1. trading approach/specific strategies to employ (e.g. fading extremes, go-with breakout moves, scalping developing mini-ranges, etc) and why.
2. current market context, and which above strategies will be matched with it
3. risk management parameters/defining risk prior to entry
4. screenshot demonstrating trades with brief description of each entry and reason for exit at location. Let us know about any specific things that you observed that prompted either entry, exit, or a trade management decision (such as tightening stop, revising target, etc).
Should help you get started. Look forward to reading more.
Ok, well I don't think I'm very good at writing but this will give me a chance to improve. A few weeks ago I was confident I could trade and my main goal was get a quick ($500) account started and get the ball rolling. My main technique at that time was going on the ES and making a few ticks profit and getting out. The ES is $12.50 per tick so I would just use trendlines and try to guesstimate where the market was headed. Pretty simple stuff. I would draw resistance lines and make $25-$50 every trade. Now I view this behavior as reckless and gambling. I was also attempting to write automated strategies in NinjaTrader which seemed to fail no matter what probably due to my lack of input parameters and getting it to do what I wanted. I would set up ATM to trail stops and never loose more than 2 ticks if the market wasn't going my way. Kind of embarrassing for me to look at my behavior back then, especially considering what I know now. I was ready to borrow money, sell everything I have of worth and start building my account. I almost succeeded too, but the person (my boss, and he would give it to me if I asked) that I was going to borrow the money from wasn't there that day. I came home and read some responses from the post I made saying "I am ready to take the plunge and I have a sure fire way that can't loose" and was directed to some literature and found out many other people had this same attitude and had failed.
I decided to take the advice that was given to me and not rush into anything, and since then I have been studying my butt off learning everything and anything I can about trading.
I am a musician by nature, and all my time is always spent playing guitar.. playing drums.. playing piano.. harmonica.. cello... learning songs, always every spare moment writing songs and singing about... Well since I have heard of trading, it is like my mind has become obsessed. I crave for more knowledge and every time I get a new piece of information it's like another puzzle piece has been fitted. I haven't played any music for 2 weeks now, it is strange and very out of character for me, but I would rather spend my time finding out more about the market, reading more books, analyzing charts, etc. than playing music. I think it has to do with my obsession with numbers and odds. This comes from when I used to play poker. I was obsessed with poker. I used to live breathe and eat poker. Always thinking about it, always talking about it. The money didn't matter to me, I just wanted to play hands. The satisfaction of a winning hand was all I needed. The more I learnt about trading, the more I found the two are extremely similar.. I wasn't your average poker player, I didn't care about the people, it was all numbers to me. I was constantly accused of card counting even though that is silly. Just because I know the odds of getting an inside straight or a flush on the river and probability is in my favor.. I think most people are dumb. They act like Ace-deuce non-suited is a god hand. I would watch them make huge gambles on cards that had meaning to them, such as birthdays, or anniversaries, what a bunch of fools they are. Poker to me was a waiting game.. folding many many many hands and waiting for a good starting hand just to see a flop and fold if it didn't look good. Most folks go crazy if they get dealt pocket jacks or pocket aces, I hated it. You don't want to call raised, but you have to. You don't want to raise but you feel obligated to weed out anyone without two good cards. I was a very honest poker player I never bluffed. In the end it worked against me (at least in real life) because if I even call a hand everyone folds. If I raised at all they would fold. I would get suffocated and reduced to blind stealing and eventually the ante's more often than not would bleed me dry. That's what sucks about poker, it's really not a card game, it's a people game. I still LOVE online poker and play it whenever I can. I win at LEAST 1 out of 3 tournaments. How the system works is that you will get bad beats and not make money 2 out of 3 times, but when you do win the wins are big and more than sufficient to play more games. The chips are fractal meaning it doesn't matter if your in a $100 game or a 1MILLION dollar game, the ante is a percentage of your stack, and the amount I raise/call is directly proportionate to the pot size. Basically most people eliminate themselves being stupid, thinking they will get their cards because it is their "lucky" numbers. Its a game of endurance and is mostly about making more smart decisions than dumb ones. One of my main gripes is that 55% of people outright lie/bluff, I cannot complain because these are rules they hardcoded into the game. 35% of people really honestly think because they have a pair of aces they have a right to bet these huge amounts, not realizing someone has 2 pair or 3 of a kind. It is hard for someone who believes they have a winning hand to fold. It is emotions taking over and they fool themselves by thinking the other person is lying. I just hate most people they are so deceptive, I just like odds and numbers. Although I will say that knowing the odds helps somewhat, but there IS NO way of telling if you will win a hand or not unless you see the river. Suppose you have a 99% chance, that 1% can AND WILL happen. Sure you have the odds stacked majorly in your favor but I've seen the impossible/improbable happen over and over again. Everytime I play a tournament, I know I could loose that $5,000 dollars, or $500,000. But I also know that I will win sometimes, and those winners will more than make up for the loosing games.
