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COMMON SENSE


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COMMON SENSE

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 mfbreakout 
BOSTON, MA
 
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I will post articles, thoughts, notes, charts, pictures from other traders, coaches whom i respect and have myself
tested whatever idea, trading set up etc. i learned from these wonderful members of trading community.

I will encourage other members of futures.io (formerly BMT) community to post they feel like worth sharing.
To kick off- here is one from Brett Steenbarger " A Visit with World Class Trader".


I follow Brett Steenbarger. He has coached or observed 100's of traders at very high quality prop. firms.

Follwoing write up from him shows many things. One thing which stands out that
in a professional enviornment - making 20% a year return is EXCELLENT.

Traders trying to make a living while trading full time on 30K, 50Ketc, paying retail
comission , having restrictions like overall day wininng of 55% or more, profit target
of $9000 ( on 150k funded account) , max draw down of $4500, 10 day duration etc.
have no chance. As usual there are ALWAYS EXCEPTIONS.

This does not mean TST program does not have merits for traders to check what's
it's like before juming into trading full time. Traders doining combine 5 times, 7 times
and on and on- have no clue. It will make more sense if they do what Marc
Greenspoon does everyday. With technology available now, it's much easier and
cheaper to record ones trading day Vs keep throwing money at TST. I have to
admitt TST guys are good traders- they have set up a system where they have all
the upside and ZERO downside. Now that's an EXCELLENT trade.


" Marc Greenspoon: A Visit With A World-Class Trader" Brett posted this in his blog in 2007.

In past posts, I have tried to describe the qualities that I have observed among very successful traders. I've also attempted to outline specific steps that traders can take to make themselves more successful. In this post, let's make the discussion more concrete by taking you inside one of my visits with a trader I consider to be among the best in the world.

The name Marc Greenspoon won't be familiar to you unless you've read my book Enhancing Trader Performance. He doesn't speak at conference events or advertise himself as a guru. What he does do is trade every day of the week, average between 50 and 100 trades per day in the equity indexes, and make millions of dollars a year. Not just one year or two years, but year after year. He doesn't trade with a mechanical system, and he doesn't trade with quantitative research. Nor does he manage a portfolio. He trades with his mouse and his computer, accounting for several percent of the day's total volume all by himself.

I'm grateful to Marc for giving me permission to write this about him, because it illustrates the sheer level of skill needed to be a great trader. Imagine the commissions of trading so frequently, even given the lower commissions available to a trader at a firm that is an exchange member. Imagine how the slippage adds up over the course of, say, 80 trades in a day. Now realize that Marc's profits are after the costs of paying for his overhead at Kingstree Trading, his trading firm, after all the slippage, and after all the commissions. He would be a fine trader simply by trading that often and breaking even at the end of a year! To make millions of dollars a year, year after year, trading that frequently makes it transparently clear that markets are not random.

Marc called me on Friday and asked, "What are you doing today?" He wanted to set up a meeting. Friday didn't work, but Margie and I had plans to be in Chicago on Saturday, I told him; we could meet then while markets were closed. Sure enough, Marc was up early Saturday morning to greet us.

What did he want to meet about? He wanted to review his first quarter performance and set goals and take specific steps to improve during the second quarter. Not that his first quarter was bad. He made a significant amount of money, certainly in keeping with his past earnings.

But he knows he can do better.

That's one of Marc's defining features. He's not just an expert trader; he's a continually improving trader.

Marc studies himself as diligently as he studies markets. His daily journals, religiously kept, go back years in notebooks that are always at his side. Sometimes he illustrates a point for me by going back to an entry in last year's notebook. He knows the entries--and the markets--that well that he can jump back months and find exactly what he's looking for.

Similarly, Marc keeps a large TV monitor and recording device in his office. He records his trading day by capturing everything on his trading screen, and then he archives each day for reference. The screen shows how the market was trading at the time, where he placed his orders, and where he entered and exited trades. At times Marc will get excited and go back to one of the recordings to show me a specific moment in a specific day's trading. He knows the market so well--and his own trading--that he selects the right day and fast forwards to the right spot in the tape.

Quite simply, he's reviewed so many more of his performances than other traders that he's learned more than others. He is a one-man study in implicit learning. And it's all driven by his desire to improve.

Also by his side are small dictation devices. Marc records his thoughts about his trading and then plays the tapes for review. Many of the tapes focus on what he needs to do to make himself better. He never trades better than when he is thoroughly disgusted with his own performance. Listening to his first tape, my first thought goes to Coach Bob Knight--another professional who hates losing and is driven to win.

Indeed, there is similarity between Marc and Coach Knight. Both are aggressive competitors who wear their emotions on their sleeves. Both are generous to a fault and inspire both admiration and loyalty. And, yes, both can push the envelope too far in frustration and sheer determination. If non-emotionality were a necessary ingredient of trading success, Marc would have gone belly up long ago.

But Marc succeeds for two other reasons:

1) He knows that winning is guaranteed to no one. Look at it this way: let's conservatively say Marc trades 60 times per day with an average of 400 contracts per trade. That's 24,000 contracts per day. It's also about 6,000,000 contracts per year. Do the math: if he makes several million dollars in a year, his edge is far less than a single tick of profit per contract per trade. That razor thin edge, replicated many times, is what makes him a success. It is like the razor thin edge of a NASCAR champion, battling with his pit crew for every fraction of a second. All it takes is a small flip to turn that small positive expectancy into a small negative one and put a trader like Marc into severe drawdown. Marc knows that. That's why he calls me. That's why he keeps recordings and journals. He works as hard on himself as on his trading. Indeed, for Marc, those are one and the same.

