....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.
Friday, October 12, 2012
Day's Anatomy- 11th October 2012
....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....
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!
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 1)
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!
Friday, October 5, 2012
Thursday, October 4, 2012
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!
"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!
Thursday, September 20, 2012
Discipline- Truth, Desire and The Trading Way.
Why is it that so many find it hard to "be disciplined"?? I'm sure I'm not the only one who has felt it is like driving with the hand-break on when it comes to trying to enforce this elusive state of being on myself!
Above, there are some boxed-off definitions that give us a clue as to why that might be. Words like "corrects", "molds", "enforcing"...in my opinion, you will ALWAYS come up against opposition- both from yourself and others(and the market!!)- if you try to force a behaviour.
The alternative to trying to fight yourself or others into doing what's necessary, is to evoke a sense of desire to do the right thing, because we only consistently do what we want to do, not what we feel we need to do.
Whatever gap exists between what you know you should be doing and what you currently are doing can usually be attributed to a gap between what you want and what you really need. Working on liking/wanting what you need, rather than keeping likes and needs separate, is, for me, the real secret to maintaining discipline long-term.
The alternative to trying to fight yourself or others into doing what's necessary, is to evoke a sense of desire to do the right thing, because we only consistently do what we want to do, not what we feel we need to do.
Whatever gap exists between what you know you should be doing and what you currently are doing can usually be attributed to a gap between what you want and what you really need. Working on liking/wanting what you need, rather than keeping likes and needs separate, is, for me, the real secret to maintaining discipline long-term.
Monday, September 17, 2012
Thursday, September 13, 2012
Only The Momo- Trade Room!
Still languishing at about -2.5% on the account, having been up to +5%. Suffering from a nasty case of trigger lock as I've found myself entering orders just a split second too late as I second guess myself before the trade goes on to be an eventual winner.
Of course, the losers always get filled as they are going against the direction you are trading in...
Given the above, why try my hand at a Trading Room?!?
Well, the reasons are many :). Roughly in order of importance:-
1) Accountability/Verification- If I'm able to give entries, stops and exits live in repeated fashion and end up net profitable at the end of the week, I really ought to be taking every trade- by talking out loud and committing myself, I avoid half-ideas and concentrate on the expectancy of the verbalized trades. I want to prove to myself, in a live public setting, that my ideas are (or, as the case may be, are not!) actionable AND profitable.
2) Passing It On- Lots of people have helped me (some for free!) to be able to reach the level I'm currently at in my trading. So, if I can be of any help to somebody still trying to find their way, I'm more than happy to do so.
3) Being Social/Having Fun!- Trading is lonely and can even be boring when your setups are few and far between. It'd be nice to share some stories- trading or otherwise- while looking for those few pips.
As I've mentioned before, there is a strong element of discretion in what I do. I have little doubt about the long-term profitability of my personal approach but, apparently, enough to make pulling the trigger in a consistent fashion difficult. Number 1) will either strengthen my resolve, or show me where the holes are in my real time decision-making. I'll welcome either outcome.
PLEASE read the disclaimer before doing anything stupid!!! If you have the time/desire and feel like playing along, I encourage you to SIM trade the calls.
Due to the points covered in 1), It is very possible that I won't be taking all of the ideas vocalized. Although highly unlikely, it is possible that I may not take any of the trades.
The room will be open as my schedule dictates between 07:00 and 23:00 CET. The most active hours will likely be 10:00 to 13:00 CET - Just click on the link entitled "ENTER OTM TRADE ROOM!" at the top right of the homepage.
 |
| It'd help if I put my finger OVER the trigger! |
Of course, the losers always get filled as they are going against the direction you are trading in...
Given the above, why try my hand at a Trading Room?!?
Well, the reasons are many :). Roughly in order of importance:-
1) Accountability/Verification- If I'm able to give entries, stops and exits live in repeated fashion and end up net profitable at the end of the week, I really ought to be taking every trade- by talking out loud and committing myself, I avoid half-ideas and concentrate on the expectancy of the verbalized trades. I want to prove to myself, in a live public setting, that my ideas are (or, as the case may be, are not!) actionable AND profitable.
2) Passing It On- Lots of people have helped me (some for free!) to be able to reach the level I'm currently at in my trading. So, if I can be of any help to somebody still trying to find their way, I'm more than happy to do so.
3) Being Social/Having Fun!- Trading is lonely and can even be boring when your setups are few and far between. It'd be nice to share some stories- trading or otherwise- while looking for those few pips.
As I've mentioned before, there is a strong element of discretion in what I do. I have little doubt about the long-term profitability of my personal approach but, apparently, enough to make pulling the trigger in a consistent fashion difficult. Number 1) will either strengthen my resolve, or show me where the holes are in my real time decision-making. I'll welcome either outcome.
