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A TopStepTrader's Humble-Pie-Way: A TST Combine Journal of iqgod's "Take 2"


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A TopStepTrader's Humble-Pie-Way: A TST Combine Journal of iqgod's "Take 2"

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  #1 (permalink)
 iqgod 
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I start off humbled.

The earlier combine attempt got me introduced to the reality of the trading problem.

Here I will attempt to document the 'correct journey'.

I will start with the 'correct map' of the trading territory.

I will define my setups, provide extensive statistics that they 'work' and then go on and document the results as applied to the combine - each and every post will be emerging from humility for my own benefit and I will try to make each post as a gift to the community, from a sense of gratitude because I am where I am because of @Big Mike.

My posts recently had dwindled to a trickle, but not because I was dozing - I have been testing out my hypotheses of the market, I have been honing my reactions (The market does what it does - what do I do?).

The goal is to prevent any activating event causing an automatic reaction and focus on self and an actionable plan - this is incredibly difficult to do in real-time, on real money. The attempts will be described here in simple terms.

Since this is a combine, the goal (of course) is to take up a capital of $30,000 in a period between 10 days to 20 days and increase it to $31,500 or more while managing risk average win > average loss; win percentage > 45%; wins to losses > 1; winner hold time > loser hold time. Needless to mention, no day with a drawdown more than $490, never a drawdown above $1500, always execute with stops, always close positions before market close.

The important part of whether I pass the combine is whether I have done 'the Work'.

Following is a list of items I wish to place in this journal before I even open a single trade in the combine:

- Risk management per unit is simple for a one lot trader. However there is still work needed - Is my strategy all in all out / scale in / scale out etc. - provide the hard math as to which would be most beneficial

- Have I defined my setup well and what are the statistics that allow me to unfalteringly place a trade OR NOT in the face of an uncertain outcome. To put it correctly: Choosing the combine trading product and the setup that has been most favorable for passing.

Unless I have done this work the combine will not start.

This is a place of honesty and integrity, and my commitment OR NOT will show up in these pages - I can make this journal as beautiful as flowers or as stark as a prison cell.

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 iqgod 
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Here I address the first problem area I encountered in the last combine.

Problem Area: Execution

The problem of execution had the following components for me:

Unanticipated moves. When caught off guard, which itself is a result of poor planning. Execution errors are more pronounced when entering countertrend, and also when entering with-trend at a climatic reversal point such as a failed final flag.
Added slippage, due to hesitation (see bar marked 5)
Anticipated moves, but early entry. (see bars marked 2, 6, 7 and 10) These are simply Impatient entries most of which can be averted by entering on a stop order one or two ticks distance from the signal bar or range break.
Execution paralysis. These are totally trader related. Scared quick exits without confirmation of reversal. No entry due to fear of trend having gone too far. Experience and practice reduce these errors. Late exits even after confirmation i.e. not exiting even after the market has shown its hand.
5. Missed entries. If these happen simply due to not anticipating and not being available when the market gets ready to move due to schedule, that is perfectly alright. A trader needs to eat, sleep and do other things. Trade-offs should not cause a resentation feeling, repenting or pining about missed entries and then cause further bad execution like chasing the market / more early entries without confirmation etc.

Of these (3) leads to greater MAE and / or causes money stops to be hit.

(1) means that a trader is trying to catch every wiggle of the market which is not bad by itself, but patience to wait for good setups always pays off - mainly due to the fact that (2) may cause being in a position which may then lead trying to close lesser positions which may cause NOT entering correctly when the really best opportunities present themselves.

(4) shows an incomplete understanding of the nature of trends, and the market in general and occasional lapses of discipline / attention

(1) and (4) show more practice and screentime is needed.


Here is a sample case presented from a recent chart of the ES on 22nd March 2013:




Description of context wrt execution on Chart:

At Bar marked 2 I read this as a point where buyers were certainly turned back, and any upmove to the right of the chart would possibly be met with stifff resistance.

This long entry was made as a range break to the upside. I was aware of it being countertrend to the overall market structure which showed a steep bearish trend and a measured move down was on the cards more than an upmove, but I sensed a quick scalp and tried to squeeze out a countertrend long scalper's profit. There were two things wrong with this trade - I was entering at the extreme of a trading range where fades are the best moves moves but I insisted on taking a range break long. The second issue was that the long was not validated i.e. there was actually no range break and I was an early long due to which I had to bear the MAE as price went down back into the middle of the range but was turned away by the trendline where the actual entry should have been taken.

Not marked, should be marked where price breaks to the upside from the trading range. This is where a valid entry shoudl have been taken and this was a perfect range break, only that it was countertrend and hence was only a scalp.

This exit was correct of a nimble scalp but also was a scared exit, but the scariness here was for real and not a psychological issue.

I hesitated to short here even though a clear bear trendline was offering a low risk high reward short trade - the hesitation cost me a lot of ticks as the market fell sharply and I was filled nearer the bottom of the bar. Waiting for further confirmation when there is confirmation leads to slippage which then may lead further issues like watching the price go against me which would not have otherwise happened had I entered from the place of the first confirmation (trendline touch and anticipation of reversal i.e. point 5 bar top)

This was defintely a scared exit, but it was a profitable trade and would have been a perfectly good target had I entered at the top of the earlier bar as discussed above. Waiting for actual signs of reversal confirmation and exiting on a huge bar's extreme usually lead to same amount of profits, except in hard trends where the market does not look back. However 6 was a bad exit anyways.

This was the worst possible early entry I could take - the market was still hugely bearish and no confirmation of a long was on the cards. This caused the maximum MFE and the stop was not triggered but was far away and if hit would have thrown a combine off track for that day.

This was where the actual entry could have been taken as the market started reversing. I was acutely aware of being painfully early and the cost of being the early bird was high.

This was where I was back in profit and should have ideally covered but I had a stubborn order two ticks above this swing point and even though I could see the market was reversing back to bear mode I did not cover. A mix of cockiness and 'knowing' that the market will go up. Both are bad when trading.

This was the absolute low point of my day's trading. The cockiness made me take on one more long here even - I broke my rule of being a one lot trader and was edging into a trap - the classic newbie mistakes of 'averaging down' and was also 'chasing the market so as not to miss the big upmove'.

This was a good exit for one lot. I should have held the other lot but exited after sitting through two lots and more MAE than I could bear.


Thus even though I had zero losing trades, the MAE was the worrisome aspect and it was totally my fault because the market behaved with precision and there were lot of easy reads but the problem components of execution were highlighted on which I keep trying to gain an upper hand since this is a critical problem area to overcome.

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 tinkug112 
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Hi,
Profile says you are from India.
a>What time do you trade ? (7:00pm - 12:00 ) ?
b> Do you trade Nifty or just US market ?

Reason for asking: I trade Nifty want to transition to TST, doing some ground work. Thanks in advance


-Shashank

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 iqgod 
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This is the platform trade report for Day 1 of the Combine:


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 indiantrader 
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Goodluck for the combine.

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 iqgod 
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A bright new day - well not so bright at 4:30 AM.

I'm fresh from a weekend holiday up in the mountains. Gorged on strawberries and the crisp mountain air.

State:

Confident of myself. In the moment. Weakness in patience.

Homework:

6E price action seemed dicey.

Need to follow clear cut price action.

Switched to CL, where a temporary reversal setup was manifesting itself. Multiple factors made it clear that a sharp downmove would materialize.

Reminder:

I must not get blinded however by the 'sureness' factor of the short as the major trend is up and need to be alert.

Chart:

Here is what I saw back then:

- This denotes a 'fog area' also known as the hard right edge because I did not know what was really going to happen, so if you wish to follow me you need to remember that the fog area did not exist in that moment.

Figure: The Hourly CL Chart




The area circled yellow is the potential reversal setup below which I planned to go short on further price action.

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 iqgod 
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Ten Steps, taken the First Step:




Confident, hence dared this (was a good idea, but.... Thought of the day: could this have been a bad idea?):

Broke a rule - switched to CL instead of focuing on 6E.

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 iqgod 
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Here are the six trades circled (the crosses inside the yellow circles are the trades, I will dedicate one post per trade, following this post):


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 iqgod 
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Here is what I saw before all the trades:



It seemed to me that there were a lot of longs trapped on the wrong side of the market as was evidenced by the huge pinbar or reversal bar printed by the market with the top at 9780 and the bottom at 9710.

There was still a clustering price action to the left that was blocking price from going below 9717 which printed a triple bottom - now the question really was how long will the buyers support an already sagging market?

I first planned to sell below the range break i.e. below 9720.

