Key Points from Notes (Refined)

Trading Session Reflection (11:39 AM)

• Massive Loss: Significant red day with a large blow to the account.
• False Signals: Every buy signal received was a false signal.
• Market Behavior: Market dropped unexpectedly with expanding volume on the open.
• Liquidity Draw: The draw on liquidity higher was the next H12 candle high.
• VWAP: Prior day untapped Lowerband on the daily VWAP did not provide a bounce; even premarket movement was manipulated.
• Rule-Breaking:
  • Did not follow the sizing plan (only 1 micro).
  • Did not adhere to the M5 chart trading timeframe plan.
  • Ignored the rule of moving to the next higher timeframe when incorrect on a trade.
  • Resulted in a loss bigger than it should have been.
• Psychological Impact: Felt market was excessively extended to the downside, leading to larger positions.
• Future Considerations:
  • May switch to trading the S&P500 due to NASDAQ volatility.
  • Need to decrease risk on trailing drawdown until recovery.
  • Wider stop losses required when moving to the next higher timeframe.

Loss Analysis and Future Strategy (3:10 PM)

• Persistent Failures: 30M and H1 long signals also failed; unprecedented failure of long signals throughout the day.
• OTD Analysis: Need to analyze how to anticipate such trades in the future.
• Key Observations:
  • H12 bearish LIS (Line in the Sand) to start the trading session was the only indication of a sell-off.
  • Typically expect a run on the LIS to the upside first, followed by a sell-off, which did not happen today.
• Signal Grouping: To prevent future false signals:
  • Short Term Timeframes: 2 Minute, 5 Minute, 15 Minute.
  • Medium Term Timeframes: 30 Minute, 1 Hour, 2 Hour.
  • Long Term Timeframes: 4 Hour, 6 Hour, 12 Hour.
  • Rule: If 3 losses are taken in a row on the same trade idea within any timeframe grouping, stop trading for the day or change the trading thesis.

Additional Reflection (12:52 PM)

• Market Movement: Reached the lower weekly DOL and continued towards the lower prior monthly DOL.

Refined Entry Criteria for Using the Middle VWAP Band

1. Market Context:

   • Range-Bound Market: Use the middle VWAP band for potential mean reversion trades.
   • Trending Market: Avoid using the middle VWAP band as a primary entry point in strong trends.

2. Volume Confirmation:

   • Look for significant volume around the middle VWAP band to confirm the strength of support or resistance.

3. Time Frame Alignment:

   • Ensure the middle VWAP band aligns with support/resistance levels on higher time frames.

4. Price Action Signals:

   • Use candlestick patterns like pin bars, engulfing patterns, or inside bars at the middle VWAP band to confirm potential reversals or continuations.

5. Additional Indicators:

   • Combine the middle VWAP band with indicators such as RSI, Moving Averages, or Bollinger Bands to filter out false signals.

Entry Signals

1. Volume and Price Action:

   • Volume Spike: Look for a spike in volume coinciding with the price reaching the middle VWAP band.
   • Candlestick Patterns: Monitor for bullish or bearish reversal patterns at the middle VWAP band.

2. Multi-Time Frame Analysis:

   • Ensure the middle VWAP band aligns with support/resistance levels or trendlines on higher time frames.

3. Indicator Confirmation:

   • RSI Divergence: Look for RSI divergence at the middle VWAP band.
   • MACD Crossover: A MACD crossover near the middle VWAP band can signal a potential entry point.

4. VWAP Band Interaction:

   • First Test: Give more weight to the first test of the middle VWAP band after a significant move.
   • Multiple Time Frames: Confirm that the middle VWAP band is respected on multiple time frames.

Example Trade Setup

1. Price Approaches Middle VWAP Band:

   • Volume increases, indicating potential support/resistance.
   • A bullish pin bar forms at the middle VWAP band on the 5-minute chart.

2. Confirmation from Higher Time Frames:

   • The 15-minute chart shows the middle VWAP band aligns with a previous support level.
   • RSI on the 5-minute chart shows bullish divergence.

3. Additional Indicator Confirmation:

   • MACD crossover on the 5-minute chart supports the bullish reversal.

4. Entry:

   • Enter a long position as the next candle confirms the bullish pin bar.
   • Set a stop loss just below the middle VWAP band and the recent swing low.
   • Set a profit target based on risk/reward ratio or at the next VWAP band level (top band).

By refining your criteria and combining multiple signals, you can enhance the reliability of using the middle VWAP band in your trading strategy. This approach helps filter out false signals and increases the probability of successful trades.

11:39AM. Massive fucking red day, massive blow to the account, every single buy signal I got was a false signal. Market dropped in the center of nowhere, volume was expanding on the open, the draw on liquidity higher was the next H12 candle high. Complete fucking joke of a day, and honestly. I dont even know what I would do differently. 

Prior day untapped Lowerband on the daily VWAP didnt provide a bounce at all, it did slightly in the premarket but even that move was manipulated. 

I also broke many many rules, almost didnt follow anything. Didnt follow my sizing plan. of only 1 micro. Didnt follow my timeframe plan, of only trading the M5 chart. didnt follow my rule of going to the next timeframe higher when Im incorrect on a trade. Loss is way bigger than it should have been. It just felt like the market is so overexaggeratedly extended to the downside that it was baiting me into bigger size. 

But because of this massive false signal, and the loss of almost half my drawdown. I may switch to trading the S&P500 tomorrow because its less volatile. I simply cannot afford to trade NASDAQ if its going to move this much. Its moved -360 points to the downside somehow. And with the timeframe stoplosses that I require, I have to decrease my risk on my trailing drawdown until I get out of this hole. 

The issue is that if I follow the rule of going to the next higher timeframe, then I have a way wider stop with the bigger candles. I would have taken a massive hit on the M15 short long extry signal because the next candle was completely engulfed. 

as it stands right now, we are going to need at least 30M confirmation to take any longs on nasdaq in the future. This loss on the day was completely unacceptable, and we have to do everything we can to make sure this doesnt happen again.

3:10PM Just came back to my trading journal to write under this statement ^^^^^^. The 30M long signal also failed. As well as the H1 long signal. This is unprecedented, virtually every long signal on the day for me failed. So the most important thing I will need to do OTD is go back to figure out how I could have anticipated this trade

The only tell that this trade would sell off OTD for me currently is the H12 bearish LIS to start the trading session. The only issue with this, is that in the past, we have usually seen a run on the LIS to the upside first. and then come down. Thats the type of move I was anticipating today, a move higher from open, until 1PM sell side was offered. I was not anticipating this heavy of a drop from open. And it basically was like trying to buy the next floor and taking an elevator down everytime. 

In order to prevent this many false signals again in the future, we will group the trade signals

(Short Term Timeframes)

- 2 Minute

- 5 Minute

- 15 Minute

(Medium Term Timeframes)

- 30 Minute

- 1 Hour

- 2 Hour

(Long Term Timeframes)

- 4 Hour

- 6 Hour

- 12 Hour

If 3 losses are taken in a row on the same trade idea within this timeframe grouping. I must stop trading on the day, or change the trading thesis.

12:52PM. It just reached the lower weekly DOL and is still continuing to head for the lower prior monthly DOL.