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Spot FX Day Trading: The Jigsaw
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Spot FX Day Trading: The Jigsaw

  #201 (permalink)
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Adamus View Post
Welcome back. Where did you go on holiday then?


Just my 2 Euro cents but hesitation for me is 99% wanting a certain outcome rather than considering the loss. Of course I fear the loss as much as anyone but I am hesitant because my read of the PA is poor. For a while I decided to go with the hesitation and not count it as an error, and I had one period of 2 weeks or so with only 1 or 0 trades per day, instead of 4, and they were all winners. Obviously that's a small sample size but I keep thinking about it. I gave up on this low volume trading approach because I wasn't satisfied with the no-trade days.

Hi Adamus,

France, a week in the Dordogne countryside and a week on the Crozon peninsula in Brittany. Far west coast of Brittany is a favorite of mine, it's France's version of Cornwall/Landsend but without the crowds and more Atlantic battered scenery. The empty beaches and surf are bliss.

You raise a couple of good points. You say you wanted a certain outcome and that is the main cause of the hesitation you experienced. I'm guessing that the certain outcome was a profitable trade? So whilst you frame it in those terms it may be pain avoidance, i.e. not wanted to experience a loss.

If I understand you, you did try using the hesitation as a filter to taking trades or not - i.e. if you hesitated that was reason to skip, and if you didn't that was reason to take the trade. This sounds like it is getting into the realm of a psychological based strategy. I have no experience of this but have read of it. An example would be to fade all normal emotions. So whenever you felt it would be the wrong time to enter, enter and once in stay in when you feel it's time to get out and get out when you want to stay in. Personally I'd stay away from that sort of thing as trying to work out what was working and what was not could speed my journey to the madhouse. But you say 2 weeks and all winners! On that basis alone I would explore further regardless of the frequency of trades.

If you track those trades where you hesitated it may open a door to the underlying reasons, once you have a sample there may be common features which can be factored into your rule set. IMHO the moment of hesitation is reflecting one of two things, i) perceived fear (anxiety) where there is nothing to be fearful about (it is a valid trade, you just are anxious about a possible loss, which is always a possibility , so just accept it), or , ii) actual fear where you consciously or unconsciously spot something to be fearful about. The later is experience started to help you out the former is lack of confidence getting in the way.

Wondered if you had managed to get hold of a copy The Chimp Paradox that we discussed a while back?

Good to hear from you and happy trading.

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  #202 (permalink)
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Day Sort Of Off

Decided not to trade today. I had a few ideas still floating around since I my last review and wanted to work through them.

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  #203 (permalink)
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mokodo View Post
France, a week in the Dordogne countryside and a week on the Crozon peninsula in Brittany. Far west coast of Brittany is a favorite of mine, it's France's version of Cornwall/Landsend but without the crowds and more Atlantic battered scenery. The empty beaches and surf are bliss.

Nice for you. I was in Northumberland, lots of beaches and ruined castles, but cold. My sister was in Vendée with her family and I downloaded the French weather forecast on my phone - made me a little envious.


mokodo View Post
You raise a couple of good points. You say you wanted a certain outcome and that is the main cause of the hesitation you experienced. I'm guessing that the certain outcome was a profitable trade? So whilst you frame it in those terms it may be pain avoidance, i.e. not wanted to experience a loss.

If I understand you, you did try using the hesitation as a filter to taking trades or not - i.e. if you hesitated that was reason to skip, and if you didn't that was reason to take the trade. This sounds like it is getting into the realm of a psychological based strategy. I have no experience of this but have read of it. An example would be to fade all normal emotions. So whenever you felt it would be the wrong time to enter, enter and once in stay in when you feel it's time to get out and get out when you want to stay in. Personally I'd stay away from that sort of thing as trying to work out what was working and what was not could speed my journey to the madhouse. But you say 2 weeks and all winners! On that basis alone I would explore further regardless of the frequency of trades.

