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The 22 Days: A Price Action Trader shares his Journey


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The 22 Days: A Price Action Trader shares his Journey

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 iqgod 
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Plan

Any good journal, if it aspires to be instructive at all, MUST start with A PLAN.

Without a plan there is no ability to monitor performance, and with one there is a guaranteed destination at the end of this journey. Without a plan there is no singular definition of discipline – how can one break rules if there were none laid down in the first place?

Thus, the objective of this journal, foremost, is to narrate whether the plan described below was followed, explain why some things were done they were (ideal answer: they were done because they were planned for being executed as part of this plan), describe the quality of execution, and evaluate the performance of this plan not based on an equity curve but rather on how well the plan was executed.

As a bonus, and I say bonus because you need to make the assumption that I must already have done my homework and BACKTESTED the plan before posting it and hence I start with the mathematical knowledge that the plan is theoretically profitable - this narration will also reveal whether the plan is suitable for the chosen markets / instruments and whether it is suitable for the timeframes chosen for me to trade, and whether it is emotionally suitable for me.

Simply, this is the plan:

Goals of the Plan:

I am doing this activity but primarily (and I must not lose sight of this fact) for growing my pile of cash at whatever percentage the market offers me within reasonable risk which means that at no point in time will I risk more that 2% of my pile. Note that there is no hard goal defined to double my capital, or increase it to 1000% etc. – rather the plan centers around PROPER EXECUTION of my PREDEFINED STRATEGY.

To achieve this goal I will FOLLOW THIS PLAN completely, without questioning it since manual backtesting has proven that it is profitable.

Markets, Instruments to be traded and when:

I am currently based in India, hence I will be trading liquid stocks on the National Stock Exchange (NSE) i.e. stocks which are have futures / options and are preferably part of the NIFTY or the SENSEX.

I will allocate one-third of my pile to take NSE stock positions which will NOT be carried forward overnight. I will trade 5 minute charts.

I will allocate the second-third to take positions in NSE future contracts of the underlying for carrying one single position of one futures contract overnight. I will trade daily charts, but will try to gain best entries by basing them off 5 minute charts if they conform to the dailies.

I will allocate the remaining third to take positions in the Indian MCX-SX commodity markets.

The last two will be collectively referred to as the SWING CAPITAL.

My secondary objective of focusing on swing trading is to allow this activity to replace my current method of earning money which will finally allow me to spend more time with my family and enjoy the freedom of travelling and being able to trade from anywhere in the world.



However the first part needs me to keep checking the market every five minutes but this is not a sacrifice by any means since swing entries are taken with a view to gaining the best entries based on 5 minute charts.

Additionally, I will paper trade the Forex market (EUR/USD or other pairs if there is a setup).

The Edge:

The edge is obtained through the hard work of studying AL BROOKS and applying his principles to the markets. All mistakes that can be made have been made. The key is to avoid making any of them again and record everything in this journal faithfully.


Set of Rules:



The basis for all entries is a PINBAR.

There are only two rules which will always keep me in the market or on the sidelines after exiting:

Rule 1: I will only take WITH TREND trades till there is a break of a major trend line. If there is a break of a major trend line I will wait for a pullback to the extreme of the current trend and then take a position based on if there is a reversal signal during that test.

Rule 2: I will exit only when the above rule applies AGAIN once a position is taken or the trend is almost vertical and then only if there a reversal signal, especially if the reversal signal is a pinbar.


About Me:

Strengths:

Patience.

Ability to follow rules perfectly, except…: read below.

Weaknesses:

Since I tend to freeze when faced with losses, I have to get a position correct or exit at the extreme of the 5 minute bar which was used as the basis for taking the trade. This applies to swing trades as well as trades which will not be carried overnight. Thus the stop loss is two ticks above the extreme of the bar used to base the trade upon. If for some reason the stop loss does not trigger and the market puts me in red, EXIT.



All these human errors that lead to improper execution – buy instead of sell, missing entries by not having discipline to make myself available to the market as decided upon, or if the market moves when II cannot make myself available (I’m asleep, or frustrated etc.) then taking second best and third best entries – i.e. patience again, rather the lack thereof.


Tools / Data Feeds:

Google finance charts
ChartNexus software
Netdania

If there is any problem with any of the above DO NOT TRADE.

Daily Pre-market Routine – or How to Start the Day before logging in to my broker’s terminal:

My daily pre-market routine comprises of:

1. To analyze yesterday’s trades.
2. To review any open positions and do a what-if analysis of targets and stops by assessing market conditions.
3. To make an initial selection of possible instruments to trade based on the above two factors.

Risk Management / Money Management:


The goal of my trading is NOT TO LOSE MONEY. Gaining money is a secondary objective.

Take a trade ONLY if the reward is 1.5 times the risk.

Every trade I take MUST have a stop loss order entered into the system.

I will not use tight trailing stops, stops can be moved to protect profits only based on rules 1 and 2.

I will stop trading for the day if I lose 2% of my total pile.

I will stop trading for the week if I lose 5% of my total pile.

The size of my position must never exceed the parameters defined above.

Finally, I will never let a winning trade turn into a losing trade i.e. I will move my stops to either breakeven or to a place which crossed refutes part of my idea.

After a winning trade I will not let ego takeover and still continue to abide by the above rules.

After a losing trade, I will verify that I followed my rules and remind myself that following the plan is more important that the outcome of a single trade.

In trading, as in life, I will strive to be impartial to the passing ebb and flow of emotions.

May DISCIPLINE be part of me for the next 22 days.

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 iqgod 
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To master Price Action trading countless hours of effort - both studying and screentime - are of paramount importance.

The following place on internet is a fountain of knowledge, so to say.



(S)/He seems to be a disciple who has attained a great level of mastery over this method who posts at:

ninetrans.blogspot.com

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 iqgod 
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Important Precepts: (underline, read many many times, backtest till these get firmly embedded in your pysche):


Trends often end with a test of the extreme, and the test often has two legs, each reaching a greater extreme (a Higher High in a bull, or a Lower Low in a bear). The first extreme and then the two legs make Three Pushes, which is a well recognized reversal setup with many names.

Although the best reversals have strong momentum and go a long way they are often very slow to start and can have several small bars before the sharp moves begin.

Typically, entries in trend pullbacks look bad but are profitable, and entries in reversals look good but are losers.

Any series of strong trend bars (big bodies, small tails, and very little overlap) that is followed by a pullback almost always has a test of its extreme.

When price goes above a prior swing high and the momentum is not too strong, place an order to short the Higher High at one tick below of the prior bar on a stop. If the order is not filled by the time the bar closes, move the order up to one tick below the low of the bar that just closed. Continue to do this until the current leg gets so high and has so much momentum that you need more price action before shorting.

Failures are often excellent setups for trades in the opposite direction, since the traders who were just forced out will be hesitant to reenter in the same direction, making the market one-sided.

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 iqgod 
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I am starting this entry with these series of rules because they are the guiding principles the journal will be based on:

You will make more money if you avoid certain types of trades.

If you can’t resist taking the less optimal trades and blame it on human nature it means that you are losing discipline and are not following your plan,

The most important thing to note is that trading counter-trend will result in missing the “with trend” trades. In his case money not gained is money lost.

Don’t do countertrend trading until after a major trendline break with momentum and a retest of the trend extreme.



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 iqgod 
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Here are the resources that helped me most during trading:

Al Brooks, of course

The James16 Group thread on ForexFactory

dbphoenix - his posts on Wyckoff theory, same name on various forums

Various samaritans: clockwork71, thalestrader, dante_trader, Strat's Price Action Trading

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 iqgod 
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8:00 AM
Checked daily charts. Massive Pinbar on ABB hence will focus on ABB considering short only trades.


9:15 AM
Market Open: ABB opened at 804.95 and started ticking up forming a high at 812.70.
9:25 AM
Since there was a minor trendline break of the previous day’s two legged fall in the final hour, I was looking for at least a scalp hence shorted below yesterday’s close at 810.

9:50 AM
Closed position at 807 as this was only a scalp and stayed on the sidelines expecting market to tick up to test the major trendline. Placed a short limit order at 814.9 (I could have placed it exactly at the trendline at around 818 but did not want to lose an opportunity in case price did not tick that high).

11:15 AM
Short order filled at 814.90. Market tested 818.90 and then started pulling back.

11:45 AM
A lower high was printed at 817.90, price reached 811.40 but formed a reversal bar, due to which I took profits in two parts at 813, 812.
01:25 PM
Market formed a almost double top by giving a high at 817.5 where it formed a reversal bar, but the prior high was not tested and hence stayed on the sidelines and did not short again.
02:05 PM
Took profit of remaining position at 810.1 seeing the big bar form on a 2-minute chart and 5-min chart.
03:20 PM
Utilized the SWING CAPITAL and sold a futures contract at 815 (stock price was 810.20), but market ticked back to 814 (hence futures contract is in the red closing price 821)

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 iqgod 
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Being from India, I often get asked on social occasions - are you veg or non-veg :-).

Right now I am short ABB and am concerned about veg err Wedge that seems to be forming. I am hoping to exit at its climax profitably, or if the wedge immediately reverses, I will have a stop loss at cash 819.1 (futures 828).

Here is the daily chart to start today's journey:



I hope my fear of three-push patterns is unfounded since we still have a strong case to stay short. If we do not take the pinbar spike into consideration then we still have not broken the bear trendline.

Regards,
iqgod

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 iqgod 
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9:15 AM Market Open

My stop placement was 'correct' so to speak - it has not been hit yet.

The probability of this trade working out is very low however.




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 iqgod 
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This is today's 5-min chart of ABB stock of NSE:




09:40 AM

There was a clear uptrend forming, and I was trying to cover my short swing position and go long, however FUMBLED during execution and by the time I had placed the order price ticked (shot up) upwards. Was still holding the shorts then.

10:25 AM

My ‘correct’ stop I had earlier prided myself upon i.e. at 819.1 was hit and price shot upwards. I KNEW this was going to happen, but FROZE (mistake number 1).

10:35 AM

Pinbar forms and price goes into a trading range.

11:00 AM

Price tested the trend extreme and started ticking downwards again. As per plan used my intraday part of the capital and sold at 829. I also used the swing part of capital and sold one futures contract to be held till March 15 or till price action is favorable.

01:15 PM

Covered the intraday shorts at 822. Observed price action for the rest of the day.


For tomorrow (this may sound like very much like a TV talking head, since price can only go UP, DOWN or SIDEWAYS, so hardly has PREDICTIVE value):

Both bears and bulls seem active in the market and it could go either way tomorrow.

In short, great discipline, poor execution today.

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 iqgod 
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3rd March 2012
Day "2.5": Weekend Trading!

There was a special trading session on Saturday. I observed the market but did not trade.

I did see shorting opportunity but since it was a weekend and was not on my regular scehduled trading plan I did not trade.

However the day was a trend from the open day with the bear being expected.


5th March 2012

09:15 AM: Market Open

Covered my short position by buying one ABB future contract at 814.

12:45 PM: Pinbar - went short below its low at 805.9

01:25 PM: Covered my shorts... saw price at 801.7 but managed to get filled only at 804 because I did not have a clear exit plan. Bearish followthrough expected tomorrow, but so show of bullish stength will be good to initiate shorts again.


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 iqgod 
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Having prided myself for following my plan for the past week, and also because my daughter was not well, I did not really plan in the pre-market except a groggy decision to take short only trades.

My Actions Today:



The market opened at 738 wwhich means multiple swing highs were broken which signaled a reversal hence I executed a buy order at 793 and immediately covered at 799. However, instead of waiting for a setup to form I simply thought I would miss a short entry and went short at 799 and then the market traded higher and reached 800, 805, 810, 814 and yet I watched without a stop in the market.

The proper price to go short would have been 814 since it was a resistance level being a swing low – however the daily chart was forming a wedge and this spike in early trading was thus signaling a wedge reversal and hence I should not have initated short positions at all.

The day ended in a loss since I sold at 799 and covered at 809, though the market gave brief opportunites by ticking down to 805.

I also had no target price in mind and could have covered the short positions at 797 had I got the targets set in time and considering that this might be part of a wedge reversal or a pullback on the daily chart.

Emotional Trading and what to do about it:

Even though I was correct in my analysis I froze and would not take a loss. Mistake 1.
Inspite of great analysis I did not take action to cover my positions, mainly because I froze in the game above.

So what made me trade like this?

- Wanting to trade and make a profit without proper planning, based only on ‘the general direction of the market’. “Thought” I had a plan.
- Thinking that I will be right ‘eventually’ and will look like a fool right now if I get out. Another symptom of the first malady described above.
- Finally, panicking and then taking a loss at an inopportune moment (also note that with proper planning it is only rarely possible to get into such situations where you are deep in the water and try to get out at the deepest point when submerged).

All of the above make me an amateur again and serve as a reminder that you can allow ego to lose more than you have gained over the past many many days. It also makes me remember the precept that you can have a huge number of losing trades if they are adhering to the plan and yet be profitable because of the risk-reward ration and the probability based on your market-reading (which is the last thing I list her – it is important to be right but it is also important to be able to know when you are wrong and ash quickly for the exits in such situations).

It feels like making me read Magee's book all over again. Not ‘Technical Analysis of Stock Trends’ but his other not so well known epitome on The Semantics of Wall Street. (now known by various names).

Sigh! I have failed you, dbphoenix.

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 iqgod 
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I believe it is the wrong question to ask in any type of trading.

Market direction matters, but only is 40% or so part of the big picture.

The remaining 60% is a what-if analysis.

- What do you do if price reaches here? here? and here?

- What would happen to your account if the stop loss order didn't execute? What? You don't HAVE a stop loss order?

So much for mental stops in a 24-hour Forex market.

Anyways, I am currently 'bullish' (bullish? on a pair?) on the EURUSD having placed a buy order at 1.3100 - perhaps it will go down further and trade at 1.3050 (much below which I have a stop loss order)

Here is the chart:


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 Big Mike 
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BTW, do you know if dbphoenix is still around? I know he stopped posting on TL, but I wonder what he is up to these days.

Mike

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 iqgod 
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Hi Big Mike,

dbphoenix was always shrouded in intrigue that comes from having an online-only identity and became a legend. He was a phenomenon on all the boards he visited. Unfortunately he seems to have gone underground - I can picture him with his ready wit preparing for the trading day and effortlessly calling tops, bottoms and everything in between.

Perhaps we should have a thread 'The Wit and Wisdom of dbphoenix' just like dbphoenix started threads titled 'The Wit and Wisdom of Richard Wyckoff' and 'The Wit and Wisdom of Justin Mamis'.

Just like Richard Wyckoff eventually became rich enough to have a mansion besides the industrialist Alfred Sloan, maybe we might come across dbphoenix in a similar neighbourhood and recognize him as such from his style of conversation. Till then we are on our own... actually traders are always on their own, but people like dbphoenix volunteer to turn into signposts for the benefit of beginners and all those who are yet to taste success in this ruthless arena.

Why he left may be best understood by him alone, but just like some saints in India who left the material world behind at age 19, he may have stopped posting because he felt he had served his purpose of community service and imparted everything there was to impart.

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 iqgod 
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I will simply say that I erred today. Mistake 1 - I froze. I tend to freeze when the market makes a quick sharp move before I enter a stop loss order and I realize that the stop loss order has already had the stop loss trigger even before I have placed it. Today it cost me a significant portion of my account. Not the usual 2% (where the stop would have been, much much more).

To cut the story short, I shorted at 02:00 PM at 814 and then price thrust upwards. The market moved. I did not move. I stood still, grew roots and froze. I let the market grow over me. A little voice in my head (but belonging to John Maynard Keynes) whispered at the market close (where I dumped my shorts and covered at 826): "Markets can remain irrational for more time than you can remain solvent."


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 Big Mike 
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He may very well be among us already, with a different identity to lose the previous baggage...

Mike

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 iqgod 
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I entered hurriedly on the day I had "forecasted" EURUSD about to begin a bull trend and got filled at 1.3150.

It has paid off very nicely, and serves as a reminder that making money in trading is partly about entering on pullbacks having good R:R



From the daily chart it seems that EURUSD is headed all the way up to 1.4200, which is my "long term" target.



But I must confess that I AM getting ITCHY leaving all those profits exposed to the market to gobble up. My stop is still a bit below 1.3050 and I haven't yet moved it to breakeven and have not yet found a logical place other than breakeven. Never EVER allow a profitable trade to become a loss.

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 futuretrader 
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BTW, do you know if dbphoenix is still around? I know he stopped posting on TL, but I wonder what he is up to these days.

Mike

Amazon.com: Profile For dbphoenix: Reviews

Seems to have shifted focus....

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To master Price Action trading countless hours of effort - both studying and screentime - are of paramount importance.

The following place on internet is a fountain of knowledge, so to say.



(S)/He seems to be a disciple who has attained a great level of mastery over this method who posts at:

ninetrans.blogspot.com

wow! thx... very good source...

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 iqgod 
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Humility is the solid foundation of all the other virtues.

– Confucius

It was what saved me today from erring for a straight fourth time.


ABB 2-min chart: The 2-min chart works better than the 5-min during the first hour

09:16 The first bar was a climactic reversal bar, hence placed an order to go short below its high i.e. at 836.70 and was filled on the next bar where I also entered a stop loss order at 837.20 (i.e. 0.5 above the fill – a money stop).

09:18 This was an imperfect inverse pinbar and hence stayed in the short trade.

09:52 Huge bear bar closed at 830.30. Since it was a bear with a shaved bottom more follow through was expected by I took profits on half the position at 831 and left the stop order as is for the other half.

10:18 Second leg of the bear with a wedge shape, hence took profits of the other half of the position.

For the next three hours the market spent time in a grueling trading range that was getting tighter hence could feel a coiled market about to spring, but could not fathom in which direction. It looked like a triangle formation which would drop down off a sheer cliff and hence was preparing myself to go short. Also due to the huge pinbar on the daily whose extreme was at 842, it seemed plausible to assume that the market was headed for a fall.

12:56 – 13:04 - I had gone short at the iii at 829 thinking the coil would break downwards and was getting more and more confident – till……

NEVER STOP LEARNING… NEVER EVER STOP LEARNING

I had pulled up Peter Brandt’s website http://peterlbrandt.com/ and was reading the post “Shucks, it’s only Corn” – the first lines held on to me, quoted below

The Corn charts are extremely compelling. The market is setting up for a $1 per bushel or so move. The question is: “In which direction?”

But what completely captivated my sight was the corn chart itself. It was exactly similar to the chart I had just come out of so confidently with a short bias. (Chart Copyrights of respective owners)



The conclusion he was coming to was “……. all [the above] stack the deck for a bullish resolution in the Corn market.”

There was a similar stout support line on ABB right now at 825 and the market had twice deflected all attempts to push below it – a breakout pullback was the third attempt - the third attempt barely reached 825.15 and the market pushed higher.

Similarly, the market ticked one tick below this breakout pullback and printed 825.10 before rushing higher. It was a clear double bottom that my short-only eyes had missed.

Also, even though I was following my rules till that point since the major bear trendline had not been broken, various minor trendlines had been continuously broken and a tiny break had occurred at 12:14 when the price ticked up to 830.95.

The First Quick Thing - I immediately covered the short positions. Luckily only a few ticks loss.

The Second Quick Thing - At 13:16 a pinbar formed with its high at 830.20 and its low at 827.55. A buy order was placed at 830.30 and a corresponding stop loss order at 827.

13:38 The stop loss was hit, but the resulting bar was again a pinbar. I remembered that I should have avoided the earlier trade since it was barb wire, but then took this one as there were trapped shorts who would definitely drive the market higher. I placed a limit order to go long above 829.70 and a stop loss order at 826.

13:40 Filled! (Second second quick thing!)

15:06 The market had a reversal bar and a bull trendline had already broken hence I placed a sell order at 848 which was near the extreme of the earlier trend which was 848.7, and which would probably be a breakout test on a lower timeframe chart such as a tick chart.

15:20 Filled and all positions sold at a profit.

15:25 Used my SWING portion of my capital and sold a futures contract. Probably not a very great place to go short, but I think by this time I was elated and had forgotten what Confucius says at the beginning of this post.


Humility. If you want to learn a lot about yourself, welcome to the markets.

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 iqgod 
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Elation is not a good strategy,and it was proved right at the opening bell of the market when my broker's risk management system neatly took me out of the market at its very top.

I watched in agony as the market them proceeeded to tank a full 20 points in my favour.



