Gold price vs Google Search Query

Here's a snapshot I took comparing a chart of the price of gold vs Googles chart of Search Queries for "gold price". See any correlation?

Update on Blog

Hi everyone,
Its been 6 months since my last update on this blog. I transitioned from trading solo to working for a Hedge Fund earlier this year. I work with a group of great Traders and I'm continuing to learn more about the markets each day. I don't check this blog very often, but I thought I would give the few followers I have an update.
HPT

Delta Divergence Short Setup on Crude Oil

I noticed this nice short setup on CL today. Cumulative Delta was lower while price was higher(also it was a morning High of Day).

May 9/10 +1,231 on 44 contracts

The Profit to commission ratio was much better today, only 15% of gross. I traded late last night and all day today. I missed the morning run up because I woke up late from trading late last night, but caught the Europe reversal on CL. TF/YM were a chop fest when I traded it this morning. I am trying out DELTA Foot print charts now. Today they helped me a lot and I used them in conjunction with my custom indicators. You can see when Longs or shorts are offside. I sold the morning delta high for a decent scalp and I bought the delta low on CL mid-day but I didn't hold it long enough.

I tried doing a spread trade on COIL/WTI last night that backfired on me.
Last week we saw the spread hit a monthly low around -10.70 and today we hit a weekly high of -14.50.
What's interesting about this spread is that it acts just like any other trading product. It shows breakouts and trends. Once -12.70 broke yesterday, the trade was to go long the spread. I failed to notice the breakout and was looking to trade the spread on a larger time frame and shorted the spread, looking for a reversion to -13 when it was at -13.50 last night, but I was wrong on how far the trade would move against me and I entered at the wrong time, and I took a loss and moved on to discretionary trading. From this trade I noticed something I had been seeing for the last couple weeks that should help me further in my trading.



Basically I am looking for key inflection points in the spread at certain times of the day. Obviously with Europe close we see a closing out of positions by European COIL traders and it only seems logical for inflection points in the spread to occur around then, and as we saw today, that was the case. What we saw  happen today in COIL and WTI/CL, was short covering by COIL traders going into Europe close which made the spread widen to a peak (-14.50). Then later going into US Crude Oil Pit close we saw short covering by CL traders causing the spread to narrow(-13.70). We saw the spread revert about 80 cents from trough to peak after Europe close. Taking the knowledge from today's spread trade, we knew that Europe Coil traders were short covering going into Europe close. This was a good hint to CL traders for the rest of the day that there would be a high probability for long trades to work and that there was a good chance there were shorts that needed to cover in CL just like COIL. If you look at the spread trade closely today you will see that the key inflection points in the spread trade for the day were at Europe close and Crude Oil Pit close.

Delta Footprint Charts

The key move occurred at 8:46am (11:46am EST).

Cumulative Delta goes negative @ 8:46, then price reverses and goes higher past negative Delta price level. MELT UP!

The Cum. Delta started dropping at 842.5 at a key reversal time period 11:45am (2:45pm EST)

May 6 $1,034 on 117 contracts

I woke up at 4:30am and prepared for the trading day. I planned on looking to short after the Non Farm # came out. My signals came a little soon, and I got stopped out a couple times. The goal was to look for a short on ES around 1351 or 740 on TF. The short setup wasn't clear on CL, and I ended up losing a lot in the morning entering short too soon on CL. At one point in the morning today I was short 102 on CL and short TF at 841, but I ended up covering these positions too soon to get back to break even on the day and I ended up limiting my profits for the day by not being patient with the bigger picture. It felt like time slowed down today for me. It was 10am, and I had been trading 6 hours in front of the computer and I thought it was near market close. I am so tired right now, I will post charts later and maybe some analysis. I really churned the account today and made my broker a ton from all the commissions I generated (over 500 dollars in commission). When your Net P/L is 50% of your Gross P/L, that means you are churning BIG TIME.

I am starting to think the scalp signals I am trading off of need to be clean up a bit and I need to incorporate Market Profile into a all of my trades. I would have been much better off today If I had waited for 1351 on ES and just held. Technically I did short TF at 841, but I covered around 38-39 because I was working to get back to positive on the day from sustaining losses on a bad CL short in the am. I am going to review my charts this weekend. I used stops today, and got stopped out many times, so there was some improvement. My performance would improve if I waited for volatility peaks and  faded those moves instead of entering too soon based off of a scalp signal that is crap. So, overall I need to incorporate market profile, the bigger picture time frame of 15min charts, some intermarket correlations, and scalp signals that line up better with market profile.I know I was suppose to trade on the simulator today, but I really felt the volatility was too good to pass up today and I had to work on my discipline on the real account. I need to improve on exiting losers sooner still. Also, my leverage still needs to be reduced when trading CL. I really don't like trading QM because CL is much easier to scalp, but QM is a smart choice for my given account size and discipline. It appears the market is starting to increase its daily range and volatility is coming back which is great for traders. I should make a post this weekend on improvements I will be making to my trading.

