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I am the 10%


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I am the 10%

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  #1 (permalink)
MisterGopher
Alexandria, VA
 
 
Posts: 17 since Jun 2012
Thanks: 33 given, 18 received

Okay, folks. Here we go. I am committing to a futures.io (formerly BMT) journal with daily updates. Thanks for the forum, Mike. I’ve only been here a little while but have already learned a lot from many members and have followed every post on the EUR/USD thread.

Background
I made the first trade in my brand new $10,000 futures account on May 28th, 2012. Today, about 5 months later, I made my 115th trade in the account. Gross, I am up $705 but have paid $808.86 in fees so my account equity now sits at $9,896.14. This includes a really dumb $800 dollar order entry mistake as well. I would have loved to show a modest return at this point, however, I have learned a lot about the 6E market, trading, and myself over this time and am optimistic despite being essentially right where I started equity wise.

Even so, I find myself at a crossroads where I have gotten decent at not losing money but struggle to accumulate equity. After introspection and reviewing my trades and notes over the past five months, this journal marks the beginning of a renewed trading journey.

Purpose
It is my primary hope that this journal will hold me accountable to examine and document the reasons for every action I take so that I can learn and get better from my trades. If anyone is interested enough to follow along, welcome! I am excited about sharing under the comfort of internet anonymity and as a newbie only trading one contract have decided to also disclose my account equity. I hope that this is not in bad taste on futures.io (formerly BMT). Another hope I have for this journal is to provide myself with a sanity check by exposing my trading to a public audience. In that regard, I welcome any and all comments from what I have seen to be a very constructive and supportive group of traders.

Trading
I am going to trade the 6E from 3-7AM EST. I trade one contract and limit myself to one trade per day. As you will see, my approach is mostly discretionary. Though there are specific set ups and technical methodologies that I use, I am not going to define them here partly because I am allowing them to evolve over time and also because of the element of “feel”. There are no “if this happens, I enter 100% of the time” rules in my trading TODAY. Perhaps that will be the next phase of my journey after I get a handle on my personality issues and can examine what is actually working without having to wade through all the randomness. For now, I am working on improving patience and trade management.

See you Monday!

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  #3 (permalink)
 Abde 
Germany
 
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MisterGopher View Post
Okay, folks. Here we go. I am committing to a futures.io (formerly BMT) journal with daily updates. Thanks for the forum, Mike. I’ve only been here a little while but have already learned a lot from many members and have followed every post on the EUR/USD thread.

Background
I made the first trade in my brand new $10,000 futures account on May 28th, 2012. Today, about 5 months later, I made my 115th trade in the account. Gross, I am up $705 but have paid $808.86 in fees so my account equity now sits at $9,896.14. This includes a really dumb $800 dollar order entry mistake as well. I would have loved to show a modest return at this point, however, I have learned a lot about the 6E market, trading, and myself over this time and am optimistic despite being essentially right where I started equity wise.

Even so, I find myself at a crossroads where I have gotten decent at not losing money but struggle to accumulate equity. After introspection and reviewing my trades and notes over the past five months, this journal marks the beginning of a renewed trading journey.

Purpose
It is my primary hope that this journal will hold me accountable to examine and document the reasons for every action I take so that I can learn and get better from my trades. If anyone is interested enough to follow along, welcome! I am excited about sharing under the comfort of internet anonymity and as a newbie only trading one contract have decided to also disclose my account equity. I hope that this is not in bad taste on futures.io (formerly BMT). Another hope I have for this journal is to provide myself with a sanity check by exposing my trading to a public audience. In that regard, I welcome any and all comments from what I have seen to be a very constructive and supportive group of traders.

Trading
I am going to trade the 6E from 3-7AM EST. I trade one contract and limit myself to one trade per day. As you will see, my approach is mostly discretionary. Though there are specific set ups and technical methodologies that I use, I am not going to define them here partly because I am allowing them to evolve over time and also because of the element of “feel”. There are no “if this happens, I enter 100% of the time” rules in my trading TODAY. Perhaps that will be the next phase of my journey after I get a handle on my personality issues and can examine what is actually working without having to wade through all the randomness. For now, I am working on improving patience and trade management.

See you Monday!

