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 missing...total 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...

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.

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 Combine...it'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.

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.

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.

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!"...so 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.

 

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.

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.

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.

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.

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.

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.

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.

"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.

Trade Room And "StoryBook" Trading Course.

For much the same reasons as the last time I did something like this, the Only The Momo trade room is back! Visitors will be able to listen in on my analysis- along with entries, stops and targets- as I attempt to take the trades myself. See the penultimate paragraph of this post and my recent Twitter posts if you're wondering why I say "attempt"...

I'm working on becoming a trader. But what I already am is a great analyst.

To understand why I'm making such a bold statement (along with what I think is a fantastic monthly return for only an hour's trading per day), stop by between the hours of 19:00-20:15 CET/ 13:00-14:15 ET and judge for yourself :).

P.S.    I'm in the process of creating video lessons for a comprehensive course detailing every aspect of the methodology in addition to the many psychological pitfalls and money management strategies. It will be available through this website....watch this space!

P.P.S   The first videos are up! Check out the "Education" tab at the top of the blog for a short description about each of them.