Wednesday January 26th

Put into my trading-plan for reversal formations:
- Head & Shoulders Tops and Bottoms
- Rounding Tops & Bottoms
- Symmetrical Triangle

One thing Schabacker is very good at, is gently leading the reader away from the all too stubborn "this exact pattern has to look exactly like x and has to behave exactly like y" type of thinking-structure, more into the chart-reading way of seeing things.
For example even though they look completely different on the chart on the surface, the Head & Shoulders, Multiple Head & Shoulders and Rounding Top are pretty much the same, only with different gradation of the price swings.

Edwards & Magee pointed a good flawed believe out which I definitely have:
"Do not think this time will be different. Look for the rule and not for the exception", which means for me to not write in my trading plan "expect the next trade to be a loss" but in reality, behind closed doors when nobody looks, still hoping for the monster trade.

Thursday January 27th

Proceeded with the reversal-formations:
- Multiple Head & Shoulders / Complex-Formation
- Right-Angle-Triangle
- Wedge
- Broadening Formation
- Inverted Triangle
- Diamond
- Rectangle
- Double Tops and Bottoms

The Wedge in Wheat would have stopped me out today. I consider my trading-plan to be in a good enough shape by now to start trading formations that I can identify if they appear.
Maybe Wheat can turn into a Head & Shoulders now. Corn and Soybeans don't look like much currently.

Friday January 28th

Finished the pattern-section with the Continuation-Patterns:
- Symmetrical Triangle
- Right-Angle-Triangle
- Inverted Triangle
- Rectangle
- Flag
- Pennant
- Continuation H&S


Trading-plan excerpt


The way I try to see that all is really more of a guideline. Most important is that the pattern had some time to develop. I think if I'm staying reasonable in this aspect, I'll be the best guarded against forcing / wishful thinking.
I feel like one of the tasks to master is, to know where to be strict and to know where to give a healthy amount of latitude.
One of the key differences this time will be, that I work with profit-targets. They'll also determine if I actually enter or not after the pattern is finished and confirmed.

Monday January 31st

If this journal acts as my boss, I hope it's a very patient boss.
I couldn't deny the diesel-smell of my car any longer, even though I did the best to unsmell it already for the past 3 or 4 weeks.
I looked into it and finally realized that my car is falling apart and I need to slowly but surely think of buying a better one. It's not worth it to put any more money into it.

What this means is, that I'm at a point where I can't afford to lose any meaningful amount of money in the market. I know that if I'd start my plan, that after 3 losses I would start to get serious issues and after 5 losses I'd be paralyzed and couldn't put in the 6th trade anymore. The money would be gone and I would have done another dose of harm to my trader-psyche.

So plan B, even though it does feel like a betrayal to my intention of providing the service of taking the risk off of hedgers, is making my own "Micro-Contract" in the Teucrium ETFs for my three Ag's.
Liquidity is not the best in them and they are not a hundred percent synchron to the futures (besides also having different trading-hours), but I prefer that to paper-trades in the actual futures, until I have things to such a degree in line that I feel able to switch to my actual plan A.

I came to the market for it to solve my problems, but that's not how it works.
"Trading is a marathon and not a sprint" - "Come on you lame duck, I'm a sprinter, you're just sayin' that because you can't do it!"
Nope, I was wrong. It is a marathon and I have barely left the starting line yet.

Strange days have found me!

Tuesday February 1st

Started Part 2 in the Edwards & Magee book, the tactical part.
Magee even goes so far as to give a recommendation for the height for your table you use for chart-drawing, as well as recommending two 40-watt lamps if there is not enough sunlight.
And if you use the "TEKNIPLAT" chartpaper, he advises you to divide your stocks into 4 groups and start drawing them each beginning in another quarter, so that if you come to the end of the paper, you not have to switch to a new paper for every stock at once, but only for one fourth of your entire chart-portfolio each quarter.
Those guys thought literally of everything!

