Saturday, December 5, 2015

The Donkey, Carrot + The Edge Of Your Edge.

Like the Flintstones post cautioned, we need to be aware of the fact that the more nuts and bolts we have, i.e. facets of a trading approach, the larger the potential for weakness within said approach. In professional kitchen lingo, those "nuts and bolts" would be the "critical control points" under HACCP.

The fewer we have, the better our chances are of managing them correctly. Therefore, it makes sense to find out what we actually need to make a system effective and ditch everything else.... But not anymore than that.

So we need to find out where the "edge of the edge" is...the point at which removing anymore from the approach causes it to fall apart. Then take a step back. Only then will we be able to do the real work of executing flawlessly (or as close to flawless as we can get) without hiding behind the unnecessary complexity of things which don't add value.

Sometimes the hardest working people are the laziest :).

Of course staying as close to the edge of the edge without surpassing it is key too. Technically it's easy to do...the challenge is mental as we are forever destined to be the donkey who can't get the carrot, but continues to travel great distances. Achilles who can never catch the Tortoise no matter how fast he runs....

Can you make long-term profitable decisions without an anchor chart? Maybe you don't even need charts altogether..? Do you need to trail stops? etc. etc. Get rid of what isn't necessary...execute what IS necessary with greater precision.

Monday, November 30, 2015

The Golden Mean!

The Golden Key - a video by Jonathan Quintin Art
The Golden Key - a video by Jonathan Quintin ArtPhi: 1.618 is the ratio the universe uses to multiply and divide itself at all scales...Explore the connected universe in an interactive online learning community with Nassim Haramein, the Academy faculty and participants from around the world: The Resonance Academy –> Delegate level 1 Course: Exploring Unified Physics is a comprehensive, self-paced online multimedia course packed with 30 years of research and the latest information on this topic. This material can literally transform the way you look at the world as it helps you to better understand our universe. Come join the thousands of people who are engaging with each other and our progressive faculty team in this co-creative learning community. Registration are open.The Resonance Project • The Resonance Project - Página Oficial Hispana • The Resonance Project - Traduction Française • The Resonance Project - Polska 8 The connected universe • The Resonance Project 共振企劃 • פרוייקט תהודה - The Resonance Project • (post by Jamie Janover)
Posted by Nassim Haramein on Monday, 2 November 2015

Saturday, October 31, 2015

Combine Update- CL going forward.

So despite getting excited about CL's newfound volatility, which started on Tuesday 27th, and impatiently rushing in to try to capitalise on it- hitting 11 losers in-a-row over the next two sessions- I eventually managed to ground myself and finish the 10-Day Combine at an equity high.

CL is definitely where I need to be.

The R:R structure mentioned in the prior post is something that will probably be dependant on the current market environment. As I found out over Tuesday/first half of Wednesday, it can be hard to shift gears...but it can be done. Of course, whether it's actually worth it will depend on how quickly you can adapt to the change and how long the change lasts for. For some, it might be better to stick with one model and see it through those periods where you feel as if you're swimming against the tide (using smaller R:R with higher WR in an expansive, trendy environment or larger R:R with lower WR in a range bound, choppy environment).

I also need to watch out for insisting on a certain scenario... the losing streak mentioned above was caused by two separate occasions where I wouldn't let go of a bias. A combination of trying to show the market that I wouldn't let it leave me behind (I know...not smart) and fear of missing out on the move.

I feel as if I'm ready to try my first C. Combine with CL as my instrument of choice. Something to think about over the weekend.

Sunday, October 25, 2015

Combine Update- Same Method, Same R:R, Different Instrument.

