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Catching Big Waves - a trader's journal of surfing the the markets
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Catching Big Waves - a trader's journal of surfing the the markets

  #1691 (permalink)
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I had no time whatsoever to watch the market today. But as one who has recently preferred to short this market, I feel vaildated.

And, I realize that is a dangerous thought.

I still cannot place the "pattern" I thought I saw, but it had not passed, and so IF I were trading I would have prioritized shorts.

It makes little sense that I believe there is upside pressure on the market. It makes no sense that if I had to sign my soul to a position I would have chosen "up". But I saw short as the near-term focus.

Knowing that a market that goes up or down, and therefore anyone has a 50% chance of being a short term Nostradamus, the feeling of satisfaction in having a prior preference for the resulting actual direction may be insignifcant and even foolish. And, I may be wrong for believing this. But I have watched this market with no mercy for roughly 5 years now, and still I "felt" something I considered more important than indicators, sentiment, Elliot wave...

Any study of the market is an attempt to quantify past motion, and distill it into future motion. Science does not like perpetual random outcome. It is understandable that there is an element most traders try to box in. Meanwhile, the future moves based on the present, and the present never stops to catch it's breath.

The best edges result from being directly wired into the motion, and the clues that gives. They are so quick, so subtle, so fluid. But they do exist.


Last edited by GaryD; March 15th, 2012 at 01:56 AM. Reason: I don't know, trying to get it right
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The edited version is closer to what I am trying to say, but misses something that escapes every time I try to catch it. How can thought evaporate so quickly?

 
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I missed the day entirely, but the final moments of the transition fro open pit to die-hard electronic shows support as of today's close. It seemed like crude had a hard time finding a reason to move up, and fell by default.

 
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This is the only reason to have a journal IMO, not to post wins, show skill or wins but see how you felt and perhaps why you either acted in haste or missed signals. Do that Gary, change this journal into cataloguing only things you missed...not a one journal that does that here on futures.io (formerly BMT)...a journal with a difference. Because no one can demand to see you live trades or your explanations. No one has that right. That is the primary reason I stopped both of my blogs, after the euphoria of how "great" and "skilled" I was wore off...I realized the best learning came from the falls...and not from seeing my wins....a delicate balance between positive and negative re-enforcement.



A benefit of having a journal online is that there are occasionally posts from other traders that reverberate in my mind for days or even weeks after, pushing my thoughts in a new direction just far enough to increase my perception and understanding. This was one of them.


I left a trading mentor around Spring 2010, and it felt very uncomfortable being alone. No guidance, no support/resistance assurance, just me and a few computer screens. When I started this thread, I did it mostly to try to help other traders. It was something I would have liked to have had from someone else. And, I knew that if I explained to other traders how I traded when I was doing it “correctly”, it would be hard for me to lose money.


I kept the focus on explaining good trade setups, and only posted the ones that were what I considered the best. What is interesting, looking back, is that when teaching was my primary goal, I traded probably as good as I ever have.


I was going to stop posting maybe one month into this, feeling like I had given my contribution and it was time to move on, go back to just me and my screens. But after really giving it some thought I decided I wanted to keep going. I learned to enjoy it, and the fact that it was wide open to the world gave it an element I thought I needed for awhile. It makes me stay honest with myself, it feels like I am being watched. And that is something I decided I needed for awhile. Like probation.


I asked Big Mike to move the thread to the journal section, and it slowly transitioned from almost a how-to thread to a journal that included my deeper thoughts.


I have come to believe that comprehensive journaling, tracking every single aspect; time of day, market traded, trade size, reason for entry, reason for exit, profit target, stop loss, indicator readings... is only beneficial for a certain period of time. Eventually experience starts to replace learning, the journaling needs change. I am beginning to believe that minimal, possibly esoteric journaling, is the end and the beginning. The caterpillar becomes the butterfly, and a new experience begins.