Congratulation MisterGopher!

You are way ahead of most prospective traders because it`s a substantial achievement not losing money after 115 trades. Believe me, if you are able to keep this behavior, you will be successful over some period of time as you get more experience.

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  #5 (permalink)
MisterGopher
Alexandria, VA
 
 
Posts: 17 since Jun 2012
Thanks: 33 given, 18 received

Entry: buy 1.3044 @ 3:16AM
Exit: sell 1.3051 @ 3:37AM
MAE: 4
MFE: 9
Result: +7

The market sold off from R1 directly to the pivot without a pullback. The market has been consolidating and I figured that the probability of a bounce off the pivot was high. I just wasn’t sure how much of a bounce I would see. It could just bounce 6-10 ticks and sell through the pivot. Or it could retrace half way to R1 or farther.

I entered long right at the pivot (1.3044) and took 4 ticks of heat on the same move that I was filled on. Quickly my position bounced up and hovered in the +2 to +5 range for a few bars. I wanted to give it a chance to retrace the proceeding down move a little more, but the bounce had stalled and I started looking for an exit. I ended up getting filled a couple ticks off the recent high.

Evaluation:
Entry was questionable – I took the first thing that came along in the morning and although I had good reason to expect support at that level, the market could have easily just paused there and sold through my stop. Especially since London just opened and had been selling off hard, I kinda got lucky that I entered very close to the pull back.
Management of the trade was pretty good. I gave it a chance to run 15-20 ticks but took what I could get once my opinion on the trade changed.

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  #6 (permalink)
MisterGopher
Alexandria, VA
 
 
Posts: 17 since Jun 2012
Thanks: 33 given, 18 received

Entry: buy 1.3020 @ 6:38AM
Exit: sell 1.3008 @ 6:45AM
MAE: -12
MFE: 5
Result: -12

The 6E traded in a 20 tick range from 3 to 6:30 and I sat patiently waiting for a compelling trade. I had it in my mind that the market was range bound and was looking for a move to an extreme resistance/support level (pivot/S1) so that I could fade the move. The low since Friday was 1.3019, equal to the daily S1. The break from the trading ranged happened to the downside and my buy order was triggered. I was looking to maybe take a little initial heat and then ride a move back to the prior trading range locking in profits around 1.35-1.40. Well, after a brief pause, the market blew through the s1/Friday’s low and stopped me out.

It’s disheartening to wait 3.5 hours for your entry price only to be out 12 ticks seven minutes later. But, time to learn from it and give it another go tomorrow. Looking back, I could have anticipated a stronger move after such prolonged consolidation and changed my opinion on the possible market action. At the least, I could have waited for price to react to the resistance level a little bit before fading the move. I have a FEAR of the market moving to the area I’m targeting and then quickly taking off without me. Of course in reality, the market usually gives me at least a couple chances to get in. To add further frustration, after getting stopped out a beautiful short set up as price pulled back right to the area of resistance/support that I had targeted for my long before selling off again. THAT is the trade I want.

LESSONS LEARNED
1) If fading the market, wait for price to confirm support/resistance
2) Constantly evaluate what market is telling you and be ready to change your view.


I forgot to screen cap the chart but will add it later tonight.

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  #7 (permalink)
SteveH
Orlando, Florida, USA
 
 
Posts: 34 since Oct 2010
Thanks: 3 given, 96 received

"Forex Price Action Scalping" by Bob Volman

This would be more valuable to you now than intense introspection.

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  #8 (permalink)
MisterGopher
Alexandria, VA
 
 
Posts: 17 since Jun 2012
Thanks: 33 given, 18 received

Entry: sell 1.2966 @ 3:47 AM
Exit: buy 1.2964 @ 3:59 AM
MAE: -5
MFE: 3
Result: 2

Entry: sell 1.2954 @ 4:00AM
Exit: buy 1.2945 @ 4:02AM
MAE: 2
MFE: 12
Result: 9


Entry: sell 1.2941 @ 5:29AM
Exit: buy 1.2944 @ 5:35AM
MAE: -3
MFE: 4
Result: -3

(not pictured)


SteveH gave me a good book recommendation yesterday, but I was afraid to check into it because I KNOW that I am very susceptible to new ideas. I seem to trade like the last thing I read and feel that I need to develop my OWN approach instead of changing what I'm doing all the time.

