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Hi everyone, a brief self intro, I have quited my job to attempt to be a trader full-time although I do not profess to be more than a beginner in trading. Its has been 1 month but my progress has not been good, hence I am starting a journal to force myself to become more disciplined in recording my trading results and review ways of improving upon my results.
I am living in a different time zone which makes it hard for me to monitor the market overnight, my time zone is around 12 hours apart from US time zone hence, although I try to keep myself awake at night, I normally will give up at around 2, 3 am.
Trading methodology
I am trading the Russell mini index mainly at the moment, a brief description of my trading method is that it enters orders when the short term trend is aligned with the longer term trend. I trail my stop with a profit target of 3X my initial risk. Using MA band filter and basic price action to filter out whipsaws.
I will be posting my results on a daily basis and note down some of my thoughts.
I will compile an overall review on a weekly basis after I have more samples to look at areas of improvement.
Results for my first day :
1) B +1.2
2) B +0.1
3) B -1.2
Thoughts :
The market was plunging down due to the US debt limit but as the longer term trend which I used a MA has not given an indication, hence, I did not trade on the downside. I wonder if I should make exceptions to my rules for certain situations where the market is trending counter to the longer term trend indicator but there is a basis for the market to be doing so, is sticking to the rules deemed as too rigid in this situation?
As you progress, your "rules" will develop for a reason. Trading with the grain is usually a good rule as long as you can adequately determine the trend.
As you discovered, trend is a relative term and depends on the time frame.
This is part of the trial and error and experience that comes with knowledge of a particular market or instrument. After awhile, you'll settle in on what time frame to calculate your moving averages to establish trend.
I would also recommend that you expand your definition of trend to include neutral or sideways, as a rigid trend filtering system falters when there's a turn or a pivot. Without the additional category of "flat" or neutral, you find yourself either two options, up or down and as you saw today, the market was choppy to negative trending...whether that's the beginning of a new downward trend or not is a matter of opinion and debate.
I would say that you can also adjust your "rule" to stay clear of days when fundamental news can throw things for a loop. Add the bloomberg news calendar to your home page (or whichever you choose) and that can help to identify things like FOMC, Jobs, Unemployment, Consumer Confidence, etc, etc.
Fundamentals always get a vote and even the most prolific edge with respect to technicals gets trumped when there's significant fundamental news that's scheduled AND unscheduled (like the Gulf Oil spill, Japanese Earthquake, Greek Debt vote, etc, etc. etc.)
"A dumb man never learns. A smart man learns from his own failure and success. But a wise man learns from the failure and success of others."
Know that the longer your MA timeframe, the harder and more extensive a countertrend will have to be in order to change the trend.
It's best to use a multi-time frame analysis in order to guage when you should enter trades.
A short and long or a short, medium and long time frame analysis will help you to enter when all the rowers are pulling in the same direction.
Secondly, the larger the time frame, the larger your loss and profit values will be. Certain instruments have more volitility and whipsaw than others.....you'll just have to guage for yourself what "appropriate" level of risk/reward you're willing to take. I'm not familiar with TF or Russel.
A general rule of thumb is that an approach that features a medium to lower win%, with a higher average profit than average loss, is usually a sign of success.
That's not to say that you can't be successful chasing small trades that win small profits often (but have high stop loss)....but if that's the case, you'd better be sure you can maintain a high win rate.
Try multi-time framing first, and then settle in on what the average or appropriate level of risk might be for the typical swings and trends. Then you'll start to develop an expectancy for how often you can win 10 ticks before losing 8. So forth and so on.
As far as the time of the market opens, well, the only thing I can tell you is if you're going to be a full time trader, you have to put in the work. Part of the reason MOST people think making money at trading is a dream is that they don't have the time or opportunity to focus on it FULL TIME. If you're a full time trader, and you insist on living in SE Asia, there's no excuse for not being up and working when the market you're trading is open for business. (unless you're going to try to trade off hours to make sanity of your work/sleep schedule).
"A dumb man never learns. A smart man learns from his own failure and success. But a wise man learns from the failure and success of others."
After the first day of plunging down, my longer term MA has started to move down, hence trades were only taken on the short side.
I have to say that the second trade which was a loss was not a good trade as I did not follow my own rules. My risk management rules state that I will not risk more than 2.5 on any single trade and if the predetermined stop loss is more than that, I have to pass on the trade. In this case, I had chosen another place to put the stop loss instead of skipping on the trade. This seems to be a problem with me, maybe because sometimes I had spend 6-7 hours waiting for a valid setup, hence when a setup comes, I am often reluctant to let it go just because of risk management rules. I have to constantly remind myself that there will always be another trade and not risk too much on a single trade. To be able to make money from trading, I have to be more disciplined than anyone else.
There was an earlier trade which I passed on as the risk was greater than my maximum loss, so hopefully, the previous time I did that will be the last time I ever do that again. Market recovered later in the day hence stopping me out.
Thoughts: Many of the setups during the trading session exceeded my maximum of risk of 25 ticks and I decided to pass on the trades. I think that my maximum risk might be too small to trade effectively, hence I have increased the maximum risk per trade to 30 ticks. Since the maximum stop loss is to protect the account, it has to strike a balance between the account size and the opportunities available in the market. 30 ticks per trade is still considered acceptable risks to my account.
thank you for shareing your trading day with others. it would be interesting to see when you enter a trade, what are the rules and definitions of the setup you take,.... .
If you do not have the possibility to take pictures from your trading software you can install FastStone Capture: FastStone Capture (Letzte Freeware Version) - Download - CHIP Online (last freeware version) itīs intuitive in handling and not a big installment.
i want to trade for a living to. i once did so about 12 years ago, also successful. but nowadays it is very hard for me to find the appropriate method to trade since my capital is very low and not much room to work with. what helped me very much to get higher profitability setups is al brooks book, reading price charts bar by bar. might you want to take a look at it. hope it helps...
