Welcome to NexusFi: the best trading community on the planet, with over 150,000 members Sign Up Now for Free
Genuine reviews from real traders, not fake reviews from stealth vendors
Quality education from leading professional traders
We are a friendly, helpful, and positive community
We do not tolerate rude behavior, trolling, or vendors advertising in posts
We are here to help, just let us know what you need
You'll need to register in order to view the content of the threads and start contributing to our community. It's free for basic access, or support us by becoming an Elite Member -- see if you qualify for a discount below.
-- Big Mike, Site Administrator
(If you already have an account, login at the top of the page)
I enjoy reading about you getting to the 'root' of your issues w/some high-end products that do work over time.
Alot of psychology is hit and miss because you can't just say it and affirm it. It has to be internalized to the point that it is like breathing to a trader.
It is NOT about willpower. It is about being true and 100% accountable to yourself; 'cause you are the CEO and you don't want to piss off the boss, now do you?
Today is day one of my gratitude project. For the next 30 days, I going to find something to be grateful for and express it publicly and if that gratitude needs to be expressed in person face to face, I'm gonna do that as well.
More than just expressing gratitude, I intended to deepen the project by thinking through the reason I am grateful and sharing that as well.
So here goes.
Today, I am grateful for my family. My wife and kid bring a sense of purpose and stability to my life. My wife is a rock for me and while the last five years have been stressful beyond reason, she has refused the easy solutions for her personal comfort and made the conscious decision to do what's right for all of us.
My kid is simply the light of my life. Nothing has ever brought such joy and pleasure to me. The day we adopted her was both the most exciting and terrifying day of my life. A little Thai kid that spoke no English had the power to both lift me higher than I had ever known as well as destroy me with her unacceptance of me. the first two months were devastating. It's been pure bliss ever since. I simply can't even remember what life was like before she came along and what's even odder than that is I can't remember who I was before her either. I'm a better human being today because of her.
Simplicity is the ultimate sophistication, Leonardo da Vinci
Most people chose unhappiness over uncertainty, Tim Ferris
Been thinking about integrity lately. The idea that engaging in performance related activity that requires your heart, mind and body to be in sync in order to perform at optimum levels dictates that one operate in extreme honesty with oneself and with ones accountability partner(s).
Here's the deeper stuff. If we continually say we will do one thing in terms of practice (sim) and yet constantly act in opposition to what we say will do, we create a conflict. Then we can magnify the conflict by lying about it to our accountability partner(s) which creates even more conflict. Thereby reducing our ability to act in harmony with our stated self interest. Our psyche sabotages the very thing that would help us in the long term.
Engaging in high performance activities with internal conflict raging is sure to lead to defeat. How can I expect to behave predictably in public if my private behavior is random? Translation: how can I trade live profitably if my sim trading is random because I have the thought process that its only sim?
How can you build confidence if you say you will stop trading after "x" ticks of profit or "x" ticks of loss and then you continue to trade? Or you will only take longs above a certain MA or shorts below?. Or you always do "x" when "y" is present? I realize that sometimes you are in the zone and you need to maximize these things. But in general, if you have a guideline for a trading variable, particularly regarding money management, that is continually violated, confidence will erode. Expectations will be unmet. Stress will ensue.
Example; today I told my trading buddy I would was gonna hold to my profit targets. Then I sent a screen shot of the trade along with the ending PnL. I did what I said I was gonna do. Confidence increased. Then after a bit, I started slipping out of that state of mind that I like to trade in so I said to him I was gonna stay flat and just watch and mark. Along comes a great looking trade. Decision point. Do I trade or do I honor what I said I would do?
A case can be made for both sides. I don't know that either side is wrong. But for me, I elected to stay flat today. Other days I've done the opposite. I almost always pay for that in terms of PnL. At that point, I am trading in conflict with what I said I would do. Nine times out of ten, I am tempted to lie about it and say I stayed flat. But now, I send my PnL at the end of the day to him and we verify our integrity. Like the great one said, "Trust but verify". There's no teeth in the arrangement except for the one that reveals duplicity and no one likes to be called much less proved to be a liar. So it makes it easier to remain true to my stated intentions.
