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Trading spot fx euro using price action
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Trading spot fx euro using price action

  #331 (permalink)
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Monday 2012-01-23

A better day - probably because it was a normal trend day instead of a sideways mind bomb like Thurs & Fri last week.

Did a little better - only made one trade that wasn't strictly following my plan, and that was the first so the mistake or error helped me for the rest of the day, and actually helped me figure out exactly why I was making these unintended trades despite the seriousness of the error - as I posted above - impatience when distracted.

I started early today at 08:30 London time, after persuading my girlfriend that our mornings can be much more efficient this way - I just need to make sure I hit the sack early enough for a good night's sleep the night before, then I can get up on time and the morning goes to plan and I can sit down to trade at 08:30 and catch the smoother markets for an hour before the later choppier action sets in. Makes perfect sense. Ideally I should do some prep the night before like sorting out the S/R levels.

Otherwise today was quiet, 3 trades and one was unintended counter-trend. I finally worked out what YTC PAT describes as Principle 2 - weak trend more likely to correct than reverse - and complex pull-back setups. There were 4 of them today and just so happened when the break-outs were untradeable. I don't know whether that's a usual characteristic of Principle 2, it seems logical since Principle 6 requires a strong trend.

You can discover what your enemy fears most by observing the means he uses to frighten you.
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Trading spot fx euro using price action-2012-01-23-market-structure.jpg   Trading spot fx euro using price action-2012-01-23-trades-.jpg   Trading spot fx euro using price action-2012-01-23-trades-b.jpg   Trading spot fx euro using price action-2012-01-23-trades-c.jpg  
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  #332 (permalink)
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More of the same mistakes .... !*?£*"!*¿*!


Adamus View Post
Realise now it's patience that I was lacking. Impatience combined with distraction was a killer. I was distracted Thursday and Friday, I have to admit it - trying to do other stuff and trade - even just minor stuff that requires a bit of concentration. Don't do it, dumbo. Had a bit too much ego thinking I can easily spare some brain cells for something else when I'm meant to be trading.

Just done it again. Two trades, not according to the plan, didn't analyse what I should be doing, didn't follow procedures. Both losers.

My plan was to leave the 00 levels alone unless they offered a pristince clear setup. I didn't even think of that, I just traded, a bit like Pavlov's dogs when the bell goes.

It's obvious that my focus is just too poor.

This time, there's no extenuating circumstances. Not much fatigue, nothing else that I'm doing, no Jehovah's witnesses at the door. I think (and this is not an excuse) that the previous trade where I was stopped out to the pip before the market went on to reach my target, had really disappointed me and I didn't deal with that. I tried to deal with it, but didn't. Then instead of refocusing on what I was meant to be doing, I just lost myself in the market - the old "if it does that, then it might do this, OK, it's doing this, it might do that" kind of routine which sounds like analysis.

The only analysis I need though is: where's the strength, where's the weakness. Then I wait for the setups.

Didn't even think about @PandaWarrior's hunter analogy.

Damn the reptilian brain reflexes.

You can discover what your enemy fears most by observing the means he uses to frighten you.
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  #333 (permalink)
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Hello Adamus,

Have you tried to write an exhaustive check list with clear (even if not quantifiable) items:
  • strength consistent with the setup? YES or NO
  • '00 xxx? YES or NO
  • yyy? YES or NO
  • zzz? YES or NO
  • Not in front of major S/R? YES or NO
  • R:R > www? YES or NO
so that you would enter a trade only if YES is on all the lines.

Nicolas

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  #334 (permalink)
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Nicolas11 View Post
Hello Adamus,

Have you tried to write an exhaustive check list with clear (even if not quantifiable) items:
  • strength consistent with the setup? YES or NO
  • '00 xxx? YES or NO
  • yyy? YES or NO
  • zzz? YES or NO
  • Not in front of major S/R? YES or NO
  • R:R > www? YES or NO
so that you would enter a trade only if YES is on all the lines.

Nicolas


Yes I have a checklist - it's slow and I'm trying to internalise it to make it quicker - but how do I force myself to use it? It seems I skip the checklist too easily, unconciously, somehow I need to reconnect my brain to the trading process I want to stick to, but the connection sometimes evaporates.

You can discover what your enemy fears most by observing the means he uses to frighten you.
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  #335 (permalink)
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Tuesday 2012-01-24

Following my last post, I guess it's pretty obvious that today was also not a good day.

1 good trade, I followed the rules totally and made good judgements.

1 poor trade - valid trades, followed the main rules but messed up because I applied a new rule incorrectly.

1 really poor trade - still valid by my rules but bad judgement on stop placement - entered late which I should be able to deal with, but instead I focused on how many pips I would lose if I put my stops in the correct place and so I put the stops too close and got caught exactly on the high. What a muppet!

2 invalid trades breaking the rules. I need a wet nurse to stop me leaping into trades like this, twice.