T.U. day 6 +6,611

I have been swing trading the last couple months. I initially started the trading Ultimatum with the intentions of trading everyday, however, I have been working 40hrs a week at my primary job and I got frustrated from seeing the market melt up everyday while I had a bearish bias. I went short TF a day after the SP500 got down graded only to see the market gap up 100+ points the next day. I was screwed. Down 12pts on TF at the open the next day. I had let 600 dollars of potential profit the previous day go to -1200 dollars from not having a stop. At that point I decided to turn the trade into a swing and scale into the trade. I waited and watched the market melt higher to new record highs on TF for the next 10 DAYS. I added around 850 and lost some money along the way. When the news came out on Sunday that Osama Bin Laden had been killed, the market was again at new record highs and the Dow futures were up 100pts on a Sunday night. Why would the death of OBL make stocks more valuable? I didn't believe that at all, it seemed people were euphoric and just buying because it was great news.
My account and brain were mentally hurting bad. I held through the pain with an average short position on TF at 853 while TF was at 872 Sunday night. This week, the market corrected, and I covered my short on TF today for 17pts on 3 contracts. My Ultimate goal for this trade was to see 780 on TF, but I think the market may bounce in the meantime and I will be looking to short above 834 if I can.

After covering my swing trade this morning, I went to scalping and all was good until the last hour of trading, at which point I covered my Crude Oil short at break even, and then saw it drop 20 cents, and I reversed my position on TF short at 834 to a long and lost 500 off the top into the close. Right now I am pretty pissed off at myself for trading the afternoon so badly. So I will be going over my trades and looking at my position sizing. As a trader I need to stick to one style of trading. Either scalp for a few ticks with a stop, or swing trade and scale in. Swing trading is a lot easier on a bigger account, but my account is small. Scalping requires discipline which I currently still lack (A lot of swearing at the computer screen instead of cutting losers quickly).
I think I need to trade something with less leverage so that taking a loss is not a big deal and I will improve my consistency right now. Crude Oil and TF are great products to scalp, but at this current point in time my discipline sucks.
I have 4 options-
1.Trade a reduced leverage contract like NQ, YM, or QM.
2.Scalp TF & CL and stick to stops.

3.Trade on Simulator and work on signals

With the way I have been feeling and trading, I think option 4 is the smart choice.

T.U. Net  +1,287 ( Yes, I am positive since I started the Ultimatum)

Pictures of my account near MAX PAIN- April 28th 2011

Today May 4, 2011 (the last day I logged in was May 1st, that's pretty good discipline to not look at your account for 3 days and hold for your intended target)

Trades taken in the morning , May 4, 2011

My goal was to make 1K at the end of 20 trading days. Technically I've only traded 6 days since I switched to swing trading after 3 days of trading myUltimatum. In my view, I wasn't ready to partake on the trading Ultimatum back in March , because I still had a negative mindset. I still have a crappy mindset today with regards to my trading. I need to go back to square one and focus on trading a method that works for me consistently. I need to build confidence in my signals and method and then I will be ready. Tomorrow, I will be on the Simulator. Current goal- get consistently profitable again on the simulator. I really want to short still, I'm really bearish on this whole market, just waiting for DX to break 73.50 to the upside and for stocks to fall.
"I will feel a sense of loss from not participating in the market if we do drop and I am not short." It is this mental shortfall that has caused me to suffer as a trader the last 6 months. Regardless of where the market goes today or next week, in order to get back on track to trading consistently, I need to forget where the market has been or where it should be and just focus on the signal and scalp trade that is in front of me and accept the stop loss when it comes.
This Blog is an Ego Motivational tool. Knowing that people read it helps motivate me to improve my trading.
Thanks for reading, Comments are turned back on, yeah ego!

