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Finally Turning the Corner, tha "its 80% Psychology" thing...


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Finally Turning the Corner, tha "its 80% Psychology" thing...

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  #201 (permalink)
 TropicalTrader 
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zmaj View Post
@TropicalTrader well said

Yes, we have to have a plan = The rules of engagement.

The worse thing for me is discretionary overrides.
It happens when i trash my rules of engagement in the garbage bin and start fishing expeditions for the tops or the bottoms.
Then the market really lets me have it


Up to 90% of my losses come from those "fishing expeditions"

There is an old trader proverb, those who pick bottoms get stinky fingers....

I used to be on that rollercoaster too. I found it to be a stressful way to trade. For me understanding volume profiling and the auction process made a huge difference. I trade extremes (tops and bottoms) only when its a rangey environment, not on a trend day..

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  #202 (permalink)
 joe s 
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TropicalTrader thanks for the explanation I will add to that for my own trading

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  #203 (permalink)
 hoppy123 
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my 2 cent . When you start trading off your plan usually your brain is overload info . I only make money when i trade for 4hrs 8-12 and 3 max trades . I traded over night a few weeks ago and was tired lost 5% of my account . I compare it to drinking and driving you seem ok to trade but the next day . What the f^^k happen last night.

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  #204 (permalink)
 zmaj 
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hoppy123 View Post
my 2 cent . When you start trading off your plan usually your brain is overload info . I only make money when i trade for 4hrs 8-12 and 3 max trades . I traded over night a few weeks ago and was tired lost 5% of my account . I compare it to drinking and driving you seem ok to trade but the next day . What the f^^k happen last night.

Well said excellent analogy, thank you.
Too bad that it takes us a while to learn this. Perhaps that is the point = to trade is to learn

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  #205 (permalink)
 TropicalTrader 
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hoppy123 View Post
my 2 cent . When you start trading off your plan usually your brain is overload info . I only make money when i trade for 4hrs 8-12 and 3 max trades . I traded over night a few weeks ago and was tired lost 5% of my account . I compare it to drinking and driving you seem ok to trade but the next day . What the f^^k happen last night.


zmaj View Post
Well said excellent analogy, thank you.
Too bad that it takes us a while to learn this. Perhaps that is the point = to trade is to learn

Yes. We make all kinds of recurring mistakes, then we make up rules and try to follow them, usually unsuccessfully, but if we keep going through all the pain and screwups - with a ton of perserverance and hard work, change happens - and it's exciting! For some reason we keep wanting to put our hand back on the stove, but eventually we remember the last time we got burned and make new choices.

6 Key Trading Errors (by FuturesTrader71)

1. Not taking a planned trade
2. Interfering with our pre-planned trade management once we're in a trade
3. Chasing a trade from FOMO (fear of missing out)
4. Technical errors, order entry mistakes (clicking buy when you want to sell, 10 lots instead of 1, etc)
5. Allowing outside influences to bias the trade (This has been my hurdle lately, I decided to not watch FT's hypos anymore, I get too biased from his info because he's my #1 mentor and it causes me to stop seeing things objectively)
6. Accidentally entering a trade (hit a button totally unexpectedly, cat walked on keyboard, etc)

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  #206 (permalink)
 joe s 
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Well said TropicalTrader

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  #207 (permalink)
 TropicalTrader 
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So how's your trading going?

Have you made any mistakes lately that are psychology related?


Most will agree that psychology is at least 50% of the succe$$ful trader equation but how much work have you been putting into it vs time spent trading?

Answer for yourself and if you're not happy with your trading, work on psyche! Otherwise, you've got a looooong way to go.

For those that think psychology is bullshit, you need to go a few levels deeper then the "visualize what you want to happen" kinda advice. Think about psychology as a prerequisite for being able to perform/execute a successful trading process over a long period of time.


Here's something special for you today, this is Pure Gold... actually, its better then gold, it's Pure Bitcoin!
I just discovered this gem today, somehow I missed it, anyway its perfect timing and a great reflection for how far I've come this year.




Thankyou Dr. Andrew Menaker!

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  #208 (permalink)
 TropicalTrader 
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Happy New Year Traders!!

Are you focused on making it happen this year?!


Here's some tools to kick it up a few notches:


1 - Presentation: "Strategies to Stop the Bleeding of Your Account" by Benjamin Lee.
It's about fixing your weaknesses & optimizing performance.



2 - I've been really enjoying these talks by 40 year veteran trader Chris Cady who is also a meditator.




3 - If you struggle with recurring destructive patterns, you definitely want to read The Psychology of Trading by Brett Steenbarger
and buy a notebook to start journaling your insights, identifying patterns and creating strategies to maintain optimum trader states.


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  #209 (permalink)
 Powdrpig 
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Great videos . . thanks for posting. I especially liked the Chris Cady talk. I am planning on listening to his other ones. His curiosity mindset is definitely a positive way to approach a trade and greatly relieve stress within the trade. Brings your focus to the trade and not the outcome. You can control your emotions, not the market.

A book that might be of interest to those that wish to incorporate psychological /meditative techniques and trading is Thinking Body, Dancing Mind by Chungliang Al Huang and Jerry Lynch. Although primarily geared toward improving athletic performance, one can easily transfer the principles to trading.

I have also enjoyed reading the rest of your thread . . much appreciated!

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  #210 (permalink)
 TropicalTrader 
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Powdrpig View Post
Great videos . . thanks for posting. I especially liked the Chris Cady talk. I am planning on listening to his other ones. His curiosity mindset is definitely a positive way to approach a trade and greatly relieve stress within the trade. Brings your focus to the trade and not the outcome. You can control your emotions, not the market.

A book that might be of interest to those that wish to incorporate psychological /meditative techniques and trading is Thinking Body, Dancing Mind by Chungliang Al Huang and Jerry Lynch. Although primarily geared toward improving athletic performance, one can easily transfer the principles to trading.

I have also enjoyed reading the rest of your thread . . much appreciated!


Thankyou for your kind words and recommendation. I'm intrigued and just ordered the book!