However, after some quick research I noticed that it was very specific to what I was trying to do and could really help my trading. I will probably order the book soon, but even reading a few posts on the book and an except posted online changed the way that I traded today.

Instead of pulling up the 512 tick chart, I pulled up the 133 tick chart (smallest on TOS) out of curiosity. Suddenly I was seeing setups that I never would have seen before and found myself in active mode getting in and out of the market much quicker than I have been. Needless to say, I still am figuring out all this shit and it's awkward time to change approaches so often. On one hand, I'm looking forward to trying to shorten the time frame and go with more concrete set ups and less feel. But, on the other hand, I'm telling myself "hear I go again"

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  #9 (permalink)
MisterGopher
Alexandria, VA
 
 
Posts: 17 since Jun 2012
Thanks: 33 given, 18 received

Trade Price Quantity Time Result
B 1.3024 1 5:40:40 AM -6
S 1.3018 1 5:48:21 AM

S 1.3015 1 5:57:29 AM -4
B 1.3019 1 6:01:33 AM

S 1.3012 1 6:29:53 AM +9
B 1.3003 1 6:16:32 AM

S 1.2998 1 6:07:44 AM -5
B 1.3003 1 6:16:32 AM

S 1.2962 2 11:14:00 AM +20
B 1.2952 2 11:25:58 AM


I slept in today (booted up around 5:30) but had the morning off of work so was still able to put in some solid screen time. Had a couple sloppy scalp attempts to start the day (There is something about the first 10 minutes of trading that makes me see things that aren’t there) . Then, one of my favorite set ups - a decisive move through a pivot level and a pull back to it. It was working out and I tried to hit a home run by pyramiding into it with another contract. But, with my cost basis averaged down on the short I got pretty cheap with the stop and tightened up too much.

Ended the day with a nice break out short. I used a tighter stop that usual and went with 2 contracts instead of my normal 1. Since I started trading 5 months ago I’ve defined myself as a “1 contract trader” due to my experience level and account equity. But, I may need to develop a comfort level with multiple contracts if I do add trades with smaller stops and targets.

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MisterGopher
Alexandria, VA
 
 
Posts: 17 since Jun 2012
Thanks: 33 given, 18 received


Trade #1
I saw a head and shoulder formation developing and when price spiked down, I went short anticipating that the most recent high would stand as the second shoulder. I used two contracts and really didn't like my emotional state during this trade. The total risk is acceptable (MAX loss), but I'm not used to watching my profit/loss fluctuate that quick and I really had to fight myself not get out of the trade early or put my stop loss too close. For the rest of the morning, I went back to one contract. +20 on this one.

Trade #2
Usually, I am not emotionally ready to get back in after a big trade. Actually, after my 20 tick profit, I was considering just closing down so I could secure a profitable week. Buuut, I noticed a set up forming before I had the chance to close the window. I had just covered my short and price froze with five consecutive bars having the same low. Price was screaming at me that it wanted to continue the down move, so when it made a new low I went in. Market didn't make me sweat this one too much and hit my target on the next move down. Aren't these emotionally easy trades, great? +10

Trade #3
The same move from trade #2 went down one tick shy of the daily S1 and bounced. Went back down to the spot and bounced again, but couldn’t make a new swing high or challenge the 20EMA. At this point, I am anticipating that price will consolidate around the daily s1 before continuing the down trend. Once price broke to new lows I entered a short. Bulls tried to battle but couldn't win against the recent high. Plus, they had to deal with round number resistance at the 0020 level and the magnetic pull of 2900. +10

Charts are attached. Sorry for the crude MS paint markings! Blue = buy. Yellow = sell.


Week in Review

Trades: 13
Ticks: 57
Gross: $712.50
Fees: $104.25
Net: $608.25

No doubt a fantastic week for me on the P/L. Second best all time out of 22. But, the four prior weeks were all negative and my account equity is still in the same range of +/- 5% that it has always been. I've had good weeks before only to give back. Next week will be a challenge to keep going in the right direction. And, I’m glad that my “big” day came on a Friday so I get off my emotional high before trading again.