Then 2 more poor trades much later. Poor read of the bias and a bit frazzled obviously - analysis paralysis.

So the new rule to save my bacon when market's at an '00 level like 1.3000 today - often the setups occur but don't go anywhere. When the market breaks through the level, pulls back and stalls, instead of taking the first entry I can out of the stall using an entry stop order, I enter on the next bar when price breaks the extreme of that signal bar. This should help avoid whipsaws.

Lessons learnt today - not really learnt yet - how to avoid getting sucked in to trades when it's not according to the rules. More learning required.

You can discover what your enemy fears most by observing the means he uses to frighten you.
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Trading spot fx euro using price action-2012-01-24-market-structure.jpg   Trading spot fx euro using price action-2012-01-24-trades-.jpg   Trading spot fx euro using price action-2012-01-24-trades-b.jpg  
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  #336 (permalink)
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Wednesday 2012-01-25

5 valid trades and no rule-breaking. A first!

Still didn't trade very well. First trade was a disaster that I didn't mean to enter but accidentally hit the confirm button instead of the cancel. Maybe I did break a rule here by not exiting immediately and trying to play the trade.

I also got whipsawed on the next 3 trades as I was slow to realise that the break-outs were still not working, just like the past 5 days.

The last trade was a goodie and made up for the errors and losers - just - as I got in on the day's trend just in time.

I felt I managed to stick by the rules today - didn't do anything to be ashamed of - and managed to keep my mind focused pretty much all the time. I set my alarm to go off every 15 mins and I re-focus then. Get up, grab a coffee or do a quick physical exercise, do a breathing exercise and re-focus - mind clear, body relaxed, posture correct. It worked.

I found 30 mins was too long and I needed breaks more frequently just to do simple stuff around the flat, and also 30mins in one stretch was too long.
I also found the market doesn't necessarily give breaks when the alarm goes, so I put the break on hold while the market demands attention, and then when the trade or setup is over, I take the break and do the re-focus procedure. The only downside is that it divides the day up into pretty random 15 mins blocks with pretty random length breaks in-between, but I guess the only reason I don't like that is I'm anal about organisation. If it works though I can get used to it.

I also find I need to concentrate on the next setups that might appear and keep my mind off trying to predict whether it's going to go up or down. All I have to figure out is whether there's evidence of bullish or bearish strength/weakness now. Predicting what's going to happen tempts me too much to put random trades on.

The strength and weakness thang is getting slightly easier to analyse now. Instead of analysis paralysis trying to decide whether it is bullish or bearish now, all I need to know is whether the bullishness is getting stronger, or whether it's getting weaker, and similarly for the bears. There might be a huge sell-off in process, but the bulls could still be increasing their strength, judging by the bits and pieces of price action that come my way.

God knows the market can turn on 180 without a warning, and it's easier this way to keep from exaggerating the importance of a huge move one way or the other.

You can discover what your enemy fears most by observing the means he uses to frighten you.
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Trading spot fx euro using price action-2012-01-25-market-structure.jpg   Trading spot fx euro using price action-2012-01-25-trades-.jpg   Trading spot fx euro using price action-2012-01-25-trades-b.jpg  

Last edited by Adamus; January 26th, 2012 at 08:29 AM. Reason: edited 6th paragraph which didn't make sense
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  #337 (permalink)
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Adamus View Post
5 valid trades and no rule-breaking. A first!

Congrats!

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  #338 (permalink)
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Friday 2012-01-27

Didn't trade on Thursday, spent the time re-reading the trade notes in the YTC PAT programme material, very useful to go over his examples again with my new experience and seeing that he is taking setups on break-outs that are every bit as ugly as the ones I'm avoiding, except he makes sense of the strength and weakness in the price action where I was just lost and gave up.

Stuck to the plan today so again no invalid trades, but some serious errors despite that.

First of all I missed out a line of resistance from one of yesterday's swing highs, because I just didn't look back on the 3 min chart, I placed all the S/R lines based on the 60 min chart - but this swing high was immediately obvious when I did eventually look back to see what had stopped the rally. So on when I was in a position, I had my limit target order far above it where the market never went and I gave up pips getting out lower later.

Made a few good trades but ended up at break-even more or less.

So some obvious errors, but a couple of border-line errors which all added up to a bad day. Went through the whole spectrum of emotions today too - letting the market overrun my full stop so obviously on the last trade when I should have got out immediately, that affected me surprisingly badly and I guess I should have stopped there but instead (a) I carried on, almost desperate for another trade so I was lucky there not to foobar it again and (b) with a massive hestitation / fear of getting in on any trade anyway, and (c) pretty much analysis paralysis as to what the market was doing. Not only should I have given up an hour earlier, but I actually carried on watching for trades 1/2 hour longer than normal - emotionally driven. Lesson learnt, no harm done, but there's more in today's session to learn from as well. Need to recover first.

