About Taking Losses and Trading Others' Methods

Here's what my week looked like:

Mon: - USD 150
Tue: + USD 571
Wed: - USD 71
Thu: + USD 235
Fri: + USD 509

For a while now, I've noticed that small losing days in between winning ones are good for my account, and that it pays to just walk away when a voice tells me that I don't really want to play anymore. It's when I fight that voice that I end up having to take the kind of loss that dampens my spirit for days to weeks. There were exceptions of course, but that's story for another day.

Although I don't trade just one specific symbol, I don't jump from one symbol to another throughout the day looking for something to trade when the day doesn't look at all promising for my trading style. These days, I'm comfortable with just shutting down and calling it a day when I feel that I've had enough of the market.

On Friday, I thought about taking trades off the 2 min charts, and also about trading the half size crude (QM) some time after that run up to R1. I changed my mind eventually and decided I should really just call it a day.

D, however, hadn't made his first trade, and I felt I needed to "help" him find one on the 2min.

Needless to say, it was a bad idea. For his 1st trade, he entered too late and his stop was not wide enough to cover that kind of move (I think we call that "chasing"), and for his 2nd trade, he entered too early and had to scratch coz I told him to.

Price immediately went his way after he scratched.

D lost USD 250 taking my trade idea. I asked him if it was my fault. He said, "Yes. You kept changing your mind about where price was heading!"

So I left him alone and chatted with J instead.

A few minutes later, D got all excited over something that developed that looked like one of my favorites, and asked me what I thought. I immediately hid my face in my jacket and shook my head violently to signal I wasn't going to say anything. D burst out laughing, and went ahead to make his own decisions. He recovered his loss by the end of the session, and made some money in fact.

Moral of the story: never ask a woman for directions.

Maksim and Jay

Crude Oil

CL 10min

In green box are today's trades:
Regarding the interview I went for - I have been asked to consider heading their corporate communications dept. I'll be meeting the dept, and we'll see how things go.

A job should keep me sane.

Life Goes On

CL 10min

In green box are today's trades:
Living with my choices.

Spent most part of my day playing on my piano while waiting for something to happen on my charts, and the rest of it replying some mails.

I guess that's one step towards finding some balance...

Thank you all who have dropped notes over the past few days. I really appreciate your taking the time to post. I've read your comments over and over, and am still at a lost for words...

Li W,
I love D. Maybe I don't sound like I do, and that's terrible of me. There's no benefit - convenience, maybe (we are both too lazy to shop around for better partners) :-)

Secret

Can space and time be warped enough to do this?
http://www.mysoju.com/secret/

My Puzzling Life

A typical week in my life:

Monday - Friday
I wake up.
I prepare breakfast for D and then see him off.
I feed my cats and massage them.
I look at my charts.
I wait for D at the lobby in the evening.
I have dinner with D.
I feed my cats and massage them.
I look at my charts.
I sleep.

Saturday
I wake up.
I feed my cats.
I look at my charts.
I feed D.
I look at my charts.
I have dinner with D.
I feed my cats.
I look at my charts.
I sleep.

Sunday
I wake up.
I feed my cats.
I look at my charts.
I feed D.
I do the laundry.
I look at my charts.
I have dinner with D.
I feed my cats.
I look at my charts.
I sleep.

From time to time, I look at my facebook and email inbox and reply some messages. Every day for 9 months now, I'll chat with J. It used to be long chats. These days, they are short. Every month, I'll see Seabloke once or at most twice. Every other day, she'll text me to see if I'm alive.

Besides the chatting with J part, this has been my life for the past 2 years.

I had lunch with Boon Sin today. It was a lovely session. We talked about our lives. And we talked about people we know. We talked about the past. We talked about the present. I realize how different my life has always been. And I notice how busy and fulfilling others' lives seem to be.

I ask D why I am not a mother of 2 -3.

D says it's because I don't want kids.

But I think it's because I know I'll be a terrible mother - the kind that will forget to feed her kids, bathe them, enroll them in schools, pick them up from school, send them for medical checkups, etc.

I ask D why I don't have a job.

D says it's because I am after something that a job cannot give me.

I ask why I had a kid at the time that I was a kid myself.

And it got me thinking that, maybe, not everything that happens to me is about me.

I'll be taking a break from charts from today on, for as long as I need it.

