Monthly Recap: July 2024

I took the middle two weeks of July off to go on a long-planned trip to Italy. It was a busy holiday filled with many good memories of visiting family and eating delicious food, but it was also a time to distance myself both from my job and from the markets for a bit. I had completed one trading session before the trip and another two after returning. The trades from these three sessions produced a combined total of +2.35R. Here are the trades for July 2024:

• 1 July 2024
  • Trade 1: -0.14R
• 22 July 2024
  • Trade 2: +3.03R
• 29 July 2024:
  • Trade 3: -0.54R

On 1 July, the S&P 500 opened and continued downward after which it formed a double bottom and began to move higher. I started my trading session around 17:50 SAST, just as price was looking to break the previous lower-highs which formed on the way down. On the way up it formed clear steps upward and began to bunch near the overhead resistance.

With the price moving higher, and after I had watched the formation of some bullish candles, I prepared to join the ride. Candle A finally closed above the high of the previous candles, as well as above the overhead resistance. Shortly after Candle A's close, its high was not taken out and the next candle reversed all the way back down. The lows of signal Candle A were still intact.

Two candles later, price began flying upwards. After that candle closed and its highs were broken, I got in long at Position 1 with the hopes out targeting the highs of the day. As the evening continued, price consolidated sideways for the remainder of my session. My stops and target were in place and I decided to continue the evening away from my screen. Shortly before heading to bed, I revisited the charts and decided to close my position for a small loss. The market was closing in 40 minutes and I do not hold trades overnight.

Unfortunately I was once again late to the trade and lost out on the momentum of the large candle that preceded my entry. What I have since learned from this trade was the idea of signal Candle A still being valid as its lows were not taken out. This would have allowed me to enter at the break of Candle A's highs and take the long ride up. However, given how the day panned out, the result would not have been spectacularly different. I'm going to keep this point in mind, and see if it helps me going forward.

Trade 2 came after price had been bouncing within a clear range from market open on 22 July 2024. After two failed attempts higher, price revisited the bottom of the range. My trading session began just as price was beginning to consolidate in the zone and was looking to push higher. I watched sell-side momentum weaken and decided to look for a potential reversal trade with a move back to the top of the range. Soon afterwards signal Candle A was formed.

Candle A closed above the highs of the previous candles, thus forming a four-bar reversal. Once its highs were broken, I decided to go long at Position 2. The trade seemed too simple, too obvious and too textbook. I was sceptical, but I decided to pull the trigger anyway. After a few slow sideways candles, price moved higher and I scaled in with an additional trade at 2.1 with half the risk of the initial position.

I noticed an interesting pattern during the two candles that formed after my second entry – they attempted to push lower multiple times but with each push they travelled less and less. The downward momentum was dwindling and as each attempt ran out of steam, price moved all the way back up to the top of the candle before travelling back down. Just as the second candle closed price exploded higher towards my target. I was contemplating a second scale in position but I wasn't convinced in the moment, given the runway I had left towards my target.

Retrospectively, I could have afforded to take a third position as there was just over 1R left before it would have reached my target. What interfered with my process was self-doubt and the idea of my profit eroding after an explosive move higher if things were to turn suddenly. The mental aspect of the trade and live performance are what cost me on this one. Besides the possibility of an additional scale in trade, I'm really happy with how I handled this trading session and followed my processes.

Trade 3 was taken on the break of a sideways channel near the top of the trading range for the day. The session opened with price originally moving higher before reversing down and then back up toward highs of the day. As I started trading, price was approaching these highs and began to consolidate sideways into a tight trading band. Price reversed after a failed attempt to break out higher and take out the highs of the day. It then broke the bottom of the band for a potential trip back down to the lows of the day. Signal Candle A was the breakout candle.

Candle A formed with a strong bearish breakout. After its lows were taken out, I went short looking for a revisit of the lows, anticipating another ranged day. An unsuccessful retest of the breakout zone pushed prices lower and offered me the opportunity to scale in at Position 3.1. My entry, however, was not optimal. The candle pushed past my scale-in levels quite quickly which resulted in Position 3.1 being about 1 point off where it should have been. This caused the stop levels of 3 and 3.1 (denoted as 3S and 3.1S) in the figure above to be rather misaligned.

I entered Trade 3 towards the end of my trading session. Had I stuck to strict time boundaries, I would not have entered 3.1 as I would not have been in front of my screen. I decided to trade a little longer to see how things played out. I had a little more flexibility on this day, since we ate dinner before I started trading and so my evening ahead was free. Nothing much happened and I decided to leave my desk and get ready for bed. When I returned to my screen, I saw that my additional position 3.1 had been stopped out but my initial position 3 was still live. Seeing as the markets were due to close in the next 45 minutes, I exited remaining contracts for a small loss.

Had I entered the second position more optimally, its stop level would not have been triggered. Small manual slippages like this have happened before but had not come to bite me back until now. There is definitely a lesson here in fast-moving live market conditions. Going forward I will adjust my process to set automated orders for my additional scale-in positions. This will ensure their accurate entry so that all stops levels trail in unison and are triggered together.

All in all not a bad July. It ended with positive outcomes in terms of trading results, as well as some lessons learnt in terms of optimisations I can make in my trading process. Hopefully these will aid in an overall increase in performance in the long run.

Until next time :)

~Alessandro