ

 GU

R+0.6 Just Shorting The Trend

Kind lost the love at moment but was just watching a pretty simple and rare orderly downtrend on the EU, so took setups off the 20EMA. Couldn't be bothered to work out the risk for each trade so just kept betting 50p a point (I'm spread betting), profit should of been higher.  Reintroduced a trailing stop, tracking the highs of each bear trend bar, which I liked as it got me risk free quickly...

An Observation Regarding S/R levels

If an S/R level is broken it is probably best to level it as in "A".

While if it stays intact it is more likely to work "B" and "C".

R-1.2: Bought at Supply, then Discretionary Exit created Over Trading!

Started okay then went to shit...

• Don't buy at supply / sell at demand ever!
• Don't discretionary exit,  let trade plan play out!

EU Trades:

8 - 12th December 2014: R-0.5

Monday: R+0.1: In and Out Day (physically). Some problems at rented property which actually took all week to sort out. One good observation: Check M30 chart for any obvious setup before entering on the M5. Don't want to be buying at supply / selling at demand.
Tuesday R-0.5: Missed Getting in after BO of R. Nothing much of note, a good read with the exception of missing a good with trend trade that had broken out of R.  The reason I found this confusing was that I would have got in on the breakout of R on a PB however in this case the PB was very subtle, more of a sideways consolidation which I took as another test of R rather than a consolidation above it. C'est la vie but something Bob Volman has mentioned in the past and I need to be aware of "Pre-Breakout Tension". It's basically an ascending triangle around R and a descending triangle around S and a good sign that that level is going to break.
Wednesday: OFF. Doctor in morning, antibiotics.

Thursday:R-0.0: Observation No Trades. Just a a little note that occasionally I can take trades off S/R and something other than the 20EMA, ie Y HI/LO or .00 / .50.
Friday: OFF

Notes: One of those weeks where life got in the way. Problems outside of trading happened, namely rented flat and health.  Got a little cautious at the end of the week but I'm not going to take this to heart. I have been under the weather and have had quite a bit of pressure from the flat weighing in and effecting my judgement and am certain it was just these two factors throwing me off.

Summary:  similar to last weeks...Just adding in  the things I took from this week.

• Trade with Price to 20EMA, 
• Price blw 20ema = Short,  price abv 20ema = Long.  
• Wait for PBs/RLs to 20EMA which coincided with S/R (can break 20, mustn't break S/R)
• Occasionally I can take trades off S/R and something other than the 20EMA, ie Y HI/LO or .00 / .50.
• Used HSL/LSH as entry,  SL low/high trigger,  PT next S/R level (this needs to be stretched in all likihood). Also need to start trail the stop:  track higher lows if long and lower highs if short. 
• Check M30 chart for any obvious setup before entering on the M5. Don't want to be buying at long term supply / selling at long term demand.
• Avoid...Shorts triggering at S level/Longs triggering at R levels unless there is good  "Pre-Breakout Tension"(ascending triangle around R/descending triangle around S)
  
• Avoid SSs(or HMs) that O/C are outside prior bars range
• condense PA in AM if MT4 has over expanded it
• Must listen to PA not Emotion

Don't trade these days...

• BOE IR /policy and ECB IR/policy: fall on first Thursday of month = off
• US NFPS: fall first Friday of month = off
• FED IR / policy: 3rd Wednesday of month = off
• BOJ IR/policy: happen over night GMT = not an issue

R+0.1: In and Out Day (physically)

Very long weekend meant I slept in a little this AM and missed a couple of trades.  Missed another later due to having to go out.  However the 3 I did take I'm happy with.

• Got the size a little low on my first trade meaning not the best PL return.
• 2nd trade long I was dubious of, as I had just seen a short setup on M30. This is something I should add to checklist.
• 3rd trade a SAR of "2"  was absolutely correct. I'm still a little bemused by selling at demand, however I guess it had broken down.

