Textbook INSIDE BARS

3 perfect Inside Bars within a short-span of 5 hours that would have yielded very lucrative returns - had I traded them (well, maybe not, coz I would have run after 3 candles at most anyway. But these are high probability setups with relatively lower risk, since you usually use the high or low of the inside bar as stops).

Double Bottom

Resistance-Turned-Support

Draw resistance where price was stopped. Look for resistance to be broken. Look for at least 2 closes (on bullish candles) above resistance. When price makes a throwback to resistance, keep a lookout for inside bars that form above it. If the bar is formed below, but the candle following opens and closes above, good to go.

Fib 38.2 Throwback

Instead, I went for really lousy setups, lost the first 2 trades (stop loss - hard ones - totally to be blamed!!), and took the next 4 (NO hard stops used - only mental ones taking into account S & R and volatility stops) to break even (if I didn't have to pay my broker).


Have had enough of Euro for today. Switching to ES & TF after US market opens.

Al and Keish are not eating or drinking. I'm starting to use syringes to force water into them. If they don't get better, I think I'll go crazy worrying.

I really have to sort out this stop loss issue. Or maybe it's my entry.

Yup, totally my entries. If I know I just went in on a bad entry, I wouldn't hold my trades, and would rather take a loss.

ES, TF & 6E 3/31

ES

Game Plan: Scalp within 760 - 800 range
Volatility Stop: 4 - 5 points

TF

Game Plan: Scalp within 410 - 440 range
Volatility Stop: 2.5 - 3.5 points

6E

Game Plan: Scalping within the 1.3180 to 1.3400 range
Volatility stop: 1.5 - 2 points

6E & TF Trades 3/30

TF 5min

Can't complain about the market. It's one that I'm familiar with. Saw my setup and went in with a TIGHT HARD STOP (D was shocked I wouldn't even give it 1 point). Bad move. I forgot that I wasn't trading Euro futures (which I'm not familiar with YET, and it can get crazier than TF).

With TF, hard stops have always resulted in losing days. Mental stops and sniper style play have resulted in winning days 90% of the time. Days that I don't know where my stop and target is are my blowup days. Used to happen once a month. For the past 3 months, it's happened more frequently. I must have hit the wall.

The thing with TF is that I know it better than I know any other futures. I don't have to trade it the "proper" way to get 1 to 3 points a day.

I have my monthly getaway tomorrow - I'm seeing a human friend! I'm not going to fret over my blunder, and am going to get my beauty sleep. At least I learnt something about balance today. I seem to have to swing from one extreme to the other to find it.

Anyway, it's a good day. I love 6E, and I love TF. But I have to use different strategy with each. And I really have to stay with the market like I did before. These days, it's just difficult to focus with all the other things that need my attending to. I am desperately looking forward to days when I can sit here from market open to market close again.

6E Trades 3/30 Part 1

Bears are so trapped....

I was one of the bears that took a CALCULATED risk:


Sending Al and Keish for fluids and post-surgery review. Getting away from my chart for a couple of hours is good anyway. I'm buying you when I get home. WAIT FOR ME, 6E!

6E Trade 3/30

Quick scalp for 8 ticks.

Long at 1.3228, Stop at 1.3223 (not an ideal entry - intention was to put in a buy stop at 1.3225 but hesitated. Went in at market instead)

Covered at 1.3236 (Price hitting ceiling of channel. MA wasn't turning up, gathered that price is going to stay within the channel)

Lots of resistance above. Chances of price forming double top, mountains etc are high. Will probably go in short when price pierce through upper channel.

Euro Futures (6E) & ES 3/30

Euro Spot (Monthly, Weekly, Daily) & Futures (30min)

Euro Futures (6E) 5min

Game Plan

For now, I'm looking to buy a 3-rising valley.
Will consider a move only when price breaks above 1.3288.
Targets 1 to 4 indicated on chart above.

Should price breaks on the downside, will reassess. But I really think that Fib ext 261.8 is a good support.

SPX (Monthly, Weekly, Daily) & ES 30min

ES 5min

Game Plan
Long above 800 (that's around Fib 161.8 for current move down)

One Of Those Days I Nearly Died

It happened in the winter of 1994, shortly after Christmas, at 10pm Edmonton time. The streets of the heart of the city was surprisingly quiet for a weekend. It's probably the cold that's keeping everyone in. Alberta's winter can get quite brutal. Stay out for 5mins and you wouldn't be able to even smile - I call it the "frozen nerve syndrome".

Cozy in my 22nd floor studio apartment, I was about to get into bed while waiting for D to drop by. I had left my door unlocked, as usual (it was Edmonton 15 years ago, only people who suffer from paranoia lock their doors), and had something interesting to read: lecture notes from engineering class....

I was setting my alarm clock when I heard the door opening. Expecting the visitor to be D, I hadn't gotten out of bed to receive him. 10 seconds later, I had this really bad feeling that the visitor wasn't D. I got up, went to the other end of my bed where I could see the door, and froze when I saw a really tall white man standing right there in the middle of the hallway, WITH HIS SHOES ON MY FREAKING CLEAN CARPET!! And I remember saying to myself, "Damn it! Not the time to worry about your carpet!!!".

I waited for him to make his demand - no screams, no asking rhetorical what-do-you-want or who-are-you or what-the-hell-are-you-doing-in-my-apartment-stranger questions. He assessed me for a while before asking me for my wallet. Great, he really wanted my empty wallet (I was penniless then, owed the school a year's tuition fees, and was living one day at a time without knowing how I'd get by the following day - all thanks to my mother who refused to give me a single cent of the entire proceeds of a house I sold in Edmonton, which I handed over to her when she cried - I can't stand a woman crying - come to think of it, I was kind of glad that my Dad's assets in Singapore were all frozen coz had it not been, my life would have turned out totally different and I would have had become one of those spoilt brats who wastes her life away).

I handed over my wallet and waited for him to curse and swear and hurl his threats. He had covered his face with his jacket the whole time, and when he needed to open my wallet, he told me to get down on the floor and keep my head down. I did as I was told. Not going to piss off someone with a gun. Then I heard him taking something out of my wallet. Strange, I thought, that he actually took SOMETHING out. When he was done, he dropped my wallet next to me, and SAID SORRY. Then he walked away from me, and made his way towards the door. I heard the door closed after him. My instinct was to get up immediately to lock the door. I actually THOUGHT I did it. It was all in my mind. Physically, I was still on my knees. I had spent the precious seconds PROCESSING what had just happened!

In that few seconds that I could have acted to change the outcome of what happened that day, I had used it to PONDER on the coulda-woulda-shoulda.

And something inside me told me that he was going to come back in. He did. And the surprising thing was, I wasn't surprised at all. It was almost as if I knew at the very moment of hesitation, that I would be sorry for hesitating!

