After reviewing my last few months of trades within my off-line journal I came to realization that I am over-trading. This is causing me, more often than I would like to admit, to lose site of my higher level trading plan. It has also become very detrimental to my PnL.
As the title says, this journal is being created to force myself slow down, go back-to-basics and correct some bad habits I've developed. This should speed up my path to becoming a better trader. I'm also hoping the accountability that comes from a FIO journal will force me to think a bit before each trade.
I read somewhere on one of Big Mike posts that he believes there are 4 major reasons for failure.
1) You are terrible at reading the market
2) You have poor execution
3) You exercise poor discretion
4) You have bad money management.
And that brings me to my second reason for this journal, which is to document things in a way such that I can determine which reason, or combination of reasons, has caused my PnL to be less than desirable.
Until I feel like I have gotten my mojo back I will only be Sim trading. Typically, sim trading for me has not been that useful because I find myself taking risks that I know I would never take in a real account. However, I am going to force myself to follow the my money management plan. For all intents and purposes I plan to trade the Sim account as if it were a real account.
I will try to elaborate in future posts but the following is a simply outline of the strategy I am using.
- Initially concentrate on trading only the ES
- 24 tick daily loss limit
- Strategy
Trade top-down, identify trend on weekly/daily/hourly level
Concentrae on watching SPY, VIX, QQQ, IWM and XLF
Identify S/R level from Market Profile
Use S/R levels, pivots, and hourly Stochastic to identify edges
Position trade edges, no scalping
Use market internals (Tick, Adv/Decl, Uvol/Dvol) to help confirm/disprove bias
- Let trades develop, no micro-managing
- One trade a day (flat-to-flat) is perfectly acceptable, in fact preferable