EU Trades: 

M30 trade

November 2014 Summary: A Lot of Trading To Iron Out Method: R-11

Week 1: 3rd - 7th November 2014: R-3.9 (success went to head). Summary: Basic, basic, basic, stuff lacking! Trend! TSL! Realistic PTs! Last week's success went to head, was focusing on LT goals in session rather than what needed to be done, as can be seen above (more here). Even the journal suffered ( was misidentifying faults). May sound down on myself  but I'm not, I just really needed to hammer home to myself here that I can't let the in session focus slip even for a minute... Not going to dwell but will remind myself occasionally this WE of what needs to be done then focus on relaxing and being fresh for Monday.

Week 2: 10-14th November 2014: R-1.1 (Some Confusion, Some Anticipation and Trading Overtired). Summary: The Plan is profitable, I just failed to follow it! I've got to stop trading Friday morning's as I am over tired and struggle to follow the plan. Maybe when I am successfully following the plan for the entire week I can work it back in. Getting an extra reason to get long or short helps trade IE Support/Resistance + (20ema / .00 / .50 / Y Hi / Y Lo)
Week 3: 17th-21st November 2014 : R-1.1 (Not Following the Plan Or Gaining Experience) Summary: The fact is I have been avoiding loads of trades and I need to trade more, to enable me to learn and earn more....
Week 4: 24-28th November 2014: R-3.9 (Messing with Method). Summary: Teething problems (messing with method!) at start of week, settled down on Thursday; Took John's comment on board dropping my work load. waited till actually wanted to trade (US session). Used 20EMA as barometer plus S&R to take trades (meant more of a waiting than "working" game), preprogrammed orders for all trades, walked away for a good deal of the time (updated stop levels occasionally), felt good.

UPDATE:  With a little Hindsight I think its important to add that this was really the month where I started to understand 2 things. 
 Firstly the importance of buying at demand (low) and selling at supply (low). And secondly that my method doesn't have to be complicated.  at the start of the month I was naffing around on three pairs labeling every high and low,  updating S& levels all the time... just running around like a headless chicken.
 Later in the month I knocked my work down to one pair (EURUSD) I stopped trading Friday mornings! More or less stopped updating highs and lows (unless it helped in someway) and based my method around waiting, doing very little before a setup, so I was fresh for it (using 20EMA as a barometer with S&R) instead of being absolutely spent and overwhelmed by the time it came.

1st-5th December 2014 : R-4.8

Monday:R-2.3: Neglected to Label Highs, Lows and S&R.  Resulted in shorting at demand. Really inbetween methods and doing neither of them correctly.  also trading EJ!

Tuesday: R-2.5: Mess on the EJ, Much Better on EU, Decided On Method.  More in post, in short; trading with price to 20EMA on pullbacks to demand and 20EMA, or rallies to supply and 20EMA. Losses came from EJ trading with no method.

Wednesday:R+0.9: Short off R+20EMA. An example of correctly trading tuesday's method.

Thursday: R-0.8: Selling at Demand and Failing to SAR. An example of trading tuesday's method incorrectly and incompletely,  I've got to SAR on failure to get back to BE.

Friday: OFF

Notes:  Started with no real method and because I insisted on continuing like this I did a number on my P/L over monday and Tueday I couldn't recover from. (Well I could have had I been a bit more confident on Tues PM,  not messed Thurs up.

Summary: 

• Trade with Price to 20EMA, 
• Price blw 20ema = short,  price abv 20ema = Long.  
• Wait for PBs/RLs to 20EMA which coincided with S/R (can break 20, mustn't break S/R)
• Used HSL/LSH as entry,  SL low/high trigger,  PT next S/R level (this needs to be stretched in all likihood). Also need to start trail the stop:  track higher lows if long and lower highs if short. 
• Avoid...Shorts triggering at S level (and Longs triggering at R levels)
  Avoid SSs(or HMs) that O/C are outside prior bars range
• condense PA in AM if MT4 has over expanded it
• Must listen to PA not Emotion

Don't trade these days...

• BOE IR /policy and ECB IR/policy: fall on first Thursday of month = off
• US NFPS: fall first Friday of month = off
• FED IR / policy: 3rd Wednesday of month = off
• BOJ IR/policy: happen over night GMT = not an issue