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.

Reply To Comments

The good thing about not having to plan for pre-market trades is that I have plenty of time to read and write. LOL!

Am responding to Emini Player, JE and Cory's comments here.

EP:
I do track my winning vs losing trades. But I do that only on a half-yearly basis. For 2008, the review can be found on one of the links on the left.

Regarding the way that professionals play -

I agree that their way is much easier on the heart. Michael (the pioneer in basic trading courses here) trades this way, and teases me all the time about my scurrying in and out of the market :-) But Michael is financed by pure trading profits. His psychological barrier is not even a tenth of mine. I am financed mostly by my own savings (although it's not an emergency fund or money that I need to put food on the table), and it hurts A LOT when it's taken from me. I can't stand it when I get stopped out. It's slow bleeding, but I can still die from it.

Most importantly, I'm just NOT the type that can sit still and wait for price to hit target. I am very hyper, and I'm a control freak. Getting in and out is not half as stressful as sitting and waiting to be stopped out or for target to be hit. It drives me nuts. I don't think I'll ever trade that way. Yes, my current profit is small, but the dollar amount per day is not what I'm focusing on. I'm counting points and tracking consistency. Once I get both right, I'm trading more contracts. Am still working on the stops still. Before I read your comment, I was thinking about setting a 6-tick fixed stop and entering only when the setup is right for such a stop. That's for now. In the long run, I'm still much more comfortable with a mental stop that takes into account the prevailing market volatility. But that will come only after I've learned how to handle the emotional bit.

Thanks so much for telling me about your broker. I will ask D. He handles my account and everything related to form filling. I just trade. LOL! So you have mentors? Good for you! I've never had one, and wonder what it's like to have someone kick my ass.

JE:
Thanks for your note. It's so kind!! Warms my heart :-) So sorry about what you went through. Good that you've recovered (you have, I gather) and are trading again (I'm assuming you are, since you're watching the market). I've heard too many sob stories from traders who are doing well now, and am convinced that it will take years and years of practice to master the art of trading. Ray Barros' is legendary. On the other hand, I know also those who hadn't been burnt ever, in their decades of trading. Michael Woo, a well-known trading coach here, and someone I really look up to and love chatting with, is a rare breed. He's traded for more than 20 years. When I teased him that he has no sob stories to tell (here, sob stories SELL!), he protested and said he lost money on gold when he first started out. I asked him how big the damage was, he replied that it was HUGE. Then I asked if it wiped out his account, he replied that it was nowhere near that. My conclusion to that is that he indeed has NIL sob story to tell. LOL!! I don't know how many out there are as brilliant as him. I believe that most have gone through rough rides in their trading journey. Except for those with really great mentors, and the mentees are NOT doctors or lawyers by training LOL!

Thank you for liking my writing. I tend to communicate better with animals, so it's really comforting whenever I come across a human that actually understands my gibberish :-)

Cory:
Gosh, you are good! I'm going to be using that list as my beacon and roadmap. I'm serious.
Do you have a blog, Cory? Think I asked that once months back. Are you a member on EliteTrader forum? We seem to have a lot in common as far as trading goes. Would really love to read about your experiences if you're sharing them via your blog or a forum.

ES 3/18 - Fib Targets

Still holding my no-good trade. Will let it go probably near pivot, if it gets there. Or at 769, which is Fib ext 138.2 (using the high to first swing low as the seed), or at around 758. Am wondering if today's doing the exact opposite of yesterday. Will see how things unfold.

ES 3min (Yesterday)

The above shows ES hitting fib 423.6 target at market close. On a strong trending day, it has hit that TWICE (seed had a tight range though) before. The downward move to yesterday's low hit 211.8 in a matter of an hour. Had I been more attentive, I should have taken that as a sign that what ES would do next was to go for the targets on the other (up) side. Before the low was hit, ES had been stopped repeatedly by 138.2, which was just too far below its potential.

