I want to apologize to all who have emailed me and dropped comments here for not having responded to you in a timely manner - once I'm back trading 12 - 16 hours, my eyes are just on my charts, even when I've no open positions. I don't multi-task very well (explains the unwashed laundry), but I'm learning.
Cory, thanks for the link - I don't have to do any test to know I'm a scalper :-) But I will check it out. And thanks for the info on Open Cry. I believe my data feed is from TransAct or something like that. For now, Sierra is still ok - it's different from the other charts but I've gotten so used to it that it doesn't really affect me. After all, I'm used to living in a world of my own! LOL!! But, thanks, Buddy! You're starting to become our virtual library :-)
HPT, good to see you here :-) Those P&L & trade log charts are an easy source of reference when I do my reviews. This is my one-stop station for getting everything I need to do my AARs. I've been doing this for, let me see...coming to a year now? During this time, posting losses has helped alleviate the "ego" issue - so that's a bonus :-)
Below's another one of my reply to an email that I'm posting here for my own referencing, coz the topics in question (profit-taking & globex-hours trading) are actually issues I'm struggling with myself (talk about not practicing what one preaches).
Sorry for my late reply.
Regarding globex-hour trades - slippage is indeed an issue, but it affects scalpers more. If you're trading these hours, it's better to go in with small sizes and hold your trades using S/R to determine your exits. These quieter hours are actually more volatile - spikes are common. But I don't think it's market makers that are hitting stops - anyone who has contracts large enough to move the market can take out stops on both sides (longs and shorts), since volume is generally very low compared to the US sessions. If you're thinking of focusing on globex sessions, a better instrument to trade is actually the russell 2000 (TF). The chart's ugly, but you don't need individual candles/bars to trade - price actions are smooth actually and all you need to watch out for are where key supports and resistances are.
Regarding profit taking - I always believe that you have to choose one - you either always just go for scalping profits (in which case, I would concentrate on the US trading session), or swing profits (this you can do both during globex hours and US sesssions). Once you've decided to take only, say, 3 to 5, or even 8 ticks, then you'll have to accept that the move might go many more points in your direction before turning around. Whenever you regret not having let profits run, and you start to hold your trades, you'll almost always find yourself in a choppy trends where moves don't go more than 2 points before they take out your stops. For those who are consistently just going for swing profits, they have those monstrous trending days where their profits can more than make up their many small losses (on choppy days where they get stopped out after an initially profitable position becomes a losing one). That's why it's important to stick to just ONE style. Nobody ever knows 100% if the day's going to be trending, ranging or choppy. Everyone can see it in hindsight. People like Dr Brett can give you some guidelines on how to see if the day's going to trend, but really, no one knows for sure. A ranging day can always turn into a trending one, and a trending globex session can turn choppy after US market opens either due to news or other factors. If you consistently take only scalp profits, you'll feel a little bitter on trending days when you see a move go 10 or 20 points and you had walked away with only 1 or 2. You'll have to learn to live with that. And it isn't difficult coz trending days are NOT the norm. It happens a few times a month - and these are the days that give the non-scalping daytraders the profits they need to cover their daily losses. But they can only hit those homeruns if they are there when it happens (meaning, they are holding their trades for home run profits - they are positioned for those profits at all times - so that when it happens, they are there).
For scalpers, depending on your entry strategy, 3 ticks to 8 ticks profit is doable. For 8 ticks profit, you'll just have to be more selective with your entries - on a ranging day, it means buying from the base of an established channel or selling at the top of an established channel. If you have 2 peaks and 2 lows, you can already draw your channel. Which means you buy or sell on the 3rd touch of the channel. The channels don't have to be parallel - they can be broadening. For triangles, breakout can happen both on top and below and usually they will go up and down trapping both buyers and sellers first, so I generally don't buy breakouts. Whenever price has touched a downtrend line twice, for instance, I'll take long trades when price has gone way beneath the trendline, but moving up, and use the trendline to time my exit. That means I'm NOT expecting a breakout on the 3rd time price hits trendline. For sellers, on a ranging day in particular, they can start watching for signal to sell when price touched that trendline for a 3rd time (expect price to actually breakout, but fall right back below the line after breaking out). On strong trending days however, price DO breakout of trendlines usually on the 2nd touch.
Hope the above helps. Yes I've been to your blog...not frequently, coz I don't usually go around checking out what everyone's doing...I'm having a hard time keeping up with those on my blogroll :-) I tend to get a little crazy and shut myself out totally when I'm focusing on something :-) But I'll make sure to drop by yours more frequently :-)
Let me know if you need more info on globex hours.
Thursday, June 4, 2009
Wednesday, June 3, 2009
ES (TA) & Reply to Comment (On My Exit Strategy)
Chart shows a Cup With Handle formation - a valid one, given that
1) ES went up 30 points prior to its formation,
2) Cup's relatively tall
3) Handle's found in the upper half of the cup
This is a cup that has clearly performed. Price hit a target that exceeded the measured rule used for a cup in a BULL market (in a bear market, the measured rule is to take HALF the height of the low of the cup to the right rim, then add it to the right rim).
I spotted several cups before this cup, and none hit the measured rule for an uptrend. This is the first one that did. I'm not sure if that means we're looking at the start of a bull market. I find it rather hard to believe. It doesn't gel with what I see on SPX monthly ( 3 strong bullish candle off price low, but a 2nd entry is usually required to reverse prcie back up given the very strong downward momentum before it).
So, this is my hypothesis (gotta have one, it's just me): granted that we could very well be looking at an intermediate uptrend ahead, market is due for correction. SPX doesn't have to go all the way back down to 666; we have support at 840 (best case scenario). I'm anticipating a Cup Pullback to around 930 (1st target for shorts). From there another cup or any other variations of "W" formation could take shape, but I'll expect all upward breakouts from such patterns to fail. I'll start looking out for inverted cups in fact, or any variations of "M"s.
Whenever I'm disciplined (rare, but I do get into that mode at least a few days in a month..), I will not take trades based on assumptions. When I say I anticipate something, it simply means I'll keep a lookout for a setups that suggest it's happening. I will need both setups and signals for me to want to take a trade.
Personally, I wish that the market will just continue to go up from this point on to look for 1000. I'm starting to NOT like to sell. In fact, I don't think I'll be selling even if the market were to go into a short-term downtrend. What's good about taking the daytrading/scalping route is that I can still BUY in a bull correction. Ha.
Daytrader 233:
You asked how I decide where to cover/exit my positions.
Briefly, I count the number of legs/push ups (since I BUY, predominantly) once price leaves the "W" base.
Whenever ES is at the low of a "W" formation just minutes prior to US market open, I'll look out for the first bear attempt to push price back down the base - it's easy to see: the first candle that has a low that's sligthly below the low of the previous candle (keeping in mind that market's in an upward swing).
Then I'll see what the next candle is. If it's a bullish candle that has a decent size body and NOT too big a range, I'll enter on close of this candle. If the first bear attempt turned out to be a hammer, I won't wait for the next candle to form. That hammer will become my signal candle.
Once I'm in trade, I keep an eye on both the tape and the candle. If the candle's exceptionally long, and if it's pierced a trendline or a resistance, I'll exit before the close of the candle. Otherwise, I'll hold for another candle. There's no particular reason - just that I've seen so many moves comprising 3 with-trend candles. I usually like to get out when many are still wanting in (easy to cover), so I'll usually pass the 3rd candle. On days where candles are relatively small (on both choppy and ranging days), I will exit on the 2nd push up.
Having said all that, I usually go with the tape. Some days I choose to ignore the tape and that's the only time I'll exit as planned. Tape helps to give me a high winning percentage with small wins each time and if I have a daily target to hit, it means multiple entries. I ditch the tape (for exits) when I'm not in the mood to get in and out a dozen times. I always use the tape to confirm my entries.
Hope I answered your question?