Part of a public journal is the accountability to others....but since its anonymous, there's really not that much one can get out of it unless one is first honest with oneself and acknowledge his/her own short comings. Besides, no one wants to step on someone else's toes and offend them by calling them out for things they do that's not in their best interest. Some have done that with me, some tactfully and others not so much. At first I was really pissed they did that...sticking their nose in someone else's business. I would spend an inordinate amount of time writing a rebuttal only to realize they might be right and not post it, but now, I think I get it. I am often tempted to do the same on other journals.....its a hard temptation to resist. And today I am grateful for the somewhat pointed comments others have made regarding my trading journey.
At one point in my very early working life, I had a mentor that called me over to his house one day and we sat out in his front yard and for 2 hours, he chewed my ass about some personality issues I had that were keeping me from succeeding. It was HARD to swallow. It did not taste like chicken. It tasted bitter and unpleasant. But the truth of what was said that day saved my life in more ways than one. Now, I occasionally revisit the spirit of that afternoon and try to breath new life into the concepts and action points we discussed that day so long ago. This weekend, I am revisiting that day as it relates to trading.
Later this weekend, I plan on laying out some of the more difficult aspects of my trading life in plain sight so I can see them more clearly. I want my path forward to be clear of all obstacles created by the past and its conflicts.
Who would have ever thought trading would turn out to be an exercise in personal psychological improvement.
Simplicity is the ultimate sophistication, Leonardo da Vinci
Most people chose unhappiness over uncertainty, Tim Ferris
Today I am grateful for the little things we take for granted. The food on my table, the clothes on my back and the income stream that provides them.
In this modern age when poverty, hunger and homelessness are so prevalent, it is truly a blessing to have these basics. I sometimes think of my friends in developing world countries as well as the poor and desperate here in the land of abundance and we throw away more food in a week than they might see in a month sometimes. They wear the same clothes day in and day out. And for most, no real way of earning more than a subsistence income.
This does not make me feel guilty or somehow responsible for them and others like them and yet my blessings are to be used both for my good as well as others. I choose today to share out of gratitude and compassion, not out of obligation or guilt.
Simplicity is the ultimate sophistication, Leonardo da Vinci
Most people chose unhappiness over uncertainty, Tim Ferris
Today I want to present a snap shot of my journey with some bullet points detailing some difficulties, lessons learned and then finish it off with a freeze frame of where I am currently and a projection of the future in terms of actions I am taking and will take. Some of what I post here I have not discussed much if at all in my various threads. I figured the threads were about trading and not so much about the tiny details. But I want it here so I can remember it as time goes by and to perhaps give a narrative of what I consider to be a typical journey for a lot of traders.
My journey began about 2.5 years ago with a purchase of a trading room vendor DVD and a monthly trading room membership. This cost me $1000 +75 a month. I remained in the room for two months and then I left after the moderator chewed me out over what I considered a routine simple question. He was right about a lot of things though including the absolute insistence that simple is better. Its from him I learned my intense dislike for all things squiggly at the bottom of the chart. Therefore there has been no attempt from me to learn to use a MACD, RSI or Stoch. I've tried them but every time I compare them to price action alone, they always lag way to much. So no oscillators for me.
He had been a successful tech bubble entrepreneur and sold a tech company back in the day when tech was booming. He turned to trading so he didn't have to work so many hours and according to him, spent 5 years and nearly a million dollars of his own money losing using various methods. He said he learned to hate oscillators as a result of getting in trades based on what they were saying and finding out they were way late. He said he became successful when he dumped everything but three moving averages and learned how to use multiple time frames. At the time I met him, he was trading 50-150 lots on ES and scalping for 4-12 ticks at a time. I know this sounds odd but I actually met the guy. Turns out he lived in my small home town for a long time, then moved to a larger city to develop his tech company and his parents still live in my city and he comes in once in a while to visit.
