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The Way of the AttitudeTrader
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The Way of the AttitudeTrader

  #91 (permalink)
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Great thread AT!
Good follow through and detailed journal. Im curious, have you planned out your next phase, and the next one after that? set clear and concise goals about what type of trader you are(strengths and weaknesses) and a game plan of how you are going to get there? there is more: pre-market routine, closing your books, self-audits, grading yourself, disciplinary actions when you fail to follow your directives, goals(yearly, monthly, weekly, daily). And that is not even bringing into discussion your actual trading plan(i believe without the former in place a trading plan is doomed to fail no matter how good it is).
When I was coming up I traded exhaustively, I refused to even think about bringing in a new system to my live account until I successfully doubled 3 demo accounts with it /properly executed at least 2000 trades/ had 500 winners in a row/ and never exceeded my pre-determined risk. This took YEARS to accomplish but it was vital for me in coming up and making trading my profession.
I honestly found that for me personally(different for everyone), the #1 factor is actually knowing WHEN to trade and when not to. I see it time and time again with new traders, trading during times they shouldnt and being afraid to trade during times where the best opportunities present themselves. Over trading will crush even the best of traders.

You obviously have discipline and persistence my friend and trading takes that in spades. I wish you the best.

Wulf

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  #92 (permalink)
Attitude is everything.
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Weekend Review and Stats - Part Two

In this second part of my Weekend Review and Stats I'm going to address the topic of my current method, and my plans for moving into "Phase 2" of my development as a trader.

My current method

I want to start off by talking about the method/plan I've been using for this exercise so far.

I want to address this for a couple of reasons. The first is because I've had a few traders ask me what my method is, and the second is, if I were in their shoes, I would want to know too.

What is probably going to be hard to hear is that I essentially threw together a couple of parameters and started trading it (in sim). I knew that I was going to be using it for an exercise in consistency, so I wasn't too concerned about its performance. Which is why I've been so surprised by its performance. It has done far better than I would ever have expected it to.

But, if I were in those trader's shoes, it would be irritating to me to think that someone just threw together some rules and started making (simulated) money, when I've spent hundreds of hours (and literally decades of my life) trying everything under the sun and constantly losing.

However, this is how my very simple method has reinforced (for me) the coin toss concept that managing your trades and yourself is more important than your setups/entries.

But there's a secret!

I want to elaborate on this "thrown together" method though.

What I want to share is that there is a secret behind how I came up with the parameters I've been using. And that secret is that prior to starting this journal of my exercise in consistency, I traded (in sim) a horrible idea consistently enough that, even though it sucked, allowed me to start seeing how I was fighting the market, and get new ideas about things that might work better.

Why the **** should I waste my time trading an inferior method?

So the birth of this simple method I've been using came from the consistent application of another, pretty bad, method.

And, for me, this is the powerful answer to the argument that so many aspiring traders seem to have with what I'm doing.

That argument goes something like: "How in the **** is consistently trading a losing method going to help me? If I'm trading a losing method consistently, then I'm instilling bad habits aren't I? Why in the world would I want to waste my time getting my *** kicked trading a sucky method? I'm not going to waste my time with that. I'm going to do research, and once I figure out how the market works and come up with a method that has a good, positive expectancy, then I'll start to work on my execution skills and consistency."

In my mind that's tantamount to saying, "Give me the rank and pay grade of Sergeant Major first, and then I'll go to basic training." Or, "Give me the salary and title of Senior Vice President first, and then I'll start working in the mail room to learn this company from the bottom up."

That's bull****.

I think the problem lies in the differences between the behavioral structures of the military (or corporate) world and the trading world. And the root of that problem is that the responsibility for the development/advancement of the Marine in the Corps (or executive in the corporate world) lies almost entirely with the organization, whereas the responsibility for the development/advancement of the trader lies almost entirely with the trader himself/herself.

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In the military (or corporate) world you step into a structure that is already in place, and you must operate within the parameters of that structure in order to advance and in some cases to even survive. Additionally there are proven techniques in place to break you down and rebuild you in a way that benefits not only the structure but your experience within that structure.

But in trading, all you need is some money and enough smarts to fill out an account application, and voila, you're a trader - at whatever "rank" you decide, regardless of your true state of development.

In most cases there is absolutely no structure for you to step into, other than the liquidation of your account when you can't meet a margin call.

Rock bottom is a powerful place.

You're on your own. This is why I've been saying that starting at the bottom is the only real way to know where you stand.

In other words, "know your place" relative to the structure within which you're operating.

I believe that most aspiring traders either do not have an appropriate understanding of this concept, or they think that they're above it, or both (which is where I think I've been for most of my "career").