I had a conversation with a friend recently, it was triggered by a post I made on futures.io (formerly BMT) called “Confessions...” I have thought about it a lot lately, and feel if I am really going to keep an honest journal I wanted to make a clarification here; Take the math and add a zero, that is the real accounting.


When I typed that post, I thought about it for a long time, knocked off the zeros, and hit submit. I felt like it would keep it more within reach of most traders. And, possibly not seem like I am completely insane. I'll leave the other post alone, but wanted to be transparent here. I have never lied in this thread, but I have chosen to hold certain things back that I felt were too personal. Being willing to post this now is somewhat cleansing for me, and possibly will hit home with someone else who experienced loss on a similar level.

Here's the missing background. Around the same time I got into futures trading, I was staring at a personal bankruptcy. I lost about $4 million personally in real estate equity during the time banks were shutting down and/or pulling out. I had roughly $20 million in development loans, most of which I had guaranteed personally, and the banks started calling my loans one after another. Meanwhile, property values fell to about half what they were previously, and eventually less than what the banks were owed. I was getting wiped out and then some.


While I was the majority investor in most of my deals, I also had friends money invested, family money invested. I felt horrible, and I wanted to make everyone whole who had trusted me. I swore to myself in silence (not to them, that would have truly been insane) that I would make it up to everyone, including myself. So I only needed to make about $6 million on a few hundred thousand... Leverage was my only hope.


I was also on a prescription antidepressant back then, recommended to help with the feeling of apathy that comes when you can't find any other way out. It made me nearly emotionless, and during that timeframe I discovered a demon inside me when it came to trading. I NEEDED to make millions, literally.


I am analytical, calm, confident, logical, hard working, organized..where that crazed person came from, and how they got into my trading account, that is something I have tried to understand for a long time. But, that life-or-death approach to trading is really how I learned to survive and make money. And also why I am so quick to take a profit, why I keep my losses so low, why I adhere to wins being greater than losses, why I study non-stop. I made a commitment to myself to learn to be a TRADER, not a gambler, not someone who was desperate for money.


I have learned the hard way that pressuring myself does not work. Setting daily money goals does not work for me. Having a bottom line goal makes me think too much about the dollar value. What works for me is when nothing exists but the trade itself.


Having had such huge losses early in my trading eventually made me incredibly focused on ending “up”, over and over and over, but to not focus on the dollar amount. Possibly most important, “heat” had to feel comfortable.


Today I still don't really care about the dollar amount. I sometimes see others talking of trading 10 contracts, 20 contracts, etc. I think about it. But not yet. I am still feeling out my new competence, and working hard at keeping it from becoming cockiness. I would like to make $5k, $10k a day, but I do not even consider going for it. I go in 1 contract, maybe 2, rarely 3, and drop most when I am ahead. The money will come eventually, and it will be easier if I can train my mind to not consider the amount. I am "up" a respectable percentage so far this year, and on track for what may break a percentage target I have kept on a silent wishlist.


Looking back through the thread that is now roughly 9 months long, I see that I was in a groove when I traded non-stop for several months. Now I am uprooted, and as a result recently my average win size suffers. I started the business travel after I had gotten into a great trading run, and I was very concerned that I would lose my abilities that I had worked so incredibly hard to develop. It made me almost paranoid about leaving the screens for extended periods. Then when I did try to maintain my trading on the road, I felt I was breaking every rule I had made along the way. Wins felt tainted, losses felt sinful. I make money, yet somehow I became afraid to continue to believe that I did. And I latched onto a belief that I had reason to be afraid. And, meanwhile I was aware of it all and the irony of it.


It seems it takes months to build up psychological trading capital, and yet only days to compromise it. But a lot of the psychological slippage only exists in the areas where doubt still prevails. Meanwhile, experience holds it's own high water mark, and silence often reveals it and also sheds new light into the darker corners. I am finding that my fears lose ground more quickly recently, and my confidence is solidifying to where it bridges the gaps of time.