I was ready.

Calm.

Composed.


The first trade of the day... confidence, IQ!

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 iqgod 
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We are back to a naked chart again, so that we can focus on the basics and the basics alone:




This is a trade with a 16 tick potential - but I wasn't prepared enough hence I could grab 6 ticks.

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 iqgod 
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Here are the six trades presented below:



I can see a common theme of fear of being wrong / fear of losing accumulated profits playing out in the sequence of trades.

I also hold myself accountable for missing out the 35 tick move of the day which was really an easy trade if I had just positioned myself, left risk to the stop instead of worrying about it and walked off after setting the target (the market reversed at the exact point I would have set my target, but that isn;t a pat on my back, not when I WASN'T in that trade!)


Journaling and analysis of Trades 2 to 6 follows.

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 iqgod 
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I got short at 9709.

Even when price showed its hand after a temporary sell climax and a reversal and then a retest of the extreme of the downtrend!

Price went to a high of 9718 missing my 10 tick auto-stop at 9719.

The MAE was 9 ticks and it was not good for my nerves which were prepared for shorting calmly before.

Irony: I knew this was a low quality premature short. Yet I took it. In scalping all it takes is an instant of indiscipline to make or break your day.

Price also was showing the downtrend clearly by respecting the bear trendline perfectly yet I was now hesitating to short the touches of the trendline in a strong bear!

Also I WANTED a winner (combine parameter paranoia over good trading?) and quickly covered once price went below my entry price by one tick.

In short this was a fearful trade, and a trade which prepared a mental block for not taking the "Short of the Day" that was coming soon which would have yielded atleast 35 ticks risking 10 ticks (worst case) / 4 ticks (best case) and where I had the targets calculated in advance.

This does show me in bad light but this journal is in the spirit of honesty, and honesty is good for humility which is the only way of approaching the markets.

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 iqgod 
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For the Harry Potter Fans: this is the CouldaShouldaWoulda platform nine and three-quarters

But these were real trades and they were really missed so must be documented as such (in fact one of them was the Star Trade of the Day):



Would I count the missed longs as 'missed opportunities'? Definitely. However I must remind myself of my place in the scheme of things YET AGAIN - I am just an intermediate trader - these countertrend trades are best left to the nimble, skilled, experienced traders so I partly feel I am right in leaving money on the table.

Perhaps leaving money on the table is the correct thing to do most of the time.

Better than taking stupid trades!


Note: When the double doji break came to my eyes I was thinking - pullback or trend-reversal / pullback or trend-reversal? I oscillated between these two 'opinions' just enough to make me miss the wonderful short opportunity. "Trends continue farther than anyone could ever imagine!"

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 iqgod 
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Trade 3 was one of those trades I take when my mind is seething with 'missed! missed! opportunity missed!' thoughts.





Having fallen into the hole of a missed 35-tick short trade opportunity such trades based on the 'missed!' mindset tend to dig you into a deeper hole - because they are simply revenge trades disguised as 'now don't you miss THIS ONE' trades!

Worst are the feelings that make you take trades where you have 'anticipated correctly' but not 'acted upon' the hunch / intuition / you-name-it feeling / technical reason.

After a large win or MISSING the large win (both cases) it is best to skip a few trades and then take the third or fourth valid trade.

I 'expected' that the two legged pullback was coming to an end and hence shorted at 9709. However in the back of my mind I knew this was a 'cheeky' short - more of a way of getting back at the market to prive that I was smarter than it.

So I did take this short but immediately was aware of the fallacy of the whole thing - there was no bull trendline break - number one reason that the trade WOULD fail.

So I moved by target at 9689. Now for this I must applaud myself because that was the low point of the pullback after which the uptrend began 'in earnest'.

-1 for not having the guts to enter a long there (I only got flat).

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 iqgod 
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Trade 4 was one of those trades where you are 'right from the start'. The trade doesn't go against you a single tick and then it give you profit at an accelerating rate till you detect momentum slowing down ... slowing.... slowing.... slowing.... and you are out!

Chart: Please refer to the earlier post for the chart.

Its what I like to call a 'sports trade'.

However it is not guesswork but supplemented by technical reasons.

In this case I was about to short at 9700 which was a round number.

I HESITATED.

For a moment.

A moment in the futures market.

So instead of 9700 I find myself staring at a new price of 9690.

I placed a sell order at 9693 and was happily filled (when I expected I would have to chase).

Or so I thought (mystery to be revealed in analysis of trade 6).


But yes I covered correctly at 9680 and was lamenting (insanely) for losing the last 3 ticks (I felt I should have covered at 9677 - who do I think I am - an HFT frontrunner? LOL) when price reversed to the upside superfast and then printed huge bars of alternate colors - this was important because a major trendline was near and that signalled that the bear trend may have run out of steam and smart money was going long. (perhaps I am wrong, I haven't looked at the charts since Trade 6 - I need to get this off my chest onto futures.io (formerly BMT) first because otherwise it would be lost forever in The Well of Lost Plots)

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 iqgod 
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If Trade 5 was the Best Dressed Trade of the Day then Trade 6 was the Joker - I should wear a Dunce cap for that trade alone.

I was checking my cash register and what do I find - I am SHORT one lot where I should have been flat.

SHOCKED!!


I covered (the trade was +4 ticks in the plus - the irony is that the trade had been 12 ticks in profit without me being aware of it.

The less said the better.

My bean counter had malfunctioned - trading had lost its charm suddenly and I abruptly stopped trading. I was making execution errors - BIG WARNING SIRENS GOING OVER MY LAPTOP - NYPD and Street Hawk and the Sheriff all are coming down - burly arms yanking me off my terminal as I kick and try to hit BUY SELL SELL BUY BUY etc - "STOP TRADING" they boom over some overdone Hollywood set.

So here I am journalling which is even better than trading, especially when the day (worth a few hours of trading) ends +200.

This is also a stern reminder to myself to take it easy and not trade for the remaining day - I have to stop after such a mistake!

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 iqgod 
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Read market direction near-perfect.

Self-confidence's last mile was an empty promise.

Took trades at proper locations (mostly).

Passed trades that were low risk due to hesitation aka "fear of giving back". Defensive playing hurt my play today.

Passed trades that were lacking some elements (e.g. were not low risk). The good side of defensive play where it is really needed!

Make silly mistakes - entry made "by mistake" - error identified as "absentlly clicking randomly on the DOM". I don't know if I should even be documenting this for TST and the world to read, but confessing everything here properly makes me ready for a new day.



Actually there are many micro-learnings but I will prefer to jot them down in my physical notebook with a printed chart cut and pasted for reference rather than put them down here - mostly because most of these observations would bear lengthy explanations to make sense to anybody but me.

Thanks for following Day 1!


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 josh 
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Nice job iq!

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 iqgod 
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 iqgod 
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Market State:

CL appears to be in an uptrend - I anticipate an upmove to complete a two-legged bull trend extreme test after which a major reversal may be expected.

Even right now pirce has broken to the upside from the trading range and shows the eagerness to break above the doble top printed earlier.



Note: I cannot start taking a long position till an hour later i.e. only after 5 PM CT.


My State:



E G O.


I detect the undercurrents of ego already.

B E W A R E.

Ego needs a tight leash - DO NOT take overconfident entries IQ!

Rule for today:

The MARKET is the 800-pound gorilla not IQGOD. Avoiding a wrestling match is a no-brainer.

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 jinhar 
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iqgod View Post

Broke a rule - switched to CL instead of focuing on 6E.

I thought your rule was to focus on 6e ? or i am missing something ? Btw best of luck on your combine.

-Jinhar

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 iqgod 
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jinhar View Post
I thought your rule was to focus on 6e ? or i am missing something ? Btw best of luck on your combine.

-Jinhar

Like much of the things in life, due to single a moment's immutable effect I'm now into CL for the long haul for this combine.

Other similar examples:

- You have a fling with a cute member of the opposite tribe and are convinced that (s)he is the Perfect One. The decision is of course taken at the mature age of sixteen and then you live till the ripe age of ninety wondering in Robert Frost fashion about all the other 'roads not taken'

- etc.... you get the drift.


One thing is - should I follow the volatility and change instruments midway? That would be too much risk, since combine parameters are applicable per instrument.

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 josh 
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One thing is - should I follow the volatility and change instruments midway? That would be too much risk, since combine parameters are applicable per instrument.

I agree, too many instruments could present challenges in meeting all the requirements for all instruments. But since you have already met the parameters for CL and wish to change, then you could do so at this point without any issue.

