Range Bound's a Killer

QG/ER2

Background:

Today was really a pretty boring day over all. Both the Russell and Nat Gas stayed range bound. The frustrating thing was the Russell's range was pretty big so each move looked like a good trend beginning. I'd follow it and inevitably get stopped out. No real news to report on any front background wise.

Trades:

I began for the first time the bringing together of two strategies. Instead of simply trying to pick up trends which can be the root cause for getting stopped out a lot, I am not, in the consolidation periods using the stochastic indicator as a tool to essentially sclap 4-8 ticks in each market. Risk wise I'll risk 2-4 ticks. Overall the system seemed to work a majority of the time, and sustained my P&L a little bit longer. I ended up with a pretty good winner in natural gas, but the russell due to it's massive swings ended in my demise. I need to think of a way to take advantage of swinging markets as well as trending markets.

Positives:

I went limit down but I still feel confident going into tommorow. The strategies are looking good and I feel confident enough to increase size on my stochastic strategy. I am currently reading Trade Your Way To Financial Freedom by Van Tharp and I seem to be doing everything necessary to allow for long term gains in the future. In addition I have been working hard backtesting these strategies in Excel.

Negatives:

Aside from the P&L, I see the weekness in my current strategy. A big swinging market that looks like it's going to form a trend then changes direction quickly will lose a great deal of money. It's possible that playing some combination of the MACD Histogram and the MACD crossing is the answer but I am going to continue for the rest of this week with this current strategy. I believe abondoning it would be foolish.

Conclusion:

Increase size on scalping technique. Adjust technicals to only account for day trades (they previously have been showing me all trades night and day). Watch for a break in natty gas as the longs in the market have taken off 16% of the their position, and watch for a rally in the Russell as it is lagging the Nasdaq.

Good luck and Namaste.