One trade last week while at home caused me to question my discipline on the entry, and so I stepped out even while I still believed in the trade. I later decided I actually liked the entry in many ways, but still feeling that one out some. When I pick tops and bottoms that are minor in comparison to the larger picture, what is really any different than scalping a move at the touch of a short-term support/resistance line (like a donchian channel, a moving average, etc.) The trigger for me is still volume.


This week I found myself at peace with the trading/traveling debate. The time in the market was much shorter, the profit expectancy much smaller, but I felt at ease after being able to sit at home for over a week and see that, while I was not as comfortable as if I had been home a month, I felt good. I took winning scalps on Monday (1/0 net 6 ticks) and Tuesday (2/1 net 9 ticks), and wired into a sizeable flat screen in my room at the Marriott on Friday morning for a full view of the market which gave me 24 ticks before my meetings (2/0).

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Three pennies and a nickel went into the "bank". My silly side venture of filling a plastic pig may actually be somewhat of a countdown to my move into full time trading. I believe I could trade full time now, but I want to just let that feeling breathe for awhile. And I don't want to set that trigger on a trading account balance, or a daily average net for so many days, or anything directly related to any real financial score. Tracking winning periods in a way that lacked seriousness, and yet was drilling into my subconscious, seemed harmless yet effective. It's silly, it's physical, it is repetitive, it is visual. I did not test the pig's capacity before I started, so it may be 6 months, or a year, or 5 years... Or I may one day decide the pig is full enough. No hard rules for that. I do not care. I want it to be when it is.


I may carry on with this journal for awhile, but I feel it is shifting so radically as it moves along. The true inner workings of an individual's thought process are not always pretty. A stranger reading some of the posts probably sometimes gets the impression that I know nothing. Not the best thing to project when I had originally hoped to help others. Maybe I should stop this thread now and start a new one called “Random Thoughts – a trader's journal of whatever comes to mind at the time, because he feels it helps him grow.”


Last edited by GaryD; March 17th, 2012 at 07:20 PM. Reason: OCD
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  #1695 (permalink)
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Crude has a tight confluence zone on the daily chart that has staked out the area between 126.70 and 128.40. Not necessarily Monday's target, but something to be aware of.

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Zooming in on the daily shows the support that held in the 104 area that has now formed a nice potential flag over the longer term, or wedge over the shorter. 108.20 is an area I would expect a lot of eyes are on.

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While I was interested in both the long and short side last week, I would believe now that crude has gotten most of that washed out, and the stops that in my mind make a ride higher an easier path are now in place. As of Sunday night I am expecting a long-only bias for Monday. But anything could happen between now and then, and a break below 103, that is a different story...

The attempt to pick a top at the major 618 made sense last week, this week I would think it was foolish. The major overhead resistance may be in the area around 109.50-110.00, but north of that does not seem to hold much that would get in the way of the 128 zone, over an extended period of course.

 
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Looking at a clean view of the daily back to 2008, there is near perfect adherence to expected patterns; A major fall, followed by a major ABC (with wave B turning at the 618), and then a fall back to the major 786 to form a global, or maybe a better term would be universal, double bottom.

That was followed by a nearly vertical run to the majr left shoulder pivot, then a period of consolidation, and recenelty a breakout above that resistance and a retrun to test it as support.

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From a higher timeframe view, this market has a base in place and is poised to take off over the months / years to come.

How does that help me as a short-term trader with an emergency stop loss of about 35 ticks? The full answer is more than I care to write out today. But it does help, a lot. It gives me a storyline to believe in. It keeps me from thinking there is a price that is too high or too low. It keeps me focused on the fact that order does exist in a world perceived as chaos. It helps me interpret the greater forces that are causing the movement to be what it is. And none of that really comes close to describing the total advantage, but I'm not sure I even could. Despite what I believe, I could always be wrong, very wrong. So writing it all out is pointless in some ways. But it is still what I have internalized, and it is part of what allows me to make decisions.


