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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

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  #1771 (permalink)
 GaryD 
Orlando, Florida
 
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I have never posted a photo before, for a lot of reasons. Most important, to me, is I had no interest this thread being a trader's version of Facebook. And, most others here don't post photos of themselves, at least when it comes to avatar images. It actually seems most users actually choose to go by an alias, remain completely anonymous. I can understand that. I thought about it myself. But, floor traders have no option but to show up in person, so why the big secrecy?

Trading is not always something to be proud of, may be one reason. Even if you are good at it, the image of traders as portrayed in movies and media can possibly be viewed by some as greedy, manipulative, power-hungry, cold, heartless... some probably are. But most that I have had interaction with here have been just the opposite. Generous, kind, supportive, honest.

And, of course there is the shame of not being succesful at trading. I imagine that has it's place here on futures.io (formerly BMT) as well.


But, at the request of Big Mike himself, and since this is my journal of my trading experiences, I'll post one that may be somewhat relevant.



My wife has hung in there with me through a lot of rough times, a lot of financial losses. She has listened to me obsess about trading a thousand more times than she ever wanted to. She has left the house and returned 8, 9, 10 hours later, to find me staring at the same screens that I was looking at when she left. She has had to suffer through the countless nights of me sleeping with a laptop on the nightstand, the glow of the screen keeping the room well lit through the night. She has witnessed me reach the edges of sanity trying to figure out the markets. And has loved me the whole time, or at least most of it.


I sometimes hand her my laptop and have her read something I posted. Nothing to do with the trades themself, but of the psychological journey that trading takes me through. She is studying to become a yoga instructor, and in some ways there are parallels. Like, struggling to find balance, or pushing yourself to do things that at first seem impossible.


This is me and my wife, taken on our recent 16th wedding anniversary.






I'm not really sure what this has to do with trading, but it has a lot to do with what is important to me.

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  #1773 (permalink)
 josh 
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GaryD View Post
I'm not really sure what this has to do with trading, but it has a lot to do with what is important to me.

It's very often the woman in our life that keeps us going when we might otherwise just hang it up... they deserve almost as much credit for any success that we might have, just by supporting us emotionally, and most of all--believing in us, when we might not believe in ourselves!

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 josh 
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GaryD View Post
I have been reviewing a few trades I took over the past few weeks trying to understand how exactly I made a decision to get in, when the entry on the charts had nothing to do with the way I intended the indicators to work. But they felt right. I am starting to believe that maybe the greatest application of any indicator is just to be incredibly familiar with it.

On a somewhat similar vein ... against my better judgement, I did some historical chart analysis last weekend, and realized why it does not work for me: there is no market there. It's like looking at a picture of a beautiful scene, without being there to see the whole panorama, smell the air, and hear the sounds. The indicators (I use volume, TICK, and vwap) were stale, tape was dead, and it was utterly unproductive. Anyone who thinks he can learn to trade by looking at historical charts is either very talented, or very delusional (the good ol' hindsight bias).

My emphasis is this: sometimes entering or closing a position feels right. I've received much scorn in the past due to using the "f word," from those who claim that a trader should have no feeling, and should behave like a machine, and should only do X if conditions Y and Z are met, every time. But when I look at past charts I see no reason to take some of the best trades that I have taken. Granted, one needs some measure of experience to know what to "feel" to make a decision; I'm not advocating clicking the buy button with no context, or to enter some mind-off state where we throw reason and logic to the wind.



GaryD View Post
I see so many cool things here on futures.io (formerly BMT) that I play with, but I keep taking them back off. It may be that I am just done looking. Maybe the same for you?

It's one of the temptations of using NT: lots of cool toys to play with, but not necessarily the better for it...

 
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  #1775 (permalink)
 GaryD 
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josh View Post
On a somewhat similar vein ... against my better judgement, I did some historical chart analysis last weekend, and realized why it does not work for me: there is no market there. It's like looking at a picture of a beautiful scene, without being there to see the whole panorama, smell the air, and hear the sounds. The indicators (I use volume, TICK, and vwap) were stale, tape was dead, and it was utterly unproductive. Anyone who thinks he can learn to trade by looking at historical charts is either very talented, or very delusional (the good ol' hindsight bias).

From my experience, I would defend chart analysis. My success is not as good with ES, but for CL I find it useful far more than not. Here is what I have found improves it;

1) Using the right time frame. Which one? It depends, there is no real "right" one. It has more to do with looking at the right time distance back. I "feel" I get the best results overall by combining the daily with the 120 minute, but have no scientific proof of that. The smaller the timeframe, the weaker the analysis. Trying to find a completion target for a 5WM on a 5 minute chart, while missing the fact that every wave of that move does not even exist on a 90 minute chart, can make chart analysis seem useless.

2) Allowing myself to have many interpretations. That one seems counterproductive, but I believe the opposite. I try to construct a chart story that would support either direction, and then try to let the movement fill in the blanks. The past week in crude where on Sunday I was only interested in long, but then I believe it was Monday's volume at what appeared to be a strong resistance area from chart analysis on the short-side story that had me consider short.