Tuesday, June 2, 2009
ES Trades 6/2 - Wrap UP
A day where too many mistakes were made:1) The 2 globex- hour trades had given me a 5-tick and 8-tick profits before my stops were hit, which I should have taken, since my stop was not set to take a swing
2) The 1st trade after US market opened was a mess - it wasn't supposed to be taken in the first place. I chased coz I was trapped out. I was trapped out coz I hesitated when I had my signal to enter (in triple pink arrow was where I should have entered).
3) The trade that followed was another chase - and even more unforgiveable coz I hadn't a signal at all!
4) The last trade was the only one today that I can feel happy about : I had both setup and a valid signal, and I exited as planned (which was NOT to hold beyond 2 trend bars, and cover as and when trendline is hit)
Before taking the last trade, I was down USD 325. I have a daily loss limit of USD 400, and what that meant was that I had 3 choices:
i) take the next signal and risk blowing my daily loss limit
ii) enter only on hammers / very small trend bars
iii) call it a day
I learn today that if I don't make good decisions throughout the day, I'll end up having to make extremely difficult ones before the day's over.
ES Trades 6/2 - Part 2
Stopped out twice (red arrows). I'm not sure from where to pick it up again. Likely at 930. I need sleep badly. If ES wants to bounce up anywhere above 930, so be it. I'm taking my nap. Scalping the US session. I AM REALLY DONE HOLDING.
ES Trade 6/2 (Tues)
Letting this one go auto-pilot. No particular setup - just betting that ES will break above downtrend line to test yesterday's high. Happy that I could at least put in a stop today! Am keeping my fingers crossed that it would kick in though (didn't work on IB during globex hours)...
ES (Live) Trade 6/1 (Monday) - Wrap Up
Failure to act on good setups (by good I mean FAMILIAR SCALP setup) - that's the worst kind of "fear" as far as I'm concerned.Was adamant about keeping my USD 250 gain on the day of the week that has historically been REALLY BAD for me - and I got what I asked for. I'm not happy, but I'll live with it - only for today.
I've taken care of the "discipline" part by limiting myself to trading just 2 signals once I see my setups - if I don't pull the trigger on these signals, something's wrong with me.
Am calling it a day.
1 trade and 2 missed opportunities....
%*#*^&*#!!!!!
I'll forgive myself.
I shall sleep well tonight.
Monday, June 1, 2009
ES (Live) Trade 6/1 (Monday)
Break's over. Haven't a clue why I chose to start on a Monday, and during Globex hours!Couldn't put in a stop (never traded pre-US-open on the Infinity platform...), and was surprised that my heart actually skipped a beat coz of that... Gone were the days where I was totally comfortable trading without a hard stop...which was just less than 2 or 3 weeks ago?? Breaks are bad!!
D will be sim trading the HOLD strategy for me (D, you promised!) Stats for sim trades will be posted on my sim trade blog...but am keeping my fingers crossed...(D CHEATED ON FRI and traded real money....and took 100 while I agonized over my sim trades!!!). For my own live trades, I might leave a contract to run only after 330pm whenever I see a good "trap" setup.
Chart above shows the candle that I've entered long (black arrow). Covered before candle closed. That's my MO - I'll be happy if I can hold for at least 3 candles. Working towards that. In this case, I was just scalping my familiar "attempt to breakout" setup (ie. not expecting a real breakout), so, no holding.
Given that today's a Monday, I'm not going to be actively looking out for setups. If I can spot them readily, I'll take them. If I have to strain my eyes to identify all the HH HL LL LH and swing highs/lows, I'll stay on the sideline.
Saturday, May 30, 2009
Reply To Comments
Thank you, DT, Ryan, MVW, Cory and Sandy.I woke up an hour ago, and the first thing I did was turn on my big monitor (I don't shut down my computer until it crashes LOL!) to look at my chart. And I saw what I expected to see. Price hitting 923.50. It went way beyond actually, to hit 928. It was the kind of action I had waited for for an entire week. And what did I do just before that monstrous candle appeared? I closed my last position (at the candle that I had indicated with a huge black arrow in my chart above).
I don't know if you recall that I wrote in my notes sometime last week, on one of my charts, that at around 345pm, when you see either a bear or bull trap, you can prepare to see bear/bull runs for at least 2 long legs.
In the chart above, you can see that sellers realized they were trapped at the candle before the one that I had exited. Price had gone 1 tick below the low of the bull candle at 335pm after luring sellers in with a "short" setup (the bullish 335pm candle had a high that's higher than the candle before and after it, and a low that's lower than them - a text book Outside-Inside-Outside signal for shorting coz the 2nd Outside bar is a bearish candle).
When price had gone 1 tick below, stop orders to sell were picked up, and sellers are now in an open position. What happened next was not what they would have expected - price closed right where their entry bar had opened. With just 30 mins to market close (and we know most don't want to be in position after 330pm), many would immediately send limt/stop orders to get out. The collective actions of sellers would send price soaring north until everyone who wants out is out, and of course along the way, some buyers would jump in and chase price up, sending price higher in matters of minutes.
The best entry for a scalper, would be the bar that I covered. The candle before it was the signal. That was the candle that surprised both sellers (who are now trapped in a losing position) and buyers (who are NOT in position and hope they are), who would then react in the candle that followed. At 15 to 30 mins before market close, you can expect price to just go in the direction of those who are scrambling for the exit. The profit taking point? When you see the first bearish candle (for a bear run).
When I closed my position and logged out of the AT platform, D chided me for giving up (strange, really, given that he's always the one that tells me to take it easy). I had to tell him I wasn't giving up, that I know that price would hit 923.50, but that there was no point in holding that trade for that profit target of 923 and capturing the day-end score coz the results were from a mixture of scalps and swings. What I wanted to capture was the statistics for swings and the figures for yesterday were invalid. I do want to beat myself up for messing up the very day that would have given me the stats that would validate whatever hypothesis I had on the strategy I was testing out.
Murphy's always just a click away.
What I had learned in few days' of experimenting with the holding method was that there is indeed an ideal hard stop that i can use even in scalps. And that is precious. The reason that I had wanted to give up scalping is coz my risk-to-reward ratio is just horrendous. I've never believed in 2R, 3R or 4R. But 1 for 1 - that seems appropriate. Or 8 ticks stop for 6 ticks profit - that's still very acceptable, to me. Many times, I was able to find entries with 3 tick risk and 3 to 6 ticks immediate profit (if I take it). Very short window to take profit before price does its usual - comes back to bite you.
So what I've decided to do is that I'll resume live trading doing what I'm used to doing, while continuing to paper trade the holding strategy. I probably can't do both at the same time, so D will help me to execute the paper trades on his computer (and in the process helping him to appreciate the benefit of WAITING for setups).
I'm NOT giving up. No way. I don't know what I would do if I don't trade. I'll probably be out causing trouble like I always do when I feel bored (I have the shortest attention span among the people I know) and aimless.
Thanks, again, guys, for the very thoughtful notes. I was surprised to see 5 comments when I logged on to my blog to do an AAR for yesterday. And I thought I hadn't really slept for that many hours! LOL!
Cory, those are black mambas. "Black" does not describe the color coz there are no "black" mambas - only green, metallic and brown and I think there's another color. I absolutely love them. They are very very nice to touch - their skin is smoother than mine LOL! Without their fangs, they are lovely creatures. They don't attack when they sense threat - they get away. And they are FAST! But once they are cornered, they retaliate and they are extremely accurate with their strikes. One dose of their venom can kill up to 15 adults. I love their eyes. Just stunningly captivating beautiful jewels.
Now that I'm feeling upbeat again, I shall wane off ice-cream (Sandy, are you psychic?!). I've had more ice-cream in a week than I've had in a year! LOL!
All's NOT good
I'm not posting my paper trading results for today. It's been a futile exercise., a total mess to be precise.
Was stopped out thrice right from the beginning, taking a total loss of 500. Was pissed, coz each time, price had gone 5 to 8 ticks in my direction, and the old me would have taken part of that before the stops were triggered.
