Another decent day of “seeing” price action. Only took two trades and marked a couple more. Was cautious per my plan due to the upcoming holiday.

Tap In 

Tomorrow: extra important to go where the energy is due to shortened week. Have the courage to take the A-1 set ups, especially early when the markets have more participation.

Identified CL as the market with the energy and took two early trades, so pat on the back for achieving my goal. Declined a couple early trades in (NQ) that looked promising but the participation was questionable.

NG was the star of the day and I am disappointed I didn't have the fortitude to take advantage of it.

Results: two trades, 1 loser, 1 winner: +1
Marked, but not taken: +35
Other trade opps: + a bunch
Total number of trades I should have taken: 10

Good journal, good comments on your charts.

I especially liked where you said "I need to figure out what I am not seeing..." Damn, me too!

I think that's pretty much the trader's theme song.

Appreciate your honesty and your thoroughness. Good weekend.

Bob.

"It has now been a few days that Gold has avoided the party. Look for a high energy move soon."

Gold moving out as I type this at 8:25 PM PST. WTF, do I need to get up early on Thanksgiving and trade!!!?

Logged in just for kicks today around 8:35am PST wanting to see what gold was doing. Turns out Oil threw the big party today due to the OPEC meetings.

I am a little concerned that if oil gets too low it will become a less attractive instrument to trade. That is why I began familiarizing myself with other instruments.

1 trade +20t

Possible C/3 wave in Oil?

I make this note to myself for future reference (and possible laughs!).

It feels like something is changing, that perhaps I am entering stage two of my trading career. This is the point where the trader senses that their read of the markets, their methodology, their technique if you will, is making some sense, has some merit, but that something is holding them back from exploiting opportunities. This is where the often talked about psychology of trading becomes the focus. The trader anticipates and sees areas in market development that speak to them, that say, "you should go short here", but they don't go short and watch as 70 ticks roll off in 10 minutes. As the trader watches these opportunities come and go, sometimes taking action, more often times not, their mental scorekeeper keeps tally of what "could be", of what "might have been." This feeling has been brewing for a couple months.

Of course, there is a danger that the trader is fooling themselves. They remember the missed gains while conveniently forgetting about the avoided full stop outs. It is important that the trader be honest with themselves and avoid falling into the Pollyanna trap.

I have long believed that the psychology of trading was an important factor in successful trading, but not the primary factor. The primary factor is the methodology, the proper reading of the market, the how-to of trading. This represents potential. Psychology determines how much potential is fulfilled. A trader with faulty technique has little potential. A trader with good technique can make as much money as their psychology will allow.

And so, this is where I believe I am in my trading development. Not that I think I have great technique, but that what I have now is adequate to consistently accumulate gains. It will be interesting to see how long it takes to get over my psychological hurdles. I only hope it doesn't take as long to learn about myself as it has to learn the markets!

Over a series of posts I will attempt to codify the details of my trade execution process, consisting of 3 steps.

Step 1) Build out market structure using the tools outlined in post #1.

The purpose of building market structure is to form a narrative of where price has been and where it is most likely go in the immediate future (Immediate future being the next 5 minutes to one hour, or, "where can I pick up 30 ticks with a 15 tick stop?").

I am also looking at potential obstacles in the way of the journey to target.

The goal is to find areas where I believe the odds are 50% or better that price will reach a +30 tick target before it hits a -15 tick stop. This being the classic 2:1 reward to risk ratio. If I can do this in the aggregate, and scale it up, it will yield adequate profitability. As the account grows and size becomes an issue I can look for areas where a larger stop and target are warranted.

My favorite tools to build structure are:

• Trend lines/channels, complete with break/retest behavior as explained by MACK. I am looking for turning points, bounces off channel lines, breaks and back tests of significant lines.
  
• Cumulative Delta: I am looking for divergences, hidden divergences, sentiment shifts, and areas of inventory reconciliation.
  
• Previous significant swing highs and lows- I am looking for bounces, breaks, and back tests of these areas.
  
• Significant market profile nodes like:

• • RTH POC's,
  • RTH Value area extremes
  • Extended market profile high value areas and low value areas, as per Matt Davio.

I am looking at behavior at theses areas for bounces, breaks and back tests.

• Opening range as per Mark Fisher and as implemented by MFBreakout. I am looking at price's relationship to the opening range. Are we likely to stay within the range or has the range been broken to establish the sentiment for the remainder of the day?

Secondary considerations include the EMA, VWAP and Fibonacci Pivots. These tools are used for pull back references, potential target references, pausing points, and confluence.

I will also watch the DOM, especially with Oil. Large orders sitting ahead of price will often predict a move toward those orders at some point in the day.

Once I have an idea of where price is likely to go next, and have determine that a viable trade might be setting up, I turn to Step 2.

To be continued...

Having identified under-trading as an issue, I will now turn my attention to addressing the problem. My definition of under-trading is, passing on too many trades that fulfill my entry criteria. Conversely, over-trading would be, taking too many trades that were questionable or did not fit my criteria. Of course, in staying out of some proper trades, losses have been avoided, but in the aggregate I believe under-trading is costing net gains.

I have decide to attack this issue with a two pronged approach:

1) Rather than jump in with guns blazing, taking every trade I see (a strategy that has not worked well in the past), the more achievable course of action will be to simply begin to raise awareness of my emotional and intellectual state of mind at the critical junctures. The goal is to make use of every trade opportunity in some way. This could mean actually taking the trade, or it could be just journaling a running commentary of my feelings and thoughts as the opportunity develops and passes. These comments will be noted on the charts at each trade location for easy review later.

With this data I can create a profile of my mental processes at the moment of truth. Perhaps I can begin to get an idea of why I choose to enter or pass on certain trades. Instead of seeing each missed trade as a negative, I will get some value out of each experience.

2) At the end of each day, the valid trade opportunities will be tallied, whether successful or not (this is where the trader must be honest with themselves), and compared to the number of actual trades taken. This ratio of trades taken to trade opportunities will create a benchmark for goal setting and further improvement.

This plan will begin Monday and continue as needed.

Update:

It has been an interesting morning regarding the implementation of my plan. There are some challenges that will need to be ironed out:

- it is cumbersome to both watch and write at the same time, especially when several markets are firing at once. Need to streamline the running commentary part. Having said that, it has been helpful

- My commentary is revealing that I can justify passing on just about every trade. LOL. I definitely look for ways to stay out of trades to avoid the pain of being trapped in a loser. I have done a lot of losing in my trading career!

- tallying the trades that "I should have taken" is going to be a challenge. Do I only count the ones I liked in real time or do I use hindsight? Doing the former is kind of like actually trading which is not what I am after. Doing the latter can give a false sense of success if I am not careful about my selections. I'll need to think on this a bit.

1 trade so far, NG +30t

recap later

Trades taken: 1, +30t
Trades should have taken: 14, +275t potential
Efficiency ratio: 1/15 = 7%

Technical: really pleased with my technicals today. Read the markets nicely.

Psychological: 1st day of work on under-trading was interesting. Keeping up with journaling my thoughts and feelings in real time was challenging. I’ll need to streamline, probably use some code words. Not sure. I need to do it a few more times.

One takeaway from today is that I nitpick my trades. It seems I’ll find any way I can to talk myself out of it. I don’t want to get burned again like I have a thousand times in the past. This is the natural result of a home educated trader getting beat up for too long. One gets a little gun shy. I am sure many can relate.

Tomorrow: continue work on the 2 pronged under-trading project. Don’t be too anxious to trade. This is just the understanding period.