Breakdown Of My Personal Strategy On Dow Jones TutorialI will be giving a breakdown on my own personal strategy on how I trade the Dow Jones Futures. I am writing this post for two reasons. First and foremost, to help people. Secondly, to help myself in better understanding.
The way that I trade is using support and resistance, only I don't use the traditional sense of support and resistance that is taught. I use price levels that all traders have. The four price points of a candle stick. I also use major round numbers of 1000's and 500's.
The Open
The Low
The High
The Close
I start by looking at the monthly. When a new month opens, I.E. February 1st for example, I mark the opening price in Orange.
I use the 2 hour chart to look for buying and selling areas, using key price levels. I look for these key price areas and see how price behaves once they get there.
Low of Month trades
Low of the Week trades
Low of the Day trades
High of Month trades
High of the Week trades
High of the Day trades
Example 1:
The month of February opens at 44,444. I mark this with a horizontal trendline in Orange Level 4. I see price gapping down right into 44,000. A major round number of 1000.
I then drill down to my entry timeframe of the 15 minute to find the buy or sell trigger entry. In this case, I saw the creeping push down into the 1000 level followed by a bull 180 bar. I entered in on the close of that bar. I used a 75 tick stop per ATR and a 200 tick target.
This is an actual trade I took. I recently changed my target strategy. I will explain in a bit.
I use the same concept for the following three timeframes.
The Monthly candle
The Weekly candle
The Daily candle
The Monthly candle:
The Weekly candle:
The Daily candle:
Another example of a trade I took
This creeping layering into a level is one of my favorite ways to get into a trade.
What I am doing now is I will set my stop loss of 75 ticks and I will have no profit target. I will hold the trade until the end of the trading day and close it out before the market closes.
On this particular trade, I closed it out at 44,820 for a 343 tick profit.
The weekly template structure:
Some obvious points but worth repeating. Each Weekly candle has an opening price. Within each weekly candle, there are 5 trading days. Monday-Friday. There is a high and low of the week.
Within each trading day, there is also an open, high and a low. I find that when day trading, only to focus on the specific day itself and to not really worry about "multiple time frame analysis"
All you need is the major key levels I laid out up above.
Here is another trade that I took. I was looking for the Monthly open and 44,500 to be used as resistance for a continuation short trade back through the weekly open.
Of course you can see, I lost on this trade. No strategy is ever guaranteed, and I do routinely take losses. My job as a trader is to preserve my capital and to stay alive.
My money management strategy:
One trade per trading day MAX
If lose, DONE
Close out near end of day if in profits, DONE
75 tick stoploss on ALL day trades. DO NOT TOUCH. Do not move up or down. Sometimes to Break-even but only if trade is seeming to fail (more of an intuition thing)
Risk 0.75%-1.5% per trade
Only make slight adjustments to strategy after every 20-trade sample size.
By limiting my losses to only one trade per day, I can easily recover from a losing day with any winning day. Somedays I will either not see the market well, enter at a poor location or just overall, not be at my best. My statistics show that RARELY do I enter another trade after a losing trade, does that one succeed. This tells me that I am not seeing something that particular day. I will wrap it up and try again another day. Revenge trading does no good but to hurt yourself. I admit I am wrong on the day and come back again.
By limiting myself to one trade per day, I am also cutting down on slippage and commissions. Because of slippage and commissions, trading is NOT a zero-sum game, but in fact a NEGATIVE sum game. Your winners are smaller than they ought to be, and your losses are bigger than ought.
I know that I can have three losing days in a row and be right back to normal after one or two winning days. Therefore, who cares if I take a loss. I need to get through the losing trades to find the big, winning trades.