So I did what any angry trader would do. I scalped my way back using 3 to 4 contracts each time, recovered my 500, and a little more. I know, it was stupid. There wasn't even real money on the line. But the main problem here is that scalping more than half of all those trades just totally defeats the purpose of the exercise
I know exactly what my problem is. I'm impatient. I'm controlling. I'm skeptical. I don't believe in waiting around for 20 points to drop on my lap one day.
So why did I even consider taking that route in the first place? I don't know for sure. But I suspect it's coz I'm IMPATIENT. I don't want to have to be good only 10, or 5 years later. I don't even want to wait 3 or 2 years for that matter.
I'm 3 years away from turning 40. For a woman, that's OLD.
All you guys out there, please don't say anything. If you're 40, You most probably have either one of these:
1) family - wife, kids, dogs, annoying/adorable relatives you hang out with once a week at least
2)friends
3)career
4)hobbies (including porn and such)
5) retirement account
5) Maserati
I'm just frustrated. I spent everyday thinking about how I've wasted another day of my life. I definitely am not looking forward to my birthday.
I don't know if I'll continue to paper trade next week. I've done this too many times - and each time I gave the "holding" mode another shot, I had felt like banging my head against the wall.
Yes, it's been years now - my mood tends to get really foul in June (And of course, the month before it as well).
Off to take it out on the only human being that's sharing my space now.
Was stopped out thrice right from the beginning, taking a total loss of 500. Was pissed, coz each time, price had gone 5 to 8 ticks in my direction, and the old me would have taken part of that before the stops were triggered.
So I did what any angry trader would do. I scalped my way back using 3 to 4 contracts each time, recovered my 500, and a little more. I know, it was stupid. There wasn't even real money on the line. But the main problem here is that scalping more than half of all those trades just totally defeats the purpose of the exercise
I know exactly what my problem is. I'm impatient. I'm controlling. I'm skeptical. I don't believe in waiting around for 20 points to drop on my lap one day.
So why did I even consider taking that route in the first place? I don't know for sure. But I suspect it's coz I'm IMPATIENT. I don't want to have to be good only 10, or 5 years later. I don't even want to wait 3 or 2 years for that matter.
I'm 3 years away from turning 40. For a woman, that's OLD.
All you guys out there, please don't say anything. If you're 40, You most probably have either one of these:
1) family - wife, kids, dogs, annoying/adorable relatives you hang out with once a week at least
2)friends
3)career
4)hobbies (including porn and such)
5) retirement account
5) Maserati
I'm just frustrated. I spent everyday thinking about how I've wasted another day of my life. I definitely am not looking forward to my birthday.
I don't know if I'll continue to paper trade next week. I've done this too many times - and each time I gave the "holding" mode another shot, I had felt like banging my head against the wall.
Yes, it's been years now - my mood tends to get really foul in June (And of course, the month before it as well).
Off to take it out on the only human being that's sharing my space now.
Wednesday, May 27, 2009
Paper Trading
Am going to do an experiment with paper trading (how odd is that??).
For 20 days, including today, I'm going to paper-trade a strategy that I've used on and off before.
Instead of scalping, I'm going to be holding my trades for more than scalp profits.
I'll be trading 2 contracts, and adding 1 more only when my criteria for adding is met. In other words, I'm scaling in.
My initial stop will be 2 points. I'll NOT widen my stop. I'll forgo any trade that comes with a risk exceeding 2 points. I'll let my trade run until I see my exit signal. I'll use only the 5min chart, with the tape.
My daily loss limit will be $400. I'll be trading round-the-clock; as and when I see a setup, I'll trade. There will be days that I won't take any trades and I will state the reasons when that happens.
I'll be showing all my trades.
After 20 days of paper trading, I'll go live with my "holding" method.
After 20 days of live trading, I'll put up a review on the whole exercise, and that will be followed by monthly reviews. I'll do this until one of these happens:
1) I double my live account
2) I wipe out my live account
If 1) happens, I'll continue to deploy my hold strategy, sans the reviews.
2)'s not going to happen.
So, my scalping days are officially over. At least for now.
D, I'm doing this for you (I seriously don't need to paper trade my "system"; all I need is the willingness to lose real money!!), so you'd better do your 20-day exercise. Penalty for cheating: NO CLEAN SHIRTS & SOCKS for ONE MONTH!
Yes, yes, yes, I'm evil. Tell me something I don't already know.
Paper trading result for today (clearly a case of over-trading):
In black arrows are my long entries; in triple black is where I've scaled in; in green are exits with profits; in red are trades that are stopped out; in pink is a scratched trade.
Stats:
Number of contracts traded: 13
Number of trades: 6
Number of winners: 2
Number of losers: 4
(3 stop-outs; 1 scratch)
Winning ratio: 33%
Average win: USD 475
Average loss: USD 165
Profit (Gross) : USD 337.50
Details of all paper-trades from today on are posted on my other blog ("Jules" on my blogroll).
Will keep this blog for documentation of live trades only.
For 20 days, including today, I'm going to paper-trade a strategy that I've used on and off before.
Instead of scalping, I'm going to be holding my trades for more than scalp profits.
I'll be trading 2 contracts, and adding 1 more only when my criteria for adding is met. In other words, I'm scaling in.
My initial stop will be 2 points. I'll NOT widen my stop. I'll forgo any trade that comes with a risk exceeding 2 points. I'll let my trade run until I see my exit signal. I'll use only the 5min chart, with the tape.
My daily loss limit will be $400. I'll be trading round-the-clock; as and when I see a setup, I'll trade. There will be days that I won't take any trades and I will state the reasons when that happens.
I'll be showing all my trades.
After 20 days of paper trading, I'll go live with my "holding" method.
After 20 days of live trading, I'll put up a review on the whole exercise, and that will be followed by monthly reviews. I'll do this until one of these happens:
1) I double my live account
2) I wipe out my live account
If 1) happens, I'll continue to deploy my hold strategy, sans the reviews.
2)'s not going to happen.
So, my scalping days are officially over. At least for now.
D, I'm doing this for you (I seriously don't need to paper trade my "system"; all I need is the willingness to lose real money!!), so you'd better do your 20-day exercise. Penalty for cheating: NO CLEAN SHIRTS & SOCKS for ONE MONTH!
Yes, yes, yes, I'm evil. Tell me something I don't already know.
Paper trading result for today (clearly a case of over-trading):
In black arrows are my long entries; in triple black is where I've scaled in; in green are exits with profits; in red are trades that are stopped out; in pink is a scratched trade.Stats:
Number of contracts traded: 13
Number of trades: 6
Number of winners: 2
Number of losers: 4
(3 stop-outs; 1 scratch)
Winning ratio: 33%
Average win: USD 475
Average loss: USD 165
Profit (Gross) : USD 337.50
Details of all paper-trades from today on are posted on my other blog ("Jules" on my blogroll).
Will keep this blog for documentation of live trades only.
Saturday, May 23, 2009
When It Comes To Trading, Just How Common Is Common Sense?
2 letters (dated a decade back) - courtesy of my broker - from a professional trader to his student (thanks, Anthony, for letting me share them here):
Letter #1
Letter #2
Letter #1
Sorry Bill,
Going have to cut you off. You've really had a rough go of it the last couple months or so and I'm not sure what my p/l was for the small 1 lot trades I did the past 3 weeks but I think it's positive. Here are the thoughts from the outside looking in, not sure if they're helpful or not. Things I noticed just now looking back at your statements.
- Losing days were down more then winning days were up.
- Percentage of winning days was very low.
- Total volume was very high considering you were trading 1 & 2 lots mainly
- Lots of decisions made during the day
- Didn't seem like a plan was in place and you were trading that plan
No Matter what strategy was being used you should have had a few really big up days and there were none. I say this because even the worst of strategies aren't entirely that bad. We've had trend days. We've had chop. We've had huge range days. We've had big reversal days. At some point in all those days in the last month or 2, you should have had some solid positive days. The fact that you didn't means a number of things. Your strategy had to have been ever changing. These results only come about when strategies are being altered on the fly. You were letting your losers ride more then your winners. You were taking profit too soon on winners. You were trading higher volume on bad trades and lower volume on good trades. Your risk reward might not have been enough in your favor to enter trades.