For everyone reading this, in my experience its really, really easy to intellectually grasp ideas/concepts, have light-bulb moments and think you are a changed person. Then you end up repeating the same stupid mistakes over and over (often for years). Dr. Andrew Menaker talks about why this happens in his webinars (see the process vs outcome video on youtube). Dr. Brett Steenbarger talks about this in his books also. It doesn't mean there's something wrong with you, it means you need to internalize the knowledge. I've been stubborn and even though I knew that I was the problem and spent all this energy to learn and grow - changing has been a challenge.

As Dr. Steenbarger put it, you need to create new endings to old stories. This takes bringing awareness to your destructive patterns in real time and invoking new routines. It's easier said then done. There are many techniques that can help with this - writing about your thoughts & emotions in a journal is very helpful to "exercise your chimp" (from book The Chimp Paradox). If you are lucky to trade in your own environment without anyone else around, you can videorecord your trading with the audio on and talk out your mental dialogue. This is a powerful technique and listening to it later you'll start to notice the different parts of your personality. (I use OBS free software)

Powdrpig, there's some videos on youtube by Bruce Bower I think you'll enjoy also.

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 TropicalTrader 
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I'm feeling really excited about realizing more of my potential this year. Last year I put in a ton of work, I really upped my game on all the levels plus worked 2 jobs and saved enough money so that starting this year I have 4 full days a week for trading. I've settled on the Dow as my market of choice. I love the way it moves. For me personally, I'm better just focusing on one market and trading it short-term. I know my weaknesses and strengths now and am ready to actualize my goal of being a 6-7 figure per year trader. It's so important to know your kryptonite and create routines around your strengths.

Here's a trade I just took and added to my Best Trades folder.



I love this trade and yes it happened to work out but even if it didn't it's still a 'beautiful thang'.

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 TropicalTrader 
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One huge step for me has been automating my trade process. FuturesTrader71 was so kind to share his scaling approach and I'm using Visual Trading Console to execute for me on MT4. If you're interested on more of that let me know. FT71 said something that really hit me hard, here's my paraphrase " f you have issues with emotional trading, make your trade management completely automated". This is has been huge for me (and my monkey).

Here's the nitty gritty for the Dow trade I just took:










After 1st scale, 1/3 comes off and stop to breakeven. Then its a stress free trade.

And ya, the Dow has kept going but that's ok, a lot of times it comes back so I'll just bag the profits and look for the next trade. It also wasnt a high volatility time so I thought it might make a trip back into the poc area. I've giving myself some discretion with the 3rd scale but the rest is automatic.

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  #213 (permalink)
 Powdrpig 
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I hope you will enjoy the Huang/Lynch book . . I still read certain sections from time to time and find it quite useful. They also wrote a sequel, Working Out, Working Within.

It always amazes me the different paths people take when trading and where they eventually end up . . providing they survive all the pitfalls. My first software was Metastock 1.0 in the mid-80s and using Dial Data. I have always tried to embrace as many different techniques as possible and to learn as much as I can. Plus, you never know where a gem will surface. Many turn out to be dead ends, while others put you on a whole other direction. I've attended the old TAG seminars in Vegas, member of the great Avid chatroom, and even dropped in Woodies' CCI . . gb007 was the only gem there. I won't even mention the amount of money spent on books, software and hardware. In the end, it comes down to yourself and many 1000's of hours of sweat and dedication . . lots of people just see the potential in the market but aren't willing to make the sacrifice. It's no wonder that psychology determines the success or failure of most traders. Hopefully, during the journey one finds something that feels comfortable and provides some success.

You mentioned that you have now just trade the YM. I too have dropped others for just the ES. Too stressful trying to follow too many . . if your system works then just add more contracts . . why look elsewhere. I also trade very short-term since it keeps me better focused, even if it is somewhat exhausting at times. In this regard, the video on Cady's curiosity mindset as been quite beneficial the past couple of days. Much more relaxed watching the trade just play out which betters my outcomes. Less anxiety makes trading more enjoyable. My only automation attempt has been my audio and visual alerts which allow some relaxation between trades. You need breaks coupled with some breathing to keep your mind and body fully in the game.

Thanks for the heads-up on the Bruce Bower videos. I'll be sure and view them. I look forward to more of your posts in the future.

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 SBtrader82 
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TropicalTrader View Post
One huge step for me has been automating my trade process. FuturesTrader71 was so kind to share his scaling approach and I'm using Visual Trading Console to execute for me on MT4. If you're interested on more of that let me know. FT71 said something that really hit me hard, here's my paraphrase " f you have issues with emotional trading, make your trade management completely automated". This is has been huge for me (and my monkey).
...

And ya, the Dow has kept going but that's ok, a lot of times it comes back so I'll just bag the profits and look for the next trade. It also wasnt a high volatility time so I thought it might make a trip back into the poc area. I've giving myself some discretion with the 3rd scale but the rest is automatic.

Hi, I just discovered your journal and l have a couple of observations that immediately came to my mind when I saw the picture above (post #212).
This is just my opinion and I am also trying to reach profitability so I still don't have the answers, anyway I will share my thoughts about the trade in the picture:

1) I used to adopt exactly the same scale out policy that you described for years. Now I came to the conclusion that it is too conservative and in the long run it is not sustainable.
In the best hypothesis that the trade reaches all your targets, you gain 42+28+20=90 and if you get stopped out you lose 75. That is in the very best scenarios you have a trade with RR=1.2 to 1.
For a trading style to be sustainable with this RR you need a high win rate. You can have a high win rate if you gravitate towards scalping but even in that case I think your RR is too low. The problem of this approach is that it is not "robust".
If you are not profitable yet you need a RR choice that makes your system robust, meaning that it can absorbe all your the stupid trades that you will take.