I then went on the Holy Grail hunt for the perfect indicator and risk elimination method. During this process, I tried Viper Trading Systems (dont laugh, i learned some stuff from them) I tried Channel-trading.com with Kevin Hudson. I really liked that guy but I understand he's disappeared at this point. Kevin spent a lot of time with me at no extra cost and he's also the one that directed me to futures.io (formerly BMT) for the free MP indicator for NT 6.5. Like me or hate me, blame Kevin Hudson. He traded MP in a way that seemed 100% counter trend. I could see a short trend setting up on my non MP charts and he wouldn't trade it short. Instead he'd wait til price got to 1-2x IB and go long. And then most of the time, price just stalled. This was trading ES during the few months in 2010 that ES left its volatility behind. I even tried those guys over at Back To The Future trading. I liked those guys as well and they proved to me that indicator based trading could work because they really did trade totally mechanically based on the indicators they used. I can't remember why I left them but it seems like they kept wanting more money or something...could be wrong about that though.
I figured I needed to trade trend at that point and moved on. Attended lots of free webinars and workshops. Read tons of threads on futures.io (formerly BMT) looking for something that spoke to me. Nothing really did. So I decided to create my own.
This creation of something uniquely mine has occupied my time the last year or so. Along the way, I've struggled with creating repeatable entries, exits and money management. I'd get some clarity on one and feel real excited about things and then find I was ignoring the other two. I'd switch focus to another one of the issues, get some traction and then find I needed attention on the last one. None of it seemed to gel at the same time. All along I knew I was making progress, I was just extremely frustrated with the 2 steps forward, three steps back shuffle.
Every time I would make progress, it seemed like a layer of complexity would be added to my thinking and one thing I knew was, I wanted simplicity. And so it would be back to the drawing board in an attempt to coalesce new knowledge into something I could do repeatably and then simplify it.
During this process my account history is as follows....all these ran concurrently with the discussion above. I don't remember exact times but the narrative is enough.
Account starts small but enough. I trade sim for two months just to get used to the mechanics and pretend I know what I am doing.
Start live trading. Account shrinks by about 1/3
Go back to sim. Get more comfortable.
Live again. Shrinks to about half. back to sim and thus begins holy grail hunt...
Trade live with Viper Trading auto traders. 50/50 success rate. Can't tolerate drawdowns. back to sim
Try various trade rooms. Account reduced to about 25%
Start to think its more about me than the method...back to sim to figure me out.
I think I have it, refund account, trade live. More shrinkage. Hunt for method with tiny stops...death by a thousand cuts.
I find TopStepTrader. Give that a try. I had no idea the level of discipline required to trade under those kinds of guidelines. It was absolutely excruciating. Took their combine three times in a row. No luck. Could not trade with the level of discipline they demanded.
Back to my own account. This time with the discipline drilled into me by TST. Still stuggling with exits and money management but now I at least know I need these more than entries.
Alternate between live and sim working on these issues. Start to see some level of success. Mostly break even.
Give TST a try again. My account is still pretty small even with the refunding process I went through and so TST looks good. Took a couple of tries but went live with TST. Traded live with them for awhile. Can't remember how long but blew that account out. Could not maintain discipline. They felt I need some more time to work on certain issues.
Back to alternating between my live and sim accounts working on the things TST said to work on.
Tried again. Went live again with TST. Again, had trouble with exits. Just could not figure out when and where to take profit. Scratched a lot of trades and slowly drew down the account. Learned more about risk control. Started to get it in terms of how to use stops and where they should go.
Back to my account and sim. Tried lots of different ideas in a fairly short period of time looking for ways to use real stops but minimize their size. Gave that up and just decided the right thing was to put them where they belonged and just live with it. Mostly break even both live and sim. Odd how my sim trading mirrored my live trading or is it vice versa?
Back to TST. Went live once again. This time kept the account for quite a while. Slightly better than break even over time. However, TST is not in the business of backing BE traders and so for a third time, a live account is gone.
