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The Beauty and Logic of the 6E
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The Beauty and Logic of the 6E

  #41 (permalink)
Elite Member
Salt Lake City, UT
 
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While this thread is about trading the Euro (6E), I have a very strong affinity to the USD (DX). Tonight I am going to be looking very closely at the DX 84.190 area as resistance. It's almost there. It has to react in that area. Let's see what happens.

Um... damn. that's quite an open! lol No I wasn't in a trade. I was waiting for the DX to get to my area. wow!


Last edited by Aragorn; July 25th, 2012 at 04:05 AM.
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  #42 (permalink)
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Today has been a long time in the coming. I began learning to trade in April 2008. Learning to trade is relatively easy and doesn't take too long. I'm referring to the Technical Analysis aspect of trading. Learning when this line crosses here or this bar changes to this color or these two lines cross or this line hooks etc etc etc. that's Technical Analysis. Learning does not take 4 years. But understanding does.

I turned the corner today. It is a historical day for me.

First, I used to trade on impulse. I traded what I saw and entered trades on knee-jerk reactions. No thought just reaction. The market has a knack for making you pay for those decisions. I entered because I was afraid of missing the move. Not only did I miss it, but I got in at the tail end of it. My short entry was the lowest tick of the day. Now, I enter trades on my terms and not the Market's. I know what I want to see and I wait until I see it. Gone is the impulse and fear of missing out. I enter trades patiently, methodically and above all, calmly.

Second, I used to trade without planning the trade. I simply expected it to work out so why have a plan if it doesn't go my way when I want it to? Do I exit with a 6 tick loss if it goes against me? That was how I used to trade. Loss loss loss loss loss. I had no plan before I got into a trade and I can assure you coming up with a plan when you're in a trade is definitely not the time to be planning the trade. Emotions are not your friend when you see red on your DOM. Just see my post a few days ago. For the first time- Ever! Before I got into the trade I planned. This is where I am going to enter the trade. If the Market moves against me I am going to watch but not react. I know where I am wrong. If it trades against me several ticks but doesn't hit my stop and the market shows me another signal to enter a trade I am going to take the trade. My stop remains the same. I am adding to a losing position. Something seems right about this under these conditions. I am not exiting on impulse. I am letting the Market dictate what I should do.

I bought $10 in gas the other day at $3.55/gal. It filled my tank about 1/3. I drove a few miles down the road and saw gas was $3.43/gal. I stopped and put in another $10. I could have gotten to everywhere I needed to go after the first time I put gas in. I didn't need to put more gas in. But I saw an opportunity. Did I waste money by putting more gas in than I needed? I don't think so. I saw an opportunity and I know that I will need to, at some point, put more gas in my vehicle. I saw value and that value may not be there tomorrow. I see the same thing with what I did.

I knew where I was wrong and all my stops went to that price. But now, I had what potentially could be a better price to trade. I am well aware of the cardinal rule touted by many to never add to a losing trade. This was not a losing trade. This was a planned trade. I wasn't averaging a loser. I was following a plan of action that I had already deemed I was going to follow if conditions warranted it. Was I wrong on direction? Or was I wrong on my entry price? Or was I wrong on both? Whatever the outcome I was going to follow my plan. And I did.

Three- the market moved 7 ticks in my favor. I was elated and wanted to exit early with my prize. But 7 ticks was not my target. I had a plan and I had a target. The market moved against my position. I saw every tick of profit disappear. And then I saw red on my P&L. But something happened. Something that has never happened before. I did NOT panic. I was relatively calm and relaxed. Or at least as relaxed as we usually are when money is involved. I has calm and relaxed because I had a plan. Nothing had changed. I still knew where I was wrong and I still had not reached target. Now my plan was coming into play. I followed my plan. The Market moved 6 ticks against me but wasn't at my stop. I saw the market was putting in a divergence and entered three ticks higher than my first trade. I was following the plan I put in place before I ever put on a trade. The stop on this second trade went to the same price as the stop on the first trade.

Four- I moved my stop one tick above what I thought was the high. It was where I thought would be the high and would now be the new place where I knew I would be wrong. But wait a minute. That wasn't the plan. That wasn't where I had determined before I entered the trade that I knew I would be wrong. Now I am making a decision when I'm in the trade. That wasn't the plan. I am creating a new plan in the heat of the battle and when I'm in a trade. I've already learned that's not a good time to come up with a plan. I moved the stops back to the price I had originally set. Sure enough- the market went one tick higher than what I thought would have been the high. I would have been stopped out to the tick.