The only reason why I say these things is to hopefully assist you in your trading. I mention these because I have seen tons and tons of traders come and go and I've seen the recipe for success and failure. There have been guys who could flip a coin whether to get long or short and would be successful because of trading a plan. Trade management, money management are key parts to trading profitably. As I mentioned before I had (my broker) set up a program on that account so I can see every order entered and pulled whether or not it's filled. Your actions were a bit erratic. Seems like a lot of second guessing on your part. Perhaps you were trying to be too perfect with entries, targets and exits.
Now your effort is extremely high. You work so hard, maybe even too hard. I could be wrong, but i get the sense that you're looking at 100 different charts and analysis of the same product. different time, tick, volume etc... It's possible to over analyze a product. Try to get too much info. What I think you might not realize along with 1000s of other traders is that trading the U.S. equities markets are the hardest thing to trade in the WORLD. Narrow that even more, trading ES is the hardest of the equities to trade. I truly believe you would have much more success trading currencies or commodity products.
Trading is never a total loss. Everytime you put on a trade it's a success, maybe not always financially, but learning. You're learning what works and what doesn't. How your emotions handle being right and wrong. How you respond to different market conditions. I really hope that you have learned a great deal over the last couple months. I know you're not asking for advice however I have been given some in the past that I think would be best to pass along. In the past when i'd go through a 3-4 month span of losing money i'd do this....
I'd take one product, and make it a product that I hadn't traded in the past few months so I have no remorse or bad feelings towards it (really helped me emotionally to look at a chart of a product that hadn't just taken money from me). I would use ONE chart and ONE indicator. That one chart could be time, tick or Volume, didn't matter. That one indicator could be what ever i wanted (for me it was pitchforks for others it's Fib lines or MACD) but what ever i wanted and i could only be ONE. and that is all i would trade for 20 trading sessions. I was NOT allowed to look at any other charts or variations of the one chart i picked. This really helped me simplify things and dumb down trading.
Each time i've been in a slump the past 8 years or so this has helped me get out of it. I hope it helps you. If you're charting your p/l everyday i'm sure you are seeing the same things I am. Some of the things i said in this email might be totally wrong or off base, i'm just going by what i've seen over the years when people fall into small losing streaks.
My hope is that you've learned so much the past few months and you're really close turning things around. I hope by 4th of July we can revisit this and get you back up and running. I'll throw another 10k in the account and hopefully you can build on your experiences and turn profitable.
-Steve
Letter #2
ok, now the first time i read this story was many years ago. so some of this might be way off but you'll get the idea and understand.
when Cal Ripken was in his 2nd season he got in one of his hottest hitting streaks of his career. he was on a 20 game hit streak and hitting like .400 over that span. in the 21st game, his first AB he hit a double down the left-field line. when he got to 2nd base the shortstop came over to him and said "Man, you're really hitting well lately. you must be doing a great job of keeping your head down, getting your hips through the zone, extending your arms and getting the head of the bat out there" Ripken thought nothing of the comments...
....until he was in the on-deck circle before his next AB. he thought, 'that must be why i'm hitting well. i'm doing all those things the shortstop mentioned' when he walked up to the plate he was saying to himself, 'keep your head down, get your hips through the zone, extend your arms.....etc...' he then went on the have the worst hitting slump of his career. after every game he'd change something small. move his elbow an inch or 2. open his stance a tiny bit. raise his hands. move back in the box. etc...... after a month of terrible hitting he finally turned it around after scraping all the adjustments he had made over the previous 4 weeks.
what i took from this story was a few things. one is the obvious, things he was doing naturally, without thought, worked better when he didn't think about them. the 2nd is a little less obvious.... as a hitter that has made it to the professional level, you're already a decent hitter. just natural ups/downs are going to give you streaks and slumps. just because you go 0-16 doesn't mean your stance or your approach is wrong, you can be doing everything right, just not getting hits. what caused him to be in his slump was the slight changes. that prolonged it.
i view trading the exact same way. you trade strategy XXX and it's profitable. if you go through dry spell where it's not working after a week, a typical reaction is to change entries and exits and scaling. putting different values on indicators etc... i view making those adjustments as prolonging your dry spell. no longer are you trading the plan. Altering it actually creates a while new plan that you really know nothing about and have no experience trading. i think the key is consistency with methodology as well as little, hopefully none, emotion involved.
now, this is NOT taking into consideration that markets change. it's possible to trade a method and after 18 months or so it just doesn't work anymore. that can and does happen. so keep that in mind when thinking about this.
when Cal Ripken was in his 2nd season he got in one of his hottest hitting streaks of his career. he was on a 20 game hit streak and hitting like .400 over that span. in the 21st game, his first AB he hit a double down the left-field line. when he got to 2nd base the shortstop came over to him and said "Man, you're really hitting well lately. you must be doing a great job of keeping your head down, getting your hips through the zone, extending your arms and getting the head of the bat out there" Ripken thought nothing of the comments...
....until he was in the on-deck circle before his next AB. he thought, 'that must be why i'm hitting well. i'm doing all those things the shortstop mentioned' when he walked up to the plate he was saying to himself, 'keep your head down, get your hips through the zone, extend your arms.....etc...' he then went on the have the worst hitting slump of his career. after every game he'd change something small. move his elbow an inch or 2. open his stance a tiny bit. raise his hands. move back in the box. etc...... after a month of terrible hitting he finally turned it around after scraping all the adjustments he had made over the previous 4 weeks.
what i took from this story was a few things. one is the obvious, things he was doing naturally, without thought, worked better when he didn't think about them. the 2nd is a little less obvious.... as a hitter that has made it to the professional level, you're already a decent hitter. just natural ups/downs are going to give you streaks and slumps. just because you go 0-16 doesn't mean your stance or your approach is wrong, you can be doing everything right, just not getting hits. what caused him to be in his slump was the slight changes. that prolonged it.
i view trading the exact same way. you trade strategy XXX and it's profitable. if you go through dry spell where it's not working after a week, a typical reaction is to change entries and exits and scaling. putting different values on indicators etc... i view making those adjustments as prolonging your dry spell. no longer are you trading the plan. Altering it actually creates a while new plan that you really know nothing about and have no experience trading. i think the key is consistency with methodology as well as little, hopefully none, emotion involved.
now, this is NOT taking into consideration that markets change. it's possible to trade a method and after 18 months or so it just doesn't work anymore. that can and does happen. so keep that in mind when thinking about this.
ES (Simulated) Trades 5/22
Don't know what to do for a break.
It's clear that I can't trade anything that keeps going up, or keeps going down. And I'm not going to force it.
My very cute broker forwarded a very interesting email a professional trader (his friend) had sent to his student, and had kindly allowed me to share it here. I'll post it tomorrow. It's D time now.
Friday, May 22, 2009
ES (Simulated) Trades 5/21
Post-Fed day. I should have known better.In black arrows are the entries; in pink, scratched entries (at breakeven to 1 tick loss - the last scratch in pink represents a combination of 3 scratches). Yes, a lot of scratches. It wasn't exactly an easy day.
As usual, I've relied heavily on the tape.
Followed the SPX 5 min as well. I like it.
I'm really going to take my break from tomorrow on before I go live...
Wednesday, May 20, 2009
ES (Simulated) Trades 5/19
A day that I could read my chart with relative ease - familiar setups, familiar candle lines and patterns, some of which I traded, others I passed (I'm still needing a fair amount of time to check for traps and track the big picture between trades)3 contracts is good for me for now - it allows me to add when I've entered prematurely. 5 to 6 is the full size.
I'm still using the tape instead of entering on buy-stop order a tick above and below. The latter just doesn't work consistently enough for me to want to continue to deploy it. The tape's still my best friend.
I should be done with simulated trading by end of May. Will post only on days like today ie. my kind of day - chop / range day (trend day's not good for me). Mondays have been terrible so far (found out the hard way) so I didn't even bother with it yesterday.
Leon,
looks like I'm going to have to give Brooks a miss. Am developing flu-like symptoms and think I'm actually feverish. Will check the archive for the webinar.
