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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

  #4011 (permalink)
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I don't have Photoshop on this computer. If I did, I would highlight the area on the 9-range that is what is shown in the 6-range. There is this window of opportunity, and when filtered with higher windows of opportunity, the higher the better, and when more come together than usual...

There is your edge.


Last edited by GaryD; September 4th, 2012 at 12:16 PM. Reason: a little nicer, but I am still frustrated with myself
 
  #4012 (permalink)
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And the reason I scalp is related to the reason I don't feel comfortable trading "size". Yet.

To me, and this will sound contradictory, but it isn't. Calculating support and resistance on higher timeframes is not that difficult.

Knowing when and where to get in and get out is.


And so my plan, as before, is to merge two traders into one.

I may pull off succesful trades, I might run for 30 days, multiple weeks, multiple months.... But that never seems to mean I don't always wonder if I can do it again. And while that may just be the way things are, it is not comfortable.



We think of "comfort" as something else. Maybe that is not something to admit. But at least, I do. Is it freedom of time and place and schedule? Is it freedom of money? I see both questions the same. Not that I don't see the difference. And just like the red pill vs. blue pill question by @websouth, unless I choose where I want to go, it doesn't matter which path I take.


So today, I scalp. It is more fun. It makes me feel more comfortable. I feel like there is more to understand about the moment.

And I still think it is wrong. But until I decide on a different path...


Last edited by GaryD; September 4th, 2012 at 04:01 PM.
 
  #4013 (permalink)
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I don't see the reason for all the inner conflict. Some days the market conditions lend themselves to scalping..Other days, there are conditions that warrant holding trades for bigger moves. You obviously have the ability to scalp and catch runners. Why denigrate yourself for scalping when the only thing that matters is the end results . The real secret to this is determining what the prevailing market conditions are for a given day and utilizing the appropriate strategy for those conditions. Some days should be scalped..other days the trades can be held longer.

Failure is not an option
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  #4014 (permalink)
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Ignore volatility? I am praying for some!!! -) The shakeout of pro traders in2012!!!


GaryD View Post
CATCHING THE BIG WAVE


Surfing is often used as an analogy to trading, and most traders dream of catching the big waves. But, similar to trying to surf monster waves, if you haven't acquired the necessary skills to do so, you 'll probably wind up smashed on the reef. Even expert surfers are going to take an occasional beating, but through years of practice and patience, they have a much higher chance of success than most.


Over a series of posts to this thread, I'm going to list some things that can help you catch a big ride, and show you a specific trades as they occur. Some posts will be in advance, and you might be able to try to catch a wave with me. I know from experience that trading can be extremely lonely and difficult, and you may find it helpful to watch someone with thousands of hours of trading and studying share their views on setups. Other posts will be the results of what just happened, and this will most likely be more common, as I do not initially make analysis to share with anyone, I make it to trade myself.


As I write these posts, my goal is that it helps you, and and the same time helps me. Training the mind requires repetition, and writing it out for someone else to benefit from it is an important part of my own conditioning.


My wave of choice is crude oil, or CL, known for big powerful moves and high volatility. Crude is not for the beginning trader. Similar to the Banzai Pipeline, it can tear you to shreds if you don't know what you are doing. But, if learning to catch big waves is your thing, crude oil produces them with high frequency.

Crude runs at a 10-day ATR of 250 ticks +/-. But, the odds of you catching the top/bottom are stacked against you pretty hard, and trying to do so will be financially painful. But getting closer to the bottom gives a higher reward-to-risk. What I look for are places where to opportunity is greater and the risk is less. Tough orders, but that is my approach.




Before we even head for the coast, so to speak, please take some time to consider a few things;




1) TRADING CAN WIPE YOU OUT


That was unpleasant, wasn't it? We were just about to make a lot of money, no?


Maybe.


But you should be aware of the fact that I have “blown up” more than one account, totaling more money than you want to know, and enough to make some men cry. This is not the wave pool at Disney World. You can and will get hurt.


Am I successful now? Yes. But it took a lot of work and a lot of tenacity. Had I had more patience, more understanding of myself, better discipline, longer training, I would be far ahead of where I am today. There are surely better traders than me on this site, but I can at least provide a lot of hard-earned knowledge.

If you are not already profitable on a consistent basis, my advice is stay in simulation mode. There are opportunities every single moment of every trading day. You are not going to miss anything by practicing. On the contrary, you will ultimately make more money (or lose less) by having the patience to really learn your market before you put real dollars on the line. When you are ready, the market will be there.


If there is one thing I should stress to you, it is that you need to protect your capital. Do not trade with high leverage, do not average into losing trades, do not take a trade just because the market is open. You might get away with some of that for awhile, but long term it does not work. To succeed at trading takes a lot of practice, a lot of patience, a thorough understanding of risk, and a thorough understanding of the market you choose to trade, and most important, a thorough understanding of yourself.


Your job as a trader is not to make money. Making money happens when your job is to NOT LOSE MONEY. Does that mean ridiculously tight stops? No. In fact, that can be the fastest way to lose. It means taking only the best opportunities.



