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Almost Skilled (YM)


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Almost Skilled (YM)

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  #1 (permalink)
SadPraetor
Prague
 
 
Posts: 41 since Mar 2011
Thanks: 11 given, 33 received

Well, I have to try everything... I want to be trader
I'm having huge problems with pulling the trigger, I can't place trades, maybe this place, where I can put my thoughts on paper, be accountable to others, and maybe get some advice, maybe it will help.

Story so far

After 3 years of preparation (first flirting with trading spring 2008) and papertrading I opened an account (november 2011). My strategy was tested on about 9months worth of data. Something similar to Woodies, based on CCI, trend strategy, buying into dips.
Unfortunately I entered the market in November 2010, very volatile time. I wasn't successful, and I lost money. I went back to paper trading, but I had feeling my strategy doesn't work. My results were bad. Suddenly market wasn't moving in steady way, it just jumped to another level, then moved to side, again jumped to another level, again to the side. I was trading ES that time - looking back, I should have started with market like NQ or YM
I tried to modify my strategy for 6 months, different time frames, little changes nothing major, but I couldn't get better then BE.

I scratched everything, built new strategy.

New strategy description
ADX - DMI, breakout from SR
Volatility indicators ATR and Boolinger band width as support indicator (breakout is accompanied with raising volatility)
At first I was testing SR, and pivots to indetify good places for breakout, and for targets where market can stop, wasn't exactly satisfied
Moved to Volume profiles, good for both tasks + some insight for SL placement
I do my homework every day, 30min before opening, I identify good places for doing business where breakout and move can happened, and where to place target.
My standard SL is from 8 to 10T in YM market, Targets at least 14T, otherwise I don't take trade if I don't see possibility for such move. Good target for me is 18T on first trade of the day. After that I'm willing to give it more space, target 25T.
I trade only morning sesion, first ~2h

Where is the problem?
Backtest on data from May 2011 till Feb 2013 (no Dec no Jan)(8months total) 295 trades, 5261$ (one contract traded) after fees. So it's viable way

But I cant place real trades. After that bad experience, after loosing money (about 15% of my account - 48 trades total) I'm scared. And I don't have it under control I have to do something with it. I do understand that losses are part of the business, theory is theory, but when there is time to pull the trigger I somehow can't.

What woke me up was this Monday 25th of March, nice big move that day. My homework identified good zones for trading, and on SIM i did 42T. I couldn't place a trade. I always switched back to SIM , frustrating. I also made decision to make a Journal here, and try to be more active on forum.
So I have to take more serious approach. I cleaned up my journal, prepared for new 2013Q2, and I want to put full effort into breaking this misery. And now I do understand it is not about methodology, but my psychology. And I'm afraid a little, that I'm damaged, and getting it fixed will take some serious effort. If someone can, plz help, thx.

My journal:
excel
one note - picture of every order placement, fill, SL move, Target move, closing the trade + small comment

Platform:
Sierra chart, Market YM

Task for this journal:
Post Game plan if I have time before trading, if not after
Post my day effort, + some comment

Task for April
Place one trade according to tested strategy and game plan each day (to take one opportunity a day)

Cya for now

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  #3 (permalink)
 efutures 
kansas city, KS.
 
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SadPraetor View Post
If someone can, plz help, thx.

I can say you have two issue - 1. Trusting your system 2. Trading with Scared money.If you want to stick with YM, I suggest start with trading its ETF equivalent DIA. Start with 100 shares of DIA and increase size as you become more confident and once you see postive returns for few months move to YM. Do not mind 1 or 2 cents difference in execution between YM and DIA at this point.

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  #4 (permalink)
SadPraetor
Prague
 
 
Posts: 41 since Mar 2011
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Homework

What I see can happened today

1) possible move to ON top, 556, and a little bit more, but at least the test of the high
Im not looking for a trade, move on top of the composite is volatile, weak, not fast, for the first trades I want better odds

2) rotation 533-556
3) fall to 500 or more to 480
looking for a short ~530 with target somewhere ~510, if good moves possible more

4) after fall possible rotation 450-500

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 MWinfrey 
Lubbock TX
 
Experience: Intermediate
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SadPraetor View Post
Suddenly market wasn't moving in steady way, it just jumped to another level, then moved to side, again jumped to another level, again to the side.

What you describe is very normal. Markets move from level to level. That's just the way it is. That used to bother me like it apparently does you. But now, I look at that kind of action as opportunities. Why do you put up a 1 minute chart of your favorite instrument just as an exercise and look at that behavior. You might see something that you haven't seen before.

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  #6 (permalink)
 MWinfrey 
Lubbock TX
 
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Trading: CL
 
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Here...take a look at CL this morning as an example. Notice the large 1 minute bars or series of consecutive 1 minute bars followed by sideways action. Then another minute bar or series followed by sideways action. that happens every day.

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 Brewer20 
Denver, CO
 
Experience: Intermediate
Platform: T4/TOS
Trading: ES
 
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SadPraetor View Post
Well, I have to try everything... I want to be trader
I'm having huge problems with pulling the trigger, I can't place trades, maybe this place, where I can put my thoughts on paper, be accountable to others, and maybe get some advice, maybe it will help.

I suggest you read "Trading in the Zone" by Mark Douglas. This is a great book to understand and improve your emotions. It will teach you about yourself and the random nature of any given trade.

Plan your trade, trade your plan.
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  #8 (permalink)
SadPraetor
Prague
 
 
Posts: 41 since Mar 2011
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Thank you for your time and advice guys

I'll think about DIA, but I'm risking not even a 1% of my trading account on a trade. What is more puzzling to me, is that i play actively online poker, which I find very like trading. Money management, accepting loss, stay calm. I'll give futures at least a chance, I believe I just have to break first few trades.

"Trading in the zone'' is on my reading list, right now I'm going through Brett Steenbarger books.

These days I'm focusing on keeping stress from other parts of my life on the minimum, no drama, and "visualizing" trading. I go through my old trades, and I replay them in mind.

Summary 2.4.2013 not much
Well I made decision not to trade long after ON break, and this decision was made before actual trading. I did stick with it. "New high" move is so steady, lots of corrections, slow. Not a lot of exp in that area, so it's like trading in dark for me.
So no trade
Let's see tommorow

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 DarkPoolTrading 
PTA, Gauteng
 
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SadPraetor View Post

"Trading in the zone'' is on my reading list, right now I'm going through Brett Steenbarger books.

Hi. Brett Steenbarger is excellent. Here is a link to a free interview discussing the exact topic you're having an issue with "Fear of pulling the trigger to enter trades". It interviews 3 of the best trading psychologists including Steenbarger.