2) He has the support of a superior organization. To use one of Marc's phrases, he has "balls" when he trades. But that is, in part, because he has a boss who has the brass ones. Chuck McElveen, also featured in my book, makes it a point to develop large, successful traders. If you don't have a goal of making a very solid six or seven figures a year, Kingstree isn't interested in you. (Of course, if you don't have a track record of success with smaller size, Kingstree isn't going to enable you to trade thousand lots in the ES contract. Indeed, you wouldn't even get hired.) But once a trader is successful at one level, Chuck encourages a raising of size. A trader like Marc can take risks because Chuck can take risks. As a firm owner, he understands that you only learn to take risks by taking risks. You only learn to trade large by growing your size.

Marc is living proof that you don't need a huge edge to be successful, but certain factors are necessary for success. You do need to have an edge; you need the consistency to replicate that edge; you need the drive to continually adapt to changing market conditions; and you need enough capital. I have never met a successful trader who makes money by doubling his or her money every year. The successful traders start with meaningful capital and earn a respectable, but reasonable return upon it. Their success is measured in their consistency, not in their ability to make occasional big scores. The small trader who tries to make millions is forced to take undue risk by trading imprudent size. When the inevitable strings of losing trades occur--as they do for the greats--the account cannot weather such drawdowns.

If you have the drive of a Marc Greenspoon to trade tick by tick every day, review markets in video, keep journals and audio recordings, and sustain a learning curve, just focus on sustaining profitability. Don't try to develop a mad edge. Instead, sustain the edge you have and then seek out those organizations that will bankroll your success. Marc is a constant reminder for me of what can be accomplished with determination and skill. For that I am both grateful and proud.

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 Big Mike 
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If you are writing your posts in Word or something and then cutting and pasting, please don't.

The formatting of your posts is impossible to read. You are inserting line breaks instead of allowing word wrapping to work naturally. It makes your post appear with extremely odd formatting and nearly impossible to read.

If you aren't using Word, then my guess is you are pressing enter when your cursor gets close to the right side of your screen. This may look good on your screen, but it looks terrible on everyone elses.

Your posts are also double spaced, making it really hard to read.

Mike

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 mfbreakout 
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Big Mike View Post
If you are writing your posts in Word or something and then cutting and pasting, please don't.

The formatting of your posts is impossible to read. You are inserting line breaks instead of allowing word wrapping to work naturally. It makes your post appear with extremely odd formatting and nearly impossible to read.

If you aren't using Word, then my guess is you are pressing enter when your cursor gets close to the right side of your screen. This may look good on your screen, but it looks terrible on everyone elses.

Your posts are also double spaced, making it really hard to read.

Mike


Thanks for bringing it up. I am not sure how to fix it? Basically, i have copied articles via CTRL- C and CTRL- V

feature in my files. I am using the same CTRL C and CTRL- V feature from my files to post.

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 tturner86 
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mfbreakout View Post
Thanks for bringing it up. I am not sure how to fix it? Basically, i have copied articles via CTRL- C and CTRL- V

feature in my files. I am using the same CTRL C and CTRL- V feature from my files to post.

Clearly you didn't copy and paste this post, but it still has a line break between sentences like all of your other post do.

Without line break below:


mfbreakout View Post
Thanks for bringing it up. I am not sure how to fix it? Basically, i have copied articles via CTRL- C and CTRL- V feature in my files. I am using the same CTRL C and CTRL- V feature from my files to post.


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 Big Mike 
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To be clear, here is what it looks like for everyone else.



You are either pressing enter at the end of lines instead of just continuing to type, or you are using some word editor to write your posts and then paste that into the site, which is screwing up all the formatting.

Mike

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 mfbreakout 
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tturner86 View Post
Clearly you didn't copy and paste this post, but it still has a line break between sentences like all of your other post do.

Without line break below:


I did copy and paste but placed space between lines thinking it will be easier to read. I corrected it, hoping it

worked this time.

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 mfbreakout 
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Keeping an eye on Vix.


Historically, July is the best performing month in the usually rather weak 3Q. None the less, if you go back to 1990, you’ll find that the VIX actually has the highest average return in the month of July! In fact, it comes in at an 8.65% average and is up 14 out of 24 years - or up 58.3% of the time.
Now, I’ve long been a proponent that you should focus more on the VIX based on absolute moves, not percentage changes. Remember, it is much easier to have a big percentage move higher when the VIX is low. In other words, a 20% move from 10 to 12 sounds like a lot, but it isn’t nearly the same in terms of the volatility is produces as an absolute move from 30 to 35 (16.6%).

Could July just be a function of a low VIX coming into it? Maybe. Still, this is one of those stats I’d still rather know than ignore.


Source: Kimble charts.

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 mfbreakout 
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Gold short till buyers show up. Failed A up short.

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 mfbreakout 
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I do not see longs any where. Failed A up short. Covered prematurely as market internals were mixed with nice earnings from GS, JPM. Thought TF will bounce off ORL but there were no takers and thus reshort and then it was matter of holding.

It's OK to cover short but taking longs aginst trend at whatever so called support one is looking at with a customary cute stop loss had no chance except for a scalp.

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 mfbreakout 
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Someone asked me to post a chart of crude. I took a short at NY open and covered it prematurely as i was busy

with TF, GC.

Method is the same. I will try not to post CL trades/charts since in my previous journal, that's all i did- trade CL

for 3 years.

It took me a while to get comfortable with GC, TF etc. so i will rather post those from time to time.

Howevre, you are more than welcome to post your chart/set up for whatever instruement one is trading.

It will help all of us.

Thx

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 mfbreakout 
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Stay away from Gold futures if you like Action. Lot of other instruements like CL, TF etc also requires lot of patience in terms of hold time but GC seems to be in a different league. Covered 1 .


I have limited experience with GC ( about 1 year) so i can only speak based off that.

Long term ? Who cares. In the long term we are all dead -- John Maynard Keynes.

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 mfbreakout 
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I guess this happens when market proves you wrong day after day, week after week, month after month and

year after year.



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 mfbreakout 
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Opposite of Rick Santelli- David Tepper.

Trading/Investing in the zone.