He told me that a 100 bucks was not enough for him. I told him he could help himself to whatever he wanted. I was raised to never show fear. I think I outperformed that day in that aspect. But the fact that I did didn't save me. The intruder wanted to see some fear. He started kicking and throwing things around. I let him, and stood by the side, just WATCHING and THINKING. Then he found my jewelery box, opened it, and asked what they were. I took the contents out of the box and put them in his hands. He backed off immediately, and nearly dropped them. I told him those were real, and he could sell them for money. Totally pissed him off. I was really sensing that the guy was getting nervous coz I wasn't NORMAL. He was losing it coz he didn't feel that he was terrorizing me. He needed to feel in control, and I wasn't giving him the satisfaction.

He said he would kill me. I believed him. He was apparently high on drugs, and if he didn't get what he wanted, he would definitely snap sooner or later. I brought him to the kitchen - well, as a Chinese, I surely must have hidden some valuables in my rice cooker or something - coz I needed my plates to knock him out. Then I noticed his height. Forget it, he was too tall, I hadn't a chance. And he kept saying he was going to kill me. Just great, I thought, I had just turned 21, and I was going to die. Then I cursed myself for spending precious time thinking useless thoughts. Focus! I told myself. Get out of this place coz this guy isn't here to rob. He's here for adrenaline. He's a cat playing with a toy and when he gets sick of it he's just going to kill it.

I sobbed to buy time. It immediately disarmed him a little. He stopped yelling, and became POLITE again.

I opened the cabinet on top of my fridge, went under it, and from the other side, I opened the doors of the fridge right under the cabinet. Then I dashed for my keys which he had thrown right in the middle of the living room (which was why I stood and watch at first when he was throwing things around - I was paying attention to my KEYS). When I ran pass the kitchen to get to my main door, I saw him knocking his head on my cabinet door and his balls on the fridge door. Clumsy son-of-a-bitch. I wondered if he was both high on alcohol and drugs, - he had an unsteady stance, and I noticed that when I was WATCHING.

I got out, and ran down the stairs that were right next to my apartment. I could have turned right and knocked on the doors of all my neighbours, but instinct told me that that would be stupid coz the guy would get a clear shot the moment he got out of my apartment Since he was clumsy, I had a much better chance by taking the stairs.

I got out after a few storeys, and ran straight along the hallway, knocking on every door and screaming that someone with a gun was after me. I hadn't the time to wait for anyone to open their door, and when finally got one that answered immediately (probably heard my screams for a while already), and that bastard had to appear at the door of the stairway that I had just gotten out from. Shit, clear shot again! I ran again, down the stairs (there were 2 staircases, one at each end of each level), and I could hear him coming after me. When I finally got down to level 6, which was the entrance to the parking lot, I opened the door to get out.

IT WAS LOCKED!!

I continued down the stairs, went to level 5.

Door was locked too!

Went to level 4.

LOCKED!!

DAMN!!!

All the doors were locked and I was at the ground level. No more stairs to run down. Only a door that was probably locked too.

I turned it, and it opened!

I dashed out, ran down the parking lot, which had 3 basements, and I kept running til I got to the guard house. The 2 guards on duty wanted to bring me to the lobby, and I refused. I took their phone and called the police. A small crowd had gathered, and a few ladies wanted to bring me to the lobby. I went with them, and saw that a much bigger crowd had gathered there. I had apparently woken many good folks with my screams. One of the guards put a towel over me. I realized later why. I was in my very light viscose nightgown - seablue - one of my favorite colors - and it was TRANSLUCENT, and I had worn NOTHING inside. And I was trembling.

Then I saw my captor STROLLING pass the entrance to the lobby to take a look at me. That sick SOB! I whispered to a friend from high school (we lived in the same building, and he was one of those who had gathered at the lobby) that I saw the guy. He asked what he looked like. I gave him a description, but wasn't sure it was a good idea for him to go after him. He did, together with another friend. They were big guys.

Anyway, they got him after chasing him down a few blocks. Pinned him to the ground, recovered my belongings (thank goodness, coz without those evidences, I could easily have accused an innocent man that was put on the stand - coz I definitely had no recollection of the face just ONE day after the incident).

The next day, I was on the 2nd page of the local newspaper - without my pictures of course coz I had refused an interview. It read "Female Tennant TERRORIZED By Intruder". The intruder was out on PAROLE- his FIRST day out!

Recently, whenever I froze when my trade went against me, I would think about that moment that I hadn't gotten out of my shock fast enough to lock the door. I have to bring back the memory of that REGRET that I had felt, so that I would do something DIFFERENT this time - the right thing.

But I have never forgotten the 100 bucks that D had slipped quietly into my wallet the night before I was mugged. He said I was so fierce then he hadn't dared to offer me money, so he could only put it in my wallet quietly. That 100 bucks had saved our relationship over and over. Coz whenever I was reminded of the fact that this was a man who appeared at the most desperate point of my life, didn't look down on me, didn't desert me, did everything he could to make me feel protected and dignified, I would do everything in my ability, and against my very MANLY nature, to be the kind of woman that he needs.

I'm still NOT that woman, but I'm on my way there.

TF Trade 3/27

It's been a long day. Had barely 3 hours to sleep coz we had to drop Al and Keish at the clinic for dental surgery early in the morning. Then there were some other matters to settle before we headed for the registry of marriage. Pilot was dashing, and MJ was breathtakingly beautiful. Pilot forgot the ring. ***Faint**

Picked up Al and Keish and spent the evening monitoring their condition. Al was pretty pissed and demanded lots of attention.

By the time we were done with dinner, market had opened for 30min. I looked at my charts and felt that I hadn't the urge to trade at all. ES had been going down and was continuing to go down in a downward channel. But I didn't feel like selling. A market that wants to plunge doesn't look like this. But I can't buy either. Little wonder that I wasn't motivated to get in.

I continued to watch both ES and TF, and was wondering if ES would form one of those DBW-ABW kind of pattern - after all price was at day's low. When ES broke above the channel, I was ready to get in. Not on ES though. Turned my focus to TF, saw the strong hammer and what looked like an inverted head and shoulder. I noticed that it was a little slow in catching up with the ES - what mattered was that it wasn't diverging.

I had stopped analyzing long-term trends, but I've been watching charts and can't help it that my brain starts to register patterns. I am not bearish. And that means I can only buy. When I see a bullish setup, I see no reason to just stay on the sideline.

Got in on TF and it did a typical throw back to the downtrend line that it had broken out of. I sat. As long as price doesn't close below the trendline, I stay. Got out after TF formed a ralatively strong bullish candle, followed by a candle that moved up too quickly for my comfort. Anyway, price was hitting a target level (one that I would use for exit if I were playing a DBW-ABW pattern) which was in fact a resistance, so there was little sense in holding any longer.

Am calling it a day. I hadn't planned on trading in the first place coz my energy level's really low, and I'm distracted by Al's condition. He has wobbly legs. And Keish's not eating.

Futures Trades 3/26

Today's all about looking for charts that can be traded. Came a point where nothing looked good enough for trading. In sheer desperation, I nearly went for crude oil and coffee.

I'm part human and part machine today. Machine sucks. The USD 105 loss in Euro futures is charting platform's fault - froze on me right at the point I entered!! I forgot I had booktrader (not been using it), and got out when I shouldn't have. Disgusting.