Some time ago, I noticed that a lot of TST traders that went on to be funded had two things in common. 1) The used a $30K and 2) They did it with CL.
Their daily WR was consistently higher than traders using other instruments, with many of them achieving 100% winning days. Those who achieved, say, 80-90% did so with larger winning days as compared to their losing ones.
I had a positive shift in my PnL when moving over to the $30K, I thought it only prudent to check out CL, even if I kept telling myself that I should be able to trade any liquid market in the same way.
Preliminary testing suggests I may be wrong.
In SIM I managed a 60% WR with 1.5/1 RR. You can see from the above that my result with the Combine so far is slightly inferior at 50% WR with 1.38/1 RR.
CL moves differently. It allows me to go with a "set and forget" attitude- no trailing, no management. It hits the target or it hits the stop. When you are on the right side of the market in CL, it rewards you quickly so their is little to no temptation to step in and intervene before stop/target is filled. This leaves me with all my energies devoted to finding the right entries. One of my stronger points...
I under-traded these first 5 days. Fear of committing to/trusting the method enough to keep pulling the trigger is an issue. I needed to be taking 5 trades a day to make it likely that I would hit the profit goal. I'm going to do that this week and see where it takes me.
P.S E is also saved in terms of costs. CL's tick value is twice that of NQ per contract with the same cost per roundtrip. Using a 2:1 GROSS RR and a 50% WR to demonstrate:
NQ- 10 tick wins. 5 tick losses. (10*$5)/-(5*$5)=$50/-$25=$2/-$1. 2:1 RR (gross)
        But commissions=$3.68 so... ((10*$5)-$3.68)/-((5*$5)+$3.68)=$46.32/-$28.68=$1.62/-$1. 1.62:1 RR (Net).
CL- 10 tick wins. 5 tick losses. (10*$10)/-(5*$10)=$100/-$50=$2/-$1. 2:1 RR (gross)
        But commissions=$3.68 so... ((10*$10)-$3.68)/-((5*$10)+$3.68)=$96.32/-$53.68=$1.79/-$1.
1.79:1 RR (Net).
E=(0.5*1.79)-(0.5*1)= 0.395.
You gain 8.5% extra per trade.

Tuesday, August 18, 2015

Combine Completed!

.....No, I haven't passed yet. But I do have more information/feedback that will guide me towards doing so.

Here are the facts (in no particular order):-

1) The percentage of the target obtained in each of the eight Combines I've taken since last June has increased over time. They are noticeably larger after moving to the $30K Combine.

Here they are in chronological order. The ones in bold are $30K Combines-

3%, 9%, 3%, 37%, 0%, 0%, 49%, 80% (< The one I've just finished...stats in the above screen captures).

2) My plan when moving in to this last Combine was to take advantage of the information gleaned from previous Combines- especially the 5th and the 6th- here is a snapshot of my TST journal which summarises this information...

I basically found that I was able to very consistently net +$200 within 1-3 hours of liquid market action. I needed to allow for a $400 intraday draw for that to happen. The one day out of seven when I wasn't able to achieve this typically resulted in less than a $400 loss.

3) After having a "discussion" with the missus, we decided that I'd no longer talk about the story- the reason why this nearly happened/didn't happen and if I had just done this that or the other...just bare bones results in business-like fashion. Even then, it was to be limited to a weekly conversation if not a fortnightly one.

The period of adhering to this way of operating coincided with the initial run up towards the target.

4) The high coincides with the blog post documenting my results (along with the story of how I got there) along with more frequent conversations with Mrs MM.

What does this all mean to me?

*"1)" Suggests I'm making progress.

*Trading the $30K is the where I need to be.

*Daily structure and an unwillingness to indulge in stories or even results in the short-term is essential.

*I need to use the daily stop and not get drawn in to the idea of taking just one trade per day.

Will establish what I'm going to do in terms of a daily structure then get back on the horse.

Saturday, July 4, 2015

Combine Update - Pushing, Pulling & The Present.

The last post documented the second Continuous Combine as well as most of the 10-Day one (the 10-Day marks the switch from the $100K to the $30K). I've since done another 10-Day and Continuous...I'm currently doing another Continuous- my 6th Combine for the year (7th in total)...