Tuesday, May 19, 2009
My Favorite Things
1) Me, ME, ME!!!
May 2009
2) My lilac dress (could be the only short dress I own now...)
May 2009
3) My workstation
May 2009
5) (we don't like 4) KEISH (and Smart Spider, since he's in the picture)
May 2009
6) AL BROOKS (the book...)
May 19 2009
It began like this (Al curling up beside me as I was reading):
Then it became like this:
It's not like there isn't enough space!!! (Really crumpled part's where I usually lie on my tummy reading)
Al's usual spot (yes, Al is King of the house):
Al's other usual spot (right beneath where I work...yes, Al follows me everywhere... surprisingly loving for a snobbish British...Sorry, UF!!! LOL!):
(Wallpaper on my handphone - tickles me every time I look at it)
May 2009
2) My lilac dress (could be the only short dress I own now...)
May 2009
3) My workstation
May 2009
5) (we don't like 4) KEISH (and Smart Spider, since he's in the picture)
May 2009
6) AL BROOKS (the book...)
May 19 2009
7) AL...BERTO!!!
It began like this (Al curling up beside me as I was reading):
Then it became like this:
It's not like there isn't enough space!!! (Really crumpled part's where I usually lie on my tummy reading)
Al's usual spot (yes, Al is King of the house):
Al's other usual spot (right beneath where I work...yes, Al follows me everywhere... surprisingly loving for a snobbish British...Sorry, UF!!! LOL!):
8) D!!!!!!!
(Wallpaper on my handphone - tickles me every time I look at it)And check this out: Denarii's BUNGEE JUMP video (and all I could do to spice up my life is take pictures around the house...how delightful!)
Yes, Denarii's one of my favorite things too! :-)
Yes, Denarii's one of my favorite things too! :-)
Saturday, May 16, 2009
Hilbert Space
In life, I've had to make very tough choices far too many times.
I began young enough.
As a minor, I made an adult decision to marry the man who was the father of my unborn child.
I remember asking my very regimental Dad to take a walk with me in the garden to have a chat. It was only the first week that I was back for summer holiday, and my Dad was thrilled to have me home. Right by our pool, I looked him in the eye, told him I was pregnant, and that I had decided to be a wife and a mother - all in a single sentence.
Then I waited to be slapped or thrown into the pool. I fully expected him to disown me, and if he did, I wouldn't have blamed him. I was really a handful.
But my Dad loved me way more than I gave him credit for. He flew to HK with my mum to meet the in-laws and to plan for the wedding.
He was truly happy for me.
Little did he know that being a wife and a mother were the last things I wanted.
Unlike most girls, I grew up wanting what men want: career, power, fast cars, and a private jet. I've never had fantasies of a fairy tale wedding; I didn't believe in love in the first place. I believed in good clean fun, and nil baggage.
But I chose to keep the child, and I must be married so he could grow up in a normal home.
Little did I know that the man I married was not ready to be a father. Didn't matter that he was years older than me.
I had a difficult pregnancy. Then I fell really ill and refused to eat and drink for a week. I remember laying in bed all ready to quit life. My then husband never came home once. I had no idea where he went, and I never asked. His mother, a really wonderful lady I still call "mum" today, nursed me.
When it got to the point that I wasn't responding at all, she called my Dad, who flew in immediately and carried me home.
By the time that summer was over, the baby was gone, and I had returned to Edmonton to start my first year at the U of A. My then husband was also back, and we moved into the house that my Dad had bought.
A year later, I was pregnant again.
Yes, I was very fertile.
Damn those no-good condoms!
This time, my Dad sent my mother over to make sure that I would have a smooth pregnancy.
Little did he know that my mother didn't love me half as much as he did.
She hated having to leave her friends, her social life, her parties, for me, and she had no qualms about letting me know how much of a burden I had been to her. She would complain all day long, and pick on people and things, including the snow.
Fortunately, for me, she quickly made new friends (my mother's department), and started going out. That was when I finally got the peace and quiet I so desperately needed.
Shortly before the baby was due to arrive, something happened that gave her a reason to go home.
Gulf war happened.
She was afraid that she was going to be separated from my Dad and Seabloke and Pilot for God knows how many years should Canada get involved.
I know, I was equally baffled, and amused - actually, more amused than baffled.
But I was glad she found herself a good excuse to go home. I wanted her to go home ,and leave me alone. I was already having a very tough time - preparing for exams and being so sick most of the time (my doctor was so worried about my condition I frequently had to go in for check ups and blood tests) - so I really could use some PEACE.
I had a difficult time at delivery. They couldn't get the baby out, and I refused to scream or use epidural. I was totally drenched in my own persperation and losing a lot of fluid and my blood pressure got dangerously low.
My girl decided to pop her tiny head out only 24 hours later. I was so glad my ordeal would soon be over I used every remaining ounce of strength I had to give one last mighty push, and out she flew, like a missile, right into the palms of an alert nurse, just a second before she hit the concrete floor, (the doctor, totally expecting the usual time it takes for the entire body to emerge, had turned to grab something).
It was 1991, and I was barely 19.
A week later, I went ahead to sit for my exams, against the advice of many, coz I wasn't healing properly.
3 weeks later, my then mother-in-law came to take my girl back to her Dad's home in HK. I didn't object to it, coz I knew her life would be 1000 times better there. They had a big bungalow house, and many adults to watch over her, and cousins to play with.
Another 3 weeks later, I moved out of the place that I was living with my then husband.
We never discussed our breakup, and remained friends.
A few months later, he flew back home for good.
I started my new life, with someone I really liked this time.
A year later, Dad died.
I went crazy, and drove the man I loved crazy too, and he did something so horrible to me I decided to walk out.
He told me that I had nothing, and that I needed him.
I said I would survive.
At the same time, my mother demanded that I drop out of school and head home, coz she had no intention to send me money. She figured that since it was illegal for me to work, I would have no choice but to go home to be her puppet.
I told her I would graduate, and I would find my way, and that I didn't need her blessing.
That was the last time we spoke. The next time we talked again would be 5 years later.
She never once asked how I pulled through.
Until recently, she would insist that she's been a terrific mother. I would never argue with her on that. I always know when to save my breath.
When I returned home, she suggested that I "retrieve" my child from my in-laws.
I was appalled.
She saw how my sister-in-law gave up her own marriage to raise my child as her own - I couldn't believe that she actually thought by virtue of my having gone through the labour pain and the trouble of carrying my child for 9 months that I had earned the right to take her back. She actually thought it was good timing since my child was old enough to not be too much of a burden to me.
It was at that precise moment that I made up my mind to initiate divorce proceeding - I had sat on it for 6 years coz I didn't want to lose my child. It was when I looked into my own mother's eyes that I realized where those selfish genes came from. There and then I made up my mind to let go.
Sea would always comment on how deceiving my very soft exterior is. She's right. Many had experienced first hand how hard my heart can be. It has to be, coz I understand and fully accept the reality of life - it's impossible to make everyone happy.
When in doubt as to who to make happy, I check my heart.
It never lies, and doesn't rationalize. He's way bigger and a gazillion times wiser than me, and I would never fight Him.
I began young enough.
As a minor, I made an adult decision to marry the man who was the father of my unborn child.
I remember asking my very regimental Dad to take a walk with me in the garden to have a chat. It was only the first week that I was back for summer holiday, and my Dad was thrilled to have me home. Right by our pool, I looked him in the eye, told him I was pregnant, and that I had decided to be a wife and a mother - all in a single sentence.
Then I waited to be slapped or thrown into the pool. I fully expected him to disown me, and if he did, I wouldn't have blamed him. I was really a handful.
But my Dad loved me way more than I gave him credit for. He flew to HK with my mum to meet the in-laws and to plan for the wedding.
He was truly happy for me.
Little did he know that being a wife and a mother were the last things I wanted.
Unlike most girls, I grew up wanting what men want: career, power, fast cars, and a private jet. I've never had fantasies of a fairy tale wedding; I didn't believe in love in the first place. I believed in good clean fun, and nil baggage.