Irrational Markets

It seems that no matter how bad an economic number is or how high stocks go, they will continue higher. Almost every economic number that has come out in the last 10 months has had almost no effect in creating fear or volatility in the stock market. As I type, the Russell 2000 is at an all time high, US dollar is at a 3 year low, and the Volatility Index is near record lows as well. We are in a exteremly low volume trading environment where every dip is bought and shear momentum continues to drive stocks higher on very light volume. The FED continues with there stimulus until June and Commodities continue there climb to record highs while the US dollar plunges. Is it smart to be buying when everything is at a record high? 2 years ago people were selling. Has the economy recovered so much that stocks are back at record highs? Or is the economic recovery irrelevant to the stock market?
The Trend will continue until it doesn't. By the looks of it, IWM should blast higher now that there is clearly ZERO resistance above and the FED is backing the market with stimulus for another 2 months. As we blast higher, volatility should expand as new retail traders enter long and volume increases.

T.U. day 5 +217

After having TF go against me almost 50pts and then waiting for it to comeback, I covered my SWING short on TF near break even today and made some change on a CL short to end the day positive. My original plan with the TF SWING short when I took it was to add once it went against me 30pts (I was only short 1 car). But TF went almost 50 pts against me as the market blasted higher after the Japan earthquake. I never added to the TF short and just waited to see how far it would come back to my breakeven point. I decided to add 1 car today near the morning HOD on a short signal and covered the whole TF short for a 2.5pt loss. I did some after noon scalping on TF and CL as well.

This last week, starting on Sunday I could sense a lot of nervousness, maybe hysteria in the metals and oil market, seeing the news from PIMCO's Bill Gross on Saturday and an unusual amount of comments on zerohedge on a sunday night with oil, gold, silver, and corn near or at record highs. It was a gap up and fade on monday, and we just hit a low point today(Thursday) in stocks and a low point in the aforementioned commodities yesterday. I continue to see relentless strength in almost all currencies pairs against the US dollar and a never ending melt up in commodities. When will it end? Perhaps the end of QE2(June), or whenever the FED accepts the reality that inflation has got out of control and they have no choice but to raise rates to help save the dollar and slow the parabolic rise of commodities.

There is a nice chart and article out from Russ Winters showing "The Fed’s aggressive Treasury monetization has been the causa proxima (90-percent correlation) to the pedal-to-the-metal Minsky Meltup in commodities."(From www.WallstreetExaminer.com)

I have a lot of thoughts in my head of how I should have been trading the last 6 years, the mistakes I made and still make, and the choices I have going forward. The markets will always be here to trade. In the last 9 months of trading, using market profile trading setups would have been very profitable (ie buying value area low each day with the current trend going up).

T.U. Net -1,485
I should not set any time restrictions or put any added pressure on myself to make money, because that extra stress can lead me to make bad decisions by increasing leverage when I shouldn't.

Outside of trading, I am having a lot of fun. I've been working on and customizing my truck, driving my motorcycle, going to the gym, running on trails near the river, watching movies, cooking, and making plans for more outdoor adventures. My next plan is to learn Kayaking and to make a trip to Yosemite or Highway 1(Big Sur) on my motorcycle. If anyone would like to reach me, my email- highprobabilitytrading(AT)gmail.com

T.U. day 4 -1,750

Was up 400 in the first hour. Then Complete disaster. I Shorted TF mid-day and it proceeded to melt up in usual fashion. I add to it over my limit as well and moved stops. Also, lost 500 on CL. I'm holding a TF swing short going into tomorrow. Today seemed like a short covering melt up and I would like to believe I have a 50/50 chance of my short working based on the daily chart pattern.



T.U. Net PL- VERY BAD - to be determined once swing short is covered

16 days to go, or less (depending if I lose it all before then)

I'm disabling comments. I'm sure the haters are just waiting to take a stab at me and tell me how much I suck. No need to tell me how much I suck, I already know. The only thing I'm good at is sucking, so Thanks.