I'm currently two-thirds of the way to the target having traded 5 days. There are a few notable changes I've made to push me in this new direction:-
1) One Time frame (less is more)- I've removed the anchor chart. My theory is, take away as much as you can without ruining the integrity of something and you have the most efficient system. Everything I need to know to make profitable decisions can be found in the one chart/TF (15 sec).
2) Process Over Outcome- This might seem like an obvious one as we are playing a game of probabilities but it's crucial to ignore what happens (in the short-term- after X number of short-term=long-term then we can look at results) and focus on what needs to be done in the moment according to a given method. We cannot control the outcome, so there is no point in getting upset (or happy) about it. We can, and must, control our actions...i.e. adhere to the process.
Therefore, it's very beneficial to get upset (or happy) about not implementing (or implementing) the process.
3) Let The Market And Time Do The Heavy Lifting(less is more!)- There have been 14 trading days since the beginning of this Combine. I've sat through 10 and only taken trades in 5 of them. Rushing in to a trade that isn't exactly what you're looking for suggests some kind of fear....fear of a future that lacks opportunity, fear of missing out etc.
I once wrote a post about pushing and pulling...this type of back-and-forth, emotional variance leaves us bouncing from trying to reconcile regret (pulling/clinging) to fear of the future (pushing/resistance). All while we ignore what's right there in front of us. The present. The gift of what you need to do, right now, without fear.
Here's an excerpt from my TST private journal which shows where my focus now lies...
Ok! Enough observing of results...time to move on to the next present moment! The next time we look at a result, the Combine will be over (in one way or another) and I'll upload the spreadsheet with all the stats as I did with the last two posts.

Saturday, May 16, 2015

UPDATE - End Of Continuous Combine 2 + 10-day $30K.

Improved on the larger-sized winning day metric...still lower highs and lower lows....
Looking back over my journal, I saw many instances of hesitation after booking profitable trades and even more after losing ones...especially if they were the first trade of the day. I also noticed that I had taken only 40 trades in 23 (trading) days compared to my first attempt, where I took 53 trades in 19 days....

All of this lead me to the conclusion that this particular Combine's parameters were a poor fit for my method's expectancy as well as my risk tolerance.

Taken from April 23rd's journal entry:

"The last three days (21st, 22nd and 23rd) have seen me stop out on the first trade only to be offered at least one opportunity to make it to target from there. Today was an especially profitable day for the method and I just sat by and watched after the initial loss. I was in the zone on paper and would have made an absolute killing if I had taken all trades... but I need to remember that it's not like this, not even close to, everyday...
IMPROVE: Take a smaller combine and express myself...."

I mistakenly avoided risk in an attempt to manage it. With a $3000 maximum draw down and $336.8 risk per trade (6 ticks of risk with 10 contracts plus commissions..) I could only afford to lose 8 in-a-row from the outset before being too close to the draw down limit to trade again. 9 and I would have been out of the game. This pushed me to have an overly tight daily stop equivalent to two losses which meant that, when I started out with a loser as I often did, too much emphasis was placed on the fact that I literally couldn't afford to lose if I wanted to be able to continue trading for the day. This made it almost impossible to trade the edge effectively...

One day's data is is ~+$100 more than the above...

Higher highs and higher lows!

So, against my own Ego, I determined that the smaller, $30K Combine would be much easier to trade. The reasons are as follows:

1) Lower profit target (on a per contract basis) - The target is $1500. As the max. no. of contracts is 3, this means $500/contract. The larger, $100K Combine required a $6000 profit target with a max. no. of contracts of 10....$600/contract.

2) Much larger draw down allowed (on a per contract basis) - Max. DD is now $1500 ($500/contract) compared to the $100K's $3000 (only $300/contract). This is the main reason for the switch.

The pay-off is a slightly smaller imposed daily stop ($500) of $167/contract as opposed to the $100K's $200/contract ($2000)...but this doesn't concern me in the slightest as I shouldn't be trading anyway if I find myself at those levels of loss in any one day.

The extra DD allows me to use the full daily stop AND still be in the game after a theoretical 3 daily stop-outs in-a-row...

$33.68/cont./trade=$101.04/trade using max. position size. Therefore daily stop= 4 losses (4*$101.04=$404.16 - less than $500). 3*$404.16=$1212.48...

The equivalent daily stop on the larger Combine would have meant hitting the max.DD after only two daily stop-outs in-a-row.

All of this meant freedom to "express" myself/method without immediate fear of hitting the above parameters.

As there is only one day left of this 10-Day Combine, hitting the profit target is not something I'm going to push to achieve. I'm prepared to do another, possibly continuous, $30K straight after this one...especially as I made some small but significant changes 3 days after the MFE was screaming at me to do so.

For the record, here is what the new, MFE-based, approach looks like on paper. Note that the first day's results were traded on SIM to build some confidence in the newly-acquired info....the rest (7) are as traded in the Combine...

Saturday, April 4, 2015

End Of Continuous Combine 1- What I've Learned.

Erroneous last day figure...never breached the daily loss limit but haven't contested it as the end result is the same.