They're going to be "smart." They're going to do laborious amounts of backtesting. They're going to amass a treasure trove of statistical data on the market's behavior. They're going to discuss the most esoteric aspects of trading with other brilliant traders to come to greater enlightenment.

But when it comes to actually applying all of this brilliant research and understanding, they struggle. They need a million excuses as to why they're not successful in order to defend their idea that if they continue to learn more about the market they will eventually be successful. The exasperated comment is usually something like, "It's taking a lot longer to become a profitable trader than I thought it would."

You get what you give.

But I believe it has far less to do with learning about the market, and far more to do with learning about ourselves. I believe that the process that I'm going through right now is a vitally important component of my development into a successful trader.

And this process, at its most basic level, is about consistent behavior.

I'm beginning to see it as a kind of "you get what you give" thing. Even if you don't have a "winning" or "profitable" method, if you will just start interacting with the market in a consistent way, you will begin to get consistent feedback from the market. Then you can take that feedback to improve what you're doing.

I think things like combines, and attempts to try to force your trading results into a predefined box, work counter to your development as a trader in a powerful way, simply because they are emphasizing the achievement of erroneous goals.

Phase 2

At the end of yesterday's post I said, "I intend for this next phase to involve learning how to modify, develop and improve my trading method."

When I finished that post I still didn't have a clear idea about how I was going to modify my current method. I started jotting down ideas about what my rules might be if price did x while my indicator was doing y, and how I would quantify that under varying scenarios. Then I started looking at where my current method was having problems and searching for ways to avoid those situations. I poured over days and days of charts to see what things I could do to catch moves that I had been seeing during this exercise.

But the more I worked on it, the more concerned I got, because I wasn't really able to describe every aspect of what I was seeing in ways that would suit every situation. Last night after becoming a little frustrated, I finally let it go because I wasn't getting anywhere.

I started going over it in my mind again this morning to no avail when I realized that I really needed to step back and adjust the way I was looking at this whole Phase 2 thing. And that had to start with adjusting my attitude.

Attitude is huge...again

This is a big topic, and I'll discuss it in detail at some point, but I discovered that it was my attitude that was stunting my progress with how I should proceed with Phase 2. I immediately did what I needed to do to get into the right frame of mind, and once I did I started to see where I was getting held up.

I realized that I was looking for a way to speed this process up. I was looking for a way to start making better simulated money. I was looking for a way to be right more often. I was looking for a method/plan that would propel me to live trading sooner.

And that clarity made me realize that this attitude/mentality stems from my current situations regarding finances, work, family and self-value (need for success and validation).

Having come to those realizations, I was able to get back to "knowing my place." I was able to get back to understanding that I'm still in the beginning phases of my development as a trader (even though I've been at this for decades), and that the only objective is that development. It isn't about developing my method.

This is hard to come to terms with for me because it makes it very apparent that I still have a ways to go; that it's still going to take more time. And, I believe, this is why so few are willing to go down this path.

And this is where developing a positive outlook on the future, deciding to be mentally strong, having faith, and creating the confidence that you can and will succeed is critical.

An attitude like this is the only thing that is going to get you through this kind of process and the **** that you're going to have to deal with on the way to your ultimate goals and success.

Being wrong and missing out.

Once I got my "mind right," it became clear to me what Phase 2 was going to be about.

If Phase 1 was about learning the value of consistency by following a specific set of rules, then Phase 2 is going to be about learning how to deal with being wrong and missing out.

As I was going over ways to improve my method I saw that there were many instances where I would have to make a decision not to follow my original plan, and in some cases even go against it. And the difficulty I was having in coming up with improvements was because I was having a hard time dealing with the idea that if I took the "new" setup and the "old" one ended up working, I would be upset that I didn't just stick with my "old" rules. I would be "wrong" on the setup I took, and "miss out" on the the one I didn't take.

Up to this point the only way I could be "wrong" or "miss out" was by not taking the setup defined in my plan. But now I have the potential for being wrong and missing out due to my decisions. The responsibility for my success/failure, profits/losses, has now shifted from the method to me.

A decent plan today is better than a perfect plan next week.

It's time for me to start taking my own advice. I'll be putting together a well-defined set of rules for my Phase 2 entries, but I'm not going to worry too much about how well those entries are going to perform. I'll let time show me that.

I'm seeing now that the notes I jotted down for possible setups yesterday are actually pretty acceptable - not perfect, not proven, not even precise - but acceptable. They're something I can use to build on.