ES 3min (Today)

This chart shows seeds for both first down move and first up move for today (pink is down, blue is up). ES has a tendency to stop at levels 211.8 and 138.2. On trending days, it usually exceeds 423.6 by the end of the active trading session.

As I've mentioned, am not planning new trades for now. Am just waiting for a place to get out

I Want Out

Nursing a scalp gone really bad. My focus now is on exit. Not planning anything else until I've closed my position. And I definitely will close it today. Even a gapped up star on daily chart will not make me hold the short position. We're no where near price top. An evening star only works there (price peaks). What I'm seeing on both daily and hourly charts are telling me a rather bullish story (now, that sounds really familiar....did I say that a couple of days back??? why the hell did I keep selling then???)

I've mismanaged my trade big time. And I've broken my number one rule about not keeping a trade overnight.

I can continue to hold the trade and HOPE for the best - and if the best happened, I would have learned nothing. Or I could bail now, take a USD1k loss, and resume practice on scalping the way I did before. It's been 6 months now, and I still can't repeat what I did in Sept/Oct last year. Back then, running was my forte. Probably has something to do with the fact that I was entering on 5 contracts (ER2) each trade. I remember saying back then that I had wanted to reduce to trading just 1 contract so I can learn to HOLD a position, but was wary of a very likely consequence ie. that I'll get sloppy and not run when I'm wrong. 6 monts later, I'm living that very nightmare. Self-fulfilling prophesy, maybe. But it's looking more like I actually DID know myself very well then.

Now, I'm simply baffled. I don't know for sure why I had to fix what isn't broken. Perhaps it was the profit amount that freaked me out. It's extremely unproductive to think that if you can earn that much, you can also lose that much, coz I hadn't gotten there by gambling. I acknowledge that the market needs to be willing to move in the first place, but the rest is really just pure money management and focus. I was so willing to scratch whenever price didn't move in my direction immediately, or when it went against me by ticks! I was also willing to take ticks for profits. On rare occasions, I got a few points in under a minute. I always depended on the market to give me whatever it wanted to give within that single 3 or 5 min candle, and I was out.

Maybe what I really need to do is to go back and take a look at how I traded then. My style was certainly a lot less complicated. I look at chart patterns and only trade 2 to 3 of them, and I kept my eyes on the key S & R levels. And with the ER2 (TF now), I would use fib to buy/sell on retracement on a trending day. That was all. Nothing else. I didn't care about pivot points. And I didn't care about previous days' highs and lows. As far as I was concerned, they would have been key S & R on the higher timeframe, which I would plot on my 3 or 5 minute chart. Entries were ususally based on 1 min. I was able to focus on the "NOW" - no prediction on whether support or resistance was going to hold coz price was at historical high/low and such, or that it had gone up/down for days so it ought to be retracing, etc, etc.

Seriously, are other human minds able to process that much in a matter of minutes or even seconds? Am I the only one that has a brain that can only focus on ONE thing at a time? In scalping, for me, it would be on what price is doing NOW (eg. price is at support, and has formed a hammer; the next candle opens below the open of the hammer and is moving down - so the only thing I'll be thinking is that price is behaving oddly, and that I should just wait to see what happens next).

I really want to get out of this confused state. I have a very short attention span (I can't even stay depressed for more than 24 hours for crying out loud), and I'm wondering why I haven't gotten sick of being confused yet!!

ES Trades 3/17 - Sleeping with Open Position

Apparently I've not finished configuring my updated TWS....haven't gotten down to doing anything about the layout either.

I've finally turned another scalp into a daytrade, which is starting to look very much like a good swing trade.

If I remember correctly, the last time I kept a trade overnight was as far back as 6 months ago.

I've gone from being extremely conservative and nervous to out-and-out fearless. Great.

Am turning in. It's 1:30am here, and I haven't slept in a long time.

Thanks, LT and Cory, for your comments. Just read them. Still deciphering LT's message though....

And thanks, MVW, just read yours seconds ago. I'm not letting anyone take my money. So I'm totally going to keep my trade. LOL!