You can discover what your enemy fears most by observing the means he uses to frighten you.
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Trading spot fx euro using price action-2012-01-27-market-structure.jpg   Trading spot fx euro using price action-2012-01-27-trades-.jpg   Trading spot fx euro using price action-2012-01-27-trades-b.jpg   Trading spot fx euro using price action-2012-01-27-trades-c.jpg  
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  #339 (permalink)
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I think one mistake I constantly make in these slower days is to plan a trade as if the market is going to shoot off sharply to the next S/R level at some point and I just have to get in there as it's about to happen.

It's far more likely that price action is going to continue in the same character as it is already rather than change, in the same way as a trend is likely to continue. In a trending market, price action does change between volatile when it's moving from one level to the next, and non-volatile when it's not trending.

So when I know price is in a range, I shouldn't go expecting sharp moves unless price breaks the range boundaries.

Funny how some things seem so blatantly obvious after you realise them.

You can discover what your enemy fears most by observing the means he uses to frighten you.
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  #340 (permalink)
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Monday 2012-01-30


Today was definitely a learning day. In fact, it was one of those intensive courses today were they cram in a year's worth of material into a day

I thought I'd note down my errors in one place rather than flagging them up in different places in my notes.

First problem is not starting at 08:30 with my eyes on the market. In fact I should start at 08:25 to analyse what's going on and then I'll be up for trading from 08:30. Just a long busy weekend spilled over to this morning and I hadn't done any prep work and hadn't slept well.

In the first couple of hours before 10:00am it's like there's a good trade setup on offer every 30 mins, and after that it just gets more difficult.

I missed 3 setups due to fatigue to start off with. At 9:30 my lack of sleep had caught up with me and I decided to give it 15 mins shut-eye. The alarm woke me after 15 mins but it wasn't enough - after another 20 mins or so trying to make sense of what the market was doing, my brain almost shut down again and I went back for another 15mins horizontal meditation, which seemed to do the trick.

Despite a clear and present trend, I got seriously phased by a tiny hiccup in the swing count as the whole trend slowed for a couple of hours. The bulls put in a few strong bars and pushed the next swing high a couple of pips above the previous and what followed was a bit of chop but then another lower low to put the trend back on the correct swing count. I think I overexaggerated the importance of this blip - maybe it was my concentration and presence of mind was still fatigued despite not being sleepy anymore.

In this situation, the market should be making corrections and complex pull-backs and in theory it won't be a trend reversal until - for a bear - at the occurrence of a higher high - it will be the higher low that confirms it! It's really quite simple so I don't know why I was fussed.

I was so fussed I then actually went in counter-trend - a complete error in my setup. Didn't lose much and I guess a lot of counter-trend traders were doing the same but according to my plan, I should have taken an earlier signal or at least the reversal to get in short at that point.

I then also missed a complete screamer of a trigger which begged me to go short - a big strong up/down twins pair which offered up a dead cert 10 pips, when not 30 if managed well. That's the one on the 1-sec chart.

I think I am suffering from two afflictions that affect beginners - (1) Fear of markets: I freeze up when I'm not deeply focused. (2) Fear of not trading enough i.e. compulsion to overtrade or at least at times just to leap at any trade that I dream up. Not a good combination.

The fear and/or compulsiveness kicks in when I'm not focused - which is something I should be able to get a handle on. I've got another problem that seems worse because it occurs when I am supposedly focused - I put too much emphasis on the most recent price action.

Today was an example of that between 10:30 and 12:30 as the bears slowed down and the sell-off almost stalled. At that point I almost gave up on short trades, continually looking for the chance to go long, which isn't even in the plan until the trend reversal is confirmed. Then that plan was booted into the long grass when unexpected strength came back into the sell-off and the bears managed another decent push down - after that I could only see short trades which was dumb considering that was then the low of the day.

I don't know how serious that is, I guess it could have been the effects of fatigue again but I have seen it in myself before.

Finally, a gross behavioural error - my last trade of the day spoiled my 2 day old clean slate. A revenge trade. I had only made 2 trades, both losers and I couldn't have stopped myself. I didn't think until it was over. I even rationalised it as I was taking it but it was pretty obviously a breach of my terms and conditions.

I had just bailed out from a short entry, which was a good entry and a good exit. Instead of congratulating myself on a good trade (despite losing) I saw the market tick up only one pip and then go back into the sell-off, which triggered something in my subconcious. I was determined to get the trade, and not let my stupid stop placement get in the way. Turned out I was right to bail and stupid to revenge trade.

You can discover what your enemy fears most by observing the means he uses to frighten you.
Attached Thumbnails
Trading spot fx euro using price action-2012-01-30-market-structure.jpg   Trading spot fx euro using price action-2012-01-30-trades-.jpg   Trading spot fx euro using price action-2012-01-30-trades-b.jpg   Trading spot fx euro using price action-2012-01-30-trades-c.jpg  

Last edited by Adamus; January 30th, 2012 at 02:14 PM. Reason: just adding a bit more clarification
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