Ok, so first off I feel very weird about posting my strategies or thoughts on things online, for fear that someone will steal my ideas, not that there are any new ideas out there, but some things are really obvious to me, and I am thinking not so obvious to others, and I really don't want to give anything away... that being said...
January 16th: I was reading some posts some very helpful users recommended to me, and was following advice that was given to someone else. I switched to a 5 minute chart, and noticed a really low point had recently hit. Infact it was very close to the yearly low. I figured either I enter the market long, and it would hit the resistance and bounce up, or there would be a breakout, in which case I would reverse. I was on a micro-fx. I was going for 25+ pips which was an entirely new concept to me, really didn't think it was possible. So, I went long and made a stop below the yearly low. If it hit that I would then go short. I made another stop about halfway up how far it had dropped. I think this is fibbonaci stuff, but I'm yet that far in my training. I got tired, the market moves soooo slow sometimes... When I woke up I found my stop had hit and I had made $57.50 !! at $1.25 per tick that's gotta be 40+ ticks !!
Ok, so I've been really absorbing myself trying to learn everything I can lately. I've been working on my degree in "pipology" from babypips.com a site I really like (I have yet to graduate kindergarten). I've also been watching a set of DVD's from Online Training Academy, they are ok, filling in lots of knowledge for a beginner like myself. Also reading the forums and searching the internet learning about stuff like TICK and TRIN. Most of this stuff I've been learning kinda seems useless, but still I find it fascinating and hoping using everything together at one point will be benificial somehow. I've wasted alot of time watching crappy youtube vids that I don't learn very much or goes over my head and sometimes I wonder why it takes over an hour to spit out something that could have taken 5 mins.
I have adopted a completely different and new style, going for much longer term now. I have been studying alot of charts. This was random as I was looking up something on investopedia and there was a chart of NASDAQ or something then there was another chart of something else and I started randomly looking at charts of stocks I have no idea what they were. Well, I started to notice patterns and correlations. I ended up just looking at charts for an hour and studying their behaviors. My thoughts are it is similar to poker, in that once you've played 23432146532345 hands you start to notice things.
The market I made big in last night has gotten me studying it I have the chart on in the background while I watch the Online Training Academy DVD's. Just watching it, seeing what it does, waiting for something interesting to happen. I start at the 1 Year view, then I zoom in little by little until I'm at 5min, looking at how it behaves. So anyways I was about falling asleep to this boring teacher lecturing on the DVD, and I noticed this market was really low, and hitting a resistance so I went long again. Just like I had predicted the market rose and rose. I had been piggybacking my profits into buying more shares until I had 10 long. I kept falling asleep and was to tired to stay up and watch the graph slooooowly move anymore so I just canceled all orders, but I had over $100 in profit. This was a micro market so that's probably not that many pips. I wish I knew more about creating stops and trails etc. I don't like to place stops anymore because it costs commission. One time I was placing all these stops and it was like 98 bucks just in commissions... since then I just be there at my pc mentally keeping value and if the market turns on me I will place stops then, rather than have a stop and keep moving it. not sure if it charges me everytime I move it around or not. When I woke up I checked the market and noticed it had soared WAY UP @@ !!! Kinda wishing I stayed up. I feel like I know this one particular market, but only during this particular time frame. Hopefully I will learn other markets as time progresses. Makes me sad that it is the weekend I can't wait till monday or tuesday to see if this market I've been watching acts like I think it will.