Observations from this week:
  • Blindly buying or selling a pivot/R1/S1 and hoping for a bounce is not a viable strategy.
  • Pretty excited to get Bob Volman’s book. I’ve already modified my trading based on publically available information. He has validated what I already felt and I hope it will continue to help me trust in my trading as well as help me define and identify specific trading setups.
  • I like having a fixed 10 tick target (like Volman). It narrows down the things I have to think about to 1)when do I take a trade? and 2) Once in a trade, at what price would my thesis be proven incorrect (placing, moving stop).
  • My setup going into next week is trading the 6E 133 tic chart with 7 tick stop and 10 tick target with only the 20EMA, Pivot, R1, and S1 on the chart. Default trade is 1 contact, but can trade 2 (all in, all out) if I think set up is exceptional.
  • Since moving to smaller chart (512 to 133), I am scrapping my one trade per day rule (if you haven’t already noticed). I put that in place to teach myself patience, but the constraint became a mental distraction when looking for trades.
  • Engaging the community at BTM is way way way more helpful than lurking and reading about other people’s trades. It is early in my journal, but I do recommend it to anybody reading this. Don’t be afraid to put yourself out there.

Have a great weekend!

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MisterGopher
Alexandria, VA
 
 
Posts: 17 since Jun 2012
Thanks: 33 given, 18 received

Trade #1
After 5 touches of 2906, I went long at the break to 2907. Target reached without taking any heat. +20 (total for two contracts).

Trade #2
Entered short after possible H&S formation. Bears could not generate any follow through selling and price keep breaking strongly above 20EMA. I didn't like the price action and after small double top at moving average, I put my stop one tick above. Stopped out at +4 (total for two contracts).

Trade #3
I should have quit after #2! My two year old daughter woke up and I brought the laptop up and watched price while I gave her oatmeal. Really?? Come on now, I know better than this. Trading requires my absolute focus!!!

This trade was a break out play but was way too aggressive. At least I reduced to one contract (-5).

Trade #4
Along with #3, this trade never should have happened. I literally was telling myself that I 'had some ticks to play with' so even if it doesn't work, I am still up $xxx on the day. Anyway, shocker I am stopped out quickly on an impulse play. Again, at least I only went with one contract and a tight stop! (-3)

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  #12 (permalink)
MisterGopher
Alexandria, VA
 
 
Posts: 17 since Jun 2012
Thanks: 33 given, 18 received

Quick update for yesterday and today. I didn’t save and mark up charts, but will return to that tomorrow. I’ve been trading a little lazy and have been lazy on my journal as well.

Monday was a grind, but came out positive. Tuesday I took the day off because we didn’t have power at the house. Wednesday was another grind but came out a little positive. Started out with a trade that reached target (+20) then had a couple small losers and ended up +10 on the day.

Today, though, was just really poor trading on my part. I never felt focused – I was distracted by things going on in my day job. But, there I was sitting watching price chop on the chart. Occasionally opening up my browser to kill time by checking email or whatever. I was just not into it. Towards the end of the morning, I took a bad trade then another bad trade. No discernable set up – I just had a notion of where price would go next and fired the order. So, a couple losers today for a total of -26 ticks. Brings me to -$110 for the week.

Focus and patience. Focus and patience. Tomorrow I will do better.

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  #13 (permalink)
MisterGopher
Alexandria, VA
 
 
Posts: 17 since Jun 2012
Thanks: 33 given, 18 received

October started with three negative weeks, but the last five trading sessions were all profitable. That was enough to more than make up for all the previous losses.

win % 45.9%
lose % 54.1%
average winner (net) 113.8
average loser (net) -80.145
R-Multiple (net) 1.420
Expectency (net) $8.96
Best trade (net) $305.55
Worst trade (net) $(156.95)
Best day (net) $472.20
Worst day (net) $(234.75)
Total Trades 37
Total ticks 51
Ticks per trade 1.378
Gross Income $637.5
Fees $305.8
Net Income $331.7

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  #14 (permalink)
MisterGopher
Alexandria, VA
 
 
Posts: 17 since Jun 2012
Thanks: 33 given, 18 received

Four trades this morning, -12 ticks overall.

