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So its now been around 8-10 weeks since I last traded and I have had plenty of time to think things over. The thoughts are in no particular order, Method, Plan, Psychology.
My biggest problem has been my psychology (The one at the moment that rules them all) and allowing my emotions to take the wheel at critical points in my decision making process, this may always be something that I struggle with but it does not mean I will let it control everything.
Whilst I have had issues with entries my bigger issue looking over my journal has been with exits, I think it's fair to say that I have a tendency to exit given anything negative to my position happening to the price, I have to accept there will be a little rough with the smooth and I cant have it all my way so now I am assessing my method/plan that incorporates more reason than rhyme to my exit criteria.
As hinted in an earlier post anyone familiar with the straight line threads on another forum might have an idea of what I'm getting at with my charts to follow. Most of what I came across in those threads answered a lot of the questions I have had over the last year and explains things more clearly than I could come up with myself.
I wont pretend to be doing it the correct way I can only apply my interpretations of the information and judge the results for what the are.
When I could I spent a lot of time just watching price, no lines, no bias, no trading this was to try and tune into what price is doing now, sure you can project forward areas of support or resistance but it does not mean price will react this time like it did the other times, past performance is not indicative of future results springs to mind.
In the last week or so I have started to think about applying my interpretations to the market in a move see how things play out. And it's weird, it's cold chill down my spine weird when it just works and works well, BUT its sim and when there is money on the line I might blow a fuse again.
We had a sports psychologist at our work to give us coaching on mentality at work in regards to safety and how we make the decisions that we do, It was very applicable to trading and made me think that everything I do is a habit that gets stronger the more you do it, with poor trading decisions being a bad habit I may need to spend some time with a tweaked method and outlook to build a new habit and reinforce it with results, this will take time and it leaves me in a difficult spot, I can only really trade 9 days a month due to work and looking ahead with training I may be limited further, I am binge replay testing out of hours, and starting to sim live during RTH, but at what point do I test my steel?
Anyways, two examples of what I am looking at and trying to do examples to be posted as a reference for future use. These are done in hindsight.
Slight change to how my charts may look, Two trades taken with two winners BUT in hindsight there was only one trade. Once price hit highs I stopped trading as I was preoccupied and could not focus.
1. First price made a higher low after double bottom then broke a line, it proceeded to retrace, entered a stop buy order and moved it a little lower as price moved down, trade triggered and price breaks breakout highs, price then again retraces back to entry I would have, I think, exited on price breaking the pullback low, Price rallies fast and I exit.
EXIT: Absolutely no reason to exit I was overawed by the P&L and wanted to bank the money. Price continued to rally then consolidated at highs it then broke those highs bringing me onto trade two.
2. Entered on breakout of range, this was another mistake as I should have entered 3 bars later on the retest and again using entry technique used on first trade, Price rallies consolidates rallies again, I exit as price exits the range to the downside, which again in hindsight is poor as it is retesting the previous range it then rallies out to highs and breaks a swing high from the 3rd (red line) giving a more appropriate exit at around 94ish after a lower high forms.
There really was only one trade, had I been using what I have learned or at least what I think I have learned to use properly.
One way I have been thinking about making SIM more real is to have consequences for your actions when you trade sim. You don't follow your rules you don't go out to eat this week. Or whatever item you like to do that would be a punishment if you couldn't do it.
Now it won't be exactly like trading real cash, but you will be mindful that your actions have consequences.
(I am even looking at doing this when I go live, if I fail my plan then I will for go a luxury. Luckily I have a wife that will see to this. lol)
I have often thought about some kind of consequence to substitute for the loss of discipline when it comes to sim trading but it can be hard to chastise yourself when you stray from or completely break your plan and still have a positive result.
It's very easy to say it is a one off a gut shot or you were simply trying something different. I have been there more often than I care to admit and it's something that still finds a way of throwing a spanner in the works from time to time.
At the moment I am in the process of reconstructing my method and overall plan so everything is up for assessment but prior to this when I strayed accidentally or intentionally I'd shut it down and go think about what I've done, the reality in my mind is pretty clear, if I fail to take it seriously, fly by the seat of my pants and stray from the plan the further I will get from achieving my goals.
This brings me into the next part.