2) A major flow of this scaling style is this (it happened to me again and again) I will multiply your number by 10 so that the psychological effect is more evident: Suppose you risk 250 USD per contract and your first scale out is at +200 and the second scale out at +280. Once your trade has reached the second target you have cashed in 480 USD and you are happy.
Then you will have one contract open with the following possibilities
  • to gain 420 USD more by letting the trade run
  • to close the trade with 280 USD more ( that is at the same price of the second contract)
  • to move the stop at break even
.
Out of these three situations the only correct one to give a chance for your system to work is the first. But most of the time after reaching the second target the price will retrace a little bit and you will find yourself with 480 USD in the pocket and the third contract which should be a runner is not really running, it is just walking around an area of +200 USD/+150/+220, so you will look at it and think "you know what?? if I close now I can close the last contract with +220 USD and go home with 700 USD. If I gain 700 USD per day this roughly 15K per month".

I don't know if I am correct but this is what I used to think and do. If this is the case you risked 750 USD to gain 700.

I think that the right way to scale out is that the first scale out target must be at 2:1 Risk reward, the second scale out at 3:1 and then you forget about the last scale out or make it at 5:1. If you are a scalper maybe you want to scale out at 2:1 two contracts and the third one you let it run. But if your first scale out is at 1:1 you will end up having an average winning trade that is almost the same of your average loser or even less.

This is just my humble opinion based on my experience, so take it for what it is.

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  #215 (permalink)
 Powdrpig 
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SBtrader82 . . I agree with having 2:1 ratio for intraday swing and higher time frame charts. You need to offset the time risk that is higher in those charts. Risk increases the longer you are in the market. Commensurate with this is the need for either greater return or smaller stops in order to achieve a profitable ratio. Yes, a lower 1.2 ratio can be used depending on a system with a higher win rate, such as scalping.





My system is pure scalping and my overall ratio can fall down around your lower level at times. There is no way it would ever achieve a 2:1 ratio but then my risk is considerably lower due to being in the market an extremely short time. To show this is possible, I have attached a chart that shows my trades from Friday. It is from opening to around 9:00 PT . . I usually stop around noon ET on Fridays. This is a 30 second chart that I take my trades. The upper colored bars represent potential setups while the second chart colored bars denote possible entries. I use either a 5 or 6 tick stop depending on volatility from the prior week. Exits are determined by a number of factors. If I see setups on my "longer-term" charts (2m/90s/1m), then I will expect my runners to go further and time exits will be based on those charts. Exit and entry signals are based on indicators (three are not shown) and filters (not shown.) Only use two filters: markets' tick chart and A/D ratio.

Another filter are the S/R lines which are square of nine lines shown on the chart. The black lines denote the major degree lines (0/90/180/270/360). I have found the SQ9 lines to be especially useful with the ES over the years. They act like magnets to price by attracting, repelling, or holding. Many times once price breaks or is repelled by a line, prices will flow the the next line especially with prices trending in that direction. A good example is the 7:26 breakout trade. I didn't get a signal on the the first down move but once price broke the trend line (not shown), I knew it would head toward the next lower SQ9 line. The major 55 ema was heading down and the 8 ema (red) had broken the upper SQ9 line.

My color bars are based on indicators and are created by programing the color bars based on alerts in Sierra Charts. I also use audio alerts that can be developed using the following free site: Balabolka If the text-to-speech file sounds odd just adjust the text phoenetically. Mine are simple . . ES long or ES short but you can create anything. The English lady's voice is much nicer than a ding or beep. Just attach the WAV file to your sound directory and attach your alert to it.

I hope this has been of interest to some. I'm sure my system might be a bit hectic for some but it does work for me. I still miss trades . . three on Friday. Two for not being filled and the other a call of nature. I have also discovered that each future contract has a different personality and by concentrating on one or two that addresses all your needs that you'll discover many nuances which can greatly increase your profitability and enjoyment. It's amazing how one will just feel more comfortable and seem to fit. Kind of like the wand in Harry Potter.

Have a great weekend and a profitable trading week ahead . . .

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 SBtrader82 
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Powdrpig View Post
SBtrader82 . . I agree with having 2:1 ratio for intraday swing and higher time frame charts. You need to offset the time risk that is higher in those charts. Risk increases the longer you are in the market. Commensurate with this is the need for either greater return or smaller stops in order to achieve a profitable ratio. Yes, a lower 1.2 ratio can be used depending on a system with a higher win rate, such as scalping.





My system is pure scalping and my overall ratio can fall down around your lower level at times. There is no way it would ever achieve a 2:1 ratio but then my risk is considerably lower due to being in the market an extremely short time. To show this is possible, I have attached a chart that shows my trades from Friday. It is from opening to around 9:00 PT . . I usually stop around noon ET on Fridays. This is a 30 second chart that I take my trades. The upper colored bars represent potential setups while the second chart colored bars denote possible entries. I use either a 5 or 6 tick stop depending on volatility from the prior week. Exits are determined by a number of factors. If I see setups on my "longer-term" charts (2m/90s/1m), then I will expect my runners to go further and time exits will be based on those charts. Exit and entry signals are based on indicators (three are not shown) and filters (not shown.) Only use two filters: markets' tick chart and A/D ratio.

Another filter are the S/R lines which are square of nine lines shown on the chart. The black lines denote the major degree lines (0/90/180/270/360). I have found the SQ9 lines to be especially useful with the ES over the years. They act like magnets to price by attracting, repelling, or holding. Many times once price breaks or is repelled by a line, prices will flow the the next line especially with prices trending in that direction. A good example is the 7:26 breakout trade. I didn't get a signal on the the first down move but once price broke the trend line (not shown), I knew it would head toward the next lower SQ9 line. The major 55 ema was heading down and the 8 ema (red) had broken the upper SQ9 line.

My color bars are based on indicators and are created by programing the color bars based on alerts in Sierra Charts. I also use audio alerts that can be developed using the following free site: Balabolka If the text-to-speech file sounds odd just adjust the text phoenetically. Mine are simple . . ES long or ES short but you can create anything. The English lady's voice is much nicer than a ding or beep. Just attach the WAV file to your sound directory and attach your alert to it.

I hope this has been of interest to some. I'm sure my system might be a bit hectic for some but it does work for me. I still miss trades . . three on Friday. Two for not being filled and the other a call of nature. I have also discovered that each future contract has a different personality and by concentrating on one or two that addresses all your needs that you'll discover many nuances which can greatly increase your profitability and enjoyment. It's amazing how one will just feel more comfortable and seem to fit. Kind of like the wand in Harry Potter.

