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Today, instead of trading (which I really wanted to do), I analyzed my day-to-day habits. I'm not going to share them all with you, but here's some of my morning habits:
- I wake up, and I immediately check my phone for the time. After I do that, I get on facebook, and if I woke up earlier than I usually do, I scroll through my newsfeed and end up watching hilarious videos for 15 minutes. Ok.
- After that, I grab my glass from the night before from my desk, walk out of my room, put my glass on the very same surface as I do day-in and day-out, and go take a piss. I come out of the bathroom, grab my glass, and pour myself some water. I then head to my room.
- I turn on my PC, sit down in my chair, type in my password, then proceed to check futures.io, YouTube, and sometimes Quora. I read all the new journal posts here, give some thank you's, then switch on over to YouTube to watch some new videos that are in my home / recommended. I'll watch some content on trading, comedy, fighting (UFC), and other things that catch my attention. Needless to say, some of my actions certainly won't contribute to me becoming a better trader, or a better person in general.
Going through my daily habits is kind of shocking. I thought I was pretty good at managing my time, and I considered myself to be a hard worker, but the evidence suggests otherwise.
Obviously, I went through my trading routine as well, and I noted all of my bad trading habits and I realized a vicious cycle. I don't know why I have it, and I don't know if I'll ever find out what causes these negative influences on my trading on a deeper level, but I know I can take action to diminish these counterproductive behaviors.
I've realized that my hypothesis generation is inconsistent in terms of what time I come up with trading plans. Sometimes I'll create plans at night before bed, and sometimes I'll wake up and create one then. I'm disorganized in this regard- I could do better in allocating a specific time for plan creation, and I could be more thorough in my analysis and consider consequences that could derange or invalidate a given hypothesis. Often, I create a hypothesis as if it's a static entity, and I don't account for what I would do if the plan failed- and I know it's an insane proposition to account for everything- I just know that I can do better. Also, given the variations in my approach this month, sometimes I wouldn't even come up with plans, because I wanted to trade "what is".. There's inconsistencies all-around. Through this process today of going through my daily habits, and most importantly, my trading habits, I have a clearer picture of myself. The current me is not fit to become a great trader. I've got some work to do!
By the way, yesterday, I nonchalantly put on a swing trade in SIM, in the MES. I've been in the trade for over 24 hours now, and it's going well. I kinda like it.
I entered this trade around 7:00pm on 6-18-2019. I closed it this morning at 7:30:
My stop loss was at 2909 (17.75 points of risk), and I was shooting for 2962 (35.25 points of reward). I just closed the trade when I checked on it this morning- admittedly I should've waited for my profit target to get hit. As for my trade location, I think I could've done better, because I bought right at a POC. The ideal trade would've been for me to buy in the 2920s on a test of the VAL, and if I had put my stop behind 2900. I'll be more deliberate in that respect with my next swing trade.
I approached coming up with hypotheses differently today, through a format I'm experimenting with. I may change it in the future, and add or subtract some things, depending on if I think of better ideas or not this weekend. Anyways, here's the format:
1st thing: When you first look at your charts, what is the first thing you imagine happening? Write it down.
Then, answer these questions:
What do you think is going to happen? (Answer the general questions first) And, does this scenario align with your set-up(s)?
= "I think today is going to be a range day. Specifically, I think price will push higher to test all-time highs out of the open, then it will exhaust and reverse down to yesterdays value area low. Yes, if this happens, it aligns with my set-up and is an acceptable trade."
Why do you think it's going to happen?
= "Because it's a Friday, and historically, Fridays are slow and range-bound in the MES. I think we're overbought for the week as well, and in this context, I can't readily accept or easily imagine the notion of a breakout working."
When do you think it's going to happen?
= "I think that if this event is going to happen, it will happen sooner rather than later. Volume tends to die out over the session. I imagine this scenario happening right from the open, when volume is at it's highest."
How do you think it's going to happen?
= "I don't think it's going to be a big day. We've established a balance yesterday and we're going into the weekend. It's summer also. I think this possible opportunity will develop slowly, if at all."
If it plays out, where is your stop loss, entry and profit target going to be (note: establish important/significant levels despite bias)?
= "s/l = 2967, e = 2964, p/t = 2950. These prices are subject to change based on the OrderFlow."
At what event should you exit the trade?
= "If volume slows down substantially, and/or if price shows strong absorption or exhaustion at ~2953 (discretion here)"
What should you expect of price behavior when I enter the trade?
= "I think this is a high probability trade, given the context. I expect decent follow-through."
Since market conditions never go as planned, obviously some improvisation is almost always required. Having things planned out like this takes a good amount of uncertainty away though, which improves confidence, execution, and may help you stay in the trade until it's completion. For the sake of remaining objective, perceive the other side:
What is the opposite scenario of your bias or hypothesis?
= "Price takes off to the upside right out of the open, and makes new all-time highs."
I think you get the point!
What do you think is going to happen?
