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Catching Big Waves - a trader's journal of surfing the the markets
The forecast for storms and lightning held me back from driving the hour + to try real surfing today, but at least I tried. came back to see that up was about the only direction today.
I have seen this more than a few times in CL. When a 5WM completes with the exact symmetry this one had, it draws a lot of attention. W2 and W4 were perfect replicas, and W1 and W5 were nearly perfect as well, with overnight pushing a little further than the zone. But to give it some slack on the overrun, that spike top that does not show on daily charts gave it some leeway.
I poked at it a few times, picked up another 30 ticks or so. I did not feel like taking any trade that would threaten the $1000 up mark on a Friday after it was already in the bank, so I dropped losers at around 3-5 ticks, let winners run to 8-9, mostly just watching where it would turn down but not about to short it with Friday afternoon volume and the way it was moving. Around 80.32 it looked done, or at least the major positions were liquidating ahead of the weekend.
Yesterday I said I was going to be a buyer, and then into the night questioned if that was the correct thought to have before the market even opened. This morning I commented that I would have preferred to catch the up wave that started around 4am, which shwowed I was already starting to question myself again. But then decided it really just gave that much more confirmation to the zone. I failed to project the ABC pattern until I was already out of the trade, I was targetting the threat of blowing the top more than anything this morning. That one volume bar was all I needed to pull the trigger, which is not typical for me. But I had a plan, and the market looked like it wanted to be part of it today. That's all I ever really get to go on anyway.
Entering at 9:01am is NOT my comfort zone. I usually prefer to see the 9:30am open as well, and even wait for the 10am time window more often than not. But knowing which side I wanted to be on since yesterday helped a lot.
Still feeling a bit weak on the confidence, wish I would have set my stop and seen what happened.
CL broke south of a rectangle I drew on Wednesday, after I had thought I would short it heavily the next time the other markets started down. And then did not go heavy, and did not hold that for long either. That failure to believe in trades for longer runs is really starting to eat at me. I am considering switching workspaces after I am in a trade, and just focusing on a 15-30 minute, the 120, and a 1 minute. I am so in tune with that 6-range that I hate to let go, butit causes me to also feel every tiny move. I was studying various timeframe ATRs this week and may bring that in. I know there is "supertrend", or standard deviations, or trailing 1,2,3 bar stops, and I do understand that I get out far too early, but knowing and doing...that tiny difference can be maddening sometimes.
The fear issue on size is greatly reduced, but I traded very light today, Friday. There are very few things worse for me than going into a weekend with a loss. That concept was actually part of ATW training, and maybe it causes me to place too much emphasis on it. But when it comes to trading psychology, if I can't always figure out how to correct certain things, that also makes me somewhat superstitious about changing other things. Who knows what makes the mind tick just so. Not wanting a loss on a Friday, and playing safe because of that, is not necessarily a bad thing.
NT is shut down and I refuse to open it again until Sunday, I can't really recall the exact ending win balance, but I feel I came out well trading 1-2 contracts on small moves, for my trading style anyway. Had a plan, played safe, gave nothing back. But I should start shifting my style to include runners, at a minimum. Maybe I'll trade in 3's with one of them on it's own bracket? Maybe that will be the next issue I can obsess about. It's like a trading To-Do list. I check one off, and add three more.
Can you help answer these questions from other members on NexusFi?
Yesterday I made about $1400.00. On max 2 contracts. You would think that would make me happy. Maybe my mind is twisted and I should be happy and quit thinking about it. But I look back and feel like I traded like a pussy.
There are only really a few places where my experience says the odds are really heavily weighted in my favor. The completion of a five wave move, with such near perfect geometry,on a daily chart...if that does not catch the attention of the majority of educated traders nothing will. That did not mean anything had changed to cause price to go up fundamentally, but psychologically, absolutely.
I felt the BEST odds were for AT LEAST a range bound day, and so set my target for the prior high range. And then, being a Friday, having drilled into my mind that I should treat it differently, I went in with 2 contracts, hit it another time with 1, both for relatively tiny moves. And then backed off. Instead of "pressing when I am right", I pull back to remain "right". Having an ending balance higher at the end of the day is "success" in some ways.
But, in a situation like yesterday, which only comes every so often, the posibilty for a extended move is also there. You may recall the time I went max down and commented I was going for $12,000 on 6 contracts. The next setup I got, it did move the $2 up. yesterday's move, $2 up. And I grabbed a few pennies out of it.