This means that I'm going to have to allow my method to be "not so great." I don't know everything yet. I haven't figured everything out yet. But I do "know my place." So I'll have to be ok with the fact that my ideas/setups may not work out so well - at least in the beginning.

I can already see that I'm going to have some gut-wrenching times during this process, but that's where the real work is going to be: learning how to manage my reactions to being wrong and missing out, as well as the ever-present fact that I'm still nowhere near my ultimate goal of making a living from my trading.

I have to remember that this is a process of incremental improvements - in the method and in myself.

And I have to have the faith that somehow, some way, I will ultimately reach my goal.

Here we go again...

I knew I needed to do it, but I could never have predicted how much this exercise would change the way I look at my trading.

As such, the main focus will continue to be on my own consistency.

And the only performance that will continue to be of the utmost importance to me is my own performance.

"Is it hard? Not if you have the right attitude. It's having the right attitude that's hard." - Robert Pirsig
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  #93 (permalink)
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Training Day 34


Mission Plan: 2013.03.11.218-238

Kevlar, bullets & batteries checked and ready...
08:25 T-Minus 5...weapons live...head on swivel...eyes peeled...prepared to engage.

Trade #218
08:42 Long on [SS2] setup (going against Core setup). Win or lose, it's irrelevant. Record the trade, watch it, and learn...
Wow! Extremely nervous but it's a setup according to my Mission Plan, so I need to take it. I feel like I'm walking a tightrope without a net or something. This is "no man's land" for me. Well done executing in the face of uncertainty PFC! It appears that you're beginning to mature into this regime!
08:48 Target 1 found. +6 ticks.
08:51 Target 2 found. +10 ticks.
Record results, stabilize/regroup, and prepare for the next assault. Focus only on the task at hand.

Trade #219
09:17 Long on [Core] setup. Win or lose, it's irrelevant. Record the trade, watch it, and learn...
09:49 Target 1 found. +6 ticks.
I thought for sure this one was going to get stopped out, but I'm used to how my Core setups behave so I just had to wait to see what would happen.
10:11 Target 2 found. +10 ticks.
Record results, stabilize/regroup, and prepare for the next assault. Focus only on the task at hand.

Avoiding my Core setup
11:41 [COS1] I'll be avoiding a Core setup here as part of the subjective decision-making latitude built into my rules/plan. This decision is based on reasoning specifically outlined in my Mission Plan document.
12:02 Not necessary. Price didn't come to the entry level anyway.

Avoiding my Core setup again
13:15 [COS1] I'll be avoiding a Core setup here for the same reasons as above.
13:47 Application of this discretionary rule kept me from a winning Core setup.
This doesn't feel great, but I don't feel horrible about it.
The second target level was touch but not exceeded, and shows me that this was not a strong setup anyway, and could easily have been a losing trade.

Avoiding my Core setup again
13:59 [COS1] I'll be avoiding a Core setup here for the same reasons as above.
14:36 Application of this discretionary rule saved me from a losing Core setup.
I felt a greater sense of control over my trading by being able to avoid this trade. And it turned out to be a beneficial decision.

Mission complete. RTB for AAR.
14:30 New entry cut-off time. Finished for the day.

Special Note
Starting today I'll be noting the specific Mission Plan in use at the beginning of each post. I'll also be noting the specific rule (or set of rules) being applied for each trade or circumstance. For example, [Core] is my core setup rules, [SS1] is "Supplemental Setup #1," [COS1] is "Core Override Situation #1," etc. This way I can go back and see exactly why I did what I did if I need to.

AAR
  • Objective: Follow mission plan with extreme prejudice.
    -
  • Outcome: I followed my plan well for my first day of dealing with more discretionary decision-making.
    -
    I had one [COS1] that cost me a (probable) winning trade, and one that saved me from a (certain) losing trade.
    -
    I'm doing a 20-trade sample size (through trade #238) for this first application of my Phase 2 training rules, so that it doesn't take too long before I can make a modification if I need to.
    -
  • Observations: I was a little surprised that I didn't feel more irritation about missing out on a winning Core setup, but it was nice to have the next application of that rule save me from a losing trade. I'll just have to see how it works out over time.
    -
    Overall it was a much slower pace for my trading today, and the market too I guess.

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"Is it hard? Not if you have the right attitude. It's having the right attitude that's hard." - Robert Pirsig
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Last edited by AttitudeTrader; March 12th, 2013 at 06:54 PM.
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  #94 (permalink)
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Training Day 35

Mission Plan: 2013.03.11.218-238

Kevlar, bullets & batteries checked and ready...
08:25 T-Minus 5...weapons live...head on swivel...eyes peeled...prepared to engage.