Boon Sin gave me a 3D globe puzzle. I almost didn't know how to react when I took the box from her. I still don't know what to feel now. I have a tendency to not know what to do with extreme kindness.

But I love the puzzle. I will be spending some time with it, and on the piano that I've almost never touched for years. Boon Sin is going to bring me some scores, and for the first time, I'm going to hear her play on a piano.

Something that I will definitely set aside time to do from tomorrow on is replying to messages and comments. I have been rude, and I apologize.

In green box below are crude oil trades (QM is mini crude oil) from Tues; in red are CL trades from Monday. Chart shows CL trades from Tues.

CL 5min

Choices

I've received emails asking for access to this blog which I closed over the weekend (the main reason that visitors want in is my bloglist).

I realized my action was abrupt, but I have my reasons.

That said, I'm feeling really bad about what I did. AND, I miss writing about my day.

So, I'm feeling really torn here.

I'm also feeling extremely suicidal.

Tomorrow, I'll be meeting a friend that I've known for more than 2 decades. We were supposed to have met up months ago - we didn't because things got in the way at first, and finally I became so withdrawn I simply couldn't step out of my home. Boon Sin writes beautifully in Chinese and expresses her feelings so well I'm almost envious. I was reading her blog from her very first post to the most recent one, and noticed how similar we are in terms of how we FEEL, but how very different in terms of how we THINK and make decisions. Putting it simply, she does what she feels; I don't. My actions and the decisions I make don't always reflect my feelings. As a matter of fact, I try to NOT feel.

I've not seen Boon Sin for more than a decade, even though we live on the same tiny island. We've always managed to keep in contact though. She was one of my closer friends before I went away for a decade, and one of the sweetest persons I know. She remains one of the rare few female friends I have (for some reason, I have problem communicating with girls and women). Extremely soft and kind (explains why she would even be my friend), she's almost the opposite of me. She's also a beautiful mother of 3, and plays the piano professionally. It isn't that I wish I could have her life - I like mine, no matter how screwed up it has been - but I just wish I can feel a little of the bliss she feels on a daily basis.

I traded crude oil yesterday. It was a terrible choice. I would have done better trading crazy nat gas. I took a loss of USD 150 by the end of the session, but it isn't the loss per se that frustrates me -it's how I habitually like to make BAD choices these days that's killing me.

Stymie

I love Solfest.

I got out of bed this morning feeling like I wanna kill someone, but Solfest's comments really cracked me up.

Something happened, and I'm now more frustrated than I've ever been.

I didn't think my life's going to turn out this way - aimless and completely meaningless.

I have a tendency to think too much - baffling, since I really hate using my brain.

I'm taking a very long break from public blogging to detox.

I Hate Festivals & Trading Holidays

CL 2min

A bout of depression is good for the soul, I heard.

I hope it's true.

There's something about festive occasions that depresses me. I'm glad Chinese New Year and US trading holidays are over.

A good friend visited on Tuesday, and I showed him how I trade crude. After a 5-hour tutorial, he went home to trade that monstrous uptrend, and took USD 750 from the market (he has been trading forex on and off for a few years, and has almost never touched futures, let alone crazy crude).

That's about the only thing (other than Seabloke and Gremlins) that made me happy in the past week.

Was at Seabloke's on the 2nd day of Chinese New Year, and we had a lot of fun playing with her MAC. Twins were adorable. "We don't love you, Yee Yee", they said, "We love you VERY MUCH!". I'm blaming Sea for my not wanting to have a baby. I'm afraid that mine will turn out just NORMAL.

I'm still depressed. I don't know why, but I'm not going to dwell on it. I'll just continue to pop my happy pills.

Sage,
Of course I want the job. Isn't it obvious I was trying very hard to stand out? :-D

Crazy Everything Day

Waiting patiently for the day when everything stops chopping around!

No time for charts. Looking for my mascara again! I'm sure Keish (my vain cat) hid it, AGAIN.

Update

About the job that I turned down - the director called and spoke with me for a half hour. I'm sold. It turns out that I'll be vetting reports and not writing them from scratch. There will be steering committees for each aspect of the project, and representatives from each department to coordinate trainings and meetings. Bottom line is, I CAN STILL TRADE IN THE EVENING (when US market opens). I'll be meeting the highest management tomorrow, and we'll see how things go from there.