So what happens, is I can be profitable and still feel like a loser. I know that may sound like "boo hoo, poor me", but it is the pursuit of excellence, or at least the pursuit of improvement, and I am functioning at a frustrating level of effectiveness.
I know the crude oil market as well as probably most traders. This week, @greenr asked where I thought crude was going. I had two zones, about a dollar apart. CL made a significant and tradeable pause at the first, and when it broke below it had nothing to stop it but the second. Freefall. I KNEW that, but did I catch that move? No. I never, almost never, hold a trade for it's intended target. I got a few coins, yes. Bravo. Loser.
And on the few times I do hold my ground and go for a major target, I get mixed results that cause me to go back to taking 30-40 ticks, because I know those moves are infinitely re-creatable and make trading feel more like a high probability event instead of a lottery ticket.
I know it has to do with the lack of confidence I have developed, but that does not seem to change my bevahior. So I am considering a technical rule. I have read so many; trailing 3 bar high/low, ATR, standard deviation, but have never backtested any of them that prove better than the other. What I do know, is I can spot a turn pretty well, eerily well some days. I have even practiced intentionally trading against the trend. Key inflection points combined with volume give 20-30 tick bursts. But, I would prefer to expand my view to 100-300 tick moves.
In summary, I settle for scraps, like the remora, and don't dare attempt the real meal. I can make money and feel horrible, because I don't see the dollars as much as I see the psychological weakness. I see that the person I used to be may be gone. It's almost like this is not about trading, but a proving ground to find the person I once was. A place to be myself again. To be the eternal optimist again, to believe in unlimited opportunity.
I read about traders like Tom Baldwin and Mark Cook (whose record I have read may be in question? That would be sad, because he is a personal favorite), who claim to not desire to go for the longer moves, and yet they are thought of as some of the best traders in the world. And I think to myself, maybe that is the way to go, stop questioning it, stop looking at what I missed. If it were not for the fact that choosing that path feels more like accepting my fear and limiting my potential than it feels like I believe in myself. It does not matter how other traders trade, what matters is that I lack confidence.
Trading with anything resembling "size" would feel so much calmer if the target were 200 ticks and the stop 25 ticks. And I do enter those trades with decent regularity.
As I type this it occurs to me that to me, becoming a truly succesful trader is not just about making money. It is about feeling good, having confidence, not allowing the market noise to talk me into second guessing myself. If I see a pattern set up, and don't see anything that would stop it, I should just let myself be right. But I don't. I see when the most likely distance is reached, based on my backtesting, and then start to feel like I am pressing my luck by not getting out. Is that the right thing?
I have found that going to the gym and seeing the slow build of strength is helping me with a physical representation of the process. It requires repetition, pushing myself, not stopping just because I am tired or don't feel like it. Maybe the tick size of my targets is no different than the numbers on the sides of the weights. I want to go from curling 35 pounds to 70 pounds, tomorrow. But the reality is, I may never curl 70 pounds. If that is really what I want, yes, it is possible. But it is going to require a lot more work from where I am today. Is it worth it? Is the goal to be as big and strong as I can, or just to be "healthy"? If one person chooses one and someone else the other, are either right or wrong?
There is no correct answer that applies universally, other than, did that person accomplish what they desired?
The $250 that was won in the trading journal contest sat in an Amazon account until recently. Yesterday I received my first reward out of it, a copy of The Disciplined Trader, by Mark Douglass. I am growing tired of trading books, have a library already, and had looked at this one online more than once in the past and then not bought it. But a couple weeks ago I found a recording of a seminar he did, and thought that what he was suggesting was more what I need now. Not a technical education, but a psychological education. Sure I could always learn more technically, but when I weigh myself as a trader I am still very light on the psychological side. Maybe not in writing, but in practice. That part of me suffered significant damage, and unless I make it a very concentrated focus, I will not rebuild.
Confidence that comes naturally is different than confidence that comes back after failure. The former is easy, the latter hard earned. Very hard.
You do understand that being able to consistently grab 40 tick plus moves and make several hundred ticks a week is a great accomplishment. I have changed my strategy lately from a mostly scalping style to picking larger targets of 30 to 40 ticks and it's going quite well. If you can catch two or three moves like this a day, that's over 90 ticks. Why is that somehow inferior to finding a rare 100 tick move.? This doesn't make sense. Does it make you less of a "pussy" to hold onto a trade that is retracing 30 ticks before hitting a target. If you can make these 30 to 40 tick moves, then you are there! With increased leverage, your moneymaking potential is unlimited !