3) Allowing volume to have a loud voice in the decision.





josh View Post
My emphasis is this: sometimes entering or closing a position feels right. I've received much scorn in the past due to using the "f word," from those who claim that a trader should have no feeling, and should behave like a machine, and should only do X if conditions Y and Z are met, every time. But when I look at past charts I see no reason to take some of the best trades that I have taken. Granted, one needs some measure of experience to know what to "feel" to make a decision; I'm not advocating clicking the buy button with no context, or to enter some mind-off state where we throw reason and logic to the wind.


You have a strong ally here in the "feeling" debate.

Feelings of greed, hope, desperation, elation, overconfidence, certainty, anger, necessity...those can hurt me. But when feelings originate from a technical basis, those are different.

I have felt when the market is strong, when it is weak, when it has shorts nervous, when it has longs hesitant. I swear, crazy as I may be, I can almost feel the message volume gives sometimes. It is those feelings that can possibly help me. If I combine that with techincal knowledge and indicators, there is an edge that is hard to define, but I believe does exist.

And going into the realm of feelings on a more personal level, I am about halfway through the book "Market Mind Games" by Denise Shull, which provides a very interesting and compelling technical approach to emotions.


Here are a couple quotes;

"The bottom line is that, in general, we have abdicated our need to use the judgement demanded by a fundamentally uncertain situation under the illusion that the answer is always in the math. Market performance emerges from owning the need to always be improving our judgment."

"On the day of the Flash Crash in May 2010, certain traders used not their models but their brains, their memories, and their pattern recognition skills to immediately decide to shut down their automatic trading systems. They judged something to be awry. They didn't know what; but in effect, their lack of confidence or what could be that dreaded word "fear" served as their best risk manager. That is exactly how Darwin said it was supposed to work - an emotion like fear could be useful. As it turns out, that famous saying, 'The only thing we have to fear is fear itself' is another mistake. In fact, the only true thing we have to fear, at least when it comes to decisions about uncertainty, is a complete lack of fear."



Where the rules of non-emotion should not be broken are when it comes to my risk size, moving stops, not honoring max drawdowns, trading markets I don't understand, trading timeframes I don't understand. I somewhat "fear" those things, and I believe for good reason. In that context, maybe the 'Wall Street' quote should have been, "Greed is good, but, fear is good too".

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  #1776 (permalink)
 GaryD 
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Until "Zone 2" is broken, the emphasis for crude remains up. And then "Zone 3" provides an interesting area. If "Zone 1" breaks I would be on the watch for a test or breakout of the high pivot at around 111.








On the daily, the flag pattern holds, as does the major trendline.







I have not used a 21-range before, I bumped it up slightly from an 18 I have been playing with (which I have not really gotten familiar with either). Really, to me the idea of range / time has more to do with the distance and the strength than some magical setting. I picked 21 today because I seem to like intervals of 3, and really just wanted to get a view back to some major pivots. Regardless of the familiarity, short-term 105.65-106.20 has my attention on this chart.

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 GaryD 
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At 30 minutes the read is very jumbled. That huge volume burst on Friday and the resulting pullback may make 30 minutes a bad choice today.





Maybe 106.40

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  #1778 (permalink)
 GaryD 
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I see the zone 3 a little differently on a 120 minute, and the 105.70 area is still appealing.

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  #1779 (permalink)
 GaryD 
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Trading from two computers which are not always on at the same time makes NT Performance Reports, other than day-by-day, very misleading without a lot of work. Meanwhile, my pig has 13 pennies and 3 nickels in it. That report is so much easier to compile.

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 josh 
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GaryD View Post
If I combine [those feelings] with techincal knowledge and indicators, there is an edge that is hard to define, but I believe does exist.

Not only do I believe it exists; I would go so far as to say that it's practically impossible to succeed without those feelings. I base this only on anecdotal observations and not on some reliable, empirical data, or by claiming that I'm successful. I am reminded of pit traders, who traded with no charts--I do not know whether they referenced available data like advances and declines, but essentially they traded based on how the market "felt" to them. Many would argue that these pit traders are all now extinct and this proves the opposite of what I'm saying. However, I would disagree and note that the venue is simply different. Note of course that strategies which depend on execution speed in the fractions of a second are playing a different ball game, and I am not referencing these at all.



GaryD View Post
"The bottom line is that, in general, we have abdicated our need to use the judgement demanded by a fundamentally uncertain situation under the illusion that the answer is always in the math. Market performance emerges from owning the need to always be improving our judgment."

I like this quote by Shull very much Gary. I would also bold this: "we have abdicated our need to use the judgement demanded by a fundamentally uncertain situation..." A whole lot of discretionary traders seem to want to remove uncertainty, and thus judgement based on the variable nature of the markets, from the equation.

I look forward to checking out her book; thanks for recommending it Gary.

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