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.