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 mfbreakout 
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Why Wall Street's 'Eat What You Kill' Motto Is The Only Way To Live
JAMES ALTUCHER,





We’ve become animals in a zoo and wait for our masters to feed us. Our masters are our bosses, the government, the shareholders of massive corporations, the media that spoon feeds us random doses of fear and greed. The banks that squeeze our genitals when we try to break free.

Life only tastes good when you eat what you kill. When you hustle for what you earn and someone pays you money in proportion to the service you’ve offered, the idea you’ve created, your ability to execute on it, and their ability to consume it in a way that benefits them.

Someone asked me the other day “what does it mean when you say you ‘eat what you kill’ “.

It means the greatest pleasure is going into the jungle and mastering the ability to hunt and survive without the help of masters who only pretend to guarantee our safety. Whether you’re an entrepreneur, an employee, a student, a homemaker, a writer, it’s time to start forgetting about all the ways the world has promised you safety and comfort.

Human knowledge has torn apart our families, our bank accounts, and lulled us into a creepy sense of Disney stability. A good friend of mine was just laid off from his job of ten years. He found out through an email and was asked to not come into work for the rest of the week and clean out his desk when security came in on Saturday. All of that human knowledge in an email. Ten years of work. Time to cut costs. “What do I do now?” he asked me.

How to Eat What You Kill:

- Don’t depend on one boss, buyer for your company, product, service you offer, etc. Diversify everything you can. When I was starting Stockpickr I was trying to start 9 other companies simultaneously plus was running a fund of hedge funds. When I was trying to sell Stockpickr, I was in serious talks with 5 other companies. When I write articles, there’s 5 different sites I write for. When I was broke and about to lose my home, I wrote to over 100 different people to try to build up my network. When I worked at HBO I tried to build value in every department, all the time I was preparing my exit by planning out my first successful startup.

- Become an expert. Read every book, blog, website, whatever, about what you want to be an expert in. When I began daytrading for hedge funds I must have read over 100 books on trading and investing and then wrote over 1000 programs testing out different trading models. And I still sucked at trading. I then spent years doing it before I felt I was halfway decent enough to pull consistent money out. And only then hedge funds started hiring me.

- Connect people. If you introduce person A to person B and then person B is able to solve a pain point in his life, then you just made a good connection. Each connection is another string in the tightly woven net you build that will catch you when you fall and throw you to higher heights than you’ve ever experienced before. And you will fall. Don’t think it can’t happen.

- Give ideas for free. If you have no network yet then you have to build it. Nobody wants to help you for free. They are all just trying to survive. Even billionaires are trying to protect their luxury-soaked lifestyles plagued by jealousies and oversexed libidos. You have to build your idea muscle and work hard to come up with ideas that can really help these people. Then send them the ideas for free. Not everyone will respond, but the benefits are:

You exercise that idea muscle
Someone will respond. And that someone will make you money. When I did this technique,one person out of the 40 gave me money to manage. Another person hired me to write. My life changed.
See, Give and you Will Receive.
- Always work on your exit. No matter where you are: a job, a startup, your startup, writing a column, working at Mcdonalds, always diversify your possible exits and begin immediately working on them. You don’t have to exit tomorrow, but never forget that you can get that email tomorrow that says you have to clean out your desk by Saturday. Build your personal brand, make your boss’s contacts your contacts, make calls, send emails, leave responses on blogs, come up with ideas out of the scope of your job description

- Never say a bad word about anyone. Don’t betray anyone. Don’t backstab anyone or step on anyone’s toes. Don’t gossip.This might come into conflict with the idea of “eating what you kill” but backstabbing in order to do it implies you have a “scarcity” mentality. That there isn’t enough out there unless you kill someone else in order to get what you want. Let me tell you something: there’s enough out there for you and me. Your competition is not other people but the time you kill, the ill will you create, the knowledge you neglect to learn, the connections you fail to build, the health you sacrifice along the path, your inability to generate ideas, the people around you who don’t support and love your efforts, and whatever god you curse for your bad luck. Avoid those and you avoid competition. Don’t hurt anyone.

- Don’t care what people think. People will hate you for being a hunter: your bosses, colleagues, partners, investors, extended family. But they don’t have to feed your family. You do. This is how you do it. Once you care what others think, you’ve lost. Then you’ve just set up the same boundaries for yourself that those other people have set up for themselves. They are all smaller than you and live in straitjackets. It’s easy to kill someone in a straitjacket. Don’t be one of those people.

- Create your luck. Luck doesn’t come from god or come magically out of the air. When a runner wins a race by a one-tenth of a second chances are he prepared more, he studied his competition, his diet was that much better, he was better rested, he was mentally fit, etc. Once you’ve checked all the boxes on your preparation, guess what, you’ll be lucky. A lot of people say, for instance, that Mark Cuban became a billionaire by luck. I address that in this post.

- Reward is unrelated to risk. People say, “no risk, no reward.” This is not true. I don’t like to take risks. I have a family to feed. Don’t take risks with your kids. Diversification is not about diversifying your cash investments, it’s about diversifying all the sources of plenty in your life: opportunities, knowledge, friends, networks, investments, risks, health (physical, emotional, mental, spiritual, i.e. the Daily Practice I recommend). To eat what you kill, minimize risk so you don’t die on the hunt. You do that by diversifying every part of your life. The outcome of this is that if you forgot to bring your knife on the hunt, you still have your gun. If you forgot to bring your ideas full force into the game, you still have your network, if you lose on one risk, you still have the nine others. That’s where you get the reward.

- Take responsibility for all failures. It’s your fault when you go hungry. Former world chess champion Mikhail Botvinnik said in his book, “100 selected games” that the only way to reach the highest level of success is to develop the ability to critique your own failures. Note the word, “ONLY” in this. Anecdote: Botvinnik used to train by playing against someone who would blow smoke in his face so as to get accustomed to difficult playing situations. He was the world chess champion for 15 years.