Well first up, as I said I only made 0 or 1 trades a day and after 2 weeks that only amounted to 5 trades. Insignificant as far as sample size goes and too slow for my personal schedule, if I'm ever going to go live with this. Actually to be truthful I think after 5 winning trades I got cocky and started trading more as a consequence.

And hesitation is not something you can easily replicate when going over old charts, so there was no way to accelerate the process.

You are understanding me - I did use hesitation as a filter, but that's what a spin doctor would say - I'd say, it was just an experiment to avoid the discomfort and agonising when I wasn't sure. Just forget about the missed trade and the hesitation - go for 'one good trade' and 'take only the A trades'.

When I said I wanted a certain result, I didn't mean 'certain' as in 'particular' though - I mean I want certainty. Everybody does. That's what Mark Douglas has written anyway.


Mark Douglas, The Disciplined Trader
Most people like to think of themselves as risk takers, but what they really want is a guaranteed outcome with some momentary suspense to make them feel as if the outcome had been in doubt. The momentary suspense adds the thrill factor necessary to keep our lives from getting too boring.


mokodo View Post
If you track those trades where you hesitated it may open a door to the underlying reasons, once you have a sample there may be common features which can be factored into your rule set. IMHO the moment of hesitation is reflecting one of two things, i) perceived fear (anxiety) where there is nothing to be fearful about (it is a valid trade, you just are anxious about a possible loss, which is always a possibility , so just accept it), or , ii) actual fear where you consciously or unconsciously spot something to be fearful about. The later is experience started to help you out the former is lack of confidence getting in the way.

I did try to work out what is making me hesitate, at least in my post-session analysis, so I can improve, but my whole plan is to get away from pre-defined rule sets - I've done that with mechanical trading and to do it properly (at least the way I figured I can do it) I'd need either more money or more time and a part-time job. I can't argue with you about having anxiety even entering valid trades because of the 49% losers or whatever. I want my subconscious as per your (ii) above to do its multi-variate analysis that my conscious is too slow to handle. That's why I'm using only price action with just one MA and a few support and resistance lines. That's why I follow your journal. It clicks with me the way you break it down into 'shortening of upthrust' or 'ease of movement'. Obviously I'd be happier if you'd lose the MACD though


mokodo View Post
Wondered if you had managed to get hold of a copy The Chimp Paradox that we discussed a while back?

No I haven't. I haven't even finished reading "Willpower" by Baumeister and Tierney in four months yet, and then I've got "Thinking Fast and Slow" by Kahnemann to get through and my work rate at the moment is frighteningly slow. When you start raking it in, I'll bump the book up my reading list

You can discover what your enemy fears most by observing the means he uses to frighten you.
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  #204 (permalink)
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Adamus View Post
I want my subconscious as per your (ii) above to do its multi-variate analysis that my conscious is too slow to handle. That's why I'm using only price action with just one MA and a few support and resistance lines. That's why I follow your journal. It clicks with me the way you break it down into 'shortening of upthrust' or 'ease of movement'. Obviously I'd be happier if you'd lose the MACD though

I get what you are after in terms of 'read and react' trading, assessing in real time and making a commitment. I think that is the way I am heading too. But it is far too early for me to take the stabilisers off yet, so in practice I have a hybrid approach. I assess the environment until I can label it. Once I have committed to the context I am then looking for particular set-ups, these are fairly tight, but open to interpretation. Once I commit that a set-up is complete the last part is 100% mechanical, it is on a turn in MACD histogram. So there is a 3 stage decision process, once I have committed to the context, e.g. "this is a breakout", I no longer question whether that is right or wrong, I am committed to it, the next stage is the complete formation of a set-up, again, once I believe it is complete I will commit to it, and the last stage - the entry - is purely mechanical which has to be on the close of a 350 tick bar. By this point in the entry process I find myself focusing only on trying to nail the entry, not questioning whether I am right or wrong on the previous 2 stages. And I am tracking how close to the ideal entry I am to assess my level of hesitation. As with all things a work in progress, but I would expect this to be a fairly common approach - context, set-up, entry.

