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

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.

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.

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...

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.

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

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! :-)

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.

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.

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....

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).

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.

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!!!

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!!!

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.

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!

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.

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!!!!!

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???

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.

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

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.