Close, but no cigar
08:48 Price came near an entry level defined by my [SS2] rule, but didn't quite get there and now I'm watching price power away. Something I'm going to have to get used to.

Didn't get a [Core] entry
09:23 Didn't get a [Core] entry fill, because I'm placing my MIT orders 1 tick beyond my entry level. In this case my entry level was touched, but not exceeded (to touch my MIT order). This is a situation where I would normally have been filled in sim using a Limit order and ended up with a "0 MAE" trade, which is precisely what I'm trying to avoid during this phase.
Price reached T1, so this setup is now over.
09:29 Price only exceeded T1 by 1 tick before falling to hit the stop on the second lot. This trade would have only netted +1 tick.

Trade #220
10:02 Long on [SS2] setup. Win or lose, it's irrelevant. Record the trade, watch it, and learn...
10:05 Stopped out. -10.
Followed the setup rules, but I'm still feeling a wave of aggravation. I feel stupid like I stepped in front of a bus. I made a note on my chart that the uptrend was looking like it was turning over based on the things I'm watching, and it did. I know I'm feeling this aggravation because the outcome of the trade was a result of <i>my decision</i> rather than the "system." That's right PFC, and there are plenty more of those to come! Now you can lay there on the ground and whine, or you can stand your *** back up and get ready for the next fight! What's it gonna be?!
Record results, stabilize/regroup, and prepare for the next assault. Focus only on the task at hand.
ERROR: I realized that when I was first watching this setup, it fit the [SS2] criteria, but by the time I entered, it didn't anymore.
And the main reason for this error was that I got up from my desk to go to the bathroom and grab a couple of treats for the dog and cat, and when I sat down I saw price falling and hit the entry without looking to see if things had changed.

Trade #221
10:36 Short on [Core] setup. Win or lose, it's irrelevant. Record the trade, watch it, and learn...
10:47 Target 1 found. +6 ticks (hit to the tick - don't like this).
10:54 No Joy on Lot #2. -5 ticks.
Record results, stabilize/regroup, and prepare for the next assault. Focus only on the task at hand.

Trade #222
10:57 Short on [SS1] setup. Win or lose, it's irrelevant. Record the trade, watch it, and learn...
Stepping in front of the bus again...
Avoiding my Core setup
11:06 [COS1] During this trade I'm getting a Core setup too, but I'll be avoiding it here as part of the subjective decision-making latitude built into my rules/plan. This decision is based on reasoning specifically outlined in my Mission Plan document.
11:22 Target 1 found. +6 ticks.
11:28 Target 2 found. +10 ticks.
[COS1] saved me from a losing Core setup and let me have a winning [SS1] setup.
Record results, stabilize/regroup, and prepare for the next assault. Focus only on the task at hand.

Trade #223
11:56 Short on [SS2] setup. Win or lose, it's irrelevant. Record the trade, watch it, and learn...
This is actually preempting a [Core] setup that is forming in the opposite direction.
12:31 Target 1 found. +6 ticks.
12:54 Target 2 found. +10 ticks.
Record results, stabilize/regroup, and prepare for the next assault. Focus only on the task at hand.

Trade #224
13:25 Short on [Core] setup. Win or lose, it's irrelevant. Record the trade, watch it, and learn...
Order Entry Error: In one tick below where I should be. I'm used to entering Limit orders at my price level, but I need to be entering my orders 1 tick beyond my entry levels because I'm using MIT orders.
13:42 No Joy. -10 ticks.
Record results, stabilize/regroup, and prepare for the next assault. Focus only on the task at hand.
As I look back at my charts I realize that I had the opportunity to invoke my [COS1] rule, which would have saved me from a losing [Core] setup.

Trade #225
14:13 Short on [SS1] setup. Win or lose, it's irrelevant. Record the trade, watch it, and learn...
14:23 No Joy. -10 ticks.
Record results, stabilize/regroup, and prepare for the next assault. Focus only on the task at hand.

Mission complete. RTB for AAR.
14:30 New entry cut-off time. Finished for the day.