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 iqgod 
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Today was a good day, according to me.

I was unable to read the tape for CL (leading to breakeven after breakeven trades), but the price action on the Euro FX became clear suddenly (light bulb moment) hence switched to 6E which improved my performance because I was in the flow there.






The blow-by-blow account of each trade follows shortly.

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 iqgod 
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The Euro FX Part:


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 iqgod 
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This is the CL tab of the report:


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 iqgod 
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A Letter To Myself


I will not be trading today.

Why?

I have not journaled Day 2 Blow-By-Blow yet. That is a big warning sign of an impending lapse in discipline.

The other sign is I have not completed ANY market preparations yet. Big Big Ego looming large on the horizon.


I will complete the journaling process to allow my intuition to regain its footing. Perhaps this early success has gone to my head. But I promise here that I will not go back to the markets until I finish the journaling process that puts me back in touch with my intuitive function.

If and when I reexamine my head and find it held high without fear (not held high with false self-bloat and false ego) ONLY THEN will I open up my trading platform and start. Needless to say, I will first complete the necessary homework on the market state and only then place another trade, if any manifests itself.

Also, in this period I will not doze but I will continue to work as hard as I did to prepare for this combine.

Humbly yours,
iqgod

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 iqgod 
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I hold myself accountable for trading CL with 'scared money' today.




These are the total five trades on CL today - three were near-scratch winners and two trades I took were actually closed at the same price as they were opened.

Trade 1 was a correctly taken (almost, but could have waited more) short.

It became obvious that once 9688 double bottom pullback level broke then the marker would form a new low before resuming its uptrend.

However I was nervous. Mainly because I had not practiced this type of trade pre-combine.

Hence I entered "anticipating" 9688 would be broken (may not be a good thing to always do), the stop was 10 ticks away and the target was 20 ticks instead of the 50 ticks planned (this was a scalp). However I could not read the tape at that moment and hence resigned myself to a breakeven + 1 stop. This was hit moments later.

You could say I chickened out, and that would not be far from the truth.


Trade 2 was a short that should have been taken earlier i.e. at 9690 but I hesitated and got filled at 9684 (confident market read, bad entry). The market then reversed quickly, almost touched my 10 tick stop at 9694 but reversed at 9692, probably after having taken out breakeven stops of the nimble folks who had entered at 9690). The market then reversed but since it was not behaving the way I had expected it to I exited at the same price on the third. This as per me was a good exit because my if..then...else logic's else clause says I must exit if the market comes back to my entry price after NOT DOING what I had expected it to do.

Trade 3 was after I came back to the screen having missed the sharp downmove. I expected a second sharp leg down but then I was flustered by not being able to read the market correctly earlier and hence I exited at a $10 gross profit ($5 after commissions). Otherwise my target of 9674 had been correct (to form a double bottom with the earlier wing low) had I waited with calm.

Trade 4 was a similar trade - this time however I was right in exiting quickly because this was a potentially dangerous trade because after Trade 3 the market had gone up and then this downmove was possibly climactic and taking on the last part of a gasping trend isn't high odds trading. So I was right about this but then I should not have taken this trade at all and should have instead waited for a reversal setup.

Coming up next: Trade 5 (another chart)

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 iqgod 
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The fifth and the last trade of CL was entered and exited at the same price though the short based on half-confirmation was not a good one even during real-time. mainly because two bars earlier the market broke the pinbar high taking out the stops above it and usually when this happens statistics point to a long drawn uptrend or range before a meaningful reversal. So it was simply bad trading.



Now that I think of it was a heady trade - the market had given me no losing trades for two whole days - what wrong could I do (Added Verbiage: such was the egoistic smell this trade stank of!)

Thus I decided to call it a day when my eye was rivetted my the Euro FX price action and I decided to switch.

Coming up next: My two successful Euro FX (6E) trades.

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 iqgod 
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The first trade was a nimble scalp and deserves applause (@iqgod applauds @iqgod!) I expected the market to go a 'bit' higher and then start reversing - that happened by the book.




The second trade was after the confirmation of the pinbar extreme break - a 'safe' high probability trade - I exited quickly here again - 'fear lent me wings'. The funny thing about this trade was that I had exited the earlier trade using the infamous 'Flatten All' button. Then I was aware thanks to the posts on @indextrader7's journal that my auto-OCO orders would not be pulled (I had not set that option yet) - but then I saw that the auto-OC order was where I wanted to enter short the market. Before I could pull those orders and enter a NEW order with auto-OCO preset the market traded through my auto-OCO sell and I was in!

These two trades netted $187.50 ($177.5 post-commissions) - I could have held for the further prolonged downmove but my nerves declined the offer.

More than market state, my state matters most!

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 iqgod 
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This is the trade report version 1.0:

(I continued trading after this so it is not the final report but need this report here for the comments I will be making in further posts)



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 iqgod 
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Version 2.0 of Trade Report: (the final trade report - I have stopped trading for today)


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 addchild 
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Version 2.0 of Trade Report: (the final trade report - I have stopped trading for today)


Have you traded 3 different products in 3 days? ZC CL 6E?

.
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 iqgod 
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Have you traded 3 different products in 3 days? ZC CL 6E?

Yes! But only after making sure that all parameters were in the green for the previous products.

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 addchild 
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Yes! But only after making sure that all parameters were in the green for the previous products.

What is your reasoning?

.
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 iqgod 
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What is your reasoning?

I do my homework and it turns out after the analysis that price action is more clear on Instrument X instead of Instruments Y and Z. Instead of taking sub-standard or dicey setups on Y and Z I take better quality trades on Instrument X.

However the downside of course is that since wins and losses are a random distribution then there is a possibility that Day 1 for Instrument X is a loser and I thereby get 'locked in' i.e. I need to continue trading Instrument X for the probabilities to play out properly.

I wonder if this can be termed as the magic bullet @Big Mike preaches about i.e. "Diversification" though that isn't really the correct word for it. I mean it isn't time division multiplexed but frequency division multiplexed (the electronics engineer speaking, the concepts come close to what I am trying to express).

I hope I don't sound smart-alec-like - there are wide chasms around my argument.

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 iqgod 
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 iqgod 
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I took four trades today on ZC (Corn) - two winners and two losers - netted $25 gross and $5 after commissions:


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 iqgod 
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I am still collecting my thoughts about the trading I did today. It was good trading analysis but bad physical trading, since trading is a physical activity as well which is separate from armchair analysis and prediction.

I had great intuition but did not know the concrete path to follow that intuition and be led by it instead of injecting my ego and front running the market. This sentence will hopefully become crystal clear by the time I end this post.


I posted the annotated trade chart in this post.

However I was too overwhelmed to type in anything.

Cardinal Sins:

1. The first sin I made was that I entered too early, without waiting for the market to confirm my analysis.

2. The second sin I made today was I did not estimate risk correctly - by the time it was apparent that my position entailed a stop worth more than $300 I was already cursing myself. However I had the sense to adjust my stop to the new far off position (6484). BUT cardinal sin: I moved my stop. Divine Intuition: I moved my stop to the correct place after which the uptrend would have been confirmed.

Side-effects:

Entering early with a huge stop simply means that I could not enter at an opportune moment then reverse at will and then enter again - no less than three trades passed before my eyes and I could only screw my eyes and stare.

The cardinal sin I DID NOT commit was "Doubling up". Thank heavens that minimal good sense did prevail.



What exactly happened?

Corn has been wild for the past two days.

Corn's Monday close of $6.43 was a sheer 85 cent drop.

Prices gapped through support and then opened gap up today - note that this was expected after the super sharp fall - the only thing in my mind was "I want to go short" - but the question was WHERE?

The trade I took makes it very clear that I let this pre-market analysis BIAS me into taking a short postion without listening to the complete story on the tape.

I entered at 6420. (marked) The stop was at 6445

Then I saw price moving upwards. My stop was still not hit.

Two factors told me that a reversal was still not on the cards:

1. There was no trend channel-line break
2. Prices were holding above the double top support level which had been penetrated - this indicated further bullish momentum.

