Pandawarrior, i am so sorry for your loss.I have only been following your journal for a few weeks, and i must say, the last post could be a valuable reference to alot of the struggling traders out there.So many important key points, and a very inspiring read.
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Nice work Pdub - way to capitalize on a market that was directly in line with your edge. Its so important to be able to recognize when the market is lined up with your edge and delivering outlier returns - these are the days you really have to push. Glad you got that zen poker book - its a goody. Here's a familiar quote from schwager's 2nd book in the section titled "zen and the art of trading" -
"In trading, just as in archery, whenever there is effort, force, straining, struggling, or trying, it's wrong.
You're out of sync; you're out of harmony with the market. The perfect trade is one that requires no effort."
May you have continued high returns on your journey (both financially and in life).
Seek freedom and become captive of your desires. Seek discipline and find your liberty. - Frank Herbert
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great job on the trading Pandawarrior, it looks like you have settled into a good rythem.I read a good part of the"zen and the art of poker " book, and enjoyed it very much.I think there are many things that apoker player goes through, that traders go through as well.I felt obliged to reccommend a book that has helped me , quite a bit, for over 20 years."Way of the peaceful warrior", by Dan Millman.IMO, trading is one of the hardest things to master, because it exposes some of our truest weaknesses.For those who choose to realize this, and actually work on their shortcomings, the progress comes.We all know, its a slow process, but as you say, its more of a realization, that just takes time for us to see.I have read this book probably 30 times, and it never gets old.Its a short one, that can be finished in a weekend.Once again, nice trading
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Ok, I have some time to elaborate on some of my trading ideas. Keep in mind these are just guidelines and are distilled from everything I have learned and unlearned during the last two and half years.
First things first. I believe VERY strongly that in order to be success at any endeavor, you MUST know who you are. Otherwise you will self sabotage. For years I was a mortgage banker. I did it very well. When I tried other so called ancillary things, those didn't go so well. I was also a specialist inside the mortgage banking arena. Not many people in the country were better at my specialty than I was.
Same with being a trader. Are you a scalper and frustrated by the big moves because you weren't in them? Forget about it. Do you have the skills to capture the big runs? Probably not if you are scalper. So trade a chart small enough to give you enough entries to make your nut and then freaking quit for the day. How to tell if you are a scalper? Its real easy. Answer one question. How long can you stand being in the market without freaking out? Less than 10 minutes? Less than 5, maybe one minute or how about 30 seconds. I say if its less than ten minutes, you are a scalper.
If you can sit there for an hour while a trade is in progress and read a book or read the news or some other activity while your trade advances and retreats, you can do what I call, intra day swing trading. Looking to capture larger moves.
Both styles are valid and acceptable. Just decide what you are and then ONLY trade that way. Forget about the stuff you miss. Just trade the way that works for you.
So I said that to say this: I am a scalper. I want to be in and out inside 10 minutes and hopefully sooner. I can and have held longer. I held a trade the other day for 45 minutes and after the first 10 minutes or so, the pain of that waiting more or less went away. But I still to be in and out. SO I trade a one minute chart and have set my targets to 15 ticks...well 16 to be fair. I want to cover slippage and commissions with that extra tick. Anyway, I have found that 15 ticks is a fair target before a pull back occurs. Sometimes it goes more but I don't care. Its a conservative exit and that is what matters to me. All that being said, I see the exact same set ups on all time frames, its just that the stops are bigger and the targets are bigger. I think I could trade a daily chart the exact same way I am trading a one min chart.
Being a scalper means I want momentum on my side. I used to buy pull backs on the range charts but honestly, I never really trusted them. I knew most traders use time based charts and so I went back. Even then, I was entering at the wrong place. I would wait until the pull backs happened but would enter long after there had been selling. I never really figured out that I should buy after the buying actually started again. I wanted my entry to be as close to the swing as possible so I could have a smaller stop. Then I read Perry's thread and his use of the "PPMAs", the light bulb went on and I realized he was buying strength and selling weakness. I didn't like his method of showing it and so I just figured out how to do it on my own without the extra MAs.
