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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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  #1981 (permalink)
 researcher247 
Chicago, IL
 
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Gary,

Jeez--you guys are active on Saturday. I just got up (it is 4:30pm est).

Thank you for the good questions; I'll get back to you on Sunday evening.

peace

Hedvig


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  #1982 (permalink)
 zt379 
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GaryD

Here are some thoughts regarding your recent posts about increasing your contract size.
I'll leave the "esoteric" to one side...
Rather it's at about this point you need to start practicing your duck impersonations because
the 2 x 4 (no pun intended) may start swinging

Firstly, imo, researcher247 post # 1894 is worth a lot.

Somehow I can't help thinking that even though you think you've proved something to yourself about being a "trader", you haven't ?

Or at least not something you feel confident enough to repeat on a consistant basis.

Perhaps, (and these are just my thoughts) if you had/did, then you would be able to apply some basic "book keeping" logic that would take care of what you may be preceiving as any "emotional" issue to increasing your contract size.

Wouldn't it stand to reason that a downside to any trade/day, you are "ok with" would be relevant to an account size rather than to an arbitrary dollar amount that is twice (as a result of doubling your size) what it was before ?
This is (I pressume) part of the 21 days researcher247 mentioned.
ie: trade at a contract size for 21 days and then increase contract size appropriate to the profit.

But this only works with a consistant trading method.

Thrown into this mix of confussion is that you're asking yourself, in a way, to decide between two careers.
You're making the usual and appropriate comparisons between the two, but namely about the income.
You want the trading income to be something that is enough to replace the other career.

You've also got this "scalper" "swing trader", thing created when your time window for trading is altered due to the other career.

All of this, perhaps, forces you into thinking about increasing to 2-4 but again only in terms of the perceived "income".
ie: the sooner you get to 2-4 the sooner you can match the other income and hence the sooner you can make a decission about stopping the other career and trade full time. But, I sense that you wnat that decission to be made sooner rather than later...like now ?

Your motivation is in conflict with the outcome/objective.

That's not to say that either or both are in any way wrong.
They may well both be right but for different reasons.


I say this because, and as researcher247 highlighted, everything comes down to discipline.
But we have to first have the things to be discipined about/of/for.

In other words we can't be desciplined about applying a plan unless we have a plan.
We can't be disciplined about applying entry and exits rules unless we have those rules to be desciplined about.



The most interesting point I got from the article researcher247 posted (post # 1894) was that many of the things we apply to other careers were not always compatible to trading and researcher247 made some interesting observations about how that may apply to you. (?)


So, again, things have suddenly got very busy at a time when things felt as though they had settled into some semblance of order for something going forward.

In short one could (and has been said already) just say apply what you're doing on 1-2 for a set period of time to "financially" justify increasing to 2 -4.
But there is (this past week ?) a change in the way you perceive market information when trading 2-4 because the dollar amount on any downside "triggers" some past reflection of loss.

I don't sense that this reflection of a past loss in terms of money, is the issue.
I sense that changing your career to a full time trader is triggering a past sense of irresposibility or rather the guilt of being responsible for something that went wrong.
This is not about the money but about how you perceive yourself to be in the eyes of others.
Now if this "trading " goes wrong, well....! ?

So this leads to many further questions.
Such as;
In what sense is it right ?
How and why would it go wrong ?



These are just my impressions and thoughts on those impressions.

You're clearly motivated, for whatever reasons, to make money.
For most people, how they make money and how much they make, defines who they are.

You may be caught, however breifly, in a no-mans land.
Being that you want to, and to whatever extent, do define yourself as a "trader", but that financially, is some what removed (for the time being) from a financial definition you have or used to have or want now of/for yourself or of/for how you want others to perceive you.

How do you replace one before you have created the other ?
Imo you can't, but rather need to lose the illusion or need to have to define one self in terms of either or anything.

That, imo, will be all about our motivation verses our objective and whether the two are in conflict or harmony.

"The present changes the past" !

Now what did I do with that 2 x 4...

Best regards..

"Every moment I wake up I realize I know nothing, and then I smile..." zt379
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  #1983 (permalink)
 GaryD 
Orlando, Florida
 
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researcher247 View Post
Gary,

Jeez--you guys are active on Saturday. I just got up (it is 4:30pm est).