If you like the PA terms shortening of the thrust, ease of movement etc I would recommend getting hold David Weis' Book 'Trades About To Happen'. I know how personal the selection or adoption of a methodology can be, so just saying there are more 'common sense' things in there that certainly spoke to me. My main concern was that it is a volume/PA method and trading spot FX thought the volume element would make it a non-starter. Not all my experience so far, using tick volume is a good proxy.



Adamus View Post
No I haven't. I haven't even finished reading "Willpower" by Baumeister and Tierney in four months yet, and then I've got "Thinking Fast and Slow" by Kahnemann to get through and my work rate at the moment is frighteningly slow. When you start raking it in, I'll bump the book up my reading list

I loved Thinking Fast and Slow, it is a summary of Daniel Kahnemann and Amos Tversky's work. Nobel prize for economics for their prospect theory which says humans aren't rational and are vulnerable to a whole load of heuristics and biases. All applicable to trading and understanding why we so often make questionable decisions. It is not at all heavy weight and really accessible. It made me laugh aloud often.

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Last edited by mokodo; September 7th, 2013 at 02:46 PM.
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  #205 (permalink)
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Trades 4 & 5 In The Sample

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I felt really loose last week and was just trading without clogging up my head with too much self-talk or performance anxiety stuff, I was drumming in the mantra, "just trade the rules and build the sample, don't worry about the outcome". Over the weekend I also felt fine, but when I sat down this morning I was fretting and it took me longer than I imagined to re-focus. I ran through some notes and spent longer than I usually do getting relaxed and prepared for the day.

That was time well spent as I traded pretty well, although I did feel it was (too) important to get the week off with a winner.

Game plan was to get long if we held over Friday's high after breaking above it at the end of the London Open. The first trade was a pull-back to the creek after demand came in. I was happy with my entry but realised there may likely be a more complex correction after the initial upwave. The following upwaves were diminishing in strength which caused me to change my view from break-out to neutral and at that point I closed out the trade.

I re-entered the trade after the next couple of waves had completed. At this point there were two more convincing signs of strength: a spring and a downwave showing lack of reward for the effort. Exit was in two parts +26 pips and +43 pips against an initial stop of 10. Just over a 3R winner. MAE was 4, MFE was 43.

A good result, but not great. My trade plan says to trail the stop on the second exit where there is evidence a move has more to go. I was doing this but left my target in place. I was 'brain-blind', simply fearful of losing paper profits. Not going to beat myself about that though. Yes left a fair amount on the table, but happy to get the week of to a positive start.

I adjusted my rules over the weekend to include the dreaded 'scratched' exit. First trade was an example, my position sheet went from break-out to neutral. I've reflected on this and believe it is valid as long as the exit is driven by PA and not merely convenient 'pain-relief'.

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Trade 6 In The Sample

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Game plan today was to expect price to take a breather and perhaps retest the breakout area from yesterday around 1.3220-30

It was one of the days where the set-ups weren't quite setting-up. I nearly went short after price broke the ice late in the London open, but the pullback was not quite good enough, so I passed. Then after signs of strength coming in I went long, but on checking my set-up saw I was forcing it - the context was OK for a possible reversal but the elements of the set-up were not there, so I scratched it. After the minor sell climax, spring and demand coming in off the LOD at the US open I was keen to get long, but the only valid entry was outside my max stop.

The price range of my trading session was 40 pips, and I am trying to take something out the market everyday, regardless of what is served up. Didn't quite get 'em today. I see it as a good day though as I was open to opportunities and was actively in the hunt on a day when in earlier phases I would have looked at the PA and said 'chop' and switched off.

The scratched trade also felt good. Something within said 'check that set-up'. I was not wrapped up in dreaming of a quick winner, I could clearly see the alternative scenario. So pleased I stayed objective, made a decision and took action.

