Wednesday, October 31, 2012

Day's Anatomy- 31st October 2012

Too tired to comment with more than what's on the chart. Spinning my wheels...


Day's Anatomy- 30th October 2012- Decide.

1.2956....I hate you!

Followed along nicely today although I just missed the xxx69 short just. 18:20 ish on the chart (CET). I like the fact that I took all viable signals...something which should obviously always be done.

Ran the first of the two wins. Indecisive on the 2nd/last win. I had three choices:

1) Take the single (6 pips) and take no further action.
2) Take the single then get back in for the expected bigger move.
3) Hold through the pullback AND hold for the bigger move.

...I chose a hybrid of 1) & 3). I wanted the bigger move but then allowed the fact that it came back to break even (and into the red) to shake my resolve, exiting close to the 1 min pivot that it created the first time around.

TWoT  (well, four...but you get the idea!)

Reminds me of the time I stepped (yes, stepped!) off a moving bus. Not the smartest thing I've ever done, I'll admit :/

I was trying to follow my mischievous friend who enjoyed doing things like smashing bus stops, doing graffiti or using the emergency exit feature of a bus to jump off whilst it's still moving... leaving behind a blaring alarm and a pissed driver!

This time, I was onboard with him. His act caught me by surprise and so I had to decide whether to stay onboard and face the wrath of the driver or jump off of the relatively slow (it was doing about 15-20mph...)moving bus...

...I couldn't commit to a decision. So I stepped! I realised I had done the wrong thing by making my non-decision when I woke up on the floor after stepping in front of a street light pole!!! I still remember asking myself what the swishing sound was as I picked myself up off of the floor. I'm sure you can imagine what it was :)

Personally, I think it's better to make ANY decision, even the wrong one, rather than be indecisive. You're almost always going to get a worst result if you don't.

Monday, October 29, 2012

Day's Anatomy- 29th October 2012

Not a good day behaviour-wise.

The chart explains it all. Those consecutive errors just after midday cost me between 11 and 17 net pips. The long from xx892 could have been held for 4 more pips too. The last trade had to be taken off due to the close. Currently waiting to be filled @ xx901 but already had two chances to get in there.

Not a good day at all.

(Incidentally, Hurricane Sandy seems to have had an effect on Eur/Usd).


Saturday, October 27, 2012

Readers' Poll!

Have a look at the following six charts:

Three of them are derived from one set of data. The other three from another set of data. But how are the six divided?

Answers in the poll situated on the right-hand side of the blog! The result will be used in a blog post in the near future. :)

Friday, October 26, 2012

Day's Anatomy- 26th October 2012

Only the one scenario played today. Could have played it better by doing what I did in the first trade on the second, doubling the pip-count.

I always knew why volume drops off going into the weekend, but now I get to feel it firsthand. Nobody wants to mess things up going into the weekend! It appears even seasoned traders suffer from the Framing Effect.


Two fingers to the Framing Effect! Statistically, doesn't mean a thing whether you make then lose just before the weekend/end-of-day etc etc or vice versa. It's all in your head!

Thursday, October 25, 2012

Day's Anatomy-25th October 2012

I used to always lose on trend days.

They still aren't my strong point but I'm closing the gap in performance between trend days and range bound days.

As far as today is concerned, the first trade ended with a loss of 5 pips (in opportunity) and, from that point on, I followed the script. Like yesterday, loads of opportunity within the scope of the methodology.

I'm thoroughly enjoying building the consistency muscle!! The money is almost an afterthought...

Wednesday, October 24, 2012

Day's Anatomy- 24th October 2012

Was incredibly difficult to get in on the 1st trade after yesterday's cock up. Top marks for me for doing what was necessary!

Today saw lots of opportunity within the boundaries of this method, but I was absent for a good chunk of it. Took what I saw, managed it according to the guidelines. Good trading.

Day's Anatomy- 23rd October 2012

The market tested my patience....and won.

A couple of decent paper profits, then the break even result before the subsequent drop pissed me off quite badly. Trade 3 and 4 ruined the day when I treated 3 how I'd have liked to have treated trade 1. Again, TWoT...I should be using that kind of stop on both of these setups but I tried to run it  (3) based on the outcome of 1. 

Less said about trade 4 the better :)

What should have been a tgt/almost tgt day became a loser.