T.U. day 3 +513

I traded the first 2 hours today. The day started out rough after being stopped out 3 times on TF short signals. Luckily my CL signals were rocking as usual and they coincided with my analysis to buy below 103. Unfortunately I left a lot on the table as my upside target on CL was 103.35 and I exited my long scalps too soon. I missed a lot of great buy signals on CL and missed a lot of the move, but I still got the direction right and had solid scalps and stuck to my stops, despite my TF frustrations. I really think I need to be focusing more on CL because the range and volatility always provides great scalping opportunities and my signals kick ass on it. My trades on TF were sub-par because I was adding 1 contract to my base position at the lower bollinger areas and saw reversion a lot of the time and I am unable to move my stops due to my software enforcing NO stop movement, and as a result of having a 12 tick stop, I got hit a few times. This raises the question again. When is a good time to add to a position? Well, CL was a great example of a trade I should have added to because it was clearly trending and had a large weekly trading range. TF on the other hand did not have the market internals to support my strategy for adding near lows and looking for breakouts. This strategy, always has been a flaw I keep messing up on. I need to remind myself, adding on breakouts typically only work on CL. I get washed out a lot of the time on TF when I try adding after the position has moved 8 ticks in my favor and I think I have a runner. A lot of the time the trade comes back to breakeven, and that is why I need to pay more attention to internals when looking to add to positions on TF. I should have kept my 1 contract size or shorted 2 cars at the time of the signal. If you look at my trade log, you will see I had the direction of the day correct from the open, but I got stopped out multiple times on TF, and my first buy on CL got stopped out. I didn't give up, and I kept taking my signals and I turned a  profit. Yesterday, I ignored CL sell signals when I was long and I lost because of it. Discipline improved today.

T.U. Net P/L to date $+424
17 days to go

T. U. day 2 -300

I started off with a short, looking for a gap fill. I got stopped out numerous times. My stop on CL was too tight on my first scalp and it cost me the day. I then watched every signal after the first failed signal work. Sucks. Not on my A game today. Need to treat every signal the same. I Moved my stop on CL and added to a loser. Still trading badly. 18 days to go.

NET PL for Ultimatum is $-100

T.U. Day 1 +210

I missed the morning and traded the afternoon. I waited for buy setups because we were at the lower end of the range for the day and I saw more potential for upside after Crude Oil pit closed. It turns out ES was a better long over TF, but I still had solid scalps on the longs I took and hit my PL. I should have taken the short signals, as they would have given me better runners. At least I am over the curse of only taking short signals.

I will not be trading Friday or any Fridays during the Trading Ultimatum going forward. The majority of my losses have occurred on Friday in the past and I will avoid Friday for the simple reason that history has a way of repeating itself.
I know $200 is nothing, but its my starting P/L target. I will be focusing on Crude Oil and TF next week.

19 More Trading days to Go.

Here is a Video highlight from my chat room on a scalp I took.I will be Broadcasting all my trades live during the Trading Ultimatum. I exited this scalp 1 min too soon.


Watch live video from High Probability Trading on Justin.tv

The time on the chart and trade executions are an hour off. Each Scalp is held for about 1-3 minutes and hit with a trailing stop except for 1 that I lowered the profit target on and exited.

Trading Ultimatum

It hasn't been long since "I quit"... a week...
The market can make you go crazy. I either have the worst luck in the world or I'm really stupid. (I would like to think I'm just not very lucky).
I was short TF last all last week for a swing trade, large size for the account, and I covered my short near the highs on Thursday, via the max pain method, ie "I've given up shorting this market because it melts up everyday on NO VOLUME and there is no telling when it will ever stop". Call me the ULTIMATE FADE INDICATOR,,, where is Neemo when you need him? (j/k)
Needless to say we gap down largely the next week and proceed to sell off on Libya news. I shake my head in disbelief as I had pretty much covered my short at the TOP on TF, and I would have made 20+k if I held my short over the weekend into this week, instead I lost 7k on the account. Regardless, the market could have rocketed higher and I could have taken a bigger loss because I wasn't trading signals or a plan. I let a BAD SCALP TRADE turn into a swing and I had let LOGICAL REASONING and BIAS affect my trading and I held the short. I over leveraged myself and I let the loss snowball until I hit my max pain. History repeating itself.
All the guys in the trading room know my problem; inability to accept a loss or a losing day. I really thrive on being green everyday I trade. My method to trade will deviate from the norm in order to get back to green if I turn Red on the day, ie use increased leverage or fade an obvious trend.

"HPT would be a great trader if he just stuck to using his signals and stops." This is what is commonly heard from traders in the room. As is the case for many traders. We MOVE OUR STOPS. We cheat ourselves. We go against the plan. We accept unknown risk for the potential to make it back to BREAKEVEN.