There is no crying in trading.Especially when you enter without a clear setup, and without waiting patiently for your plan to trigger an entry.

This now also means I am deep in red having lost around 10% of my account and will have to papertrade for the rest of the week on my swing portion.

The EURUSD trade played out nicely, with the market coming down and executing my orders at 1.3084 and 1.3090. The ride is showing a nice profit and I have marked the trendlines that were used to trigger the trades.






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 iqgod 
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Entered long thrice - first 1.3100 second 1.3090 third 1.3084



Sat through the pullback of the scary looking pinbar, but followed plan since there was no trendline break prior to the pinbar formation and hence stayed in position which has paid off. Yippee!

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 iqgod 
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Perhaps the market might be wanting to make me a philosopher.
I took Bad trades today but got the honors of a Good guy – i.e. I was profitable.
I was profitable because a few setups I took were pure gold and they offset all the losses of earlier trades.



10:00 Missed the first good trade of the day – I could have gone short at one tick below the nice pinbar’s low.
10:30 Made the first mistake of the day. Entered a long swing (!!) position on this bar – took an UNLCEAR setup by fading the EMA Gap Bar on the 2-min chart. This was 1. Barb-wire 2. No EMA Gap Bar on 5-min (1 and 2 in hindsight, but a pathetic trade nevertheless).
10:45 Exited the position with a loss.
Takeaways:
No entering swing positions on 2-min charts – strictly on 5-min charts
The obvious one last: Do not fade 2-min gap bars

02:45 Entered on a pinbar break. At this point traders must only look to buy because a bear trendline has been broken earlier and the low has been tested. This was correctly followed, slightly late though, had gone for an expensive toilet break. J
3:30 Exited almost at market close with a windfall profit. However, elation had set in and made the earlier mistake of immediately going short. Probably this bad trade might dig into today’s windfall.


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 iqgod 
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The EURUSD trades taken at 3.1000 etc. were wildly profitable, but since they were paper trades I did not monitor my positions at all. Let's review these trades:




This does diverge from the seriousness of the trade factor but I was sort of in a buy-and-hold mode mainly because of lack of time to monitor these positions.

A few astonishing things happened over the past few days starting from 7th March:

1. I entered long on a limit order at 1.3100 and was filled at 1.30995
2. The price moved in my favour in 1.3290. That is 190 pips of sheer profit left on the table or $190 on one full contract. No time to enjoy the sweet fruits of labour as I had not checked my price charts till 12th March.
3. On 12th March price was hovering at the same magical number of 1.3100 and was heading even lower. I was bullish as projected at that time and hence I entered limit buy orders at 1.30900 and 1.30850. Both orders were executed and price ticked up again to 1.3191 giving 90 pips of profit per trade, i.e. a total of $270 on the three contracts I was long on. On the table again since the market started ticking lower from that point.
4. The price dropped like rock and hit 1.3030 but surprisingly did not hit my stop which was placed at 1.3025 (which I referred to breezily at that time as much much lower than 1.3050)
5. The bar where I placed the three red arrows was deemed as an ideal place to go flat – mainly because the huge bear trendline is still not broken – thus a round number such as 1.3000 or 1.2950 would be a good place to initiate long trades. Repeating the rules: Never trend countertrend until a major trendline has been broken, and even then only trade with trend till there is a retest of the old trend’s extreme. (an Al Brooks quote)






I also realize with this post what a great thing it has been to start a journal here, contest or no contest. Analysing the trades for the benefit of other traders (rather than benefit, I can use the word for ‘review’ of other traders, because there are greater eyes than mine who see these posts too) makes oneself a much better trader and brings to light the nuances which otherwise would have been lost in a will-o-wisp.

Hindsight shows I traded great, but hindsight is not a trader's tool :-) here is the chart while I was typing this post:


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 iqgod 
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I don’t quite know how to start this post. For the past two days I have been taking setups with low probability, not waiting patiently (which used to be my number one strength, see plan). I have been procrastinating writing this - the reality is that I have not followed my plan and momemtary lapses of discipline have been cosstly.

As the chart shows, I took a HUGE number of trades in the chop area. Paid my broker handsomely. Put simply I committed the cardinal mistake of OVERTRADING.
The other mistake I made was the good ol DEEP FREEZE. Observe how I bought a top on 16 March at 13:55 and then sat through some ugly action where the price fell to the downside off a cliff. And subconsciusly I was ANTICIPATING a fall earlier and don't know why I took the flimsy trade.


As price did the Great Indian Rope Trick by rising in a seemingly solid manner after breaking a steep trendline and posting a lower low, and then stayed above the 20 EMA for a dozen bars I got some stupid courage and bought a futures contract with my swing capital.
And then I watched. And watched. Price did a merry waltz and I was its partner. It would fling me, tilt me, left me gasping but I would not let go its hand. Overtrading was like going around the edges of the ballroom asking the shy women to dance. Hardly a thing to get a kick out of. Now this was the opposite – a non-stop sweaty fling all over the place with all the excesses. Neither of it was fun.
An old habit. I now need to pull out my capital out of my broker’s and hoard it up in my locker until I am profitable on paper again.
I think I should have Madonna playing in the background while I trade. What else but the song FROZEN.
I’m frozen….
You only see what your eyes want to see
How can life be what you want it to be
You're frozen When your heart's not open
Oh no… I am still long and will be margin called by my broker again on Monday I guess. A trading account’s funeral is no place to burst into song.


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 iqgod 
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Is Trading Profitably (capitalized) just a temporary phenomenon? After being a trader for more than four years, after having used many strategies, even seemingly great ones which are based on price action, it took me just a fortnight to give back all my profits and go deep into red.

When I entered trading with its magical illusion of untold riches, easy money and a life full of free hours to do whatever I wanted to do it all seemed so very easy. Now I realize that it is the hardest easy money I ever made.

I discovered trading in the middle of the recession, when the intraday market moves were wild and ‘glacial’ (as dbphoenix had once said) – no order seemed applicable and all you had to do was become adept at riding wild beast and – I could easily get off the beast before it threw me off its back. How could I have missed all the action all these years of my life slogging away at jobs and obeying masters when the free life awaited me?

I entered the arena full of punch and ready to take on the market. How easy it all was. Within minutes I had made thousands and was secretly laughing at myself at the great foolish world passing by like one great herd that went to offices, slogged, made a career and brought home a regular pay to raise a family.

The random luck did not last. I lost more than I had ever made over a period of two weeks in five minutes. Needless to say I had become cocky and had increased my position size manifold.

I discovered trading books. I ‘learned’ that this was a necessary phase – that I need to pay the market its ‘dues’ before I could beome profitable. And how could I become consistently profitable? By learning the ‘secrets’. That was how most trading books were titled anyways. It sank in that I had to be on the ‘other’ side to make money. I couldn’t be an ‘insider’ nor could my money be ‘crooked’ or ‘manipulative’ but I ‘realized’ that everybody in the game making money ‘knew’ what was going to happen.

Enter technical analysis.

The crystal ball.

The ‘secret’.

I locked myself up and I toiled hard with the books (too many to name, literally hundereds of books have passed under a pair of eyes multiple times). I learnt that indicators are ‘evil’ and ‘price action’ is the way to go. And when I actually tried out my new found knowledge it all seemed to work.

Armed to the teeth. Ready to go into battle.

Except.

I had forgotten that a good soldier needs chinks-free armor.

Such was my confidence that I entered and lost. Entered and lost. What would appear to work on paper suddenly became an anxious ‘please work, pretty pretty please work’ plea to the markets.

Money flew even more from my account to the market – the confidence gained with bits and bits of knowledge was turning me into a desperate person with a desire to get rich quick.

It would work once twice thrice and then I would get cocky and take it another time (where I would have increased my size four-fold) and immediately go under water. It was freezing down there. No stops. No sense of reality. Just looking frozen eyed with hands turned into cement blocks unable to click, eyes unable to cry for the fear of missing a reversal – it will come now, soon, and I will be richer and free.

In fact I gave away all the freedom in the world in this nauseating quick ride to ‘riches’. I became a walking ghost, unable to think rationally. A possessed man who would think of nothing but the markets. Perhaps the direction was right – I was learning the ropes, but I was learning nothing about myself. All my dormant negative qualities had come into play. The market exploited all of my insecurities.

I then entered a Utterly Confused phase. I had such acute knowledge which I was sure no one in the world possessed (really? With all the books bought from Amazon?) I would enter an order and quickly take a tiny profit and convince myself that I did the right thing because so many things were looking dicey about this trade. I would not give it time to move at all. My five second trades became a joke at the brokers’ offices when I was on the phone. A surprised female voice would say ‘But sire you JUST bought this and now you want to sell. The market is still open for another four hours – why don’t you wait?) But no, the evil forces would get me. By this time I was using stop losses. But they KNEW where my stops. Or so I thought. Why else would the market momentarily slide off a cliff, dive into my stops and then go straight up to its platform where it had bungee jumped from? SOMEONE was tipping off SOMEONE and all these SOMEONES had greater resources, were closer to the market forces, or were somehow scheming and were on cohorts with each other to get me. They would always be there lurking and trolling and would personally empty my wallet, just like a mugger on the lookout for a single lone person walking down an empty alley.

Finally I thought of giving up. it was a losers game anyway. All who made profits were insiders anyway. Industrialists. Or politicians who made interest rate cut announcements. Or manipulators and operators who sold stocks in round-robin spirals and then suddenly brought them down by ‘bursting the bubble’. What was I doing in their world donating my hard earned clean white precious limited money?

I became the butt of jokes of my colleagues. ‘So how much money have you LOST this week’ (Chuckle!)

Now I wish to thank them for their insults. They were what kept me going when no hope was left.

I discovered many things all at once. And they had nothing to do with technical analysis though it was the bedrock and could be trusted because all of these people used it. And these people were no ordinary people. They were harbingers of hope – messiahs who had the power to heal my wounds.

I healed after long therapies.

The words of some people became precepts, tenets. They were conduits who enabled me to make the LEAP OF FAITH. That something as flaky as technical analysis could be trusted as a framework to take decisions. They made me write a plan. They became my Drona (a guru in Indian mythology) in self-study. They made me learn money management. I however kept avoiding a few things here and there and thought I could ‘beat the markets’. I do that till this very day. I am not yet a trader. I just think that I need to overcome a ‘bit of’ a psychological weakness. I disobey my rules I have laid down so firmly. The markets then teach me sternly. Sometimes they reward me for breaking the rules, but I soon realize that I am a goose who was being fattened for thanksgiving.

I discovered dbphoenix, Wyckoff, Semantics of Magee, various members of the James16 group, deep and hard to decode Al Brooks (but priceless and rewarding when you have the ball of wool unraveled and woven together again!). I ACQUIRED them but had no taste for them (they were all bland, not nearly as exciting as all the ‘secrets’ trading books) ,earlier until I tasted these bitter truths.

Like life I learnt that the values in markets remained the same. The teachings became a religion, the books became scriptures, analyzing the markets was a stream of consciousness thing. All the wisdom that parables taught in the real world was applicable to the markets manifold.

And this is what happened in the past four days. The ominous rumbles of getting to a blown account were almost apparent, but I have been unable to stop the destruction. No amount of technical analysis in this world can help me if done in such a hotch potch, bit by bit, patchwork methodology. The plan has to INTEGRATE all the necessary things and tie them into an elaborate knot - a proper unambiguous strategy for entry and exits, money management and many elements of discipline defined to their very minutest details. One loose thread and the parcel of your pile of money goes down the never satiable black hole of the markets.

I have blown yet another trading account in the past four days. And I know that I can’t love myself because I have no one left to blame.

Sigh! Sometimes I wonder if the investment of so much time, energy and concentration will EVER payoff (a voice in my head says ‘It will, it will, you need to …..’ ) Many voices start talking here. A mind becomes a schizophrenic entity before it reaches a pure state of realization. How far beyond that state is I do not yet know. But all I know is that I have made my journey much harder than it needs to be by being stubborn. By not flowing with the markets. Like a stiff oak tree which comes crashing down in a gale rather than like the reeds which bend with the wind in the willows.

I can hear the market burp greedily and whisper to me ‘So long and thanks for all the fish.’



I am posting my charts of entries and exits, where it is painfully obvious how I entered at the exact wrong times, had no stop losses and donated teh maximum amounts of money that were possible in the range of the day just because I thought that the market would 'come back' and its 'just another pullback before the major reversal'. I have been too depressed to post for the last four days.

Your warm comments will be most welcome. Even if they are a friendly way of telling me I am an idiot.








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 Anagami 
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Hey IQ,

Very painful to read, IQ... but reality for most of us out there. It's a struggle and the margin for error is close to zero.

If there's a ray of hope, it's that you are NOT trading the Al Brooks setups correctly. Study his 3 new books, particularly the Reversal one. Look up the chapter on best trades. Pick 2 types. Study them religiously, become an expert, paper trade them profitably for a month... AND THEN go back to live trading and kick some ass.

"The mind is its own place, and in itself can make a heaven of hell, a hell of heaven." - Milton
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 Surly 
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IQ - thanks for your honest post, hopefully you can take solace in knowing you're not alone - many (most?) go through the stages you've been through. A year or so ago I came across the following post (from FB123) and I found it helpful. I don't know you at all so please don't take this advice as prescriptive - its just something that resonated with me. If you find it helpful, great - if not, well, it didn't cost you anything...:

...................
You are missing one key thing that you need to be a successful trader. I wrote about it in another thread, but I'll state it here again.

What you need, and what you lack, is a "shut off switch". You need an internal mechanism that makes you STOP TRADING when you are screwing up. It is amazing what a difference a simple half hour break can do. If you had this mechanism, and if you had actually walked away while you were losing, you would have regained your sense of perspective and either come back successfully for the rest of the day or else taken some time off and eventually come back the next day, or the next day after that. Instead you continued to trade and took large losses.

The only advice I could give you is to actually visualize yourself placing a bad/stupid trade. Visualize yourself getting angry about it, and placing another one, causing even more damage to your account. You need to visualize this scenario because it IS going to happen.

Now continue with the exercise, and visualize yourself stopping and walking away. See yourself calming down, and then returning to the computer in a restful state of mind and doing whatever needs to be done.

There is no point in only visualizing positive outcomes and great trades. Those things are important, but if you don't prepare for and practice those times when you are going off the wall, you will not be able to handle them when they occur.

It is ridiculous to expect that you can trade without making mistakes, and equally ridiculous to think that you will never get mad at yourself. The #1 thing that successful traders have is an internal "self monitor", that allows them to analyze themselves (not the market), and stop themselves when they are screwing up.

When you screw up, the goal is not to fix whatever mistake you just made and get the money back, the goal is to make yourself WALK AWAY. You can't possibly fix your mistakes in an emotional state of mind, so step #1 is getting away from the computer.

If you ever decide to trade again, make sure that you spend a heck of a long time visualizing and practicing what I said. You need an internal shut off switch, and if you don't have one naturally, then you'll have to practice getting one. If you can't do that, then for god's sake just walk away from trading because you are 100% doomed without this ability.

(And by the way you're absolutely right, the market IS literally out to get you. It is nothing more than all the other traders in the world doing actions that are specifically designed to screw you over and part you from your money.)


... one more thing I will add, for those that are trying to learn how to do control themselves properly:

Take a look at Tiger Woods. The reason that Tiger is the #1 player in golf is not because he is more skilled than the other players, or because he can hit shots that they can't (although both things happen to be true).

The thing that sets him apart is his mind. If you watch him play, you will see him hit a terrible shot many times per round. Sometimes it's really bad, like 50 years off line and behind a tree. Whenever he does that, he lets out a loud curse, slams his club into the ground, and looks like he just swallowed a raw egg. The man is a perfectionist after all, and he expects every shot to be right down middle of the fairway, even though he consciously knows that this is impossible. This is very similar to trading... we all expect every trade to be perfect, even though we know it can't be. And that's why we get mad when we screw up.

The thing that makes Tiger special is not how he reacts to that shot, it's how he reacts to the NEXT shot. The next shot is always taken with a fresh mind, as though the last mistake never happened. And if he makes another mistake on the second shot, then he curses again - but the third shot is not affected, and so on. No matter what, he is always "grinding" his way around the golf course trying to shoot the best possible score that he can. I have seen him score 3 bogeys in 4 holes, and then pull himself together and grind the next 12 holes for par, followed by a finish with a few birdies. That takes a lot of mental discipline, because most people would fall apart after those first few holes went badly and wouldn't be able to grind out two thirds of their round just making pars after that, before the birdie chances came around. Many players would try to get those bogeys back right away because they couldn't stand the feeling, and would therefore end up pushing it and making even more mistakes.

Tiger also leads the PGA Tour in par saves, which is emblematic of this ability that I have described. A par save only occurs when you first shoot a really terrible shot or two and then pull out a really good shot or two to save par. There is nobody in the world that has ever been as good as him at this. Other players make a couple of bad shots, and before you know it, they are dropping shots left and right, doing stupid things, and shooting themselves out of the tournament, but he never does that. That's why he's almost always near the top of every tournament he enters, and why he has only missed a small handful of cuts in his entire career.

The next time you decide to trade, visualize yourself approaching the screen the way that Tiger approaches the course. Know that you are going to screw up, but make it your #1 priority to always clear your mind before the "next shot", or in your case, the next trade. Personally I try to visualize myself trading the way that he plays golf, which is why I have trained myself to immediately walk away when I do something stupid. It helps a lot.

Seek freedom and become captive of your desires. Seek discipline and find your liberty. - Frank Herbert
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 otazaide 
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Thank you so much for sharing. It takes a strong yet sensitive soul to bare it all. Now, at least I do not feel so isolated. There are people like us who are struggling to make the hardest "easy" money.
I agree w the previous post about the mindset being key in trading and I guess in any endeavor. I am reading Market Mind Games by Denise Shull who had a webinar here on futures.io (formerly BMT). It's a good book too re: treating trading as a sport. She recommends getting plenty of sleep, good nutrition, exercise and taking breaks from the screen. It just makes sense that you need 110% energy to focus on the markets. Of course this is all easily said than done but we are all works in progress especially in trading.
Thank you again for sharing, it is much appreciated.

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 Cloudy 
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Thanks for your thoughts about your trading journey however rough at the moment it is. I as I'm sure many others have felt similar. I have the same thoughts about the markets being "rigged", run over by institutional HFT, manipulated by the Fed and corporate and political interests etc. Like it's a jungle with a bunch of booby traps at every corner with fakeouts and whiplashes, etc.

My comment about your charts. Is there another instrument you could trade, or make use of a different type of chart(tick)? Is there an optimum time period to trade it? Just my opinion, but it seems the the first three screenshots you have show a market that looks extremely hard to trade off of as it seems the market at that time isn't doing much of anything. Unless you have the vertical proportion of the graph condensed the bars look really small and hard to see much of any price action and it's stuck at the ema too like a vine. Brooks himself says extremely tight trading ranges are hard to trade I've heard in his live webinars. Of course, the last screenshot looks much better to trade.

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  #32 (permalink)
 iqgod 
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The support I received was tremendous.

Thank you to all who posted inspiring replies.

I was able to recover my 'winning streak' today on a live account at a much much reduced size:





I couldn't resist posting this - I am full of gratitude.

I also attended FuturesTrader71's seminar yesterday on Big Mike (set my alarm clock at 2 AM India Time :-) ) - it has been perhaps orchestrated by the gods to be so timely and the topic was what was needed to imbibe a healthy dose of common sense and perspective again.

THANK YOU BIG MIKE. THANK YOU Surly. THANK YOU Anagami. Thank you Cloudy. Thank you otazaide for making your first post on Big Mike for helping me.

You guys don't know what you collectively provided me with. You might have done the equivalent of just saving Holland from flooding with your simple act of putting your fingers in a leaking dyke.

Five fingers. A miracle called a hand. Which might seem cheesy but I don't QUITE know why I haven't QUIT yet. All the magical people out there, Thank you once again.


Analysis of the day and why I took these trades:

I was long from yesterday at 810. I was expecting an upside move after the climactic selloff yesterday and after the deep lower low below 802 after the break of the major bear trendline (drawn in yesterday's last chart). Today the major bull trendline had not been broken till a pinbar formed with a top at 825 and the market went sideways thus breaking the bull run. I covered at the break of the bull trendline at 816.

10:00 AM

I was conservative.

That is to put it mildly.

I was burnt, bruised, maimed and mauled by five days of unending movement against me each time I took a trade and had almost blown my account to bits. I cannot recollect which time this was out of the many blown accounts. I have basically lost count. Event this time. Inspite of the solid plan. Because I froze. Like always.