2) YOU MUST BE COMFORTABLE WITH BEING WRONG


In big move trading, you are not going for high win percentage, and so you have to get comfortable with the fact that you will most likely be wrong more often than you are right. That concept is tough for a lot of traders, as many of us believe that to be profitable we need to be right more than we are wrong. Yes, for scalping that is true, but for big swing trading, with the proper risk to reward ratio, you can be profitable even if you are wrong more often than you are right.


You must have the patience to wait for a trade to come, and also patience to wait for a trade to work.


Unlike surfing, you don't get the luxury of knowing which direction the wave you are on is headed, but trust me, it is going somewhere and is not going to sit around in any one place for very long. I may spend days watching for a sequence of events, enter a trade and get stopped out in minutes. But, if I want a big move, I have to just get back up and start watching again. That is tough to swallow for traders that enjoy the adrenaline of a fast-paced trading environment. I may have to sit out for hours, days, weeks, depending on what size move I am looking for. Wrong. Wait again...




3) YOU MUST LEARN TO IGNORE INHERENT VOLATILITY.


The extreme volatility of crude most likely whipsaws anyone who trades it. It typically has 20-30 tick swings that can feel frustrating when you are going for a longer move. It can be hard psychologically to be up 30 ticks per contract and then watch it disappear, and harder still to have your stop hit a few minutes later. But if you are going to ride the big wave, you have to learn to see that volatility as nothing more than the nature of the wave. Think of it as an exercise in endurance, and train your muscles (mind) to push past the pain as you maintain your balance. This could be a long ride, and you are going to have to find your second wind if you expect to be able to hold on.




The next posts will show a specific trade setups and discuss the tools and patterns that were used in making a trading decision. I plan to update this thread as new trades develop, and to continue to emphasize the factors that contributed to the trade being succesful. Until then, stay safe.

GARY AND ALL,

Many of us need a move of 20,sometimes 40 pips before we can confirm, be it a by a moving average or 2 higher lows that a trend actually is in place. The frustration of thE er/usd this whole month is we dont even get a 40 pip straight move all day and night. And then "if" we get it, but it seems this august to have come at some early oddball hour like 11"30pm est and there is nothing but sideways action till next day. Look at tonight,perfect example. Its 6:30am...end of the 3 day weekend...where was the rush of money flowing into Forex between 2-5am we always get? On a long weekend yet! I sware I will never complain if we go back to the times of rediculous viotility, where it6 takes 3 stop outs to catch your train, i wont complain. But something is changing in the markets, all of em. Cant you guys smell it!??? Looks to me like we are going to see a lot of "pro" traders going broke, being shaken out, not by bad plays but by waiting for moves that no longer happen with enough regularity to make trading profitable. We will see a shakeout of people going back to work again....(creating more strain on our supposed healthy economy) and then maybe in a year or 2, markets will become wild ,erratic and a new breed will come forth. WHY DO ALL OF YOU NOTICE SO MANY MORE VENDORS AND PEOPLE TEACHING "because they love teaching" more now that ever before? Cause the prose are making so little it aint even worth it. Just my 2 cents.

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  #4015 (permalink)
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Daytrader50 View Post
But something is changing in the markets, all of em. Cant you guys smell it!??? Looks to me like we are going to see a lot of "pro" traders going broke, being shaken out, not by bad plays but by waiting for moves that no longer happen with enough regularity to make trading profitable. We will see a shakeout of people going back to work again....(creating more strain on our supposed healthy economy) and then maybe in a year or 2, markets will become wild ,erratic and a new breed will come forth. WHY DO ALL OF YOU NOTICE SO MANY MORE VENDORS AND PEOPLE TEACHING "because they love teaching" more now that ever before? Cause the prose are making so little it aint even worth it. Just my 2 cents.

Certainly there has been a lot of this over the last years (educators cropping up who can't cut it). And while "something is changing" is always the case, beware of placing too much emphasis on a 4-week period of inactivity. A month in the market is a very short period of time.

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  #4016 (permalink)
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josh View Post
Certainly there has been a lot of this over the last years (educators cropping up who can't cut it). And while "something is changing" is always the case, beware of placing too much emphasis on a 4-week period of inactivity. A month in the market is a very short period of time.

Agree with josh.
Daytrader you are reading too much into this last one month activity... historically also last week of aug & dec & 1st week of Jan is low volatility & vol time.
I am talking about last 20+yrs of data ...there were some exceptions like 2008 2011 or so.

CL GC SI & bond market is pretty much active. Currencies & indexes are somewhat sideways.

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  #4017 (permalink)
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Why am I uncomfortable in a winning position? I take myself out almost every time. I track multi-dollar moves and benefit 10 cents at a time.

There is some wiring inside me that is not yet right. If I am drawn to scalping, it is still an issue about money, not trading.

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Scalping feels comfortable. It is rewarding. And it has me trapped.

 
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closed

 
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This was a HV washout


Last edited by GaryD; September 4th, 2012 at 02:39 PM.

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