Give it a listen: How To Overcome the Fear of "Pulling the Trigger" on a Trade | Interviews With Top Traders

Diversification is the only free lunch
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SadPraetor
Prague
 
 
Posts: 41 since Mar 2011
Thanks: 11 given, 33 received


Wow, today was a mess

I made a trade, but it was a bad trade

So, I logged in 40min before opening, finding out, that TT changed something with data feed.
YM - CBOT did not load overnight data, or basicly no historical data from the last time I was online, till going online again (when I deleted and reloaded data, it only started to write data from that moment)
YM - CME gateaway - something new, loaded overnight data, but no realtime

so chaos, some search on the internet, and trying to solve the problem
finaly patching YM-CBOT with YM-CME data, got my file, but the show already started

I started to do my homework when action tested overnight high. That is quite common these days when market is trying to push higher. I wasn't looking into long breakout trades, and I'm not trading rotations based on volume profile as this is not tested well yet for me.

But I identified a possible short spot at 575, with a target to 554 (smaller volume zone, + yesterdays fall jumped of it)
So I was looking short at 575

"first attachment"

Problem was that price moved close to this area before I assessed whole situation and finished my homework.
Weighted pros and cons, and the fact that last days I'm focusing at pulling the trigger, I decided to make a trade if there is a setup. First mistake. My contingency plan for trading when I come to party late, is to wait 20min bofore trading. To get into the flow

"second attachment"

I did, but volume on that levels started to rise up. Which is something I do consider when closing the trade. I closed it when volume was about 500 per level. Looking at it back, I did not give trade enough time. So a second mistake.
Doing whole homework, I would either not take the trade as I would think about possibility of rotation 575-600 or be more confident in trade
At least I didn't hesitate when I made a decision to make a trade, and signal came.

Now hour into the game, what I see today
1) overnight test
2)fall 575 to 554
with information hour after open

3)rotation 545-565/575
4)maybe fall, very low value area, 540 to 500

"last attachment"

Writing a journal really clears your head and calms you down
Well learn and regroup

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  #11 (permalink)
SadPraetor
Prague
 
 
Posts: 41 since Mar 2011
Thanks: 11 given, 33 received

Journal restart

Hello,

I did setup this Journal in March 2013. I made few posts, but soon after I landed an office job. I left without explanation, and this journal was unattended for 2.5 years now.
I left my work this year in February, and I'm taking trades since March. Looking back I think it was good to take that job. Firstly I tasted what it is to be an office rat, made some contacts, and earned some money that help to keep me calm this difficult beginner's days. But truth be told I wanted to be trader since I was 14. So taking another stab at it.

Reason why I'm restarting the Journal is that during the downswings, reading journals of some other trades helped me to put things into perspective. We all repeat the same mistakes, experience the same exuberance. It helps to know that I'm not the only one in the trenches. If I ever become successful trader, and this journal will help some other trader as motivation in his journey, mission accomplished.

I hope I'll stick around for longer than last time. Human is creature of habit, so building habit to attend journal can take few weeks. I'll do my best

Journal was also renamed from "Damaged goods" to "Almost skilled"

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SadPraetor
Prague
 
 
Posts: 41 since Mar 2011
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I never cancelled my broker's account, and I was regularly paying for Sierra Chart. So even during the time of my office job days, I was working on trading. Spending good 20h per week on average working with backtest and so on. Trading evolves and there were some slight changes.

Instrument and platform
YM and Sierra Chart, nothing changed

Trading style
Breakouts from SR level, or trendline, but whole process is more layered now, will be explained later.
Targets around 25t, SL 8-10t
No change

Charts and Indicators
I cleaned up my charts a little bit. Background is black now (probably the main difference)
Uisng 250 vol bars

My main tools
SR levels charted from composite (months to years) of volume profile. Marking low and high volume areas, and adjusting them slighly based on price action in last days, so it closer matches real SR levels.
Trendlines
EMA 34

Secondary tools (means that I look at them if something is in question, but they are not the signal)
ADX (been considering to remove it for few months now)
ATR (actually was removed for a long time. Volatility judged by eye based on size of bars. Showed up again on 24-26th of Aug, when I was comparing volatility of those days to previous periods, keeping him there for now)
Cum Delta, and DeltaMomentum
Mid of range

Charts can seem little bit overcrowded. My eyes are used to it, and can filter what is important at the moment. But I do make mistakes, sometimes in stress of trading we experience tunnel vision.

To summarize, very little changed. Instrument, platform, style (breakouts), and most of the tools are the same. Top down approach was refined, but the main idea of it is the same.

Psychology
Some improvement in this area. This Journal was formerly named "Damaged goods". The name reflected the fact, that in my first attempt to trade I lost 15% of the account very fast, and it burned me. I had huge problems to open trades. At the moment of this post I have 93 live trades, being somewhere around BE (after fees). I do have habit of taking at least one trade a day. I still have some issues, overprotecting my profits, under trading, not letting winners run, but I see light at the end of the tunnel. I'm improving, and I see real possibility for this career path. The name of the Journal is now Almost Skilled

Please see my results in USD, after fees

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SadPraetor
Prague
 
 
Posts: 41 since Mar 2011
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Well moving into a new place, and parents visiting kept me busy over the weekend and Monday. Quick recap of week, before I move into this new week. Wanted to write first about current state and performance, but was not enough time.

Very simple post, just to review last week

Monday 7th of Sep - Bank Holiday

Tuesday - 2 loosing trade, really bad trades, brain dead kinda type. I was looking for breakout, but really bad thinking process



Wednesday - Market opening on the edge of short term balancing range. Tested this level H from 28th of August, but reversed. Entry on break of trendline, also breaking SR level. Target matched to L of previous swing down, 30t.



Thursday - big range ON, extended slighly below previous day L. Before opening slightly climbing upwards. Trendline coming from this L of ON and move upwards. ON breaking together with break of SR line. Very similar trade to previous day trade.



Friday - preoccupied, + symbol rollover and 9/11 anniversary

Summary - One trade a day mostly accomplished. 2 really bad trades, 2 ok trades (satisfied)

Areas to improve - increase number of trades

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SadPraetor
Prague
 
 
Posts: 41 since Mar 2011
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Before I continue with daily/weekly reports, I want to address more my trading style, methods, situation so far, and what targets do I have in next months.

Principles - how I see market, my frame of perception that I use to work with market. This is only my opinion, what helps me sleep at night.

1) Market moves in range, rotating from one side to another. Sometimes from SR to SR level, sometimes in direction within trend channel borders. Sometimes crosses over border into another range. Entry on the edge of range "should" be more successful than in the middle of range, where the move is more chaotic. Market is an auction, searching and testing. It does not know whether it is priced at correct price, only way to find out is to move and test level above or below, and wait for the response.

2) Part of the market move is chaos, part is pattern. Maybe pareto rule 80/20. What it means that I do not bother trying to explain or understand most of the action. In addition to that I'm trying to avoid to trade in moments where I have not a slightest idea what is it trying to do.