This time I decide I need to once and for all figure out the mental aspect of the game before I risked another live dollar either with TST or my own money. This is where I am currently.
During this time, I switched instruments several times. I started with ES, then NQ, TF, ZB, 6E and now CL. Combine instrument changes with chart changes and you can see why its taken me so dang long to make something out of this wonderful opportunity.
Now the last two weeks have been sim and have been done with the express purpose of solidifying three things I think I finally got to come together three weeks ago in a brief moment of clarity. Those three things were: Simple entry rules that did not demand intense intellectual gymnastics to figure out, Simple and repeatable exits but with the caveat the exits MUST be dynamic with market conditions and third, rock solid money management for both initial size, daily stops and subsequent sizing increases once profits are the norm and not the exception.
The first item, Simple entry rules was something I had been thinking about for a long time. I went to the simplest entry method I had used and decided I wanted to make it visual. It needed two things, momentum on its side as well as sound price action structure. I found I just didn't have the chops to do the kind of work that @Private Banker or @GaryD or some of the other analysis heavy ideas required. I found it in something @TMFT uses. Its just EMAs but it helps me visualize price in a way I've never done before. It has two things going for that I value, momentum and structure and then a third very important component for me, visuals for both. Further, filtering trades was easy and each entry had to have certain characteristics. Otherwise no trades. I experimented with some of these over the last two weeks and have determined for the most part which ones to take and which ones to leave alone. Nothings perfect but at least its repeatable.
The next item, exits came about 3 months ago when a friend told me about a forex trader that used a certain type of fib based exit but I had trouble working the method into my trading in a simple, repeatable manner. It took me a bit longer than I thought to figure this part out but since I am a scalper and like to be out on whatever swing I am trading, I needed something that would maximize the swing while not being to greedy. I wanted to leave some but not to much on the table. Further it needed to be dynamic with market conditions and it needed to be 100% repeatable with no grey area. Lastly, it needed something approaching reasonable risk/reward ratio of at least 1:1.
I finally got this dialed in when I watched a video by Todd Mitchel as he talked about his exits. What he did made perfect sense to me, fit my personality style and was mathematically sound and repeatable. Basically its a 2 stage exit. 1X risk and 200x risk. I use it slightly different than he does but thats ok, it works for me and best of all, its dead simple. It produces an over all 1.5X risk if both exits are hit. The trail stop was something I worked on last week and while nothings perfect, I've decided to do this. Stop is moved to BE once first target is hit. Once price is within 75-80% of 2nd target, move stop to 1st target. At that point, worse case is AIAO at first target. I'm sure this will not be totally optimum but for now, this is what I've decided to do.
The last item, money management which has two parts for me, daily stop loss and its derivative, per trade position sizing came AFTER the first two items above became available. I simply took what I was willing to risk daily, divided by 4 and calculated position size on a per trade basis based on the result of that simple division problem and the size of the risk. I then created a simple grid of risk in ticks, plotted the resulting size next to it and viola, money management. I further refined it by deciding when to increase my daily stop which will in turn allow me to increase the number of lots per line item in my risk grid by a factor of two since every trade has two positions, all lot increases must be able to be increased by two as well to make my exits even....i suppose I don't need even exits but it seemed logical at the time.
So emotionally I now feel better about the three critical areas of trading. Entry, exit and MM. The last area I am struggling with is one I think I will always struggle with. Allowing the trade to fully develop and giving it time to mature to the second exit. I've done some work on all in all out at 1X risk and while its fine in terms of dollars, a two stage exit at 1X and 2X risk is better in terms of overall PnL. Of course that assumes you hold to that second exit. Otherwise its just better to be AIAO at 1X risk and hope for decent win ratio.
Here is my plan for the near future.
As the last couple of weeks have been sim working out the finer points of what I have just outlined, this next week will be a crucial forward test of both me and the method to produce consistent profits taking only system trades and then holding for system targets. Using position sizing on each trade to manage risk.