Five- I had to sit patiently waiting. I wanted to exit for a small profit. I was in the trade for an eternity it seemed. I would be justified. Right? I sat and watched and waited. I saw price gyrate for me and against me and for me and against me and against me a tick or two. I wanted to exit now with a small loss. So what did I do? I got up and left the room. I had my targets and I had my stops. Either it was going to work out or it wasn't. It was no longer in my hands. I had made my decisions and I had followed my plan. Finally, after 30 minutes, it began to move in my direction. After it had moved 10 ticks in my favor I followed my plan and moved my stops to b/e +1. Either I was going to reach target or I was going to make 1 tick. My targets were set in place. My stop was set in place. There was nothing more I could do so I left the room- permanently. No more checking. Now, the final decision was made. Now it was truly going to work or it wasn't. The trade took 50 minutes to complete. As it is, the market reached both targets for a nice gain.

For the first time ever- I feel like a true trader and not a dabbler or like I'm trying an experiment every time I put on a trade. I was deliberate. I was methodical. And I was relaxed throughout the process. I wasn't reacting emotionally like this was going to be my last trade. My biggest fear before was, surprisingly not a fear of losing money. My biggest fear was that I wouldn't be able to make it back after I had lost it. That fear is slowly diminishing. A great day for me.

I should add, as is often the case for me, and this is most surprising, while I am happy about my profit it is NOT what I am most happy about. What I am most happy about is the maturity that I'm going through. It's like there's greater stability emotionally and psychologically. This is a change that's not just a step in the right direction. It's a transformation into something or someone that's more permanent and more lasting than the outcome of a single trade. The money will be gone and spent. But the lesson will endure beyond this simple and single trade as I go forth throughout my trading career.


Last edited by Aragorn; July 30th, 2012 at 01:44 PM.
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  #43 (permalink)
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Congrats for your achievement.
Trading is just collection of these days. Concentrate only one day at a time....

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  #44 (permalink)
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I am not sure what trade you took, but congratulations on doing what you wanted to accomplish and on your good day. It feels great to have the market reach your target and have the patience to hold for it.

How long you are in a trade certainly can test your patience. I was in a sequence for 80 minutes this morning, and it required a bit more patience due to the fact that I had a losing trade just prior. So, congrats on holding as it went in your favor.

It depends a lot on the time of day and other factors, but the fact that the market stays and rotates around your entry price for a long time is not particularly a good thing. I'm not saying you should simply close it, but consider that when the market gives so many opportunities to enter, then it may have to move beyond that area to find real supply or demand (which is almost always evidenced by fast moves away from a price, not rotations around a price). Of course one side will win out, and it's usually the side that's positioned with the immediate trend, but it's a bit like gambling to simply hold a trade when you're positioned in the middle of a range. Sometimes it will work, sometimes it won't -- sometimes it's best to hold it, sometimes it's best to ask, "would I enter the trade again at this point?" and if the answer is no, then just close it. But as long as there is some reason that you are with the right side of the market, then sticking with it can offer a higher probability of the market moving in your favor.

My other caution would be: now that you have had what you consider your first "real trader" experience, celebrate your success, but realize that it's a pattern of consistency that you are looking for. "One swallow doth not a summer make" so they say. I had one losing day at the end of June that was quite bad, and if I know myself well, it was because of overconfidence. Realize that you could have very well been stopped out here, and you might be feeling bad as a result, but it still would have been a good process according to your measures. So, celebrate the good processes, along with the good results. Cheers and happy trading! (out of curiosity, it might be interesting if you would share a chart with your trade locations)

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  #45 (permalink)
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I'd like to ask anyone reading this a rather weird question. "How do you combat boredom waiting for a trading opportunity?" Are you watching the market the whole time? How do you combat getting bored until you see what you want to see? I find I get so bored and then tired and then exhausted. I can only watch the market for a few hours then I have to stop. Not because I want to. I wish I had the stamina and fortitude to persist and watch it for an extended time. I thought about No-Doz but somehow that doesn't seem like a viable long term solution. Trading is boring- except when your in a trade of course. But it's like an hour or two of boredom and a few minutes of heart pounding blood pumping excitement. I wanted to join a room that is open during the European Session just so I could combat being bored. Unfortunately I couldn't justify spending that much money for that reason. Just wondered what other traders do. Watch a movie? Listen to music? Read a book? I've tried them and it doesn't work for me. Suggestions?

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  #46 (permalink)
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Bore-doom?

