Technical Analysis of your own patterns

Technical Analysis most basic premise is that the people involved in the market leave their foot prints of emotions in their actions that can be read in re-occurring patterns. When traders are bullish you can see patterns of higher highs and higher lows. When they are suffering loses, like recently, you see breaking of previous lows then its close to straight down, its a 'I give up get me out of here'. All the basic chart patterns represent some kind of emotion or thinking of the participants and this at times has little to do with fundamentals. Think of the patterns and you can classify the thinking or emotion. Double tops, frustration and give up. Head and shoulder, hope followed by disappointment then give up. Blow off top, I can't believe I have missed out on this great run , I'm in at any price. And on and on with consolidation followed by explosive and surprising strength etc.  Have a look at the charts below and you can see many of the basic Tech/a patterns support, resistance, retest and trends.

A nice up trend,

A persistent down trend

A double top and big drop,

Up trend with a nasty break and fade,

Broken up trend with nothing but disappointment and pain,

And my favorite. some classic Tech/a price patterns and even some time or cycle patterns,

So by now you are thinking what the hell is all the chart lesson step one about? Well these are not stock or index prices charts. They are plots of my P & L sum measured in points from scalping on the HSI. As you can see I'm pretty active doing about 200 round trips a day. What I have found is that as I monitor these charts I can see my own actions and emotions in my P & L. I can see where I am taking good entries and good exits. I can see where I have lost all control and refection from trade to trade. I can see a market that is fitting with my trading edge or one that is giving me nothing in spite of my best entries and effort to take tics from the HSI. What I have is a coach standing over my shoulder saying' look you are trading with frustration , you have made 15 trades in the last 10 minutes that have got you nowhere except paying commission, whats your edge here?' or 'look you have just gone from 200 ticks up to being flat in 30 minutes whats wrong with your approch' or even ' your a superstar up 600 tics but don't get to cocky you just took an 2 R loss on the last one.'

I keep pretty detailed measures of my trading and like to plot and dig into my performance to find areas that have stuffed up each day. With 200 trades a day one or two ticks per trade makes the differance between a loss or a spectacular day. What I would often see is in spite of me finishing up more days than not there were times that my trading was not much more than random orders thrown into the market. It would result in a string of consecutive loses, at times 10 in a row, that many times would be larger than 1R and also times of very small winning trades that would be just lost due to commission. This would be the difference of a great day turned into just another day. This is easy to see after the event but in the heat of the battle with a crazy wild index like the HSI it was not that hard to lose all proper mechanics and tactics when your average trade last 25 seconds. With my coach siting on my top trading screen I now get real time feed back of my emotions and thinking and can make adjustment during the battle which has resulted in more of the first chart rather than the mistakes that lead to chart 2 and 3. Or printing more of my own Bull market charts rather than digging myself a Bear chart.

Comments

[John Forman]

Very interesting post. It wouldn't hurt more traders to analyze their performance this way.

[THT]

Yes it really helps my trading. One of the best things is it takes some of the pain away from a bad run and gives you something to work on rather than just being pissed off at the loss.

[Jorge]

Fantastic idea, I'm following suit!

Thank you for the insight,

Best trading,

Jorge

[sysin3]

200 round trips ?

LOL, you are some kind of machine .... makes me tired just thinking about it ;-)

[Chops]

Great post.

It never hurts to have something funny to watch after a couple of bad days either.

Just wish I had the know how to put up the great custom made charts like you do consistently.

[Beebers]

I also track my trades the way you do. I break it down by the pattern I am trading. This also gives me a clue to when to stop trading, when a patterns stops working, or when to adjust my position sizing.
I have noticed the winner's curse affects me (which looks like your 3rd or 5th chart) and adjust my positions accordingly (scale back as I am doing better and feeling good).

[Ryan]

Yeah, what prog do you use for creating those charts and then analysing them?