(Botvinnik versus future world champion Bobby Fischer in 1962)

- Honesty. If you don’t ask for what you want, chances are you won’t get it. If you don’t say what you believe, you’ll never stand out from the 99% of people out there who hide the truth about themselves and their desires. If you don’t stand up and say or show how special you are, nobody will ever think you are special. Nobody is out there advocating for you. Honesty about what you feel, believe, know, think, want, will make you a multi-dimensional being in a flatland world.

- Patience. Most important. A three year old could be honest but it doesn’t mean anything. They still shit in their pants on occasion. You need to grow up. To check all of the boxes on the above items. To do the Daily Practice to stay in mental, physical, emotional, spiritual shape. Toavoid crappy people, to be honest, to take responsibility, and so on. Being a hunter is very discouraging. Sometimes you have to go for stretches of disappointment where there’s nothing to kill and then nothing to eat. To be honest, I’m on a four year stretch. I’m hunting for my next kill and I will get it. During those times its most difficult to keep balanced and stay sane. I’ve talked many people off ledges during these periods, including myself. It’s these times it’s most important to only be around the people who love you, and avoid the damaging people who will bring you to their peculiar and particular circles of hell. You don’t want to go to hell. At the end of the day, patience is the virtue that takes you to heaven.

Don’t worry about adding or subtracting to the sum of human knowledge. Human knowledge is never that great. Be better than human.

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 mfbreakout 
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Opening paragraph from James Altucher post on " Eat what you Kill" was missing.

Here it is,

An anonymous commenter named “Frank” wrote on an article I wrote, “Every time Altucher opens his mouth or posts commentary, he subtracts from the sum total of all human knowledge.”
Frank is absolutely right and I congratulate him for recognizing that. I do subtract from the sum total of all human knowledge when I speak. I’m not human. I hunt humans down. I then eat what I kill.

Frank is afraid maybe that I’m trying to take too much of the knowledge he spent 40 or 70 years learning. It’s ok, Frank. You can keep your knowledge. I won’t take it from you. You can go home now.

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 mfbreakout 
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I miss Private Banker, Vince Virgil, Panada Warrior , Gabrieyle posts/journals. I learned a lot from their posts.

Fortunately/Unfortunately, i have nothing to offer worthy enough to charge for it. Traders who were struggling

when they started following my previous journal are still struggling. They can not seem to get out of their own way.

Seems like primary culprit is picking wrong direction of a move and stop loss.

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 mfbreakout 
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A down confirmed. Market is rotating. It's after 11.30 am . What should be 1st target of a long?


Traders spend hours and hours looking at things to come up with targets etc. and they can not clear more than couple of points.


These RULES may not mean a thing to other traders. But after 20,000 trades ( SIM +LIVE), that's all i need.

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 mfbreakout 
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What happens when RULE #1 is ignored and i try to trade based off whatever Mobo Jombo i still had in the back of

my mind from old days?

Luckily i executed trades in TF and CL by the RULES, so no harm done.

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 mfbreakout 
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What happens when RULE #1 is ignored and i try to trade based off whatever Mobo Jombo i still had in the back of

my mind from old days?

Luckily i executed trades in TF and CL by the RULES, so no harm done.


Well after 2 more hours of song and dance- out scratch.

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 PandaWarrior 
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I miss Private Banker, Vince Virgil, Panada Warrior , Gabrieyle posts/journals. I learned a lot from their posts.

Fortunately/Unfortunately, i have nothing to offer worthy enough to charge for it. Traders who were struggling

when they started following my previous journal are still struggling. They can not seem to get out of their own way.

Seems like primary culprit is picking wrong direction of a move and stop loss.


Funny thing, while I've had something to sell, I've found I don't really like it as much as I thought I would. I like teaching and I like being paid but I dislike the selling part....even though I spent much of my adult life in sales...(quite successfully). I've taken my website down for that reason. It was just unpleasant convincing people to buy something trading related from me. Not sure why the dynamic changed when I went "pro" but it did. I just don't have the heart for it. If people want to pay, that's fine but I'm no longer soliciting. Much less unpleasantness.

I agree, most issues arise from direction and improper stop placement....I still make the stop mistake from time to time....more often than I care to admit but at least I know what I'm doing when I do it and normally correct straight away....I find the odd thing is many traders get direction right but the stop is what kills them.

While I can't journal on futures.io (formerly BMT) any longer due to vendor status, I've maintained a journal for a year at The Trading Quest Its not professional or anything and there's nothing for sale so feel free to stop by once in awhile.

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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 mfbreakout 
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Funny thing, while I've had something to sell, I've found I don't really like it as much as I thought I would. I like teaching and I like being paid but I dislike the selling part....even though I spent much of my adult life in sales...(quite successfully). I've taken my website down for that reason. It was just unpleasant convincing people to buy something trading related from me. Not sure why the dynamic changed when I went "pro" but it did. I just don't have the heart for it. If people want to pay, that's fine but I'm no longer soliciting. Much less unpleasantness.

I agree, most issues arise from direction and improper stop placement....I still make the stop mistake from time to time....more often than I care to admit but at least I know what I'm doing when I do it and normally correct straight away....I find the odd thing is many traders get direction right but the stop is what kills them.

While I can't journal on futures.io (formerly BMT) any longer due to vendor status, I've maintained a journal for a year at The Trading Quest Its not professional or anything and there's nothing for sale so feel free to stop by once in awhile.



Too bad it did not work out. Traders would have benefited from your service.

I have lot to offer but i decided against it after realizing that most traders do not have properly funded account and

the way i trade with wide stop loss, adding to position etc. there is nothing i could do for most traders.

Therfore, i just post to keep in touch with fellow traders.

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 Daytrader999 
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While I can't journal on futures.io (formerly BMT) any longer due to vendor status, I've maintained a journal for a year at The Trading Quest Its not professional or anything and there's nothing for sale so feel free to stop by once in awhile.

On a sidenote, do you still have vendor status on futures.io (formerly BMT) even if you don't sell any trading related stuff anymore ?