But I chose to keep the child, and I must be married so he could grow up in a normal home.
Little did I know that the man I married was not ready to be a father. Didn't matter that he was years older than me.
I had a difficult pregnancy. Then I fell really ill and refused to eat and drink for a week. I remember laying in bed all ready to quit life. My then husband never came home once. I had no idea where he went, and I never asked. His mother, a really wonderful lady I still call "mum" today, nursed me.
When it got to the point that I wasn't responding at all, she called my Dad, who flew in immediately and carried me home.
By the time that summer was over, the baby was gone, and I had returned to Edmonton to start my first year at the U of A. My then husband was also back, and we moved into the house that my Dad had bought.
A year later, I was pregnant again.
Yes, I was very fertile.
Damn those no-good condoms!
This time, my Dad sent my mother over to make sure that I would have a smooth pregnancy.
Little did he know that my mother didn't love me half as much as he did.
She hated having to leave her friends, her social life, her parties, for me, and she had no qualms about letting me know how much of a burden I had been to her. She would complain all day long, and pick on people and things, including the snow.
Fortunately, for me, she quickly made new friends (my mother's department), and started going out. That was when I finally got the peace and quiet I so desperately needed.
Shortly before the baby was due to arrive, something happened that gave her a reason to go home.
Gulf war happened.
She was afraid that she was going to be separated from my Dad and Seabloke and Pilot for God knows how many years should Canada get involved.
I know, I was equally baffled, and amused - actually, more amused than baffled.
But I was glad she found herself a good excuse to go home. I wanted her to go home ,and leave me alone. I was already having a very tough time - preparing for exams and being so sick most of the time (my doctor was so worried about my condition I frequently had to go in for check ups and blood tests) - so I really could use some PEACE.
I had a difficult time at delivery. They couldn't get the baby out, and I refused to scream or use epidural. I was totally drenched in my own persperation and losing a lot of fluid and my blood pressure got dangerously low.
My girl decided to pop her tiny head out only 24 hours later. I was so glad my ordeal would soon be over I used every remaining ounce of strength I had to give one last mighty push, and out she flew, like a missile, right into the palms of an alert nurse, just a second before she hit the concrete floor, (the doctor, totally expecting the usual time it takes for the entire body to emerge, had turned to grab something).
It was 1991, and I was barely 19.
A week later, I went ahead to sit for my exams, against the advice of many, coz I wasn't healing properly.
3 weeks later, my then mother-in-law came to take my girl back to her Dad's home in HK. I didn't object to it, coz I knew her life would be 1000 times better there. They had a big bungalow house, and many adults to watch over her, and cousins to play with.
Another 3 weeks later, I moved out of the place that I was living with my then husband.
We never discussed our breakup, and remained friends.
A few months later, he flew back home for good.
I started my new life, with someone I really liked this time.
A year later, Dad died.
I went crazy, and drove the man I loved crazy too, and he did something so horrible to me I decided to walk out.
He told me that I had nothing, and that I needed him.
I said I would survive.
At the same time, my mother demanded that I drop out of school and head home, coz she had no intention to send me money. She figured that since it was illegal for me to work, I would have no choice but to go home to be her puppet.
I told her I would graduate, and I would find my way, and that I didn't need her blessing.
That was the last time we spoke. The next time we talked again would be 5 years later.
She never once asked how I pulled through.
Until recently, she would insist that she's been a terrific mother. I would never argue with her on that. I always know when to save my breath.
When I returned home, she suggested that I "retrieve" my child from my in-laws.
I was appalled.
She saw how my sister-in-law gave up her own marriage to raise my child as her own - I couldn't believe that she actually thought by virtue of my having gone through the labour pain and the trouble of carrying my child for 9 months that I had earned the right to take her back. She actually thought it was good timing since my child was old enough to not be too much of a burden to me.
It was at that precise moment that I made up my mind to initiate divorce proceeding - I had sat on it for 6 years coz I didn't want to lose my child. It was when I looked into my own mother's eyes that I realized where those selfish genes came from. There and then I made up my mind to let go.
Sea would always comment on how deceiving my very soft exterior is. She's right. Many had experienced first hand how hard my heart can be. It has to be, coz I understand and fully accept the reality of life - it's impossible to make everyone happy.
When in doubt as to who to make happy, I check my heart.
It never lies, and doesn't rationalize. He's way bigger and a gazillion times wiser than me, and I would never fight Him.
Friday, May 15, 2009
Facebook, How Do I Love Thee??
Facebook's driving me crazy. I'm pulling my hair now. I'm serious. I have 129 unread mails, more than 200 requests not including friend requests, and no end of notifications from facebook telling me to meet new guys.
Facebook is the first one I ignore, obviously. Went over my mails and started deleting spams, until I got sick and bored I decided to check out the list of requests. Accepted invitation to play some personality games, coz I REALLY want to know more about ME. Jeez.
And what did I find out?
1) I'm a vampire - apparently I LOVE people, but hate the light. Right, of course vampires love people. But I love my vege!!!
2) I love with my eyes closed and heart open and love unconditionally.
3) I make a good teacher coz I'm so controlling I will have no problem handling 30 monkeys.
Great! Now I know I'm a really affectionate vampire that makes a great teacher coz I can just gobble up naughty children.
Absolutely the most constructive 2 hours of my life.
Facebook is the first one I ignore, obviously. Went over my mails and started deleting spams, until I got sick and bored I decided to check out the list of requests. Accepted invitation to play some personality games, coz I REALLY want to know more about ME. Jeez.
And what did I find out?
1) I'm a vampire - apparently I LOVE people, but hate the light. Right, of course vampires love people. But I love my vege!!!
2) I love with my eyes closed and heart open and love unconditionally.
3) I make a good teacher coz I'm so controlling I will have no problem handling 30 monkeys.
Great! Now I know I'm a really affectionate vampire that makes a great teacher coz I can just gobble up naughty children.
Absolutely the most constructive 2 hours of my life.
ES (Simulated) Trades 5/14 - Scaling-In Experiment
I have to say, I much prefer to go in with 5 contracts and get out with 5 contracts.That said, it's a tad early to form any kind of conclusion.
Started small and adding only when MY criteria for adding was met. What I'm absolutely aware of is that there wasn't an issue of over-trading. The multiple entries work fine for me as they kept me in tuned with the market throughout the session.
Notes on chart. All entries are LONG entries - all stop orders. Exits mostly on market orders.
My greatest accomplishment today: I didn't have to sneak out of bed after 2am (my time, and 2pm N.Y. time) to continue to watch the market. D was a good boy and went to bed himself, after I kissed him goodnight and gave him a rub.
I wonder how I'm going to manage in the long run: turning in at 5am, and getting up 2 hours later to make breakfast and see D off to work.
So far, caffeine has helped though I utterly hate the after-taste (I'm by default NOT a coffee person, not a liquor person, not a coke person - D's all of those) . Absolutely worse than cigarette. I'm going to have to start popping wake-up pills. And I'm not even sure that's legal here. Hmm....
Thursday, May 14, 2009
ES (Simulated) Trades 5/13
5 entries (indicated by black triple arrows) - all LONG.All entries are stop orders; all exits market.
"Profit": 21 ticks (profit for each trade is indicated in pink next to arrow) on 10 contracts. Inflated $ amount of USD 2625 (inflated coz I won't be trading 10 contracts anytime soon - 10's just to make me run faster).
Forward testing continues. Live trading to resume once I've figured out the number of contracts to trade, and if I should scale in or scale out, or do the usual ie. everything in and out at the same time).
Wednesday, May 13, 2009
Break & Brooks & Bloggers
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!!!
Tuesday, May 12, 2009
Sierra! & Brooks!
I'm proud of myself.I installed the new version of Sierra (the last time I used it was like a year ago??), paid for the service, set it up to connect to my broker's data feed, played with the setting and learned how to use it all in 60 minutes.
Greatest achievement in 2009.
D has officially outlived his usefulness.