Then I dealt the cards as follows:

3. The trade risk was still within manageable limit because I was dealing with a single lot and I could safely assume more tisk without hitting my daily loss limit. Risk management is always the priority customer even when your shop is closed for renovation.
4. I moved the original stop to 6484 and then watch the price gyrate toward 6470 - this was the torturous part. This also highlights the importance of waiting for correct entries - the MAE gets agonizing and might have made me click the exit button but I stayed calm (+1)
5. Price printed a lower high. I realized I had missed not one but two good trades - a long trade starting where I so hurriedly got short AND a short trade once 6444 was broken.
6. I set the target to 6416.
7. Price dropped as if going over a cliff and then stopped at 6434 and started reversing. This was the scary part. Now was this a pull back in an uptrend? Not likely, I thought because the downmove had been sharp. I waited and continued sitting on my hands.
8. As expected price traded through my target of 6416, and I was filled - this had been one long trade.
9. As also expected buyer overwhelmed sellers at 6414 and price moved upwards.
10. By this time I was completely exhausted, but the deeds I did spoke of the flaws to be eliminated (working on it) and showed me that I had come far on this trading journey.


Special thanks to Bob Volman and Al Brooks for making everything possible. I am full of gratitude today.

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 iqgod 
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Posting all the charts I was watching - the price action tied up nicely and each time-frame confirmed by analysis - this is the beauty of the markets:

5-min with all trades:




15-min




30-min




The 15-minute was the easiest to trade and the 30-min wasn't bad either.

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 iqgod 
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I forgot to add that there was a lost opportunity cost associated with fiddling with Corn - it was this:

I was watching CL 1-hour chart from the corner of an eye - my ZC drawdown had reached $200 when I spotted the wodnerful CL short trade opportunity that comes once in a blue moon. A short! A short! A perfect pinbar short! screamed the market.

Alas, I couldn't take the short and risk hitting my daily loss limit :-(

Here is the missed trade shown in gory detail:





Discalimer: Deep inside I know that I am not yet mentally ready to short and hold so capturing that 200 tick drop is an illusion (though a GOAL) - however I could easily have walked away with the first 50 ticks after which I surely would have exited.

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 iqgod 
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 iqgod 
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Today ends up with me trading the 6J (initially well, then allowing over trading to happen, followed by two trades fueled by revenge) - it should come as no surprise that I end with -$395, down below $30,000 initial balance.

In trading I get what I deserve, and this is a just dessert.

The mistakes far outweigh the good things that occasionally manifested in me:


Did not do homework - jumped into the market unaware of Bank of Japan announcement or the earthquake in Japan.

Even though unaware of the news events I could see the short opportunity on the tape! (+1)

Did not take the short - this has been happening over and over and over - I am skipping the best trades.

Read tape well - Correctly anticipated reversal and placed stop where the theory would have been invalidated.

Revenge traded. Wanted to be made whole again. Last two trades were AGAINST the trend.

Realizing that this is a TEMPORARY setback. This is just ONE losing day.

The biggest one? I was slow. I could see the losses coming and I would have been able to avert them had I been mindful - instead I placed my limit order just as the market escaped its net.

I had stopped trading after I was flat. I could sense the impending overtrading coming.

But.... I did not follow the maximum trade rule and I got back in hoping to end up in positive.

I stopped trading after I reached 80% of my daily loss limit.

The worst mistake? I kept watching and allowed my full stops to be hit. Even though the tape was crystal clear that I was wrong I clinged on hope.

I wasn't deceitful with myself today. I could distinguish the truth and the falsehood the market was offering without bias.

Overtraded.

I was full of compassion for @indextrader7 - somewhere deep inside I believe I made myself lose today because tried to express this sympathy by getting into losing trades - please don't flame me for this because I know @indextrader7 is tough and will rebound but thinking with sympathy works on a subconscious level and is best avoided - this is a business. (Sorry @indextrader7, I am without prejudice really, but I had to get this off my chest - of course it is a silly way to put it and I alone take full responsibility for my internal dialogues). Sorry @indextrader7 !

I held on to a loser for a much longer period than was warranted. I need to put in a TIME STOP and cut trades that are not working for the sake of this combine.

There was NO hesitation today - I was ready! However...

X - I created an environment full of internal sadness and clutter today. (This was the only mindful observation I had before I lost it completely.)

X - I was without compassion today for the members of the family (kids, wife, parents - all were vying for my attention and I was glued to my trading screen). This is a sure fire way of killing intuitive function. When I am without compassion the demon takes over. That happened.

X - Execution sucked... I could not move fast enough though I had precious time (multiples of seconds... ). The second mistake was that I was long and the stop was not hit and the market reversed but the MAE scared me into moving my target to a loser level. Had I allowed the target to remain (Remember @PandaWarrior's advice? "Do not mess with a trade (targets/stops) once in position!") this would have been a profitable trade and I would have stopped trading further, and this story ugly would not have materialized.



The summary: I thrived on technical competence initially, but then wanted to become "whole" again so over traded and then took two mad trades against the near trend (what was @iqgod thinking - he is Superman? - fighting with the Bank of Japan and an Earthquake)

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 iqgod 
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 iqgod 
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I need to talk about so many things, dear journal.... be all ears.

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 iqgod 
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Like @AttitudeTrader would say using some military analogies - Loss Braking... Slowly to Reverse to Profits soon (I'm not versed with gunspeak so he would probably say something different :-) )

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 iqgod 
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Dear Journal,

How I ignore you!

This is a written reminder to myself: Day 4 & 5 Blow By Blow Accounts are still Pending.

It gives me shivers to post the crap. If I mine all that crap and make use of the experiences then it isn't crap but a gold mine - "The Well of Lost Trades - What Not To Do In Trading, and Areas of Improvement".

However unless I journal those experiences they will be lost to the will-o-wisp, and then where would the learning come from?

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 rubyslippage 
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There was NO hesitation today - I was ready! However...

X - I created an environment full of internal sadness and clutter today. (This was the only mindful observation I had before I lost it completely.)

X - I was without compassion today for the members of the family (kids, wife, parents - all were vying for my attention and I was glued to my trading screen). This is a sure fire way of killing intuitive function. When I am without compassion the demon takes over. That happened.

X - Execution sucked... I could not move fast enough though I had precious time (multiples of seconds... ). The second mistake was that I was long and the stop was not hit and the market reversed but the MAE scared me into moving my target to a loser level. Had I allowed the target to remain (Remember @PandaWarrior's advice? "Do not mess with a trade (targets/stops) once in position!") this would have been a profitable trade and I would have stopped trading further, and this story ugly would not have materialized.

Pre-market, close your door, no distractions, technical and fundamental research (news), note important levels, etc.

Pre-market warm up, something you're good at that you can do quickly, get in the mode of acting quickly - word search, juggling, hackysack, or just tossing a small ball back and forth from one hand to the other - do this to get your mind in "here/now" focus mode.

Pre-market reminder - "I have great skills. Perfect execution brings the profitable outcome. I look forward to paying for my inventory (trades). With inventory, I have a thriving business. I look forward to putting my inventory out there. Customers will be there to buy some of it for a good price when it's in demand. I will clear out the not-so-hot inventory for the small loss and free up my working capital for the next hot thing. I have great skills. Perfect execution brings the profitable outcome."


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 iqgod 
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 iqgod 
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I am short one lot of Corn (ZC) and the trading has been halted by the exchange.

I was planning to close the position before 2 PM CT which is minutes away.

Now what?

Side Note: I do expect corn to open limit down but what about the combine rules?

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 iqgod 
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 Big Mike 
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I am short one lot of Corn (ZC) and the trading has been halted by the exchange.

I was planning to close the position before 2 PM CT which is minutes away.

Now what?

Side Note: I do expect corn to open limit down but what about the combine rules?

Could ask here:



Mike

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 iqgod 
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A word of appreciation for TST support is due...

They responded to my SOS within seconds and my account was flattened - this would have been possible because it was a SIM account.

Combine still eligible for review.

Here are the final stats:


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 iqgod 
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Let me start off with my worst trade ever - worst ever since I learnt applying myself diligently.

Look at where I sold and where I bought it back..... they are the two cleanest swing points ever possible.




Why did I manage this trade so badly?

That will be the subject of the next post. This post deserves the Muse to take over and reflect on it in silence.

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 iqgod 
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By the time I entered short at 10102 I had already overtraded.

This is one observation for you, dear Journal - whenever I overtrade, the results get skewed in favor of worse - trading smacks of panicky exits, missing the best opportunities and going on tilt.

I had placed my stop at 10136, which was -$340.



Now here comes the ridiculous part - as I watched price gyrate upwards I was about to leave my stop alone as by that time it was clear that the big downmove was due anytime, but I started panicking that the market would hit the combine's dialy stop limit AND THEN start that big downmove.

So as soon as the market reached 10135 I panicked and exited.

I allowed my mental state to be what it was because of:

1. I was accepting Mediocrity in my trading
2. I had come back from a down day of -$395 and this was unbearable, there was discomfort.