FX futures are a challenge to trade on a choppy day. But they are awesome when they trend.

I stand by my system still. It has its limitation - it doesn't work on a day like today - but it helps me with my stops, and that's all I really need.

I made many blunders still, and am going to treat the USD 60 loss as tuition fees, although my broker really hasn't taught me anything.

I should be trading the full session for my system to work, but I have to wrap up now, coz tomorrow's going to be a crazy day.

Pilot

My 31-year-old baby brother is marrying Girlfriend #122 tomorrow. She's Korean, and is Seabloke's and my favorite (NOT because she's Korean). She actually COOKS!! Every meal!! Girls that cook are a dying breed in Singapore.

It's just amazing how your impression of certain people don't change over the course of time. Pilot's always been the 11-year-old timid and funny kid I knew before I left home for Canada. When I returned almost a decade later, Pilot was no longer small and timid. He was TALL!! And he no longer mumbled. He was a commando and a sniper, and had a reputation for being ruthlessly cold and sharp. His hands had grown much bigger than mine, and I loved to hold them in mine, and he would tell me that he had never held another hand that was coarser than mine (I washed my hands so frequently they literally bleed).

After national service, Pilot went on to do aeronautics engineering. 3 months prior to graduation, he decided to join the Singapore Airlines as a commercial pilot. Pilot always listens to him and himself only. No one can talk him out of doing anything that seems totally senseless to most people. He has my blood.

I am happy beyond description for my brother. He has had a very difficult - if not disturbing - childhood. Dad was going through a crisis, snapped, and nearly killed him. After Dad passed away, and our mother took off (I had no idea until I returned years later), he was like an orphan. Lucky for him, Seabloke was more motherly than a mother and raised him like her son. As a teenager, Pilot didn't have many friends. He kept to himself, and kept imaginary friends. As an adult, he had to move from places to places like a nomad. The first time he earned a real paycheque was after he completed his pilot training just before he turned 30. He's now a First Officer, and his paycheque is bigger than the last one I received. Moral of the story: don't bother finishing college, do something that you really, really love, take ridiculous bet in life (like NOT finishing the last 3 months of your 4-year degree to grab the once-in-a-lifetime opportunity to fly a plane, start a business, become the next American Idol etc, etc) and don't let others talk you into giving up your dream.

I will always remember Pilot's offer from just months back to live with me. He was actually going to get an apartment so I would have a place to live in the event that D and I didn't work out. Not a single question regarding how things got so bad was asked. Only a simple "I'm here" message. Very Pilot.

Granny waited so long to see tomorrow. Everyone wanted to see Pilot settle down, get his own family, find true love...BE NORMAL. Granny wanted these for him more than anyone else. She left half a year too soon. One of those pranks that life plays on us.

I'm happy.

I have a Korean sister-in-law!!!

She makes delicious Kimchi!!!

ES & TF Trades 3/25 - After Action Review

ES 5min

As I mentioned, I was looking to buy after ES hit its high of the day at 823.5, and has done a 38.2% throwback. The basis was that it's better to to assume that the uptrend is intact until newer data says otherwise.

When price made a lower low and a lower high after coming down from 823.5, followed by a retest of 823.5 - which failed, indicating at the same time the failure of an Inverted Scallop - and when my indicators started to give a SELL signal, my thinking was that the odds of ES breaking its high on an Inverted Scallop pattern has just gone down. That, plus ES' hitting 211.8% and stalling there (138.2 and 211.8 have been the levels that stopped ES - something I observed since I started trading the ES in early Feb this year) made me decide that it'd be worth taking the signal to sell.

ES ended up pulling back by 2 bullish candles. On other occasions, I would have waited to see if the candle that followed would be a bearish one that would take price back down, resuming the downtrend. But ES had opened within the bollinger band on the 2nd pullback candle. If I'm selling at a point that's beneath the lower BB, I don't want to see a candle open and close anywhere within the BB. I covered my short.

What I Think I Had Done Right

1) Looking at only the most recent price action, and focusing on what price IS doing.

2) Looking at price pattern - a 2nd leg up was expected after wave A-B-C-D-E, and when the supposed 2nd leg failed to break the high at 823.5, I switched my focus to look for a confirmation of a FAILED pattern. That confirmation came when ES punched through support at 815, followed by 3 consecutive closes. The signal from my indicators to sell came after the 4th close. I sold on the candle after the trigger candle.

3) Sticking to bailing rule - Given that one of the basis that I've entered was price falling out of a BB that's turned south, my reason to get out of trade would be if a candle were to open and close within the BB. I exited my trade when ES gapped up and candle opened within the BB.

What I could have done better

I should have waited for the 2nd pull back candle to close completely before bailing. I had covered near the top of the candle and taken more loss than I would have had I covered at the close of the candle. But this is more about following my rule of covering at closing of candles than about the difference in the dollar amount lost.

TF 5min

The rationale to sell TF was much simpler - I simply took the signal from ES, since TF has not been diverging from the former. TF has a tendency to follow the ES, except that its move is usually more exaggerated when it's REALLY moving. I have both charts on because I know I can always take a trade on the TF if I were to have missed one on the ES.

On the TF, I didn't get a signal to sell at all until after I've closed out my ES position. Which was a good thing actually. Getting in on a fresh signal gives me the best risk to reward ratio.

I had gotten out on the 3rd bearish candle on a smooth ride down - which took price down to 161.8 without retracing at 138.2 (characteristic of TF to do that anyway). The candle that followed was a tiny bullish one - expected, once TF hits 161.8. I would have gotten out at this point whether or not I was looking to cover my loss in the ES trade. My plan was to get back in after a slight retracement to 138.2 (for TF, that would usually be in 2 small bodied bullish candles).

What I could have done better

I should have stayed put at my screen during the anticipated pullback at 161.8, instead of going out to get my nicotine fix! When I came back 5 MINUTES LATER, TF had gone back down in a long bearish candle. Following it was a doji. I hesitated at the sight of a doji, only to see the next bearish candle bringing price down to support at 419. That was the move I had wanted to catch before I called it a day. Missed it, and was too tired to trade the after 2pm session, and had to wrap up for the day.

ES & TF Trades 3/25 - Truly Happy!

Above is my chart setup. I watch both ES and TF for a few reasons which I will talk about in more details after I get a good night sleep, which I missed last night.

Got home an hour after market opened. Didn't feel like I've missed anything. I wouldn't have chased that move up anyway.

Was waiting for a signal to BUY, but got a signal to SELL on ES instead. Again, will elaborate tomorrow morning (it's now 1:38AM in Singapore). I took the signal and sold. Got out when price opened above BB. When ES went back down again, I hesitated to chase. My signal has become too old. Meaning that my stop loss would be too far away to make it a worthy trade.

On TF however, my signal to sell was fresh. I sold at the candle indicated on my chart above. Covered near 161.8 coz, well, it's 161.8, and it's common for price to retrace. And I had enough to cover my first loss. I don't want the first day of pure robotic trading to end on a bad note. Thought I'll get in again on TF after that. Went for a smoke break. Came back and was a little disppointed to see that TF hadn't waited for me.