AAR
  • Objective: Follow mission plan with extreme prejudice.
    -
  • Outcome: My first trade of the day was an error and a loser. The cause was a lack of focus. Completely avoidable. I didn't knowingly take any trades outside of my plan though.
    -
    It will take some time to get used to my new setups. I can already see that I'm going to have to reformat the way I have them listed in my Mission Plan too.
    -
    My [Core] setups didn't do well today. In fact on trade #221, my exit was to the tick on a Limit order and would likely not have been filled live, so it was more likely a full loser.
    -
  • Observations: I had a rush of interesting realizations today.
    -
    I found it interesting that I kept seeing things happening on my charts that looked like "good" setups, but when I double checked my list of setups in my Mission Plan, they weren't even close to being a part of my rules.
    -
    And it's amazing: Every time I allowed my mind to wander away from the rules I have literally sitting right here in front of me on my desk, I could feel the uncertainty, confusion and anxiety that I used to experience on a nearly constant basis.
    -
    I also found it interesting how "comfortable" I felt with my Core setup. It's not that it's better (as evidenced by today's performance), it's just that I've taken so many trades using it that I don't have too much issue with entering it, letting it go, and waiting to see what happens.
    -
    And the last thing: Just as it has been in the past, it seems that it only takes one or two days of poor performance using a new method and I'm ready to start changing it or looking for something better. I feel that way today.

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"Is it hard? Not if you have the right attitude. It's having the right attitude that's hard." - Robert Pirsig
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Last edited by AttitudeTrader; March 12th, 2013 at 06:55 PM.
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  #95 (permalink)
Attitude is everything.
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Training Day 36

Mission Plan: 2013.03.12.218-238

Pre-market
08:12 Core setup override situation [COS3] in effect.
08:13 Watching for possible [SSN1] setup.

Kevlar, bullets & batteries checked and ready...
08:25 T-Minus 5...weapons live...head on swivel...eyes peeled...prepared to engage.

Initiated [COS3] rule
08:49 [COS3] saved me from a losing Core setup.

Incoming barrage. Take cover and stand by...
08:50 Important report due out in 10 minutes.
08:54 [COS1] would have saved me from a losing Core setup if I had still been entering orders.

Trade #226
09:11 Short on [Core] setup. Win or lose, it's irrelevant. Record the trade, watch it, and learn...
Filled 2 ticks below my order using MIT.
09:14 No Joy. -10 ticks.
Record results, stabilize/regroup, and prepare for the next assault. Focus only on the task at hand.

Could have initiated [COS3] rule
09:28 On trade #226 I is was selling into support at 1542.75 because I really thought we would break through to test yesterday's low. The fact that I made the decision (to take a [Core] setup instead of invoking my [COS3] rule) and that it looks stupid on my charts now is causing me some anxiety, and I feel confusion and hesitation creeping in.

Trade #227
09:36 Long on [Core] setup. Win or lose, it's irrelevant. Record the trade, watch it, and learn...
09:37 Target 1 found. +6 ticks.
09:42 Target 2 found. +10 ticks.
Record results, stabilize/regroup, and prepare for the next assault. Focus only on the task at hand.

I know I'm still too emotionally tied to my trades, because I felt much better once I had this winner. But that's just part of the process.

Trade #228
10:32 Long on [Core] setup. Win or lose, it's irrelevant. Record the trade, watch it, and learn...
Ugh. Going to have another loser here. WHAT?! Where is your head PFC?! It doesn't matter! You took appropriate action and now it's out of your hands. What happens on this one trade is meaningless! Take notes, record the results and get ready for your next assignment!
11:18 Target 1 found. +5 ticks. Because I'm using MIT's for exits too, I got filled 2 ticks below my actual order.
11:29 Target 2 found. +10 ticks.
Record results, stabilize/regroup, and prepare for the next assault. Focus only on the task at hand.

Initiated [COS1] rule
13:52 [COS1] saved me from a losing Core setup.

Missed a new setup
14:21 I missed an [SSA2] setup. I'm trying to make sure that I'm not just making things up, and I just dismissed what price was doing as a non-plan move without really re-reading my setups. It'll take some time to get used to them. I wouldn't have been filled on this one, but I should have had an order in anyway.

Mission complete. RTB for AAR.
14:30 New entry cut-off time. Finished for the day.

AAR
  • Objective: Follow mission plan with extreme prejudice.
    -
  • Outcome: I didn't take any out-of-plan trades, but I did miss an entry (even though it wouldn't have been filled).
    -
    I also had to deal with a losing trade as a result of my decision to take a [Core] setup instead of invoking a [COS3] rule.
    -
    After yesterday I needed to reorganize my setups so that I can refer to them more easily, and I had to change my setup codes as a result - same rules, just different codes, and new Mission Plan number.
    -
  • Observations: I'm definitely experiencing a different pace to my trading now: fewer trades, less action.
    -
    I also realize that I've created more rules than I know by heart yet. I have to be more diligent about checking current market action for a match to one (or more) of my rules.
    -
    My [COS1] and [COS3] override rules are working so well that I may have to consider turning them into entry setups at some point.