The Sunk Cost fallacy, there is no escaping it.You pay for a movie and sit down to watch it and after 5min, you realize its going to be a waste of your time, but you already paid for the movie. SO what do you do? Do you sit threw the movie or do you get up and leave to spend your time doing something you enjoy more? Most people would say they would just leave. But what if the price of the movie ticket was $100 dollars or $1000 dollars, then the scenario changes dramatically, and that is exactly the challenge that traders face on a daily basis when they enter the market and don't have a defined stop loss.
If you don't have a defined stop loss you might waste 2 hours of your life watching the worst movie of your life or in a traders situation, lose thousands of dollars as I have done numerous times from moving stops.
If I were able to take away 3-4 of my worst days from trading each year, my P/L curve would look dramatically different, and I'm sure that's the case for many traders as well. What did I do wrong on these days (ie trading against the trend on FRIDAY?).What is it that makes me want to short everyday when the market is clearly trending up?(It is not logical for the market to go up everyday) Why do I average down on losers? (To get back to breakeven) Why do I trade a range bound market and one that is very difficult when I could be trading something that is more volatile and easier to scalp?(I don't know? Why aren't you trading CL more?)
I hate having to announce that I'm not very profitable trading after 6 years of trading. You would think a guy with a trading website would be making the big dollars and know what he's doing. But I am human and still make mistakes. Lame excuse I know. History repeats itself and I'm no exception. Enough with the gloom and doom talk, and on to HPT 2.0,, the new improved trader the has a new outlook and plan and will likely fail again, but is promising he will do everything he can to avoid blow up days.

The Trading Plan-
Trade my Signals-
Max size 2 cars- (but when do u choose 1 or 2 cars? Good question,If I were trading stock index futures the answer would be when internals are heavily weighted one way- ie 1500+ advancing or -1500 declining stocks)
Trading Contract- NQ, QM, (possibly go back to TF and CL/COIL)
Stop loss- 8 ticks for now- will vary on market volatility
Time stop- 2 minutes ,cut it if its not Breakeven or green after 2 minutes, you may miss some trades, but it will save you in the long run from seeing a trade wiggle and hit your stop.
Risk Managers- YES- I've got friends that will call and tell me to Stop trading if I am not trading well.
(If anyone is in need of a risk manager, or wants a trading buddy because they have problems taking stops, please email me and maybe I can help-
highprobabilitytrading AT Gmail.com

Max stop loss per day- $500
Starting Profit Goal per day- $200
Profit goal per week- $1000

HPT biggest problem- Adding to losers-
Answer to problem- Bracketed stops that can't be moved NO MATTER WHAT- via 3rd party software.
I would like to get back in to doing a daily blog of my results and dedicate more time to this blog and my trading.
One bad day is not the end of the world for a trader, but it definitely starts to wear you down when you do it several times a year and you don't fix yourself when you clearly know what the problem is and how to fix it. My goal is to fix myself and accept every stop as a scalper. Time will tell whether I will fail again and go insane or finally fix myself and stick to a system that works and make good money. I hate making this post public, but I think it will be helpful to me and my goal of sticking to the plan. I know people will read this and see history repeating itself. That's fine. You are all probably right. I have nothing to prove to anyone,I only have to keep my promise with myself which is the most important and the hardest. Trading may be the biggest waste of my life, but I've never stuck to my stops, so I've been sabotaging myself all these years. If I can keep my discipline this time and get some help from 3rd party apps and Friends/Risk managers, I might be able to succeed. Time will tell. It only seems fair and logical to make an Ultimatum so I don't keep making posts like this and keep coming back after quitting.

The ULTIMATUM-
I will give myself 1 MONTH (4 weeks of trading) to trade in order to determine if I can trade and stick the stops. If I'm not profitable at least $1000 at the end of the month, I will quit trading Forever. I will share my results on the blog when I start trading again, likely in the beginning of March.

HPT

Best futures Broker Based on Commissions, Data Feed, and Trading Platform

I've reviewed some of the most popular Futures Brokers available to retail traders and rated them based on Commission. Finding the best broker based on commission should be one of the top factors you have when selecting your broker, because you can save you thousands of dollars per year by choosing the right one. I've put together a table comparing each broker based on their "advertised" commissions. Some brokers are negotiable in their commission rates, so be sure to call the broker your interested in before making the final decision. Remember, Commissions alone should not be your sole determining factor in choosing your broker, you should also consider data feed speed and reliability as well as the trading platform offered in which you will be placing your trades on.

Video on How to Read the Time and Sales

A live trade setup from the chat room today showing what the time and sales should look like on a breakout trade for the Dow emini futures (YM).

Rithmic Data Feed (Optimus Futures) vs InteractiveBrokers

In this video I go over the Rithmic data feed and how it is one of the fastest data feeds available for futures traders. I compare Rithmic vs Interactive Brokers data feed and detail the strength and weaknesses of both.

Automated Trade System From NinjaTrader to Bracket Trader to Interactive Brokers

This is a Video I made showing automated trades being sent from NinjaTrader to Bracket Trader to Interactive Brokers