I'm turning in now coz I'm beat. And I don't want to trade when I'm drowsy.

Most importantly, I finally have a net positive day again after...forget it, I don't even remember the last time I had one.

I'm happy. My heart hadn't raced at all throughout. My first loss hadn't affected me at all. I had gone out without hesitation once my stop was hit (a mental stop - a stop nonetheless). I took the 2nd trade without hesitation, and let my profit run although TF hesitated a little on the candle after the one that I entered on. Waited for one more candle, and saw objectively that 161.8 was near, and thought strategically about taking care of my capital first. Something that I wouldn't have been able to do had i been scalping.

This is a breakthrough for me in terms of overcoming my fear of holding a winning trade beyond 1 candle, and my fear of taking a loss.

Definitely going to give my "system" a chance.

Will provide details on my setup tomorrow if I get a chance. Another busy day...

Trader Personality Quiz (By The Lonely Trader's Favorite Dr. B)

I'm revisiting the following from Toni Turner's "Short-term Trading In The New Stock Market" (which I read ages ago and have forgotten totally!):

Dr Brett's Three Dimensions Trader Personality Quiz
by Dr Brett N. Steenbarger
When traders run into emotional difficulties with their trading, they often assume that they have deep, dark, underlying personality conflicts that require therapy. Sometimes this is true, but very often, the source of the problems is different. Often there is a mismatch between the method or system that a trader is using and the trader's needs and personality.

Instead of beating themselves for a lack of "discipline", traders need to ask whether their challenges in following a methodology might be because the methods aren't right for them. Finding the proper fit between who are and how you trade is a big part of finding success in trading.

The following questions are designed to help you assess facets of your personality that are related to the kinds of trading approaches that are likely to work for you. Please remember, there are no right or wrong answers. None of the questions are designed to evaluate your emotional stability or mental health. Rather, we are trying to find out your personal style, so that you can match it to your trading style. Each item consists of 2 statements.

Choose the statement that best describes you:

1a) I often arrive early for appointments and events to make sure I'm not late.
1b) I'm not very time-oriented and often show up late to appointments and events.

1a)

2a) When a problem occurs in my trading, I first feel frustrated and vent my feelings either outwardly or at myself
2b) When a problem occurs in my trading, I first try to focus on what went wrong and what I can do to fix it

2b)

3a) When I go out to eat, I generally go to my favorite restaurants and order my favorite foods
3b) When I go out to eat, I like to try new and unfamiliar restaurants and foods

3a)

4a) I tend to be detail-oriented and try to get each aspect of a job done as well as I can
4b) I focus on the big picture instead of details and don't sweat the small aspects of a job

4a)

5a) If you could hear the thoughts in my head as I'm trading, you'd hear worried or negative thoughts
5b If you could hear the thoughts in my head as I'm trading, you'd hear me analyzing the market action

5b)

6a) If I had a choice of car to drive, I would choose one that is comfortable and quiet
6b) If I had a choice of car to drive, I would choose one that is fast and handles well

6b)

7a) I would be good at following a diet or exercise program
7b) I would often cheat on a diet or exercise program

WHAT PROGRAM??

8a) It is hard for me to shake off setbacks in the market
8b) I take market setbacks as a cost of doing business

8b)

9a) I like vacations that are peaceful and relaxing
9b) I like vacations where you see and do a lot of different things

9b)

10a) I get routine maintenance done on my car when it is scheduled
10b) I don't follow deadlines for routine maintenance on my car

10a)

11a) Sometimes when I'm trading, I feel on top of the world; other times, I feel depressed, or down on myself
11b) I don't have any emotional ups or downs in the market

11a)

12a) I would like a job with a stable company that pays a guaranteed salary and benefits, even if I might not get rich
12b) I would like a job with a startup company that offers me a chance to get rich, even if I might get laid off if things don't work out

12b)

13a) I try to eat healthy foods and get a good amount of exercise and rest
13b) I'm very busy and don't always eat, exercise and sleep as I should

13b)

14a) I trade by my gut
14b) I trade with my head

14b)

15a) I avoid arguments and conflict
15b) I like to argue and hash things out

15a)

Dr Brett's Scoring
Items 1,4,7,10 and 13 measures a personality trait called "conscientiousness". A conscientious person is someone who has a high degree of self-control and perseverance. If you scored mostly a) responses for these items, you are high in conscientiousness. Conscientious traders are good rule-followers, and they often do well trading mechanical systems. Traders who are low in conscientiousness will have difficulty following explicit rules and often trade more discretionarily. Ideally, you want a style of trading that is more structured and detailed-oriented if you are more conscientious. Trying to trade a highly structured manner will frustrate a trader who is low in conscientiousness. Such a trader would do better with big-pictures trades that do not require detailed rules and analysis. Similarly, very active trading with rigid loss control will come easier to the conscientious trader; less frequent trades with wider risk parameters will come easier to the trader lower in conscientiousness.

Items 2,5,8,11 and 14 measure a personality trait called "neuroticism". Neuroticism is the tendency to experience negative emotions. If you scored mostly a) responses for these items, you are relatively high in neuroticism. The trader prone to neuroticism tends to experience more emotional interference in his or her trading. Wins can create overconfidence; losses can create fear and hesitation. The trader who is low in neuroticism is more likely to react to trading problems with efforts at problem solving and analysis. He or she will not take wins or losses particularly personally.

Neuroticism is a mixed bag when it comes to trading. Often the person who is high in neuroticism is emotionally sensitive and can use this sensitivity to obtain a gut feel for market action. The trader who is low in neuroticism may experience little emotional disruption with trading, but may also be closed off to subtle, intuitive cues when a trade starts to go sour.

In my recent expereince, I have been surprised at how successful gut traders are often relatively neurotic traders. Very active trading methods are particularly challenging for such traders, as they don't allow much time for regaining emotional equilibrium after losses. This can lead to cascades of losses and significant drawdowns of equity. It is much easier for the non-neurotic trader to turn losses around, since these are less likely to be tied to self-esteem.

Items 3,6,9,12 and 15 measure a trader's risk aversion. A risk-averse trader is one who cannot tolerate the possibility of large losses and who would prefer smaller, more frequent wins with controlled losses to larger wins with greater drawdowns. If you scored mostly a) responses for these items, you are relatively risk-averse trader. Trading with careful stops and money management, and trading smaller time-frames where risk can be controlled with the holding period, will come most naturally for the risk-averse trader.

The risk-seeking trader is one who enjoys stimulation and challenge. Larger positions and longer holding periods are easier to tolerate for the risk-seeking trader.

Very often, the risk-seeking trader will be impulsive in entering trades and will have difficulty trading during periods of boredom (low volatility). The risk-averse trader often experiences difficulty hanging onto winning trades, and will cut profits short to avoid reversals. This trader will be challenged during periods of high market-volatility. Position sizing is key and often overlooked as a trading variable. Trading too small will bore the risk-seeking trader, who will then lose focus. Trading too large will overwhelm the risk-averse trader, who will also then lose focus.