Last edited by GaryD; March 18th, 2012 at 02:12 PM.
 
  #1697 (permalink)
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When I am at home all of my trades occur on a desktop running two monitors to create this workspace. A second computer runs an additional two, but I rarely watch those other than for news releases, and maybe to watch another market or two. But I settle in and become fixated on this view. It makes me feel very comfortable. When I travel I try to re-create this feeling, but it never seems to be the same.

Looking at it now I laugh at myself, wondering how I could take so many pieces of information, most of which have never been backtested together with any other one, all completely independent views running simultaneously, and make a single trade decision. And while I laugh at myself, it is mostly because I kow that that is how I make a trade decision, and I feel good about it.

I would not want to part with any of the components for any extended period of time. My favorites remain the 6 range, 120 minute, and 1 minute, and if I was forced to get rid of something, those I would fight for. But together they seem to form some subconscious synergy for me, possibly like a choir, rich harmonies suggesting where price might go.

With the exception of the new 18-range chart I added recently (I guess I did not feel I had enough to look at), I feel I know each and every component of my screens with great intimacy. I have hundreds, probably more like thousands of study hours with all of the others. I have been lied to by all of them at one time or another, but know that for the most part they tell the truth. I have had them scream at me to listen and have chosen to ignore them, and suffered the consequences more often than not.

This is the team I have assembled, and together we face the challenges of risk and uncertainty.


Last edited by GaryD; March 18th, 2012 at 02:57 PM. Reason: typos
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When I am at home all of my trades occur on a desktop running two monitors to create this workspace. A second computer runs an additional two, but I rarely watch those other than for news releases, and maybe to watch another market or two. But I settle in and become fixated on this view. It makes me feel very comfortable. When I travel I try to re-create this feeling, but it never seems to be the same.

Looking at it now I laugh at myself, wondering how I could take so many pieces of information, most of which have never been backtested together with any other one, all completely independent views running simultaneously, and make a single trade decision. And while I laugh at myself, it is mostly because I kow that that is how I make a trade decision, and I feel good about it.

I would not want to part with any of the components for any extended period of time. My favorites remain the 6 range, 120 minute, and 1 minute, and if I was forced to get rid of something, those I would fight for. But together they seem to form some subconscious synergy for me, possibly like a choir, rich harmonies suggesting where price might go.

With the exception of the new 18-range chart I added recently (I guess I did not feel I had enough to look at), I feel I know each and every component of my screens with great intimacy. I have hundreds, probably more like thousands of study hours with all of the others. I have been lied to by all of them at one time or another, but know that for the most part they tell the truth. I have had them scream at me to listen and have chosen to ignore them, and suffered the consequences more often than not.

This is the team I have assembled, and together we face the challenges of risk and uncertainty.

Well said! It's amazing what we get used to watching on a daily basis just staring at different chart intervals and how they all come together and provide the message with what the market is doing. Thanks for sharing your screen shot!

Cheers,
PB

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I was surprised by the amount of selling that took place as crude broke above the morning's prior high, and have decided to take a break. I started this morning with a buy-only plan, but never really saw what I was looking for to feel very strongly about an entry. I have made 11 RTs 1 contract, but keep changing my mind and dropping the trade. While the net result so far today is up 41 ticks, my largest win is 20. Not the type of move I was anticipating, and certainly not incredible trading.

Had I not been so focused on the long side today, I actually would consider a short entry after that volume bar. But I'm going to sit aside for awhile and see if crude can find a bottom. It may also be range bound today, and I may see if I can locate the edges of that channel. Despite the fact that I had up until recently believed I was not good at trading channels, on the days I make myself just sit and watch I surprise myself by homw many times I will say, "here is where it will probably turn", and it does. Maybe it is an old wound from so many whipsaws that causes me to hold onto that fear.

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