Manoj's Trading Diary

... and you may not even have to pay that 20 rupees!! Check out the contest on the Zerodha thread.

yes sir, I entered the contest yesterday, will see what happens ?

Hi Manoj,
are you following Al Brook's price action method? Your setup looks similar to him so asking this question

Yes, I am learning his techniques

Must wait for a good reversal bar to form, doesn't look will form today, so buying 56 CE cancelled.
Will decide on tomorrow's price action

Today saw double top formed in nifty future but could not act on it and later impulsively sold @ 5667 and got stuck, finally exited @ 5680.

Today 5594 acted as very strong resistance, so will see on monday now as today also no reversal bar.

Important lesson from Al Brook, don't wait for counter trend entry meantime you will lose plenty with trend entries.
Actually this is happening to me and I am not able to control it.
I should have focused on with trend entry which was around 5595 in the morning but I was more concerned about reversal and so I missed the profitable entry.

Chalo learnt something and will improve on it.

I have started using Savant sir's Trade Organizer and damn sure that it will help me in reducing the errors I do quite often while trading.

will post the chart later for today's trades

Hi Manoj,

I agree with you, i was also looking for counter trend entry in the morning but after some time I just book the loss and waited for opportunity. Market was in tight trading range, also there was stiff resistance at 5593.20 (around 1.25 lakh quantity was for sell at that level) and whenever price hit that level it came down.. in the afternoon i kept sell order at same level and it got executed and market turned down from there..As usual I booked profit early and NF went down to make new low.

Al brook proved right again - when market is in trading range, u must sell high and buy low.. I have implemented one part successfully.

On second part - I bought again at 5558 level but did not book profit at around 5584 ( greedy, thought it will go to 5593 again). Now I am holding on to this position for monday, hoping some recoevery.

Do keep sharing your knowledge on PA techniques, it will be helpful for all.

Definitely I will keep sharing whatever I am doing, it will also help me realize my mistakes and ways to avoid the same mistake again

Notes on Al Brooks' Price Action Trading

Al Brooks' style of trading is based on price action only. He does not look at any technical indicators, only candle sticks, trend lines, and moving averages. He trades mainly S&P futures, but I am trying to apply the techniques to stock equities (SPY).

Chart Setting
5 minute chart with 20 EMA. The point is to be simple and nimble. Too much information will simply paralyze you from making quick trading decisions.


Terminology
H1, H2 Signals: The first and second occurrences where the high of the current bar is greater than the preceding bar during a given pull back of an up trend.
L1, L2 Signals: The first and second occurrences where the low of the current bar is lower than the preceding bar during a given pull back of a down trend.
Signal Bar: The bar preceding the H1, H2, ... or L1, L2, ... triggers.
Entry Bar: The bar after the signal bar.
Range Bar: A doji or near doji.
Trend Bar: A large white body candle is a bull trend bar; a red/black one is a bear trend bar.


Entries

H1 long or L1 short with-trend entries. These work well on a strong trend.

H2 long or L2 long entries near the 20 EMA. These work well based on the observation that a prevailing trend normally uses a 2 legged pull back before resuming the trend.

Parallel channel over-shoot and failure. Stay-in-the-channel, don't chase.

Reversal counter-trend entries only after trend line break AND a retest of the low (long entry) or the high (short entry). Look especially for 3 pushes for better reliable trade.

Exits
For scalping SPY: Exit 1/3 after the first .10, another 1/3 after .20, and let the remaining 1/3 run.

Stop exits: Initially 1 tick "beyond" the signal bar; after the entry bar transpires, move the stop to 1 tick "beyond" the entry bar; after taking the first target profit, move the stop to break-even.


Miscellaneous Notes
Do not look for perfect patterns. Resembling one is good enough.
Don't over-trade. Be selective. 3-4 trades per day is enough. If you're consistently profitable, simply increase the shares.
Most of reversals fail, so make with-trend trades.
Beginners tend to make reversal trades, so areas where they'd be stopped out would be good entries.
Market usually makes 2 attempts to do something; if failure, it would do the opposite.
Bail out if the signal bar is weak. E.g. a doji range bar or a bull trend bar on a L1/L2.
Reversal long entries - if lower low then expect 2 legged up; if higher low, then perhaps only 1 legged up. (Reverse for reversal short entries.)
Non-trending days: if long tails and overlapping bars during the 1st hour, then try fading at extremes. There tends to be 2 trading ranges.
Trending days: may want to have a swing trade rather than just a scalp.
Spike and channel trend day: a gap can be a spike; the channel would be in the direction of a spike.
Scalping requires higher percentage of winning trades. Swing trades require less winning percentage.
Only use 1 minute or 3 minute charts for with-trend trades, never counter trend trades.