As far as trading goes, there's nothing much going on. I'm distracted, and also in the midst of sorting out what type of trades I want to take (I'm learning not to feel bad about not catching all the big moves in the symbols I trade).

This is from yesterday:

Life's Interruptions

I'm taking a break. There's too much going on (chinese new year celebration that I hate, job interviews to attend, and some personal matters to settle), and I'm losing focus.

Sometimes, sad movies make me cry.

I Love Fridays

GC 10min

Outlined in pink are places where I sold. Yes, I am stubborn. I was prepared to be stopped out on every trade I took. I simply MUST have my S1 target TODAY.

D's still marveling at my 10% winning ratio:

QM and ZS

ZS 200-tick

For the week:

I'm too tired to figure out what ZS is doing.

The only thing on my mind now is my bed.

Mini Crude

QM 100-tick

Got home just in time for market open. It's been a very long day; everything turns out fine, except for one problem: hours. I would have to give up trading altogether.

Above is the first proper trade I took this whole week. Well, at least I managed it the way I did when I had my heart and soul and my entire being in trading.

Time-Out

Definitely reliving January's nightmare - bad timing, generous stop-loss, and the constant feeling of wanting to just lift my stops and walk away.

I don't trade pullbacks, so when something's trending higher/lower, the wise thing for me to do would be to stay on the sideline until the trend exhausts itself. Right now, it looks as if everything I have attempted to short is on a healthy uptrend. So, it's a waiting game for me from here on out.

I'm still not crying. Not over my trades.

But if I don't find my mascara before my job interview, I will most definitely cry.

Sick of Break

The organization that I most want to work with replied.

Meeting date set for this week.

I am beyond elated - after 2 years of hiatus, I'm starting to seriously miss the morning and evening traffic.

If only we could skip the whole interview thing...

Nat Gas Trade 2/1 (Mon) - After Action Review

NG 10min

What I did wrong:

1) Attempting to fade a more-than-10-point gap

2) Failing to get out at the start of the pit trading session - on a strong up day, trapped-out buyers are going to buy on a dip at market open. Where my profit hit USD 200 and made a U-turn - that was the perfect pullback to buy

3) Attempting to short something that's reached R1 way before the pit session started, which is really not prudent - the likelihood of price hitting R2 - R4 subsequently is high

4) Ignoring my FEELING about taking a 4% risk on a single trade (knowing that my stop was going to get hit paralyzed me - while price action clearly indicated it would be wise to scratch my trade, my fingers had not co-operated with my brain)

5) Attempting to fade a strong trending OIL simultaneously - it was clearly distraction that I didn't need

What I did right:

1) Respecting my stops - even though the stop for natural gas was PAINFULLY wide

2) Not attempting to short NG at a higher point after lunch - on days like yesterday, price is likely to go sideways after buying stops - MACD can continue to show divergence after divergence, price will simply not plunge

Additional Observation:

1) I have a tendency to short a strong uptrend on the first trading day of each month

2) NG is crazy - I realize that now (I've found some of my sanity)

Gagged

NG 2min

I had placed my stop at above R2. After seeing a USD 200 profit, to have to watch price make a U-turn for R2 was just plain torture.

I have yet to make out if it's just my style, or a bad habit I should consider breaking - I tend to be overly aggressive/ambitious in the beginning of the month, get all bruised, and spend the rest of the month pretending that I have amnesia so that I can continue to trade.

I'm not sure that I want to switch mode like I did last month after taking a substantial loss in the first 2 (3??) days of trading. The thing about trading in the conservative mode ie. constantly moving stops to protect gains, is that I'd have to give up the kind of profits that come with my adhering to my exit rule.

Objective for the trade above was a level slightly below pivot - a USD 1500 profit target.

I'll probably be spending the next few days in a daze.

In green box are today's trades:

LW, Velazquez and Mark Douglas on "Are You REALLY a Risk Taker?"

An easier-to-understand version of this Englishman's post:
_________________________________________________

Are You Really a Risk Taker?

By Gabe Velazquez, Online Trading Academy E-minis Instructor*
Posted: Jan 29, 2010

Very early on, on the first day of any class I teach, I write on the white board these two words in big bold print: EMBRACE RISK. It would seem that everyone looking to get involved in trading, whether on a full-time or part-time basis, understands that trading is a risky business, so embracing risk would be a given. When asked, most of the students will acknowledge that they are indeed willing to assume some degree of risk – some more than others – and that's typical.