MUAHAHAHAHAHA!!!!!
Thanks, Solfest, for telling me about Sierra last year :-)
And thanks, Leon, for convincing me to give Sierra another shot. I just didn't know how to use it the last time (ok, I didn't make an effort to, coz I had resigned to the fact that computers were just not my department) and was too proud to ask D.
I have to say, I really like Sierra :-)
Oh, my precious book arrived. So I'll be hibernating with Brooks for a while.
I'm happy!!!
Sunday, May 10, 2009
RILED!!!
I'm a short-tempered person; patience has NEVER been one of my virtues. I particularly cannot, and do not want to put up with people who are inconsiderate and ungrateful.
Just read a blog post where the author talked about a loss he had to take on a simulated trade- when asked about his stop loss, he had identified by name the person he had adopted the stop strategy from.
3 issues I have here: first, the stop strategy is NOT meant for the instrument he is now trading; second, one should never adopt another's stop strategy if he doesn't have his risk appetite; third, there's absolutely no need to name someone on your blog unless you have something good to say about him/her.
I'm mad because the person implicated is an honest man who had simply shared the way he's been trading, and has no idea his student has put him on the spot. The method works for him, and the stop loss is an amount he can totally afford. He can make money using his method because he seriously does not care about the typical chops we see these days and basically just sits through them. You can call him a quasi swing trader. It's just that he prefers to close out his position by the end of the day. He always teases me about my grab-and-run method, and I always ask why he won't cut his loss and reverse his position. But at the end of the day, we respect the fact that we are 2 different individuals and he can only do so much to get me to see the benefit of letting my profits run, and I have a lot of respect for his lack of fear and greed. He knows to take a good profit, and sit calmly through noise. I can't, so I stick to my own style, and if I don't say, no one's going to be able to tell that he's the one who taught me to trade futures. If not for him, I wouldn't have touched futures. I am always going to be grateful to him for calling me personally after I sent him an ultra depressing (I was scalping options then and had cleaned out a huge chunk of my daytrading account) email in May last year - when I was just one of his hundreds of students whose name I bet he could barely remember.
To sum it all up, I don't like it that a good person is being implicated. And he's probably not even going to know that he has been, coz he hasn't a cult following and informants to keep tabs on what others are saying about him. He keeps to himself and minds his own business.
I like to mind my own business too, and my family and friends are my business.
So, I've de-linked the blog in question.
I had meant to leave a comment but dropped the idea.
That's his space. He can say what he wants.
My impression is that we share a common readership, so I'm clearing my teacher's name here on my own blog.
Just read a blog post where the author talked about a loss he had to take on a simulated trade- when asked about his stop loss, he had identified by name the person he had adopted the stop strategy from.
3 issues I have here: first, the stop strategy is NOT meant for the instrument he is now trading; second, one should never adopt another's stop strategy if he doesn't have his risk appetite; third, there's absolutely no need to name someone on your blog unless you have something good to say about him/her.
I'm mad because the person implicated is an honest man who had simply shared the way he's been trading, and has no idea his student has put him on the spot. The method works for him, and the stop loss is an amount he can totally afford. He can make money using his method because he seriously does not care about the typical chops we see these days and basically just sits through them. You can call him a quasi swing trader. It's just that he prefers to close out his position by the end of the day. He always teases me about my grab-and-run method, and I always ask why he won't cut his loss and reverse his position. But at the end of the day, we respect the fact that we are 2 different individuals and he can only do so much to get me to see the benefit of letting my profits run, and I have a lot of respect for his lack of fear and greed. He knows to take a good profit, and sit calmly through noise. I can't, so I stick to my own style, and if I don't say, no one's going to be able to tell that he's the one who taught me to trade futures. If not for him, I wouldn't have touched futures. I am always going to be grateful to him for calling me personally after I sent him an ultra depressing (I was scalping options then and had cleaned out a huge chunk of my daytrading account) email in May last year - when I was just one of his hundreds of students whose name I bet he could barely remember.
To sum it all up, I don't like it that a good person is being implicated. And he's probably not even going to know that he has been, coz he hasn't a cult following and informants to keep tabs on what others are saying about him. He keeps to himself and minds his own business.
I like to mind my own business too, and my family and friends are my business.
So, I've de-linked the blog in question.
I had meant to leave a comment but dropped the idea.
That's his space. He can say what he wants.
My impression is that we share a common readership, so I'm clearing my teacher's name here on my own blog.
Jules In Jumbles
There, much better.
Jules "Trading Journal" just doesn't feel like home.
D once asked me - must have been MONTHS back - if I ever considered giving my blog a more appropriate name. I asked what "appropriate" means. Personally, anything that describes me is appropriate.
On the first day of my blogging break, I pondered on what I want changed after I return.
"Not so jumbled up" was the first thought that came to mind.
Hence the more proper "Trading Journal" title.
But everytime I come in here, the new title irks me.
It's not that I'm incapable of being serious. I am very serious when it comes to work , and when lives are at stake. I'm about the scariest person to work with back in police days. But outside work, and in the company of my very small circle of family and friends, I'm mostly clownish, and speak like a bullet train (need to catch up with my thoughts before they get all jumbled up).
This blog is all about who I am - and I am one who always starts off CONFUSED.
My thoughts might be jumbled, but my mind has a way of organizing them and producing something coherent that I can use eventually.
I'm happy the way I am - jumbled.
I know Seabloke loves me that way too. If I get too clever, I might just find out where she has hidden her MILO TIN!
Jules "Trading Journal" just doesn't feel like home.
D once asked me - must have been MONTHS back - if I ever considered giving my blog a more appropriate name. I asked what "appropriate" means. Personally, anything that describes me is appropriate.
On the first day of my blogging break, I pondered on what I want changed after I return.
"Not so jumbled up" was the first thought that came to mind.
Hence the more proper "Trading Journal" title.
But everytime I come in here, the new title irks me.
It's not that I'm incapable of being serious. I am very serious when it comes to work , and when lives are at stake. I'm about the scariest person to work with back in police days. But outside work, and in the company of my very small circle of family and friends, I'm mostly clownish, and speak like a bullet train (need to catch up with my thoughts before they get all jumbled up).
This blog is all about who I am - and I am one who always starts off CONFUSED.
My thoughts might be jumbled, but my mind has a way of organizing them and producing something coherent that I can use eventually.
I'm happy the way I am - jumbled.
I know Seabloke loves me that way too. If I get too clever, I might just find out where she has hidden her MILO TIN!
Friday, May 8, 2009
ES Trades 5/7
Quick post (officially still on blogging break) for D's sake.Green arrows show where I've entered LONG. Pink arrow shows where I've wanted to place another LONG entry but didn't. Was starting to lose focus (been staring at charts the whole day, and haven't taken my nap) and didn't want to push my luck.
Closed my trading platform before I decided to put up a brief write-up. So, no capture.
1st trade: 6 ticks/contract
2nd trade: 8 ticks/contract
Hard Stop for both trades: 8 ticks
Total no. of contracts traded: 10
Total for the day: USD 875
Will resume posting daily in June.
Thursday, May 7, 2009
A Trading Session Filled With "I Don't Know"s
Me Vs Wallstreet's latest post caught my attention, coz it talked about something D and I can definitely relate to.
During yesterday's trading session, D and I started off trading in opposite directions. I kept buying where he was selling. Soon it became clear that he was going counter-trend at the wrong time.
After 2 consecutive losing trades, he started taking cues from me
At one point, when I entered long on the ES, he went in long on TF.
After his order was filled, he asked if price was really going to go up.
I told him I had no idea.
He got a little flabbergasted. So I had to explain that it all depended on whether enough people were jumping in - if there weren't, we'd just gotta run.
I then asked where his "run point" was.
He had no idea.
I suggested that he scratched his position coz I had entered at a place where it would take him just a few ticks to know if he was right - and he wasn't.
He didn't want to bail. So I said fine, then he'd just have to see if price would come back up to a level where he can cover at a smaller loss, or at breakeven, or even with a little profit.
He asked if price would find support at the level I marked "support".