Cultivate that time with the same commitment that you use the time when you are trading.

What you do with your non-trading time actually supports your trading.

When you don't cultivate the other parts of your life, you will eventually sabotage your trading because you will fail to see the point of it.

If I hadn't done all of the above I would have gone back to taking anti-depressants (apart from losing my capital over and over again to replace BOREDOM with THRILL).

So short answer: PUT A LIST OF NON_TRADING ACTIVITIES IN YOUR TRADING PLAN and FOLLOW that plan for those activities as well as you follow it for trading.

Here is the fantastic article that drove home the point for me:

"The Bored Trader" By Adrienne Laris Toghraie


Also note that instead of No-Doz perhaps moving to higher timeframes (and putting more space between the sampling intervals where you are checking price live on the screen) would better combat exhaustion.


Last edited by iqgod; August 5th, 2012 at 11:27 AM. Reason: Added more advice
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  #47 (permalink)
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Limit your trading time-window


Aragorn View Post
I'd like to ask anyone reading this a rather weird question. "How do you combat boredom waiting for a trading opportunity?" Are you watching the market the whole time? How do you combat getting bored until you see what you want to see? I find I get so bored and then tired and then exhausted. I can only watch the market for a few hours then I have to stop. Not because I want to. I wish I had the stamina and fortitude to persist and watch it for an extended time. I thought about No-Doz but somehow that doesn't seem like a viable long term solution. Trading is boring- except when your in a trade of course. But it's like an hour or two of boredom and a few minutes of heart pounding blood pumping excitement. I wanted to join a room that is open during the European Session just so I could combat being bored. Unfortunately I couldn't justify spending that much money for that reason. Just wondered what other traders do. Watch a movie? Listen to music? Read a book? I've tried them and it doesn't work for me. Suggestions?

A way I have found to successfully fight boredom (and avoid overtrading, in my case) is to limit my time trading and staring at the screen. Thanks to @Fat Tails analysis of the most volatile times of an instrument (not always the highest volume time) I've limited my screen time to 2 to 4 hours, from approx 7am to 11am cst, and often done by 9:30am cst. I then spend a bit more time on post trade analysis. Trading the 6E as well.

https://futures.io/elite-circle/5242-intraday-seasonality-volatility-when-trade-when-not-trade.html#post58611

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  #48 (permalink)
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iqgod View Post
What you do with your non-trading time actually supports your trading.

When you don't cultivate the other parts of your life, you will eventually sabotage your trading because you will fail to see the point of it.

So short answer: PUT A LIST OF NON_TRADING ACTIVITIES IN YOUR TRADING PLAN and FOLLOW that plan for those activities as well as you follow it for trading.

Making money is a temporary motivator. There must be more to one's life than simply making money. There must be a balnce to making money and enjoying life. Life is what is passing you by when you're out trying to eek every penny you can out of the market. Soon the enjoyment of trading will be gone along with possibly everything else you hold dear. I've sacrificed a lot. It's a hard lesson learned.

rpm123 View Post
A way I have found to successfully fight boredom (and avoid overtrading, in my case) is to limit my time trading and staring at the screen. Thanks to @Fat Tails analysis of the most volatile times of an instrument (not always the highest volume time) I've limited my screen time to 2 to 4 hours, from approx 7am to 11am cst, and often done by 9:30am cst. I then spend a bit more time on post trade analysis. Trading the 6E as well.

I agree completely. According to my plan I try to trade in 3 and sometimes 4 hour blocks. It depend on what's happening in the market and how much movement or how active the market is.

Excellent suggestions!

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  #49 (permalink)
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Everything you're saying is fine except for one thing:

Never add to a losing trade. It is the road to ruin.

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  #50 (permalink)
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iqgod View Post
Also note that instead of No-Doz perhaps moving to higher timeframes (and putting more space between the sampling intervals where you are checking price live on the screen) would better combat exhaustion.

Good point made here. I trade 15 minute charts and had been tracking these with only the last day in view. This had me constantly zooming out to check my chart mark-ups which stretch back a week or so. Exhausting to do as I would be repeating this countless times a day on 10 forex pairs. Seemed a poor investment in effort as I only get a handful of signals a day and only take a trade or two per day.

Simply viewing the last week (but still with 15 minute bars) makes the tick by tick price action invisible and I can immediately see any set-up in context - and then zoom in to asses the local price action. This has not changed how I assess a set-up or effect which trades I take, but boy has it saved me a load of mental energy.

Simple change - big effect.

know thyself
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