10:30 AM

Hence even though the market had printed a clear higher high and a trendline could be drawn and I was looking to get long.....


... I did not take the trendline touch at 12:30 PM. (Well, actually I did but kept a super tight stop loss which was foolish because between the ask and the bid by stop loss was the spread and was instantly hit.)

And since I kept squirming for losing all that lovely money by not taking that trade I entered later at the green arrow, took quick profits off at 825 where the market formed a double top.

I also hesitated to short this clear setup.

Because I still have not forgotten all these wounds.

The good things were that:

1. I entered not too tight stop loss orders except the one I have highlighted above.

2. I recognized opportunities but acknowleged that the market is random and was prepared for all possibilities.

3. As a bonus: I PREDICTED market direction correctly (but this point is meaningless and not important without context, where I got filled, and where I placed stops!)

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 Big Mike 
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Very nice post @iqgod.





Enjoy your weekend and get some sleep.

Mike

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 GaryD 
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iqgod View Post
Is Trading Profitably (capitalized) just a temporary phenomenon? After being a trader for more than four years, after having used many strategies, even seemingly great ones which are based on price action, it took me just a fortnight to give back all my profits and go deep into red.

When I entered trading with its magical illusion of untold riches, easy money and a life full of free hours to do whatever I wanted to do it all seemed so very easy. Now I realize that it is the hardest easy money I ever made...


iqgod,

Forgive me for my lack of patience sometimes, I will admit I only skimmed through. It is Friday and something in your post caught my eye on the home page.

I did not find where you mentioned your account size, but I saw "10% loss" for example. Can you share an approximate size of your account?

Or if that is not comfortable, can you describe your profit targets, stop losses, daily goals, annual goals, max drawdowns, all as percentages of your account size?

What markets are you trying to trade with that account size? I did not recognize what I saw, except Corn.

I see a few charts of 2 minutes and I saw a weekly, is there anything else you trade with? Do you have a screenshot of your total view of the markets?

I thought I saw you called your broker to exit a trade? Are you trading by telephone still?

How do you perform when sim trading?

I may be trying to answer your question from a too technical perspective, but would like to take a shot at it if it interests you. If you want to PM me instead of post publicly with answers to those basic items I'd like to see where you are.

If nothing else, you have passed the tenacity test!

I blew up more than once and kept coming back. Compulsion, stubborness, ego, insanity, all had a part in it. But so did committment, hard work, surrender, acceptance, risk management, self-management, and a whole list of thoughts and emotions that have nothing to do with trading, but can change everything.

Good luck in getting this worked out.

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 devdas 
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thanx @iqgod...i didnt saw your journal...you understand the obvious reason...limited time for even myself.

@Surly , took my wods.......one similar trait in my trading style is....i could never sit for more than 30-40 min during my trade time...that too is limited to only morning half. I trade with roaming here and there in my house...completing multiple daily task...

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 CRM5096 
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yea that Trader 71 webinar was timely for me as well

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 iqgod 
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iqgod,

Forgive me for my lack of patience sometimes, I will admit I only skimmed through. It is Friday and something in your post caught my eye on the home page.

I did not find where you mentioned your account size, but I saw "10% loss" for example. Can you share an approximate size of your account?

Or if that is not comfortable, can you describe your profit targets, stop losses, daily goals, annual goals, max drawdowns, all as percentages of your account size?

What markets are you trying to trade with that account size? I did not recognize what I saw, except Corn.

I see a few charts of 2 minutes and I saw a weekly, is there anything else you trade with? Do you have a screenshot of your total view of the markets?

I thought I saw you called your broker to exit a trade? Are you trading by telephone still?

How do you perform when sim trading?

I may be trying to answer your question from a too technical perspective, but would like to take a shot at it if it interests you. If you want to PM me instead of post publicly with answers to those basic items I'd like to see where you are.

If nothing else, you have passed the tenacity test!

I blew up more than once and kept coming back. Compulsion, stubborness, ego, insanity, all had a part in it. But so did committment, hard work, surrender, acceptance, risk management, self-management, and a whole list of thoughts and emotions that have nothing to do with trading, but can change everything.

Good luck in getting this worked out.

Answers to the Tenacity Test: (all these combined must be the Answer Key aka THE HOLY GRAIL, but if only all these knotty problems are cut through by a sharp Excalibur)

Firstly, I have gathered all the data you stated. I did not reply immediately because I did not have all this data off hand. I labored hard over the weekend. However while giving answers I will also have to add my personal story and my personal problems. I hope that by posting this on a public forum I might serve as a red flag hoisted over a shipwreck, if only to warn other sailors of the treacherous rocks lying just beneath a seemingly calm surface. So here are the facts and the story behind the curtain which even my spouse has not heard till date – I am laying bare EVERYTHING. My premise is that I have nothing to lose (no more damage than all that has been done) and everything to gain (insight, guidance, advice). That will be in the next post.

Since the Story is Long here is the Answer in Short:

<Answer in short begins>

What is my account size?

For this you would really need to read the story to get an idea of what the ride has been like.

However since this is the short answer section, it is Rs.40,000 RIGHT NOW. It was Rs.50,000 in the morning before the market opened.

Which markets?

All securities which have futures contracts on the NSE and BSE – these are the two Indian stock exchanges.
All futures on NSE.

(The Corn chart you saw was not traded by me, it was an example posted by Peter Brandt who trades on the CME).

Is my account size large enough to trade these markets?

NO NO and NO. (But at one point – yes, it was) For example the security I have traded and posted charts of is NSE:ABB. A futures contract of ABB is for 250 shares of the underlying hence if the share price is Rs.400 then the contract is worth Rs.1,00,000. The margin needed to buy / sell one contract is around Rs.35,000. Thus one contract barely fits my account size (a good point: the leverage is okay i.e. 2:1)

How much risk should I be taking?

Ideally I should be taking no more than 1 % risk on each trade.
This means I must not lose more than Rs.500 on each trade.

How much risk do I ACTUALLY take?

Well, I lost more than Rs.15,000 today. That was 30% of my existing pile. HOLY SHIT. I FEEL LIKE A WRECK AFTER SAYING THAT.

I have not stopped trading INSPITE of reaching my monthly loss limits. Post mid-March it seems limits do not
matter.

In the heart of my hearts I am a perfectionist. I would not dream of trading like this. People who know me know how logical, disciplined and fastidious I am in my daily work. But they also know how reckless, gambling-prone I am – for example give me a ‘deal’ in a shopping mall and I am hooked. Doorbuster sales are my weakness. Ditto in trading. If I feel that there is a high risk opportunity which will be worth 10x the reward, then I simply execute the trade. If I miss that opportunity for whatever reasons (not at my desk, sleeping etc.) then I take even more risk (the stop is far far away) and I still enter that trade.

I will show how I approached this exact need to be in a trade in my next post which shows how I traded today.

Which timeframes?

5-min charts.
No, let’s be honest – 2-min charts.

None of which are what I SHOULD be trading.

I have a day job.

And the Indian markets are open at the exact same moments as my day job.

I wish to be honest here – I trade off 2-min charts during work hours. And then I sit late and work like a dog to finish my day's assignments.

But it doesn’t always work this way in a job, does it? The following may sound like one big crib, but it simply is the real picture. It might sound sympathy inducing but it should not. It is fashioned out of my need to do a day job and bring steady income to support a growing family, and at the same time pursue a dream of being an entrepreneur someday when trading full-time will be the only business I am into. But right now it is a cocktail where none of the two paths are being walked on properly. Instead I am tumbling down a “middle” path where progress is noticeably absent in my work life and neither are the profits falling into place due to the reasons stated in the next paragraph.

The environment is locked down. I cannot install any trading software of course. I have to rely on google charts and free quotes on the internet. My trendlines are “drawn” by placing a stiff ruler against an LCD monitor and they are all I have… I cannot really draw the trendline and expect it to stay or stick. It is in the air.

The colleagues may ridicule me when they see me with a chart. So I take one quick look at it after every second minute (since its a 2 minute timeframe) when a bar closes. And then get back to thinking what I need to do when price gets to so an so point.

Sometimes I have to place orders before running off to meetings. Needless to say those are not really places where I should be trading anyway – the risk:reward is not right. But I am worried that once I get into a meeting
I will have no chance to place an order. So I go ahead and place the order anyways.

I use a mobile to trade, but it takes time to login, locate securities, enter trading password etc. The session times out if I just leave the connection on and do not trade. Hence I sometimes have to call my broker via telephone to execute orders. Sometimes their lines are busy. And I helplessly watch price slipping away from green to red. And all the while my trades are “right” (except that this may be a hindsight bias because I haven’t told my broker a target price and stop just yet) – i.e. price hits my target price but often then goes the other way. Sometimes the brokers lines are busy even though I am free to close the position. Then as losses deepen and the account starts to bleed, I freeze.

Where are my stops?

Read the above. And below.

Why do I behave this way?

At some points I feel my understanding of the markets is so complete that THERE ARE NO STOPS. Of course there are mental stops, but then they are constantly moving like a hazy mirage in a heated desert – a mound of sand (price) shifts due to the market wind and the stop dune shifts as the market changes structure, and I am too blinded by the heat haze to notice how really far price has come. Till I get a call from the broker politely informing me that she is closing my position if I don't transfer funds.

Deep inside I KNOW I should be trading the daily chart, but the quick reaction I get from the 2-min and 5-min i.e. a feedback loop is “absent” on the dead daily chart. But I also know that it is just an excuse and I want the lower frames for a kick I get.

In simulated trading environments too I behave EXACTLY the same. In fact losing money in the blender of the markets has shredded my heart so many times that real money and sim seem exactly the same right now. The numbers are all enticing even on sim. On both I go full tilt. Period. (Sigh! Which is why I fail, which is why I fail)

Goals?

I want to double or triple my small account in one – two months.

After that, I solemnly promise myself, I will risk only 1 % of my account. (The devil inside me chuckles, satisfied.). Then I want to make Rs.5000 per day. (Which is a wrong notion in itself - setting expectations from the market on a day to day basis - I need to define it on a more longer term basis such as Rs.1,00,000 per month where I have just multiplied the figure by 30)

It is as stupid as that. I know it is gambling but then somewhere inside my monkey says that maybe I will hit it
lucky and then you can go on being a saint with a larger account size.

I have not yet learnt. I have not yet learnt in the true sense and spirit of learning.

</Answer in short ends>

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 iqgod 
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Prologue

Here is the longer story, the behind the curtains of the mind, a peep into a room lit with the author’s own candles:

As stated earlier, I started when the recession was at its deepest. I was new to the markets. I did not know a and hence my approach was like an amateur approaches a playing field and this ‘this is easy’. My mutual fund investments were at less than half of what they were worth and still sinking. I was mad at the markets and trying to avenge my losses. A neighbor had given up a cushy job as a manager and was making a living trading and teaching the ropes of trading. I am prone to not trust people and I am stubborn and bookish and wish to do things on my own, hence I started off on MY path of learning. Through books.

Since I was just ‘testing the waters’ I started off, I reasoned that this business just involves having balls of steel.

No wimpy men (or women!) here – just high testosterone fuelled, cash loaded, consistent winners.

Losing was baaaad. Only fools, wimps and people who chickened out lost.

If you had guts and adequate money, the fluctuations of the markets would turn into gyrations that allow your stockpile to zoom up like a rocket.

Then rinse, repeat. Compound interest with a new meaning.

E=MC2

Exponential equals More Trading with Capital x 2 times the guts

Old Albert had it up his sleeve all along.

Often I was just incompetent and did not know what I was doing. With no target to aim at I just shot from the hip at every new discovery I made. No sim here. All live.

If I had all that money from my five or six trading accounts I could be a breakeven trader. Now, just getting all that capital back will take me a long time.

The total losses run into around Rs.5,00,000. Ironically my capital today stands at Rs.50,000 (nay.40,000 once the day will close, so I better speak fast) and it is exactly at 10 % of my original booty. Go figure compound interest in reverse.

The loss of confidence is incalculable. True I have gained lot of knowledge and feel confident yet, but these demons are so unassuming and subtle that I do not know if I may fall prey to them anytime, at any point of the trade. Sometimes they (demons/ monkeys whatever you call them) visit me when I am at my peak feeling invincible; sometimes they work their way quietly while I am too tired and too sapped to protest; but many times they are driven by me as a result of GREED and more GREED.)

Each time I turn into a accusing, finger pointing loser I give these excuses (maybe some of these are painfully true and need to be addressed till which point I have no business to be trading):

1. I did not find enough time to analyze the market because of family chores.
2. I was ‘right all along’ – the stop did me in.
3. I did not have balls of steel and chickened out.

One conception I feel which has a truism to this very day is worth mentioning:

4. I did not move fast enough to assume the risk once the trade opportunity presented itself. Or I did not assume the risk, and did not move at all.

Reasons for this were (and a proposed solution):

I had been bitten hard by the booby traps the market had placed along the way and by the time this trade presented itself I was
Hence, the twin morals: LIMITING LOSSES PER TRADE + LACK OF PATIENCE TO TAKE ONLY THE BEST TRADES

Thus, risk management and self-management.

Effects of these misconceptions:

Once I was just about to put my money in some stocks that I had analyzed and decided they were ripe for shooting up. At that time I was reading Channel Surfing / Balance Dynamics by Michael Parsons.

At this point my father walked over to me – the money was needed for a new family apartment. Without second thoughts and being a dutiful son I took a payout from my trading account and I handed it all over. And miserably watched those stocks shoot up after the Indian Elections where the stock market gained 2000+ points each trading day moving from 10,000 to 14,000+ points. I watched in agony – my money WOULD have doubled, tripled in a couple of days.

Such is the nature of markets to present opportunities to even the unprepared and unskilled. Yet I keep feeling the forebodings of ill-luck each time (which may not be perfectly true since luck favors those who are prepared.)

I have often watched 10% of my account disappear. Once I watched 100% of my account disappeared (even more, since I answered a margin call and transferred more funds after a bad trade gone really bad). I also watched the trade come back soon after and felt even more agony of having my long term stop… I felt hunted and deceived.

Even since those few trades I have treaded with SUCH extreme caution that it has resulted only in piddling profits.

Some Truths I have Learnt (and some myths that I have unlearnt):

It is only now that I am realizing that the market is an untamed beast – to trade takes an incredible amount of mental discipline, being on the block for more hours (your day job seems like a breeze after the grinding discipline and energy needed for the markets).

The beast cannot be tamed.

It can be observed and its characteristics can be decoded in bits and pieces. Even then it cannot be predicted.

The only thing that can be done is you can come prepared for ANY eventuality. And that involves multiple things.

And all those have to do with you and nothing to do with the market.

You can eat healthy, sleep well, and then show up in the forest OR not come to fight the beast when you are not in the prime of your health.

You can decide how much weaponry you will hurl at the beast. If highly leveraged, it adds to walking over a rope bridge over a flaming river while in the fight. Few can survive such battles. Or you can decide not to use leverage, lose no more than 1 % on each trade. And put your feet on the solid ground and then fight the beast.

What makes more sense?

True that over the flaming river and on the rope bridge bring more honors to the warrior, but then who counts the corpses littered on the bridge? Which legend is celebrated for becoming a mere statistic? Taleb and Darwin ring true at such points.

You can select the timeframes to trade. Choose a quieter life more in tune with your inner being rather than going hyper on lower timeframes thinking you still have the vigour of a teenager. (And you may, but that is an entirely different story for now).

You may make wrong moves, predict the beast wrongly, but having your armour ready (STOPS, hard stops, in the market) would save you from most of its claws and leave you alive for many many battles to come.

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 iqgod 
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I can never forget this chart as long as I live:





It contains all the elements I have been plagued with in my trading life.

You have the privilege to observe, with commentary:

1. How I broke my rules by not waiting patiently for setups

2. How I became cocky with consecutive wins and increased position size.

3. How I could not devote my full time to trading, and missed opportunities to exit at a favorable price. Since I had blown my account with my first broker and I was trading with a shrunk account, I was using another broker who had a weird product which I was not fully familiar with and which allowed more exposure by placing a market order alongwith a stop loss order but no way to put a corresponding target price i.e. you could execute a target order only as a market order - there was no concept of OCO orders :-(

4. How I froze after missing the place to exit at a profit, and didn't take a partial loss - instead I let the trade sink for a full stop loss hit.

I just received my trasaction statements. I am down more than Rs.15,000 after taking everything into consideration.


AND I do not know WHY I executed any long trades to start with. I had decided that today was a down day based on the opening price action and the daily chart as marked below. Once price forms a double bottom either today or tomorrow, its only THEN that I expect it to go up to test the top spike of this spike and channel range (a three push wedge too) I have marked.


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Billbb
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I am starting this entry with these series of rules because they are the guiding principles the journal will be based on:

You will make more money if you avoid certain types of trades.

If you can’t resist taking the less optimal trades and blame it on human nature it means that you are losing discipline and are not following your plan,

The most important thing to note is that trading counter-trend will result in missing the “with trend” trades. In his case money not gained is money lost.

Don’t do countertrend trading until after a major trendline break with momentum and a retest of the trend extreme.



Im just trying to get that image of a falling chainsaw out of my head...ouchhh

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Billbb
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I can never forget this chart as long as I live:





It contains all the elements I have been plagued with in my trading life.

You have the privilege to observe, with commentary:

1. How I broke my rules by not waiting patiently for setups

2. How I became cocky with consecutive wins and increased position size.

3. How I could not devote my full time to trading, and missed opportunities to exit at a favorable price. Since I had blown my account with my first broker and I was trading with a shrunk account, I was using another broker who had a weird product which I was not fully familiar with and which allowed more exposure by placing a market order alongwith a stop loss order but no way to put a corresponding target price i.e. you could execute a target order only as a market order - there was no concept of OCO orders :-(

4. How I froze after missing the place to exit at a profit, and didn't take a partial loss - instead I let the trade sink for a full stop loss hit.

I just received my trasaction statements. I am down more than Rs.15,000 after taking everything into consideration.


AND I do not know WHY I executed any long trades to start with. I had decided that today was a down day based on the opening price action and the daily chart as marked below. Once price forms a double bottom either today or tomorrow, its only THEN that I expect it to go up to test the top spike of this spike and channel range (a three push wedge too) I have marked.


well, Im glad Im not the only one that does this sort of thing...allows me not to be too hard on myself.

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Billbb
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Answers to the Tenacity Test: (all these combined must be the Answer Key aka THE HOLY GRAIL, but if only all these knotty problems are cut through by a sharp Excalibur)

Firstly, I have gathered all the data you stated. I did not reply immediately because I did not have all this data off hand. I labored hard over the weekend. However while giving answers I will also have to add my personal story and my personal problems. I hope that by posting this on a public forum I might serve as a red flag hoisted over a shipwreck, if only to warn other sailors of the treacherous rocks lying just beneath a seemingly calm surface. So here are the facts and the story behind the curtain which even my spouse has not heard till date – I am laying bare EVERYTHING. My premise is that I have nothing to lose (no more damage than all that has been done) and everything to gain (insight, guidance, advice). That will be in the next post.

Since the Story is Long here is the Answer in Short:

<Answer in short begins>

What is my account size?

For this you would really need to read the story to get an idea of what the ride has been like.

However since this is the short answer section, it is Rs.40,000 RIGHT NOW. It was Rs.50,000 in the morning before the market opened.

Which markets?

All securities which have futures contracts on the NSE and BSE – these are the two Indian stock exchanges.
All futures on NSE.

(The Corn chart you saw was not traded by me, it was an example posted by Peter Brandt who trades on the CME).

Is my account size large enough to trade these markets?

NO NO and NO. (But at one point – yes, it was) For example the security I have traded and posted charts of is NSE:ABB. A futures contract of ABB is for 250 shares of the underlying hence if the share price is Rs.400 then the contract is worth Rs.1,00,000. The margin needed to buy / sell one contract is around Rs.35,000. Thus one contract barely fits my account size (a good point: the leverage is okay i.e. 2:1)

How much risk should I be taking?

Ideally I should be taking no more than 1 % risk on each trade.
This means I must not lose more than Rs.500 on each trade.

How much risk do I ACTUALLY take?

Well, I lost more than Rs.15,000 today. That was 30% of my existing pile. HOLY SHIT. I FEEL LIKE A WRECK AFTER SAYING THAT.

I have not stopped trading INSPITE of reaching my monthly loss limits. Post mid-March it seems limits do not
matter.