PLEASE read the disclaimer before doing anything stupid!!! If you have the time/desire and feel like playing along, I encourage you to SIM trade the calls.
Due to the points covered in 1), It is very possible that I won't be taking all of the ideas vocalized. Although highly unlikely, it is possible that I may not take any of the trades.
The room will be open as my schedule dictates between 07:00 and 23:00 CET. The most active hours will likely be 10:00 to 13:00 CET - Just click on the link entitled "ENTER OTM TRADE ROOM!" at the top right of the homepage.
Sunday, September 9, 2012
Trading Without A Compass- Revisiting Past Posts.
As I suspected in my last post, the winning streak has been followed by a losing streak.
If we define "draw down" as the peak-to-trough decline in equity after the peak has been surpassed by new equity highs, then this incomplete draw down is currently the second smallest of the six that stand out on the chart (because there is a very large number of DDs if you look at every decline followed by new highs compared to the previous peak...intra-day, intra-trade etc etc). So nothing to become alarmed about there.
It is, however, joint 1st place for steepest DD among the 6 on record. It was preceded by the largest winning streak on record. Emotionally-driven variance.
Luckily, I think I have the solution :)
"Borrowing & Lending VS Ownership."
"Fear Of The Future?"
The key paragraphs are the 1st and 2nd in the first post and the 1st in the second post. I've used these concepts before whenever the need arose. Eventually, I'd like to grow out of them but I'm more than happy to use it if it betters the bottom line!
The "glass ceiling of profit" comes at an arbitrary point whereby you're no longer trading to trade well, you're trading not to lose. This inevitably blunts your edge due to the cognitive bias "loss aversion" and, well, you lose!
The above idea ties in with the fear of reversing success obtained or gains accrued. The solution is simple: start at the beginning. Beginning of the next day, week....beginning of the account.... As long as it's a new chapter in your mind. Of course, this assumes you know yourself well enough- and you are honest enough with yourself- to be able to identify, in real time, when you switch from plain trading to trading not to lose recently acquired gains.
Logically, we should just be able to trade without these arbitrary points of reference as a loss is a loss regardless of when/where it occurs. But, for most, that isn't the case. So why not just work solutions around our biases rather than try to eliminate them?
If we define "draw down" as the peak-to-trough decline in equity after the peak has been surpassed by new equity highs, then this incomplete draw down is currently the second smallest of the six that stand out on the chart (because there is a very large number of DDs if you look at every decline followed by new highs compared to the previous peak...intra-day, intra-trade etc etc). So nothing to become alarmed about there.
It is, however, joint 1st place for steepest DD among the 6 on record. It was preceded by the largest winning streak on record. Emotionally-driven variance.
Luckily, I think I have the solution :)
"Borrowing & Lending VS Ownership."
"Fear Of The Future?"
The key paragraphs are the 1st and 2nd in the first post and the 1st in the second post. I've used these concepts before whenever the need arose. Eventually, I'd like to grow out of them but I'm more than happy to use it if it betters the bottom line!
The "glass ceiling of profit" comes at an arbitrary point whereby you're no longer trading to trade well, you're trading not to lose. This inevitably blunts your edge due to the cognitive bias "loss aversion" and, well, you lose!
The above idea ties in with the fear of reversing success obtained or gains accrued. The solution is simple: start at the beginning. Beginning of the next day, week....beginning of the account.... As long as it's a new chapter in your mind. Of course, this assumes you know yourself well enough- and you are honest enough with yourself- to be able to identify, in real time, when you switch from plain trading to trading not to lose recently acquired gains.
Logically, we should just be able to trade without these arbitrary points of reference as a loss is a loss regardless of when/where it occurs. But, for most, that isn't the case. So why not just work solutions around our biases rather than try to eliminate them?
Wednesday, September 5, 2012
End Of Winning Streak
Had to come sooner or later! What's most important is how I conduct myself- win, lose or draw- in the coming trades as this is where traders sometimes run into trouble.
As covered on the above charts, I basically waited for a confirmation of a lower time-frame setup on a weaker larger time-frame setup (see hourly for why I thought it was weak).
This time I was the one who got trapped as the following price action pivoted nicely off of the two ZoA before breaking above the important 560 area.
The trade was within my trade plan guidelines. The two subsequent entries that were not taken were too. But, for now, my trade frequency guards against this type of quick-fire trading. I'd rather miss those entries than take 2-3 losses in quick succession and ruin things going forwards.
Somewhat incidentally, I also had an order for a short on the books at 560.5 just before 2am. The fact that it reached 560 then fell away bothered me a bit and that's another reason why I need to refrain from high frequency trading at this time.