Why do you think it's going to happen?
When do you think it's going to happen?
How do you think it's going to happen?
Where is your stop loss, entry and profit target?
When should you get out of the trade?
What do you expect will happen when you get in the trade?
or How do you see this trade playing out? How do you want to see it play out?
Other plugs:
What is the macro context of the market? (Weekly, daily)
How has the market traded this week? (Account for volume, range of movement)
How did the market trade yesterday? ( - )
Do you think today is going to be like yesterday? Why or why not?
I still have more questions to generate for coming up with specific hypotheses. Hopefully these ones help you too, though.
This was a very simple trade. I didn't prepare much for it either. I took the poor open volume as a signal to not trade today, but when I saw the buyers step in at that level, it seemed like a no-brainer. I'm buying with heavy buyers at a responsive level in responsive conditions.
I got away from trading over the weekend, and damn, I realized that I've been taking this way too seriously, all the while thinking that I wasn't. I gotta be sure to take breaks like that more often. You don't realize you're in a loop where you're in it.
On the flip side, I have to take "One Good Trade," then "One Good Trade," then "One Good Trade." I know those trades, and that's it.
we are all trying to get better and sometimes we need to work on our behaviour and sometimes we need to work on our strategy. By going (quickly) through you journal I feel like there is room for improvement in both categories, I do not mean that negative. I see you use orderflow, I do too. It can be a very effective and powerful tool but only in combination and in context with other stuff. On the other hand it can become very confusing especially if we lose focus.
Have you already written down a proper game plan that contains how you approach the markets and what "signals" you want to see? And what background or fundation i.e. about price action do you have?
You're not lying! Interestingly enough, from two weeks ago when I kept losing trade after trade, I realized it's because I was relying too much on the OrderFlow (I lost the forest for the trees), and I was hyper-vigilant to relatively minute signals (was too enthusiastic to risk). At the time, I put no emphasis on the bigger picture, because I recognized my proclivity to get too attached to certain hypotheses I create, so, I tried trading without it. It worked for a week, and the next week, I got my ass kicked using the same method. My performance psychology dwindled with the consecutive losses, and I created a negative feedback loop, used tight stops at inappropriate levels, over-traded because of distorted thinking and got careless, etc. Because of that experience and frustration, I was motivated to firmly establish what I want to see in the OrderFlow in order to trade. I posted about it here, check it out.
I know exactly what I'm looking for now, on both levels. I don't want to neglect the larger context because I don't want to be trading against the OTF. I want alignment of the weekly, daily, and the 30 min. chart. I'm trading in their direction. I'm not looking for breakout trades anymore, I'm looking for bounces off of significant levels in the minute charts (I switch between 5, 15, 30, 60 for perspective). I'm looking at a bounce interaction through the OrderFlow, and specifically, I want to see either absorption or exhaustion, followed by an influx of one-sided momentum.
I pulled off a nice swing trade last week that you can read about here. That's what I want to see. I'll be day trading and swing trading this strategy.
I am refering to the first picture in that post, in case I deleted the wrong stuff. If you look at the 9.39am bar you will find a cluster of buys about 350 or so, then price got rejected of your level and went below. Then, check out what happened next, price came back and tested that cluster (by the way I am pretty sure within that cluster used to be a buy imbalance) most likely that buy imbalance went neutral after it got tested. That would be your entry, stop to the other side of the level, may be 6 ticks. I was pretty shocked you took 17.5 Points of risk in your swing trade.... I personally trade the bonds, I can highly recommend because those markets are much heavier to move. If price flipped it is very unlikely they will drive price in the other way one more time just to take in your stops, know what I mean?
So I feel you are doing a pretty good job of waiting and let the trade appear but I would try to execute closer to your level when momentum shifts.
Have you checked how price acts at those levels? Take a look at it and let me know what you think.
Had I of been on the ball and entered that trade earlier, obviously the stop would've been smaller- but not by much. Do you think it's unnecessary to risk that much on a swing trade? The idea of using a 6 tick stop loss seems crazy to me. 2 points is tight enough as it is. What's your take on this?
Thank you. Yeah, that trade your referring to in the attachment, I definitely waited too long to enter. I got my confirmation.
Well we all have different ideas of what risk is but I just do not like to take on unnecessary risk. To me the swing trade is nothing more than a usual trade but you let it run longer. In my eyes the swing trade you took was pure luck, because price was still in consolidation as you entered. But if you day trade, you wait for momentum to shift in your favor in order because you want to increase the winning potential. So why would you trade a swing differently? Having said that means if you had waited for the sell off on your swing you could have entered at your level, just like I previously tried to explain. If you do that means you do not have to take on higher risk. Or do you think I am mistaken.
By the way, like I said I trade the bonds and I rarely take on more than 3 ticks of risk. But I would close them out manually earlier if I see the trade will not work out, may be for a small win may be for a small loss until the trade eventually goes in my favor. Keep cost of business small and try to let winners run is my approach.