ES 3/17 & Rant

ES 3min

Levels that I'm watching. Plus 776 & 782.

I have no idea if ES wants to test the high or the low, and I have no idea how I'm going to go about trading today. So far, using stops has been EXTREMELY uncomfortable and unnatural. If it takes doing something that feels totally unnatural to trade well, I'll choose sitting on a losing position over using a stop ANYTIME. Ok, that's not fair. Sitting on a losing position is absolutely in my blood, but damn, it's gotta be the most uncomfortable thing to do!

So far, scratching without waiting to be proven wrong, or outright sitting when my trade has not been proven a bad one has worked FOR ME (save the few times that I totally lost my mind and decided to inflict some REAL pain in order to learn). Trading without a hard stop has been stressful, but I feel in control. Putting in stupid bracket orders or simply a hard stop makes me feel like a really lousy stuntman that needs a safety net, or more aptly, a leashed dog.

I'm tired of wanting to do what's right. Why can't what's right be whatever that makes you money 80 - 90% of the time?? Now I've simply gone from feeling stressful to MORE stressful coz I really don't know what the hell I'm doing.

Why does wanting to be JUST me ALWAYS feel so wrong???

Admirable Politics?

I am not American, and I don't like to talk about politics, the economy and general social ills. Because they are unnecessarily complicated, and generally inherently depressing. But I've reached the point that I need to unload some pent up indignation. After days of reading stories like this, I have been visualizing slapping the person I used to admire.

What baffles me is, why is he even reprimanding?? Those are not just a bunch of school kids that are acting up.

If he is not merely putting up an act, then he's simply incompetent. I believe his hands are tied. But hadn't he come into office with some sort of a game plan to take command?

First you have a puppet Bush. Now you have a softie, whose desire to be a folklore hero is even more unpalatable than his predecessor's thirst for oil.

Americans don't need a hero as a President. They need a Hitler, or a Saddam, to weed out the ills in their society.

They need someone like Jack Bauer in 24, a Jack Bristow in Alias, and a Bryan Mills in Taken.

A man's gotta do what a man's gotta do!!

When my Dad used to see something seriously wrong, he would always go,"If I were the government...I would......".

Right now, I really feel like saying:

If I were Obama, I would stop apologizing - stop talking altogether in fact - stop wanting to be a GOOD MAN ("Good" is the antonym of "Politics". So I take back my word that I thought America needed a "good" man as a president. As my brilliant brother, the Pilot had said, the only good man who chose to be a politician - and he did so only coz no one else would fight - is Gandhi), and JUST BE A JACK BAUER.

Actually Bryan Mills is even better. Cool headed guy who's always in control - hardly surprising given that he spends most of his time thinking and TAKING ACTIONS rather than talking. I love the way he goes for the neck, the key organs, and the repeated punches on the face til the crooks totally stop moving. He doesn't spare anyone who got in the way of his saving his daughter, a defenceless teenager who had gone on a tour with her crazy cousin coz she didn't know better, and was kidnapped (sounds familiar huh? Can you blame a young girl when even adults of today clearly show that they are not any wiser?). That's what you do to selfish, wicked people who harm the innocents. And I don't care about the reasons they are selfish. They could be doing everything for their family. But hey, all of us have got a family, but we don't go around destroying others' so we can live in huge mansions and holiday at the bahamas every summer!!

The people of America need a Bryan Mills.

Lost, Again

Frustrating day. Nothing's working. Just realized that my TWS setting has always been stored on my server ie. no local copy.

My cats are as crazy as my charts.

The universe has conspired against me again.

It's strange that a person who has the entire house to herself for the most part of the day is desperately needing space.

Everything around me that moves distracts me. Every sound I hear annoys me. It's a clear sign that I've lost my focus.

And I don't even know how and when that happened.

Was telling D last night that I don't have the luxury of taking things one step at a time.

I feel like a total failure, and I've wasted my life.

Got My Old TWS Back

Got my old version back. Took 5 different funny faces from D to make me laugh again. I just don't understand why men must fix what ain't broken!!