Notice the bounce off of the max. draw down limit...~ -$2500.

The solution is clear. Run the winning situation and circumnavigate the fear of short-term loss.

I generally do a good job of cutting the losing days short but need to improve on allowing the winning ones to get big enough to compensate. This is likely caused by a fear of giving back a short-term victory...the cost of which is long-term success...

No matter how good the strategy, everyone who has larger winning trades/days than their losing ones will, to some degree or another, experience that feeling of giving back profits which they could have booked if they weren't looking (and holding out) for larger gains. Trusting an edge which regularly fails you in the short-term is hard for most people to get their heads around.

So, I've reset the combine and this is now my 3rd attempt since June 2014. My goal is to divorce myself from the idea of an individual trade's result (since this is what causes the emotional variance) and train myself to look at aggregate results. The wider the view the better...I'll start with aiming to get through the hour I trade without focusing on each trade and thinking of the session itself as one, big "trade".

Action based on the present, results based on a collection of present moments.

Thursday, March 26, 2015

Combine- Day 17.

On the back of a losing streak but finally starting to see a glimmer of what's necessary to move towards the combine target rather than bounce around break even, which is what I've been doing.

The second trade went nicely in favour but I only got partially filled and let my disappointment get the better of me, keeping the order for the remaining 8 contracts on the books when I should have been out for a minuscule profit. I ended up paying out as a result, throwing the day off by some $400. Need to be better prepared to do the right thing even when tested.

If you are going to step off a moving bus, you had better do so with conviction! The next few days in the Combine will demonstrate whether I have that or not as I look to replicate today's kind of engagement with the market consistently. I see two probable outcomes:

1) Quickly moving towards the profit objective- I've been trading alongside the Combine in SIM and, as has been the case for 2 years now, I'm satisfied that my method has edge. The issue will only ever be the ability to execute consistently with a cool head. If I don't do this then the other outcome will be....

2) Quickly failing the Combine- Not embracing this possibility is the surest way to make it happen as we tend to hide from information that threatens us or cling to an outcome we are searching for, quickly removing our ability to be objective.

So my goal isn't to pass the's to trade the way I almost did today and let the chips fall where they may. I will gauge success or the lack thereof by the process I engage in NOT by the outcome of that process.

Let's see what happens.

Thursday, March 19, 2015

Combine- Day 14 + Fever.

Spent 10 minutes saving, then re-saving, todays' charts to the HD...wondering why the little image wasn't appearing in the folder. It took me that long to realise that I was saving it as "130315" instead of "190315"!

....yes, some residual effects of the fever I am now just getting over. This was almost certainly caught from my daughter, except she is tougher than me and managed to walk around with up to 38.5C/101.3F while I, on the other hand, was reduced to tears, bedridden for 3 days with 39.2C/102.6F and "head pain" so severe, it made a migraine look like a headache.

I'm now happily drugged up with two antibiotics and a third tablet "to protect me from a stomach ulcer". Joy :).

Things are becoming fairly routine trading-wise. Attempted to move one step closer to respecting the ZoA target by putting in order in to scale out of half when the trade appeared to run out of steam. It was rejected for some unknown reason. So I exited for $175 less than I would have earned if the order had been accepted. Probably a fever-induced error...we'll see tomorrow.

Tuesday, March 10, 2015

Combine- Day 12.

Good job with patience and avoiding TWOT...I recognised that thoughts of frustration, failure and regret were running through my mind yesterday when I missed purposefully passed on what would have been a nice payment because it didn't flush the way I needed it to. No trade.

Fast forward to today and I was faced with the same situation. Recency bias- together with negative self-talk-reared their ugly heads ("take it now or you'll miss it like yesterday"). But I just simply chose not to take part in it.

Work needs to be done on trusting my targets, but acclimatising myself to 10 contract trading is my first concern.

Wednesday, March 4, 2015

Combine- Day 9 + How We Frame Things.

Is it a "loss" or a "cost"? A "win" or "revenue"?? How we label our subjective view of a reality with unlimited malleability will, ultimately, shape the very reality we end up living.