Ultimately, it is the blending of these 3 dimensions of trader personality, and not any one in isolation, that is most important in shaping trading outcomes. In my experience as a psychologist, the traders who are most poorly suited to trading are those that are risk-seeking and who are low in conscientiousness and high in neuroticism. Such traders often take large gambles on impulse, and very often these impulses are driven by emotional frustrations. An example would be a trader who gets frustrated after a loss and doubles his position size on the next trade just to make the money back quickly.

Conversely, I have seen very few successful traders who were highly risk-averse. The risk-averse trader, particularly one who is high in neuroticism, is motivated more by a fear of loss than a desire for gain. this makes it difficult to sustain meaningful position sizes during promising trades. Often such traders berate themselves for being self-defeating or sabotaging, but the reality is that they might be better suited for investing than trading.

If I had to identify an ideal personality pattern for traders, I would say that such a person would be risk-tolerant, low in neuroticism, and high in conscientiousness. Such traders are generally good at following trading rules (entries, exits, money management) and disciplined in their preparation. They don't take losses personally, which gives them the perserverance to weather losing periods. When they see a good trade, they are comfortable trading in size, so that the average size of their wins exceeds that of their losses.

Finally, let me mention one other important dimension that is related to neuroticism and emotionality. I strongly suspect that cognitive style is just as important as personality style in trading. Some people process information intuitively, relying on gut cues and subtle, nonverbal information. Other people process information explicitly, through reasoning and analysis. Both cognitive styles can make traders money in the markets, but it is essential that one's cognitive style match one's trading methodology.

As one trades shorter and shorter time frames, moving from swinging to scalping, it is less practical to expect explicit analytical routines to guide trading. Very short-term trading is more about pattern recognition than historical research. Conversely, long-term trades often benefit from modelling and statistical analysis that informs traders where the edge might lie. How traders process information most effectively is a neglected variable in selecting proper time frames to trade.

Under each pair of question for the quiz is my answer. Yet to tally my scores - sure gives me something meaningful to do today! Feel free to share yours, if you're game. It will be fun!! LOL!

Reply to Cory & Michael

Michael,
If you really want to learn about how to apply Fib in a more practical way, check out Trader-X's blog. He uses Fib for both entry and exit. Very simple setup, but easier to apply on stocks, coz there're so many stocks with their own trends and patterns. For futures, those that fall under the same category have more or less the same charts. For instance, on a specific day, the 7th candle (on market open) of all the index futures will be an inside bar, or a hammer, and then the 14th will be stopped by the support/ resistance of the 7th candle, etc etc, or all will hit a full fib target (for ES, mostly 138.2 and 211.8 and TF is mostly 161.8 and 261.8 etc, depending on the seed you choose...) at around the same time.

Still, I strongly recommend that you take a look at Trader-X's charts. It's very enlightening to see how simple trading can actually be.

Cory:
Yes, I like Fib. I don't use it for its intended purpose that often - most use the levels to exit their trades. I use it to see how strong price is trending and coz I use both upward and downward fib once I get a swing high and low, I tend to use it to see which direction price is likely to test next. I used to use the Fib retracement levels for entries when I was trading TF. Not anymore. TF is no longer the TF I knew. It retraces whenever ES retraces. It used to have a character. Now it's just an ES follower. But it's good to trade coz of its tick value. LOL!

Reply to Lord Tedders & Emini Player

In reference to my post on ES Trades 3/24,

Emini Player asked:
How tight/wide are your stops?
How much paper profit did you have before the trade turned against you?

and

Lord Tedders commented:
Jules,

You seriously think that a mechanical system will be good for you? I guarantee it won't take the stress away. I've walked down that road many times. It might work for some, but it won't help us "emotional" traders control our emotions.

I think your last sentence is truth, not sarcasm.

Best of luck finding your seed.

Emini Player:
The stop for my first trade was 2 points. It was based on the first candle that closed above my 25ema. Price went in my direction for 1.7 points before changing direction. I should have gotten out at 1.7, but I didn't coz I had overridden my system and gone in before it gave a signal. I was right in my direction, it's just that I got in too early, and obeyed one part of the system. Had I stuck to the entry signal, I wouldn't have been stopped out, coz the signal came AFTER price went up above the ema. Totally my fault here. I should have just taken 1.7, and counted myself lucky.

For the 2nd trade, my stop was the same - a close above the ema. But price was already trading very far away from ema when I entered. It was near the close of the market, TF was rather crazy with candles turning readily from bullish to bearish and vice-versa. I had 1 point before trade turned the other way - I was looking at a 4 point paper loss. I got out after the loss came down to 1.3 points, although TF has never closed above the ema before trade went back in my direction again.

In between the 1st and the 2nd, I actually had a winning trade - 1 point. This one went immediately in my direction. I took the 1 point - totally didn't wait for my system to give an exit signal.

I saw where my problem was after getting 3 hours of very good sleep :-)


LT:
To be perfectly honest, I think a mechanical system is good for me only if I let it take over completely. I have to trust it enough to get in and out based solely on its signal. But you know me, I can't let some signals take over my trading for me.

So what happened was that I obeyed an aspect of it, and override the others. No, it totally didn't take the stress away. I felt like throwing up everytime I saw a move that I would have otherwise taken a scalp on, and had to let it go coz my system says "NO".

For Mar 24's session, I actually ignored my system once, and went in before it gave a signal. Trade went 1.7 points in my direction immediately. I was too surprised to act, and let the trade go against me, and I ended up having to get out at a loss coz my exit signal was triggered (which was meant to be a stop signal - best part was that it wasn't supposed to be a stop signal, given that there was no ENTRY signal to start with. It was absolutely imbecilic - ME, I was the dumb ass!)

I think ther's a possibility that I MIGHT never trust any system enough to let it work for me. Mine is a very, very simple one that uses candle stick pattern, MAs and Bollinger band. And Fib of course. And I'm looking at just 1 chart (ie. 1 timeframe, coz I have the higher timeframe's MA on the same chart, allowing me to know its trend at all times). I think part of the reason that I don't trust it is that I was the one that came up with the way to deploy it. I just kind of put together all the things that I've used before that I haven't thrown out in disgust, tweaked the parameters in accordance to the prevailing market volatility, and used it in a way that I haven't seen any one using.

I'm a broken record, but I'm still going to say it - my mind's constantly in a jumble, and I keep getting caught in a situation where I trust the "Me" in real time, and not the "Me" a second ago.

I've resorted to recording my thoughts as I trade. So I've been talking to my pc a lot. But I don't play back at all now, coz I always find the person I'm hearing super ODD, so NOT me.

No wonder my doctor has been persuading me to get a brain scan (I have very painful headaches)....

ES Trades 3/24 - Is This REALLY What I Want?

I'm going to take this as a good sign that my new method is actually working. I've put on 3 trades after 2:10pm. All shorts. Both ES and TF went south throughout after they failed to hit their previous high with a failed cup and handle pattern (which failed of course).