So after that I was looking at a different market, one that I am unfamiliar with, but I thought I saw a good opportunity, it was nearing a 10 day low so I went long. Every few ticks it went up I put the profits back into buying more shares until I was +11 long. I put a profit target thinking that it would obviously hit while I was at work. Well, it didn't. It plummeted. I came home to find the pip at 1.3532 ... I think I bought my first share at 1.3562 and at 11 shares that's -$400... Seeing as how it's a sim account and it has 30k in it, I am just going to hold on and hopefully it will turn around. I have decided never again will I even think about positioning myself in a market without studying it first.
I have to say I was surprised in reading your opening postings here in your new Journal. When you first showed up here at futures.io (formerly BMT) with the story of a baby and a girlfriend and borrowing money from your boss to start trading, well I had a good laugh.
Here are a couple of things you said that caught my attention.
Trading is a game of probabilities and controlling risk. Trading is a numbers game. Your genuine understanding of probability and game theory should give you an advantage as you get started. Trading is not predicting the future, it is the ability to recognize a probable outcome. So if your learning something that is trying to predict the future, your on the wrong path. I cannot predict what will happen next, and neither can you. The sooner you can accept this fact and move forward the better off you will be.
Good trading requires a lot of patience. Good trade opportunities aren't all over the chart, they take time to properly develop. It's very easy to click the mouse on the DOM and get into trouble, it takes skill to sit and wait patiently for a genuine opportunity to present itself.
Every day I remind myself of this one simple truth : The market rewards us for being patient and trading smart.
The corollary to this is... In trading you have to know, to really understand, what you can control and what you cannot control.
So best of luck to you in your trading endeavor and your journal.
The following user says Thank You to trendwaves for this post:
Yes, poker is a game of patience. I used to get antsy after 30-60mins without any "action" and I would end up being bored and calling hands I had no business being in. Another obstacle I had to overcome is when you fold something crap such as 7/2 offsuit, and then a full house flops, it makes you feel like putting money into the stupidest of hands. The brain has a funny way of *only* remembering the time you won something, even though you may have lost that hand a million times, your mind will block out the loosing times. Psychology is weird I don't pretend to understand it all. I reached a turning point when I started folding pocket aces if the amount was too high. It can be risky, sure it's a good starting hand, but in reality the cards don't mean ANYTHING until you've seen the flop. Most people think it's about gaining chips, but mostly it is about not loosing them. There is all kind of tactics you can use, like leverage if you are the chip leader it is nothing to you to raise every hand and therefore less people get to play their cards.
My thoughts were mostly about making the statement that I am serious about trading. This is I feel one of the best investments you can make. Secondly I feel there are probably alot of people that come here and get free information that is better than most info you pay for, so I guess I'll ante up for them, Mike deserves it. I guess that's mostly why I did it, this is a really good forum and I'm glad to be here. I hope someday I'll be trading. I've already stopped trading for the goal of attaining money. I do it because I want to beat the market, and I really do enjoy this stuff.
Brilliant. Just knowing this one fact puts you miles ahead of an average new trader starting out.
In real estate its said : Location , Location , Location
In trading (for me anyways), it is: Control Risk, Control Risk , Control Risk
Think of this. For any trade you enter there are 4 outcomes:
1. Make a lot of money (ticks , points, $)
2. Make a little bit of money
3. Lose a little bit of money
4. Lose a lot of money
As traders we spend a lot of time doing 2 and 3. If you think of a normal probability distribution (bell) curve, 2 and 3 is the middle 70% of our trade outcomes. You will find, 90% of your meaningful profit (or loss) comes from 10% of your trades, think of the Pareto principle.
What we can do, we can control, is not allowing #4 to happen, ever. Because #4 is what ends your trading career, it takes you out of the game. Stop the loss at #3 and don't ever let it get to #4. A small loss is always better than a big loss. I know this sounds stupid, but traders make this mistake every day. There is a reason why the failure rate of new futures traders is 90%, consistently for decades.
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