To read of your dissatisfaction over your great performance is almost painful. Will you be satisfied with your 100 tick trades...or will you eventually find that "wimpy" and decide you need 1000 tick moves. This sounds like the type of psychology where one will never be satisfied. If you can make 100 ticks a week and you work up to say 20 contracts one day, that's $20,000 a week or 80K a month. Does that sound like "Pussy" money to you ?
Which takes more balls..holding a 10 contract trade for 40 ticks or a 2 contract for 200 ticks? Speaking of balls, millions of traders would trade their left nut to be able to do what you seem to do ?
Anyhow, what might make sense to me..doesn't necessarily make sense to you. I just don't see why a higher leveraged trade held for 40 ticks is somehow inferior to a lower leveraged one held for double. This sounds like a psychological issue that has little to do with actual trading proficiency.
I think you should just step back a moment..appreciate how far you've come..and give yourself a pat on the back. Yes, we can all improve....but please..give yourself some credit. You're doing an outstanding job.
When I was in business years ago, I had quite a few employees. 80+ for awhile. I had a quote "ethics before dollars", and re-stated that phrase I could not count how many times over the years. It was about prioritizing "doing the right job" over "making the most money". Whether it made sense or not, to me, that was what mattered.
From a personal standpoint, I would be more proud of my trade decisions if I would stick to my targets of larger waves, because it would say I had a higher belief in my decisions, that I was not swayed by every tiny move. The frustration does not come from some dream of larger moves, it comes from my experience that they do happen with great frequency and accuracy.
I will believe a move should be about 100 ticks +, and yet catch 25 ticks and then run back into hiding again. The feeling of being flat so much more appealing than the feeling of the unknown, but I feel disappointed in that.
The issue is that I am not in control of my own decisions. I am not able to trade to my own preferences. When I say "get out", I get out. Period. But when I say "stay in", it does not register, in one ear, out the other. It is rarely "target hit" or "stop hit", it is "closed" because I am afraid of giving something back.
I do that because I doubt myself. And based on where I am in my life, that is possibly the most important thing.
I was reading and re-reading what each of us wrote, and something more came to the surface;
It has to do with the "value of the trade".
If I risk 35 ticks as an initial stop loss, and then take 35 ticks as a final profit, but then the move goes on for another 100 or more, I effectively de-valued the trade. I was willing to pay $350 in return for $350, when the true value was $1,350.00 or higher. Maybe I never really believed my stop would get hit, or else I would have never placed it so far away, and so in that respect the stop placement and the "risk" are not necessarily the same. I close early on the loss side as well.
Here's an analogy;
If you bought antiques, like in the show "American Pickers", and you paid $350 for something. Your maximum "risk" (similar to your emergency stop loss order) was $350.00. Maybe you believe, based on experience, that at a miniumum, worst case you might only get $150.00 for it, so despite the initial "risk" (emergency stop loss), the real risk in your mind is more like $200.00.
Then, let's say you sold it a few hours later for $700.00, you risked $350 (really $200 in you mind) to make $350 profit. Great job, right?
What if later, you hear the guy you sold it to sold it to someone else, two days later, for $1,700.00. The guy you sold it to made 3x more than you did. And all he did was put a for sale sign on it and see what happened.
But what if then, later still, what if a top antique appraiser tells you $1,700 was a steal, it was probably worth $3,000. If you were the "expert" antique "picker", how proud would you feel of your professional ability that you sold it at $700.00, as if you really had no concept of true value?
Sure, you made a profit. $350.00. But at that moment, are you feeling great about your decision, or your skills, or your true knowledge of the industry? You took the first offer that came along, scared to set your price of true value and possibly wait a little longer.
Now, fast forward. Let's say you had that experience, and now have seen yourself do this same thing, over and over, for a year now. You swear each time that you have learned your lesson and should wait for your price. Yet, almost every single time someone offers you $350.00 more than you paid, you fold. And then, back in the truck, driving all over trying to find another great "pick"... There is time involved, mileage racked up, gas in the truck, and all of that had to come out of the $350.00, so for everything you did and "made money", there could have been so much more reward for the same effort.
I do all this higher timeframe chart analysis that says there is nothing to turn price until "X". And I do that analysis every day. And I see it come to fruition on a regular basis. Yet, over and over I am content to take less than "X".