Thank you for the good questions; I'll get back to you on Sunday evening.

peace

Hedvig


I made my living mostly as a musician from age 18 to age 25. 4:30pm was a normal waking time back then, but can't hang anymore. Today I can't sleep later than 8am if I try, and know not to start a movie after 10pm because I will miss half of it.

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  #1984 (permalink)
 GaryD 
Orlando, Florida
 
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Private Banker View Post
Hi Gary,

Have you ever thought of trading like "being paid to trade" in lieu of "trading to make X amount?" My point is, if you do your job and "trade/work" well and efficient you get paid for it. It seems you're heavily focused on how much you can make/lose, maybe I'm a bit off on this but that's my impression.

Moving up in size shouldn't be any different than what you're doing now IF you think of it as being paid to trade. Your "job" requires that you handle (trade) more business as your account grows. You should do the exact same process and have the exact same mind set as you do currently. The nice thing about adding size is you're potentially giving yourself a nice raise for your efforts and success. But if you have in your head that you are trading more contracts to try and make more money, of course you're going to psych yourself out.

Hopefully that's helpful. That's the way I was able to consistently add position size while not letting the psychological aspects of it take over. Just think of it as handling more business. If business tapers off (have a few bad trading days), you take on less business.

Best,
PB

No, not exactly. Maybe I will work on that direction some.

I think your background included getting paid to manage money, correct? While I managed investor money previously, it was in an area where my being active and working hard made the difference. In trading, there really is not much you can do "actively", other than watch and make decisions.

I read your comment several hours ago. We are working on moving, and I just let it run in my mind for awhile. I have some thoughts about maybe writing myself a job description, a development plan. This is obviously a bar napkin version, but along these lines;

Job Description: Full-time trader that will enable the realization of a 5-year plan, the Long Term Financial Goal, trading for a pool of Qualified Investors. (Minimum investment TBD).

Long Term Financial Goal (LTFG): A mathematical example of a specific rate of exponential growth that is believed to be achievable based on historical experience. The LTFG includes a Risk Matrix that will determine required leverage as a ratio of Investor Equity.


I'll play with that some.




Can you tell a little more about your experience with this issue? And, if you had similar difficulties to what I am going through would you be willing to elaborate? Do you believe this is something everyone goes through, or do you think there is a reason it is hitting me harder?

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  #1985 (permalink)
 GaryD 
Orlando, Florida
 
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zt379 View Post
GaryD

Here are some thoughts regarding your recent posts about increasing your contract size.
I'll leave the "esoteric" to one side...
Rather it's at about this point you need to start practicing your duck impersonations because
the 2 x 4 (no pun intended) may start swinging
...


I have had similar conversations with myself, and plan to extract a response to you when I get settled again next week. But there are a lot of things in what you said that I do see. I was talking with my wife about something similar last night. Thanks again zt.

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  #1986 (permalink)
 GaryD 
Orlando, Florida
 
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The discussions that have appeared in this journal over the past month have really started to get into something serious for me. I am very thankful for all of the advice that has been posted, and have copied and pasted a number of recent and past posts into a word document to spend some time reading and digesting over the next week / month / year.

This journal has almost become a book that I have written about myself, and for myself, and along the way have had the regular contribution by other traders that may prove to be invaluable. By just consistently throwing out there to whoever may be reading, I am inviting answers from anyone who chooses to participate, myself included, and this journal is shaping up to be exactly what I had wanted it to be; a tool to help myself, and possibly help others.

Today I am short on time, but have three areas that have hit me hard this week;

1) My trading style developed out of a feeling of a need to survive. As such, I have learned to rarely even allow my stop to get hit, "feeling" the motion and power of the movement, and stepping in and out more on instinct than indicator. That does not transition well into bigger dollars, as I perceive "danger" differently, and that then throws my thoughts into a different mode and begins to eat at my confidence.

2) I have a desire to make enough money trading to make up for some past losses. While motivation is required, and a good thing, mine also holds me back. And I know that it does, and I allow it to hold me back, possibly fearing what might occur if I don't.

