One monitor system

The path of simplification that I have followed over the last few weeks has enabled me to have an effective trading system on a single monitor.  On this single monitor I am able to display my three primary charts: 576-tick, 1 minute, and 5 minute charts of the ES and my Static SuperDome (Ninja Trader) for orders.  While the real estate is tight, it is nonetheless sufficient, and enables me to make my trading system mobile on a laptop.  This single monitor system also improves my focus and concentration as my eyes do not have to gaze at numerous monitors and charts.  Time and results will tell if this is indeed a more productive approach.

Lesson in Patience

Most of the day’s market was stuck between two Fibonacci areas of support and resistance just about 5 pts apart and it just couldn’t break through.  My checklist kept me out of many losing trades, so much so that I could never identify a conservative trade from the best of the best areas…and as a results I did not take a single trade.   While a few months ago, I would have walked away from a day like today quite frustated and maybe even desillusioned, I was actually proud of myself today.  Proud that I demonstrated sufficient patience to wait for the right setups, did not trade out of boredom, and followed my trading plan to the letter.  This alone tells me that I may have taken yet another step towards becoming the trader that I want to be.

Simplify

As Einstein once said “Everything should be made as simple as possible, but not simpler”.  After using a trading plan of more than 10 pages that included complex setups and trading rules, I have now boiled my methodology down to its essence:

1. From 5 timeframes down to 3 (576-tick, 1′, and 5′)
2. From 5 setups down to 1 (I still need to name the little guy)
3. From pages of trading rules and guidelines to a simple checklist of 5 items:
   1. Assess the direction and strength of the overall trend of the market based on the 576-tick chart (strong, weak, flat, etc).  Evaluate the price action relative to this trend (is it strengthening the trend, weakening the trend, or possibly trying to reverse the trend).
   2. Pull back to an area, ideally the ‘best of the best area’, i.e. the furthest possible pullback with maximum risk to reward ratio.
   3. Evaluate the strength of the short term momentum of the market.  Is it working for me or against me, and how is price action affecting this momentum (strengthening it or weakening it).
   4. Evaluate the MACD BBs.  Is the MACD trend with or against the trade, what is the position relative to the zero line (ZL), do we see any divergence between MACD pivots and price action pivots, what is the angle and spacing (i.e. strength) of the MACDs?
   5. Evaluate the risk/reward ratio to ensure that the minimum requirements have been met.

Entries are now done ideally on reversal bars on the 576-tick chart (not on the 144 any longer), and stops are placed two-ticks above/below the entry bar.  Targets, as always are based on the next area expected to hold.  So far this simplification has paid off.  I come to my trading desk with renewed interest every morning and a sense of confidence that I had started to lose.  I have spent a significant amount of time backtesting this approach and I feel that it better leverages the information from the indicators, is much simpler and therefore easier to apply in the heat of battle, and last but not least a lot closer to actual price action on the 576.