Dinner now. Trade later.

SUPER MAD!!!!!!!!!!!!!!

I AM SUPER PISSED!!

D updated my TWS over the weekend, and when I logged on today, booktrader looked different (no more market depth!!), and the configuration for my bracket orders looked alien!! The worst part was that there was just no way that I could re-configure bracket orders, and no information whatsoever on how I can view market depth again! Sure I was pointed to their website (I happen to know the URL!!!!!), but once in, I was left strandled at their homepage, not knowing what I was supposed to subscribe to in order to see my original tape!

In frustration, I had put in a wrong order TWICE!!!! BLINDED BY RAGE!!!

D's not home yet (2 hours late), which is totally fine had IB not screwed me. He had to call at precisely the time that I was about to implode.

I HATE CHANGES!! I HATE UPDATES!!! AND I UTTERLY HATE USING BRACKET ORDERS!!!!!!!!!!!!!!!!!

D said he's coming home to fix everything. But I'm too mad to be able to focus anymore. I WANT BLOOD!!!!!

ARGGGGGGHHHHHH!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

ES 3/16

ES 3min

ES looks bullish for now. Buying first decent throwback. Selling double tops and Inverted Head and Shoulders. Watching 669, 776, 782 resistance and signs of bears fading gap.

In a nutshell, playing by ear.

ES - Fulcrum

ES Hourly

What I see when I put on a Bull's hat:
i) Price stopped by pivot at around 754, OR ii) by 752, leaving half of gap unfilled,
then plunges to 729 support, from where it takes off for 776.25 resistance, clears it, then go straight for 836 target

What I REALLY See:
1) Price making a dash for 776.25, creating a classic bull trap, then comes back down towards 737 and stalls there, creating a bear trap; bears run, price shoots up to 796.5, then free-falls to floor of dotted white uptrendline

2) Price falling to 729, finding support temporarily, goes back up, only to be stopped by 745, forms a classic partial rise, then plunges down to 720 or possibly 707 (either way, finding support at floor of dotted white uptrendline)

Ok, what I see is what I WANT TO SEE (I mean, don't we always see what we want to see?....ok, enough mf for now...) . A 3-rising valley type of bottom is simply more convincing, at least visually. Something that stands on one leg looks precariously like it's going to topple, sooner or later.

Again, will draft my game plan for today only at 5am EST.

Phantom Of The Pits (1)

Phantom Of The Pits was asked:

After more than three decades of trading, why haven't you written a book sooner?

Phantom's response:

I have, but they have all seemed to become outdated because knowledge is quicker in coming than in writing. I always wanted to have it exact. I have made mistakes, and to give my mistakes to others seemed to be admitting I was wrong often.

It has taken years to understand that being wrong is what trading is all about.

Just Gotta Love Facebook

Personal ALL TIME favorite:

ES Trades 3/13

Choppy day. Not totally unexpected. Setups kept failing, and I kept having to sit on my hands. Probably a good thing though.

Stopped out once, and that was definitely the best thing that happened today. Allowed me to get back in the game instead of having to sit for hours to nurse a single very sick trade. Totally been there - too many times - and never want to go there again.

With a safety net in place, I should have taken profit instead of getting stopped out. All the trades were almost immediately profitable - entering on MSL & MSH, inside bars worked well. Missed 2 trades that broke out upwards - I hesitated even though the trigger was an inside bar for both, coz as always, I simply couldn't BUY.

Was convinced by the TICK (which has spent most of its time in the positive region ), eventually, that RESISTANCE IS FUTILE. It's just not a day to sell.

Lost at leaset 5 points coz I didn't take profit the way that I've gotten very good at doing. I let a trade get stopped out, and scratched another instead. All because I was still wanting to give taking profit at target a shot.

I'm convinced now that I have a certain style of trading that I can't change. It's not in my blood to let anything go auto-pilot. A stop only serves to save me from serious damages. The only way that I can trade comfortably is to watch my chart, THE TAPE, and the TICK ,and bail at the first sign of trouble. Scalping is the only mode that I can trade without going crazy.

