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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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  #751 (permalink)
 josh 
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Agree on all counts Mike -- I didn't mean to imply it was that easy regarding increasing size. But ultimately it's probably the goal of all traders; it's one of the reasons we get into this to begin with -- we can do the same amount of work, taking up the same amount of time, and increase our potential risk and reward by changing our size. It's the ultimate anti- "dollars for hours" business. If only it were this simple..

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 GaryD 
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josh View Post
To what end? To make more money? To improve your quality of life (perhaps by being at the screen less)? Something else?

If it's to improve quality of life and free up time, then I get it. If it's to increase the bottom line, you could just increase size. But I expect it's more than that.


That is a very complex thing. There are a lot of reasons, and I'm not sure I could really say which is the strongest factor.

1) Because that is how I am wired. To seek improvement in whatever I pursue. I set a 10 year financial goal when I turned 25 and made it in less than 7, just because that is what I do when I get up every day. Where am I headed? I feel better with a purpose.

2) To me it makes a lot more sense as a goal than being a bodybuilder, or a professional figure skater, or an olympic athlete, or a black belt. All are driven by ego to some degree, but trading is a money making skill I could carry with me for another 50 years. Compare that the the financial opportunities for a 90 year old figure skater.

3) I was a real estate developer and got caught in a downward spiral, had money swept from my accounts, got put in default when I was current on payments (commercial loans have 12 month expirations), had sales contracts fall through over and over for years (because no one could get financing). I lost a lot of money. A LOT. What nailed me was RISK. The impossible happened. The banks never saw it coming, and neither did I. So I lean towards finding a trading style that minimizes risk and improves potential reward. I turned to trading because; A) it relied on only me B) It was incredibly liquid compared to real estate C) It has similar leverage characteristics.

4) I have lived with complete financial independence in the past. It was not about money, it was about choices in life. I was free to live the life I wanted. It did not mean expensive things or rolexes or sports cars or women to me, even though those things were available. In fact, I decided to go back to work 60 hours a week after fishing and drinking for a few years in the Keys. I felt the need to do something with my life. But it did mean having the freedom to do what I wanted to do, and the peace of knowing I had no financial worries. I liked that part of it.

5) Increasing size increases risk. I don't want money at all costs. Having had enough for my desires at one point in my life, I know what it is and what it is not. Money does not equate to happiness or fulfillment or love.
So decreasing size is the way I would prefer to go, within reason.

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  #753 (permalink)
 Big Mike 
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Well said, keep the extra risk in mind. Nothing is free.

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 bluemele 
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Have you tried Viagra and Steroids. It will descrease your size...

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 PandaWarrior 
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GaryD View Post
That is a very complex thing. There are a lot of reasons, and I'm not sure I could really say which is the strongest factor.

1) Because that is how I am wired. To seek improvement in whatever I pursue. I set a 10 year financial goal when I turned 25 and made it in less than 7, just because that is what I do when I get up every day. Where am I headed? I feel better with a purpose.

2) To me it makes a lot more sense as a goal than being a bodybuilder, or a professional figure skater, or an olympic athlete, or a black belt. All are driven by ego to some degree, but trading is a money making skill I could carry with me for another 50 years. Compare that the the financial opportunities for a 90 year old figure skater.

3) I was a real estate developer and got caught in a downward spiral, had money swept from my accounts, got put in default when I was current on payments (commercial loans have 12 month expirations), had sales contracts fall through over and over for years (because no one could get financing). I lost a lot of money. A LOT. What nailed me was RISK. The impossible happened. The banks never saw it coming, and neither did I. So I lean towards finding a trading style that minimizes risk and improves potential reward. I turned to trading because; A) it relied on only me B) It was incredibly liquid compared to real estate C) It has similar leverage characteristics.

4) I have lived with complete financial independence in the past. It was not about money, it was about choices in life. I was free to live the life I wanted. It did not mean expensive things or rolexes or sports cars or women to me, even though those things were available. In fact, I decided to go back to work 60 hours a week after fishing and drinking for a few years in the Keys. I felt the need to do something with my life. But it did mean having the freedom to do what I wanted to do, and the peace of knowing I had no financial worries. I liked that part of it.

5) Increasing size increases risk. I don't want money at all costs. Having had enough for my desires at one point in my life, I know what it is and what it is not. Money does not equate to happiness or fulfillment or love.
So decreasing size is the way I would prefer to go, within reason.