So, I got my logics right, and my direction totally correct, at the time that TF broke out of range. Yet 3 times I was stopped out. And all 3 times I'd actually have gotten 70 - 100 each had I not let the trade run long enough to be stopped out.

So I traded without emotion, letting the stops do their work and I just sat there and look at my profits vaporize before my eyes.

I'm still wanting to think that this is all good.

By 3:30pm, I was so fedup, I just couldn't go in anymore even though I could see that bulls were giving up. There was nothing to suggest that it was anything close to a stampede though, so I didn't bother getting in.

I have no idea what IB is up to. It's not capturing my trades. Just coz I'm not getting in and out a dozen times, it decided to take a break??

I'm THRILLED to see the consistent LOSSES everytime I deploy my pseudo mechanical method. I still have a lot of discretion - it was my decision not to use it. Somehow my heart goes with my brain. When I got rid of one, the other one refused to work too.

My simulated trading during the pre-market session today was a disaster. I lost 1000USD. I seem to do much better with money on the line. I mean, I did lose a lot less... So, I'm going to stick to practising my new method with real money.

I'm not going to be tweaking anything until I figure out what's wrong with me. Perhaps my only problem is that I find it immensely difficult to have losing days. Something that I definitely will have to learn to come to terms with.

I have to get used to non-action. I have to learn to be a machine. I shall honor all my very tight stop losses so that my account can be wiped out and I can finally kick my addiction.

Euro & Yen Futures (Simulated) Trades 3/23

1st trade of the day, and the 1st 6E (Euro future) trade of the day.

Price had retraced 38.2%, perfect pullback for a measured move down.

When everything crossed over bearish, I started looking out for a candle that I can enter on.

Inside bars are what I like. Saw one at the perfect spot: when the 5min EMA crossed beneath my 65min EMAs.

Took the trade, and covered at 161.8 target. I was tempted to cover earlier at 138.2, but my displaced MA and Bollinger band (not shown here - they clutter my chart and make it difficult to read and for me to write notes) were giving STRONG signals to hold on to trade.

At 161.8%, signal started to get weak, and since my target has been hit anyway, I covered for 6.3 points.

2nd 6E trade for the day:

I wasn't sure about my entry, and hence had placed no fixed stop (should have taken that as a reason to NOT enter). I was ready to exit for a loss anytime a candle closed above the 25EMA.

I don't know why I shorted it. Usually, the pipe bottom would have had me going long too early actually.

"Lost in charts" is the only reason I can think of. Had I stepped back and reassess after 1245, I would have seen the pipe bottom, the Inverted HS and the very obvious higher peaks clearly enough to throw out any short bias.

Lost 1.7 Points here.

3rd trade:
Yen futures trade was similar, except that I had entered on a bearish engulfing pattern. On hindsight, really dumb to take a bearish engulfing as a signal to go short when price was at day's low. Again, lost in charts.... Anyway, I had a hard stop for this, and was stopped out at 1.8 points.

ES (Simulated) Trade 3/23

ES 5min

Above shows ES hitting Fib EXT 423.6% (seed highlighted) before 4am EST. I said I wasn't going to do prediction of any sort, but this was really hard to ignore.

At 930am EST, I drew the 2nd Fib EXT with the seed shown below. I wasn't expecting ES to hit 261.8 full target. I often see ES being stopped by 138.2 and 211.8.

The chart shows also where I entered my one and only ES trade. It was not exactly the best entry, given that 800 was just right on top and tested once only. But given that the day had been trending so strongly up, I thought what the heck.

With real money, I would have taken my profit at the close of that long bullish candle. That was 800 resistance, and 138.2 target. I like to take profit at 138.2. BUT given that the day has trended strongly, yada yada yada, I decided to aim for 161.8.

I could have gotten out at the close of the bearish candle that followed that long bullish one, but I wanted to get into the habit of letting my system do its work. For now, human intervention is forbidden. Stop took me out.

I said it was a lousy entry because I hadn't waited for ES retrace to Fib EXT 100% first. For it to break such a strong resistance, it needed a launch pad like Fib 100. Anyway, that was the 4th trade of the day, and I decided to call it a day.

All in all, I took 6.3 points for 6E (Euro futures), lost 1.7, lost another 1.8 on 6J (Yen futures), and lost 2 points on ES, leaving me with 0.8 point gain. Ha.

Will put up the charts for 6E and 6J in the next post.

Sim Trade On New Setup

Sold Euro futures at 1.3621 at 815am EST and covered after fib ext 161.8 was hit at 930am. Other indicators were used too and when all were in agreement, I got out.
+ 6.3 points.

Went in again (short) at around 11am EST. Stopped out (-1.7 points). Shorted Yen futures at around the same time. Stopped out (-1.8 points).

Decision to enter the 2 losing trades was against my rule of not entering outside of these 4 timeframes once US market opens: 945am, 10am, 10:45am, 12:45pm. Why the rule? Patterns and fib targets. Will elaborate in separate posting.

My next setup is at 1245. Will see what comes up.

Casing Spun Of Silk

Thanks to all who have left your footprints here in the past few days. I apologize for not having responded to each and everyone. But I hear you, and I'm really grateful that you took the time to write.

I have been doing a little more thinking after my posting on Saturday, and asking myself if I've really had a moment of epiphany, or is this simply just me being fickle. I ruled out the latter, but I can't be sure about the former either.

The thing about epiphany is that you can have as many as a dozen of them in a single day. I have heaps of them everyday - as I look at my charts, as I see price moving a certain way, and even when D says something seemingly trivial, I can extract patterns and draw lessons from them and form brand new conclusions to add to my very massive (not at all sophisticated, not even organized, just a HUGE and MESSY one) trading framework.

But no, this is not about me realizing all of a sudden that I've been doing it all wrong. As a matter of fact, I know without a doubt that the only way I'll ever get to find out what is right for me and what is not is by LOOKING BACK.

So what's important for me now is to stick to a general PLAN, or system, or method, whatever you call it - in my years with the public sector, I've gotten used to the terms "Framework" and "Standard Operating Procedures".

As far as trading goes, my framework will include such elements as my vision, goals and objectives; my values, beliefs and assumptions - simply put, my personality; my limitations - financially, physically, mentally, emotionally; my other obligations and commitments ; etc, etc.

My Standard Operating Procedures (SOP) - which is pending completion - will include a myriad of factors and parameters (just like I've done it before at work - I've written a 30 page long one for a single policy when I was with police (just the main body, EXLUDING the 19 annexes) that literally gave my superior a nightmare...she slept TERRIBLY after going over the first draft that night), and will be reviewed and revised as and when the market changes its pace and mood, and in accordance with changes in my life.

Unless I have the above, no after action reviews or the deepest reflections will help me pinpoint my problem and improve my trading. In fact, without the above, after action review is simply a joke. I can write a thesis on why it is, but I'll spare myself the agony.

It's a relief to know that all my past AARs are simply garbage. It would be a real pain to have to go over them, and I'm glad that now that I've satisfied myself that they are junk, I won't ever have to read them again.