Did a lot of things wrong....missed all the good set ups..took all the wrong ones. Tried too many long breakouts when the bears were obviously more agressive.

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mwtzzz
Sunnyvale, CA
 
 
Posts: 171 since Dec 2012
Thanks: 8 given, 105 received

If I'm not mistaken, the title of this thread is the OP's claim that he/she is part of the "10%" of successful traders?

Not to burst the OPs enthusiasm, but no trader can make any claim that they are successful until they have traded the last trade of their life and are sitting on a positive net P/L at that time.

Not to dampen at all the OP's ebullience and desire to become a successful trader. I totally support you in that endeavor. Just a gentle hint that you are way jumping the gun making such a claim.

Now that said, let's not dwell on killjoys. If you continue with your journal, I'll keep an eye on the thread and offer some suggestions for improvement.

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  #16 (permalink)
mwtzzz
Sunnyvale, CA
 
 
Posts: 171 since Dec 2012
Thanks: 8 given, 105 received

Ok, I read through your thread. I have a few general observations to make:

- As you mentioned if you do your own thinking and come up with your own methods, this is probably best. Although if you take a book like Volman's and implement one or two of its methods verbatim, you'll probably end up with more or less the same results long term.

- There's no point in trying to figure out the "problem" with every losing trade. The fact is you cannot get around the necessity of taking losing trades. It's better to accept this and look at it for what it is: a higher-probability that ended up not panning out

- Emotions. In your case, I think your emotions will subside with time once you realize how the markets work, tighten up your trading method a bit, and begin to see the results over increasing number of trades. At that point, if you have a decent method you'll see your account balance grow and be able to realize the process will be sustained.

- another reviewer mentioned something about "too much introspection." I agree. You're probably focussing too much on explaining why trades did or didn't work .... It's not necessary and it doesn't matter. Look instead at the bigger picture.

-

Generally speaking, when a trader's results are consistently hovering around a "0" net P/L, it's because of either the influence of emotions in their trading (basically not seeing their strategy through to completion, bailing out early or trying to second guess it) or their method needs slight tweaking in order to pop it over into the + column. Both cases are easy to fix.

so, the OP hasn't posted in a couple months. If you're still trading, please start posting updates again. If you quit trading because of being discouraged or blowing up your account, I would urge you to reconsider. You're basically on the right path towards successful trading, just need a couple minor modifications to make it work. Probably a simple matter of identifying a few situations where you can let the profit run a little longer and/or work with somewhat more lenient stop losses. Also pulling the reins on the over-trading.. Etc. . So if you put together another stake, come back on here and let's see what we can do.

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SteveH
Orlando, Florida, USA
 
 
Posts: 34 since Oct 2010
Thanks: 3 given, 96 received

mtwzzz,

Good advice. The only thing I would add is to trade the CL instead of the 6E. Lots more 12-30 tick scalping moves while keeping the average stop loss to 7 ticks (varying from 5-10 ticks per trade, given the setup). The avg 45% winning pct is fine and a REALISTIC long-term expectation. Let the odds play out with the superior risk/reward ratios you can get. [I'm like a broken record in these forums: winning pct and RR ratio have an INVERSE relationship in trading systems. You should be getting higher RR ratios at the 45% winning pct level than shown here. Agree...minor tweaking involved.]

The volatility has been lower (in general) on the CL over the past few months, but I'm confident that it will "come out and play"...like it always does. It's a good time for a beginner to get used to trading it.

If you ever start freaking out on the CL, look at a 20 ema on a 72 tick chart. When you get out of the flats, you'll see lots of bounces in the 20-50 tick (total) moves where a 7 tick stop loss on the opposite side had no worries. You can see that the ones which went to 10+ ticks tended to spell trouble for more strong trending. LOTS of 3-5 ticks pullbacks to the other side of the line and an advance of 12 to 20 ticks before the next pullback to the 20 ema again. 45% winning pct is right in the ballpark. This is SO important: get good reading that context right first (up / down / sideways determination with a good read on degree of choppiness of trend). That's how you get the casino effect...taking your setups when the context is in your favor.

Bob Volman's book is so on the mark. It's the complete picture of what you need to do. It's written in plain English. It's thoughtful, realistic and just a pleasure to read.