Thus today trading was not about trading, but it was about me.

Had I let the trade be it would have been the rainbow colored trade I had been waiting for 'to make me whole again'.

But there is more.... the next post talks about the ROOT CAUSES of all this.

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 iqgod 
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Dear Journal,

The root cause of it all is: hold your breath (all journals have one!) is ENTERING TOO EARLY.

Entering without following rules.

Entering when you know that this isn't the best possible entry and YET taking it.

When my intuitive function is telling me to stop, and I go ahead and trample on it, it then becomes fainter and fainter.

If I disrespect myself then such trades are a high probability bet - so this is the Area of Improvement - BE CONSISTENT with your entries.

Which means....

do your homework on the nuances of the entry.

... if that is already done go to the next step...

wait patiently for the entry

... if that is already done go to the next step...

once in, allow the trade to play itself out

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 iqgod 
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The rule of maximum 5 trades in a day was formulated my be for a reason. It was to save me from myself.

Not following that rule and overtrading simply meant that this last trade that happened was just a Cap in the Feather - the final eruption of a volcano that has been rumbling ominously for the last few hours.

Discipline is about saving me from myself.



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iqgod View Post
Dear Journal,

The root cause of it all is: hold your breath (all journals have one!) is ENTERING TOO EARLY.

Entering without following rules.

I struggled with this again and again and again, to the point I wondered if I suffered from some mental defect.

I knew that not following the rules was the cause of poor trading results, but the root cause of not following the rules was something you nailed in your earlier post:

"...as I watched price gyrate upwards I was about to leave my stop alone as by that time it was clear that the big downmove was due anytime..."

I think it was second or third time through Trading in the Zone that I awakened to the root cause of all the other trading issues: It was an overpowering belief that I knew what price was going to do next. I realized that the only reason I would hesitate to trade a signal, or jump in too early, or chase a trade after the planned entry was left in the dust, or move a stop, was that I personally believed I knew what was going to happen next.

If you break a rule and have a positive result, it's dangerous because it reinforces a belief that you can psychically predict individual outcomes from a series of randomly distributed results.

If you break a rule and have a negative result, it's dangerous because you're prone to allow previous results to influence your subsequent trades.

So I think you're on target that breaking the rules is the root cause of negative overall $$ results, but the belief that you need to deactivate and replace before you can more comfortably follow your rules is the belief that you can predict the outcome of an individual trade, the belief that you know what's going to happen next.

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 iqgod 
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rubyslippage View Post
I struggled with this again and again and again, to the point I wondered if I suffered from some mental defect.

I knew that not following the rules was the cause of poor trading results, but the root cause of not following the rules was something you nailed in your earlier post:

"...as I watched price gyrate upwards I was about to leave my stop alone as by that time it was clear that the big downmove was due anytime..."

I think it was second or third time through Trading in the Zone that I awakened to the root cause of all the other trading issues: It was an overpowering belief that I knew what price was going to do next. I realized that the only reason I would hesitate to trade a signal, or jump in too early, or chase a trade after the planned entry was left in the dust, or move a stop, was that I personally believed I knew what was going to happen next.

If you break a rule and have a positive result, it's dangerous because it reinforces a belief that you can psychically predict individual outcomes from a series of randomly distributed results.

If you break a rule and have a negative result, it's dangerous because you're prone to allow previous results to influence your subsequent trades.

So I think you're on target that breaking the rules is the root cause of negative overall $$ results, but the belief that you need to deactivate and replace before you can more comfortably follow your rules is the belief that you can predict the outcome of an individual trade, the belief that you know what's going to happen next.


What a wonderful piece of advice! Thanks @rubyslippage!

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 iqgod 
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 iqgod 
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Tip




Although the cheetah is the fastest animal in the world and can catch any animal on the plains, it will wait until it is absolutely sure it can catch it’s prey. It may hide in the bush for a week, waiting for just the right moment. It will wait for a baby antelope, and not just any baby antelope, but preferably also one that is sick or lame. Only then, when there is no chance it can lose its prey, does it attack. That, to me, is the epitome of professional trading.”- Mark Weinstein





cheetah . trader (\_/)
cheetah.:``";=-.,.-;-='
chee/,.'`,.'.'`.'.(='Y.)=
cheet //\.','.'./.'.,|`""`
cheetah // /)./`"""\.'./
cheet _// |/|| \.|\
cheetah-' \\ \\ \\\\
cheetah `" `" `"`"


A cheetah will sit and hide in a bush waiting patiently for its prey. It may see a strong juicy meal run by and be tempted to jump at it, but instead it waits for a weak, sick, or lame animal to pounce on and guaranteed to enjoy its long awaited meal. The cheetah understands probability innately and uses its instinct to guarantee a kill rather than chance, chasing after something that it may not enjoy the benefits of and expend energy that it cannot afford to lose since it is already hungry. It does not listen to its emotion of feeling hunger and lunging after the first piece of meat. Trading is no different. If you force yourself into the market because of the temptation of making a profit, at some point you will not be able to afford another loss, as you do not have a specific plan with rules that constitute a trading system, there will be more losses than wins eventually.

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 xelaar 
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Great analogy, Iqgod, but we shall remember that trading is about probabilities, we cannot be sure like cheetah, even if we wait patiently for the best of best setups. Losses will still happen, and they are price to pay, like business expenses.

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 iqgod 
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 iqgod 
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Jim Rogers in Market Wizards:

“I just wait until there is money lying in the comer, and all I have to do is go over there and pick it up.”

As a humble trader, I am trying to go the same path - until I am so sure of a trade being as easy as picking money off the floor I do nothing.

Now is this a:
Problem?
Plan?

You decide dear reader! For me it is a Plan.

The waiting part is now under control. Earlier I used to JUMP in within FIVE MINUTES of opening the platform! Juicy Trade! JUMP! Then tackle with managing it for the next two hours LOL and I would end up with a large loser held for a large period of time - both BAD for the combine, bad for me.


However there have been so MANY days I wish I had followed @PandaWarrior's advice to the book - set the target and stop and DON'T MESS WITH EITHER.

Still working on it, meanwhile some food for thought offered by my old mentor from sunny Florida - who else but Gary:



Quoting @GaryD


GaryD View Post
How do you stop moving your stop, or hitting "close" at a small profit? You just stop. No one forced your hand but you.

The psychology behind it I suspect is complex, survival instinct or "fight or flight". The base is fear. Fear of giving up what you have on the screen in the case of taking profits early.

You could try just setting a profit target and a stop loss and considering your job done. That was your best guess and roll with it. Pretend that is all you have control over. Trading will become a less active role and the pace will slow down considerably.

.
.
.


You could try meditation to calm your mind during trading. Or sound files that play certain wavelength sounds to put you in various brainwave states. (I have actually done both).

Ultimately it has to fit your beliefs, your risk tolerance, your psychology, your experience, your level of confidence in the trade, and the reason you put the trade on to start with.


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 iqgod 
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Why can't I let a trade be?

Why do I let fear move my target and stop - trying to bracket a profit.

Reason is I have not yet done enough homework like @PandaWarrior and @josh who spend lot of time in preparation - I hope to be a disciple of these two greats!

Ultimately belief is the winner - getting to a place where your belief system aligns with market state and you flow.... that is the ultimate goal.

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 iqgod 
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I resolve to let the next trade be.

Once I have waited
Once I have reasons to pull the trigger
Once I have identified the risk being in tolerable limits
Once I have probability on my side

I WILL ENTER WITH AN auto oco order AND JUST LET THE TRADE BE.

I WILL NOT MOVE MY 10-tick STOP OR 20-tick TARGET.

That is a promise.

Let's see how it goes.


If I honor my promise I would be well on my way to add value to myself and the world around me, so be my guest on this journal if I do!

If I dishonor this promise, you, dear reader, can really choose not to visit this journal again.

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 iqgod 
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I have four enemies.

Impatience.
Fear.
Self-doubt.
Greed.

When I lower my vigil they slink up behind me and try to possess me.

When I have my visor on, when my magnetic force field is activated I can spot them on my radar and give them a mighty whack.

So I choose to trade only when my shield is ON.

But they entice me from the outside and sometimes I let them in. Sometimes. Those are the times I need to monitor...

That is why INTEGRITY is such an important concept in trading... a foundational stone, if you like.

Else, a great trader can build a Great Wall of China and all it would take is a single bribed General in Ming's army to let the hordes in...

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 iqgod 
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In trading you are as smart as your dumbest mistake.

Shows up in my ZC and 6J statistics.

As much as I try not to, I am leaning towards'repairing' the statistics than trading well.