"If you don't design your own life plan, chances are you'll fall into someone else's plan. And guess what they have planned for you? Not much." - Jim Rohn
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 Big Mike 
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On a sidenote, do you still have vendor status on futures.io (formerly BMT) even if you don't sell any trading related stuff anymore ?

No.

Mike

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 Daytrader999 
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Thanks Mike, so Brian would basically be able to continue his journal if he decides to go on with it...that's good news.

"If you don't design your own life plan, chances are you'll fall into someone else's plan. And guess what they have planned for you? Not much." - Jim Rohn
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 mfbreakout 
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We all have turning points during our trading career. Some turning points more meaningful than others.

latest turning point came in last quarter of 2013 as i started to get away from loading up all cars in CL in all in and all

out type of mode.

Next when i decided to trade multiple instruements at the same time- trade small size in each instruement and add

as order flow becomes clearer.

Lastly, when i decided to get away from tight stop loss. I just try to make sure i size the position appropriately per

risk : reward.


So salp in Gold, Nice trade in Heating Oil with no draw down, Nive trade in TF with little draw downs, OK trade ( so far) in CL with manageable draw down and then turned positive.

Overall Portofolio is +ve per risk taken.

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 mfbreakout 
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1) Flat in GC. Nothing going on there.

2) Flat in RB. Covered around 2.87

3) Flat in CL . Covered short 102.

4) Flat in TF. Long and short . 8 handles.


All trades per RULE # 1.

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 mfbreakout 
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CL moved too quickly off 102 for me to try long.

Per my RULES, i want consloidation before trying long. I have never won trying to trade like an algo.

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 mfbreakout 
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CL moved too quickly off 102 for me to try long.

Per my RULES, i want consloidation before trying long. I have never won trying to trade like an algo.


Massive buy orders came in GC, so my bias of last 3 days for shorting is over. Will look for longs.

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 mfbreakout 
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short CL 102.81.


Out flat 102.43. Lunch hour chop zone , now. If 103.20 area gets taken out with FORCE- it can get busy for next leg up.

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 mfbreakout 
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short CL 102.81.


Out flat 102.43. Lunch hour chop zone , now. If 103.20 area gets taken out with FORCE- it can get busy for next leg up.


reshort CL 102.84. Clearly defined trading box. 103.20 to 102.40 area.

and no reason for longs- except scalps in TF etc.

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 mfbreakout 
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" reshort CL 102.84. Clearly defined trading box. 103.20 to 102.40 area."




Out flat 102.52

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 rmejia 
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Your Active Trader seems to be missing the Level II info; the live account should have 10 levels instead of just 1. Might need to email support to get it fixed.

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 PandaWarrior 
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CL moved too quickly off 102 for me to try long.

Per my RULES, i want consloidation before trying long. I have never won trying to trade like an algo.

i agree. I don't try to capture V bottoms. Its highly unproductive for me. I much prefer consolidation before going either direction.

Simplicity is the ultimate sophistication, Leonardo da Vinci


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 mfbreakout 
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Your Active Trader seems to be missing the Level II info; the live account should have 10 levels instead of just 1. Might need to email support to get it fixed.


Hi Rmeja,

I hate times and Sales so much that i have this feature turned off. Main reason being that i lost so much money trading stocks off it that i had to tun it off and start from

ground zero when i switched over to futures.

Thx

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 mfbreakout 
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i agree. I don't try to capture V bottoms. Its highly unproductive for me. I much prefer consolidation before going either direction.


I am glad we have similar rules.

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 mfbreakout 
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reshort CL 102.84. Clearly defined trading box. 103.20 to 102.40 area.

and no reason for longs- except scalps in TF etc.


Shorts and shorts to ones hearts desire.

1) GC never pulled back to an area for me to try long. So no trade.

2) No trade in CL after last short.

3) TF kept me busy.

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 mfbreakout 
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short CL 102.81.


Out flat 102.43. Lunch hour chop zone , now. If 103.20 area gets taken out with FORCE- it can get busy for next leg up.


Well 103.20 area gets taken out and fly robin , fly. I am flat.



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 mfbreakout 
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I wowed never ever to SWING trade CL for more than couple of days.

A friiend of mine is short from 106.20 with a target off 95.

I wonder how is feeling? I am pretty sure he covered the short by now.

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 mfbreakout 
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1) Scalp in CL.

2) Scratch in Gold.

3) and TF was trade of the day.

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 mfbreakout 
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Day traders Paradise and we do not have to make forecasts, make projections, worry about HFT, Times and Sales,

Level 11, Ice berg orders and on and on. It was right there. TF YTD is -ve but patient day traders with ability to hold in the right direction with market internals are up nicely on YTD basis.

The ones who forecast TF, ES will be here or there in 2 days, one week etc. and use stop loss to avoid so called NO HEAT keep forecasting.

Anyone betting against direction of $ and market internals ( especially when they are both in sync) has a long way to go.

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 mfbreakout 
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I am really excited to be a day trader based on what lies ahead. Markets will balance some time, trend some time, chop sometime and we will put on trades based on what's on hand. No need to worry about if and when fed will
increase rates, what geometric cycle markets are in, which Fib. ratios will get hit and on and on. We will SIMPLY trade based on collective judgement of market participants of the day we are trading.



MARKET GURU: The Conditions Are Set For A 'Veritable Explosion' In M&A That Sends Stocks To 'True Bubble Levels'


"Jeremy Grantham has published his latest quarterly letter to GMO clients.
In it, he continues to deliver his message of caution, warning that the stock market is expensive and is priced to deliver paltry returns for years to come.

And he continues warn that we are heading for a bubble.

"[M]y recent forecast of a fully-fledged bubble, our definition of which requires at least 2250 on the S&P, remains in effect," he reiterated.

In this letter, Grantham commits some time addressing the current M&A boom that we have been witnessing this year.

He actually believes the next leg of this boom could be a truly historic one.