"Winning" conjures up thoughts of luck. A lack of skill. You wouldn't go to work as a teacher, bus driver, electrician or any other "normal" job and say, "I won my payslip!" why do we use this terminology in trading? Does that not encourage the gaming mentality that gets so many people, myself included, financially slaughtered??
Similarly, "Losing" brings to mind failure. Being less than. But when we pay for a train ticket to get to work, or buy some food etc. we don't think of that money as lost but, rather, spent. Same monetary result, different psychological framing.
"We pay the market to find out whether we are right or wrong in our analysis"- This is what Tim Racette told me in a recent E-mail exchange over the Christmas period (thanks Tim!). There is no winning or losing. Just revenue/earnings and costs. At least this is true if you have a tried and tested trading methodology...
Sincere thanks also to Pete from Everydayaware for reminding me just how important the words we use are for cultivating the behaviours we want to adopt.

Tuesday, March 3, 2015

Combine- Day 8.

Last Thursday was Day 7 and that was a profitable day with full contract size (10 contracts). Friday was a repeat of this scenario, except I did one better and just didn't watch the markets.

Since Monday, I've returned to my 19:00-20:00 CET hour (which is where I intend to stay for the rest of the Combine). I've taken just the one trade, today's, out of seven setups identified in those two hours. I managed to catch the only one that resulted in a loser an expense.

Easing in to 10 contract trading. Under water in the account but know the power of the edge so still feeling confident.

Wednesday, February 25, 2015

Combine- Day 6.

Confused. Will take a day to decide on a direction that can be sustained without risk of ruin as an exercise in building confidence. Will at least scale back on the frequency of updates as that is starting to become a chore too.

Tuesday, February 24, 2015

Combine- Day 5

Followed through with the plan...but the trades I got in didn't follow through. Not as frustrating a day as yesterday, where there was one runner and a few scalps that I sat on my hands for, but close.

Wasn't aggressive enough on the 4445.25 short...missed the 4452.25 short in to the close (not annotated on the chart) as I was doing the write-up. Too many coincidences suggest fear was in my trading today.

Good control though and live to fight another day. No regrets and will see this week through hunting for two or three "runners" and controlling losses on the rest. This will mean giving back a few scalps. Will review at the weekend and change course if necessary.

Saturday, February 21, 2015

Combine End Of Week (EOW) Review 1.

Blue and Red values are winning and losing days respectively.
What I'm pleased with this week is my consistency of approach towards my interaction with the market. I chose how much I was prepared to lose and stuck to it, even if I used to find it difficult to "give up" (We have to learn to be good losers in order to win over the long haul). I knew I wanted to have bigger winning days than losing ones and so I made that possible by controlling the downside...

I see a few areas for improvement. In order of importance:-

1) Emotional Variance- As mentioned in this post, this is, in my opinion, the most detrimental threat to anyone's profitability. Tuesday's mild euphoria followed by extreme emotional fatigue the following day meant a lapse in my ability to wait. If I had done so, I would have had the opportunity of up to 5 points of profit rather than the -1.5 points that I ended up with.

Action Plan: I have enough awareness of self to catch this scenario as it's unfolding. I will be in bed earlier than midnight on those winning days that trigger such a reaction. No bed before midnight, no trading the next day.

2) Run Winners, Cut Losers- This can be intra-trade, trades relative to other trades or on a collection of trades that make up a period of time, such as a day. I did a good job with the first two but not with Tuesday (took one-and-done) and Friday's trade (lowered contract size) which inevitably capped the week. This was done on purpose but, as I said, it won't do long-term.

To do this requires trust. Trust that pushing when already up will result in more over the long-term. Trust that, as much as you think you can fight, giving in too soon will save you in the long run. We have to forget those odd occasions when we pushed and gave back gains or when we fought our way back from huge drawdown.

Action Plan: Risk at least one more trade (full-size) when I'm up as much as I'm prepared to be down on any given day. Know that, sometimes, this is going to mean taking a decent winning day and turning it in to a smaller one in order to reach those larger-than-average-losing-day winning days. Example: If I'm only prepared to lose $336 in any given day, then take that one extra trade when up $336 on any given day.

It's also interesting to note that, just by moving from 5 contracts to 1 on that last trade, I cut the weeks' expectancy by just over 10% - E= 0.1013 missing from what would have been 0.2767.

In a nutshell- Go to bed and push when you're winning.

Friday, February 20, 2015

Combine- Day 4.