In the heart of my hearts I am a perfectionist. I would not dream of trading like this. People who know me know how logical, disciplined and fastidious I am in my daily work. But they also know how reckless, gambling-prone I am – for example give me a ‘deal’ in a shopping mall and I am hooked. Doorbuster sales are my weakness. Ditto in trading. If I feel that there is a high risk opportunity which will be worth 10x the reward, then I simply execute the trade. If I miss that opportunity for whatever reasons (not at my desk, sleeping etc.) then I take even more risk (the stop is far far away) and I still enter that trade.

I will show how I approached this exact need to be in a trade in my next post which shows how I traded today.

Which timeframes?

5-min charts.
No, let’s be honest – 2-min charts.

None of which are what I SHOULD be trading.

I have a day job.

And the Indian markets are open at the exact same moments as my day job.

I wish to be honest here – I trade off 2-min charts during work hours. And then I sit late and work like a dog to finish my day's assignments.

But it doesn’t always work this way in a job, does it? The following may sound like one big crib, but it simply is the real picture. It might sound sympathy inducing but it should not. It is fashioned out of my need to do a day job and bring steady income to support a growing family, and at the same time pursue a dream of being an entrepreneur someday when trading full-time will be the only business I am into. But right now it is a cocktail where none of the two paths are being walked on properly. Instead I am tumbling down a “middle” path where progress is noticeably absent in my work life and neither are the profits falling into place due to the reasons stated in the next paragraph.

The environment is locked down. I cannot install any trading software of course. I have to rely on google charts and free quotes on the internet. My trendlines are “drawn” by placing a stiff ruler against an LCD monitor and they are all I have… I cannot really draw the trendline and expect it to stay or stick. It is in the air.

The colleagues may ridicule me when they see me with a chart. So I take one quick look at it after every second minute (since its a 2 minute timeframe) when a bar closes. And then get back to thinking what I need to do when price gets to so an so point.

Sometimes I have to place orders before running off to meetings. Needless to say those are not really places where I should be trading anyway – the risk:reward is not right. But I am worried that once I get into a meeting
I will have no chance to place an order. So I go ahead and place the order anyways.

I use a mobile to trade, but it takes time to login, locate securities, enter trading password etc. The session times out if I just leave the connection on and do not trade. Hence I sometimes have to call my broker via telephone to execute orders. Sometimes their lines are busy. And I helplessly watch price slipping away from green to red. And all the while my trades are “right” (except that this may be a hindsight bias because I haven’t told my broker a target price and stop just yet) – i.e. price hits my target price but often then goes the other way. Sometimes the brokers lines are busy even though I am free to close the position. Then as losses deepen and the account starts to bleed, I freeze.

Where are my stops?

Read the above. And below.

Why do I behave this way?

At some points I feel my understanding of the markets is so complete that THERE ARE NO STOPS. Of course there are mental stops, but then they are constantly moving like a hazy mirage in a heated desert – a mound of sand (price) shifts due to the market wind and the stop dune shifts as the market changes structure, and I am too blinded by the heat haze to notice how really far price has come. Till I get a call from the broker politely informing me that she is closing my position if I don't transfer funds.

Deep inside I KNOW I should be trading the daily chart, but the quick reaction I get from the 2-min and 5-min i.e. a feedback loop is “absent” on the dead daily chart. But I also know that it is just an excuse and I want the lower frames for a kick I get.

In simulated trading environments too I behave EXACTLY the same. In fact losing money in the blender of the markets has shredded my heart so many times that real money and sim seem exactly the same right now. The numbers are all enticing even on sim. On both I go full tilt. Period. (Sigh! Which is why I fail, which is why I fail)

Goals?

I want to double or triple my small account in one – two months.

After that, I solemnly promise myself, I will risk only 1 % of my account. (The devil inside me chuckles, satisfied.). Then I want to make Rs.5000 per day. (Which is a wrong notion in itself - setting expectations from the market on a day to day basis - I need to define it on a more longer term basis such as Rs.1,00,000 per month where I have just multiplied the figure by 30)

It is as stupid as that. I know it is gambling but then somewhere inside my monkey says that maybe I will hit it
lucky and then you can go on being a saint with a larger account size.

I have not yet learnt. I have not yet learnt in the true sense and spirit of learning.

</Answer in short ends>

Try this...

Reset for 2 weeks..completely stop trading..dont even look at it...bury yourself into your day job like u never did before...that 2 weeks will fly.

Then take 1 week off of work..say u need some time off if u can...then...bury yourself 100% or 1000% into trading...relax, breath easy..see the market in a calm enviroment & state of mind.

Allow yourself a chance to succeed.

Good luck my goodman...

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 GaryD 
Orlando, Florida
 
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Wow. My answer is not one you are going to like.


You are not ready to trade live. You are fueled by a demon that wants money and wants it now, and until you exorcise that part of yourself, you will not find lasting success in trading. Your goal of “I want to double or triple my small account in one - two months” is the biggest problem I see. You do not want to be a trader, you want to be rich, and you are demanding that the markets make it so. You see trading as your lottery ticket.


There is no Holy Grail. There is no perfect system. Solving the mystery of trading has less to do with charts and indicators than it does with patience, experience, and self-control. From what I am reading, you currently lack all three.


You say you have the belief that your “understanding of the markets is complete”. Where is the proof? It is only a mirage if there is no water.


You are answering yourself over and over. You are describing an addiction, not a skill.


Trading is is a craft that takes a lot of hard work. If someone makes their sole source of income through trading, they are earning every penny of it. Adrenaline, addiction, thrill-seeking. That is not trading.


You mentioned your account size is not large enough, but that it once was. I would suggest that, no, it wasn't. Your account cannot be large enough if you trade the way you do. There is a saying, “How do you get a $1 million trading account? Start with $2 million.” Account size and margin requirements only come into the true trading equation when you know how to trade. Until then, any leverage is too much leverage. Regardless of your account size today, it can go to zero in a very short time.


You trade ALL futures? Which one have you mastered? Which do you know inside and out? You would be better off trading a high-volume stock, or an ETF, and picking only one and sticking to it. But even then, your trading methods of using the telephone support you being a position trader, and maybe if you were in the top percentage of the world, a swing trader.


But you are trying to be a day trader, or a scalper, by remote access. That is just silly. Futures trading requires the best equipment, connections and information. You are trying to ski the Olympic downhill course with 2x4s tied to your feet and a kitchen pot on your head for a helmet.


Do you really want to be a trader? Then start by taking responsibility for your actions.


My advice; Stop the live trading. Get the trading program off your computer for 12 months. Get your head together. Get rid of the goal of doubling or tripling in a month. Set your goal to finish up 20% for the year.


Practice visualization and relaxation techniques. Study chart patterns. Research better software and connections. Then come back next year, and trade simulated until you can be profitable every week for 3 months. No more real money until you can do that.


If you can't find the discipline required to become a trader, you will fail. Hope to hear from you next year. Good luck.

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 Cashish 
Miami FL USA
 
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I've been following this thread from the start and honestly couldn't figure out what was going on. The last few posts turned on the flood lights. I wholly agree with @GaryD ('s) well written assertion. I know this is a "hard pill to swallow" @iqgod ,,but this is an excellent suggestion if you wish to retain any hope for future success as a trader. This is a business where every action I take (or don't take) influences my success or failure immediately, this is compounded by very few (if any) second chances.


GaryD View Post
Do you really want to be a trader? Then start by taking responsibility for your actions.

In some weird way, you can start by stopping.


GaryD View Post
But you are trying to be a day trader, or a scalper, by remote access. That is just silly. Futures trading requires the best equipment, connections and information. You are trying to ski the Olympic downhill course with 2x4s tied to your feet and a kitchen pot on your head for a helmet.

My wife said, "what are you laughing about," when I read these lines. Although I find the mental vision of this skier extremely funny, I find it not that uncommon to find struggling traders with sub-par equipment, connections and information. Each day I compete with serious people, with serious attitudes trying to make serious money. IMO, This takes serious tools. Good luck

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 GaryD 
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You will most likely get softer answers than what I posted. You probably think I am a jerk, it's none of my business anyway, and you may be right.

But don't think I am judging you, meanwhile believeing I am a superior trader.

What could I possibly know about you and your situation?

I was once you. Here are some of my credentials;



https://futures.io/psychology-money-management/12643-you-sure-youre-trader.html#post141649








Study, have patience, take it slow, turn that tenacity into the fuel that it takes to become disciplined.

Becoming a trader is not about money, it is about understanding yourself.

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  #46 (permalink)
 iqgod 
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GaryD THANK YOU.

Since his reply is as incisive as it is as honest, and as it gets to the roots of the problem I am taking the liberty of prodding GaryD a bit further, with an aim to discover a bit more of myself.

I am putting this post in the form of a conversation because role-play brings out emotions that might be otherwise lost in a wad of prose.

If ever My demon and GaryD have a one-to-one it would go something like this: (GaryD, I have PRESUMED your replies, but please reply to this thread and correct them if needed - till then they are to be taken with a pinch of salt)

IQGod's Demon (IqGodD): I thank you for the Occam's Razor analysis, and confirm that you are dot accurate about everything you have stated about me. But I wanted to draw out some points so as to be extremely clear about my path ahead and what I am up against.

GaryD (Market Wizard): No problem. Shoot.



IQGodD: I was analyzing my goals. I had started with the goal of 'Trade with discipline and proper sizing - follow your plan; the money will come automatically once you follow your plan.' However the plan was followed only PARTIALLY and I feel that was the trouble.

GaryD: Not just that, it was also executed lamely with scalping futures over a phone and with live money it was just plain irresponsibility.



IQGodD: I doubt if I had a solid methodology defined all along. A bit of Al Brooks, a bit of James16 pinbars, and a bit of risk management and trade mangement. Maybe all of it works but I probably have selected too short a timeframe to allow me to execute the plan properly. Do you feel so too?

GaryD: (Let's leave this one for GaryD to actually answer, he may probably say that I need to first experiment with the setups on sim and be consistently profitable for every week for the next three months, which is what he said earlier)



IQGodD: I have won a Forex contest on Sim. That was when I took my account to almost double in one month. But perhaps I just picked up bad trading habits from the contests. It may serve as proof that I have a good level of understanding of the markets, but under the current circumstances let's just say that I don't.

GaryD: Trading profitably where you are up for each week for three months will prove it to yourself.



IQGodD: (still plagued with thought like - "But what about Larry R. Williams who made a gain of $1100000 (11376%) in a 12 month competition with real money in the 1987 World Cup Championship of Futures Trading from the Robbins Trading Company?" But not having the guts to say it out loud right now for the fear of a rebuttal.)

GaryD: (seems to realize what is going on in IQGodD's mind, looks sternly) Set your goal to being up 20% at the end of the next year. THAT is a sane goal for a beginning trader.



IQGodD: Well, this method does seem to deliver exceptional results. I had backtested it a lot. I had tested it on many stocks and many futures on DAILY charts and it works say 60% - 70% of the time. I agree that the phone line way of scalping was dumb ass, but the same issues also cropped up when I was sitting at my terminal and execution was flawed for reasons such as slippage, bad discipline items such as not being fully prepared for the day, and on days where I was prepared and had a plan even then looking at too short a picture and glitches in following the plan because of the over-analysis (and also greed and boredom and feeling of being left behind at times).

GaryD: Be honest with yourself. Stop treating it like a game or a past-time. Get the necessary elements of discipline in place FIRST. Until you have proof that you are good do NOT commit real money.



IQGodD: I had earlier done the exact same thing that your advice recommends. I had taken a break from trading after I had lost 100% of my trading capital one day, had gone back to the study room and worked hard on studying setups, got evidence that 'this thing actually works' - however was so maimed and mauled (due to putting in real money and losing) that mental blocks stop me from taking those trades which have been proven by backtesting to be good places to initiate trades. Also exits are based on gut feel rather than any other parameters. Also, fine tuning some of the setups seems to make it work better - but then here I go deviating from my plan again.

GaryD: Hard silence.



IQGodD: Do you feel that I should be on sim or should I reduce the account size to a 'Don't care' size to ensure that I smoothen out the execution part as well? (fumbling with orders, slippage) etc.?

GaryD: (he would be the best person to answer, I can't simulate the mind of an experienced trader)




IQGodD: (promises himself to refine his plan with details, will follow his plan for the next three months.)

GaryD: Smiles.



There. GaryD will make it in the next 'Market Wizards' book. I, for one, am happy to have him visit me at this moment inspite of the heady advice (since its all the truth nevertheless, and the bitter truth is always hard to accept and swallow) and am grateful that he has chosen to respond and spend time with me.

Let not the above conversational format make you think it is written in light or jest - it is not; it is as earnest as the posts that have preceded this one, except that the next three days of the journal will be paper traded and an Epilogue will follow in the footsteps of these discoveries, harsh or otherwise which will set me on the right path of being a TRADER, following on the footsteps of many great ones who have walked before me and marked it with their Milestones.

Wish me luck!

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  #47 (permalink)
 iqgod 
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Ulp err, here is what I found about Larry R. Williams:

CFTC / NFA Levies Fines Against ...

NFA fines Larry Williams for not reporting to potential clients that, while his personal account in a promotional 1987 contest was very profitable ( a gain of + $902,599 ), his managed accounts for clients lost substantial funds ( - $6,122,281 ). This constituted deceptive and unbalanced promotional material and disclosure statements. Details in William Gallacher's book Winner Take All.

Footnote -- In July 1988, the Larry Williams Financial Strategy Fund was launched, followed in March 1989 by the World Cup Championship Fund, managed by Larry Williams, Jake Bernstein and two others. The 1988 fund lost more than 50% of its clients’ equity in barely one year, as reported in the October 1989 issue of Futures magazine. The 1989 fund also lost more than half of its original equity by May 1990.


_____



So GaryD, 20% annual returns it is, for me, as a realistic goal.

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  #48 (permalink)
 hadamkov 
Prague Czech Republic
 
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IQGod,

Thanks for such honest posts...

I would like to write but am lost for words. More and more "clever" advice come to my mind, none of them feels appropriate and anyway, lots of above is just that.

Still, your thoughts make me think of seemingly unrelated stuff. So what I am about to write may or may not apply to you, I cannot tell since I do not know you, but let me write it anyway.

Before I begin, I would like you to know that I admire your persistence.
And now, the problem. Your external motivation (not inner motivation that comes from within a man and is based on a want to be a better man, to know more, to help others, to develop). Your external motivation is money. You should know that external motivation (in this case money as a reward) devalues anything that a person does (and that applies to every activity not only trading). You seem to be addicted to reward (money in trading, good marks at school, little treats at kindergarten). I might sound weird, my apology, but if one can go even deeper into human psyche, you seem to have ingrained in you a desire for being right, being correct because then and only then you will be rewarded and, probably, loved.

I can see that you have studied about trading and markets a lot. You must have come across many books about trading psychology as well. Have you studied them? Have you studied psychology books unrelated to trading? Have you studied your own psyche? Have you tried to find out who you really are? Maybe you could try to find something that will help you in defining your own personality. Before I found out my "tool", I was vaguely aware of what my weaknesses are but after having read them on paper, I cried with disappointment. I thought I could not be such a faulty human being! But after I stopped crying, I realized that I am a faulty human being. I have realized who I am. And that helps me work around my weaknesses. It helps me define what I need to define in order to do what I want to do with success (am not speaking about profitable trading, just writing a plan and starting a journal are successes for me).

So my recommendation would be to study yourself, not the markets or trading, find out all your weaknesses (I am sure you know them but that is not enough: ) and try to find a way and learn how to work around and with them. Some of the advice in previous posts apply.


Wish you a successful journey.

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  #49 (permalink)
 iqgod 
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As promised, took all the money or the bits left of it out of my trading accounts and put it into short term CDs.

Trading Sim, I realized how LITTLE I knew of the markets. I read the market correctly around 50% of the times - I think this painfully obvious figure COULD have been obtained with a coin-toss too. Which means I have no edge in the market YET. I need to stay a humble student till this win rate goes up.

Here is today's stock chart of ADANIENT (NSE). The trades I was itching to take (my mouse finger actually twitched and hit the sell button on that first red arrow I have drawn but since I had taken a payout the order got rejected due to insufficient funds - the unfilled body of the arrows indicate that I did not actually take those trades)



I would have also made other mistakes had I been really placing those orders. Thankfully, I took the advice of the many friendly posts to stop live trading (even took to heart the not so friendly posts, but even those were super honest ones worth their weight in gold).

Thus ends a trading day where I have not made either a profit or a loss, but I suddenly feel calm and composed instead of sapped and drained. I also am able to comprehend the many beautiful things around me which I would have been unable to had I been in live trades.

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 GaryD 
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iqgod View Post
Ulp err, here is what I found about Larry R. Williams:

CFTC / NFA Levies Fines Against ...

NFA fines Larry Williams for not reporting to potential clients that, while his personal account in a promotional 1987 contest was very profitable ( a gain of + $902,599 ), his managed accounts for clients lost substantial funds ( - $6,122,281 ). This constituted deceptive and unbalanced promotional material and disclosure statements. Details in William Gallacher's book Winner Take All.

Footnote -- In July 1988, the Larry Williams Financial Strategy Fund was launched, followed in March 1989 by the World Cup Championship Fund, managed by Larry Williams, Jake Bernstein and two others. The 1988 fund lost more than 50% of its clients’ equity in barely one year, as reported in the October 1989 issue of Futures magazine. The 1989 fund also lost more than half of its original equity by May 1990.


_____


So GaryD, 20% annual returns it is, for me, as a realistic goal.


I was going to mention something about Larry Williams, not that exact article, but I had read that his performace was not so good in all accounts. Of course, what I know is only heresay.

I have attached a file I have had for awhile that lists the Worl Cup winners and their percentages. Larry Williams is way outside the norm. I guess I could add it up, but just by eye the average seems closer to around 250%.

But that is a competition of traders who claim to be the best in the world. And, you don't see the ones who entered and and went the other direction on that list. You don't see each individual trader's performance year after year on that list. You don't see their drawdowns, their setups, what the market conditions overall were like for the year.

You could have won the competition by just buying one market, take silver for example, and adding in as it moved up. But is that going to win again next year? Is it going to even make money next year? Was is "good trading"?

Attached Thumbnails
The 22 Days: A Price Action Trader shares his Journey-futures-world-cup-winners.pdf  
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 GaryD 
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iqgod View Post
GaryD THANK YOU.

Since his reply is as incisive as it is as honest, and as it gets to the roots of the problem I am taking the liberty of prodding GaryD a bit further, with an aim to discover a bit more of myself.

I am putting this post in the form of a conversation because role-play brings out emotions that might be otherwise lost in a wad of prose.

If ever My demon and GaryD have a one-to-one it would go something like this:


iqgod, I have to say that was very entertaining. Sorry for not following suit and writing the conversation I believe your "demon" would have with me. It might be fun, and I have laughed at myself for some of the comments I came up with, but too time consuming and does not accomplish anything.



Below are my comments where you requested and then some;


IQGodD: I doubt if I had a solid methodology defined all along. A bit of Al Brooks, a bit of James16 pinbars, and a bit of risk management and trade mangement. Maybe all of it works but I probably have selected too short a timeframe to allow me to execute the plan properly. Do you feel so too?

GaryD: (Let's leave this one for GaryD to actually answer, he may probably say that I need to first experiment with the setups on sim and be consistently profitable for every week for the next three months, which is what he said earlier)

Studying other traders methods is a good practice, it let's you look over another trader's shoulder and gain insight into what they do. But always remember, you are not them. For you to be successful you must learn how YOU trade profitably. There is no exact instruction manual out there. There are pieces of information, tools, that you learn, experiment with, tweak, use for awhile, then abandon. Over time you find one that resonates with you, and it finds a permanent home in your trading arsenal. And then you keep looking until you find another. You make them yours and you get to where you understand them better than anyone else does.



IQGodD: I have won a Forex contest on Sim. That was when I took my account to almost double in one month. But perhaps I just picked up bad trading habits from the contests. It may serve as proof that I have a good level of understanding of the markets, but under the current circumstances let's just say that I don't.

GaryD: Trading profitably where you are up for each week for three months will prove it to yourself.

No, trading profitably for 3 months is nothing more than a milestone. It proves nothing other than you had a 3 month period that you were profitable. The real purpose of having a goal of three months is to begin to shape your mind and your actions so that you can become profitable over the longer duration. You will prove that you are CAPABLE of doing it, but that is not where the works stops and easy street begins.