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"Is it hard? Not if you have the right attitude. It's having the right attitude that's hard." - Robert Pirsig
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Last edited by AttitudeTrader; March 13th, 2013 at 07:39 PM.
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What a wonderful piece of wisdom!

What a wonderful post!

I have nominated this post for "Trader's Edge" feature (here) and hope it gets highlighted as one of the posts of the month:



AttitudeTrader View Post
In this second part of my Weekend Review and Stats I'm going to address the topic of my current method, and my plans for moving into "Phase 2" of my development as a trader.

My current method

I want to start off by talking about the method/plan I've been using for this exercise so far.

I want to address this for a couple of reasons. The first is because I've had a few traders ask me what my method is, and the second is, if I were in their shoes, I would want to know too.

What is probably going to be hard to hear is that I essentially threw together a couple of parameters and started trading it (in sim). I knew that I was going to be using it for an exercise in consistency, so I wasn't too concerned about its performance. Which is why I've been so surprised by its performance. It has done far better than I would ever have expected it to.

But, if I were in those trader's shoes, it would be irritating to me to think that someone just threw together some rules and started making (simulated) money, when I've spent hundreds of hours (and literally decades of my life) trying everything under the sun and constantly losing.

However, this is how my very simple method has reinforced (for me) the coin toss concept that managing your trades and yourself is more important than your setups/entries.

But there's a secret!

I want to elaborate on this "thrown together" method though.

What I want to share is that there is a secret behind how I came up with the parameters I've been using. And that secret is that prior to starting this journal of my exercise in consistency, I traded (in sim) a horrible idea consistently enough that, even though it sucked, allowed me to start seeing how I was fighting the market, and get new ideas about things that might work better.

Why the **** should I waste my time trading an inferior method?

So the birth of this simple method I've been using came from the consistent application of another, pretty bad, method.

And, for me, this is the powerful answer to the argument that so many aspiring traders seem to have with what I'm doing.

That argument goes something like: "How in the **** is consistently trading a losing method going to help me? If I'm trading a losing method consistently, then I'm instilling bad habits aren't I? Why in the world would I want to waste my time getting my *** kicked trading a sucky method? I'm not going to waste my time with that. I'm going to do research, and once I figure out how the market works and come up with a method that has a good, positive expectancy, then I'll start to work on my execution skills and consistency."

In my mind that's tantamount to saying, "Give me the rank and pay grade of Sergeant Major first, and then I'll go to basic training." Or, "Give me the salary and title of Senior Vice President first, and then I'll start working in the mail room to learn this company from the bottom up."

That's bull****.

I think the problem lies in the differences between the behavioral structures of the military (or corporate) world and the trading world. And the root of that problem is that the responsibility for the development/advancement of the Marine in the Corps (or executive in the corporate world) lies almost entirely with the organization, whereas the responsibility for the development/advancement of the trader lies almost entirely with the trader himself/herself.

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In the military (or corporate) world you step into a structure that is already in place, and you must operate within the parameters of that structure in order to advance and in some cases to even survive. Additionally there are proven techniques in place to break you down and rebuild you in a way that benefits not only the structure but your experience within that structure.

But in trading, all you need is some money and enough smarts to fill out an account application, and voila, you're a trader - at whatever "rank" you decide, regardless of your true state of development.

In most cases there is absolutely no structure for you to step into, other than the liquidation of your account when you can't meet a margin call.

Rock bottom is a powerful place.

You're on your own. This is why I've been saying that starting at the bottom is the only real way to know where you stand.

In other words, "know your place" relative to the structure within which you're operating.

I believe that most aspiring traders either do not have an appropriate understanding of this concept, or they think that they're above it, or both (which is where I think I've been for most of my "career").

They're going to be "smart." They're going to do laborious amounts of backtesting. They're going to amass a treasure trove of statistical data on the market's behavior. They're going to discuss the most esoteric aspects of trading with other brilliant traders to come to greater enlightenment.

But when it comes to actually applying all of this brilliant research and understanding, they struggle. They need a million excuses as to why they're not successful in order to defend their idea that if they continue to learn more about the market they will eventually be successful. The exasperated comment is usually something like, "It's taking a lot longer to become a profitable trader than I thought it would."

You get what you give.

But I believe it has far less to do with learning about the market, and far more to do with learning about ourselves. I believe that the process that I'm going through right now is a vitally important component of my development into a successful trader.

And this process, at its most basic level, is about consistent behavior.

I'm beginning to see it as a kind of "you get what you give" thing. Even if you don't have a "winning" or "profitable" method, if you will just start interacting with the market in a consistent way, you will begin to get consistent feedback from the market. Then you can take that feedback to improve what you're doing.