3) Another similar application of this view is idea that any given trade is affected by luck and skill. Sometimes there is a washout pullback far beyond what I considered a good SL placement. Sometimes you don't get filled and you miss an opportunity, sometimes you get slippage. There are factors I can't control. My job is pick up the situation where skill factor dominates over luck factor. An example of such approach is to avoid to trade in volatile whipsaw market.

4) One thing I can control is my down side, my stop loss. Stop loss plays a dominant decision point whether I should take the trade. I do have a pain threshold, so I do not take trades where proper SL would be too big. I do not chase market, and rather look to enter on pullback, where I can place SL behind EMA or SR level, or last swing + few ticks. I look for entry where my stop loss is small but still sufficient. Sometimes I do not get filled, as market does not make a pullback that far, or I miss an opportunity, but it is part of my style and I'm ok with it.

5) In trading you have small losses, small winners, breakeven, you should never have big losses, and you need big winners to pay for it all. (do not remember who is author) Not letting your trades to reach targets, will bankrupt you eventually.

6) Psychology. I'm the greatest obstacle on my way to the success. It is your "lizard brain" that takes over, and you shoot yourself in the leg. Fear, greed, anger. Making sure that you are focused, and have your emotions in check is very important.

Trading process

1) I do start 1.5 hour before market opening. Checking up on any reports coming in, Asia/Europe, any news. I live in Central Europe, so main trading hours for me are. 15:30-22:15. My core work hours are 14:00 to 18:00 (usually finished earlier, if trades taken are at satisfactory level)
2) I do consider the big picture, market in view of several days up to weeks. Using volume profile composite, and daily bars
3) Take look at current consolidating range, or current move. Short term composite. Controlling price, unfair H and unfair L, SR levels, Gaps, anything that can contain the move, or act as SR and start for breakout. Also studying moves can provide information whether market is finished with the move, or will continue further (daily view)

- This part should provide ideas of dominant direction during the day, how big volume, volatility, confidence, and range I should expect. I identify important SR levels. Not every day I can gather idea what might happen, but sometimes it works out. More or less it gives answer to question what is market trying to do, who is in control (buyer/seller), and whether I can expect response from other side.

4) 250vol chart - perceived volatility at this level also gives information how confident is the market in the move in any given direction. More confident usually means less volatility. On this level then I look for signal. While top view of what market is trying to do is discretionary and is thinking process, signals themselves are statistically backtested and clearly defined.
5) I use Access database as main journal. All screens and comments, news, homework preparation, theories, trades, how I feel (psychology), and comments about days
6) I did find that taking a look at the charts and trades next day, after taking a good night sleep, puts them into different perspective. You are a blank slide, without emotions, and can judge better. This is what I do in the morning, and this is time I will try to update forum Journal.

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SadPraetor
Prague
 
 
Posts: 41 since Mar 2011
Thanks: 11 given, 33 received

During my trading I encountered 2 big problems.

1) Fear of putting on trades. The Journal was originally started because I was seeking help with this. Taking office job, and time passed healed this wound significantly. I started to trade in April, and limiting myself to one trade a day in the beginning, let me slip back into pool slowly without any further shock. I do have a habit now. I do my homework before market opens, I put on trade. I do feel that I have problem to add more trades during the day at the moment. Especially after good winning trade. Having one loosing or BE trade does not stop me the way one good winning trade does. I have a tendency to protect the money too much. This need to be addressed in next few months.

2) Fear that trade will turn against me. Closing them too early. If you take a look at the graph March-Aug (realizing now that name of graph is wrong, should be April-Aug), you can see that it was 34th trade, where I for the first time let the market reach my target. This affects the results in a great way. Without big winners (principle #5) your equity curve will just slide down. I made some progress in this area. Currently I minimize Sierra Chart window when the trade is open. I do have sound notifications on target/SL reached, and also for connection lost. I do have a stop watch, and I check the graph every 30s in. I move SL if the read is there. If the SL is BE+, I do check the graph less often.
The problem here is that the moment I see price coming back in pullback, my lizard brain takes over, and fight or flight response kicks in. In open trade easiest response is to flatten all. Avoid looking at the trigger, the pullback itself. If you don't have the trigger, you can keep calm head. I do check graph time to time, as moving SL can improve results. It is easier also to keep calm head in SL moving decision when you get only short bursts of stress exposure, and time to rest in between.

Situation
- Trading since April, more or less in line with rule one trade a day. Number of trades should be increased
- I did run a SimTest in March. This test provided me with a performance benchmark.



I do have lower win rate on sample of 88 trades. It is also true that SimTest averaged 4 trades a day, while I average less than trade a day in real trades. Also psychology is under higher pressure. That can account for this miss, but it is still a concern to me. I do have on my to do list to run a backtest on August days I was away from pc, to recheck whether system works properly.
Lower profit factor is mostly caused by my inability to let the winners run. This was addressed, and is watched closely. I can't say I'm out of the woods, but improvements were made.

Tasks for next months (end of Dec):
- Recheck with backtest the win rate
- Increase amount of trades per day
- Make sure you let the winners run
- Be better in execution, avoiding mistakes (difficult to explain here, tracked in weekly trade reviews, notes, screens, it is a process check, long to describe, not a simple metric)
- As always, keep an eye on downside, trade SL, day SL
- Also be more disciplined in working hours.

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SadPraetor
Prague
 
 
Posts: 41 since Mar 2011
Thanks: 11 given, 33 received

Week recap 14-18 Sep

Stressful week. Moving to new place, visit from parents. Parents were strictly against me leaving the job, and trying out trading. So I had to endure a ton of criticism. It is difficult to explain to people, that this endeavor requires some study time, and that sometimes fixing one mistake, or improving some metrics by few % can shift you from red to black. People lack ability to think in exponential, compounding world.

Monday -Preoccupied

Tuesday - I tried to trade, but with 3 nights of little sleep under my belt, and running on caffeine my head was not in the game. Missing signals, so I gave up.

Wednesday - Took one live trade.
Idea was, weak High previous day, strong SR above, ON H overlaps with this SR, small pullback to test previous day low volume area at 16473, is reasonable. Two swings up, with second swing lower H. Trendline coming from ON and first two swings down. Now, I could have taken entry on trendline break, or on break below previous swing L. But with this second entry I would need bigger SL, somewhere 16530. This SL would be little out of my comfort zone. So either entry, or SL sizing was wrong in this trade. I paid for it. Market pulled back to EMA, and moved further down, slowly, but it would hit my target



Thursday - FOMC day, decision was to be very careful, and avoid trading. I was watching market almost whole day, but pre FOMC it was dead (I did not trust breakout upwards) and after FOMC it was wild. A trade could have been taken hour before market closing, when it calmed down a little, but I was a chicken.