IQGodD: (still plagued with thought like - "But what about Larry R. Williams who made a gain of $1100000 (11376%) in a 12 month competition with real money in the 1987 World Cup Championship of Futures Trading from the Robbins Trading Company?" But not having the guts to say it out loud right now for the fear of a rebuttal.)

GaryD: (seems to realize what is going on in IQGodD's mind, looks sternly) Set your goal to being up 20% at the end of the next year. THAT is a sane goal for a beginning trader.

How much you are up at the end of the year is directly correlated to how well you can shape your behavior to do the right things and avoid the wrong things. If you can make 20% per year consistently, you are doing good, but don't limit your beliefs to that number. It is a mindset, that you are not here to make as much as possible, you are here to do the right things as often as possible. Forget the money, focus on being in control of yourself, your actions, your emotions.



IQGodD: Well, this method does seem to deliver exceptional results. I had backtested it a lot. I had tested it on many stocks and many futures on DAILY charts and it works say 60% - 70% of the time. I agree that the phone line way of scalping was dumb ass, but the same issues also cropped up when I was sitting at my terminal and execution was flawed for reasons such as slippage, bad discipline items such as not being fully prepared for the day, and on days where I was prepared and had a plan even then looking at too short a picture and glitches in following the plan because of the over-analysis (and also greed and boredom and feeling of being left behind at times).

GaryD: Be honest with yourself. Stop treating it like a game or a past-time. Get the necessary elements of discipline in place FIRST. Until you have proof that you are good do NOT commit real money.


I can show you strategies that backtest 90% accurate and fail horribly in real markets. Backtesting can be useful, but it is not everything.


I assume you want to trade live because you want to have more money. Ultimately, that is the reason we trade. Somehow we ignore the fact that trading before we are ready gives us less money. Every time you blow $1k on a trade you did not understand, you wasted a drawdown cushion on a method you do understand. Every loss counts for something. Even if you become very successful, you will need that money to absorb losing trades, commissions. Plus, if you ever want to scale up, you will need more capital to do that. By trading today, before you know that you are not a losing trader, you are throwing away your future potential. Making money is easier than keeping money. Stop wasting your chances by not having the patience to wait until you are better perpared.



IQGodD: I had earlier done the exact same thing that your advice recommends. I had taken a break from trading after I had lost 100% of my trading capital one day, had gone back to the study room and worked hard on studying setups, got evidence that 'this thing actually works' - however was so maimed and mauled (due to putting in real money and losing) that mental blocks stop me from taking those trades which have been proven by backtesting to be good places to initiate trades. Also exits are based on gut feel rather than any other parameters. Also, fine tuning some of the setups seems to make it work better - but then here I go deviating from my plan again.

GaryD: Hard silence.

No, I would say that the ONLY evidence that something works is when you simulated account balance proves it over months of practice. Enter wherever you want, exit wherever you want, see what works. It is not real money so you can't get hurt. That is what simulated trading is there for.



IQGodD: Do you feel that I should be on sim or should I reduce the account size to a 'Don't care' size to ensure that I smoothen out the execution part as well? (fumbling with orders, slippage) etc.?

GaryD: (he would be the best person to answer, I can't simulate the mind of an experienced trader)

It is apparent that the thought of not being allowed to trade live is pure torment to you. Why do you think that is, when you know you are losing money? Pilots train on flight simulators, the military has practice operations, golfers go to the driving range, in all organized sports they PRACTICE.



IQGodD: (promises himself to refine his plan with details, will follow his plan for the next three months.)

GaryD: Smiles.

Actually, that might be a smirk, because I'm not sure I believe you yet.




Let not the above conversational format make you think it is written in light or jest - it is not; it is as earnest as the posts that have preceded this one, except that the next three days of the journal will be paper traded and an Epilogue will follow in the footsteps of these discoveries, harsh or otherwise which will set me on the right path of being a TRADER, following on the footsteps of many great ones who have walked before me and marked it with their Milestones.


That paragraph above is pure demon talking, not some fictitious conversation. "I will solve all my problems in a few days", "I feel so much better now"... Trading sim for the next three days will not help you. Taking time off to re-think things might.

1) Forget about money, learn to trade.

2) Forget about money, learn yourself.

3) Forget about money. But, if you must think about money, think of what you are saving by not trading live and how much that will amount to over the next year. When you have saved enough to trade again with a decent account size, and when you have learned to have respect for that money, and when you have learned to control your risk and position sizes, and when you have truly earned the right to trade, then;

4) Forget about money, and trade.


Tell your demon it was a pleasure.

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  #52 (permalink)
 BarefootHank 
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I feel your pain.
Thank you for writing what most don't have the guts to write.
Your solution is simple, not easy, but simple.
1. First and foremost, your account must be funded properly.
2. YOU MUST use stop losses, unless you like donating your house, car, marriage, etc to the market monster.
3. Learn the rules of Value Area, Pivots, VPOC, and make yourself a daily worksheet tracking all of it to give you the critical 3D view of the market.
4. Incorporate not just the what, the how, the why... but also the WHEN (time cycles tool)
5. Ignore the value of money, become a mathematical robot.
6. Have NO BIAS, Use auditory alerts allowing you to get up and take your eyes off the charts and do that, A LOT.
7. Back test and paper trade your pivots. Trust Them. Play the bounces taking notice of price behavior at the pivots.
8. NO BIAS + NO EGO = NO FEAR.
9. When your setup is triggered pull the trigger without hesitation.
10. DO NOT grab the quick buck and move your stoploss in too quickly.

LET YOUR PROFITS RUN (meaning, make the market prove that it's turning against you before pulling the plug)
CUT YOUR LOSSES SHORT (meaning, when the market turns against you, take the hit, do not make the market chase you.)

And finally, understand this.
HOPE IS NOT A TRADING STRATEGY.

Paper trade with all the seriousness of a live account.
DO NOT TRADE WITH MONEY UNTIL YOU MAKE PAPER MONEY
IF YOU "GET BORED" and restless paper trading, then this business is NOT for you. (yes it is a business).

Here are the rules I STILL TO THIS DAY have to read aloud before the first trade early every morning:
I hope they help you.
- I am involved in the market for one reason only... to systematically, consistently pull money from the market on a daily basis.
- I do not trade impulsively
- I am a conservative trader
- I only trade my established setups
- I always let the market come to me
- I have my limit and stop losses in place ahead of time
- I do not chase the market, EVER.
- After losing a trade, I step back, waiting a while to trade again, if at all
- After a large loss (yes, it happens) I cease all trading for the remainder of the session.
- I keep tight stop losses and DO NOT move the stop back when the market moves against me.
- I do not get frustrated
- I am a trading robot, I am Spock , I pride myself on being a creature of pure, unflappable logic.
- I control my emotion so that it does not control or influence me.
- I NEVER "Throw caution to the wind"
- I NEVER place overnight trades and look away
- I let my profits run, particularly following the PROVEN morning reversal.
- I trade as though I have 100 cars on all the time, regardless of how many I have in.
- I am perfectly content to exit the day with $50 - 100 profit per contract ($ES_F)
- My strongpoint is the 10am morning reversal.
- I DO NOT overtrade
- 95% of all the money I have lost was from overtrading or retreating a stop loss when losing.
- I NEVER trade if I am edgy or have butterflies (for whatever reason)
- I always eat a solid breakfast and NEVER drink coffee before entering the market.
- I seek out 7,8,9,or 10 ratings (out of 10) for trading environments (locations to trade, no distractions)
- I put a minimum of 1 hour research and number crunching before entering my first trade.
- After winning a good size trade, or any trade, I know that I AM NOT INDESTRUCTIBLE
- After winning, I only trade again if the trade is one of my established setups
- I am a student of the market and will continue to learn until my very last trade.
- Of the 22 or so trading days per month, I only trade approximately 15 of them.
- I am not in this to play games, for the thrill or the risk.
- This is NOT gambling, any more than buying or selling real estate is gambling.
- After losing a trade, I do not get frustrated or angry, as it is merely part of the process, much like accepting rejection as a commissioned salesperson.
- I proceed confidently, understanding that with the consistent, intelligent use of stop losses, this is NOT a dangerous endeavor.
- While in a winning trade, my method for letting my profits run is by sitting back and looking at the big picture after my stop loss is positioned to guarantee me a tiny profit.
- I behave as a HUGE Trader every day, in every trade, in order to become that HUGE Trader.
- I am vigilant for detecting sideways action and AVOID IT AT ALL COSTS.
- I understand that I must constantly adapt to what the market is doing.
- On Trending days I force myself to let profits ride. On smaller days I take what I can get, never hoping for more.
- If I miss my entry point (for whatever reason) I simply wait patiently for a retracement or a pull back and execute an intelligent market entry, rather than foolishly chase the market.
- I never have or share disbelief of behavior or price level in the market because robots do not emote.
- I never let the size of my account interfere with my rules.
- I am watchful for sideways action and understand that there may be no 10am reversal on this day.
- I occupy myself with other tasks while trading, understanding that staring at the charts = LOSING.
- I understand that the market can and does move fast and can turn on a dime covering considerable distance.

Best of Luck.
-Barefoot Hank

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 iqgod 
Market Wizard
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Well GaryD, you seem to read my mind as if it is a transparent globe. Deep inside though I know I am finally being honest with myself. So here goes.


Well GaryD, I am a Toad.

Almost.

While I agree that first proving myself on sim would be necessary before I go live without being prepared, the reason I keep being mutinous above stopping live trading is that with the kind of scalping I do I feel that for slippage to be factored into the equation I need to trade atleast a minuscule amount. The profits will not be attractive enough to generate the emotional swings that I experienced earlier.

So this is what I did - I brought down my size from 250 shares / 1000 shares / 1500 shares (last two were INSANE sizes) to 2 shares per trade. I also took a single trade which earned me a profit of Rs.6 (around 8 cents) which I took only once I saw a risk free opportunity (rather - less risky and with a definable stop which offered a risk:reward of 1.5:1).

I am treading carefully, trading with a really don't care size - not sim because I need execution with real fills. Two shares is a token amount which does not kick my demons / monkeys in.




However, just to put my psychology in the right perspective, the following passage (some text omitted and replaced by ...) from 'The Wind in the Willows' on Toad is worth reproducing here since I have read that book umpteen times since childhood and immediately identified myself with Toad after GaryD's wise words.


Hang on with me for a bit, for while the passage is slightly longish it seems relevant just now - it is to do with the crafty Toad's addiction to motor-cars. Till this point he has had many adventures just because he gets behind the wheel and takes off whenever he sees a motor-car in sight.

Chapter 11: `LIKE SUMMER TEMPESTS CAME HIS TEARS'

(Toad speaking)

`O, Ratty!' he cried. `I've been through such times since I saw you last, you can't think! Such trials, such sufferings, and all so nobly borne! Then such escapes, such disguises such subterfuges, and all so cleverly planned and carried out! Been in prison--got out of it, of course! Been thrown into a canal-- swam ashore! Stole a horse--sold him for a large sum of money! Humbugged everybody--made 'em all do exactly what I wanted! Oh, I AM a smart Toad, and no mistake! ...'

When at last Toad had talked himself to a standstill, there was silence for a while; and then the Rat said, `Now, Toady, I don't want to give you pain, after all you've been through already; but, seriously, don't you see what an awful ass you've been making of yourself? On your own admission you have been handcuffed, imprisoned, starved, chased, terrified out of your life, insulted, jeered at, and ignominiously flung into the water--by a woman, too! Where's the amusement in that? Where does the fun come in? And all because you must needs go and steal a motor-car. You know that you've never had anything but trouble from motor-cars from the moment you first set eyes on one. But if you WILL be mixed up with them--as you generally are, five minutes after you've started--why STEAL them? Be a cripple, if you think it's exciting; be a bankrupt, for a change, if you've set your mind on it: but why choose to be a convict? When are you going to be sensible, and think of your friends, and try and be a credit to them? Do you suppose it's any pleasure to me, for instance, to hear animals saying, as I go about, that I'm the chap that keeps company with gaol-birds?'

Now, it was a very comforting point in Toad's character that he was a thoroughly good-hearted animal and never minded being jawed by those who were his real friends. And even when most set upon a thing, he was always able to see the other side of the question. So although, while the Rat was talking so seriously, he kept saying to himself mutinously, `But it WAS fun, though! Awful fun!' and making strange suppressed noises inside him, k-i-ck-ck-ck, and poop-p-p, and other sounds resembling stifled snorts, or the opening of soda-water bottles, yet when the Rat had quite finished, he heaved a deep sigh and said, very nicely and humbly, `Quite right, Ratty! How SOUND you always are! Yes, I've been a conceited old ass, I can quite see that; but now I'm going to be a good Toad, and not do it any more.

Excerpted from the following website, copyright of respective owners: 11 - The Wind in the Willows - Kenneth Grahame (1859-1932)

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 GaryD 
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iqgod View Post
Well GaryD, you seem to read my mind as if it is a transparent globe. Deep inside though I know I am finally being honest with myself. So here goes.


Well GaryD, I am a Toad.

Almost.

While I agree that first proving myself on sim would be necessary before I go live without being prepared, the reason I keep being mutinous above stopping live trading is that with the kind of scalping I do I feel that for slippage to be factored into the equation I need to trade atleast a minuscule amount. The profits will not be attractive enough to generate the emotional swings that I experienced earlier.

I am treading carefully, trading with a really don't care size - not sim because I need execution with real fills. Two shares is a token amount which does not kick my demons / monkeys in.


OK, fine, 2 shares. I did that for awhile. M6E was my weapon of choice, and $35 was a great day. But what would make it far safer, is to remove any additional funds that are not necessary to satisfy your broker's requirements. Trade an account where trading 2 shares might decrease your account 1 or 2%. Let's pretend it is $500.00. Run that account up 50%, or 500% if you can. But stay in control.

No demons, no monkeys, no toads, not even a rat. You are responsible for that account. Do not allow it to fall more than 2% in a day, or 5% in a week. It sounds horrible. It sounds pointless. It sounds boring and tedious. But, I made it through your stories, it seems only fair that you try mine.

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 peteman 
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Iqgod, I think you have missed your calling... you make a better writer than a trader

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 iqgod 
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It feels great to be in control of the mouse.

It does not anymore feel like I am reaching out for it like an ingrained reaction - the feeling of THINKING about the outcomes, the amount of risk I am taking, the amount of risk that I actually take by placing a stop loss order immediately - all these have taken the incredible amount of stress out of trading I used to face earlier.

Here is today's chart of entries and exits (I missed the last trade where I would have gone long above the break of the double top bear flag - it would have been a great trade; however this time, in Thoreau fashion, my serenity is rippled but not ruffled):





Our roots as hunter-gatherers would serve us well to make us great traders. Unfortunately we are role-playing actors in life - we are hunters in pin-stripe suites - we are conformists to a herd which is where the problem starts. Breaking away from the herd and thinking independently and calmly to decipher what those sounds in the surroundingly jungle mean, reacting quickly to the shadows moving in the forest - all those were the keys to our survival earlier, and all those are the keys to survival in the markets too.

I go back to literature again for expressing my feelings (pardon me, but ALL emotions, fleeting or great, have been already covered by the great authors) - replace NATURE with THE MARKET and all these events with the ever moving PRICE and there! you would still be describing my emotions intact in this paragraph:



Quoting 
This is a delicious evening, when the whole body is one sense, and imbibes delight through every pore. I go and come with a strange liberty in Nature, a part of herself. As I walk along the stony shore of the pond in my shirt-sleeves, though it is cool as well as cloudy and windy, and I see nothing special to attract me, all the elements are unusually congenial to me. The bullfrogs trump to usher in the night, and the note of the whip-poor-will is borne on the rippling wind from over the water. Sympathy with the fluttering alder and poplar leaves almost takes away my breath; yet, like the lake, my serenity is rippled but not ruffled. These small waves raised by the evening wind are as remote from storm as the smooth reflecting surface. Though it is now dark, the mind still blows and roars in the wood, the waves still dash, and some creatures lull the rest with their notes. The repose is never complete. The wildest animals do not repose, but seek their prey now; the fox, and skunk, and rabbit, now roam the fields and woods without fear.

Excerpted from: Solitude -- from Walden by Henry Thoreau, with notes and analysis

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 Cloudy 
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iggod, you were trading on a 2min chart? I just have a few ideas. Maybe change to a different platform like ThinkOrSwim. You can deposit a little like 1k and ask them to make sure the papertrading TOS platform is realtime. You mentioned Al Brooks? Did you read the original book or the new ones? Unfortunately Brooks doesn't mention much about stop management or psychologically dealing with losses in his book. It's pretty much a sink or swim message from his books. www.youtradingcoach.com has far more info on trade and stop management and trader's psychology.

I fully understand about freezing up. 2min is too fast not to have a stop especially if you have a lot of leverage or size. Maybe place the stop at the recent low or place where price action tells you that the reason for the trade was wrong and over. I'm still struggling with not letting bad stop placement kill my gains for the day or week. Keeping losses small while having had recent wins i.e. when the mind is in "revenge" trading emotions, is just one hardest hurdles..

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 Big Mike 
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Congratulations on your journal!



In the spirit of our March Trading Journal contest, I am asking everyone to spend a few minutes and share their journaling experience.

A) What are the top five benefits you have seen as a result of regularly posting in this journal?

B) What are the top five problem areas you have identified as a result of regularly posting in this journal?

C) Were you initially reluctant to start this trading journal? If yes, why?

D) How do you feel, overall, about your journaling experience?

E) Would you recommend to others that they should also start a trading journal?

Thank you for taking the time to answer my questions. I appreciate your posts, and I hope you have benefited from your journal. I also know that others will benefit as well, just by reading about your own experiences.

Enjoy your weekend,
Mike

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 iqgod 
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GaryD posted some hours back about the sheer types of trades available in a trader’s universe. It set me thinking about his small study in putting on a few different types of trades (actually a concoction of trade period, varying trade size to keep risk percentages same, stop size, varying the scaling method, the trader’s current personality and how well (s)he can read the market on that timeframe) showed how the equity curve could be affected (tweaked positively) without compromising risk management.



Unfortunately I made the cardinal mistake of planning the trade on another timeframe (daily) and executing the trade on a different timeframe (5 minute). I was bullish to say the least, mainly because I was expecting another leg up after yesterday’s strong momentum. I thus kept reading the market incorrectly for the whole day because of this one preconceived notion which anyway was based on shallow rooted analysis. I did not see what the market was telling me with the broken bull trend line and a fantastic pinbar below which I should have shorted.

The second mistake I made today was that since I was trading with a super reduced size of two shares, I played with my price action stop which I would otherwise have placed below the double bottom at 851 and instead leniently put it at 841 which was being untrue to my premise that I would follow the exact rules as if trading a live large account. This was my primary learning, and the market taught me hard by falling till the stop in a soft bear trending day.

The learning continues to the end of my journal. Also, I have decided not to end this journal for many reasons. mOre about those in the next post.

It also deals with how my belief systems were challenged (forever indebted to GaryD) and how I benefited from the whole excercise beyond words.

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 iqgod 
Market Wizard
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A) What are the top five benefits you have seen as a result of regularly posting in this journal?

B) What are the top five problem areas you have identified as a result of regularly posting in this journal?

C) Were you initially reluctant to start this trading journal? If yes, why?

D) How do you feel, overall, about your journaling experience?

E) Would you recommend to others that they should also start a trading journal?


Somehow, on non-trading days, I never have a problem getting out of bed in the morning. Thus, I woke up for the last day of the challenge, and decided that I wanted to make this one last post count and cover everything deep inside that I had missed in my flurry of trading.

In doing so, I hope to also end up answering Big Mike’s questions, and even though I have tried my best to confine them to the above questions from A to E, some of the answers really gel into one another.


Tip

The obscure we see eventually. The completely obvious, it seems, takes longer. ~Edward R. Murrow




On the last day of the challenge i.e. yesterday which was the last trading day, I was tempted to pose as a golfer who has successfully SOMEHOW got a 22 shot lead just by preaching and going into the weekend on cloud nine. However, truthfully I just want to talk about what had really happened in these four weeks and it has truly been nothing less than a miracle.

I got suckered into a long position on the last trading day which was a trend from the open bear. Perhaps it is good to have that happen to me on the last day, and I was trading really small .