However, when we begin discussing technical analysis and trading set-ups, those same students who assured me that they didn't have a problem taking losses begin asking questions such as, "How do I know if it will hold that support or resistance level?" or "What if it doesn't hold?".

Another one of my favorites is "What do you use for confirmation?" to which I reply, "I put on the trade, and let it work or fail. Confirmation is the trade working.” This answer always seems to elicit a puzzled look.

Now, this last statement flies in the face of what many traders have been conditioned to look for. Many new traders seek out multiple technical indicators, in essence, searching for multiple layers of assurances for their trades. The problem I see with this that, by the time all the stars line up (so to speak), these traders are usually entering the trade too late, thereby increasing their risk of missing the trade entirely.

This inability to pull the trigger when an opportunity presents itself is a direct result of the self-doubt generated when one does not TRULY ACCEPT THE RISK on the trade (I'll expound on this later).

What I also find interesting is that, when we start the first trading segment of the class, I begin to hear the sighs of vexation every time a student has a stop triggered (takes a loss). It's as though this student just received a body blow. Some students even begin to take every loss personally. With others, I have to suggest that they step back and take a deep breath before they continue their trading because they've become overwrought and are no longer thinking logically.

It's at this juncture when students really find out how they react to losses emotionally. Changing their attitudes about losing and being right is truly where the work begins.

Let's delve into this notion of unconditionally accepting losses as part of trading, which in my humble opinion is one of the biggest obstacles for most traders to overcome. It goes without saying that we never put on a trade expecting to lose, and most traders do place a stop loss just in case the trade doesn't work.

Yet, when price approaches the stop level, the natural tendency for the non-professional trader is to move the stop away from the market in hopes that the market will recover. The next adjustment in his or her avoidance of losing is to pull the stop altogether, or worse, double-down on the position.

Moreover, when a trade initially goes against the non-professional, and then recovers to a break-even level, this trader will close out the trade, relieved that he or she didn't lose money. Invariably though, as soon as this trader exits at break-even, the trade goes on to do exactly as analysis had suggested – causing the trader to be immensely irritated.

Regrettably, this begins a vicious cycle that can only be broken by gaining confidence in a methodology and coming to terms with risk acceptance. So you see: Placing a hard stop does not necessarily endow a trader with the "risk taker" attribute.

In class, I encourage students to think in terms of risk versus reward, as well as probabilities. I won't go into risk / reward now, but, rather, I will discuss the odds game.

Much like a professional poker player, a trader must find an edge. A poker player works at memorizing what card pairings offer the highest chances for him or her to win. The poker player understands that, aside from the initial ante, he or she only presses a bet when the odds are in his or her favor.

What's more, those who play poker professionally understand that they may not win for a series of hands, but, if they play enough hands, their edge will win out over time. Similarly, the professional trader will put on his or her trades in a systematic fashion without fear of losing or being wrong. He or she sees every trade as only one in a series of hundreds or possibly thousands in a trading career.

I understand this is much easier said than done, and it will probably take some work to modify your thinking. On the other hand, those traders who can't get over their fear of losing or being wrong will always operate in an environment full of stress and anxiety. Sure, they'll have their ups and downs, but at some point, trading will become drudgery and not much fun.

Then again, for those of you who truly want to take your trading to the next level and experience the satisfaction of seeing a rising equity curve over months and years, next time you spot an opportunity, predefine your risk, put on the trade without hesitation or doubt and let the chips fall where they may.

After all, what's the worst that can happen? You might lose a few bucks, or perhaps the trade works and you attain your profit target. If your profits exceed your losses by a margin of better than three-to-one and you have an edge (higher than 50 / 50 probability), your chances of being consistently profitable will vastly improve. That is, provided you accept the outcome on every trade. In other words, you must truly embrace risk in order to become a professional trader.

_________________________________________________

Audio lectures on the subject matter by our all-time favorite:

http://club.ino.com/trading/2008/07/saturday-seminars-the-dynamics-of-a-traders-mindset/

http://club.ino.com/trading/2008/10/saturday-seminars-finding-maintaining-your-personal-trading/