There are a number of reasons that I decided to take a blogging break. (By taking a break I don't actually mean that I'll stop writing altogether. I guess what I should have said is that I'll stop posting my trading results on a daily basis.)
Those that are extremely close to me already know that last year was among those I would label an absolutely "nightmarish year". It began bad, and got terribly out of control by May. It was during the worst time of my life that I began to blog regularly. Seabloke and my counselor thought it would be good for me to express feelings I never knew how to express (I remember telling my counselor that I was capable of expressing anger and anger only, and told her that I'd probably be her only patient who was too intellectual to buy into the notion that admitting and showing my vulnerabilities is going to help me move on) via journalling.
So, I had a jolly good time putting up my first few ultra expressive entries in May 2008. After that, I regretted my emotional outpour, and deleted the really weepy ones. Instead of writing about my extremely dark thoughts and negative feelings, I started to write about my trading activities and thoughts about trading instead. Trading distracted me from useless thoughts, and writing about it was beneficial to both D and me. D has always been too busy/lazy to do pre-market analysis, so I did that for him via my blog. Then I began to post my daily trading results, since I need them for review, and I couldn't find a better place to archive them than on my own diary. The rest's history.
Came May 2009, and I was reminded of all the bad things that happened in May 07 and 08. I feel sick everytime I'm reminded that there are those reading my blog that are the eyes and ears of someone I would not hesitate to slap if I were to run into him on the street. I was very close to wanting to keep a private blog, giving access to only the few who started reading my silly entries when I started writing last year. At the same time, I was also starting to become aware that I traded quite differently from the norm, and was constantly afraid of inviting questions that I couldn't respond to in a way that could be understood.
People like Lonely and Solfest would know that I frequently let my losses run and cut my profits short - I let my losses run until I know that I'm clearly wrong. 8 out of 10 times, I'd be right and I'll get out with a profit. I don't take things for granted - so when I'm in profit, I take them. While going over my past trades, it's obvious that my trades suffered a great deal when I started to get too afraid of sitting on losses. I bailed at maximun damage so many times I lost half my account in a mere 3 months.
My trading style would reflect that I've never been able to relate to the term "risk-to-reward ratio". Regarding entry - it was until I attended Michael's class that I learned about the proper way to enter a trade. And on profit taking - I'll cover whenever price stops moving. As far as trade execution is concerned, I can't think of anyone who does it more sloppily than me. I can never tell another person what triggered my decision to enter a trade. I can sit in front of my screen for hours without moving and all of a sudden, I see something, and I jump right in. No thoughts about stops, risk, where to take profit. If I'm right, I grab my profit and wait for the next sighting. If I'm not immediately right, I wait to see if I'm going to be wrong. If I see any signs that I could be wrong, I'm out. If I don't, I stay.
The thing about wanting to nail that perfect entry is that it's a tad similar to wanting to find the holy grail to trading. Sure it would be nice to find trades everyday that offer a 3R profit each. And I suppose a lot wouldn't mind if they have to wait days or weeks for that. But so many times, I see traps set up precisely to catch those who are after 3R profits. You can have all the patience, and all the discipline of an exemplary trader, but once you're after low risk high return/probability trades trading the futures, you'll be disappointed at best in the long run. I can't say the same about stocks, but in futures and forex trading, there's no such thing as a low risk high probability set up. Every entry is inherently very risky, and you will only have 50% chance of being right. Your probability of coming out with a gain is always 50%. If you have a tight stop of 2 ticks for a 2 point profit target, you'll be wrong 99.9% of the time.
That's just my observation, of course. And I actually don't want to be right about it.
That's why I'm studying Al Brooks (But even Al Brooks doesn't have a 2 tick stop. I believe he has an 8 point stop. Haven't got to that part yet, but I remember hearing it on one of his presentations.). Brooks gave me the impression that he has found a way to nail entries that are close to being "perfect". I'm going to have to go over 400 pages of his work to find out what his secrets are. For the past 3 to 4 weeks, I've gone over the entire June contract's 5-min charts to study them candle by candle, and my conclusion is that it's simply not possible to be consistently profitable (I'm not saying that I expect nil losers - that's laughable at best) if the focus is on R to R ratio. The gems are the riskiest trades - high risk high reward is the best the market has to offer. You will see trades with perfect R-R ratio when you do all your backtestings.