As covered on the above charts, I basically waited for a confirmation of a lower time-frame setup on a weaker larger time-frame setup (see hourly for why I thought it was weak).
This time I was the one who got trapped as the following price action pivoted nicely off of the two ZoA before breaking above the important 560 area.
The trade was within my trade plan guidelines. The two subsequent entries that were not taken were too. But, for now, my trade frequency guards against this type of quick-fire trading. I'd rather miss those entries than take 2-3 losses in quick succession and ruin things going forwards.
Somewhat incidentally, I also had an order for a short on the books at 560.5 just before 2am. The fact that it reached 560 then fell away bothered me a bit and that's another reason why I need to refrain from high frequency trading at this time.
Tuesday, September 4, 2012
Activity Around Bar Closes- Pt 2
Another example of how AABC can be used in conjunction with a bias &/or method for added confirmation/conviction.
The pattern to go short was against the failure of the one to go long (see 1 min chart). It had some internal price action which made the pattern slightly weaker but the overall picture was strong. It very nearly got my stop but I would have got back in anyway given the scenario.
Price got above the 590 action zone (where the two patterns meet...no horizontal line on the chart) then wondered up into the close leaving the Bullish Harami behind. My bias was short at the time. A strong trigger of the hourly reversal would negate that bias. A trigger and immediate reversal meant trapped longs. Especially as it occurred at the turn of the hour.
The false trigger of the two-candled (word?!) reversal, with the context of the bigger picture and timing of the setup, created a continuation pattern.
Noticing these kind of situations real-time allows you to run that winner a little further or, if you happened to be on the other side of the trade, manage your money a bit better- i.e take off contracts, move stops or just exit the trade.
Price got above the 590 action zone (where the two patterns meet...no horizontal line on the chart) then wondered up into the close leaving the Bullish Harami behind. My bias was short at the time. A strong trigger of the hourly reversal would negate that bias. A trigger and immediate reversal meant trapped longs. Especially as it occurred at the turn of the hour.
The false trigger of the two-candled (word?!) reversal, with the context of the bigger picture and timing of the setup, created a continuation pattern.
Noticing these kind of situations real-time allows you to run that winner a little further or, if you happened to be on the other side of the trade, manage your money a bit better- i.e take off contracts, move stops or just exit the trade.
Monday, September 3, 2012
Activity Around Bar Closes
Profits would be nice, but my main goal is just to keep the account moving without doing too much damage in the infancy of my return to live trading.
So far, I haven't noticed any discernible drop off in my trading volume (which would be a dead giveaway that FEAR is raising it's ugly head). At least not since moving to the live account. August as a whole has seen lighter personal trading due to holiday volume and me being half present while enjoying the summer season.
Back to the title. Here are the hourly and 1 min charts from the first trade of the week.
I won't go into the details of the trade as that's not the point of this post (there are enough notes and doodles on the chart to get a good idea anyway).
Instead, I want to focus on the price action around the turn of the hour. It fell through my pattern, held the "Zone of Action" (< where a prior situation occurred) then fired away from there after breaking the low of the hammer by a tick. That hammer was also the low of the weak hourly close, which happened after the break-down, marked with the white arrow on the above hourly chart.
The market drove prices down to a significant level and then moved up away from that level with speed right at the turn of the hour. This, to me, was a clear indication of a pending up move as we now had trapped shorts liquidating.
I could have played it better by taking off my usual ~ 1R gain then repositioning when it came back down to those lows on lower pace. Final target was 583, which has just about been hit at the time of writing.
So far, I haven't noticed any discernible drop off in my trading volume (which would be a dead giveaway that FEAR is raising it's ugly head). At least not since moving to the live account. August as a whole has seen lighter personal trading due to holiday volume and me being half present while enjoying the summer season.
Back to the title. Here are the hourly and 1 min charts from the first trade of the week.
I won't go into the details of the trade as that's not the point of this post (there are enough notes and doodles on the chart to get a good idea anyway).
Instead, I want to focus on the price action around the turn of the hour. It fell through my pattern, held the "Zone of Action" (< where a prior situation occurred) then fired away from there after breaking the low of the hammer by a tick. That hammer was also the low of the weak hourly close, which happened after the break-down, marked with the white arrow on the above hourly chart.
The market drove prices down to a significant level and then moved up away from that level with speed right at the turn of the hour. This, to me, was a clear indication of a pending up move as we now had trapped shorts liquidating.
I could have played it better by taking off my usual ~ 1R gain then repositioning when it came back down to those lows on lower pace. Final target was 583, which has just about been hit at the time of writing.
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