Since my last post it became very clear that my approach was not robust enough as my results became incredibly erratic with large swings in the P&L and I quickly realised that I needed a lot more practice in order to define better when to enter and exit a trade.
Some of the issues I encountered:
Giving back a large percentage of unrealised profit (failing to accept that direction had changed)
Trading chop (or failing to identify chop)
Trading without context (not looking at areas of support or resistance on higher time frames)
Holding onto trades that did not behave as planned (need to scratch them if direction is not clear)
And a lack of discipline and focus
It's not all bad though, things look promising and the practice has come in handy for constructing the method so I can better define it and what I'm doing, once I'm confidant with 1 or 2 set ups I'll move it into a proper sim scenario and see if it stands the test.
The whole point of this is to only move forward with ideas that have been tried and tested, I just need to keep reminding myself that putting in the time and effort now could make a huge difference later if I do it right.
Learning to read buying and selling pressure will help you to realize when a trade is turning and close it. When I first start I would do this a lot, I would be up $250 and then end up losing $250 because I didn't take the profit when it was there and didn't understand direction was changing. Now I watch when I am trading for both sides bear and bull and I will look to see if the opposite sides case is increasing. If it does and passes a tipping point then I will close the trade. I have no shame in taking profit off the table.
Made an effort to try and follow the market according to previous post to see how the day went. Went a little better to some extent but found myself over trading later on in the day, some thoughts don't occur until the dust has settled but hopefully if I keep tracking things I can work on them.
Trying again to stick to only exercising the trades as I see fit, most of the trades today were based off reversals, I think I struggled throughout the day to highlight areas of support and resistance which would give me a warning that something might happen.
Also found myself taking on trades where I may have been over eager to jump into the action, My mind wants to see something so it comes up with something.
Not a bad day got into a couple of trades that seemed okay but left me with some thoughts on their conclusions.
Felt my charts have been very cluttered of late, and I think I will try to keep the trades off of them for the time being, and leave my thoughts on the charts to give myself a record of what I was trying to do or thinking about at the time when I look back over them in the future.
To start with, as we approached open I tried to identify any support, resistance or trends that might offer a clue of things to come. The drop from yesterday was in a reasonably neat channel so we could pick up on that as price approached the extremes for potential trades. As far as horizontals, very short term support at 72.25 and resistance at 81 these are in the lead up to open and perhaps inconsequential, Also larger time frame 60 min lows from 13th February and 2nd March linking up to give a potential support in the low 60's (depending on the line followed).
1. Market bounces off support and rallies to resistance and channel extreme, price hits channel and fails it then has a second go at it and fails again as it does so my sell stop is triggered and I am short. Tracking the drop with a line, price drops through the earlier support goes a little lower before bouncing and breaking the line where I exit.
Thoughts, It's a bit of an issue, as price breaks support I am very much aware that it might act as resistance and that it is very likely price will revisit this area shortly after breaking it. I acted by my rule to exit on the line break but the question is.
Do I hold and wait and see or exit and re-enter if price fails to break back?
2. Price by now has hit the lower extreme and bounces, again, I wait for the retrace for an entry and as price fails to move lower my buy stop is triggered and I'm long, Same as before track the price upward exiting on a break.
Thoughts, Same as trade 1 thought about the high off the low being a possible resistance becomes support (RbS) once price broke over, I had to exit as per rule but I felt the target was the opposing extreme or earlier resistance. The same question arose and I seriously considered a re-entry but it was mid channel and by then not a whole lot of upside potential.
3. I was treating this as a break from the downtrend and was looking for a possible pullback continuation, price dropped and eventually rallied again my buy stop was a tick or two above the highs, price failed to follow through so I exited for a small loss, price then broke lower and it was at this point I felt there was indecision and that it would be safer to sit out until direction or range established.
My other thoughts after this point are on the chart.
Due to appointments I was unable to do much with the 13th and by the time I could, the opportunity had passed me by, there will be others. As for the 14th I had appointments again and then spent most of the day familiarizing myself with another charting package.
I wanted to take the time to post notes on what to look at for future reference, these are more pointers and clues of things to keep eye on, This is an update to the second chart in my last post and what happened at a key point and what might be happening now.