Try forward testing instead.
In response to a question over at my comment section, I have signed up for Sierra because I need data from the past 6 months to do all my research. TOS has only 20 days of intraday charts. I have now downloaded 5min charts for the u8,z8,h9 contracts on Sierra. And Sierra allows me to make notes very efficiently on the chart itself. I am now able to do on Sierra analysis and note-taking for 5 to 6 days' charts in the time that I used to be able to do only 1 on TOS.
To cut a really long story short, I'm taking time out to avoid having to think about upsetting events and people, and to do a lot of back and forward testing on concepts I didn't quite use to believe in ie. beautiful entries and money management (to me, money management used to mean NOT WIPING OUT MY ACCOUNT. Just that. Simple enough for me to grasp and follow).
I trade occasionally still, but most days, the only thing I do after market open is to OBSERVE price movements - and take notes of course. I haven't finished even chapter one of Brook's book. It's hard when my tendency is to go back to my charts after reading a few pages to check out the setups.
I most certainly hope I'll be done by June.
Those that are extremely close to me already know that last year was among those I would label an absolutely "nightmarish year". It began bad, and got terribly out of control by May. It was during the worst time of my life that I began to blog regularly. Seabloke and my counselor thought it would be good for me to express feelings I never knew how to express (I remember telling my counselor that I was capable of expressing anger and anger only, and told her that I'd probably be her only patient who was too intellectual to buy into the notion that admitting and showing my vulnerabilities is going to help me move on) via journalling.
So, I had a jolly good time putting up my first few ultra expressive entries in May 2008. After that, I regretted my emotional outpour, and deleted the really weepy ones. Instead of writing about my extremely dark thoughts and negative feelings, I started to write about my trading activities and thoughts about trading instead. Trading distracted me from useless thoughts, and writing about it was beneficial to both D and me. D has always been too busy/lazy to do pre-market analysis, so I did that for him via my blog. Then I began to post my daily trading results, since I need them for review, and I couldn't find a better place to archive them than on my own diary. The rest's history.
Came May 2009, and I was reminded of all the bad things that happened in May 07 and 08. I feel sick everytime I'm reminded that there are those reading my blog that are the eyes and ears of someone I would not hesitate to slap if I were to run into him on the street. I was very close to wanting to keep a private blog, giving access to only the few who started reading my silly entries when I started writing last year. At the same time, I was also starting to become aware that I traded quite differently from the norm, and was constantly afraid of inviting questions that I couldn't respond to in a way that could be understood.
People like Lonely and Solfest would know that I frequently let my losses run and cut my profits short - I let my losses run until I know that I'm clearly wrong. 8 out of 10 times, I'd be right and I'll get out with a profit. I don't take things for granted - so when I'm in profit, I take them. While going over my past trades, it's obvious that my trades suffered a great deal when I started to get too afraid of sitting on losses. I bailed at maximun damage so many times I lost half my account in a mere 3 months.
My trading style would reflect that I've never been able to relate to the term "risk-to-reward ratio". Regarding entry - it was until I attended Michael's class that I learned about the proper way to enter a trade. And on profit taking - I'll cover whenever price stops moving. As far as trade execution is concerned, I can't think of anyone who does it more sloppily than me. I can never tell another person what triggered my decision to enter a trade. I can sit in front of my screen for hours without moving and all of a sudden, I see something, and I jump right in. No thoughts about stops, risk, where to take profit. If I'm right, I grab my profit and wait for the next sighting. If I'm not immediately right, I wait to see if I'm going to be wrong. If I see any signs that I could be wrong, I'm out. If I don't, I stay.