The defensive trades are showing up as small consistent winners which cannot replenish the large down days I created during the 'infancy' of the combine especially in the 6J.

Winning a combine can quickly have geometric complexity repercussions, as with all trading - unlike a coin toss experiment, each stupid move against you gets you further down Impossible Lane.

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 iqgod 
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I have confidence in my trades... in my analysis of the market.... BUT I DON'T TAKE THE TRADE. I can SEE the market hit my targets on trades I am not in.... I suppose this is nothing new to fellow traders, but here I am at this stage of the journey, looping looping looping in the same vicious cycle.

Now that is an oxymoron, but that is how it is currently and I must record it in my journal.


Examples:



To be fair this short was missed when I was not at my desk, so next example....



Need to do 'the Work' more....

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 iqgod 
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This was the day (day number seven) that the playing field was laid for the real combine battle:




iqgod View Post






This is how it goes (Day number twelve), plodding to meet statistics (a humbling, cherish able, accelerated learning experience - all at the same time!!):




The problem: Avoiding eating like an bird and dumping like an elephant.

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 iqgod 
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Having a profitable strategy is no consolation!

If I enter too early, where is the strategy?

And I did for corn today!


If I exit when I see teeny profit instead of holding till target, where is the strategy?

And I did that for corn today!


If I enter too early, hold till profit shows up.... and even though now the price action is screaming "WAAAIT, I am going to your target SOOOON" - I sell.

That is akin to weeding out your pretty plants as soon as they sprout buds - instead of letting them flower I nip them buds and all!

Three lessons for me today!

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 iqgod 
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 iqgod 
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I took 9 trades today (against my limit of 5 in the rulebook).

All 9 were winners (no hurrah).

The problem here is that I am
- right on direction
- wait patiently for entry
- use a good trade location (risk defined well in advance)
- enter only when flowing with the tape

B U T....

once in profit I
- trail my stop very closely
- am afraid of MAE to such an extent that I DO NOT allow a trade BEHAVING PRICE ACTION-WISE TO THE BOOK to go against me even one tick (though it is expected and normal, however I am beset by uncertainty and trail close or close out the position).

This is simply an addiction to WINNING.

It is not healthy trading - setting a stop and target and letting them be.

The irony of course is that if I had allowed my stops and targets to be 2 out of 9 trades would still have been winners (due to patiently waiting for only A+ setups) and even though I cannot know in advance which ones will winners it is so obvious that the seven 20-tick winners will compensate for the two 10-tick losers.

I KNOW.

I SENSE.

B U T

I CAN'T EXECUTE.

In trading you are your own worst enemy.

And due to the geometric outcome model of trading the digging into a hole becomes worse and worse.

This combine will not be a winner if I do not give up my addiction to winning.

Period.


Postscript: I know what all things are wrong with my thinking - its like someone needs to handcuff me after I pull the trigger. I don't know HOW to get into a yoda state or 'the zone'.

Perhaps its much simpler than I am thinking.

Let's see if I am able to pull it off.

(Won't happen out of a hat. Or perhaps it will happen at the drop of a hat. Perhaps the click moment is near.)

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 iqgod 
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So I've come a full circle....

My equity at the end of Day 13 stands at $30,000 after having suffered a drawdown of $765.

I've managed risk properly, I've learnt SO MUCH (about myself, more than about markets!)



So as I start all over again its time to reflect on how I'll act to fulfill the solemn promise I made to my readers today.... letting my trades be; not messing with my target and stop once I'm in.

Here is the day summarized in a single picture:





Its time to redeem myself!

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 iqgod 
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"We shall not cease from exploration, and the end of all our exploring will be to arrive where we started and know the place for the first time." - T. S. Eliot





After all these days I'm feeling that I've understood what the markets are all about for the first time. It has been a slow gradual and painful process.

As Ralph Vince says:


Tip
It requires discipline to tolerate and endure emotional pain to a level that 19 out of 20 people cannot bear. This you will not learn in this book or any other. Anyone who claims to be intrigued by the "intellectual challenge of the markets" is not a trader. The markets are as intellectually challenging as a fistfight. In that light, the best advice I know of is to always cover your chin and jab on the run. Whether you win or lose, there are significant beatings along the way.




If a trader realizes so much on the first day of his trading journey - whether by a strong belief system, mental toughness and LISTENS to sage advice, nay, listens to the MARKET then (s)he would be nearer to achieving trading goals that much faster.

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Pedro40
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My advice: now that you are back in the green, fix the stats, and stop this Combine and do a rollover. There are not enough days left to reach anything, you are better off starting brand new, with more chances....

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 iqgod 
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Pedro40 View Post
My advice: now that you are back in the green, fix the stats, and stop this Combine and do a rollover. There are not enough days left to reach anything, you are better off starting brand new, with more chances....


The stats are still broken and I would not yet be eligible for a refund.

In the Japanese Yen I need to have my Average Winner greater than Average Loser which isn't the case.

Also, my average winner is held for one-fifth time than my average loser.

My Winners vs Losers ratio is nice but we need two statistics green for a refund.

In Corn I still need to get back to a positive average (it is currently negative six dollars)

So the only fighting chance I have is to trade well (which is rather easy to say, harder to implement!).

What does it mean to trade well?

Stay longer in trades!
How?
By letting my stops and targets be!

That is my current target.

Thanks for your comments.

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 iqgod 
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As the Red Queen says in Chapter 2 of "Through the Looking-Glass, and What Alice Found There" (1871) the famous children's novel by Lewis Carroll:

"Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!"


However, we all know what doubling up / loading up / overtrading etc will do to a combine (forget statistics) so I need to be at the top of my game and not disrespect my play.

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 iqgod 
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I'm expanding on the earlier quote simply because it rather remarkably describes the predicament I am in:

Excerpted from Chapter 2: The Garden of Live Flowers from Through the Looking Glass, by Lewis Carroll

Just at this moment, somehow or other, they began to run.

Alice never could quite make out, in thinking it over afterwards, how it was that they began: all she remembers is, that they were running hand in hand, and the Queen went so fast that it was all she could do to keep up with her: and still the Queen kept crying 'Faster! Faster!' but Alice felt she could not go faster, thought she had not breath left to say so.

The most curious part of the thing was, that the trees and the other things round them never changed their places at all: however fast they went, they never seemed to pass anything. 'I wonder if all the things move along with us?' thought poor puzzled Alice. And the Queen seemed to guess her thoughts, for she cried, 'Faster! Don't try to talk!'

Not that Alice had any idea of doing that. She felt as if she would never be able to talk again, she was getting so much out of breath: and still the Queen cried 'Faster! Faster!' and dragged her along. 'Are we nearly there?' Alice managed to pant out at last.

'Nearly there!' the Queen repeated. 'Why, we passed it ten minutes ago! Faster! And they ran on for a time in silence, with the wind whistling in Alice's ears, and almost blowing her hair off her head, she fancied.

'Now! Now!' cried the Queen. 'Faster! Faster!' And they went so fast that at last they seemed to skim through the air, hardly touching the ground with their feet, till suddenly, just as Alice was getting quite exhausted, they stopped, and she found herself sitting on the ground, breathless and giddy.

The Queen propped her up against a tree, and said kindly, 'You may rest a little now.'

Alice looked round her in great surprise. 'Why, I do believe we've been under this tree the whole time! Everything's just as it was!'

'Of course it is,' said the Queen, 'what would you have it?'

'Well, in our country,' said Alice, still panting a little, 'you'd generally get to somewhere else — if you ran very fast for a long time, as we've been doing.'

'A slow sort of country!' said the Queen. 'Now, here, you see, it takes all the running you can do, to keep in the same place.
If you want to get somewhere else, you must run at least twice as fast as that!'

'I'd rather not try, please!' said Alice. 'I'm quite content to stay here — only I am so hot and thirsty!'




That, dear reader, is where my trading adventure brings me today (and I created the "wonderland" - I who am my own worst enemy!)

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Pedro40
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The stats are still broken and I would not yet be eligible for a refund.

In the Japanese Yen I need to have my Average Winner greater than Average Loser which isn't the case.

I am not sure you understand the rules correctly. You can have one red stat in each instrument and you are still good for the redo.

The easiest way to fix the stats is to throw in small but quick losers. That fixes both the duration stat and brings down the average loser too.

So make a little money in each bad parametered trading vehicle, then throw in a couple of losers (using a very thight, 1 tick stop loss usually works)

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 iqgod 
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I am not sure you understand the rules correctly. You can have one red stat in each instrument and you are still good for the redo.