So its pretty easy actually, trade in the direction of the 89SMA, and above or below the 21EMA for the most part. Exception to this, I will almost always take a trade in the 89SMA if price is below the 21 and touches the 89 and then closes back in the trend direction. I figure this is the deepest pullback I will see without disrupting the chart structure and more importantly, entering a different market state.
I have three market states: Trending, consolidation and transitional. The two hard ones are consolidation and transitional. Consolidation for me is when price has pulled far away from the MA and works its way back over to them by either going sideways or by a sharp pullback. Transitional for me is when price has closed against the fast EMA. this is the first signs of a possible transition. At this point, I get pretty cautious. I will then wait for further signs of the trend resuming before placing another trade. A full transition attempt occurs when price closes opposite side of the 89SMA. At this point, one should be VERY careful and wait for trend conditions to reestablish themselves before trading. This could take a while. In fact, If I am nicely green for the day and this happens, I might just quit for the day especially if I am close to my 9:30AM cut off time. No sense in pushing it and giving something back.
Thats it in a nutshell. I have all this formalized in a short trading plan document. I have some sizing rules, some drawn down rules but I suspect most people are only really interested in the method. I have some counter trend trades I can take but I'm not a real fan of those so why waste energy doing something you don't really like?
Here are my hillbilly formulas for success.
1. Know your market states. There are three of them. Know what they look like for your method. If you cannot identify a consolidation zone with your method, you are not ready to trade. If you can't figure out when price is trying to go from long to short or vice versa, don't trade.
2. Have a trading strategy for each of the three market states. For me, the trading plan calls for no trades except in the trending state. So no trading most of the time for me.
3. Develop CONSERVATIVE exits. I want to make money without being right about the overall direction of the move. I don't want to bet the day's ticks on catching the monster move.
4. Don't trade all day long. It will drive you to make stupid decisions. Most traders that win in the morning, lose most of it in the afternoon. Its called decision fatigue and its real. Being forced to make snap decisions all day drives people to make less and less rational decisions as the decision making period is extended.
5. Don't be greedy.
6. When your kid walks up and asks you to play with her, stop trading and play with her. You'll be a hero and the market will be there later. Don't ever be to busy for your kids.
7. Whatever your trading plan is, you must own it like nothing else. It must be down deep in your soul, your psyche if you will. It has to be second nature. You must be able to walk up to a chart of any instrument and look at it with your indies on it and know instantly what you would do next if forced to make a snap decision. It could be short, long or flat but you must know and you must know why.
So the long answer to a short question about what my entry and exit rules are.....I sort of wait until after price crosses the fast MA, wait for a pull back and enter after a bar closes in the trend direction....more or less. Look at the charts I posted today, you'll see it.
Hope that helps......
Simplicity is the ultimate sophistication, Leonardo da Vinci
Most people chose unhappiness over uncertainty, Tim Ferris
Last edited by PandaWarrior; November 29th, 2011 at 05:24 PM.
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I've taken the last week or so off -- as much as I could anyway, so am just now catching up on some posts. I was very pleased to read the newest entries.
I hope this takes you in the right direction. A direction that you create yourself, execute yourself, and are accountable for -- yourself. A lot of traders get caught up in "the blame game", always placing blame elsewhere for their poor trading results. You have to take complete control of your trading and fully accept the outcome as your complete and utter responsibility, and then it empowers you.
Too many search for black and white answers. When do I enter? When do I exit? The truth is trading is a lot of gray area, there are no such things as black and white answers to everything. Each person has to find their own path.
Last, I just want to congratulate you on staying with it. I think that there is no more important thing than sticking with it, following your dreams, having the courage and conviction to stay with it even when it is very challenging.
A "master trader" is a trader that has made all the mistakes, and is still trading.
Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.
Need help? 1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first. 2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses. 3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make. 4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance. 5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers. 6) Help using the forum? Watch this video to learn general tips on using the site.
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