Friday - one live trade, waited for it. Missed one double bottom. I was very sleepy this day. Probably stress wearing me down. I went for a run after trading, and there was a ton of energy, so the problem was more psychological than physical.
This trade was taken with idea, that market is trading in range, with top edge defined by opening level. Market moved from bottom in very strong move, reached this opening level, and reversed. Trendline break, break below SR. I made some sim trades during this day, none of them worked out. This affected me. There was hesitation in opening. During the trade, I minimized window only for a minute, then I started looking at it. Low volume area around 16328 scared me a little. Not having it minimized, is against my trading rules. Naturally fear kicked in, and I closed the trade. There were some warning signs. Firstly, taking look at it later, turned out that the move upwards had second leg up coming from this pullback. Could have been anticipated. Second, weak momentum. Midpoint and low volume area acting as support. What is important, currently my aim is to let the trades work out, so that was not achieved by this trade. But entry was good.




I want to talk little about SimTrading. During past months, when I did not feel like taking a trade, or signals were messy, I often took SimTrade. I think that was a mistake. Backtest or SimTrading should be deliberate exercise. That means testing specific strategy, signal, set of rules. I often took SimTrades to test my feelings about what market should do. I took them often in order to avoid real trades, or to avoid boredom. This can cause few problems along the way.

1) You train yourself to take untested signals, to trade on impulses
2) It trains you to avoid trading, as you have easy way out (switch to Sim)
3) As you take bad trades, it affects your perception of your system. Several bad SimTrades in line, and you can hesitate in real trades. You can feel that your system is not as good as you thought.

I feel both of these problems are starting to show in my trading. This week I took 24 SimTrades and 22 of them were losers. Majority of them outside of my rules. This in combination with more stressful week than usually, caused hesitation in real trading.

This is one of the reasons why I'm currently reworking/rewriting/reorganizing "playbook", looking over all rules, any detail I picked over last months. Also I plan on backtesting again, to reinforce correct habits.

Let's see what new week brings. Good luck all.

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  #17 (permalink)
 PeakGrowth 
Sydney, Australia
 
Experience: Intermediate
Platform: Sierra Chart, IRESS
Broker: IB, IQFeed
Trading: ES, SPI, ASX stocks, options
 
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Have you tried keeping your job and trading after work?

When you don't have the ticking time bomb monkey on your back to succeed, everything becomes much easier and much faster.

You might find it'll take you 2 or 3 years of living hard before becoming successful without a regular pay check versus 1 or 2 years of much easier living.

There are a lot of perks to keeping your job before you quit for full time
- No time limit. This gives you more time to test and trust your system
- No make or break. Your wife/gf/kids/dog/cat/fish won't leave you and you won't be living on the streets if you don't succeed.
- Your parents won't think you're crazy. Your trading has to be in harmony with the people you love the most - if they don't approve or don't understand, it won't work - it will just be another source of stress
- Reduced psychology issues if blowing your account. Your stake will turn from "can't lose" to "can lose" and will get rid of your trigger issues.

Good luck

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SadPraetor
Prague
 
 
Posts: 41 since Mar 2011
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PeakGrowth View Post
Have you tried keeping your job and trading after work?

Yes I did try it. For about one and half year, but work came first (responsibility to other people depending on quality of my work). Under such conditions there were some weeks when I was not able to open the charts. It was not sustained effort and I was not in a flow.

Regarding money, I have enough in bank account to last a year from now. Nothing fancy, but my life standard. I'm 28, no gf no wife. Being older, and having other commitments would make this endeavor much more difficult.
I thought about different possibilities, and came out with conviction, that I should give it at least a year of sustained fully focused effort. On the other hand, part time job is a possibility, as main US trading hours start for me 3:30pm. Right now I have 10000 things I would like to address in my trading. I would like to see some progress, before I would allocate some substantial time to part time job. And by progress I mean positive expectancy, maybe around 40trades a month, and more ease in execution, less mistakes.

And my parents are very conservative and risk averse, they would be against trading in any circumstance. I very differ in this from them.

Thank you for your post

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SadPraetor
Prague
 
 
Posts: 41 since Mar 2011
Thanks: 11 given, 33 received

Monday
No trades. Mostly fear, little bit of confusion what is market doing

Tuesday
2 trades

1st trade +1t
Idea here was, opening with GAP down, before NY open it started to grind upwards in trending channel. Made a quick drop after initial chop, but rejected this direction. Back to opening level above SR and EMA. Manages to extend range upwards. If I had more confidence, I would took entry just above SR somewhere @16200. With this entry SL would be below SR, in safer spot. Instead of that, I took entry on upper side, when I saw momentum rising. I believed market will continue, and break above 16228 resistance, and close the GAP. Market did not move that far. I concluded that SR will hold up ( I see two moves into SR, and push back down). Exited with +1t.

2nd trade +14t
Market tested SR at 16228 again, failed. Strong push down. Break of trendline, move below EMA. I took the scalp, with targeting 16198. Market was in chop, and I did not believe it will gather enough strength to extend range very far.



Wednesday
2trades

1st trade +18t
Declining from ON H. On opening it retested the first swing up but failed to move further, fall below SR level. Fast move, but reversal close to 16198. Pullback back up to 16228 SR, trendline and EMA, where I entered. Read was that market failed to extend range above previous day H, so it will move to opposite side. Entry could have been few ticks higher, I wouldn't have taken so much heat. Managed to stay in trade, mainly by minimizing the window. Went my way. Target was 18t which is my usual smaller target. There was a support level below, edge of value area from previous day, clear dip in volume profile.18t was good for this scenario.

2nd trade -7t
Still in theory that market will test bottom edge of previous day, as it failed to extend range above H of previous day. Initial range establishing move. Broke below SR 16198, returned back, and bounced back down from EMA and SR. Entry when momentum showed move down. Trade is by my rules. There was some hesitation in taking the trade. I account this to my tendency to protect profit from first winning trade. Trade went eventually against me.



Thursday
Difficult day, 1 trade +1t

I missed initial move down and I failed to enter on pullback. I was not focused. Feeling under pressure, I was hunting for trade. Market reached SR, and I entered. Entry is not in line with my rules and experience. As I realized this, and I saw some resistance, I exited from this trade. Proper entry by my rules would be closer to EMA and trendline, that means on pullback. Breakout was eventually retested with pullback to 15950. Not satisfied with this trade.



Friday
1 trade -8t
Opening in no man's land, between two volume peaks on short term volume profile composite. Possible reaction from both buyer and seller, but also great chance of containment of action. After opening whipsaw, but clearly defined bottom edge at SR level. I place entry 3t below L. I can play several scenarios where trade would have work out, but main thing is that proper SL at 12-15t above 16293, that would be a proper SL placement for this scenario. That is on edge of my SL rules. I try to never go over 10t. So in such case correct decision would also be not to take a trade. Market went down, and even had a pullback where entry would have been possible.



Summary:
3 decent trades in line with my rules I can be happy about. One good BE trade with proper management. One really bad trade with wrong mindset, and one trade where I can find an error in process.
Current #1 area to improve - letting trades run - good results
#2 - increase amount of trades - not good. Many of the moves happening later in day this week, where I lack experience in live or SIM trading, so avoiding them. But it has impact on your psychology seeing opportunities go by.