I was particularly pleased with the first trade today. My "Daily Goal"- one of 5 daily notes that you are encouraged to keep in the community journal at TST- was " Wait, read and react with no thought of where I am for the day (until daily tgt or stp)" 5.25 pts/3 pts respectively. This was almost achieved today.

 I walked my way through the pre-trade analysis, analysing out loud, from 14:13 CET until the trigger at 14:43 and then continued the analysis through the trade with no noticeable change in pace or attitude. It helped that I had my partner with me but the whole event, from the stalking to the entry, management and eventual exit, seemed effortless.

Of course, when it was time to put on a second trade 3.5 hours later, the ole brain started whizzing through what a losing trade would mean in terms of the weeks' result and the TST stats- both of which mean very little in the grand scheme of things.

So that second trade's MFE was 3 pts. The earlier win was 2.5 pts...but I decided to put on just the 1 lot- down from the usual 5- to protect the day and week. Long-term, this won't do...but I'm treating this week as acclimatisation, so I'm happy to pay for that in lost E this time.

Later/tomorrow, I'll be posting the uploaded stats from my own spreadsheet and looking at what I learned this week by going over each trade, and the accompanying emotions, with a fine-toothed comb. Then I'll see how I might use that to move towards sharpening the edge for next week and beyond.

Thursday, February 19, 2015

Combine- Day 3.

Nothing to report here...only the feeling that I'm trading a losing approach simply because the first three trades have resulted in a net loss. Do the same thing tomorrow. Look at the result after 10 well managed trades in a row.

Wednesday, February 18, 2015

Combine- Day 2.

I know these days well.

It goes something like this. Happy with my actions on the prior day leads to euphoria. I can't get to sleep until late as I feverishly imagine what it'd be like to be completely location and time independent. I'm talking calculating how much it costs to live in Medellin, who I'd pay tax to if I was a digital nomad...the works. When I do eventually get to sleep, I don't rest well and my eyes are wide open by the crack of dawn.

One of two things then happens:

1) God complex in tow, I bend rules that served me well even if, in the moment, I'd swear that I didn't. It doesn't work out or, worse still, it does.

2) I become overly careful. This then leads to frustration which ultimately leads to 1). The amount of frustration is directly correlated with the amount of damage I end up doing.

In short, euphoria leads to emotional and physical exhaustion which then leads to decisions based on "then" ("it worked back then"= past or "If I get out now and it goes in favour, then I'll miss out on X"= future) rather than "now". "There" rather than "here". Gone unchecked, this can cause traders to doubt their edge, or abandon it entirely. All they needed to do was trust and stop trading so as to limit the damage. This is what I've done today.

A whole host of emotions arise when you take this kind of action; "I could have made it back and then some" or "If I have true edge, I should just plug away and take more trades" but that's just our inherent faulty wiring that causes us to fight when we are losing and run with some gains when winning.

Continuing with 5 lots for now and back to waiting diligently, taking what the market has to offer and asking for no more.

Tuesday, February 17, 2015

"StoryBook" Trading Meets TopstepTrader's Continuous Combine!

At the request of this frequent blogger, and this not-so-frequent one (!), I've decided to document my journey in the TopstepTrader Combine.

I'm trading the $100K account. Here are the account parameters and Combine rules:

The profit target is $6K. Past performance would suggest an ETA of 20-40 trading days. This is the result of Day 1:

A bit of background info: blue rectangles = MR, Blue triangles = PF, Arcs = C2N and Yellow ellipses = App....all colours refer to the background of the shape.


EDIT: I've been made aware that the charts are a bit small. This 5-min chart and this 15-sec chart should be clearer.

I opened the Combine on the 12th of February 2015, but due to US holidays and just generally getting myself set up (I subscribe to Continuum data but the program only works with Rithmic etc) I was only able to get started today.

The green triangle on the 5-min chart depicts the trade I decided to let go. My plan was to trade half-size (I intend to start trading 10 lots shortly) with a one-and-done approach, win, lose or draw. I bailed 3-4 ticks before the target because:

1) Moves tend to be quicker and more volatile during the late EST morning/early EST afternoon in the NQ as compared to pre-market (when I sometimes attempt to catch bigger moves).

2) It put in wicks a hair above the 1st target of the pattern.

My aim is to document everything here, but, should it start to take my focus away from the task at hand, I will scale back/stop the blogging and just continue with my usual record-keeping.