Tip

A stumble may prevent a fall. ~English Proverb



I started the journal confidently, with (the now laughable) aim of teaching others how to trade – nay, a peep into the works of a master, a kind of Santa Claus gesture where I go ho,ho, ho helping traders left and right as I shove a bunchful of ideas down their chimneys while executing perfect or near-perfect trades with an occasional, small loser thrown in – and I probably tried hard too, with the first week of trading doing very very well. I felt that my trading on Day 1 (Thursday) and Day 2 (Friday) i.e. the first two days was in top form. I had a great plan, was following the plan – what could possibly go wrong? In hindsight, it feels ridiculous to have thought like this - I a consistently losing trader for the past four years, keeping a journal detailing how to go about making heaps of money. A pure ego trip.


I struggled on Day 3 (Monday) from the minute I woke up, blaming it on not being up to the mark for trading since my daughter had been unwell the whole night.

The day was to be one of my many BIG losers of the month.

Lost big on Tuesday.

Lost even bigger on Wednesday.


Taking the Blame On ME


My mind was in a state of denial – my stories were beginning to revolve around why the big losses I suffered as a day trader were because of something that was outside of my control took place each time.

However, GaryD, a fellow trader who I still uncannily felt that he stood next to me, said, "I don't feel sorry for you, it is all YOUR fault!"

At first glance, I was deeply pained at what this guy said - it wasn't very compassionate,
but then he said, "I am fed up idiots who come say they lost all their money and it wasn't their fault." And then he added “… and one of those idiots used to be ME.”


Tip

When the student is ready, the master appears. ~Buddhist Proverb




The blow-by-blow analysis was:

You want to know why it was your fault?

1. Well, first, you put all the equity you had in your account into the market without learning the ropes - that is very stupid.

2. Next, you chose to scalp and do intraday futures trading with a flaky connection with your broker, obviously you did not do enough research to see if this was sustainable (it might have been on a higher timeframe but honestly I WAS a fool trying to scalp this way.

3. Finally, judging from your personality, you wouldn't have eaten humble pie and taken the loss and cut your position. Basically, inspite of a golden shiny plan, the truth was that You had no plan that you were trading with, i.e. no target price or stop loss.

4. Thus, you were in denial the entire time of the trades and as a result you blew out your account."

It felt like this guy looked me in the eye and nailed me. I stood in utter shock and dismay and didn't say a word, but I knew that it was the truth.

The moral of his story was simple - I can't afford to go into denial and blame my losses on something that was "out of my control." A professional has to take the blame for all consequences of his trading and by taking the blame, I needed to learn to recognize mistakes and learn from the mistakes.



Quoting 

Alice came to a fork in the road. "Which road do I take?" she asked.
"Where do you want to go?" responded the Cheshire cat.
"I don't know," Alice answered.
"Then," said the cat, "it doesn't matter."
~Lewis Carroll, Alice in Wonderland

If I don’t confess to being wrong, there is no way I can learn the lesson.

My trading from NOW ONWARDS is my responsibility. GaryD discovering my journal was the BIGGEST thing that happened to me. I lost more shackles with which I had enslaved my mind that day than I had ever earlier in my life.


Tip

Losing an illusion makes you wiser than finding a truth. ~Ludwig Börne



Suddenly, I woke up. I was very nervous and weak in my knees. "Relax," I said to myself. It was just a dream, but when I saw my face in the mirror I found something looked very peculiar about it – it was as if the mirror looked back and showed my true self - hideous, dream-gilted, lost in darkness even though the Indian summer sun was warm and bright outside.

"How could I have ever done this?" I was thinking to myself.


Tip

You become responsible forever for what you've tamed. ~Antoine de Saint-Exupéry, The Little Prince, 1943



How was I going to explain to everyone that I had been so irresponsible? I broke all the rules within a week of starting my journal. The challenge was over and all the hard days and nights I had laboured to study trading seemed wasted. It took me about three days to regain my bearings (all these days I kept trading away like crazy and capital poured out of my account into other accounts prepared to receive it).

I made all sorts of mistakes which I want to recount (these mistakes had kept repeating themselves over and over and over until I took the courage to post them to a public journal, where they now have died their natural deaths, though theu still lurk in the shadows waiting to pounce if I am not alert):

1. I would find myself running to work, start my trading, and trade the first tick I see.
2. I would lose all my plan I originally had for the trades - the whole thing would go out of the window in a live market.
3. I would be so confused and muddled in execution (this, finally identified, was OVERTRADING) that I would lose sight of how many long, how many covered, what my planned bias was, and so much analysis sometimes told me to be bullish then bearish then bullish again etc till I would either be scratching trades or quickly reversing etc.- alas, brokers are very friendly with me because I line their coat pockets with so many pennies.
For the same reason as above, I would be fumbling with execution. I wanted to cover my position but some would be left (bad fill etc). As soon as I realized that I still owned some stock, I would try to sell it. But at that point the stock would be falling off a cliff, and I wouldn't get out. Deep freeze. Hand on the mouse and hovering. It would go down 20
points since I tried to sell it, and I would be down twenty times more than my planned position exit. At that point the mouse would click, and an order would be placed to sell. Then the stock would be turning around and racing up up and above. I would be trying hard to cancel my order. For some weird reasons I wouldn’t get it to cancel! I would assume that my orders are not reaching the exchange or something. Then the stock would be up by 50
points, but then my net position would be zero. I would have finally gotten a confirmation that my order has been cancelled and I was flat.Net result - loss. Then my HFT mind would say - How can this be?

Tip

Beware lest you lose the substance by grasping at the shadow. ~Aesop



My perfect week was over. Day 7 was scratched. Day 8 was rumbling with ominous sounds of an account blow up.

Same mistakes made again and again. Small gains, big losses.


I felt very tired that morning. Too tired to trade. Each time I did not trade and WATCHED I would have made great calls. While I realized that risk and money management was the key, the actual execution was not showing that I was a good trader.


I made great calls and did not take them – I had zero bucks to show for it.

I also would struggle with good predictions and then letting my guts fail. I would watch in pain as I would see a big winner happen where I had exited early. Also I was right in my initial analysis and then a second and third analysis did me in.

It was always – oh god, how much money have I left on the table! Which was where the doom started. Risk management thrown out of the window. Enter tilt mode.


I believe great traders never look back at what happens to a trade after they exit it.


The learning was that: If I don't have exit prices planned in advance, including stop loss and price targets, then I am not a professional trader.



Be right. Sit tight.

If wrong, out quick.


Of course I still haven’t scratched all the problems this new world made me confront. Journaling made me realize just how DIFFICULT a simple thing like trading really was.





Four losing days in a row were a sure sign that I should have shut shop and gone on a holiday.

But a demon inside would kindle the fire within and shout "Go on coward! Make money! Don’t run away!"

I tried second and third rounds of calm.

I was so calm that I missed all entries. I decided not to chase prices and also told myself to wait for a pullbacks, take risk free trades only. In short I was too conservative. My heart would see the small fortune that I was losing, and had I gotten in earlier, I could have been scaling in right now. It was torment to watch the trade profits (paper) grow bigger and bigger
with each tick and not be in the ride.

These last trades were devastating blows to my confidence levels. Having a trader tell you how to act was great, but many things have to be figured out before trading nirvana.

On the last day my biggest mistake was to argue with the tape. The market immediately showed me that it is always right.
But atleast GaryD’s words had made their mark and I was down to trading only two shares TILL I WILL BE PROFITABLE FOR THREE CONSECUTIVE MONTHS.


Although it sounds like common sense now, I hadn't bothered to understand this concept in the past. Reason being that I was in love with the setups I was trading and it was just an addiction. I assumed I knew that there would be a big move on which I would make a killing.
Competency or skills have to be honed first before putting big money into the market. Slow and steady wins the race.


Tip

It takes all the running you can do just to keep in the same place. ~Lewis Carroll,Through the Looking-Glass, 1872



I still commit sins. I try to gather my commitment and dedication and pick my self up everyday. Sometimes when I finally wake up the market has been open for
two hours already, and I think I don’t care. Commitment to a profession requires THE BEST. You sow what you reap.

Thus, this journal has also helped me to identify the patterns that were so elusive to nail down before. The problems identified are:
1. inferior trading tools / technology, 2. half-knowledge, 3. over leverage / over trading – i.e. lacking in 1 and 2 and yet making money available to the market

Thus only a few simple things seperate trader wannabes like me from green traders, professional traders. One thing at a time needs to be addressed.

Tip

If you chase two rabbits, you will not catch either one. ~Russian Proverb








I think I have learned the hard way from this month long challenge.

The most important thing is found to be adhering to the plan – obeying the rules and guidelines of a trading system flawlessly. Discipline in executing each and every trade according to the rules is the secret.

Publicly profiling your inner workings was the real deal. Thank you god that I had the courage to accept this challenge.

Now, more than ever, each time I am tempted to break my rules, I ask myself, "How are
you going to justify this in your journal entry?"

This self-introspection that has resulted from keeping a public journal has proven effective in ironing out even the smallest Achilles heel from my trading.

Simply by documenting the following things, remarkable things have happened:

1. Explain why you entered the trade here,
2. Explain all the if then else stuff i.e. your risk management parameters – why would you place your stops here? (position sizing – what is the maximum amount you are willing to lose on this trade?)
3. Explain why would you exit the trade here (target price)


It clears up the mind when you knowingly trade thinking that the world is watching your every action / inaction behind your shoulders.


Would I recommend journaling?


A big resounding yes.

While it is easy to get on the soap box and start preaching that you must be disciplined in following the plan religiously, it is easier said than done.

Recording everything about your trades firstly makes you cross-check whether you are following your plan.

When you write down the following parameters – 1. where you enter the trade, 2. what is expected from the trade (likely outcomes) , 3. what actually happened in the trade – you are actually entering an untapped unexplored realm, treading unfamiliar ground.

Believe me that this territory is SCARY. Include notes in your journal to allow you to learn from each trade, uncover patterns so that you become adept in recognizing your strengths and weaknesses.

Most importantly: SHUN the type trades in which you have been exploited – i.e. where your weaknesses have kicked in.

Note each time if you are always trading in your comfort level. Increase that VERY VERY gradually.

When your position is profitable, move your stop to break-even and never let profits turn into losses.


It is a shame that my life’s best weeks of trading did not make it into this journal, but the worst trades did – maybe the distribution was good for me and good for the journal – I concur it all has happened with a purpose from the higher powers that be.

I have finally shared my trading journey with my spouse. But that is for another post. My wife and I had plans for a celebration dinner following the last trading day of the challenge. But I was very depressed. I had just witnessed a brutal dwindling of my account and this was the fifth time. I promised a celebration would come only when I pay for it with my trading profits.

I must not get slack ever. The following proverb is worth taking to your trading desk each time to prevent precarious outcomes:

Tip

Before enlightenment - chop wood, carry water. After enlightenment - chop wood, carry water. ~Zen Buddhist Proverb


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 GaryD 
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Great job, in the shift of focus, the near immediate acceptance, the honesty with yourself, the honesty with your wife, the realizations you have had, the greatly reduced size, the desire to keep learning. Keep that up and you will find success.


About the comments I made that felt bit ballsy at the time, so much that I felt I needed to come back and add examples of my own mistakes, looking back, I had basically two groups of people regarding my trading;

RESISTANCE GROUP

There were those who said I was crazy. You can't beat the market at it's own game. It is impossible. So many people had a story to tell of someone they knew who had tried trading and lost miserably. Or, those who would not have the courage to even try such a thing. "Get a steady job, buy stock in good companies over time in a little retirement account, and some day (if you're lucky) you should have some money to retire on." That was basically the message from one of my "financial advisors". There were those who do not believe in risk in general, but yet somehow can continue to believe in luck of an account rising on it's own over time.


SUPPORT GROUP

There are those who supported me, but gave very loose guidance, if any. Most just said, "go for it", "you can do it", "attitude is everything", and all kinds of other kind, but meaningless, encouragement. There were instructors whose job it is to have everyone believe they can be succesful. I don't fault them, there is a need for a trading education. There were other traders I started to meet, who also believed what I wanted to believe, that one day we would be profitable, and they urged me to hang in there. There were business partners and others from that world who said if anyone could do it, it would be me, because I was so succesful at other things I had done that they had witnessed.


Neither group gave me what I was looking for. The supporters gave blind encouragement that was hollow, left me believeing it would be easier than it is, possibly convinced me to keep trying when I was not ready. The resistance camp haunted me, their words would echo thorugh my head after a bad day or week, and made me question my sanity at times.

Thanks for the praise, but I really did nothing other than tell you what you already knew. Who is GaryD anyway? You don't really know, I could be any level of unsuccesful trader with a bad attitude and full of self-righteousness. But, what I said to you is what I wish someone would have said to me, years ago. Someone who had been there, done that, and had advice that would actually make a difference. Someone not afraid of upsetting me if that was what was needed, and did not tell me to quit trading altogether, but told me what to stop doing and what to start doing. I have tears in my eyes as I write this. Trading has been such an emotional journey for me, I have become such a softy...

"Successful" trading can mean so many different things. But in the majority view, it probably means you make money. And in that interpretation, then being a "successful trader", you probably make a lot of it. Well, from my perspective, money has the least to do with it. If you can stay focused on the skill, not the money, and have patience, you'll find success. Stay open to the fact that it may not mean what you picture today.

Best of luck to you in your trading. And thanks for making me feel good about my decision to try to help.

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 Maisie 
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i really feel silly commenting a lot of the time as my account is in the red, i have little experience, and generally don't know what i am talking about. however there is something i am puzzled by, not just in this journal but in general. people talk *alot* about trading decision based on break of trend. however, i do not see alot of trendlines drawn on peoples' charts. perhaps i haven't looked at enough charts on the site to make this generalization. if so plz forgive me. but i thought i would mention as i would just not be able to function without constantly drawing and redrawing the absolute basic trendlines - connect the lows and highs of the day. if price starts to flag, or wedge, or do the hokeypokey, *draw* it...just kind of easier to *see*.

Du sublime au ridicule, il n'ya qu'un pas. ~Napoleon Bonaparte
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 iqgod 
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Dear Maisie,

I think you brought up a really good point; I thought about this and I do think I owe you an apology.

I do agree that I have not drawn all the trendlines that were necessary to be shown as broken and then retested - especially since this journal is on trading based on valid major trendline breaks and entry on the retest of the extreme of the prior trend. I promise that I will try to edit any posts that do not clearly portray this.

However, Al Brooks does state that he draws the trendlines for "a brief moment" and then erases them once they are no longer needed OR once it is obvious that a trendline exists without having a need to draw it - the reason he does this is to enable you to concentrate on the price action and prevent you from taking decisions based solely on trendlines alone.

I tend to agree with his discussion mainly because there are a huge number of possible valid trendlines and all of them offer trades one way or the other - i.e. all of them are tradable.

But yes, in this journal, since it is for cross-examination, dissection and also for providing a logical framework to guide the textual journal it is only fair that I should add as much information to the charts as can be accommodated for to help the reader and also to cross-check whether I am being true to my self.

Thank you for taking the time to voice your opinion, and your post was pertinent and useful.

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 iqgod 
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Having poured out my inner recesses in my last reply to Big Mike’s questions made the last reply extempore, but due to its spontaneity and the inward focus I realize on re-reading it that a more thoughtful precise reply might serve myself better – this new concise reply is being posted primarily perhaps that I can read it over and over to ‘fix’ my trading if (rather ‘when’, not ‘if’) it deteriorates.

A) What are the top five benefits you have seen as a result of regularly posting in this journal?

It brought commitment into my trading.

It quantified my core qualities – my ability (barely sustainable, on reflection), my discipline (lack of), my patience (lack of), my understanding of what it takes to become a trader (complete on paper, summative zero in implementation). It simply made me realize

1. Trading is not taking pot shots at the market at some random points while running errands.

2. Trading is not being consistent ‘most of the time’ and it is not a ‘discoverable’ science of making progress at technical analysis and then ‘relaxing’ because you have ‘mastered it’.

3. Trading is the purest form of management. Self-management, risk-management, trade-management, life-management, time-management. Other corporate versions seem like diluted watered down versions once it becomes apparent how much hard work needs to go into trading, and I don’t say that is true of timeframes are short or accounts that are undercapitalized; it probably is true on all timeframes, all account sizes.

It showed me that operating in the market is like driving in the gray fog, and made me realize that I would be alright if I just stuck to following the lights on the freeway. It made me realize how hard I made it really because I stubbornly insisted that driving on the edges of the freeway near the railings seemed better because then there was no traffic to contend with. It seems so laughable when stated like this, but this is how I thought (slyly) from all the corners of my mind about tweaks and tweaks and how foolish rules were in front of my brain which could bend it like Beckham so that by the time I was done with trading for the day I could own that Rolls-Royce by evening.

It made me competent. It allowed me to see which trades were causing my account to slide and which trades were (and I don’t mean the TYPE of trades but rather the quality and the ones executed with sheer discipline inspite of the monkey inside screaming to stop-notstart-exit-beafraid-takequickprofit-pushinmorecapitalonthissurething).

It showed me that trading is just another boring day job when treated rightly – correct trading did not invoke the sheer pleasurable emotions that were possible earlier, it did not mean come-trade-takeprofitout-relaxonbeach-goandtradeagainwhenmoneyover.

B) What are the top five problem areas you have identified as a result of regularly posting in this journal?

If I had ever been asked the following questions in the beginning of spring i.e. February I would have confidently and positively replied yes to all of these questions.

If had been asked:

1. Are you disciplined enough to follow your plan day in and day out?

Pre-journal: YES! That’s me, disciplined as a rock. Trust me to keep losses small, letting profits ride and that sort of thing.

Post-journal: NO. I need to be CONSCIOUSLY aware that I am ACTUALLY being disciplined; I need to AVOID low-probability setups like plague; NEVER risk more than the permitted amount and ONLY take the BEST setups which have a confluence of parameters going for them. I USUALLY do none of these and hence I also need to PLAN, and consider that I am NOT competent enough hence MUST have a stop loss order placed IMMEDIATELY once the setup triggers.

2. Do you have a solid trade plan?

Pre-journal: YES! I have read Al Brooks maybe twenty times, and worship it at the altar. You could say that the trade plan is lifted right off Al Brooks.

Post-journal: NO. Everything falls apart and feels like I am building a rickety two-legged stool and am actually betting my leveraged ass by sitting on it hard with no safety net or railings around to grab in case I fall. (I am VERY likely to fall…. I am VERY likely to fall… God of carpentry please let the nails and glue hold till I get up, pretty pretty please). The nitty gritties are very real only once you start JOURNALLING, else you tend to behave like Dr. Watson to whom Sherlock Holmes says “It is a capital mistake to theorize before you have all the evidence” Sherlock Holmes - Wikiquote).

3. Do you have a deep understanding of the markets – can you recognize setups in real-time?

Pre-journal: YES! In all my humility I can claim honestly that most things that the market does are already apparent to be before the market does them

Post-journal: NO. Most predictions are intuition. It is only when you WRITE DOWN the reasons that you realize how flaky they are. Penning down your thoughts serves as a bull-shit radar and filters the bad trades from the good ones. If you had not written down these things you also tend to celebrate wins as if they display your genius and downplay your losers because ‘the markets did me in’.

4. Are you an expert in some markets / stocks / futures?

Pre-journal: YES! I am already an old-timer in the markets and can discern multiple market directions in flat five minutes. So I can easily watch a hundred charts everyday since price action is price action.

Post-journal: NO. I have not proved I can watch ONE market and be profitable. Unless this first piece placement is solved, there must be no attempts to do the whole jigsaw puzzle thing by picking up all pieces at once.

C) Were you initially reluctant to start this trading journal? If yes, why?


As many would say, I always have wanted to keep an elaborate journal not just for my trading life, but also for life in general. While the benefits are obvious and clearly can be visualized, actually sitting down and doing it is another matter altogether.

The reluctance to keeping a private journal boils down to the feeling of investing a lot of time into documenting - it is personally relishing, but the benefits are redoubtable unless you religiously reread it, analyze its best and worst parts and work on improving on that basis.

Also, publicly posting your thoughts into a journal was appealing to the ego when the purpose seemed like a master writing down his daily profitability scrolls as a public service, much akin to a friendly billionaire helping all the poor traders out there (the reality was much far removed from the truth, which was blown account after blown account wherein the real trader within had difficulties making a single dime in the markets consistently).
Thus the reluctance was a mix of procrastination, doubts on usefulness, fear of expression of your deepest emotions and even plain laziness.

However, I am so glad that I overcame all of the above and journalled everything into my posts – and I mean everything – and put down thoughts as honestly as I could.