Will stick to trading the few setups I'm familiar with (yes, I'm scalping high probability setups. What a waste).

Focus is back on achieving consistent results, and if by Sept I don't get another nasty incident, will start adding contracts.

ES - Fibonacci, Keltner Channel & 3 Bullish Reversal Patterns

ES 3min from Mar 12

This was from yesterday's session, sequel to the 3 rising valleys .

The pattern indeed developed into a cup with handle.

My habit has been to look for channels and broadening wedges to trade. In this case, the first thing I saw was the Ascending Broadening Wedge. By the time that a handle was formed, I was waiting for price to come down to touch the floor of the wedge for the 3rd time. Broadening wedge at day/year's low or at midway between high and low usually sees price hitting the ceiling of the wedge and breaking out after bouncing from its floor for the 3rd time.

Trigger candle will be the 3rd candle of the MSL. The only thing about the candlestick pattern (it's NOT an engulfing pattern aka outside bar) that suggests a bullish reversal is perhaps that the bullish candle is a marubozu. Get in 1 tick above the high of this candle, and trade all the way up to the ceiling of the channel. If you take a seed (highlighted in blue - refer to chart above) from the non active trading hours, you can usually expect a 261.8 to 423.6% run with this pattern (as seen on chart).

I usually will trade the pattern on the short side. I will go for the throw backs. Especially the 2nd one, after ES has formed a swing low, and then a double top, accompanied by a spinning top with long upper shadow. My kind of pattern.

I've briefly mentioned Keltner Channel before (re how I used it with the NYSE TICK when trading the TF). The chart above shows how it can be used with Fib ext. Note that the fib ext is for an upward move. Once fib 132.8 or 161.8 target has been hit, and price has traded out of channel, it's a sign of an exhaustion of the upward move. A short entry can be considered but only from the upper band of the channel. I usually will wait for price to move back into the channel (ie. usually the lower peak). Avoid shorting before price has hit at least 138.2 target, or before price has first gone out of the channel, coz it will make another attempt to do so, and that's usually when you're SELLING (been there).

Bollinger Band and Regression Bands should work the same way. I don't use BB coz it makes my chart look really ugly. The bulges and throttling and all. Just not pretty. If I'm staring at something for the most part of my waking hours, it cannot be UGLY!

That's why it's ok if D is.

MUAHAHAHAHA!!!!!

ES - Cup W Handle & Fibonacci

ES Hourly

What I see:

- ES coming down from ceiling of broadening channel, possibly going for 740.25 support (also Fib retracement 23.6), or to 729 (also Fib retracement 50).

- A bull would want a 50% retracement - coz a drop to that point is the pattern we've come to know as a partial decline, a fairly reliable indication that price will break above the channel.

ES Hourly with Fib Retracement & Extension

I see a very bullish, rosy picture:

- A cup with handle formation in the making (the cup is that whole grayish area there)

- If we have a partial decline ie. if ES pulls back to fib retracement 50% (seed highlighted in green on above chart) at 729, and ES breaks above 750, we should have our complete cup

- If we have a cup (comes with the handle of course - IF we get our partial decline), there's a possibility that ES will at least hit Fib Ext 423.6 (seed is highlighted in blue on the chart) or resistance at around 800 (won't happen today though).

- For the first time in a long time, the faster EMAs have gone above the 200EMA

- Where ES went up by way of the 1st leg of a measured move was exactly the point of a bullish crossover of the 20 and 50 EMAs

I'm not concerned about this being just a dead cat bounce, or a sucker's or bear market rally. It could be. But that's D's problem (he invests. OK, so I'm a little concerned ). All I'm interested in getting out of my charts are the best areas to place my entries and exits for intraday plays.

I'm not going to plan anything until 5am EST.

Will trade mainly the active hours from now on.