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mwtzzz
Sunnyvale, CA
 
 
Posts: 171 since Dec 2012
Thanks: 8 given, 105 received

SteveH:

Good post.

A lot of people mistakenly believe they should not be making losing trades. They strive for the unattainable perfection of nothing but winning trades. But it doesn't really matter your percentage of losing trades, as long as the wins make them up + some. Who cares if you have 70% losers, as long as the other 30% makes up the losses and provides a profit on top of it?

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MisterGopher
Alexandria, VA
 
 
Posts: 17 since Jun 2012
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Mwtzz and SteveH

It's crazy to me that you started chiming in on this little random journal thread of mine. That there are these faceless folks across the web that want to help and guide me even when I have not active in my own thread. You've provided me the opportunity to update my journal with the last couple months activity which is something that I have wanted to do anyway. But first, Mwtzz, to address my journal title. I think you figured this out after you posted your first comment, but it is purely an aspiration and not a statement of my current abilities. None of us would be here on futures.io (formerly BMT) if we didn't think that we had to potential to be successful.

When somebody recommended Volman in my thread I was appreciative but also worried because I knew that I was going to change what I was doing AGAIN. I had just resolved to stop taking advice, but I couldn't resist. Volman seemed to be teaching what I had always felt but could never express to people about trading.

I bought and started reading Volman and at the same time kept trading and was more and more influenced by him in the trades I took. It hasn't gone well and I am on the biggest skid of my accounts history - about a 25% drawdown from my high of $10,700 which I had posted after my first week of journaling on futures.io (formerly BMT) in November A lot of that was taking bad trades due to impatience and wanting to trade. But even the good trades have been stalling a tick from my target or hitting my target and not getting filled and turning into losses.

I'm at the point now where I feel that my time is better spent reading Volman again than trading. But I really want to trade and get my account back in the right direction. I've also had a lot of change in my life the last couple months unrelated to trading. I took a new job out of state and my family hasn't moved down yet. My surroundings are different, my schedule is different, and I think it has caused me to lose focus in my trading. Not to mention the fact that I have had to learn a lot of new things for work and that has taken time away from my trading work.

Thanks to you both for reaching out and checking in on me. I haven't blown up my account, but it has been a straight line down from 10,700 to 8,000 and I have lost a lot of confidence. The winners have been very far and few between. Honestly, right now I'm scared to take another trade because I don't want to see a number that starts with 7 on my statement.

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 plethora 
Los Angeles, CA
 
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MisterGopher View Post
When somebody recommended Volman in my thread I was appreciative but also worried because I knew that I was going to change what I was doing AGAIN. I had just resolved to stop taking advice, but I couldn't resist.

It may turn out that you will "change" your trading ways more times than you ever imagined -- and then possibly return to where you started. Don't be alarmed. Think of it as a painting in process, or a science experiment, whichever metaphor resonates best. But allow yourself to evolve and don't act like a stern parent to yourself limiting your experiences when so many possibilities are open to you. If something you are exploring doesn't work out presently, just let it go. It will still be part of your toolbox to grab when you have your epiphany about works best for you.

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MisterGopher
Alexandria, VA
 
 
Posts: 17 since Jun 2012
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6 trades this morning, total +38 ticks. Made some mistakes, but feels good to have a positive day.



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mwtzzz
Sunnyvale, CA
 
 
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MisterGopher:

Glad to see you're back and glad to see you're still trading.

Let me tell you a little about my approach, maybe it will help you. Trading oil futures my methods have always
been my own. I never felt the need to use anybody else's ideas and aside from looking at a couple books
like Volman's, I've never felt the need to seek out anybody's else's methods. So if you have your own trading
method that seems like it "almost works", that's a pretty good sign that it will work with a little
tweaking. No need to go seeking out brand new methods.

As I said before, it doesn't matter whether you have an up day, or a down day. As long as your strategy gives you
an edge over a large number of trades, then it will work out in the end. You can't be getting emotional about the results
of any particular day.

I'm sure the main cause of distress is that you simply don't know whether your strategy has that edge over time. And
that's a tough one, because it can only come by seeing it in action over a long period of time.