Have a great weekend and a profitable trading week ahead . . .

@Powdrpig thanks a lot for your post, it's really interesting. I never thought that since you are involved in the market for less time than there is less risk and you can have a system with higher win rate.
Iterestingly that's, almost the opposite of how I perceived things, but I can clearly seeyour point. I am definitely not a scalper but I don't regret taking a trade that lasts only a few minutes.

I have one question for you, that has always been in my mind: "do you think that there is a level of noise in the market?" I mean do you think that there is a time frame below which you cannot trade and the market is just noisy, or do you think that in any timeframe it makes sense to trade?

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  #217 (permalink)
 Powdrpig 
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SBtrader82 . . That's a very good question regarding excessive noise drilling down too far in time. Personally, I doubted I could ever trade this low. I was using pretty much same system on a 2min but I was just getting tired waiting for trades. If I tired expanding to other contracts, I could never get a feel for them or they just had something that didn't meet my needs, For example, I would like to trade gasoline since system works great, but the volume is low which I think subsequently causes the wide spreads. In terms of the NQ, I thought it would be perfect but in that case there is too much volatility for me to trade. My stops would be beyond the threshold I would find acceptable. In that case, yes, noise would prevent trading that contract. My stops would be even larger in using a 2 min time frame. I do sometimes look at the Russell but the volume isn't that great. It was an excellent future to trade when it was the TF, then they sold their soul to ICE. Exchange fees plummeted due to nobody wanting to deal with ICE. Now they are back as RTY with CME but volume never returned. The YM just never feels right to me . . maybe it's just because there are fewer stocks in the index.

I think a lot of how your system will perform just depends on what you're trading. The ES provides everything I want. It has great liquidity and huge volume plus almost always a one tick spread. I also like the fact that it has an unquenchable thirst for size. Scalability in unmatched other than bond market. It will gobble up 1000 lots and not even hiccup. Also the volatility has greatly increased for the ES over the past few years. Previously, it was difficult to get any move greater than 6 ticks most of the time. Now I get nice runs even using a 30s chart. Although on those types of runs, I'm switching to a higher time frame for exits.

I think a lot of the indices have much more volatility than a few years ago and there are all sorts of different traders these days. That is probably why I like really short time frames. The volatility helps me since it promotes faster moves. Most of my trades are around a minute. For this past week, 57% of my trades were for 8 or less ticks. But that that's okay . . elephants get fat just eating peanuts. I'm trying to utilize my longer time-frames more so Friday was just 32%.

It's difficult trying to quantify volatility in the market. Each week I look at my Sierra charts stats to determine my stops for the next week. It gives an open trade average loss for the week which I add usually 2-3 ticks. I've been down to a 4 tick stop at time but usually it's 5 or 6. Friday's average loss was 1 tick. Sometimes you get lucky.

Bottom-line is I think noise is difficult to fight. For traders, there is an unending battle between balancing noise and lag with indicators. Somehow I've been either lucky or too stupid to have quit searching in finding a system. But then I have been at this since mid-80s. My occupation was as an economist so I suppose I just like fiddling with numbers and formulas for entertainment. It just takes a long time to fit everything together . . if you're not willing, then go find something else you enjoy.

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 TropicalTrader 
Vancouver Canada
 
Experience: Intermediate
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Powdrpig View Post

I think a lot of the indices have much more volatility than a few years ago and there are all sorts of different traders these days. That is probably why I like really short time frames. The volatility helps me since it promotes faster moves. Most of my trades are around a minute. For this past week, 57% of my trades were for 8 or less ticks. But that that's okay . . elephants get fat just eating peanuts. I'm trying to utilize my longer time-frames more so Friday was just 32%.

It's difficult trying to quantify volatility in the market. Each week I look at my Sierra charts stats to determine my stops for the next week. It gives an open trade average loss for the week which I add usually 2-3 ticks. I've been down to a 4 tick stop at time but usually it's 5 or 6. Friday's average loss was 1 tick. Sometimes you get lucky.

Bottom-line is I think noise is difficult to fight. For traders, there is an unending battle between balancing noise and lag with indicators. Somehow I've been either lucky or too stupid to have quit searching in finding a system. But then I have been at this since mid-80s. My occupation was as an economist so I suppose I just like fiddling with numbers and formulas for entertainment. It just takes a long time to fit everything together . . if you're not willing, then go find something else you enjoy.

Wow! Thanks for sharing your experience and chart. That's awesome you settled on a 30 second chart after trading all this time! Do you use keyboard shortcuts to trade quickly and did you see my external numpad setup in a previous post?

I appreciate your feedback on the risk to reward factor (and SBtrader82). Would you be interested to share more on your trade management approach? I'm curious, are you all-in, all-out for each trade, or do you scale-in, scale-out? Do you pyramid sometimes? It's very cool to meet a scalper who's been at this for decades! I'm also curious if at some point on your journey you reached a level where you became "solidly consistent", like keeping it green every month and scaling up your size every so often - or do you still go through variance, like a losing month, then lower your size, build it up again, etc. ?

So sychronistically, I've been making some upgrades the last few days. Last week I started listening to some psychology talks by Trader Tom on youtube, he's a scalper also and I then I got curious about his methods. He has a couple of scalping presentations on youtube I found very interesting. From my perspective he's an expert scalper on what I've termed "Trading 1.0" which is reading charts bar-by-bar, price action trading like Al Brooks (and I'm not knocking it with that label - some people have incredible success that way).

I've termed "Trading 2.0" utilizing the 'volume profile framework' (day types, opening range, initial balance, opening types, statistics, etc) with volume inside the bars and cumulative delta (hitting the bid vs taking the offer). At one point I started getting frustrated with the pure price action stuff (even though my psychology & boom-bust pattern was the real problem) so I went deep into that study, which is what I've been learning from Futures Trader 71 & some others.. So I had this idea yesterday, what would it be like to merge these 2 worlds and be a Trading 3.0 guy.. This way I can get into trades with more precision (smaller stops) and still utilize everything else I've been working with. Now that I can see the renko bars unfolding I'm less likely to get faked out by the candlesticks and I can extract the value from them. I'm bringing a 2 and a half minute chart into the mix so I can get in with tighter stops.