Overcoming this reluctance occurred because once I started I really figured I had nothing to lose and everything to gain, and it turned out to be true.

D) How do you feel, overall, about your journaling experience?


I think that because of journaling I am making steady progress, not in monetary terms but in getting closer to my goal of becoming a REAL TRADER.

I have stopped gambling.

I have been able to discover my bad habits, my flaws.

I have been helped by the whole community and look forward to helping others (or atleast in whatever small ways I am capable of helping, one of which is to honestly journal my experiences here without shame or fear.)

I have come about to realize what a friendly, secure, comforting, helpful, down to earth place the Big Mike forum really is. Magic seems to happen where it is needed the most.

@ GaryD, it seemed as if a fairy godmother appeared when Cinderella was at her forlorn-est.


E) Would you recommend to others that they should also start a trading journal?

YES. Answered thoroughly in my earlier post.


And Thank You everyone (advisors, readers, commentators, enlightenment-seekers, hard-working administrators including Big Mike) for reading this, for this opportunity to present myself, for allowing me to weep like a baby. Nowehere else I can forsee that this could have happened.


Quoting 


“Philosophy is life's dry-nurse, who can take care of us -- but not suckle us.” - Soren Kierkegaard


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 iqgod 
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Why am I feeling so HAPPY today? Not because I am profitable (which I am) but because I
1. Followed My Rules,
2. Was Patient,
3. Assessed My Risk BEFORE Entering,
4. Entered with a Stop Loss Order in place at a valid point,
5. Did Not Panic and Exit,
6. Exited At A Valid Point.

Here is the detailed breakdown of how I traded today, and how I plan to continue trading throughout this fiscal year ( :-) ):

1. I patiently waited for a setup over a period of two days. I did not click the mouse over so-so setups. I missed one really great setup but did not chase it and enter late. I kept waiting for the next great setup.

2. When the next great setup manifested itself I entered on a stop order one tick higher than the signal bar on 03 Apr 15:02 on a 2-minute chart. I used a 30-minute chart to assess my risk and at a low risk - high reward place I switched to a 2-minute chart where I lowered my risk even further and placed a stop at a point below the last swing low.

3. I then walked away from my computer for the next ten minutes. I have noted that ten minutes is the time it takes for my monkey to settle down my fidget control to kick in (which otherwise is managed by my monkey who readjusts stops, sees danger signs and panic exits!). I will address this issue in a later post because I need to get this worked out - what if the market shoots up in those ten minutes, provides a valid exit signal and then reverses?

4. I exited below the bar at 15:18 which printed a double top at 860. My exit happened at 859 where the bar closed. I could have trailed my sell order but didn’t because I badly wanted the profit.

Note that I kept my position size to two shares and the profit will not amount to much. However I now am simply accumulating proof that I have what it takes to be a trader.


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 iqgod 
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Unfortunately, my quote feed was gone bonkers today - I was able to see the price quote but the realtime chart displays had gone kaput.

I did try to get a feel for the price action by looking at price alone but felt handicapped.

I am sure older traders would say that you can trade off price alone (not even Time and Sales or Level II and not even a price quote but simply a PRICE i.e. the last traded price). A poor man's version of the ticker tape without the volume or the srrrrrrrrrr flow of the tape which might make Wyckoff feel out of place for placing an intraday trade but I wonder if it is still possible.

However I have become so used to having a real-time candlestick chart that the idea of trading on price alone seemed preposterous hence, as said, nil trades today.

However I would like to have healthy discussion (flaming might work, but is not encouraged!) whether this is even remotely possible, or if anyone actually goes so far as to DO it in this century.

Remember - no charts, not even volume, no ask bid either - just pure price.

(The daily price charts are still viewable of course, albeit on a computer, but just like the old timers would do it with graph paper and a sharp pencil. Only the intraday prices are in the form of PRICE alone)

Any takers?

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 TrendTraderBH 
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IQ thanks for your posts.....I've experienced your feelings and did those actions many times over the years....I even had to take a couple years off trading because of the self inflicted damage I did.

What has changed today? The number one item (not system, not money management - although I've got those firmly in place now) is psychological help (specifically a trading psychologist).

It has made all the difference in the world. The person who has helped me says his (biased) research shows that 95% of traders need this help to lay the foundation and succeed in this business (and less than 10% have the ability to do it themselves). The attributes that help us succeed in other endeavors outside trading are the exact attributes that kill us in trading (a weird but true dichotomy).

Getting the core mental/spiritual/psychological foundation re-built from scratch is what helped me. After that all the other important disciplines followed.

Still learning and still a humble beginner but getting better everyday.

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 iqgod 
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Well, I had a bad dream last night where I was either in the Alpine Meadows or the Squawk Valley (Lake Tahoe, CA) ski resort sitting on a chairlift with a kitchen pot on my head and two shiny metal poles strapped onto my feet. I was nearing the slope part that started sloping down and was 'ready' to launch myself down the Olympic Ski Slope in this gear (or lack of).

I am sure GaryD must already have cringed at my asking about whether trading is possible only based on a price alone without a real-time chart.

It probably was my demon trying to claim his territory.

Sorry for asking, really.

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 iqgod 
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After trading and posting regularly last month, and since this month began with holidays where the markets were closed for almost half of last week and the one and half days of being without a live chart I took a break and recharged myself.
However, being in the holiday mood while treating a day as a ‘working day’ is almost a disaster in the making.

I woke up early but ‘didn’t feel like it’ and was also taking care of chores so got to the market after almost half the trading day was over. Talk about the early bird catching the worm.
Meanwhile, the ‘worm’ had already wriggled and shown its downward intentions multiple time by printing a Double Top Bear Flag (5 Minute bars 09:55 and 10:50) and then a Lower High (11:45).

Which goes on to show how even small lapses in discipline have an effect on your bottom line. Especially since there was no plan NOT to trade the first hour etc. since actually the first hour sometimes brings easy opportunities.
However I did manage to take the Failed Failure of the Breakout (12:25) where a pinbar closed below the 20 EMA after a push downwards (breakout) failed and then the breakout failure failed as shown by this pinbar, below which I shorted.

I covered at almost the bottom of the huge bearish bar at 13:00. The exit was simply taken because I was afraid that this was a breakout test of the 09:25 huge bear bar which had closed at 345 and hence covered my position. I did not go long because that would have been foolish and I am not yet a consistently profitable trader to trade countertrend.

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 DoubleClick 
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A lot of nice read in this thread. Thanks guys!

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 Upupandaway 
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You just have to remember that for every "bear flag" or what not, their is someone else on a higher time frame doing something different. I dont think the "players" are watching for bear flags, or wedges or MA for that matter, which I use as well. Everything we put on our charts is a response to trying to figure out where "most" of the money is coming and going from, whether we know it or not. That is, know that we should be looking for the "OTF"

I can't stress to you enough, how important I think it is for a trader to know this. To know the different "Day Types" and to mark the IB on his chart, as well as the open. Thats whats being used by the " OTF " and that's the guy that is moving your market. So you want to play his game, and his game doesn't include MA, Bear Flags, Fib, or even Market Profile. But Market Profile is as close as I personally feel "we" can come to seeing the truth.

I think if a trader hasn't yet checked out "FuturesTrader71" they need to. I don't use everything he talks about, but I did find a great use for the IB, and especially the different "Day Types". You can tell with alot of accuracy based soley on price, what will probable happen next, that is where prices "should" go to.

Thanks for all the posts. I'm not profitable trader yet, so this is just what I think today. I think it might "add" to what you already do, maybe. I just wanted to say it, because Market Profile has really helped me. I came across it once, and passed it over, looked to complicated for myself. But sonner or later if your going to make it, you have to get inline with what is "really happening" I think.

Good luck and thanks for placing yourself out their. You have helped a great many people, and given them hope.

I'll post some pictures I keep now and show some "Day Types"

Yellow lines are the IB. I've posted three, and their are 7 different day types.

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 Cloudy 
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iqgod, I noticed on your chart .jpgs that you were trading off of a 30 min chart. And it looks like your charts only show RTH. Are you trading stock or a futures market?

I'm not sure if that's a way Brooks recommended trading off of charts. He does look at the previous day's close but mainly as targets or high low points for reference for the next RTH session of the ES. And primarily for an intraday day trading session. You seem to be trading on the 30min looking at chart expanded over a week or so, but separated by overnight gaps? I could be wrong about this, but I hadn't seen BPA traded that way..

update: never mind, I saw that you had a 5min up. So it looks fine to me. Futurestrader71 mentioned by upupandaway has great points about the 7 different day session types. Fattails has great indicators for IB bands and vwap. He has a nice webinar on futures.io (formerly BMT) introducing and explaining in general vwap. Fattails also talks about his IB band here.


(attached .jpg showing example Brooks like setup ES with one 20 EMA and then only IB range bands (set for initial 1st hour) and vwap + std devs. All the lines can be turned on or off or set at different colors and opacity etc. to one's liking)

Links to Fattail's IBRange and vwap indicators:


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 iqgod 
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Alas, @GaryD. I broke my vow not to trade huge size today.

It started like this. I have been consistently following your discussion where increasing position size puts your trading in jeopardy. I have been working hard on my strategy and it is working with two shares for over a fortnight now (which again is too less, but it is also working over longer times. Caveat: My personal skill is around 10% of the possible skill set a master like Al Brooks would possess, maybe even lesser than that.) I wished to find out if I the same rules I adhere to for two shares would still be unwavering at 2000 shares (!!!!) and I wanted to find out if I would. This was a conscious attempt to scale up to a gigantic proportion for the same intraday period I used with two shares.

I have been battling with the same emotions as @GaryD lately is, day in day out - mixing up my trading full-time ambition, desire to keep my current job for the steady income, and hence confounding both in the process since the latter needs abandoning 2 or 5 minute charts and the former needs concentrating on daily charts which entails larger stops etc.

Firstly here is today's chart:





First the good news:

I traded in the same way as I did with 2 shares. The analysis was correct and I read the market correctly without any pressure. I was calm, relaxed and outwardly at peace.

The bad news:

I did not take the next trade of the day inspite of anticipating it, expecting it and being ready for it. I became disoriented not because of the large size but something came over me and I did not take the trade.

Side note: I had already made an obscene profit.

But I am happy with this experiment nevertheless.

The experiment is not conclusive, and I still might be a ticking time bomb. (Risk of ruin calculations, etc.).


But it gave me something to live off for the whole next fiscal year even if I never trade this size for the entire period again.

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 Upupandaway 
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"But it gave me something to live off for the whole next fiscal year even if I never trade this size for the entire period again"

The above is your qoute. I'm just curious, because I dont trade stocks, but how much money do you make on 2000 shares? What was your profit? I am probable reading this incorrectly, but I'm looking at the above qoute and thinking your "saying" you made enough money today to not trade for a full year? Is that right?

I doubt I am reading this right. However would you say how much you made? If not, no worries, I was just interested in how much money 2000 shares brings, on whatever price move it was.

Thanks for your posting

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 iqgod 
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Upupandaway View Post
"But it gave me something to live off for the whole next fiscal year even if I never trade this size for the entire period again"

The above is your qoute. I'm just curious, because I dont trade stocks, but how much money do you make on 2000 shares? What was your profit? I am probable reading this incorrectly, but I'm looking at the above qoute and thinking your "saying" you made enough money today to not trade for a full year? Is that right?

I doubt I am reading this right. However would you say how much you made? If not, no worries, I was just interested in how much money 2000 shares brings, on whatever price move it was.

Thanks for your posting


Unfortunately, you have misunderstood the above post. And I am to blame for the confusion.

After factoring in the commisions etc I definitely did not make much scalping 2000 shares of a 850 ish stock. Definitely not even enough to survive for a day in my current conditions (though the sad reality of India is that less-fortunate people below the poverty-line ARE living off that amount for an entire month.).

The reason I used the word 'obscene' profit was because what I did today was 1000x in comparison to my daily 'practice volume' which is all of 2 shares.


Also I missed the best trade of the day which WOULD have offered me a truly obscene profit of Rs.9,000 on a base capital of Rs.40,000. @ GaryD I know you are coming for my hide, but believe me this is the last time I am trading such a large size. And I am withdrawing my remaining funds too.

The above statement, more simply put, means that I will have something memorable to remember (just because it turned out nicely, mind you, NOT because it was the wisest thing to do, rather the opposite!) mainly because I was able to retain the calm state of mind I had while trading 2 shares.

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 nakachalet 
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iqgod View Post
Trading Profitably (capitalized) just a temporary phenomenon? After being a trader for more than four years, after having used many strategies, even seemingly great ones which are based on price action, it took me just a fortnight to give back all my profits and go deep into red....

a personally response and personal opinion: @ iqgod

i just read and reread your post with the greatest empathy ever. and at the end, i tried to put myself into your circumstances and attempted to discover, personally how would i treat, respond, react or bewilder at each of the same sets of obstacle and predicament.

here is what i would do personally. so what you are going to read is just what another trader would react to the similar circumstances, OK? my personal responses are just my personal reactions to your circumstances, they are not meant to be better, more superior nor more appropriate in any shape or form, alright? besides, it might even be full of even bigger and more meaningless holes, thoughts, experiences and outlooks; so pls do keep this realistic fact in mind, if you will, while you are going thru my responses, K?

@ iqgod:

1--iqgod....Is Trading Profitably (capitalized).... after having used many strategies, even seemingly great ones which are based on price action, it took me just a fortnight to give back all my profits and go deep into red. you mentioned that you were trading for 4 yrs and whence was that pls?

there is a shut down setup in my trading plan; if and when three consecutive losses are incurred, that would be the end of my trading session for that day. and that is just me alright. others have different setups which are altogether perhaps much better and much more effective as well.


2--....The random luck did not last. I lost more than I had ever made over a period of two weeks in five minutes. Needless to say I had become cocky and had increased my position size manifold. i am hopeful that at this point in time, proper trading mechanisms, setups and trading plans are all in order for you to again propel yourself to the front of the class, correct?

3--I discovered trading books. I ‘learned’ that this was a necessary phase – that I need to pay the market its ‘dues’ before I could beome profitable. And how could I become consistently profitable? By learning the ‘secrets’. That was how most trading books were titled anyways. It sank in that I had to be on the ‘other’ side to make money. I couldn’t be an ‘insider’ nor could my money be ‘crooked’ or ‘manipulative’ but I ‘realized’ that everybody in the game making money ‘knew’ what was going to happen. by now, i also am hopeful that we recon that, that is also whole bunch of hot air as well--whatever most merchandizers were trying to induce the wannabes, right?


3--Enter technical analysis.

The crystal ball.

The ‘secret’.

I locked myself up and I toiled hard with the books (too many to name, literally hundereds of books have passed under a pair of eyes multiple times). I learnt that indicators are ‘evil’ and ‘price action’ is the way to go. And when I actually tried out my new found knowledge it all seemed to work.

Armed to the teeth. Ready to go into battle.

Except.

I had forgotten that a good soldier needs chinks-free armor.

Such was my confidence that I entered and lost. Entered and lost. What would appear to work on paper suddenly became an anxious ‘please work, pretty pretty please work’ plea to the markets.

Money flew even more from my account to the market – the confidence gained with bits and bits of knowledge was turning me into a desperate person with a desire to get rich quick.
ooooouch.... and more oooooouch....


It would work once twice thrice and then I would get cocky and take it another time (where I would have increased my size four-fold) and immediately go under water. It was freezing down there. No stops. No sense of reality. Just looking frozen eyed with hands turned into cement blocks unable to click, eyes unable to cry for the fear of missing a reversal – it will come now, soon, and I will be richer and free. yes, you were in a trance with utter disbelief and.... you did not know what to do next.... so you let your positions sink even deep and deeper with even greater disbelief....

4--In fact I gave away all the freedom in the world in this nauseating quick ride to ‘riches’. I became a walking ghost, unable to think rationally. A possessed man who would think of nothing but the markets. Perhaps the direction was right – I was learning the ropes, but I was learning nothing about myself. All my dormant negative qualities had come into play. The market exploited all of my insecurities.

I then entered a Utterly Confused phase. I had such acute knowledge which I was sure no one in the world possessed (really? With all the books bought from Amazon?) I would enter an order and quickly take a tiny profit and convince myself that I did the right thing because so many things were looking dicey about this trade. I would not give it time to move at all. My five second trades became a joke at the brokers’ offices when I was on the phone. A surprised female voice would say ‘But sire you JUST bought this and now you want to sell. The market is still open for another four hours – why don’t you wait?) But no, the evil forces would get me. By this time I was using stop losses. But they KNEW where my stops. Or so I thought. Why else would the market momentarily slide off a cliff, dive into my stops and then go straight up to its platform where it had bungee jumped from? SOMEONE was tipping off SOMEONE and all these SOMEONES had greater resources, were closer to the market forces, or were somehow scheming and were on cohorts with each other to get me. They would always be there lurking and trolling and would personally empty my wallet, just like a mugger on the lookout for a single lone person walking down an empty alley.

Finally I thought of giving up. it was a losers game anyway. All who made profits were insiders anyway. Industrialists. Or politicians who made interest rate cut announcements. Or manipulators and operators who sold stocks in round-robin spirals and then suddenly brought them down by ‘bursting the bubble’. What was I doing in their world donating my hard earned clean white precious limited money? <many of these incidents did occur many years ago, or am i incorrect as usual?>

I became the butt of jokes of my colleagues. ‘So how much money have you LOST this week’ (Chuckle!)

Now I wish to thank them for their insults. They were what kept me going when no hope was left.

I discovered many things all at once. And they had nothing to do with technical analysis though it was the bedrock and could be trusted because all of these people used it. And these people were no ordinary people. They were harbingers of hope – messiahs who had the power to heal my wounds.

I healed after long therapies.

The words of some people became precepts, tenets. They were conduits who enabled me to make the LEAP OF FAITH. That something as flaky as technical analysis could be trusted as a framework to take decisions. They made me write a plan. They became my Drona (a guru in Indian mythology) in self-study. They made me learn money management. I however kept avoiding a few things here and there and thought I could ‘beat the markets’. I do that till this very day. I am not yet a trader. I just think that I need to overcome a ‘bit of’ a psychological weakness. I disobey my rules I have laid down so firmly. The markets then teach me sternly. Sometimes they reward me for breaking the rules, but I soon realize that I am a goose who was being fattened for thanksgiving.

I discovered dbphoenix, Wyckoff, Semantics of Magee, various members of the James16 group, deep and hard to decode Al Brooks (but priceless and rewarding when you have the ball of wool unraveled and woven together again!). I ACQUIRED them but had no taste for them (they were all bland, not nearly as exciting as all the ‘secrets’ trading books) ,earlier until I tasted these bitter truths.

Like life I learnt that the values in markets remained the same. The teachings became a religion, the books became scriptures, analyzing the markets was a stream of consciousness thing. All the wisdom that parables taught in the real world was applicable to the markets manifold.

And this is what happened in the past four days. The ominous rumbles of getting to a blown account were almost apparent, but I have been unable to stop the destruction. No amount of technical analysis in this world can help me if done in such a hotch potch, bit by bit, patchwork methodology. The plan has to INTEGRATE all the necessary things and tie them into an elaborate knot - a proper unambiguous strategy for entry and exits, money management and many elements of discipline defined to their very minutest details. One loose thread and the parcel of your pile of money goes down the never satiable black hole of the markets.

5--I have blown yet another trading account in the past four days. And I know that I can’t love myself because I have no one left to blame. in the last 4 days, meaning from when to when, pls? and also in india or in us market, pls? many do realize that trading in the pacificrims are much different and much more prone to error in general as well?

Sigh! Sometimes I wonder if the investment of so much time, energy and concentration will EVER payoff (a voice in my head says ‘It will, it will, you need to …..’ ) Many voices start talking here. A mind becomes a schizophrenic entity before it reaches a pure state of realization. How far beyond that state is I do not yet know. But all I know is that I have made my journey much harder than it needs to be by being stubborn. By not flowing with the markets. Like a stiff oak tree which comes crashing down in a gale rather than like the reeds which bend with the wind in the willows.

I can hear the market burp greedily and whisper to me ‘So long and thanks for all the fish.’



I am posting my charts of entries and exits, where it is painfully obvious how I entered at the exact wrong times, had no stop losses and donated teh maximum amounts of money that were possible in the range of the day just because I thought that the market would 'come back' and its 'just another pullback before the major reversal'. I have been too depressed to post for the last four days.