The thing about wanting to nail that perfect entry is that it's a tad similar to wanting to find the holy grail to trading. Sure it would be nice to find trades everyday that offer a 3R profit each. And I suppose a lot wouldn't mind if they have to wait days or weeks for that. But so many times, I see traps set up precisely to catch those who are after 3R profits. You can have all the patience, and all the discipline of an exemplary trader, but once you're after low risk high return/probability trades trading the futures, you'll be disappointed at best in the long run. I can't say the same about stocks, but in futures and forex trading, there's no such thing as a low risk high probability set up. Every entry is inherently very risky, and you will only have 50% chance of being right. Your probability of coming out with a gain is always 50%. If you have a tight stop of 2 ticks for a 2 point profit target, you'll be wrong 99.9% of the time.
That's just my observation, of course. And I actually don't want to be right about it.
That's why I'm studying Al Brooks (But even Al Brooks doesn't have a 2 tick stop. I believe he has an 8 point stop. Haven't got to that part yet, but I remember hearing it on one of his presentations.). Brooks gave me the impression that he has found a way to nail entries that are close to being "perfect". I'm going to have to go over 400 pages of his work to find out what his secrets are. For the past 3 to 4 weeks, I've gone over the entire June contract's 5-min charts to study them candle by candle, and my conclusion is that it's simply not possible to be consistently profitable (I'm not saying that I expect nil losers - that's laughable at best) if the focus is on R to R ratio. The gems are the riskiest trades - high risk high reward is the best the market has to offer. You will see trades with perfect R-R ratio when you do all your backtestings.
Try forward testing instead.
In response to a question over at my comment section, I have signed up for Sierra because I need data from the past 6 months to do all my research. TOS has only 20 days of intraday charts. I have now downloaded 5min charts for the u8,z8,h9 contracts on Sierra. And Sierra allows me to make notes very efficiently on the chart itself. I am now able to do on Sierra analysis and note-taking for 5 to 6 days' charts in the time that I used to be able to do only 1 on TOS.
To cut a really long story short, I'm taking time out to avoid having to think about upsetting events and people, and to do a lot of back and forward testing on concepts I didn't quite use to believe in ie. beautiful entries and money management (to me, money management used to mean NOT WIPING OUT MY ACCOUNT. Just that. Simple enough for me to grasp and follow).
I trade occasionally still, but most days, the only thing I do after market open is to OBSERVE price movements - and take notes of course. I haven't finished even chapter one of Brook's book. It's hard when my tendency is to go back to my charts after reading a few pages to check out the setups.
I most certainly hope I'll be done by June.
Oh, and those following Daytrader 233's blog, he's moved to: http://priceactionscalping.blogspot.com/
There are quite a few others who have started blogging. They should be on my 2 blog lists. If I've missed anyone, please let me know.
Cory, where's yours??? LOL!!!
There are quite a few others who have started blogging. They should be on my 2 blog lists. If I've missed anyone, please let me know.
Cory, where's yours??? LOL!!!
4 comments:
Jules - You have a great blog and I'm glad I found it! Thanks for posting all of your thoughts; it is great to step into the mind of another trader who also experiences very similar ups and downs. I haven't checked your site for a while because I took the term "break" literally! :) Had I known it was a fakeout I would have kept visiting! ha ha. Anyway, just wanted to say hi and thank you for taking the time to post your thoughts on trading and life in general. Keep after it!
Stan
Jules,
I want to say this as plainly and clearly as possible: YOU GET IT. This is a great post. It means nothing that others can't or don't see what you see. I think it's a good sign. Since I started blogging, I've received a lot of feedback to the effect that all or some of my approach is misguided. It's bothered me at times, because I'm super confident that I'm going to win at this game but not so egotistical to think that I can't be wrong. I won't lie, I've wanted to really flame some of the commenters. But I'm learning to take it in stride, pick out the helpful thoughts and suggestions (and there have been many), and generally stick to what works for me no matter what others think. Anyway, it's just so damn clear to me that you have the goods. Keep it up!
JE
Stan,
Thank you for the very kind words :-)
JE,
your comment really makes me want to say more about the naysayers LOL!, but it's 1.30am here and D's waiting up (guess I'll never get to trade the after 2pm session!) so I've gotta run now.
Oh, Stan, I've been quiet but am reading your daily posts. Hope YM works out for you.
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