I've had enough of the non-active hours - drained me to the point that by the time market opens, my brain's half dead. Prices crawl around in a haphazard fashion, and almost always never break out (resulting in my fear of buying breakouts after having traded those hours for a while). Well, you can't expect breakouts without volume....

Tape is easy to read though - so if chart's not too ugly, I might still take a scalp here and there. But I'll rather use that 12 hours to read - books, blogs, anything.

ES Trade 3/12

Sat on my hands for more than 15 hours (what can I say, I have problem trading bullish patterns), and finally decided to go for a break out play. Was fooled into covering too early - by a dark cloud cover! I should have known better. Anyway, I gave it a shot.

No more breakout plays for me.

Told D last night that I was going to go back to trade the active trading hours. Looks like I have to tell him again. Coz he's waiting up for me, and I have to turn in now....

ES 3/12 - 3 Rising Valleys

ES 3min

A pattern I've seen often enough...Didn't take the trade coz it's not my practice to buy an upward breakout. Maybe one day I will. I most definitely should!

A rather reliable reversal pattern to play. Look for it around day's low and near major support (712 in this case). High probability trade as the expectation is for price to break on the downside of the triangle (ie. betting on bears running).

First exit target's the start of the pattern (715.75). If it develops into a cup with handle, 2nd target could easily be at day's high (fib ext 261.8 -"seed" is that drop before the 3rd valley). Enter 0.25 point above the high of the trigger candle for the MSL at 3rd valley. That's the way I would play it. My exit target would have been at 714 (which is actually the confirmation for the pattern) , or maybe even at 713.5 (I don't buy breakouts). It would have been a nice scalp - too bad that entry is less than 3 points from my exit target.

Definitely going into my depository.

ES 3/12

ES Hourly

Nothing much to say except that I can't see ES going up without revisiting support at 665 - 680.

As far as trading goes, will stick to scalping if there's no quality setup to trade. Using stop loss.

Am now spending a fair bit of time looking for the setups that I've been trading - those that had worked for me, and those that had gone against me in lightning speed (am particularly interested in the latter). All will go into my chart setup warehouse...

ES Trade 3/11 - Scalping Setup

Above's my scalp. Went in at higher MSL, trigger candle is an inside bar, entered 0.25 point above trigger, stop loss at 0.25 below.

This is one of the patterns that I'll BUY. I don't care if price will break out of range, coz I always get out before price hits resistance. It's a scalp after all.

ES Trades 3/11 & A Pretty Chart Pattern

Ugly day and ugly charts for most part of the day. Ugly hourly, ugly 10min, and ugly 3min - well, except for the setup below.

Took a scalp. Not a perfect setup, but one that I'm familiar with - price going for resistance. Used a stop. Stress-free scalp. But I'm sick of looking at trendless charts with price going everywhere and nowhere. Calling it a day.

Profit: USD 100

Double Bottom & Fib Extention 161.8

Above is the only good setup I've seen on the 3min for today. It appears often enough - you wait for the low of the day, and keep a lookout for "W" shape. Best if the 2nd bottom is a double-bottom MSL. Take the left of the "W" as the seed, and use fib ext to get the exit points. 161.8 is usually attainable. 261.8 is NOT uncommon, but you'll usually have to sit through a retracement.

I missed the entry when I was checking out the higher timeframe for confirmation. Part of me just wasn't sure about the trade. It would have helped if either side of the pattern was a hammer or at least a double bottom MSL. Highlighted in green on the chart is the trigger candle. As usual, enter 0.25 point above its high, and place a stop 0.25 point below its low.

This is one of the very few patterns that I'll trade on the long side. So far I've only scalped it and hardly held it til its potential. It's a reliable enough pattern . Hence, should it fail, short it!

YIKES!!!

Exactly how many are still holding their shorts from yesterday??

Anyway, ES has broken out of that stupid wedge on the hourly (FINALLY), pulled back, and I really don't know where it's heading now.

740 perhaps?

I wanna throw up.

No, I'm not in any short position (thank goodness). But I really want to sell! The time that I wanted to buy had long passed!