Again, I said I had no idea.
He gave up.
I pointed out another place that he should cover at a loss of 200, or risk 500 to see if price will bounce.
He asked if the long legged doji after the long bearish candle would halt price (I had told him to run after the completion of the long legged doji).
I said I had no idea.
Most of the time, these dojis don't reverse price on a downtrend, and the best answer I could give him was "I had no idea" coz really, I hadn't the slightest clue if that particular doji would be an exception.
He eventually bailed at loss of 400, right after the close of another long bearish candle that came after the doji.
I waited for the bounce, and got out with 300 gain.
D was disheartened, but I didn't console him (yes, I was mean). I asked on what setup had he entered. He gave me a blank look. Then he said it just looked like price was going up. I asked if he recognized that the small bullish candle he was looking at could very likely turn out to be part of a falling 3 method (completion of the method was right before the doji appeared). Yes, yes, I was nasty.
He asked what gave me the confidence to hold on to my position. I replied that I had entered on a very familiar setup, and knew where I would run. Before price got anywhere close to my stop, I was starting to see bear traps being setup, so I had no reason to run. Had it been the other way round ie. bull traps seen instead, I would be ready to bail before my stop was hit.
With me, it was all about seeing what's unfolding at every step and I just act accordingly.
Go with the flow; keep in mind that the only certainty about the market is that certainty doesn't exist.
The best we can do is to be very selective and trade only setups we recognize (coz we've seen them enough times and had backstudied them), accept that this very particular trade that we're putting on could just turn out to be among the 10, 20 or 30% that don't work out, and bail after the pattern we had entered on has clearly failed.
Right now, I'm printing out all the charts with my favorite setup highlighted, and I'm sticking them up on hard cardboards (I bought a dozen really huge ones) so D can stare at the setup day and night. When he starts to see them in his dreams, he can then start trading real money again. LOL!! Yes, he's volunteered to start paper trading (which he's never done!!).
And he's switching to ES!
And opening an account with Inifinity just to daytrade futures.
GIRL POWER!!!!!
During yesterday's trading session, D and I started off trading in opposite directions. I kept buying where he was selling. Soon it became clear that he was going counter-trend at the wrong time.
After 2 consecutive losing trades, he started taking cues from me
At one point, when I entered long on the ES, he went in long on TF.
After his order was filled, he asked if price was really going to go up.
I told him I had no idea.
He got a little flabbergasted. So I had to explain that it all depended on whether enough people were jumping in - if there weren't, we'd just gotta run.
I then asked where his "run point" was.
He had no idea.
I suggested that he scratched his position coz I had entered at a place where it would take him just a few ticks to know if he was right - and he wasn't.
He didn't want to bail. So I said fine, then he'd just have to see if price would come back up to a level where he can cover at a smaller loss, or at breakeven, or even with a little profit.
He asked if price would find support at the level I marked "support".
Again, I said I had no idea.
He gave up.
I pointed out another place that he should cover at a loss of 200, or risk 500 to see if price will bounce.
He asked if the long legged doji after the long bearish candle would halt price (I had told him to run after the completion of the long legged doji).
I said I had no idea.
Most of the time, these dojis don't reverse price on a downtrend, and the best answer I could give him was "I had no idea" coz really, I hadn't the slightest clue if that particular doji would be an exception.
He eventually bailed at loss of 400, right after the close of another long bearish candle that came after the doji.
I waited for the bounce, and got out with 300 gain.
D was disheartened, but I didn't console him (yes, I was mean). I asked on what setup had he entered. He gave me a blank look. Then he said it just looked like price was going up. I asked if he recognized that the small bullish candle he was looking at could very likely turn out to be part of a falling 3 method (completion of the method was right before the doji appeared). Yes, yes, I was nasty.
He asked what gave me the confidence to hold on to my position. I replied that I had entered on a very familiar setup, and knew where I would run. Before price got anywhere close to my stop, I was starting to see bear traps being setup, so I had no reason to run. Had it been the other way round ie. bull traps seen instead, I would be ready to bail before my stop was hit.
With me, it was all about seeing what's unfolding at every step and I just act accordingly.
Go with the flow; keep in mind that the only certainty about the market is that certainty doesn't exist.
The best we can do is to be very selective and trade only setups we recognize (coz we've seen them enough times and had backstudied them), accept that this very particular trade that we're putting on could just turn out to be among the 10, 20 or 30% that don't work out, and bail after the pattern we had entered on has clearly failed.
Right now, I'm printing out all the charts with my favorite setup highlighted, and I'm sticking them up on hard cardboards (I bought a dozen really huge ones) so D can stare at the setup day and night. When he starts to see them in his dreams, he can then start trading real money again. LOL!! Yes, he's volunteered to start paper trading (which he's never done!!).
And he's switching to ES!
And opening an account with Inifinity just to daytrade futures.
GIRL POWER!!!!!
Wednesday, May 6, 2009
The Lonely Trader's Latest Post on PRICE ACTION
I'm not writing, but I'm still reading.
A great post by Lonely. Astounding piece.
Got me thinking:
What, exactly, is PRICE ACTION???
A great post by Lonely. Astounding piece.
Got me thinking:
What, exactly, is PRICE ACTION???
Tuesday, May 5, 2009
Hole Up
I'm taking a break from blogging and will return in June.
I should have taken my break in April.
For the past 4 years, Apr/May had been the worst time of the year for me.
One year I was isolated for nearly 2 months after being attacked by atypical pneumonia; the following year was a wisdom teeth complication; the year after was my leaving the police force for a job I utterly hated - worst year ever - it was the same year I met a monster who thought he was an angel; and in 08, when I chose D over him, monster showed his true colors.
So, I'm hibernating for the rest of May.
I should have taken my break in April.
For the past 4 years, Apr/May had been the worst time of the year for me.
One year I was isolated for nearly 2 months after being attacked by atypical pneumonia; the following year was a wisdom teeth complication; the year after was my leaving the police force for a job I utterly hated - worst year ever - it was the same year I met a monster who thought he was an angel; and in 08, when I chose D over him, monster showed his true colors.
So, I'm hibernating for the rest of May.
Saturday, May 2, 2009
ES Trades 5/1 - Wrap Up
Done for the day.2 Longs, 1 short.
I would have loved to go for 1 more short but the range's been so tight and momentum so slow that it's simply not worth the risk anymore...
Total: 33 ticks; USD 412
Friday, May 1, 2009
ES Trades 5/1 - TRAPS (I Like)
Again, another day of failing to pull the trigger too many times before I realized I was being ridiculously foolish.Highlighted in pink were the signals I acted on (finally). Was telling D to stop selling after that long bearish candle that punched through support. D was indeed going to go short on TF, and was surprised that I read his mind. Anyway, after telling him to stop selling, I started looking out for a signal to go long. It came. And I took it.
And D went long on TF too at the same time, and was relieved and happy to get out with a profit instead of a loss. He would have sold right at the bottom had he not been warned...which means I'm probably going to be able to get away with not doing his laundry for the next 2 weeks. Hur hur hur....
Went long on the ES again after it closed above the downsloping channel and after a spinning top failed to send it back down.
After price broke above 870 and closed strong above it, I did consider going long after the small bearish candle. I didn't, eventually, and waited to see what was going to form after that. Price consolidated, and simply couldn't close above grey downtrend line. D asked if it's a bull flag. I told him even if it was it could very well fail, and that it's better to look for a sell. As for me, I wouldn't be looking at any longs before price falls back to at least 865. It's the time of the day that price wasn't going to do anything spectacular anyway.
Am going to take a cold shower to clear my head. Returning for the 2pm session.
ES Trades 4/30 - Wrap Up
Highlighted in blue are trades I took. Highlighted in yellow are signals that I had indicated a "go" on my notebook which I didn't take. These will be printed and pinned right next to my screen where I can see them whenever I'm seated at my workstation. My desire to trade was near zero today and I had to push myself like I've never done before. Bizarre.17 ticks in all: USD 212 . Too far away from target. I really have to start wanting to trade again.
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