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SadPraetor
Prague
 
 
Posts: 41 since Mar 2011
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There is one idea I would like to share this week regarding SIM trading. As I mentioned I often switch into SIM when I'm unsure what to do. Sometimes I'm just taking trades, with excuse that I want to test an idea. I already mentioned how such SIM trading can impact trader in previous posts. In this post I want to point out that just taking the trade to test idea is not enough. You have to review the trades. It is important to spot patterns, and it is easier to spot pattern when you look at 50 trades in 1 hour, and take notes, rather than take 50 trades in span of a month. You do not remember all of them, your memory of those trade is affected by your mind state when you took them. I did neglect this reviews. It was not so bad, I always review my live trades again and again. But I should have taken a look also on SIM trades more often. Usually when I reviewed them I always found out they are out of my rules, and in many cases I can't understand what was my reasoning why I took them.

I found one interesting piece of data




Table shows several days where my winning rate is very low, below 50%. Yet with managing my down side, limiting maximum loss, and letting winners run, I managed to end in profit. This picked up cherries show extreme cases, where even winning rate below 30% could have yielded decent per day profit (for 1 contract traded). Still it shows how important it is to let your winners run, and cut your losses. This is one of the reasons why I consider systems with good positive RRR superior.

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SadPraetor
Prague
 
 
Posts: 41 since Mar 2011
Thanks: 11 given, 33 received

Monday
1 trade +25t
On Friday, test to upside was pushed down strongly. ON move up to retest, was again pushed down, opening at bottom edge of Fri range. So my scenario is that market wants to continue down. It moves swiftly down to SR level and pulls back. Narrowing range, and sudden break down, below trendline and SR, in continuation of previous move. Now, truth be told, there was a hesitation in opening trade. I was supposed to enter by stop order, but hesitate too long, market moved far away. Entered limit order, luckily market moved back and picked it up. Also, my target was picked on touch. So I can say I had a ton of luck in this trade. That is bad, luck does not always swing your way.



Tuesday
1 trade +5t

A bad trade in many aspects. Opening in value area of previous day. Makes a swing down, but pulls back. Reaches just to opening price level above SR 15908. Narrowing range, and breaks out down. Break of trendline, also below SR. This should have been first good entry. Second good possibility to enter was at level of last swing L, around 15890. I hesitate, and fail to open the trade. Last decent entry is at L of previous day, but at this point price is far away from EMA, so some pullback is a possibility. Again failed to place stop order. Price moves away. I place limit order, but realizing this is probably not going to be picked up. Price makes sudden reversal, and picks the order. I panic and close the position. Very bad trading, mistake after mistake.



Wednesday
1 trade -8t

Opening with GAP up. Breaking above SR level, and above ON H. Runs far away without pullback. Trying to find entry. Looking for pullback to trendline. I have mixed opinion about this trade. I can argue some warning signs (far away from EMA), also entry could have been better, but it was not out of my rules significantly. I was aiming for continuation to next SR, so bouncing from trendline, entering on increased momentum. Did not work out.



Thursday

2 trades: -8t and +25t

Open with GAP up, very little. Previous day P volume profile, so strong pull of value area below opening. Slow grind up after open, but nothing strong. Breaks from it, breaks trendline, breaks SR level. Little hesitation and I was entering decent distance from actual breakout. Market picks my SL very quickly, I had almost no reaction time to adjust SL. Second entry, only few ticks higher. Took some heat, widened the SL by 2t, but eventually it did drop down. Target usual 25t.



Friday

1 trade -6t

Jobs report caused big ON move. Opening at the edge of Thursday range. Possible responsive buying, or continuation. After open it seemed as first move is going to be down. Swift move, breaking ON L. I was looking at continuation of the move. By my rules I should not have taken SR breakout signal after such decent move. Waiting for pullback to EMA is in line with my rules.




Summary: weak performance. I do not have a feeling that I have it under control, that my execution is right in the places where I want it to be. I do get tunnel vision. 2 trades can be considered chasing entry. 2 were entry with great hesitation. Also I'm picking up trades very early in the day, few minutes in, when market have not yet shown what it wants to do for the day.

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  #22 (permalink)
SadPraetor
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Posts: 41 since Mar 2011
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6 months of live trading. Taking around 20 trades a month. Anytime I'm in downswing, I hunker down and follow rule of one trade a day. In addition to that, my trading system was changing and evolving in past 6months. Therefor I was lacking anchor, so my confidence in trading system was affected, and I did not want to take too many trades.

I reviewed my benchmark trades, made during March 2015. I did find out that my style changed. Firstly, many trades in benchmark study seem random to me, or without some set of rules. Secondly, I added some new signal and some new rules, and I'm trying to incorporate "story arc" (what is market trying to do?) form higher timeframes. Despite the fact that benchmark study showed good results, I do not consider it a good trading. Many trades lacked some set of rules, they were random. Luck played some role in the results.

Watching my SIM trading results makes me worried. I do recognize that many trades taken in SIM are out of my playbook, but my SIM results for week 28-Sep to 2-Oct were, 34 trades, 26.47% win. That is miserable. Because my system changed in past 6 months, I would say I lack proper benchmark to which I can compare my trading. Something I can look at when I'm in downswing. Statistical study, that yes, my system is profitable. This affects my confidence.

I would say that my system evolved to better in past 6 months. I finished my playbook, my rules are more rigorous, more clear. At least on paper. Unless I'm proven otherwise by benchmark backtest I do consider current style good and profitable.

Currently, I have to do a backtest. Make a new benchmark which I can use as anchor for comparison to my live trades. Train my though process during trading to follow my rules. Build confidence.
Main current issue is low winning %. This might be because I do not always follow my rules, I hesitate in opening trades (and I get worse entry), or I hesitate to take 10-12t SL instead of 8t SL.
Secondly number of trades in a day. I would expect 4-5 trades a day on average with my style. In order to make this a serious business I have to increase amount of trades in a day.
Third task, is to let winners run. This is getting better lately, but still has to be watched.

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SadPraetor
Prague
 
 
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Only one trade on Monday. This is the type of the trade we all refer to as "What was I thinking?!". There is really nothing that can explain my action






This trade was a catalyst. For good month or two, I had great concern about my performance. SIM results were horrible, and I was lacking focus, and confidence in my trades. I decided to pull back from live trading, and do some backtesting. Well results are bad.

My initial idea of my trading style has to layers. First one is story arc or "What is market trying to do?". Let's talk about Friday. Market moved in one week from bottom of short term balancing zone to top side. In YM market it is breaking outside. Move was very swift, and in last few days market is slowing down. The moves are less confident. There was not yet a pullback, that would confirm the strength of move. Thursday end was close to H of the day and during overnight this H was overtaken. One of the possibilities that can play out during the Friday is test to ON H, failure to break above, and fast move to opposite side, testing ON L. So my plan is to look for trade after failing the break, in swift move down.