Quoting 
Friday's average loss was 1 tick. Sometimes you get lucky.

Jedi Alert ! epic, that definitely skill..


Quoting 
It just takes a long time to fit everything together . . if you're not willing, then go find something else you enjoy.

For Sure. Do you still tinker with how you view the charts or has it been the same for a bunch of years?

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  #219 (permalink)
 TropicalTrader 
Vancouver Canada
 
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Here's my 3.0 setup

Left 27"



Right 27"


Center 32"



I've tightened up my renko bars on the main screen and added heiken ashi, this will allow me to ride waves longer. I can get way more precise with the 2.5 min but not too fast that it messes me up.

A very important piece is that I have a 1.5 point spread on the Dow with my fx broker and zero commissions. I'm not ready for multiple full futures contracts yet and my micro fees as a Canadian are not conducive for scalps, my cost for micros works out to like 2.5 points plus the spread.. 3.5 is insane.. On a full contract it works out to 2 points which is way better and there's the advantage of saving a tick on average by using Sierra vs MT4..

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 Powdrpig 
Bend, Oregon
 
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Thanks, Tropical Trader for your comments. I'll be able to address your questions this afternoon but first I wanted to share two items.

The first is Dr Brett Steenbarger's latest blog post regarding trading psychology techniques and how it is not what we thought it was accomplishing. There is also a link to his Forbes article within the text on the same subject. Most interesting.
TraderFeed: Why Your Trading Psychology Exercises Don't Work

The second item is the Netflix series on different mindfulness techniques, Headspace Guide to Meditation. I believe one episode is on analytical meditation where you focus on a specific problem rather than nothingness. I saw this mentioned in today's Parade section of the newspaper. Sounds like a great series.

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 cory 
the coin hunter
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. . gb007 ..

Those Were The Days!

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 Powdrpig 
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Those Were The Days!

That they were . . gb007 . . a classy gentleman!!!

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masterelf1
Roanoke
 
 
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Trading, like golf, is mostly a mind game against oneself. I have learned to shift my impulse trades to writing them down only.
THis way I get to see if I was correct and do not risk my account on impulse trades. I only use my proven edge with my real money.
I think it is always best for newbies to start with a tiny account with real money than using demo trade accounts. The trader never feels the sting of loss in a demo account. Anyway demo accounts are only for getting the feel of how to place and close trades on the platform. You may wish to use them to try out "new" strategies and prove an edge. That would also be an acceptable use of a demo account. In fact, a mentor of mine gave me an exercise that proved quite interesting. He told me to use my edge in reverse to , on purpose, lose 1/3 of a demo account. I thouht that would be a breeze, given my past track record. But you know it turned out to be more difficult than I thought! Once done, he had me use the same edge properly to restore the account back to its original starting value. THis exercise helped me learn to trust my edge. Much like fire fighters learn to trust the smoke mask by removing it in a smoke filled test chamber and then putting them back on. So for me, any trade that is not part of my edge, is deemed an impulse trade and is recorded in a journal that I analyze later (after hours). I want to know the motivating factors behind my impulse trades (greed, fear) so I can learn to identify them on a real time basis.

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 SBtrader82 
Rovigo (ITALY)
 
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SBtrader82 . . That's a very good question regarding excessive noise drilling down too far in time. Personally, I doubted I could ever trade this low. I was using pretty much same system on a 2min but I was just getting tired waiting for trades. If I tired expanding to other contracts, I could never get a feel for them or they just had something that didn't meet my needs, For example, I would like to trade gasoline since system works great, but the volume is low which I think subsequently causes the wide spreads. In terms of the NQ, I thought it would be perfect but in that case there is too much volatility for me to trade. My stops would be beyond the threshold I would find acceptable. In that case, yes, noise would prevent trading that contract. My stops would be even larger in using a 2 min time frame. I do sometimes look at the Russell but the volume isn't that great. It was an excellent future to trade when it was the TF, then they sold their soul to ICE. Exchange fees plummeted due to nobody wanting to deal with ICE. Now they are back as RTY with CME but volume never returned. The YM just never feels right to me . . maybe it's just because there are fewer stocks in the index.

I think a lot of how your system will perform just depends on what you're trading. The ES provides everything I want. It has great liquidity and huge volume plus almost always a one tick spread. I also like the fact that it has an unquenchable thirst for size. Scalability in unmatched other than bond market. It will gobble up 1000 lots and not even hiccup. Also the volatility has greatly increased for the ES over the past few years. Previously, it was difficult to get any move greater than 6 ticks most of the time. Now I get nice runs even using a 30s chart. Although on those types of runs, I'm switching to a higher time frame for exits.

I think a lot of the indices have much more volatility than a few years ago and there are all sorts of different traders these days. That is probably why I like really short time frames. The volatility helps me since it promotes faster moves. Most of my trades are around a minute. For this past week, 57% of my trades were for 8 or less ticks. But that that's okay . . elephants get fat just eating peanuts. I'm trying to utilize my longer time-frames more so Friday was just 32%.

It's difficult trying to quantify volatility in the market. Each week I look at my Sierra charts stats to determine my stops for the next week. It gives an open trade average loss for the week which I add usually 2-3 ticks. I've been down to a 4 tick stop at time but usually it's 5 or 6. Friday's average loss was 1 tick. Sometimes you get lucky.

Bottom-line is I think noise is difficult to fight. For traders, there is an unending battle between balancing noise and lag with indicators. Somehow I've been either lucky or too stupid to have quit searching in finding a system. But then I have been at this since mid-80s. My occupation was as an economist so I suppose I just like fiddling with numbers and formulas for entertainment. It just takes a long time to fit everything together . . if you're not willing, then go find something else you enjoy.

thanks a lot for the reply, wow 4 ticks average loss is really nothing, my average loss is around 5 point per contract. I tried to scalp in the past but it's not my style. I loved the phrase "elephants get fat just eating peanuts", I will definitely use it to avoid taking one small loss after the other it often happens to me and I build an "elephant size loss".