I have been a silent reader until now. I am in exactly the same situation. I am in Arizona and got hit by the real estate bubble same as you. I trade for the exact same reasons you do so I understand what you are saying. I said those things so I can say this:

Your desire to decrease size is good but if you want to increase earnings, you must then catch much larger waves to equal the return given by smaller waves with larger size. You of course understand this, but I wanted to jump in and say that your desire to change your thinking and belief system to allow you to have confidence to trade larger waves is right on track.

A single suggestion to your problem might be spot forex. You can ride the waves for days if you like, you get to choose your leverage and you get to choose your size. So you have the best of both worlds, big waves and positions sized appropriately for the risk the trade requires. Just a thought.

Good luck on your journey......

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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  #756 (permalink)
 GaryD 
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  #757 (permalink)
 GaryD 
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I did not watch the markets on Friday, but just opened NT to test something and saw the price action from Friday on this 120 minute chart. I changed the color of the major trendline from the previous chart post blue to a bright red in the chart above to make it stand out more. Look how beautifully it held. My guess is that stops blew above the tension that had built up around the LSP resistance zone, and I would also guess it happened on or after the third approach to that zone. If had had looked at some other charts before this post I could tell much better, but it will be fun to see later if my assumption is correct. Sometimes the more obvious resistance becomes, the more dangerous it can be in regards to stop placement.

A reversal confirmation around the first green trendline would be my dream entry for a long to catch the possible continuation, if I was going to watch for it. But I have a lot going on through the end of the year and believe this year's trading is winding to a very quiet close. I most likely will not be trading much over the next few weeks, if at all. But I am going to watch this gold wave when I get time just to not lose touch with it. If it makes it to the target I will consider it a win in analysis, and hopefully another lesson learned.



EDIT: I just noticed that this wave 5 may develop as a 5WM itself, on a lower timeframe. Watch for the 100% to 137% move of possible w2 of this move on a 120 minute.


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 GaryD 
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After recognizing I had set my MAs this year purely on visuals, I decided to do some backtesting to see how they worked. For my approach to trading, T3s did prove to be the best MA type for me. And, not that I will trade it, but the best crossover for 2011 on a CL 6 range was 27 fast, 188 slow with a secondary exit trigger of a 195 over 200, and a 100 tick stop loss. The EC is above.

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 GaryD 
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same T3 combination shown by month.

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  #760 (permalink)
 GaryD 
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I had a very close friend who died two years ago. He was a pilot, and I flew with him many times for no reason other than he wanted to fly. Today's technology is amazing, and the act of piloting seemed like it could be easily programmed. Plane speed, altitude ranges, flight paths, GPS, autopilot, landing patterns. And we were in very unsophisticated aircraft compared to what is out there commercially.

I fly a lot, and often turn to look into the cockpit as I enter the plane. There are maybe hundreds of buttons, dials, screens, displays. I imagine a lot of the process of today's flying is computerized. So, why have pilots? As many flights as we have per day in our world (historical data and volume), and as much as we can automate the process, and as many airlines that have filed for bankruptcy and would have loved to reduce their expenses; why not just automate the whole process? We have the data, we have the computers... Don't we?

My guess; they can't match whatever it is that creates the human factor.

I know I am not ready to fly an un-piloted aircraft, yet. Taking the risk down a little, nor am I ready to ride a computer guided mountain bike, even if the terrain is well-mapped. Maybe the fantasy computer-guided mountain bike could beat a sampling of our entire population. But match them against the small group who live to ride, and my money would be on the living team.

Many seem to think computer generated trade entry and exit is where the holy grail lies. They expect to box in the market's movement, and believe they can find the perfect formula. I don't, not today.

The market moves because we are alive, and we make it move. And so to me, it is still organic. Yes, almost everyone approaches it from some computer based platform. Some day soon it may change. But for now, being human is the place to be as a trader.

Some spend so much time in building formulas and backtesting, while neglecting to keep a similar record of themselves. I've been there, so I am criticizing a part of myself. Thankfully I finally got it. I paid dearly for what I have learned, and still have a long journey ahead of me. But what I know that I know;

You are the key. Analyze yourself, chart yourself, track your thoughts, note your behavior. Optimize yourself.

Stay safe, good trading.

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Last Updated on May 23, 2014


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