But there is one thing you can do which will give you an idea. Backtest your strategy in Tradestation. Just be sure you are backtesting your actual strategy.

Or pick two of Volman's methods and backtest those. This will give you a really good idea of whether they are viable or not. It will also teach you a lot about trading strategies
in general because you can instantly see the results.

I personally am flexible in my setting of stops and profit targets. I look at price areas rather than
specific price points. When I enter a trade I set a stop loss based on a general area rather than a
certain price. Same thing with the profit objective. These "areas" (price ranges) are the result of my interpretation
of price behavior, and therefore as the behavior evolves and changes, these areas may or may not stay the
same, and so profit and loss targets might change too. In any case, you certainly don't need to trade in this
manner, but if you are encountering a lot of situations where you stall just a few ticks shy of your
objective, then it help to be a bit flexible.

I trade according to setups that give different ranges of profit and loss objectives. Some of my trades have a
profit objective of 10 ticks. Others 25 or 50 ticks. When losses start adding up on me, I start looking
for the "higher probability"/"larger range" setups. In this way if I'm working out of a 30-tick loss,
then I may strive for the entire 30-ticks in one trade, or perhaps break into chunks of 15 each or something.

Same thing with stop losses. Some of my trades have a very tight stop, others have a large stop. It all depends
on my assessment of price behavior. I'm flexible in this as long as the price behavior permits me to be
flexible. I guess what I'm getting at is, carrying a loss on a trade is a necessary part of trading, and
the conditions are dynamic so you may need to adjust that stop in real-time, tighter or looser, to reflect
changing conditions.

This of course is the opposite of what Volman advocates, which is a hard-coded stop point and profit point
on every trade. In my personal opinion, both methods are valid and probably end up giving you about
the same results when all is said and done.

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 Cloudy 
desert CA
 
Experience: Intermediate
Platform: NT7, SC, ToS
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MisterGopher, your last trades looked great. On the 6E no less. Bravo!

Hope you found what's working for you since your previous update. I took a look at Volman's book. Personally I wasn't impressed with the setups or the trade management but maybe that's because I've been through a bunch of other methods already in two years. Seeing that you've only been trading futures for 5 months, if you're still having
uncertainty reading the price action, I would suggest the popular Al Brook's material, if only to learn about BPA. Not necessarily having to use his setups while still using your own.


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MisterGopher
Alexandria, VA
 
 
Posts: 17 since Jun 2012
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2 trades last night and 7 this morning. Total of -22 ticks.




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mwtzzz
Sunnyvale, CA
 
 
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MisterGopher View Post
2 trades last night and 7 this morning. Total of -22 ticks.

on the first setup in that first picture, what you want to do is put a stop below the lowest bars just before that mini "breakout". See the two low bars around 18:16. So you want to put a stop some reasonable distance below them. The idea is that the little breakout won't stall and go below those two bars if it is a true breakout. For this trade you want to put a profit target in the vicinity of and below the tops of the highest bars in the graph to that point. Say around 1.3330. The idea is that those highs represent a resistance area (congestion) and you expect a good possibility prices will stall around that area but you should not try to predetermine a specific price point. You need to be flexible. And so I always give it the benefit of the doubt and assume it may stall and reverse before it gets to the actual highs of those bars.
On the second setup in that picture, my strategy would be the reverse of what I just described.

The second picture I personally would not trade because there's not enough volatility to indicate direction. It seems like gently undulating stuff and I have a hard time determining what it means.

The first half of your third picture. Here's what I would have done:
(a) gone long around 3:47:08 for a retracement to a point about half way up that long green bar to the left and a stop below the lowest of that long green bar. Then several bars later as it is apparent no quick retracement is occuring liquidate at flat

(b) Prices bewteen 4:00:06 and 4:21:10 seem choppy with no consistent areas of congestion (resistance, support). do nothing

(c) prices bewteen 4:21:10 and 4:44:00 seem like a gently meandering "trend" or whatever. I never trade gently meandering stuff. Do nothing here.

(d) Go long on that upward breakout at 4:58 with a stop in the lower 25% of that first long green bar, and a profit target about half way between my entry and the congestion areas previously indicated on the chart in the 1.3342 area. And then just wait and see what happens. The back-to-back series of long green bars immediately after entry wouldn't phaze me because the thrust of the initial breakout should be strong enough to make that irrelevant as long as it doesn't get back to the lower portion of that breakout bar.