Monday, October 22, 2012

Day's Anatomy- 22nd October 2012

Could have waited a little longer before committing to the first trade but missed the fact that the resistance had just been pierced with seconds left for the change of bar. Had the opportunity to reverse/get out at a pip loss but not in my plan (I've found that giving myself the liberty of doing that causes more harm than good). Got trapped there.

Otherwise, followed along and did what PA suggested was the right thing to do at the time.

UPDATE!:One more trade taken...

Saturday, October 20, 2012

Day's Anatomy- 19th October 2012

This is where the rubber meets the road. Can you do exactly as you did in forward tested SIM with a live account? So far, the answer for me is "no".

The more discretionary the approach, the harder it's going to be as you gained your results through choices that were more easily affected by your emotions. The solution is simple but not easy- relax and trade as you did before.

Monday did the most damage and was also the day where I deviated from the plan in an obvious way. Tuesday to Friday where good days in terms of following the story and taking action in terms of entries but didn't Mind The Gap, evident from a too frequent occurrence of b/e trades and Wednesday and Friday's suffocated wins which would have ended both days at target rather than 50% tgt and -50% tgt (i.e flat between the two days). Huge difference to the bottom line and the edge in general.

Got some work to do...

Friday, October 19, 2012

Day's Anatomy- 18th October 2012

Another day of just following along with two near misses, one shown near the end of the day, one not shown just after the first trade. Monday is the only big deviation from the plan and it shows in the difference between actual outcome and what could have been if all days were treated equally.

Just the one lone trade was responsible for triggering my stop order on the last trade. Fun stuff :)

Wednesday, October 17, 2012

Day's Anatomy- 17th October 2012

Can You Spot TWOT?
Most of the action occurred in the European morning before the US open. Then a bit of a choppy, 20-pip range.

Day's Anatomy- 16th October 2012- The Worst Of Three.

I'm happy with the way I traded today. No rule-bending or trade-skipping (within context..).

The idea of "The Worst Of Three" came about when I repeatedly noticed that when I tried to reason my way around two variables- let's call them A and B- I always ended up in 3rd place in terms of pips, with A and B taking turns for 1st and 2nd place.

TWOT relates to today's action because, sometimes I exit before the 23:00 CET forex break, other times I don't.

It just so happens that the two times (off the top of my head) that I've elected to leave trades through the break, I've suffered some adverse fills that have cost me a half R here and there...

This time I take it off and, after a 12 pip gap in my favour, it speeds off to target.

Whether I had always held or always exited I would have been better off fiscally. The worst of three...

(Not prepared for multiple R losses so no holding from now on!) 

Tuesday, October 16, 2012

Day's Anatomy- 15th October 2012

Last trade (with huge slippage considering my lot size) was a dead giveaway that we were going up. Had I have traded the two missed trades I'd have had the opportunity to take the last two longs and finish up to some degree or another.

Epic fail.

A bit more of this and I'll be forced to resolve these issues in SIM for a few weeks/months.

Saturday, October 13, 2012

Day's Anatomy- 12th October 2012

Followed along much like yesterday except today ended up with some much needed profits. Note to self: The fear of losing money and/or being wrong must be outweighed by the fear of not following your proven plan.

Incidentally, for those who do not yet have a proven plan; It's far more valuable to lose money trading a plan that doesn't work rather than trading with no plan at all. Losing consistently beats losing randomly every time because you have a constant which can be tweaked to profitability. Trade randomly and you are trading with raw luck (or lack there of).

Friday, October 12, 2012

Day's Anatomy- 11th October 2012

Much better. Just the one slight deviation from the plan with the "miss" after the first trade. It's difficult (impossible?) to objectively define a "miss" versus a "skip/hesitate", being a discretionary approach. Too many shades of gray....

....if you're able to be honest with yourself, you'll reach a point where you can start to rely on your feelings as a strong indication of the truth.

Wednesday, October 10, 2012

Day's Anatomy- 10th October 2012

Complete breakdown today. Same themes as yesterday, except worse.

It's really not about the money. It's all about the difference between taking risks and accepting them. Doing the former without the latter is financial suicide...

Taking a stance in the face of conflicting market information- such as in the last trade- is a sure sign of my needing security outside of the strategy. I noticed it, but continued to trade what was. Pretty much fell prey to all the biases I mentioned on Monday!