Second layer is actual signal. Entry on SR level breakout, or entry in trending channel at the edge, etc. This is supposed to allow me entry with good RRR, so I do not have to have big SL.





Somewhere along the way I got confused. I'm looking for trades outside of story arc. Problem is overtrading. I do have good trades, where all pieces of puzzle come together. But then there are 5 other trades that are just in chop. I was in such situation once before. From my experience I have to go back to basics. Strip down all unnecessary.

So my task list currently consist of backtesting, until I can prove I have trading edge again. Currently I have nothing worth of posting.

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  #24 (permalink)
SadPraetor
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Posts: 41 since Mar 2011
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SadPraetor View Post




I can't see pictures from my Sep recap, and can't edit the post

Reup



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  #25 (permalink)
 Zentrader2010 
Sydney
 
Experience: Beginner
Platform: E signal
Broker: AMP, Stage 5
Trading: AP -SFE; FESX; ES; 6A, 6N,6E,6B,6C,6J
 
Posts: 42 since Jul 2010
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Hi buddy,
I like your journal.....

Just wondered, why do you back test your method?

To me, that's just trying to re-invent the wheel....plenty of educators make it much easier for you...it took me years to decide and try it, by I picked one or two guys and just follow their complete methods of how to really take money from the markets each day. You seem to be working so hard - when perhaps all you need to do is learn how 'price action' traders trade. Did you buy at the top of a tight trading range? That's called a bull trap. Learn what market type is in play at any given time...if you try break out techniques in the wrong market conditions like a trade range day or a trending bear day, you'll do the strategy that empties your account.

E-mail me for a list of books to help if interested:

opsm@live.com.au

Regards,
Zentrader

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SadPraetor
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Zentrader2010 View Post
Hi buddy,
I like your journal.....

Just wondered, why do you back test your method?


Zentrader

Hi, thank you for comment.

I suffer from something called habit creep. Basically during the past months I took too many trades outside of my rules in SIM trading (watching markets real time, not taking live trades). This got into my thinking loop, so I ended up overtrading in choppy zones, out of story arc. SIM success rates were around 20%, and also my first backtested days showed this level of win rate. This affected my confidence.
I'm not trying to reinvent anything. I'm trying to get back to my rules, to trade within them. Not changing market, time frame, tools, not changing anything. Only thing I'm trying to achieve is to stop taking trades based on question: "I wonder what the market is going to do, and what would happened if I took trade right here?". Trying to train myself to sit on my hands, and only trade in picked zones of interest.

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SadPraetor
Prague
 
 
Posts: 41 since Mar 2011
Thanks: 11 given, 33 received

As I mentioned in last posts, I'm not doing live trades for now. Gained some bad habits, so I have to get rid of them and get back to trading by my rules.
I would like to share one trading day with you. Everything from preparation, what were my assumptions, trades, etc. It should show in better light how I'm trading.
I picked Wednesday 14-Oct. All trades are SIM trades. It is not by far perfect trading, but this day resembles what I have in mind when I imagine how my trading style should look like.


Wednesday 14-Oct

Homework
Usually done hour and half before NY open. I take a look at Asia and European markets. Reported economic statistics and what is going to be reported during trading hours (and mark times on chart).
On Wednesday, several WS banks reporter their quarterly results. China CPI reported lower than expected, same for US retail sales and PPI. Looking at ON session market have not reacted to the news.

Market moved from very bottom of balancing range around 15900 to the top of the range at 16800 and even broke above it. It is testing breakout zone from 20-Aug. There was no significant pullback, or slowdown. First sign of slowing down can be found in Thursday 8-Oct. Most of the volume is in bottom part of profile. Only closing move pushed it to new H of this swing. Relationship between Friday 9-Oct and Monday and Tuesday shows market hitting SR, losing momentum. Overlapping ranges, value areas, decrease in volume, balanced profiles. Monday was Columbus day in US, so need to take it with grain of salt. Still, market is unable to push much higher. On Tuesday, it opened below Monday range, was able to push pass it, to new H, but lost ground and returned almost to opening level. Move back down was weak, big swings, 2 slowdowns creating trading ranges. We can argue that both other timeframe buyers and sellers were present in this move. All of this marks uncertainty.




Main factor I consider in this day: Market on Tuesday opened below Monday range, moved through it, but lost momentum and pulled significantly back. It seems to me like last attempt on pushing higher, but failing. Not enough aggressive buyers.
Taking into account that ON showed no development, and we are at what seems top of the move, bias for Wednesday is move down.

Next I draw by hand on paper possible scenarios. I found out that it is easier to follow a picture rather than written text. I made several scenarios.

a) Opening below Tuesday value area, in the tail created by initial opening. Test to upside, into Tuesday's value area. Probably test to Tuesday's VPOC 170215. Reversal there, move down, to the open and below. First possible slowdown at 16919 SR - coming from 9-Oct and 13-Oct. Next 16857 - H of 7-Oct, and some resistance and rotation in 8-Oct. Day target for move down is 16800, corresponds with VPOC 8-Oct and very close to 7-Oct VPOC.
- Looking for entry on reversal from 17015, break below 16919, and 16857 break
b) Open drive from opening down. SR levels and targets same as case a)
- Looking for entry at 16919 break.
c) Test down to 16919 SR, no strength to break, return up, breaking open level, moving into Tuesday's value area, test top of value area, possible test H of previous day. Choppy overlapping range expected, possible one more test down.
- Possible entry after breaking opening level, at SR level 16995 which corresponds with Tuesday's value area bottom edge. Target 17030. Possible top side of value area.

So idea of my trading is to take signals in predetermined areas, where I think market is going to have tendency to gain momentum. As I mentioned my problem with habit creep occurred when I started to take trades just wondering what is market going to do in other areas. Most of the time market just chops around, so mostly you lose money and you build a trigger happy habit.
I do rework this scenarios during the day, adding new ideas and adjusting based on what is happening.


Trading

The actual trading is waiting for some of the scenarios to show up, and pick good entry with decent RRR, and not needing big SL. On Wednesday scenario that played out was a).

First area I wanted to trade was on reversal from VPOC at 17015, looking for a short trade. Below is the screen. Took 2 bad trades. First one I was trigger happy, bad trade breaking many rules. Second I did not adjust SL size. Third one was correct. Decent reward.



Next area of interest was break below 16919. I did not take into account that market already made decent move, so this breakout down might be retested pretty fast. First trade was targeted down to 16860. Market was not able to follow, still there were decent amount of warning signs that market is not ready to go so far. I could have leave earlier. One long trade, well I was thinking that it will move back to mid of range, to retest this move. This was outside of story arc. Third trade was good, entry could have been few ticks better. Target was place too far. So missed money. Too greedy



Summary: This is an example of a day where I traded in line with prepared homework. I made trades in picked zones of interest. Execution itself was bad. Still some trigger happy habits. In second set I'm greedy, and wasting a lot of potential.