Basically with breakouts you should assume that it is not a legitimate one if the price goes back to the lower 25% of the bar that indicates the breakout.

There's two kinds of breakouts that indicate a trade to go long: there's the reversal off a bottom and there's a breakout above a resistance area. To trade either of these you first have to have a clear establishment of congestion areas in those regions. The "gently undulating" prices don't give any clear indication of that, which is why I don't trade those.

When you're trading a reversal off a bottom this is a retracement and you can assume basically a 50% retracement will possibly occur. So you could put a profit objective at 30-50%.

When you're trading a breakout above a resistance are, look backwards in the chart to determine the next resistance area farther up, and put a profit objective maybe 50-75% along the way to that next area.

If there is no next area (ie price is making new highs), you don't put any profit target. You hold it (in fact you should pyramid, ie add to your position) and then just let the price action determine the new resistance and support areas on its own.


The same type of principles apply in reverse when going short.

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 Cloudy 
desert CA
 
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Just some ideas on using BPA ("Brook's price action) with your last chart update MisterGopher. This is just my own independent immediate take. Great analysis Mwtzzz.

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MisterGopher
Alexandria, VA
 
 
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10 trades, -20 ticks. Charts posted with some commentary this time. Huge thanks for the analysis on my last post. You both blew me away with the time you put into it. I read them both multiple times trying to really understand your thought process.

I'm really feeling bad today. I can't help it. You guys are like machines and I just want to be successful so bad and I am starting to feel like I don't have the ability/time to get to where you are. I am afraid for my account now and am starting to wonder if I should take a break and close it out. I'm down 25% of my 10k and what is next, $5k? I can't help but think about my account balance and "getting back" and I know that is dangerous.

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MisterGopher
Alexandria, VA
 
 
Posts: 17 since Jun 2012
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charts mentioned in previous post

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mwtzzz
Sunnyvale, CA
 
 
Posts: 171 since Dec 2012
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MisterGopher View Post
10 trades, -20 ticks.

Probably overtrading. I bet a lot of those trades, if you had let them sit longer would have shown you some profit instead of loss, right?



Quoting 
I'm really feeling bad today. I can't help it.

I view trading as nothing more than a game of probabilities. If I have a 20 tick loss, then I'm looking for a good setup that will give me 30 ticks. I try to avoid making up a 20-tick loss with a series of 5-tick wins.

Why don't you take a breather, forget everything you've read, forget all the advice, and take some time to study the price behavior on your own. Watch it and study it without preconceived notions. Take a general view of it and see if you can figure out some basic, repeatable patterns.

Like, for example, in CL if the price drop 120 ticks within an hour, chances are quite good that it will retrace 30% of that quickly, and maybe retrace 50% of it over the next several hours. That's a setup I play all the time (well, at least when it happens, which is not often, these days maybe 3 or 4 times a month). Not guaranteed, but it works more often than it doesn't, and that's how you make money.

If you can develop your own general, basic observations, then that's the best first start.

There are setups that are higher probability than others. Ones that have a much higher chance of working than not. If your money is dwindling and you can't afford to lose any more, then these are the setups you need to wait for.

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mwtzzz
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charts mentioned in previous post


Wow, that's a lot of trading. As we all know, the dumb way to trade is to buy and hold something hoping that you eventually get a profit. Actually if you had enough patience and an unlimited supply of money to weather drawdowns, this actually would work most of the time. In your chart it would work if you had gone long at any point except those three top peaks on the left-side.

When would it possibly not work? If you go long at the end of a strong move upwards or if you go short at the end of a strong move downwards. Yes it could work if those moves continue. But it won't work if that happens to be the end of the move.

So how do you deal with those things? Start thinking in terms of retracements. A simple and valid way to trade is to enter on a 50% retracement. After a big move upwards has occurred, wait for a 50% retracement and then go long. Put a stop loss at the 80% retracement level and put a small, but reasonable profit objective, say 10 ticks or a 20% "retracement against the retracement". Chances are more often than not your profit will be hit before your stop loss.

Same thing in reverse for going short.

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