If this week goes well, then I intend to re-qualify for TST the following week. They have a great program for those of us with smaller accounts but big dreams. Further, it appears they have implemented several trader coaching programs to help traders with the mental aspect of the game. Dr. Menaker does a regular spot on Friday and there are other regular contributors to the traders development. The one thing they didn't do then nor does it appear they do now is teach you to trade. You need to learn that yourself. The mental aspect of the game they do focus a lot of attention on and I plan to take advantage of that as much as I can.
Now I know I am gonna take some heat over various aspects of this trading plan. But I don't really care. This is for me and me alone. This thread is a place for me to document my journey and its been invaluable for this purpose.
My monetary needs can be met with 3 lots and 20 ticks a day net over time. That's within my safe zone for plausibility given my current skill set and emotional stage. However, my desire is to attempt to triple that each day to allow for loser/scratch days and for days I don't want to or can't trade. This works out to around $1800 as a theoretical target each day. My risk management grid says that's possible on 1-2 trades depending on risk of course. So we'll see going forward. As the Marines say, "All plans get shot to hell once the bullets start flying. You'd better be able to adapt and advance".
Lastly, since the mechanics are more or less set, I've decided to focus most of my time on the mental and emotional aspects of life and of trading. To this end, I've begun a daily habit of a brief time of meditation, reading a brief inspirational story or passage from my Bible, I began the gratitude project two days ago and I am reading this book https://www.amazon.com/The-HeartMath-Solution-Revolutionary-Intelligence/dp/006251606X/ref=sr_1_1?ie=UTF8&qid=1339307235&sr=8-1&keywords=the+heartmath+solution and it looks like it might be invaluable in helping me with my holding trade problem as well as other areas of stress reduction.
Over all, I'm really excited about the future again. Many things that have been eluding me seem to have come into focus. I have a level of confidence I've not felt since I could quote the FNMA underwriting guideline from memory!
Attached are two charts. The one on the left is my final chart. Its from @TMFT. Next to it is a naked chart I keep up. I have the levels marked on it along with my entries the trading chart gave for Friday. You can see the levels are respected, they are in line with both break outs and pull backs based on momentum. I've found over the last two weeks this holds true. I've also done about a year of visual back testing. Nothings perfect of course but that was pretty labor intensive and it produced enough consistency to warrant further forward testing.
As a trend follower, the old adage that you take the middle third out of the trend applies here. This method has the same inherent flaws any moving average method does. Its especially vulnerable on very narrow range days. On days like that, I've given myself permission to size the chart down to a time frame low enough to produce a trend. The targets will shrink as my profit projection method is dynamic. This is in line with the idea that you take what the market is giving, not what you are demanding the market give. The good thing about CL is that most of the time, it moves enough in one direction to give you decent opportunities to profit. Its a rare day price goes only sideways.
Well thats it for tonight. Its 11:30, I'm tired and tomorrow no charts or anything trading related.
Feel free to ask questions or make comments but nothing personally negative. I've decided to just block anyone that's negative from posting in my thread from now on. To be fair, that's only happened a couple of times but for some reason, I get the feeling there may be some negative blow back on this post.....not sure why....
Simplicity is the ultimate sophistication, Leonardo da Vinci
Most people chose unhappiness over uncertainty, Tim Ferris
I believe congratulations is in order for what you have accomplished.
It is easy to focus on what you don't yet have, and not realize what you have already. In this case, you have accomplished so much, and are so far ahead of the curve compared to where you started.
Keep at it, and I absolutely know you will succeed. Just play it small, knowing that there is no single thing that will suddenly convert you into a profitable trader. It is a mountain of things all working in unison.
Set realistic expectations and keep working to improve your trading. Look at how much you have improved in the last 3 years, the last 2 years, the last 1 year, the last 6 months. Imagine where you will be in 6 more months, or 3 more years.
Make sure you position yourself to give you the opportunity to continue that path of growing and learning. Most traders fail because they don't give themselves the opportunity to last long enough in this profession to ever master it. As I've said before, a master trader is simply a trader who has made all the mistakes and survived.