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  #28 (permalink)
SadPraetor
Prague
 
 
Posts: 41 since Mar 2011
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Second week without live trades. I was taking trades on Simulation and in Backtest. Total of 12 days. Results in picture.



1) Difference between SIM and Backtest. In backtest you can pause, take a break, or speed up. I have to work on my patience and discipline during boring "chop "periods
2) I see that on days where I trade outside of story arc, my % win is drastically lower. I'm overtrading. Yes, there are pretty moves, even in size of my usual target 25t, but taking into account math and statistics, I do better if I pick 2-3 trades a day in good zones, than if I try to catch every move. I have to let those situation go, as more often my SL is picked up than my target. That requires discipline.
3) It is astounding how psychology affects your results. I barely get positive on 100 trades in my real trades, but I do make 1.2k with SIM
4) There was increase in performance, but I still have some relapses

I'm going to trade again live this week, together with backtesting.

So my to do list
1) Live trades
2) Backtest

Addressing
a) Patience and discipline, wait for right situation. Trade in story arc
b) Let the winners run

Question for readers

If you are using volume profile composite (adding volume over several days/weeks), do you combine volumes on several price levels? (like volumes of 4 ticks levels combined into one bar). Thx

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  #29 (permalink)
SadPraetor
Prague
 
 
Posts: 41 since Mar 2011
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Return to live trading after two weeks. Little bit more confidence, and calm. I managed to get the hesitation about this whole trading out of my head for now.

Monday
+2t
Pulling the trigger. The whole first trade was just about opening a position. How much damage can I do if I follow SL rules? Not much. Idea was to break hesitation after 2 weeks out of the market. I did not minimize the window. So naturally fears kicked in and I exited fast.



Tuesday
+16t
So on Monday we had very narrow range, balanced profile. Opened below this range. And close to Friday low, which from short term view means below value. There was nothing that would suggest move down. Retest back up to Monday's range is reasonable. I missed the up move opportunity. It reached SR level at bottom edge of Monday value area, and formed double top. My play was pullback to mid of range. Usually I take 18t on small trades. Was not sure it will break below Mid point and SR, so I adjusted to 16t. Good trade



Wednesday
+2t
FOMC day. I did not anticipate the rise in price before the report. 2 trades were possible there, but I had not prepared anything in their anticipation. I wanted to make a trade. I expected bigger moves after FOMC report. I chased the trade, saw that market is moving down, and I wanted to enter. Nothing prepared, what I think is error in process. Not minimizing window, so naturally without game plan, and under pressure watching volatile market I exited swiftly. Bad trade



Thursday
-6t
Opened in tail part of Wednesday's range. After open, trend channel upwards. Break out of it, break below SR. The whole auction up on Wednesday was not finished. I expected some pullback, retest down, and possible continuation. On Break I assumed buyers gave up and market will break lower, retest VPOC of previous day. Market gathered itself at opening level, and reversed. Picked my SL. Good trade.



Friday
Dead day. Was looking for something 3h. Gave up. Nice move came in closing session.

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  #30 (permalink)
SadPraetor
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Posts: 41 since Mar 2011
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8 trades only
50% win rate
+$62.48

So, I took a break, backtested a little. There was this nudging feeling that something is wrong, as my SIM trade and backtest had miserable results. I looked into it, and turns out it was bad trading. System still should be valid. I do have better performance in live trades, as under pressure you think twice whether to take a trade and whether all rules are filled. That is good. Still a ton of space to get better.
I was avoiding to increase amount of trades for a long time. First downswings in account, then uncertainty whether system is good. Currently I'm in good place. Account is slightly in positive, and I have confidence. I will follow rule two trades a day. Valid signals. If I do not see good signal in morning session, I will trade closing one. Still have to be patient and trade within the story.
Secondly, I have to admit I do not give trading maximum. There is still a lot of time wasted. I should backtest and train more. Currently, I have to nail the execution to perfection. Being consistent. That can be done only by actual trading. It is difficult. Boring days have probably the worst impact on me. If there is no move in market, it feels demoralizing. Let's see how much can I push myself

November
2 trades a day
Add closing session if you do not fill 2 trades.
More time training execution.

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 Big Mike 
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Hi,

I noticed you are scalping and you are focusing on win rate. Both are very bad things and I would say classic rookie mistakes.

The smaller the time frame you trade (ie scalping), the more difficult you make it to be successful because the fixed costs are stacked against you (among a million other reasons).

This has been discussed exhaustively on the forum, so I leave it to you to do your own research. But I felt like I should point it out, because I think you are making a fatal mistake with your method.

Mike

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SadPraetor
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Big Mike View Post
Hi,

I noticed you are scalping and you are focusing on win rate. Both are very bad things and I would say classic rookie mistakes.

The smaller the time frame you trade (ie scalping), the more difficult you make it to be successful because the fixed costs are stacked against you (among a million other reasons).

This has been discussed exhaustively on the forum, so I leave it to you to do your own research. But I felt like I should point it out, because I think you are making a fatal mistake with your method.

Mike

Ok, you got me confused. I do not want to be defensive, and you are busy man with the whole forum, not sure how to properly response

Define borderline between scalping and trading?

My ideal system produces usually "trades/scalps" with 8-12t stop loss, and targets 18-50t, with majority at 25-30t. Trade length average above 5min, with longest trades around hour. That is ideal, benchmark backtest, what I want it to be. I'm aiming at 50/50 success rate, generating 2-4 trades on normal day.

Now it is true, that my live trades are not same as described system above. I'm closing trades too early, I hesitate, and I do take trades that are not always in line with my rules. Performance therefore is not great. I'm working on it.

I was recently mentioning win rate, because during my SIM test and backtest I was doing below 30% success rate. I suffered a habit creep. Taking too many shots. It did hurt my confidence, so I took 2 weeks of to refresh my habits.

Am I missing something? Do I have blindfold over my eyes?

Anyway thank you for your time and post

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  #33 (permalink)
 Big Mike 
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Measuring in ticks, to me, says scalper.

Discussing "success" or "win rate", to me, says rookie. Win rate is unimportant. What matters is expectancy. Be sure to include slippage and commission.

Mike

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SadPraetor
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Measuring in ticks, to me, says scalper.

Discussing "success" or "win rate", to me, says rookie. Win rate is unimportant. What matters is expectancy. Be sure to include slippage and commission.

Mike

I have to pick a battle with you here
You do realize you stated fallacy in that statement?

Expectancy = (probability of win * average win) + (probability of loss * average loss)

Win rate is important, it is one component of the equation. With 0% win rate you can't make money.
I described the whole style with ticks, identifying my SL and my targets, clearly showing where is my RRR. I wanted you to get a better feel what I'm trying to achieve. I showed you SL, target, time in trades. You can derive RRR from it, and you can see that I'm building it rather on Average winner > Average looser, than big winning rate. With good results I should be getting RRR above 2, with aim 50/50 win rate. Yes I'm failing at achieving it at this moment.