I've whined too many times about not having a proper trading system, while actually preferring the whole time to trade the very discretionary way. I scalped and took scalp profits coz I had hated to lose (there are other reasons - good ones - to take scalp profits of course). In order to have perpetually winning days, I couldn't afford to get aggressive. I must take what was offered in that few seconds to a minute or at most 3 mins. I've always said I had based my exits on momentum. I had indeed. If price was going in my direction too fast, I'd get out. If price was going too slow, I get out too. So, I was always looking to get out.

While this is probably widely practised on the floor by those who trade huge contracts and enjoy better commission rates, I've come to realize that even if I had had plans to substantially increase my contract size over time, that this way of trading is simply NOT for me, for the one and only reason that my emotional makeup is simply not suitable for this kind of play.

I've read too many times about the consistency of many scalpers, and I don't doubt they make money on daily basis, and I don't doubt that some have an entire year of NIL losing months, weeks, and even days. I have no doubt that these are people have gotten to where they are because they have gotten - above all other things - so good with protecting their capital that it's near impossible for the market to take it away from them.

Well, I've learned, gradually, that I am lousy at protecting my money. I don't like losing, and I certainly don't enjoy having my money taken away from me. But I don't actively protect it. I have a tendency to protect my ego first, then my capital.

I make a dreadful scalper. Dyed-in-the-wool horrendous.

I am going on and on simply coz I need to convince one single person that this change that's going to happen is necessary. That person is ME.

My approach from now on will be radically different - not just in terms of how I execute my trades, but also in how I prepare for them. I will no longer come up with scenarios on where the market's likely to be heading today, the following day, this week, or even a few hours later. After the initial overhaul, there'll be minimal planning and preparation on a daily basis.

The time that I'll start looking at charts to see if there's a play is when the US market opens at 930am est.

I will no longer be trading one single instrument. I'm still trading purely futures, but I'll be trading both indices and currency futures (No energies, soft/hard metals, grains - all in all, no commodities at all). This is the way I've been trading forex (I don't have a bread-and-butter pair). So far I have no complaint when it comes to trading forex. I have decided to trade futures on a long term basis only because the futures market is regulated. I prefer to trade a market that's regulated, and instruments that can't be manipulated by market makers or a few huge players.

I should resume trading today, unless something cropped up. E.g. if my pc crashes on me before D gets home - I've been overloading it.

Don Miller's Video, The Chinese Bamboo Tree, & My Turning Point

I have the habit of playing Don Miller's weekend videos as I study my charts. A moment ago, I was doing just that, except that I was really focusing on making out the price patterns on yen futures during pre-US market open, and then I heard my name mentioned. D, who was playing online poker, turned to look at me, with his usual now-what-have-you-done-this-time expression written all over his face.

Anyway, here's Don's video for this weekend: VIDEO - The Weekend Trader

God works in mysterious ways indeed. I was telling Lord Tedders how I felt like I've hit the wall, and I've been fretting over not being able to find my centre. I looked everywhere for an answer, without really knowing what the question was in the first place. I thought maybe I needed to see more of how others trade. I would visit a forum, and I would get right out by the first page of a thread. I revisited my books, and would feel like throwing up whenever I come across a trading "receipe" with step-by-step instructions on how and where to get in and out, and the indicators to use.

I got so sick of reading the technical stuff, I went looking for what I call "pleasure reads". The first thing that came to mind was a "bamboo tree" that Don mentioned a couple of days back. Got curious, and went to check out his posting on the "Chinese Bamboo Tree".

I can't describe the impact this posting has on me. Words getting in the way.

All I can say is that it gave me my questions and the answers to them.

Earlier, I talked about going back to my older postings to find out what I had done differently last year. The assumption was that what I did back then was the best that I could have done. But here's exactly where I get all confused, over and over: if it was so good, why did it feel so wrong the whole time?

After reading the bamboo tree story, it hit me that I had grossly under-estimated the magnitude of my predicament. I hadn't a seed to plant. While others have theirs and are simply always either looking for more fertile grounds to plant it, or looking to change it for another, I've never had a seed to start with- never thought about it, never understood it. I have nothing to put my faith in. I haven't a systematic way of going about trading - sure I make plans and I have an idea where I would buy and sell, but I never know exactly where I would get out. I basically have been exiting as and when I feel I'm no longer comfortable staying in the trade. Trading has always been all about my FEELINGS. And my feelings is about the last thing that I'll put my faith in.

To cut a very long story short, I realized that the way I had traded last year was the worst way to trade. I've fooled myself into believing that a net postive year means that I must have been doing things right. But in trading, as in many other things in life, early successes have proven time and again to impede further growth, at best. The absolute worst that comes from small victories in the beginning is the laying of a path for very painful, if not fatal, falls in the journey ahead.

What I can say about my result last year is that it's consistent with the outcome of almost everything else that I've undertaken. I have very competitive blood. I must win. And I'll do whatever it takes to win. Sometimes, all I need to do is to believe that I WILL win, and I would. So far, so good.

But I'm cursed with an extremely short attention span. How that affects my ability to continually perform needs no elaboration.

The method with which I had used to achieve a certain ratio of winning to losing trades is not even a strategy within a systematic business plan. I hadn't the patience to come up with the latter before I got started. My approach was purely tactical. There is no blueprint, no roadmaps, not even the simplest of plans. My "plan" was simply to "GET IN".

Without something that I could, and was willing to trust, almost every trade has been placed at my discretion, and getting out has of course always been at my discretion and based totally on my very fallible emotions.

I personally know a few discretionary traders that are doing very well, consistently. These folks have little emotions when it comes to trading. It could have taken them years to get there. Maybe some are just blessed with extraordinarily tough minds. In any case, I'm certainly not one of them. I might NEVER become anything like them.

If I want to start getting on the track that I've never been on in the first place, I have to totally change the way I trade. It can no longer be discretionary. It's going to feel ALL wrong I have no doubt about that. I'll start asking myself again why I'm even doing this. I'll start thinking about all the floor traders who had made it by scalping, or by any other ways they can't explain in words coz so much of it is about trader's instinct.

But I'm determined to see this through. I will trade only in a way that I can actually describe in plain English.

For weeks now I have been comtemplating deploying a very simple trading plan, which I've never gotten down to executing. Short-sightedness is the main obstacle.

But I've made up my mind to either do it, or stop trading entirely. Monday on, I will trade a very different way. It's a way that no longer has its focus on achieving consistently winning days. High winning rates is going to be totally irrelevant. Thanks to Don - whose complaint about having no losing days finally made sense to me earlier TODAY - I now realize that I had gotten my focus all wrong. The questions I have been asking were all wrong, and had gotten me no where near to where my heart really wants to go.

Don mentioned both in his comment and his video that I had brought up the word "strong" in my comment. So I have had "strong", "Bamboo Tree", "Faith" ringing in my head the whole day. And I had to end the para before this with a "heart" in it....

I get your message, my Mighty One up there.

A Classic Example Of How NOT To Trade

I don't know how and when it all began, along the way, I developed a really bad habit of waiting for confirmation to get out of a losing position, rather than getting out at the first sign of trouble.