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 Powdrpig 
Bend, Oregon
 
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I should clarify that I have not scalped that long using the 30sec chart. I have over the past few years primarily used the 2 and 3 minute charts . . I suppose that is scalping as well but not to the same degree I am trying now. Also I showed the 30sec chart earlier since it more clearly showed my trades. Although I look at both setups and signals on that chart and enter trades on that time frame, the 1min chart is also just as important to my setups. I also use the 90sec/2min/3min charts to determine my possible exits and sometimes entries. I use the one with the longest time frame that has provided a setup to determine my exit. Thus, I am hoping to maximize my holding period and profit on runners.

My orders are all-in with a limit order and a 1 tick chase. My first target is 6 ticks and the second is at 8 ticks and if using additional lots at 12 ticks. I never change my first target unless the trade has stalled or hit my stop. My stop level is usually set at 5-6 ticks and goes to -1 once price hits 5 ticks and goes to breakeven +1 after first target hit. Rarely is my stop moved . . only if I get a signal on a higher time frame then no more than two ticks if price is supported by S/R level. My target levels are all market orders. I will move my stops higher with price if signal has been generated on a higher time frame. Those higher time frame indicators will determine my exit level. A lot of times, I will just flatten the trade if those exit levels are hit. I don't add to a trade since I really never get another signal during a move.

Although I primarily trade the ES, I also now trade the MES at times depending on circumstances. Prior to the ES, I usually traded the Russell (TF) until it was hijacked by ICE. At that time I switched over to the ES. I have mostly traded the ES the past ten years until just recently.

Early summer I had emergency surgery for an aortic aneurysm with 50/50 chance of survival . . I had skied the week prior with no symptoms. I survived with 3" of new piping and then had some aortic stents installed this fall. I don't feel or have any trouble with them. But I did get some vertigo and dizziness that prevented me from using the computer for months. Five weeks ago I saw a neurologist that gave me a drug that cleared my brain. I have started back trading but I am using the MES to get back to trading mode. I think I will be able to finally get back to ES by next week . . hopefully.

In the Chris Cady video that TropicalTrader posted prior, Cady speaks of coming into the trading day with a sense of gratitude. Believe me, I can definitely relate to that 100%. I'm still alive, still trading, and now still skiing. Life is good . . be grateful !!! Trading is like life . . the future is always unknown.

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 TropicalTrader 
Vancouver Canada
 
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masterelf1 View Post
Trading, like golf, is mostly a mind game against oneself. I have learned to shift my impulse trades to writing them down only.
THis way I get to see if I was correct and do not risk my account on impulse trades. I only use my proven edge with my real money.
I think it is always best for newbies to start with a tiny account with real money than using demo trade accounts. The trader never feels the sting of loss in a demo account. Anyway demo accounts are only for getting the feel of how to place and close trades on the platform. You may wish to use them to try out "new" strategies and prove an edge. That would also be an acceptable use of a demo account. In fact, a mentor of mine gave me an exercise that proved quite interesting. He told me to use my edge in reverse to , on purpose, lose 1/3 of a demo account. I thouht that would be a breeze, given my past track record. But you know it turned out to be more difficult than I thought! Once done, he had me use the same edge properly to restore the account back to its original starting value. THis exercise helped me learn to trust my edge. Much like fire fighters learn to trust the smoke mask by removing it in a smoke filled test chamber and then putting them back on. So for me, any trade that is not part of my edge, is deemed an impulse trade and is recorded in a journal that I analyze later (after hours). I want to know the motivating factors behind my impulse trades (greed, fear) so I can learn to identify them on a real time basis.

I like how you phrased that! "a mind game against oneself".. That's great how you shifted your impulse trades!

Interesting approach from your mentor to lose money on purpose. Thanks for your comments!

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 TropicalTrader 
Vancouver Canada
 
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I should clarify that I have not scalped that long using the 30sec chart. I have over the past few years primarily used the 2 and 3 minute charts . . I suppose that is scalping as well but not to the same degree I am trying now. Also I showed the 30sec chart earlier since it more clearly showed my trades. Although I look at both setups and signals on that chart and enter trades on that time frame, the 1min chart is also just as important to my setups. I also use the 90sec/2min/3min charts to determine my possible exits and sometimes entries. I use the one with the longest time frame that has provided a setup to determine my exit. Thus, I am hoping to maximize my holding period and profit on runners.

My orders are all-in with a limit order and a 1 tick chase. My first target is 6 ticks and the second is at 8 ticks and if using additional lots at 12 ticks. I never change my first target unless the trade has stalled or hit my stop. My stop level is usually set at 5-6 ticks and goes to -1 once price hits 5 ticks and goes to breakeven +1 after first target hit. Rarely is my stop moved . . only if I get a signal on a higher time frame then no more than two ticks if price is supported by S/R level. My target levels are all market orders. I will move my stops higher with price if signal has been generated on a higher time frame. Those higher time frame indicators will determine my exit level. A lot of times, I will just flatten the trade if those exit levels are hit. I don't add to a trade since I really never get another signal during a move.

Although I primarily trade the ES, I also now trade the MES at times depending on circumstances. Prior to the ES, I usually traded the Russell (TF) until it was hijacked by ICE. At that time I switched over to the ES. I have mostly traded the ES the past ten years until just recently.

Early summer I had emergency surgery for an aortic aneurysm with 50/50 chance of survival . . I had skied the week prior with no symptoms. I survived with 3" of new piping and then had some aortic stents installed this fall. I don't feel or have any trouble with them. But I did get some vertigo and dizziness that prevented me from using the computer for months. Five weeks ago I saw a neurologist that gave me a drug that cleared my brain. I have started back trading but I am using the MES to get back to trading mode. I think I will be able to finally get back to ES by next week . . hopefully.

In the Chris Cady video that TropicalTrader posted prior, Cady speaks of coming into the trading day with a sense of gratitude. Believe me, I can definitely relate to that 100%. I'm still alive, still trading, and now still skiing. Life is good . . be grateful !!! Trading is like life . . the future is always unknown.