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  #207 (permalink)
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No Trades

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Game plan today was 'wait and see'. Price coiled into an apex at yesterday's close level 1.3265. There were rising supports through the range that had formed yesterday and today and the heavy tick volume just before the breakup was in the top half of the range. The 10 or so bars prior to the spike show steadily rising lows and closes, a telling precursor to the break itself (all with the benefit of hindsight of course). But without me as I didn't have a set-up to hitch a ride with.

And the pull back didn't act right so no entry for me there either.

I've a set-up to get in on a pullback after a break of the ice or creek. But of course not all breakouts read the script, such as this one, where I was looking for a long entry but didn't get a signal. So in the never ending mental tug-of-war is it i) well done for not jumping in on a whim and stick steadfastly to the current plan or ii) test out a set-up to get on these buses in the future.

Two days without a meaningful signal. Question is: can I keep my frustrated monkey at bay, I've offered him a banana and so far so good. As I've said before, my monkey is strong but he aint that bright.

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Hi there, Just wondering after reading the first half dozen pages of your journal and then the last few why you changed from 15min to 350tick charts?

Its good your being patient and choosing your trades carefully its so easy to feel the "need" to be in the market to justify the hours of studying and screen/chart time we invest in trading, so well done!

For what's its worth from someone who is not consistently profitable yet, try to hold on to those winning trades and squeeze ever pip out of them......I think I'm taking to myself here!

I really enjoy your posts and hope the winners come thick and fast........:-)

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blackdogfx View Post
Hi there, Just wondering after reading the first half dozen pages of your journal and then the last few why you changed from 15min to 350tick charts?

Its good your being patient and choosing your trades carefully its so easy to feel the "need" to be in the market to justify the hours of studying and screen/chart time we invest in trading, so well done!

For what's its worth from someone who is not consistently profitable yet, try to hold on to those winning trades and squeeze ever pip out of them......I think I'm taking to myself here!

I really enjoy your posts and hope the winners come thick and fast........:-)

Thanks for stopping by and the kind words of support.

I changed from 15 minute to 350 tick bars to get my risk down. I tend to enter on an oscillator signal, which means waiting for a bar to close and with a 15 minute bar the anticipated trade was often already well out of the gate and my entry away from where I could get the best reward and the least risk. So I was either passing on trades, getting stopped out on pullbacks or not getting a decent R:R for the winners. I've found the tick charts much better as they, an average, improve all the above issues. At least they do for me and my approach. I don't plan to change it.

Yes, 'no trade' days are a challenge, not because of the inactivity but because how they can tilt your judgement the day after. And if you get a few in a row.... But that is a walk in the park compared to not cashing the darn things out early!

Noticed you are in the UK and trade forex too. Are you planning to set up a futures.io (formerly BMT) journal? I'd like to follow it if you did.

Again thanks for the input and happy trading to you.

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Trades 7 & 8 For The Sample


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I had a good day today. Game plan was to watch reaction around 1.3280 and 1.3325 and trade off that.

First trade was a reversal long targeting the asian high, there were some pretty good signs of strength coming in and this looked like a fair R:R given the context. My stop got pinged, for a 0.7R loser. Happy with context, set-up and entry.

The second trade was a full stop loss. My position sheet went from breakout (once price went through the ice) to reversal once I had looked at where and how price rejected the 1.3265 level (this is an axis line from the last few days). I counted 3 legs down off the asian high culminating in a selling climax and demand coming in. The 1.3265 is the test of the acceleration area (breakout) from yesterday. It looked like buyers stepped in strongly so I was then looking for a long. I did get a signal on the no supply pullback, but was one leg too early. I went in with a 10 pip stop, (perhaps a bit tight given the pick up in volatility) targeting the top of the range which would have been a 4R return. It was a bet worth taking.

Really pleased with how I assessed the price behaviour today and my execution was good too. Particularly pleased with how I dealt with the outcome of the trades, which is sort of detached.

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