"Don’t tell me there are already a lot of deals," he writes. "I am talking about a veritable explosion, to levels never seen before."

He gives reasons why he predicts this:

1) Cheap debt: "...when compared to other deal frenzies, the real cost of debt this cycle is lower..."

2) High profit margins: "...profit margins are, despite the first quarter, still at very high levels and are widely expected to stay there..."

3) Young-looking recovery: "...the economy, despite its being in year six of an economic recovery, still looks in many ways like quite a young economy..." Grantham notes that there is slack in the labor market and room for capital spending.

"If I were a potential deal maker I would be licking my lips at an economy that seems to have enough slack to keep going for a few years," he writes.

Grantham, also observes that investors are "just now picking up their courage" after getting crushed in the last crash. Furthermore, the low interest rate environment has forced companies to find new ways to offer growth.

"I think it is likely (better than 50/50) that all previous deal records will be broken in the next year or two," he writes. "This of course will help push the market up to true bubble levels, where it will once again become very dangerous indeed."

So, there you have it. Grantham is forecasting that this bubble could be the one marked by M&A."

Read the whole letter at GMO.com.

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 mfbreakout 
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Do not initiate a new short at ORL and do not initiate a new long at ORH except when market is ONE TIME FRAMING= Rule #1.

CL as usual did her thing .

Done for the day.

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 mfbreakout 
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CL- Rule # 1 in action.

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 mfbreakout 
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Anxiety and Rants.


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MFB- do u ever look at a shorter time frame open (especially in the indices). I like the break out of the 2 min OR most days in the indices. trading the breakout of 15 min or 20 min OR seems a lot trickier though.

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tflanner View Post
MFB- do u ever look at a shorter time frame open (especially in the indices). I like the break out of the 2 min OR most days in the indices. trading the breakout of 15 min or 20 min OR seems a lot trickier though.


Hi Tflanner,

Good to see you around. Couple of points regarding shorter time frame OR.

1) Any type of index like YM, TF , ES etc are the worst trading instruements for trading breakouts especially shorter time frame OR. For me the bar is very high if i am goining to take a trade based off 2 minutes OR. I do have 2 minutes OR on my charts in case conditions for 2 minutes OR are met. But those conditions do not come across very often.
Typically some catalyst need to be present to take a trade right at the open.


2) For TF i use 20 minutes OR not for breakouts but reversion to the mean type of set ups.




3) Regardless of OR time period, market internals are the key. If market internals were -ve this morning, i would

have shorted ( like during yesterday NY open). But they were +ve. Thus long made sense off failed A down set up. For me these OR do not get formed by accident. They provide context and some common sense based trades.


NOTE: I covered my longs but no shorts for me due to very +ve market internals. Under such circumstances if i am going to take a short ATR need to be expanded. Higher it goes - better the odds of some decent points on shorts for reversion to the mean type of set up.

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 mfbreakout 
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Gold short on failed A up.

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Failed A up and then hold.

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 mfbreakout 
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Up Volume - Down Volume and Advancing stocks- declining stocks need to be in the same direction to have a

significant move beyond ATR.

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 mfbreakout 
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CL is doining her thing. Reshort after API report. Reaction to DOE report tomorrow will be interesting to say the

least. My favourite day to trade CL.

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Traders using MA etc. are stunned and in disbelief with CL moves. Yesterday 90 ticks move from 102 area after 30

ticks range SONG and DANCE for majority of the day .

The short covering pushed CL into 103.40 area into Asian session and today there are NO TAKERS.

Everyone like to be a PRICE ACTION trader but then they count candles all day and get surprised.

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" My favourite day to trade CL".

Regardless of the day , have to follow the RULES. Feeling the pain for not following the RULES.

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Fortunately longs in TF paid off.

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" My favourite day to trade CL".

Regardless of the day , have to follow the RULES. Feeling the pain for not following the RULES.



Added size to short around 103.22 for reversion to the mean and BOOM. Nothing wrong with adding to so called looser if RISK is within ones comfort zone but then it's not for everyone.

If ones goal is to make 20 ticks etc. then tight stop loss is the way to go. I tried this approach for many years and i just could not compete with algos.

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 mfbreakout 
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Q) A fellow trader e-mailed me asking why i shorted 102.54, add to short 102.90 etc. when Level 11 etc. were

showing buyers.


A) I get headache when i look at anything which moves at a fast pace like Delta foot print etc. If i look at them
all i get at the end of the day is sweaty arm pits, dry mouth, heart poinding fast and on and on.
It's not worth to me plus i have not found a trader who is clearing more than scalps while looking at so called order flow. I am holding trades for hours. There is no way i would be able to hold a trade while looking at level 11 etc.

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 mfbreakout 
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Violated RULE # 1 in ZS also. Took a short off ORL area. Paid for it.

2 trades since then per RULES paid off.

1) Short reversion to the mean.

2) A up confirmed pullback long.

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Added size to short around 103.22 for reversion to the mean and BOOM. Nothing wrong with adding to so called looser if RISK is within ones comfort zone but then it's not for everyone.

If ones goal is to make 20 ticks etc. then tight stop loss is the way to go. I tried this approach for many years and i just could not compete with algos.


let's say i was not aware of what can happen on a day when A up is confirmed. What would i be feeling with CL back up at 103.12 with fully loaded short position with some PIE IN THE SKY targets?

Luckily i am aware of that. Out flat 103.09.

Trading day is over and now it's analyst time to fantasize as to why CL did what it did today. Whatever pre market fantasy i had sure did not work out.

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 mfbreakout 
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Over the years after searching high and low for various indicators, it seems to me from other traders posts and my

own trading that it does two things.

1) Reduces the potential gains.

2) Get a trader brain wired for a certain outcome within a short time period. For example posts like
grabbed 24 ticks in 5 minutes, snagged 16 ticks in 2 minutes and on and on are pretty common. I was the same way without realizing
that this kind of behavior will take years to get rid off or in some cases never.