Thank-you for sharing your trade management techniques! That's really lucky you survived, I'm happy to hear you're doing better. That's shocking how it happened so fast without any symptoms..

Yes, gratitude is strong medicine! That's a good reminder for me to dust off the gratitude journal I started a while back and make some entries.

Thanks for sharing your wisdom with us.

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 TropicalTrader 
Vancouver Canada
 
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This was my favorite trade of the year so far and one great reason why learning and watching the profile is valuable. I saw that Dax had quite a rise yesterday and was in a range. I noticed that as dax dipped below the range the other indices were holding their positive % change. Dax went right to the point of control area from yesterday and there was also confluence with the high from 3 days ago, then it made a W on the 1 minute chart and I got in knowing very clearly where I was wrong and where the target was (top of range). This was an excellent opportunity to pyramid and get some major R factor on the trade.


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 TropicalTrader 
Vancouver Canada
 
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Wow! Just got a second opportunity for the same trade. With a little luck Dax will squeeze those stops above the range.


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 joe s 
sacramento ca us
 
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TropicalTrader what is the indicator in the middle below price on post 228 telling you not sure what it is for

thanks

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 TropicalTrader 
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joe s View Post
TropicalTrader what is the indicator in the middle below price on post 228 telling you not sure what it is for

thanks

That's how I'm choosing to view the Cumulative Delta, via a 2 & 5 period ema and keltner bands. I find that looking at the delta per bar tends to fake me out sometimes and this smoothed version is easier to work with. In that particular chart though it was actually useless because I don't have Eurex data, I'm just using CFD data because I don't trade the Dax much. (I had duplicated the chart from my Dow chartbook)

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 joe s 
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Ok got it thanks

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 Dolomick 
Los Angeles California
 
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TropicalTrader View Post
That's how I'm choosing to view the Cumulative Delta, via a 2 & 5 period ema and keltner bands. I find that looking at the delta per bar tends to fake me out sometimes and this smoothed version is easier to work with. In that particular chart though it was actually useless because I don't have Eurex data, I'm just using CFD data because I don't trade the Dax much. (I had duplicated the chart from my Dow chartbook)

That's a very cool idea, I like that. Have you discussed your charts in other posts in more depth? I watched your webinar and wonder if your charts have other nuggets like that one that I may find useful...

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 TropicalTrader 
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Dolomick View Post
That's a very cool idea, I like that. Have you discussed your charts in other posts in more depth? I watched your webinar and wonder if your charts have other nuggets like that one that I may find useful...

I decided that I wasn't getting enough value from the delta and I've since taken it off my charts. I found that sometimes its helpful and sometimes it hurts (like when its late and costs me the wrong decision). I have had a 'long-term relationship' with Trix lol, so I get what its telling me and I use that for divergence, strength analysis etc.

As far as learning trading from me, I think you'd be better off with someone like FuturesTrader71 who has a 15+ year track record of successful trading and actually knows what it feels like to trade a 50 lot position.. There aren't a lot of people in this industry who share publicly and are legit imo. One day I'll get there but its a journey and a grind to be honest. That's why the psychology part is so valuable, if you want to make it through the grind, keep your sanity and keep improving.

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 Dolomick 
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TropicalTrader View Post
I decided that I wasn't getting enough value from the delta and I've since taken it off my charts. I found that sometimes its helpful and sometimes it hurts (like when its late and costs me the wrong decision). I have had a 'long-term relationship' with Trix lol, so I get what its telling me and I use that for divergence, strength analysis etc.

As far as learning trading from me, I think you'd be better off with someone like FuturesTrader71 who has a 15+ year track record of successful trading and actually knows what it feels like to trade a 50 lot position.. There aren't a lot of people in this industry who share publicly and are legit imo. One day I'll get there but its a journey and a grind to be honest. That's why the psychology part is so valuable, if you want to make it through the grind, keep your sanity and keep improving.

Makes sense, I like FT 71 and will one day do his room for a few months (at least). I also like similar indicators to TRIX for divergences, one of my favorite confidence boosters is when I see a nice divergence at an important level.

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 TropicalTrader 
Vancouver Canada
 
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Dolomick View Post
Makes sense, I like FT 71 and will one day do his room for a few months (at least). I also like similar indicators to TRIX for divergences, one of my favorite confidence boosters is when I see a nice divergence at an important level.

Ya, totally!

Ok, here's an analysis from a trade today on NQ. (after the fact, I didn't trade this) for a "double top sharkfin who's motivated" trade



I highlighted with the boxes some key clues. The context is that its a couple hours into the Asian session so odds are against follow through on breakouts, I havent' analysed lately but guessing 2/3 probability of mean reversion plays working. We had a big run up in the day session. I'm looking for clues that the market could be ready for a rest, gather some strength, settle some transactions, etc. So POC play, if price gets outside of value and show weakness, look for a trade with confluence and target the point of control or a relevant high volume node.

Top box left: significant decline in volume on the profile, price went outside the volatility band and created a double top with a higher second top
Bottom box left: Trix shows clear negative divergence, RSI went out side of its volatility band for the first top and was back inside lower on second top
Top box right: nice first or second entry opportunity, footprint showing a reversal brick with voume at the top, this is a tail on a higher timeframe.

The motivation part is thinking about who's involved, sharks or whales. There's an opportunity for certain participants to drive price above the former double-top, absorb the orders and then revert back to the start. These happen a lot in trading and creates wonderful opportunities.

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 TropicalTrader 
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good day~

I recently finished an excellent trading psychology book, Market Mind Games.. I heard Dr. Andrew Menaker mention the author Denise Shull in one of his talks and speak highly of her work so I ordered the book:




It's definitely one of my favorite trading psychology books. Denise has quite an interesting story, she was a floor trader in Chicago for 7 years. This is an advanced trading psych book and would make more sense imo after you have read Trading in the Zone a few times and have been trading for a few years..