I think things like combines, and attempts to try to force your trading results into a predefined box, work counter to your development as a trader in a powerful way, simply because they are emphasizing the achievement of erroneous goals.

Phase 2

At the end of yesterday's post I said, "I intend for this next phase to involve learning how to modify, develop and improve my trading method."

When I finished that post I still didn't have a clear idea about how I was going to modify my current method. I started jotting down ideas about what my rules might be if price did x while my indicator was doing y, and how I would quantify that under varying scenarios. Then I started looking at where my current method was having problems and searching for ways to avoid those situations. I poured over days and days of charts to see what things I could do to catch moves that I had been seeing during this exercise.

But the more I worked on it, the more concerned I got, because I wasn't really able to describe every aspect of what I was seeing in ways that would suit every situation. Last night after becoming a little frustrated, I finally let it go because I wasn't getting anywhere.

I started going over it in my mind again this morning to no avail when I realized that I really needed to step back and adjust the way I was looking at this whole Phase 2 thing. And that had to start with adjusting my attitude.

Attitude is huge...again

This is a big topic, and I'll discuss it in detail at some point, but I discovered that it was my attitude that was stunting my progress with how I should proceed with Phase 2. I immediately did what I needed to do to get into the right frame of mind, and once I did I started to see where I was getting held up.

I realized that I was looking for a way to speed this process up. I was looking for a way to start making better simulated money. I was looking for a way to be right more often. I was looking for a method/plan that would propel me to live trading sooner.

And that clarity made me realize that this attitude/mentality stems from my current situations regarding finances, work, family and self-value (need for success and validation).

Having come to those realizations, I was able to get back to "knowing my place." I was able to get back to understanding that I'm still in the beginning phases of my development as a trader (even though I've been at this for decades), and that the only objective is that development. It isn't about developing my method.

This is hard to come to terms with for me because it makes it very apparent that I still have a ways to go; that it's still going to take more time. And, I believe, this is why so few are willing to go down this path.

And this is where developing a positive outlook on the future, deciding to be mentally strong, having faith, and creating the confidence that you can and will succeed is critical.

An attitude like this is the only thing that is going to get you through this kind of process and the **** that you're going to have to deal with on the way to your ultimate goals and success.

Being wrong and missing out.

Once I got my "mind right," it became clear to me what Phase 2 was going to be about.

If Phase 1 was about learning the value of consistency by following a specific set of rules, then Phase 2 is going to be about learning how to deal with being wrong and missing out.

As I was going over ways to improve my method I saw that there were many instances where I would have to make a decision not to follow my original plan, and in some cases even go against it. And the difficulty I was having in coming up with improvements was because I was having a hard time dealing with the idea that if I took the "new" setup and the "old" one ended up working, I would be upset that I didn't just stick with my "old" rules. I would be "wrong" on the setup I took, and "miss out" on the the one I didn't take.

Up to this point the only way I could be "wrong" or "miss out" was by not taking the setup defined in my plan. But now I have the potential for being wrong and missing out due to my decisions. The responsibility for my success/failure, profits/losses, has now shifted from the method to me.

A decent plan today is better than a perfect plan next week.

It's time for me to start taking my own advice. I'll be putting together a well-defined set of rules for my Phase 2 entries, but I'm not going to worry too much about how well those entries are going to perform. I'll let time show me that.

I'm seeing now that the notes I jotted down for possible setups yesterday are actually pretty acceptable - not perfect, not proven, not even precise - but acceptable. They're something I can use to build on.

This means that I'm going to have to allow my method to be "not so great." I don't know everything yet. I haven't figured everything out yet. But I do "know my place." So I'll have to be ok with the fact that my ideas/setups may not work out so well - at least in the beginning.

I can already see that I'm going to have some gut-wrenching times during this process, but that's where the real work is going to be: learning how to manage my reactions to being wrong and missing out, as well as the ever-present fact that I'm still nowhere near my ultimate goal of making a living from my trading.

I have to remember that this is a process of incremental improvements - in the method and in myself.

And I have to have the faith that somehow, some way, I will ultimately reach my goal.

Here we go again...

I knew I needed to do it, but I could never have predicted how much this exercise would change the way I look at my trading.

As such, the main focus will continue to be on my own consistency.

And the only performance that will continue to be of the utmost importance to me is my own performance.


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iqgod View Post
What a wonderful post!

I have nominated this post for "Trader's Edge" feature (here) and hope it gets highlighted as one of the posts of the month:

Thank you @iqgod , that's very nice of you . More importantly I'm glad that you found it helpful or at least thought-provoking.