Short with a long hold time. Added to short arond 102.80 on bounce from 102.60 area.

Cover some 102.21.


Today A down is confirmed , so i plan to reshort any bounces to 102.90 to 103.20 area. Otherwise holding runner to see where she goes. Beyond 100 ticks move, i typically try not to look too far into the future but 101.50 will be nice.

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 mfbreakout 
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Stay away from any method/indicator which SCALPS on a regular basis. I scalp when that's all one can do.

For example, due to FB blow out earnings last night plus host of other bang out earnings from other companies
I was all overly excited and thus fully loaded in TF this morning. But the day turned out to be a 6 points gains. One has to be flexible and have some contextual frame work in mind to have a chance.


On the other hand GOLD had some potential but as usual long hold time.

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 mfbreakout 
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I start with daily , then 1-4 hour chart and 5 minutes for execution. Take trades in instruements where there is some change.

Opportunity ONLY comes with change. Till then SCALPS is all one can do especially in this low Volatility envirnoment.

I been stalking Gold, Nat. Gas, Silver, Copper, Soy beans , Wheat for months. No change no trade in these instruements.

For daily grind CL and TF.

massive trades in Soy beans yesterday continuing into Euro session. Nat Gas attempted to break $4 today. Does not look like it will happen today.

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 mfbreakout 
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Most of the traders here at futures.io (formerly BMT) and other forums do not have a chance.

Why?

Because they are basically moochers.

How do i know?

I have talked with Private Banker, Vince Virgil, Gabrieyele and a dozen who posted in my previous journal-
consenus is the same. None of them want to mainatin a journa due to lack of ideas sharing from moochersl. They decided to become vendor and that's the end of their ideas.

I get lonely so i keep posting.

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 mfbreakout 
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re short 1157. Cover some 1149. With all the good earning news TF is stuck below ORH- calls for a short.

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 mfbreakout 
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Slowly getting into trading RB along CL.

90% of the time MACD on my chart is useless. Out of habit left it on charts thinking it may come handy in one of those rare moments - whatever they are.

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 mfbreakout 
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Dr. Copper decided to lay low.

Every instruement is traded the same way- same chart, same context with ATR in mind.

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 mfbreakout 
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I was reading another trader post regarding CL and his levels. I have no way of knowing what's his analysis or

levels means. But 2 things stood out.

1) He was talking about weekly/monthly levels.

2) He was apparently pleased as to how CL failed at his weekly level and just tagged his weekly/monthly levels.


It amazes me how traders tend to believe their own levels to a point that they really believe that their levels are
magnets and precise to a tick.

Then they turn around and use a stop loss of 10 ticks etc.. believing that their levels are so precise that it either works or does not.


I have interacted with traders like these and it's not for me. This is what makes the market.

In the mean time i shorted right at so called support around 101.80. I have no way of knowing whether 101 level will be held or not but after 50 minutes of consolidation, i know it's time to cover.

No longs as CL ripped back to 102.10 area. Will see if longs make sense around 101.70 area on pullbacks.

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 mfbreakout 
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New sanctions against Russia from Europen Block put a bid under CL. Not good for equities. I buy this more than a move based off some pattern.

News is not confirmed but traders react first and ask questions later.

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 PandaWarrior 
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New sanctions against Russia from Europen Block put a bid under CL. Not good for equities. I buy this more than a move based off some pattern.

News is not confirmed but traders react first and ask questions later.

Where did you see this? I was watching bloomberg but didnt see it there....

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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 mfbreakout 
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Where did you see this? I was watching bloomberg but didnt see it there....


CNBC. After the move, i turned on CNBC.

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 mfbreakout 
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" No longs as CL ripped back to 102.10 area. Will see if longs make sense around 101.70 area on pullbacks."


Long 101.64. Out some 102.01.

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 mfbreakout 
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Best time to trade with size when there is some kind of chnage- REAL OR UNREAL- does not matter.

Example from today.

1) Short 2 cars 101.98 this morning before NY open. Cover 101.52 area.

2) Short 5 cars at NY open around 101.60. Reduced size and held 2 to 101.10 area.

low volatility, long hold time, thats all i can handle.


How about the moves after Euro news? There is a perception of change and time to wait for a pullback and load up.
Thats what i did around 101.66 area and would have added all the way to 101- provided the perceived change did
not come out of CL completely.


Seems like CL will be in a very defined trading box today.


NOTE: I was short GC this morning and flatten after EU news for a scratch.

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 mfbreakout 
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Out of 3 patterns which one will play out? I have no idea but leaning towards Box trading.
These are only 3 patterns i tend to look at for day trading.

Time from 2.15 to 2.30 does not count due to binary options expiration.

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 mfbreakout 
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Out of 3 patterns which one will play out? I have no idea but leaning towards Box trading.
These are only 3 patterns i tend to look at for day trading.

Time from 2.15 to 2.30 does not count due to binary options expiration.

It turned out to be box trading after EU news.

Waiting for a flush down in TF, NQ etc

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 mfbreakout 
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BY JupaFX.


The story of Mr. Not Average Joe

This is the real story of Not Average Joe. I had the opportunity, a few years back, of having a direct contact with this fellow, who was a successful former FX dealer that had also managed other people's money and had eventually settled for trading his own (immense) capital. Just to put things into perspective, his account was populated by over 250 thousand Euros. After all, he was Not Average Joe. He had demonstrated the capability to make money and work the FX markets for years on end. Now, in his late 40s, he was at home trading for himself from his 1 screen computer (a vision that many of us aspire to, no doubt).

The story is not about that he used to be profitable. As you can imagine, he was profitable because of his background and experience. He worked the USD desk, which was the most complex operation going. So he knew his way around the FX markets like few others did. However he did always say that he had to work a lot harder ever since he left the bank.