I feel like back in those days there was less room for playing around. If you wanted to trade on charts you had to put work in it and couldn't really choose some easy shortcut, which might made it a bit easier to "find one's way". The downside were the high commissions, which were a serious cost to consider.

Wheat


Wheat is currently going in a good position which might turn into a Head & Shoulders, possibly a Triangle.
Looks similar to Soybeans in December 21

Wednesday February 2nd

Re-read Schabacker on stops and profit-goal measurement and made my "Micro-Contracts"
I took the High-Low spread in the future of each day of the recent 20 days in points, converted that into $ and then converted that into amount of shares in the ETF and took the average of the last 20 days again.
There is way more deviation between the future and the ETF than I thought, so it's really not precise at all, but better than nothing.
The Mini-Contracts are 1/5 of the major Contract and my "Micro-Contract" is 1/30 of the major one.
The number of shares for each grain:
- Corn: 60 shares
- Wheat: 200 shares
- Soybeans: 130 shares
I'll try to basically trade on the chart of the future and use the ETF just for order entries and exits. Sceptical if that works properly, but I'll see.

Thursday February 3rd

Thought about how to handle my trailing stop.
There is Brandt's trailing stop he describes in his book, which appears a bit too sensitive for me, and there's E&M's 3 days away rule, which seems almost too little sensitive.
Probably something in between would be optimal.
I think in the average case if the trade starts running towards the profit-target, the stop will probably only carry up around b/e-level, and then either it pushes further to the target or stops me out b/e.

Friday February 4th

Formulated my rule for the trailing-stop
Slightly altered the Edwards & Magee 3 days away rule.




Setting of the initial stop also determined



What I also gave myself "freedom to do" is formulating another rule for profit-taking on the Flag-pattern, since it appears to be more suited in the grains like I have seen it until now

"Official rule"



Altered rule


If the official one looks reasonable, I'll take that, but if the chart looks unfavorable in that aspect, and my altered rule fits, I take this one.


For the most part I'm now done with my trading-plan. Some minor things I have still to look into, but then I'll shift two gears back.
At times I start to get tired, from all that chasing.
"Just one more thing, then it's perfect."
"Just one more book, then I get it."
I think it's a real life-lesson I'm learning here and it may sound weird, but it's even a bit of a relieve accepting that there are just no "quick millions to make".

Monday February 7th

Finished my Trading-Plan.

Table of Contents


I consider myself now a Chartist ala Schabacker, Edwards & Magee. That's a substantial part of my identity as a trader and I won't deviate from that anymore.

Everything I do in terms of research/education from now on will only go in the direction of going in depth of my now built foundation, but definitely nothing entirely different ala "hidden attempt for avoiding losses" anymore.
But the bigger thing actually will be, getting my overall life and finances in such a place, that I can switch over to the Mini-Contracts from the ETFs in a timely manner and with a stable, clear and sound mind.
One thing I understand by now is, that money is not a God and I should not bow down and pray to it!
If my first unspoken plan of "making a million within 2 years" would have for whatever reason worked out, I honestly think I would have ruined my life.
I was a fool and still am, but at least I became aware of it!

Tuesday February 8th

Read the first chapter in "The Futures Game - Who Wins, Who Loses & Why" by Richard J. Teweles, Frank Jones and Ben Warwick.
The edition I have is from the late 90s (which is also the latest one), so I have to keep in mind that some things have changed, but as far as my research goes, it's probably the most comprehensive book about the mechanics of the futures-market out there.

Interestingly a part chapter 1 took on the morality behind the market. The CBOT was founded in 1848 and in the 1890s there started to arise serious attacks against the futures-market. There was even a legislative act that named the contracts as "gambling-contracts" and claims were made that it destroys the farming industry.
However in various quarrels going on until the 1950s the involved parties tended to switch between sides, depending on which side suited their current interests better.
In the end, trading in onion-futures got prohibited.