-AT

"Is it hard? Not if you have the right attitude. It's having the right attitude that's hard." - Robert Pirsig
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  #98 (permalink)
Attitude is everything.
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Training Day 37

Mission Plan: 2013.03.12.218-238

Kevlar, bullets & batteries checked and ready...
08:25 T-Minus 5...weapons live...head on swivel...eyes peeled...prepared to engage.

Trade #229
08:31 Long on [Core] setup. Win or lose, it's irrelevant. Record the trade, watch it, and learn...
I had some indecision here about whether I should invoke my [COS1] rule. I had to bite the bullet and make a decision.
08:36 Target 1 found. +6 ticks.
Unreal. I thought for sure this was going to be a bad trade.
08:43 Breakeven stop hit. +1 tick.
Not sure I like this breakeven stop thing, but I have to stick with it through this sample size.
09:01 My breakeven stop would have cost me a full lot #2 win if I had been using a limit order, and if it would have been filled, because it was never exceeded. As it stands, I'm using MIT's for exits, and I would not have been filled on lot #2, so it actually saved me from a full stop.

[COS1]
09:02 I've invoked my [COS1] rule here.
09:14 [COS1] saved me from another losing [Core] setup.

Trade #230
09:36 Short on [Core] setup. Win or lose, it's irrelevant. Record the trade, watch it, and learn...
09:56 Feeling some regret about taking this trade because I just don't think that it's going to fall like I need it to. Understood PFC, but we need to stay consistent so we can get consistent feedback! You are more than this one trade! You've started to embody consistency! This trade doesn't matter! Stand strong, win or lose!
10:47 No Joy. -10 ticks.
A little aggravated here. Understood. Now shake it off and prep for the next assault!
Record results, stabilize/regroup, and prepare for the next assault. Focus only on the task at hand.

Trade #231
11:52 Long on [Core] setup. Missed the initial entry because the trigger was so close, so after price fell through my entry level (but not to the stop level) I entered a stop to enter if price moved back up, which it did, but pulled right back down again.
Win or lose, it's irrelevant. Record the trade, watch it, and learn...
12:05 Can't believe that this is actually turning higher. I had already accepted the loss.
12:23 Guess it was a good thing I had already accepted the loss. No Joy. -10 ticks.
Record results, stabilize/regroup, and prepare for the next assault. Focus only on the task at hand.

Weekend Liberty granted. Report for duty 08:00 Monday.
13:30 Cutting out early today (it's my birthday so I can do that) and taking tomorrow off. My daughter is going to be staying the night here tomorrow with her friends on their way back to school from spending spring break in Austin this week (during the South by Southwest Festivals where she met Jack Black and got her picture with him...squeal!), and I need to get things squared away around the house.

AAR
  • Objective: Follow mission plan with extreme prejudice.
    -
  • Outcome: Followed the rules of my plan, but found myself a little unsure at times because I'm having to make "this or that" decisions. It will just take time to get used to it.
    -
  • Observations: My [COS1] rule saved me from another losing [Core] setup again today. I'm feeling pretty fortunate to have my [COSx] rules in my plan because they have reduced my potential drawdown for this week quite a bit.

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"Is it hard? Not if you have the right attitude. It's having the right attitude that's hard." - Robert Pirsig
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AttitudeTrader,

There are some great journals on futures.io (formerly BMT) and each has its place, but your journal feels like I am reading my own...the one I never wrote for so so long. I too have been a trader for a very long time and been through many ups and downs with little to show for it but piles of experience. Your focus on consistency rather than method really speaks to me and its clear where my focus should have been all these years. I am exactly like the person you describe when you talk about saying "if I just get an edge, then the rest will fall into place". For me, that has been an endless feedback loop.

You've given me some new direction (and maybe a little hope). Thank you, and Happy Birthday!

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  #100 (permalink)
Attitude is everything.
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WarEagle View Post
AttitudeTrader,

There are some great journals on futures.io (formerly BMT) and each has its place, but your journal feels like I am reading my own...the one I never wrote for so so long. I too have been a trader for a very long time and been through many ups and downs with little to show for it but piles of experience. Your focus on consistency rather than method really speaks to me and its clear where my focus should have been all these years. I am exactly like the person you describe when you talk about saying "if I just get an edge, then the rest will fall into place". For me, that has been an endless feedback loop.

You've given me some new direction (and maybe a little hope). Thank you, and Happy Birthday!

Thank you @WarEagle . Your post is the best birthday gift you could have given me.

-AT

"Is it hard? Not if you have the right attitude. It's having the right attitude that's hard." - Robert Pirsig
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