3) There are better ways for me to utilize the trading tools I have assembled, but something is keeping me from doing it. I believe it is 1 and 2 above, but I don't have a clear set of rules to work myself out of those. My definition, on the surface, of becoming a "trader" meant to be able to make money on a regular basis. That goal I can achieve. But, my definition at the core, something I don't seem to acknowledge for whatever reason, may mean something completely different. Or possibly, just being a "trader" is not everything that I seek.


I am taking a step back to my comfort zone of 1-2 contracts. There are a few adjustments I want to make to my trading style, holding time is one of them. Allowing my stop to get hit more again is another. And I have some questions to answer that have nothing to do with trading.

Thanks everyone. I could not be happier with how this is turning out.

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  #1987 (permalink)
 josh 
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Big Mike View Post
It has been a long time since I looked, but CL and USO are virtually tick for tick copies. Just like ES and SPY. If you are looking at QM, you should be charting CL but executing QM. This is harder than trading USO because QM's tick size is not equal to CL. USO's tick size is.

For someone who is familiar with volume "landmarks" as Gary is, it's like stepping into very unfamiliar territory and expecting it to be the same; it may be similar in ways, but the familiarity is not there. Probably more problematic than it's worth. I ignore SPY for intraday volume information for the very reason that it is often very different than ES, despite the fact that price movement may be pretty similar.

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  #1988 (permalink)
 Private Banker 
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GaryD View Post
No, not exactly. Maybe I will work on that direction some.

I think your background included getting paid to manage money, correct? While I managed investor money previously, it was in an area where my being active and working hard made the difference. In trading, there really is not much you can do "actively", other than watch and make decisions.

I read your comment several hours ago. We are working on moving, and I just let it run in my mind for awhile. I have some thoughts about maybe writing myself a job description, a development plan. This is obviously a bar napkin version, but along these lines;

Job Description: Full-time trader that will enable the realization of a 5-year plan, the Long Term Financial Goal, trading for a pool of Qualified Investors. (Minimum investment TBD).

Long Term Financial Goal (LTFG): A mathematical example of a specific rate of exponential growth that is believed to be achievable based on historical experience. The LTFG includes a Risk Matrix that will determine required leverage as a ratio of Investor Equity.


I'll play with that some.




Can you tell a little more about your experience with this issue? And, if you had similar difficulties to what I am going through would you be willing to elaborate? Do you believe this is something everyone goes through, or do you think there is a reason it is hitting me harder?

Hi Gary,

Yes, I was a money manager and before that I worked as a trader both at large IB/PWM firms. When trading and managing money professionally, I obviously dealt with these psychological issues. But it really hit me when I struck out on my own. The best way I found to add size while "keeping my cool" was to do as I mentioned earlier. But you really have to focus on your performance and how well you traded vs. some sort of benchmark. If one only focuses on how much money am I making/losing, it becomes personal. And when things become personal, psychology gets in the way. I've created a personal intra-day trading benchmark which is a measure against the daily range. So for example, if the day's range in CL was 1.00 and I got 80 ticks from it, I captured 80% of what the market provided for that day. The idea here is you're focusing on trading well and not staring at your pnl all day. I can go into this more if you'd like but the gist is to establish some sort of benchmark to measure your trading against. The money will obviously take care of itself.

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  #1989 (permalink)
 Big Mike 
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Private Banker View Post
So for example, if the day's range in CL was 1.00 and I got 80 ticks from it, I captured 80% of what the market provided for that day. The idea here is you're focusing on trading well and not staring at your pnl all day.

I do this as well, and think it is excellent advice.

Mike

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  #1990 (permalink)
 researcher247 
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Big Mike View Post
It has been a long time since I looked, but CL and USO are virtually tick for tick copies. Just like ES and SPY. If you are looking at QM, you should be charting CL but executing QM. This is harder than trading USO because QM's tick size is not equal to CL. USO's tick size is.

Just a thought.

Mike

---------------
Good point Mike.

I agree, if trading the QM one would have to use CL for charting and then make the adjustment for a 2.5cent tick size in QM while CL is ticking @ 1cent per tick.

Thinner market as well (way thinner) but tradeable. I tested some strategies trading QM last fall and it worked out okay.

Gary might want to look into USO for scaleability in smaller increments.

peace

Hedvig

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