Below is a classic example.

ES 3min

First, a little background on the trade that I entered on Mar 17: this was an overnight position, where I shorted the ES at 750. Price went up making HH and HL of course throughout the afternoon session of Mar 17, closing at day high at 777. I woke up the morning of Mar 18 here (Mar 17, 7pm EST), expecting some profit taking to happen in the asian and european trading hours.

ES went south throughout the pre-US market open session, and continued to go down in the first hour after the US market opened.

At around 1035 EST Mar 18, a gapped down doji formed at the low of the day, followed by a gravestone doji. Right up to this point, ES has traded under the 3 MAs which were in their perfect bearish setup (50SMA over 50EMA and both were over the 21EMA). So I was happy. Until I saw the 2 dojis (I don't like to see them at day's low when I'm shorting, especially when the low is a full 261.8 Fib target).

That was when I asked D what Citi's doing (D has been monitoring Citi for reasons I haven't the liberty to reveal). D said Citi was wildly bullish, having gone up throughout. I asked him how the others were doing, and he said GS had been going down and so had the other giants in the industry. D said Citi was apparently not following the main trend. I told him that it is NOT following, coz it's LEADING, and I said the market is going to turn wildly bullish later. He laughed. I ignored his teasings, as usual, and checked the XLF, and noticed that no trend had developed yet.

At this point, a perfect bullish marubozu has formed after the 2 dojis. Morning star! This was my 2nd chance to cover my short position. I didn't, of course. Although sixth sense was telling me that the day's done being bearish, my rational mind was screaming "it's not easy to reverse a downtrending day!". So I decided to hang in there to see what was going to happen next.

Bad decision. It would have been a good and prudent one had I been LOOKING to get into a LONG POSITION. What I was waiting for, essentially, was a confirmation that market's reversing. But when you're in a losing position, you don't wait for confirmation that you're going to be slaughtered. If you're a bear, you run when you see bulls sharpening their knives. A morning star at extreme price low, and at a level like Fib 261.8, that's a damn good reason to run for your life.

So I made the bad choice of continuing to sit. Saw the 2nd warning, then the 3rd (all shown on chart above). Now, like I said, I usually don't care about what my indicators were doing. Coz they all lag. But my 21EMA was acting strange and I noticed. It didn't stop turning up even when price was coming down. I was thinking to myself that all it needs to do is to turn all the way up to the top, sit on top of the other 2 MAs, and that would be the perfect bullish crossover for the first time in the day.

All that was left to see was if the support at Fib 211.8 was going to hold. It looked very much like it wasn't, coz if you look to the left, there's really nothing there that was acting as support. But 211.8 has been a rather common level that stops the ES (the "invisible" support/resistance), so I was wary. Lo and behold, a bullish candle closed on top of it!

The candle that opened after it would have been a perfect entry to go long. And that was exactly the point that the perfect bullish MA crossover took place.

But I was still waiting to see if the candle after the 1st hammer on the Hourly (chart below) was going to become a hammer too (classic example of a habit that no one should ever develop - to look to a higher timeframe for reasons to stay in a losing position). And it did turn out to be a hammer of course.

ES Hourly

Then I thought, "wait, this hammer might fail again, and ES WILL break below that channel". So I waited (typical psychology of a trader that's totally lost it - WAITING, HOPING and all). The candle after the 2nd hammer opened right at the latter's close and moved UP. That was clear as hell that the 2nd hammer was working! Simultaneously, on the 3min, ES was breaking above a very strong Fib 138.2 resistance, after the MAs have done a bullish crossover, following that was ES piercing the top of the Keltner channel.

"Damn it!" I said. D turned and looked at me. I hadn't the time to explain, and went on to hit the button to get out at market. This time, without hesitation.

While I could have taken a small loss of USD 500, I ended up taking twice that amount - a price I paid for waiting for confirmation.

I have to put this down in black and white so D can use it to kick my ass the next time I wait for confirmation to get out of a LOSING position.

Like I mentioned above, this is actually the best practice for ENTERING a position. Confimation, confirmation, confirmation.

So far, I've managed to do just the opposite. I enter a trade too early (without confirmation), get out of a profitable trade too fast (which I think I'll continue to do - profit in hand is always much better than profit in sight), and get out of a losing one too slow (waiting for confirmation that I am indeed wrong...something that a person who's aggressively PROTECTING his capital wouldn't dream of doing).

This is the last time I want to commit a blunder like this. I don't ever want to have to write about how I've NOT cut loss at the earliest opportunity to do so. I don't ever want to catch myself rationalizing (I talk to myself A LOT, and whenever I asked myself why I'm rationalizing, that was a sign that I should get out immediately - which I heed most times, but outright ignore when I'm in a wilful mode).

I don't ever want to lose an amount that's WAY above my max pain, for whatever reason. There is simply no good reason for getting myself into that kind of situation. Only excuses.

Update:

Whenever I've done something bad, I get super sensitive about postings like this: Lord Tedders' latest posting.

LT, talking about moi?? :-P

ES Trade 3/18 - Closed Position & Break

Hammer on Hourly. First hammer didn't quite make it. Second hammer totally worked.


On 3min: very bullish MA cross over at precisely the point where ES bounced up from a Fib 50 retracement.

NYSE Tick starting to show institutions buying. A lot of buying.


I don't care if this is another bull trap. I'm done with traps and all. I'm out:

Citi has gone up throughout the session while the others in the industry and the broader market were going down, and I told D that something's not right. Less than an hour later, XLF has gone up too, leading the S&P up as well. I should have gotten out at 762 when I told D that Citi alone could reverse the industry's trend. Not following my instinct has ALWAYS killed me.

I'm not a swing trader, so I'm going to stop analysing. Enough is enough.

Will not be trading for the rest of the week. It's time that I take a real break from the market to clear the clutter in my head and on my charts. Will go through all my past trades and really study those from my better days. There's got to be something that I did differently then. The only thing I know for sure right now, is that back then, my charts were a lot simpler, and so was my thinking process. I knew a lot less which was actually much better. You can't over analyze when you lack the expertise. You can't rationalize coz you have no basis to do so. You trade what the chart tells you, and you don't guess where it's going next coz you haven't a clue. What you can do is create scenarios - you always have only 3 to work with anyway (up, down, sideways) - and if what you think is going to happen doesn't happen, that's a good enough reason to not be in trade.

I can certainly use a break to organize D's messy wardrobe (culprits: Al & Keish), REALLY start looking for a full-time job, attend all the castings and frustrating photo shoots, shop til I drop dead (takes only 30 minutes - it's my least favorite activity and D's favorite....bizzare.....), visit Seabloke's new home (she's been luring me with her pool....a sign that she's in serious denial...I HATE WATER, SEA!!! It's a pity, coz as children, we were trained for a decade by the best coaches and finally by a national coach, and I actually swam like a fish. But the chlorine...and the other stuff in a pool....YIKES!!), and do something about my cats' very foul smelling breath.

I'm happy.