It's funny to me that even though it's quite advanced info in some ways, it breaks down into the simplistic parts, being aware of our state, creating routines for success, making sure we get enough sleep, eat well, have other sources of energy in our lives outside trading.. These are the basics that create our foundation. She talks about intuition which is a skill many of the best traders rely on. In fact, I was surprised (pleasantly) to hear Morad (aka FuturesTrader71) say in his recent webinar that for his first 4-5 years as a high volume scalper he relied entirely on his intuition to make decisions.. (and was hugely successful)


I've been thinking about this a lot lately and came to the conclusion that there are 3 main parts of me that I bring to the performance of trading:

1. "Positive Ego" - I prepare in advance, do drills (trading simulator), read my notes, maintain awareness of my fav setups, self-coach, perform emotional regulation, read books, keep improving, etc

2. "Negative Ego" - this is when I get sloppy, make mistakes, get upset, am impatient, get irritated, risk more then I planned on, get angry at the market or myself, think negative thoughts, etc

3. "Intuitive Flow Master" - these are the times when I see everything clearly, go on big winning streaks, know exactly what to do in each moment, trading "in the zone".

(I interpret ego as self-identity, awareness of our individualized self with unique preferences, strengths, weaknesses, etc)


So in the past #3 for me has involved unstructured discretionary trading, because I just "felt" what was the right move and I would say all of my biggest winning streaks came from this intuitive flow state. But the challenge was if I traded in a purely discretionary manner and then fell into the Negative Ego trader, I basically donated my trading account money to the market and caused myself a ton of frustration- because I wasn't seeing things clearly or able to hear my intuition - trading from fear and desire. (or being numb) So then after as I'm digging myself out of the hole I just created, I would make detailed plans to trade in "positive ego mode" in order to protect myself from negative ego trading, using detailed structure to make sure I wouldn't do stupid things.

Lately I've been finding my way to be "rules based" but not "totally structured". Creating space for the intuitive trader to come through.. An example of this is having a couple "bread n butter" setups to trade exclusively if down on the day and giving some permission for intuitive trades when up on the day.. Being totally structured with risk and having some flexibility for which trades I take. Listening for intuitive guidance all the time in life, not just during trading..


I've had an interesting logistics issue to come to terms with this year. I've been living on PST for years so the open here is at 6:30am and I've been on and off for trading late nights vs trading early mornings. Over the last year for months I was getting up at 5:30 to begin trading at 7:15/7:30. What I've had to come to terms with is that even if I drink coffee, go outside for a walk, do exercise etc, I'm still not even close to as sharp and as emotionally resilient as I am in the evenings. I found that I need at least 4 hours in the morning before I would be ready to be in a peak performance state.. Otherwise I'm a risk of being a menace to myself by having less patience, getting more irritated after losses, etc. Seeing how there is no way that I would get up at 4am and go to bed by 9 consistently, I've had to customize my trading around my personality. One day I would like to be trading from the Caribbean but for now I am night-trader. Besides checking on some structured swing trades in the morning and throughout the day, I do my high intensity scalping at night from 11pm - 2am. (start of europe) Its taken me quite a while to figure this out about myself.. It's really important to be very aware of our mental/emotional state and its fluctuations if we want to be a high performance trading athlete.

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 TropicalTrader 
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I just found out tonight that Brannigan has some webinars here at FIO! (and is doing another webinar next week)
I didn't think to search his name before, I've been following him on twitter for a while.. He's someone to pay attention to imo..

This is gold





Notice that there's a lot of failing involved on this journey. Its a helpful reminder to not take it personally. Just think of Edison with a huge team of geniuses taking 1000+ tries to create the lightbulb..


This is a great webinar too, in one part he talks about objective vs subjective, logic vs intuition, etc

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 TropicalTrader 
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Personal note:

I haven't posted much here this year, I've been busy working hard each day on getting better. I took some time to study some of the goats (greatest of all time), WD Gann, RN Elliot, Bill Williams and learned a few things I've integrated into my unique style of trading. I've also ditched the footprint and delta. After a long time spent applying them I realized that for my niche (momentum trading thin markets) while some times they helped, other times I was getting faked out and confusion is the last thing I need when making rapid decisions as it leads to poor decisions and frustration. I've opted to use the volume profile draw tool on key areas to get more info for volume inside price.. Many of my scalps are 1:1 R which I'm ok with as my win rate is high. When I see a great Elliot wave setup I'm getting 2-5 R so that gives a nice boost.

I also did a course from Trader Dale which I really liked. He trades in a similar way to FuturesTrader71 (reactions from key levels) and is an excellent trading course educator imo who makes it really easy to understand exactly how he trades. Personally, I only do "reaction-style fade trading" when its off of key levels on the daily or weekly profile, otherwise I mainly look for trend continuation setups.

Another change is that instead of trading 1 market, I now watch 3 (NQ, DAX, Dow) and look for which one has the best setups that match my style. If the markets are moving really fast then I choose my favorite and minimize the others so it's easier to concentrate. I'm trading at night because I'm sharper and have more patience then in the mornings, the pace is also slower which is working well for me. Sometimes I trade the US close if I didn't stay up too late as there can be some great opportunities on some days.

I'm feeling stoked about my progress and later this month I'm going to start the FTMO 100k challenge. I think this is the best path for me to get where I want to go. After passing I will get my initial funds back (works out to 800 CAD) and once I'm doing well for a couple months I will repeat the challenge (just by using a trade copier from my original account to the next). They allow up to $400,000 USD to be managed per trader (so that would have a 40k drawdown limit) and you can combine it into one account or separate it how you like. (funded traders get paid 70% of the profits they make in the account)

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 Anagami 
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One day I would like to be trading from the Caribbean...

Join us brother!

"The mind is its own place, and in itself can make a heaven of hell, a hell of heaven." - Milton
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Join us brother!

Thanks for the invite brother!! I love the turquoise ocean and powdery sand there plus tons to see within a few hours drive.. I have a fond memory of climbing the temple at Coba, felt like Indiana Jones..

I'll be in touch, looking to leave in the fall..

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I'll be in touch, looking to leave in the fall..

Absolutely, PM me anytime. The beaches in the Mayan Riviera are some of the best in the world, if that's what you like.

"The mind is its own place, and in itself can make a heaven of hell, a hell of heaven." - Milton
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