That's a good analogy and I understand the feeling of leaving money on the table...which is why I have gravitated from scalping into larger moves. But I also see the value in probabilities, which in my case show that 40 tick moves without a substantial pullback are more probable than 200 tick moves on a session by session basis. If I can get 40 ticks 4 or 5 times in a session, that still adds up to 1 trade held for 200 ticks... If that 40 tick move after several gyrations and retracements goes on another 200 ticks, I couldn't care less. There's always a re-entry. Again, just a different perspective. To me, there is no right or wrong technique, it's the results that count. I, like you, am planning to do this for my income..most probably in the next 6 to 8 weeks or so. Because of certain circumstances, I have to succeed..that's why my new signature is, "Failure is not an option." I feel I am ready and can withstand the inevitable pressure that awaits me. Maybe that's why your journal resonates with me and gets a reaction out of me. I see what is necessary for me to make an outstanding income and that's where my head is at. I realize, now, for you..it is more of a Zen thing..and you have an idea of what you want your trading to be . I guess for me, it translates to a given amount of ticks to achieve, with the least amount of stress, in order to reach my financial objectives. To me, achieving those goals and supporting myself from trading is my objective. So, perhaps, when I see someone such as yourself who could probably easily achieve my objectives, it affects me personally because this endeavor has cost me so much in terms of stress, lost money, lost time ..endlessly trying to piece it together like an epic jigsaw puzzle. And you have all the tools in front of you to achieve my goals...But I see..that these are my goals and not yours...and I totally respect that.
A 5-wave move, on a daily chart, with great symmetry in both waves 2 and 4, and in waves 1 and 5... how many times a year do we get it that good?
That setup, at a minimum, was worth trading for some up move, and that is what I did. Minimum expectation. The odds were highly in my favor that someone would want to buy after the Wave-5 zone held on high volume. But that is also where markets present major move opportunities. I know that, I obsess on that fact, I believe it. Yet, I folded early.
Back to the "pickers" story, sure now I might still be able to pay $1700 or more for the antique and go for the $3000, but I owned it at $350.00. Which is the better trade? By moving my stop and not closing the trade early, I could have zero risk and let it ride, but I choose the known over the unknown. And while that may squeak out a profit, it does not suggest mastery of my profession. To me it does not show that I am strong and confident, it says that I was scared and weak and just so happy that someone was willing to let me make a few dollars.
Picker: "Thanks guys, wow, $350.00! Do you think if I found something else you might buy it from me?"
Wise Buyer: "Sure, if you're lucky kid. Now run along..."
It is a more common occurence that the "picker" buy something and double his money than it is for him to buy and then sell at 10x more. But, that rare occasion to find something of value and "steal it" happens occasionally, and the experienced "picker" should be able to capitalize on it when it does happen. That is his field of expertise.
My frustration lies in the fact that I feel I should know better. 5 years experience is still a baby maybe, but I know more today than I am able to benefit from. Knowing and doing are so different sometimes. And the rarity of the setup makes it less frequent, completely throwing me off when I trade like I am on autopilot, unable to even do anything differently without a tremendous amount of concentration on doing so. But close the trade, the blood comes back to my brain, and I see what a moron, such fear, such lack of faith, such waste of opportunity.
So trade multiple lots. Sell some back to the guy that will pay double, sell some to the guy paying triple and sell some to the guy paying 10x. Often the sum of the parts is worth more than the whole.
If during the process of selling your stuff, you find out there are more people willing to buy at a higher price than what is currently trading, buy some more and resell it to those paying triple or 10x what you originally paid. Just don't buy so much that if all of a sudden no one wants what you are selling, you won't lose on the whole trade.
Just a thought.
Simplicity is the ultimate sophistication, Leonardo da Vinci
Most people chose unhappiness over uncertainty, Tim Ferris
For some reason, my goal is to get in and stay in from one zone to the next. I know that is not what I have taught myself, and breaking that habit that I have formed over the past few years is proving to be more difficult than it should, because I have worked so hard to refine it, understand it, I have reinforced it by the joy of winning trades, I have come to believe that is "what I know"... But I still feel like I have fear that is not justified, and that is keeping me from achieving a level that I see.
I just finished page 13 of The Disciplined Trader, and already feel connected. As if he were reciting a post from this journal, but somehow 20 some years in advance, "The less I cared about whether or not I was wrong, the clearer things became...to make myself mentally available to take the next opportunity."