The easiest way to fix the stats is to throw in small but quick losers. That fixes both the duration stat and brings down the average loser too.

So make a little money in each bad parametred trading vehicle, then throw in a couple of losers (using a very tight, 1 tick stop loss usually works)


Ummm @Pedro40 ... you are right. However since my combine is aimed to make me a better trader this can be reserved as the very last option.

I'd rather first try to trade well and I still believe everything else will automatically follow.


Also, this post set my conscience thumping, which does not feel right in trading. No offence to you, and you aren;t suggesting something wrong at all, and a plus to you for having done your homework properly, but my step one tomorrow will be to trade well - hold winners long enough and make them large enough to offset the bad statistics.

That should also get me in positive territory.

To reiterate, it is important to be at the top of my game during times of adversity. That is my goal which will spill over in my 'real' trading.

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 iqgod 
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 iqgod 
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Linda Bradford Raschke gave some very sage advice. Here it is:

Everyday on a piece of paper write (don't type!) this 20 times:

"All my thoughts and actions draw success towards me more and more each day."


If you hear to yourself saying "I can't do this" it will take three affirmations on a positive basis or more to correct.

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 iqgod 
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'Knowing' is now passe.

Once I come to an actionable tested plan and then reach a performance plateau after 'following' it, and even though I realize that I am doing the right things over and over, I now need to tell myself (without introducing risk, only managing it) that I have to make this happen.

Action Triumphs Everything.

Talented geniuses who did not take the necessary steps are cliche. Now DO the work.

S.T.O.P. taking one tick winners - be the person you always wanted to be (and truly ARE inside) - now let yourself through the sluice gates and be free........



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 rubyslippage 
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Having a profitable strategy is no consolation!

If I enter too early, where is the strategy?

And I did for corn today!


If I exit when I see teeny profit instead of holding till target, where is the strategy?

And I did that for corn today!


If I enter too early, hold till profit shows up.... and even though now the price action is screaming "WAAAIT, I am going to your target SOOOON" - I sell.

That is akin to weeding out your pretty plants as soon as they sprout buds - instead of letting them flower I nip them buds and all!

Three lessons for me today!

Having been here I understand your feeling of frustration and it's so easy to grasp the insanity of it at the end of the day, yet so difficult to act appropriately in the heat of the battle.

And remember, it's when those pretty flowers start to die, when the petals wilt and fall off (a normal retrace on the way to a profit target), that's when the fruit begins to appear and ripen! Your goal is to harvest that ripe luscious fruit and when the flower is dying it feels like it's all over, but the good stuff is just beginning.

Think about it: When price makes a normal retrace in a trending move it's flushing out the weak hands (the ones who fearfully exit for a tiny profit) and attracting contrarians, both of which will then become an additional force to push price back in your favor when the trending move resumes.

And if the trade does fail and hits your stop loss: Was the trade based on your positive expectancy plan? If it was, you accept that cost of admission from the start.

A trader who more than doubled his account in a year with a 48% win rate and 2x reward to risk drove me nuts when he let a trade come within a couple ticks of his target and stop him out for the full loss. I asked him why not take the profit a couple ticks early or at least move the stop to break even? And he told me something I didn't understand then (I had no plan for my trading, just loose guidelines), but fully understand now. He said that after 8 years of experience he learned that the best overall results come from leaving his stops and targets alone. By messing with that he is on a slippery slope that reduces his proven edge.

If you continue to struggle with cutting the winners, I would recommend NLP or hypnotherapy to redirect this dangerous habit that feels right at the time into a positive habit that feels wrong but produces consistent profits.

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 iqgod 
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 iqgod 
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Is a combine injurious to mental health?

Is trading in general injurious to mental health?

Answers to both: Yes.*

*Conditions Apply

(read the end of this post for those conditions)


What happened today that I am raising such questions?


As I said yesterday, the combine journey has been one of the most fruitful sub-activities I have done in the overall trading journey.

However, while trading corn I uncovered the root cause of some of the problems I am facing.

I put on a short position early in the session, close to the opening (after 8AM).





This is a review of the mental states I went through and the correlating belief system that causes self-inflicted damage during each step, an important part of my journalling:


Step 0: I am usually hooked up to my emWave2 which let's me know in real-time when I am in coherence or not. However today I chose to trade without it.

Belief system that came into play: I suspect this is part of some inherent inner tendency to want to lose.




Step 1: I saw a reason to go short but the setup had not confirmed itself YET I went short.

Belief system that came into play: I am smarter than the market. The 'I know what will happen' fallacy.



Step 2: Did not take the quick small loss. Rather I rather commendably guessed that the market will go around 30 ticks higher and then slowly grind itself down and then go below my entry point. Moved my stop to 40 ticks. Close to daily loss limit.

Belief system that came into play: Same as above - believing in the 'knowing' fallacy.



Step 3: Note that the market did reverse where I predicted it would, forming a perfect double top. Stayed on the edge of will it / won't it hit my stop.

Belief system that came into play: There was the thrill of the market behaving as I wanted it to. I held in fascination - ready to melt in the arms of the market (i.e. allowing it to hit my stop) for behaving like I wanted it to. 'Giving something because it had obeyed me, like a faithful spouse!'. Mixing a business and a weekend thrill.



Step 4: Should I exit now? Should I exit now? - questions.

Belief system that came into play: Positive reaffirmations that considering the sum total of my observations the market is now headed lower by a huge pinbar obstructs the last mile above my entry price - i .e. I realized that the market may not trade down BELOW my entry price TODAY.



Step 5: The market did come back to almost my entry price BUT I did not cover because I wanted to have atleast a one tick 'winner' to place in my combine statistics. Horrible mistake built upon the foundations of previous mistakes. Instead of exiting at a -$50 loss I expected further downmoves against all logic, against what the tape was telling me.

Belief system that came into play: This is the most important part here for me - two systems activated inside -
1. A belief in 'magic' - this is the childhood belief that lingers into adulthood e.g. Santa Claus exists! A false belief that a prayer will be granted without having the 'preparedness'.
2. A belief that 'hard work HAS to pay'. At this point I had held for close to four hours!!!!! I felt that the market MUST pay such a patient trader as myself. I had endured so much, watched the tape till the point of fatigue (bad decision!) that I felt the market 'owed me' atleast a one tick profit.



Step 6: The market moved away a few ticks from the lowest price it had just printed. Now I felt I should be covering as I had lost the best price to cover - I was 'calculating the pennies lost' when in fact the market had given me pounds back after going up 30 ticks and coming down 25 :-)

Belief system that came into play: Sounds embarrassing to post on a public forum but it was STINGINESS!! I wanted to haggle with the market to the last tick possible - usually a good idea for peak performance but NOT in a losing trade!



Step 7: The market came back AGAIN around four ticks higher than it had offered me. Didn't cover.

Belief system that came into play: STINGINESS continues. Sheeesh! How I want those two moments back now - if only I could go back and gently click the flatten button there!



Step 8: Now the market had moved out of the bear trend channel and would head higher before moving lower. Few minutes left. TST timings allow grain trading between 6:00 AM to 1:30 PM so thought I would cover at the last second of 1:30 PM. Now I was praying and hoping in the earnest

Belief system that came into play: Stubbornness. Thrill seeking. Same two beliefs as in step 5 (magic works / hard work always pays).


By now, dear reader, I hope to have presented why trading needs me to be 'at the top of my game'.

Now coming to the 'conditions' that apply to make trading and combines a process that is injurious to mental health.

Starting a combine without already being on firm ground can be devastating - trading is an exercise in self-mastery and endurance. Actually starting a combine is of use only to someone who already possesses the necessary mental toughness.

Mental state management and trade management requires discipline to tolerate and endure emotional pain


A trader hopes for the best but prepares for the worst. If you haven't done exercises to prepare for the worst, then doing a combine is not auto-magically going to make you a better trader. Nothing can help a trader if he doesn't have a firm base to build upon.

BUT... if the mental toughness has been gathered, the willingness to work hard and long and without remuneration (initially) is all okay then the freedom of becoming a trader is worth all of the above.

And finally what exactly did the combine do to my mental state?
Answer: Combines are powerless creatures, the person who inflicts damage is the trader. I am my own worst enemy. So instead of trading well I concentrated on statistics and thus instead of process goals I focused on statistics improvement goals - an important lesson re-learnt today.

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 iqgod 
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After posting the above I am feeling rather embarrassed at posting the worst trade ever I took in this combine - with an impatient entry, a huge MAE, with hope and praying thrown in, the plan thrown out and finally encountering freezing moments The last part I thought I had conquered atleast in this combine going by the patient entries and well planned trades that I am yet to document - serves well to remember that there exists that one black swan trade along my career that I need to intensely plan for and be watchful against.