If you want to measure slippage and commission, you have to use $ as measurement unit, and that is what I do in my monthly reports. That is how I track my account, and overall performance.
When I'm talking about single trade, here on forum, I use ticks, it is easier for me to comment.

Maybe I'm scalping by your standards. Is it that important?

If in Backtest I can achieve EV 20$ per contract per trade, average RRR 2.5, and RRR 2, is it that bad? After commissions. I'm hoping I'll manage to nudge it little bit higher. Yes I do realize that there is a space to get more from my trades. But at this moment, I think I'm the bigger problem that needs to be tackled first. I track for my every live trade "theoretical correct execution" and it shows much better results than I achieved so far.
(just to be clear, by correct execution, I mean fire and forget, SL 8t, or target 25t, no meddling)
Currently I'm positive after commissions on my account, so it is not a tragedy.

So the question is, shall I master something that shows promise (and the only problem is me, my psychology breaking the rules) or shall I delete everything and try to start from clean slide?

P.S.
also, YM market, 1point=1tick
You can read all my statements above and just exchange tick for point. I don't mind. If we were talking about ES, I would be using points, it's just a habit thing.

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 tturner86 
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Win rate is the least important. Far to often people only focus on win rate.

If you risk double what your reward is you have to be right 90% of the time to be profitable. That does leave much room to scale or improvement.

Reverse that risk/reward and you can be right as low as 30% and be profitable. Want to scale that, you have 70% room to increase your potential.

Win rate vs expectancy is kinda like speed vs velocity...

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SadPraetor
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tturner86 View Post
Win rate is the least important. Far to often people only focus on win rate.

If you risk double what your reward is you have to be right 90% of the time to be profitable. That does leave much room to scale or improvement.

Reverse that risk/reward and you can be right as low as 30% and be profitable. Want to scale that, you have 70% room to increase your potential.

Agreed


tturner86 View Post
Win rate vs expectancy is kinda like speed vs velocity...

Disagree

Speed = scalar quantity
Velocity = vector quantity

Using your analogy, win rate vs expectancy is like (speed or velocity) vs time

Using your analogy, speed vs velocity is like Average RRR vs RRR

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 tturner86 
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SadPraetor View Post
Agreed


Disagree

Speed = scalar quantity
Velocity = vector quantity

Using your analogy, win rate vs expectancy is like (speed or velocity) vs time

Using your analogy, speed vs velocity is like Average RRR vs RRR

My point was the one is part of the equation of the other. i.e. velocity = speed + direction. Speed is a variable of velocity. Win rate is a variable of expectancy. Much like advertising is a part of marketing, but often mistaken for one another.

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 tturner86 
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SadPraetor View Post
Agreed


Disagree

Speed = scalar quantity
Velocity = vector quantity

Using your analogy, win rate vs expectancy is like (speed or velocity) vs time

Using your analogy, speed vs velocity is like Average RRR vs RRR

I do like the time analogy. win rate vs expectancy is live velocity vs time. Expectancy is over a period of time. I like that a lot.

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SadPraetor
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My point was the one is part of the equation of the other. i.e. velocity = speed + direction. Speed is a variable of velocity. Win rate is a variable of expectancy. Much like advertising is a part of marketing, but often mistaken for one another.

Oh you are right, I did not recall that equation

I was working with

Speed = distance/time
Velocity= displacement/time

Yes, part of the equation. My mistake

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 tturner86 
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Oh you are right, I did not recall that equation

I was working with

Speed = distance/time
Velocity= displacement/time

Yes, part of the equation. My mistake


Quoting 
Velocity is a vector quantity. As such, velocity is direction aware. When evaluating the velocity of an object, one must keep track of direction. It would not be enough to say that an object has a velocity of 55 mi/hr (SPEED). One must include direction information in order to fully describe the velocity of the object. For instance, you must describe an object's velocity as being 55 mi/hr, east (SPEED + DIRECTION, i e velocity). This is one of the essential differences between speed and velocity. Speed is a scalar quantity and does not keep track of direction; velocity is a vector quantity and is direction aware.

Speed + Direction is a laymans way for Velocity. Speed and Velocity

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 Big Mike 
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SadPraetor View Post
I have to pick a battle with you here
You do realize you stated fallacy in that statement?

Expectancy = (probability of win * average win) + (probability of loss * average loss)

Win rate is important, it is one component of the equation. With 0% win rate you can't make money

LOL, to make your case you use a win rate of 0% in your argument?

Search the forum and you'll see the rookies talking win %. Win % by itself is meaningless. Your posts mention win % by itself, and not the profit factor or expectancy. Like I said, to me that says rookie. We were all rookies at one point, I'm simply trying to encourage you to educate yourself a bit more in this area.

If you modify your argument to say win rate of 10%, you can still have a great expectancy. And that's my point.

Your mistakes, as I see them:

(a) scalping, (b) focusing on win % [akin focusing on being right].

Scalping is bad because of the costs involved, among other reasons discussed extensively on the forum. Focusing on win % is bad because win % alone is meaningless.

Repeating myself: focus on expectancy, and include the fixed costs of the trade in the calculations (commission + slippage).

Mike

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 tigertrader 
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Big Mike View Post
LOL, to make your case you use a win rate of 0% in your argument?

Search the forum and you'll see the rookies talking win %. Win % by itself is meaningless. Your posts mention win % by itself, and not the profit factor or expectancy. Like I said, to me that says rookie. We were all rookies at one point, I'm simply trying to encourage you to educate yourself a bit more in this area.

If you modify your argument to say win rate of 10%, you can still have a great expectancy. And that's my point.

Your mistakes, as I see them:

(a) scalping, (b) focusing on win % [akin focusing on being right].

Scalping is bad because of the costs involved, among other reasons discussed extensively on the forum. Focusing on win % is bad because win % alone is meaningless.

Repeating myself: focus on expectancy, and include the fixed costs of the trade in the calculations (commission + slippage).

Mike

couldn't agree with @Big Mike, more

you are doomed, and destined for failure, if you don't heed his sagacious advice

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 trendwaves 
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After reading through the thread in it's entirety, (I was surprised to discover this thread is over two and a half years old), I have one suggestion that might help, maybe a little... here is a very good webinar I think it may help clarify the importance of expectancy in developing your skill as a trader...

Be Patient and Trade Smart
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SadPraetor
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I went quiet for three weeks. Went over the discussion in the online Journal. I was not feeling like sharing. But Journal is a commitment so I have to start posting again. I reviewed much of the notes and my personal Journal (Access, One note), thinking and weighting possibilities. The decision is that I'm going to stick to my guns. I believe that by addressing my fears in trading (closing out trades too early, hesitation in opening trades) I should get more reward per time spent and much faster than trying to redraw everything.

Past 3 weeks I was doing live trading, but not much success


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