I prefer to think of my trading in terms of distance from the absolute edge (i.e what was available from the method minus damaging thought patterns/behaviour).

Monday- No gap between performance and absolute edge. Still a marginal down day though.
Tuesday- Target-sized gap. (Target was obtainable a couple times over...I managed a hair under break even)
Wednesday- Huge gap. Again, target obtainable but finished 60% of the target under break even. Terrible.

The profitable days are always easily explained (namely, "follow the f***ing plan, despite what you feel!!").

Let's see if I can't get back to doing just that....

Tuesday, October 9, 2012

Day's Anatomy- 09th October 2012- Accepting Risk!

Today, I was that cyclist in the crowd...

Although the net result was better than yesterday's, I'm a hell of a lot happier about yesterday's self-management. Last night's decision to not put on the overnight trade had a knock on effect. I eventually got back on the horse but not before missing the two trades that would have brought me to target (I'm fine with the b/e trade, despite it going on to be a winner. Within the written plan's guidelines.)

A day I want to forget in a hurry!

Monday, October 8, 2012

Day's Anatomy-08th October 2012 (Pt 2)

10 pip range for >5hrs=Chop!

Day's Anatomy- 08th October 2012 (Pt 1)

I'm publishing this half-way through my trading day as it represents a milestone in my personal trading. One which may apply to others whether they are aware of it happening or not.

It goes something like this:

Trade 1- loss. Internal dialogue: "good trade- move on"

Trade 2 & 3- Break even. Internal dialogue: "after resisting the urge to take a strong setup out of context AND taking the other side of the market (the correct side) you STILL have nothing to show for it! I'm getting a little frustrated..."

Trade 4-loss. Internal dialogue: "So, after following my proven plan, I'm one stop away from having to stop for the day. The day has only just begun!"

....Before Trade 5...

"Here's a setup. But I've only just lost (Recency Bias) and it was right here (Spatial Bias). What if I get stopped trading in the opposite direction of the last trade I took? (again recency and spatial biases)...

....what if I hit the day's stop?"

As you can see, I took the trade for 19.2 pips. But the fact that it's a big winner, while nice, isn't the point. It's staying with "process-oriented thought processes" rather than "outcome-oriented thought processes" Being aware of the way we all think (see the above bias links) and steering myself toward the process is probably the single most important change I've made/ am making in my trading.

Focusing on what you're trying to avoid is like a cyclist who looks at the people he's navigating around rather than the place he wants to get to. You just end up flat on your face!

Monday, October 1, 2012

The Man From Sicily.

So I'm taking my daughter for a walk in the park before lunch on Saturday when I noticed a guy watching me intently from across the way. He didn't have a very amicable look on his face.

"Oh God, what does he want now", I said to myself. (At this point I'll disclose that I am a black man living in Italy. I've had more than my fair share of racially-motivated slurs thrown my way.)

I decided to employ the "eye gazing" technique I had read about in "The 4-Hour Work Week" by Timothy Ferriss, but had inadvertently stumbled upon years earlier whilst trying to expand my comfort zone. The basic idea is you have to hold someone's gaze until they look away.

I failed :)

Several minutes later, he approached me with the little boy he was looking after. He drew the boy's attention to the bubbles I was blowing for my little one. I said, "ciao" and we struck up a half-hour conversation.

It turns out that Francesco from Sicily was quite an interesting guy. He had studied Hotel and Catering like me, but now had a burning passion to return to Sicily as part of the "Carabinieri" to fight the Mafia. 
He cited all kinds of reasons for wanting to do so but, when I asked him if he wasn't scared, he quickly answered, "No, because I have nothing to lose".

That stayed with me for the rest of the weekend and, of course, conjured up a whole bunch of trading related themes. The usually greater fear of losing what we "own" over losing opportunity. The fears of what tomorrow may bring instead of living in the moment and doing what's right now. The fears of what yesterday did bring and how we should modify our behaviour instead of just doing what's right now...

The rich (in every sense of the word) get richer because they don't need to. They have enough resources to be able to play the game of risk to reward without actively holding on to what they already have. The poor get poorer because they are afraid to give up what they have in search of more.

Over to you Tyler!