6--Your warm comments will be most welcome. Even if they are a friendly way of telling me I am an idiot. i am also beginning to bewildered, what are your real setups, strategies, trading plans et al behind your posted charts, pls? no way, sir/lady iq, you are far from being an idiot of any sort.... and i do not believe either.... that you were telling the truth and the whole truth here, nor that you are seeking any real remediation or redemption here for some unknown reasons.

but i did finish reading your trading story with even more puzzling trading questions that before though.... anyway, that is my own personal pitfall trying to read into more than what the author vicariously intended.

sincerely hope you'll recover and become a great trader soon <if not already>, so we all would enjoy reading your success story with even greater revenge. cheers, iq.

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 plethora 
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nakachalet View Post
there is a shut down setup in my trading plan; if and when three consecutive losses are incurred, that would be the end of my trading session for that day

nak -- Have you requested your broker to shut down your account or you yourself just walk away?

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 iqgod 
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nakachalet View Post
a personally response and personal opinion: @ iqgod

i just read and reread your post with the greatest empathy ever. and at the end, i tried to put myself into your circumstances and attempted to discover, personally how would i treat, respond, react or bewilder at each of the same sets of obstacle and predicament.

here is what i would do personally. so what you are going to read is just what another trader would react to the similar circumstances, OK? my personal responses are just my personal reactions to your circumstances, they are not meant to be better, more superior nor more appropriate in any shape or form, alright? besides, it might even be full of even bigger and more meaningless holes, thoughts, experiences and outlooks; so pls do keep this realistic fact in mind, if you will, while you are going thru my responses, K?

iqgod: Ok. And thanks for your comments. Read below for the answers.

@ iqgod:

1--iqgod....Is Trading Profitably (capitalized).... after having used many strategies, even seemingly great ones which are based on price action, it took me just a fortnight to give back all my profits and go deep into red. you mentioned that you were trading for 4 yrs and whence was that pls?

iqgod: 2008 - current


there is a shut down setup in my trading plan; if and when three consecutive losses are incurred, that would be the end of my trading session for that day. and that is just me alright. others have different setups which are altogether perhaps much better and much more effective as well.


iqgod: If you can read my trading plan at the start of this journal you will find similar statements. But following them is another matter. How can you succeed if you do not follow your time-tested plan, you may ask? Ummmm.....


2--....The random luck did not last. I lost more than I had ever made over a period of two weeks in five minutes. Needless to say I had become cocky and had increased my position size manifold. i am hopeful that at this point in time, proper trading mechanisms, setups and trading plans are all in order for you to again propel yourself to the front of the class, correct?


Earlier I did not have a plan AT ALL. I have a trading plan in place. The setups are Al Brooks setups - you can term them as setups with perfect precision, but the discretion part is what keeps improving each time with experience. But the pitfall (and at this point I realize that it is a pitfall) is that I try to frontrun or outguess the market everytime and try to get a BETTER entry while understanding deeply that I am infact getting HIGHER RISK entry due to the market not having confirmed my setup yet hence the probability is not clear!



3--I discovered trading books. I ‘learned’ that this was a necessary phase – that I need to pay the market its ‘dues’ before I could beome profitable. And how could I become consistently profitable? By learning the ‘secrets’. That was how most trading books were titled anyways. It sank in that I had to be on the ‘other’ side to make money. I couldn’t be an ‘insider’ nor could my money be ‘crooked’ or ‘manipulative’ but I ‘realized’ that everybody in the game making money ‘knew’ what was going to happen. by now, i also am hopeful that we recon that, that is also whole bunch of hot air as well--whatever most merchandizers were trying to induce the wannabes, right?


iqgod: Yes. But there is also a lot of good FREE stuff that is equally priceless and true.


3--Enter technical analysis.

The crystal ball.

The ‘secret’.

I locked myself up and I toiled hard with the books (too many to name, literally hundereds of books have passed under a pair of eyes multiple times). I learnt that indicators are ‘evil’ and ‘price action’ is the way to go. And when I actually tried out my new found knowledge it all seemed to work.

Armed to the teeth. Ready to go into battle.

Except.

I had forgotten that a good soldier needs chinks-free armor.

Such was my confidence that I entered and lost. Entered and lost. What would appear to work on paper suddenly became an anxious ‘please work, pretty pretty please work’ plea to the markets.

Money flew even more from my account to the market – the confidence gained with bits and bits of knowledge was turning me into a desperate person with a desire to get rich quick.
ooooouch.... and more oooooouch....


I STILL lose money. The pain of losing money seems lesser. And each time I have come to realize that whatever gives me pain is an ADDICTION.

It would work once twice thrice and then I would get cocky and take it another time (where I would have increased my size four-fold) and immediately go under water. It was freezing down there. No stops. No sense of reality. Just looking frozen eyed with hands turned into cement blocks unable to click, eyes unable to cry for the fear of missing a reversal – it will come now, soon, and I will be richer and free. yes, you were in a trance with utter disbelief and.... you did not know what to do next.... so you let your positions sink even deep and deeper with even greater disbelief....

Read ADDICTION again. In fact I feel surprised now that I am still trading after so many deep holes and so much pain. Something in me REFUSES to give up.


4--In fact I gave away all the freedom in the world in this nauseating quick ride to ‘riches’. I became a walking ghost, unable to think rationally. A possessed man who would think of nothing but the markets. Perhaps the direction was right – I was learning the ropes, but I was learning nothing about myself. All my dormant negative qualities had come into play. The market exploited all of my insecurities.

I then entered a Utterly Confused phase. I had such acute knowledge which I was sure no one in the world possessed (really? With all the books bought from Amazon?) I would enter an order and quickly take a tiny profit and convince myself that I did the right thing because so many things were looking dicey about this trade. I would not give it time to move at all. My five second trades became a joke at the brokers’ offices when I was on the phone. A surprised female voice would say ‘But sire you JUST bought this and now you want to sell. The market is still open for another four hours – why don’t you wait?) But no, the evil forces would get me. By this time I was using stop losses. But they KNEW where my stops. Or so I thought. Why else would the market momentarily slide off a cliff, dive into my stops and then go straight up to its platform where it had bungee jumped from? SOMEONE was tipping off SOMEONE and all these SOMEONES had greater resources, were closer to the market forces, or were somehow scheming and were on cohorts with each other to get me. They would always be there lurking and trolling and would personally empty my wallet, just like a mugger on the lookout for a single lone person walking down an empty alley.

Finally I thought of giving up. it was a losers game anyway. All who made profits were insiders anyway. Industrialists. Or politicians who made interest rate cut announcements. Or manipulators and operators who sold stocks in round-robin spirals and then suddenly brought them down by ‘bursting the bubble’. What was I doing in their world donating my hard earned clean white precious limited money? <many of these incidents did occur many years ago, or am i incorrect as usual?>

Well, as I had already mentioned I started in October 2008 deep in the recession peiod. 2012 makes it four years. The feelings I describe were from the Utterly Confused era which lasted from 2009 start to the start of 2011.

I became the butt of jokes of my colleagues. ‘So how much money have you LOST this week’ (Chuckle!)

Now I wish to thank them for their insults. They were what kept me going when no hope was left.

I discovered many things all at once. And they had nothing to do with technical analysis though it was the bedrock and could be trusted because all of these people used it. And these people were no ordinary people. They were harbingers of hope – messiahs who had the power to heal my wounds.

I healed after long therapies.

The words of some people became precepts, tenets. They were conduits who enabled me to make the LEAP OF FAITH. That something as flaky as technical analysis could be trusted as a framework to take decisions. They made me write a plan. They became my Drona (a guru in Indian mythology) in self-study. They made me learn money management. I however kept avoiding a few things here and there and thought I could ‘beat the markets’. I do that till this very day. I am not yet a trader. I just think that I need to overcome a ‘bit of’ a psychological weakness. I disobey my rules I have laid down so firmly. The markets then teach me sternly. Sometimes they reward me for breaking the rules, but I soon realize that I am a goose who was being fattened for thanksgiving.

I discovered dbphoenix, Wyckoff, Semantics of Magee, various members of the James16 group, deep and hard to decode Al Brooks (but priceless and rewarding when you have the ball of wool unraveled and woven together again!). I ACQUIRED them but had no taste for them (they were all bland, not nearly as exciting as all the ‘secrets’ trading books) ,earlier until I tasted these bitter truths.

Like life I learnt that the values in markets remained the same. The teachings became a religion, the books became scriptures, analyzing the markets was a stream of consciousness thing. All the wisdom that parables taught in the real world was applicable to the markets manifold.

And this is what happened in the past four days. The ominous rumbles of getting to a blown account were almost apparent, but I have been unable to stop the destruction. No amount of technical analysis in this world can help me if done in such a hotch potch, bit by bit, patchwork methodology. The plan has to INTEGRATE all the necessary things and tie them into an elaborate knot - a proper unambiguous strategy for entry and exits, money management and many elements of discipline defined to their very minutest details. One loose thread and the parcel of your pile of money goes down the never satiable black hole of the markets.

5--I have blown yet another trading account in the past four days. And I know that I can’t love myself because I have no one left to blame. in the last 4 days, meaning from when to when, pls? and also in india or in us market, pls? many do realize that trading in the pacificrims are much different and much more prone to error in general as well?

I need to get hold of the dates once more. One more lax discipline part is that I did not keep a record of the trades I had taken, the reasons for taking them or the reasons for the exits. I STARTED with keeping records in 2011 end when I had already closed accounts with four brokers. I had to refer to the email contract notes they provided to trace how much I had really lost and the ballpark figure is Rs.5,00,000. I now have (had!) a Rs.40,000 account.The biggest loss I took on my Rs.40,000 account was where I lost Rs.15,000. I now have a Rs.3000 account as of today when I withdrew the remaining Rs.15,000 out of Rs. 18,000 left as @GaryD suggested that I REMOVE my capital and leave only whatever was needed to trade two shares. It was a blown account because I cannot buy sell any futures contract anymore.


Sigh! Sometimes I wonder if the investment of so much time, energy and concentration will EVER payoff (a voice in my head says ‘It will, it will, you need to …..’ ) Many voices start talking here. A mind becomes a schizophrenic entity before it reaches a pure state of realization. How far beyond that state is I do not yet know. But all I know is that I have made my journey much harder than it needs to be by being stubborn. By not flowing with the markets. Like a stiff oak tree which comes crashing down in a gale rather than like the reeds which bend with the wind in the willows.

I can hear the market burp greedily and whisper to me ‘So long and thanks for all the fish.’



I am posting my charts of entries and exits, where it is painfully obvious how I entered at the exact wrong times, had no stop losses and donated teh maximum amounts of money that were possible in the range of the day just because I thought that the market would 'come back' and its 'just another pullback before the major reversal'. I have been too depressed to post for the last four days.

6--Your warm comments will be most welcome. Even if they are a friendly way of telling me I am an idiot. i am also beginning to bewildered, what are your real setups, strategies, trading plans et al behind your posted charts, pls? no way, sir/lady iq, you are far from being an idiot of any sort.... and i do not believe either.... that you were telling the truth and the whole truth here, nor that you are seeking any real remediation or redemption here for some unknown reasons.

but i did finish reading your trading story with even more puzzling trading questions that before though.... anyway, that is my own personal pitfall trying to read into more than what the author vicariously intended.

sincerely hope you'll recover and become a great trader soon <if not already>, so we all would enjoy reading your success story with even greater revenge. cheers, iq.

Umm, you might be using a slightly rough dialect of English or English may not be your first language, but the above comments seem a bit impertinent / rude. But that is okay. Too many people have helped me in harsher tones but the effect has been positive - if it takes harsh language to reform, change, learn then so be it. The proverbial surgeons knife. Sir IQ would not have posted a journal had Big Mike not held a contest but Sir IQ's castle was defended by many Kinghts of Unknown Armor nevertheless and Sir IQ has come out alomost unscathed and even wiser after meeting Merlin himself (@GaryD and many others!)



Thanks for your encouragement. I hope to be more sincere with myself and understand me and my problems very deeply now. Taking action is a problem. I do not know what CONCRETE steps to follow to improve. Some have suggested engaging professional coaches etc. I keep feeling that my current attempts are HALF ENDEAVOURS. Trading still falls into the HOBBY category. I feel I would die destitute if I make it my sole profession.

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  #79 (permalink)
 nakachalet 
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iqgod View Post
Is Trading Profitably (capitalized) just a temporary phenomenon? After being a trader for more than four years, after having used many strategies, even seemingly great ones which are based on price action, it took me just a fortnight to give back all my profits and go deep into red....

....Your warm comments will be most welcome. Even if they are a friendly way of telling me I am an idiot.









plethora View Post
nak -- Have you requested your broker to shut down your account or you yourself just walk away?

just waltzed away begrudgingly and pulled the plug, turned off the light and locked the door, before heading to the andaman shore to refresh.

had i not implemented and rigidly followed this routine, perhaps i could be in worse shape than our friend.

if anyone have any doubt about one's own ability to self-shutdown and walkout ability, it is perhaps best as you mentioned, to engage the broker to do it on you behalf.

but then some could not resist but call up the poor broker to beg for just another chance to get even.... LOL

if you are to instruct the broker, then perhaps you ought to use exact dollar amount which would be best for all concerned, otherwise the process could get bogged down unnecessary or could be carried out untimely with dubious results at best. cheers everyone.

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 nakachalet 
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Umm, you might be using a slightly rough dialect of English or English may not be your first language, but the above comments seem a bit impertinent / rude. But that is okay. Too many people have helped me in harsher tones but the effect has been positive - if it takes harsh language to reform, change, learn then so be it. The proverbial surgeons knife. Sir IQ would not have posted a journal had Big Mike not held a contest but Sir IQ's castle was defended by many Kinghts of Unknown Armor nevertheless and Sir IQ has come out alomost unscathed and even wiser after meeting Merlin himself (@ GaryD and many others!)

Thanks for your encouragement. I hope to be more sincere with myself and understand me and my problems very deeply now. Taking action is a problem. I do not know what CONCRETE steps to follow to improve. Some have suggested engaging professional coaches etc. I keep feeling that my current attempts are HALF ENDEAVOURS. Trading still falls into the HOBBY category. I feel I would die destitute if I make it my sole profession.

@iq

thx for your response. wish you great success and definitely no malice from your humble fellow trader. have a wonderful wkend. cheers.

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 iqgod 
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Stop is 5 pips below the swing low 0.9938

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 iqgod 
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The target (higher timeframe trendline) was near and the spread was increasing so closed my position at +82 pips of profit.



This is my first win after a loooong losing streak which lasted till the last posts of my journal.

Learning:

Patience patience patience till all the stars align into favorable positions
... and even then, manage risk with stops.

... and finally sit on your hands and don't panic if the MAE is within the plan!

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 iqgod 
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No this is not working. I am not a wildly profitable trader with a parabolic equity curve (Hence the saying – there are bold traders and there are old traders, but there are no bold old traders.). But I have crossed a subtle line – I am finally a BREAKEVEN trader.

I started off with Rs.1,00,000 in my account. I have Rs.1,13,000 in my account as of today. The capital shot up till Rs.1,30,000 and then I wiped off Rs.17,000 in a single cocky trade.

In the month of June I was:

- somewhat patient in waiting for good entries, - roughly 50 % of the time (the other 50% was where I jumped in eagerly and then had to spend the time miserably watching price going nowhere, and good trades missed because all my capital was tied up)

- was mildly willing to take losses at points where I had pre-decided to pull the plug on the trade if price ever reached, - roughly 30 % of the time (the remaining 70% I froze in a thawed soft fashion, i.e. not a deep freeze like earlier times

- I somewhat took the trades as my system dictated even though my heart was pounding DANGER, DON’T DO THIS (though this good thing happened and I was good with my analysis 80% of the time. The other 20 % of the time the analysis was correct in warning me that this is a low probability setup but I took the setup nevertheless out of pure cockiness due to recent heady wins – this happened in my last trade yesterday.

Earlier I would have developed an automatic swagger on the last part of the statement alone – being right 80% of the time on intraday trades. But I am neutral now in the sense that I feel I am staying on the road. Not yet at a place like @GaryD where I can think of being a fulltime trader. That would eat me up alive and bring nervousness, depressive – happy mood swings, and got knows what other problems.

I will be focusing on studying Al Brooks further, though I know that I could still continue doing whatever I have garnered from earlier study and still be profitable if I follow money management and keep my awareness of my psychological barriers sharp.

This is the hardest easy money a man can make.

And I have decided to resume posting again – it makes me reason out my trades clearly and makes me more responsible.

Coincidentally like @GaryD I too had a conversation with my wife two days ago about full time trading. And my wife was a gem with her support. She said that I can focus full time and she will take care all the chores that I currently do such as dropping off the kids to school, being their playmate in the evening, i.e. everything that currently takes up my time before and after my day job - and also continuing to work fulltime for bringing home a steady pay. Rock solid base to launch a TraderShuttle I say. Only that my NASA brain is not ready for the countdown yet. One half-step at a time. A giant leap for ManKind (with WomanKind's support).

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 nakachalet 
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iqgod View Post
No this is not working. I am not a wildly profitable trader with a parabolic equity curve (Hence the saying – there are bold traders and there are old traders, but there are no bold old traders.). But I have crossed a subtle line – I am finally a BREAKEVEN trader.

I started off with Rs.1,00,000 in my account. I have Rs.1,13,000 in my account as of today. The capital shot up till Rs.1,30,000 and then I wiped off Rs.17,000 in a single cocky trade.

In the month of June I was:

- somewhat patient in waiting for good entries, - roughly 50 % of the time (the other 50% was where I jumped in eagerly and then had to spend the time miserably watching price going nowhere, and good trades missed because all my capital was tied up)

- was mildly willing to take losses at points where I had pre-decided to pull the plug on the trade if price ever reached, - roughly 30 % of the time (the remaining 70% I froze in a thawed soft fashion, i.e. not a deep freeze like earlier times

- I somewhat took the trades as my system dictated even though my heart was pounding DANGER, DON’T DO THIS (though this good thing happened and I was good with my analysis 80% of the time. The other 20 % of the time the analysis was correct in warning me that this is a low probability setup but I took the setup nevertheless out of pure cockiness due to recent heady wins – this happened in my last trade yesterday.

Earlier I would have developed an automatic swagger on the last part of the statement alone – being right 80% of the time on intraday trades. But I am neutral now in the sense that I feel I am staying on the road. Not yet at a place like @GaryD where I can think of being a fulltime trader. That would eat me up alive and bring nervousness, depressive – happy mood swings, and got knows what other problems.

I will be focusing on studying Al Brooks further, though I know that I could still continue doing whatever I have garnered from earlier study and still be profitable if I follow money management and keep my awareness of my psychological barriers sharp.

This is the hardest easy money a man can make.

And I have decided to resume posting again – it makes me reason out my trades clearly and makes me more responsible.

Coincidentally like @GaryD I too had a conversation with my wife two days ago about full time trading. And my wife was a gem with her support. She said that I can focus full time and she will take care all the chores that I currently do such as dropping off the kids to school, being their playmate in the evening, i.e. everything that currently takes up my time before and after my day job - and also continuing to work fulltime for bringing home a steady pay. Rock solid base to launch a TraderShuttle I say. Only that my NASA brain is not ready for the countdown yet. One half-step at a time. A giant leap for ManKind (with WomanKind's support).

welcome back, finally.

she is a gem and give her a big appreciative hug from me too, alright?

oh no.... can't do that in mumbai now, can you? L O L....

best

nakachalet@gmail.com

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 iqgod 
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NIFTY is in a secular bull market but this countertrand trade is the one that offers the highest probability today.

I also expect to be long at the end of this day.


Big Picture:

A major resistance level, probably the bears will put up a fight and sell heavily.



Analysis basis:



The exact levels where I will sell and cover, and a reminder to myself that the high of the pinbar is the stop loss. If market opens higher than the high of the pinbar then no trade. Sit out for a pullback if you get a gap up.



Let's see how the day unfolds - let's also see if I follow my rules.

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 iqgod 
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 iqgod 
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Too fond of scalping.

Plan thrown out - brain sees a Low 1 short and then a covering at the 2 min 20EMA so went for it.

Sold - 5737
Bought - 5725

Net +12


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 iqgod 
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However - WILL I FOLLOW MY RULES and hold it till the next probable swing low?

Will I ride it to a logical point or will I take panic profits?

Let's see.

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 iqgod 
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I finally HELD through and had my stop correct.



Covered partially to tame my emotional demon who can't bear to watch paper profits slip away.

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