Quoting from a recent book:

If you play a game with unlimited liability, you will go broke with a probability that approaches certainty as the length of the game approaches infinity.

Tthe probability of experiencing a cataclysmic loss on a position today may be extremely small. Yet if you trade long enough, eventually this probability, too, would be realized.

So make up your mind that you are going to quit trading unlimited liability vehicles altogether if and when your account equity reaches some prespecified goal. If and when you achieve that goal, get out and don't ever come back.

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 iqgod 
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If you are reading this to learn something then learn this: Trading success is within you

If you stare at the book long enough as if its God i.e. you literally watch the market trade, you start learning how to trade! Getting into the scalping 'zone', its almost as if the market were a dancing partner - you let go when the market dips you, and the whole process becomes intuitive, subliminal and a flowing melody.

It takes an incredible amount of preparedness to reach that yoda stage.

The few moments I enter 'the zone' its complete bliss, and it is a place of peace not otherwise found in this world.

Thus its not really out there (books / gurus / indicators / courses), its inside you. Or rather, to take out the mysticism, ITS YOU.

When in the zone you also know when to avoid trading - i.e. there is a time to patiently watch and a time to click in a fraction of a precious moment - the tape speaks to you mind and you KNOW. The purposeful waiting, the sublime fleeting moment wen you know what is to be done, and then you know exactly when to do it.... what more can I ask for?

All my work currently is on ME. The ME in the equation is the only variable. The rest as they say - the markets keep repeating themselves over and over again. Those who don;t get it feed those who do at that particular moment. And 'getting it' is in you, not out there on the chart or DOM.

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 iqgod 
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Over this weekend I will share the plan I am using for the combine.

This journal is a good place to lay it down post by post.

Single Focus Points


Sharing the complete plan lock stock and barrel in a single post will most likely drown the specificness of parts of it that may do good service to me as I look them up again; more important, a reader taking in a plan part by part will be a better critic of components rather than the plan as a whole.


Each post will contain one specific actionable part of the plan.

That will allow both me and you, dear reader, to stay focused.

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 iqgod 
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A Request : I would appreciate if you please "thank" individual posts only if you feel they add value, so everybody including myself can weed out the unnecessary, trivial and obvious. Value areas, not volume!

Combine Plan

Part I


Section 1


PREPAREDNESS


My formula:

(MY STRATEGY + MY MONEY MANAGEMENT + MY CAPITAL) * ME = MY TRADING PERFORMANCE


Note that everything adds up but is multiplied by ME. The ME is the most important.


This means that I prepare exactly enough but I do not overprepare.

Overpreparation alerts me that I am striving for 'perfection' - this is an elusive goal that cannot exist in an efficient market.

As soon as conditions are created that put probability on my side I am ready to begin.

Prologue

Previous shortcomings:

These are what are aware of and we build upon these before attempting anything else:

1. I am susceptible to NOT take a loss and allow it to grow bigger and bigger and averaging down. Such big losses have nibbled away large chunks of my capital.

2. I am susceptible to passing over the big winning trades and taking the losers because in real-time they look so 'obviously profitable'. I get a gamblers kick out of every winning trade.

3. I am susceptible to overtrading.

4. I am susceptible to not following my trading plan and trying to get ahead of the trade by premature entries. Sometimes this is hard to distinguish between intuitive early entries, but in any case the way to overcome this is to be consistently early or consistently wait for confirmation. Consistency with everything is my key.

5. I allow large winners to feed my ego.

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 iqgod 
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A Request : I would appreciate if you please "thank" individual posts only if you feel they add value, so everybody including myself can weed out the unnecessary, trivial and obvious. Value areas, not volume!

Combine Plan

Part I


Section 2


PURPOSE OF THIS PLAN


Coming Strategically Prepared

This plan exists to put probabilities in my favor.

This plan allows me to confidently say that I know what to do and how to do it and when to do it.

Decisions: How I have decided that I have come prepared

Steps:

These are what I did before attempting a single trade:

1. I have discovered what works.

2. I made certain myself that it does indeed work.

3. I have this written plan and that everything I do feeds off this tiny document.

4. I have prepared enough. That allows these:

- I know what my risk will be (market based + money management based)
- I know when to feel confident that my trade is complete (stop hit or target hit).
--- I am guarding myself against exiting winners too early. This is a big problem area.
----- How? I am not sure of the HOW I will go about letting trades be. I would appreciate help.
- I know my guidelines for entering a trade.
- I know my guidelines well enough to not enter yet.
--- Rule of thumb: I need to spend more time waiting that entering quickly.
- I know when to step aside. (specifics: news, increased volatility, thin markets, incomprehensible price action)
- I know when I am not in a position to trade. (lack of sleep, anger, ego- wanting to prove myself in the markets)

5. I realize that markets are dynamic and that my method will have its ups and downs. Winning a combine does not make me a winner and losing a combine does not make me a loser.
- I know in advance what will be the conditions that will cause me to alter my methodology.
--- Losing trade after losing trade in an unprecedented consecutive manner
----- I will first determine it is not ME but it is the market before changing anything.
----- Change will be slow and gradual and not sudden whimsical dumping of my strategy.

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 iqgod 
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A Request : I would appreciate if you please "thank" individual posts only if you feel they add value, so everybody including myself can weed out the unnecessary, trivial and obvious. Value areas, not volume!

Combine Plan

Part I


Section 3


MONEY MANAGEMENT


My formula:

Entry is simple:

RISK = 1% of MY CURRENT CAPITAL

Even if within above risk parameters put on only a Single lot TO PREVENT CATASTROPHES based on previous experiences.

Even if there are postive urges to ADD to a winning postion it is not allowed in this plan.

Exit is preset at 20 ticks

Stop loss is preset at 10 ticks



In Defense of My Money Management Strategy

- I have done the groundwork to lay down a winning strategy.
- Money management is simply a pillar in a three-legged stool supporting my strategy.
--- Money management cannot make a losing or bad strategy
----- e.g.countertrend quick scalps where hesitation of milliseconds is the difference between a loser and winner.

Commitment to my money management approach

This is what I am aware of about this strategy and we build upon this always:

1. The combine registration fee is money that I can afford to lose. It has been written off the day I enroll for a combine. If I lose it I will still maintain my peace of mind. Period.

2. I will always use my MM strategy because I am not making random entries and exits. Thus I will risk my capital without hesitation.

3. I am susceptible to overtrading and also get exhausted/wron out so I will stop trading for the day after five trades (win or lose).
- Side note: I have not been able to follow this in this combine

4. I allow large winners to feed my ego. Hence I will limit my wins to 20 ticks. This is also a VaR computation that puts probability on my side on average (I will know when there are exceptions. I will not shy away from a trailing stop in extraordinary conditions for a larger profit just to justify this rule.)

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 iqgod 
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Combine Plan

Part I


Section 4


GOALS


Notes to Myself

- I take every signal that my strategy says is a valid signal.

- I have lot of courage to do that. It is not blind courage, it is backed up by my commitment to my trading because of many things:
--- studying the markets every day. Reading up price action material EVERYDAY before starting up my trading platform.
--- I have commitment. I read at least one full chapter Al Brooks Reading Price Charts Bar by Bar each day. I skim through more pages and charts quickly as much as time will allow (described more in my 'Time Table' section of this plan)
--- I trust my methods. Over the years I have developed firm conviction
--- I trust myself to be mindful and stay in present tense
--- AND most importantly - I have courage because I use stops. Not using stops is NOT courage.

- I only think about what is POSSIBLE (the only thing that is possible is that I FOLLOW MY PLAN).
--- I am not unrealistic even at the back of my mind (e.g. doubling my account in a few months)

- I stay in my trade till it is appropriate to get out

- Current goal is to strictly allow trade to take out stop or reach target. Why does this a rule for myself? Here is the WHY
--- Why? I adore my winners. I can take twenty winners in a row and yet fail in trading! I need to HOLD and have faith in my system.
--- Why? I need to be detached from results from the outcome of a single trade.
--- Why? I will not have unrealistic expectations that every trade will reach my target before taking out the stop.




Progressing

A Design of Steps Necessary to Achieve Process Goals

NOTE: These MUST NOT be solely on paper to look nice in a plan.

I commit myself to doing the steps outlined below.

How?

I have made a time table and follow that time table.


[TODO: Add the timetable here in tabular format]
_________

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