Mr. Not Average Joe had no trouble speaking of his trades. He took around 15-20 trades per day, and used a low amount of leverage per each trade. Each single position was a 1-lot position (100K). And this fellow was making around 3-4% per month. So he was successful. Very successful! But as time went by, I started understanding that he had a problem. Why was such a successful person always upset with the world (he was very negative in his world view and always referred to his gains as “peanuts”), and why was he not happy with his life?

I started to observe when he would answer my questions, and how long he would stay connected to Skype. It turns out that his habits were awkward. He was trading around-the-clock. He took some naps obviously but he could trade basically anywhere from 7AM in the morning to 3AM the next morning. This was the first tell-tail. He was evidently NOT working smart. He was working HARD. And he was not happy about it. Also, taking all that risk (20 trades/day is a LOT of market risk) and making 3-4% per month seemed questionable. He had a very high win rate – around 84% - so basically he could trade for less hours, adding a little more risk to each trade, and come out with the same %-return or even more. But he didn't.

Then I saw another pattern, that emerged from his comments and from his equity curve.


The pattern was always the same: he would be as consistent as a machine, trade away and then after a while make a bigger bet and wipe out a lot of gains. And then he started over. For some reason, he held onto losers because of his experience as a dealer, and would hedge them or rotate the position onto some other currency pair. For example, if he was long USDCAD and the market started going south, he would frequently hedge the problem. If it was an adverse USD-move, then he would sell USDCHF and hence transform the position into a short CADCHF. Other times, when he just didn't like the position, he would use the triangular relationships in FX to transfrom his position into something more interesting. For example he was long USDCAD and started to dislike the position over a period of hours, he might decide to rotate it into USDJPY by buying CADJPY.

So while he was good at what he did, he also had this inherent bias towards not taking a loss. He would rotate his position, rather than take a loss. When he DID take a loss, it was around 1.5 times his average gain. So obviously his profitability came from his insane hit rate. While he was profitable and he had been a professional trader for years, it's not really a good practice to hang your hat on a high win rate at the cost of much larger losses.

But despite all these technicalities, the worst part of Not Average Joe's trading habits was the recurrence of large hits. He would fight for weeks on end and then shift his thinking from a short term perspective to a more longer term swing, ultimately losing large sums. This of course was affecting his psyche. He would reduce his stake, take a couple of days off, and then come back and work his way back up the equity curve...until the next big hit. He was not able to control this self-destructing habit of his. When I inquired as to how he could let himself get into such a mess, he said that he had a natural habit of not respecting his risk parameters. This apparently “came from the days at the bank where I could hold onto positions for quite some time, because I knew that the market would come back sooner or later”. So you see, even experienced traders get caught in some of the bad habits that novice traders frequently display:

1) falling into the overconfidence trap: “I know it will go my way” mentality

2) holding onto lo losing propositions because they “fall into the swing category and not the scalping/short term trading category”.

3) Overestimating our capability to understand what's going on (sentiment/intermarket correlations)

4) incapacity to identify and eliminate bad habits

clip_image004

What eventually happened to Not Average Joe? He kept trading 16 hours a day...he had a wife that was not able to help him...he started running low on energy and finally got himself tangled up in a long USDCHF position that cost him 80% of his entire trading account. He still trades, but very small and very infrequently.

Not Average Joe had a sickness. He was not satisfied with his life, and with what he was doing. He was “hiding” inside his trading habits, because it made him feel like he was “doing the right thing, doing something useful”. But his habits eventually brought out the truth: he was unable to let go. He was unable to have fun with his accumulated capital and take his trading less seriously.

You can suffer even if you're winning


Mr. Not Average Joe had become addicted to his trading. He was hiding from real life, inside his trading endeavors. And yes, these things happen to skilled professionals as well as novice traders. As long as you have some sort of unresolved issue in your life, trading will bring it out. Trading will force you to face your inner demons.

What goes on in the brains and bodies of people like Not Average Joe (approximately 1 in 10 traders) who are addicted to trading? The researchers from UCLA Gambling Studies Program have gone in-depth and their insight is quite fascinating. Addicted traders feel the need to be in the markets at all times and feel the need to be trading. At one level, this is a type of addiction to excitement, mediated in part by a neurochemical called dopamine. It is the thrill of the game, and the rush that comes from the anticipation of reward. But a 2013 study from The Imperial College, London and the University of Cambridge has discovered that there's more than just dopamine involved. Dr. Tim Fong, Co-Director of the UCLA Gambling Studies Program says, “The brain of a pathological gambler is very different than that of a social gambler while they play," he said. "The neurotransmitters dopamine, serotonin and norepinephrine play an important role in all addictions. In pathological gamblers, certain dysfunctions are present prior to addiction, and put people at higher risk of developing such behavior.”

MRI (Magnetic Resonance Imaging) scans show areas of the brain that activate or “light up” when a person believes he or she is about to get a monetary reward. There is a social stigma around money. It may, in fact, be the last great taboo of our culture. People will tell you everything about the most intimate details of their lives, but they will not tell you about their money: How much they have. How much they want. What they think about others who have more or less money than they do. What money really means to them.

Traders and others suffering from addiction are sick because of their secrets. In order to conceal their secrets, they lie and deny. But the brain can’t lie when it is placed in an MRI Scan. The brain images tell secrets that the addict can't or won’t express. Money is the biggest secret of all. It’s more secret than drugs or alcohol. People have more emotions of shame, guilt, greed and lust around money than perhaps any other singular thing.

clip_image006The-importance-of-information-in-Selling-shares

What is he doing? He might be hiding from his secrets or from reality, behind all these screens...

And so it goes. Traders boot up their computers, turn on their trading platforms and become hypnotized by the flickering ticks. Each tick of the market represents the sum total of the greed and fear of every single one of the millions of people trading at that time. We also know that the majority of people that are attracted to the “game” look for certainty and “excuses” to get active in the market through Technical Analysis. We go through great lengths, at Orderflowtrading, to stop people from putting their faith into some magic lines.

Sure, technical analysis sounds good and looks professional when you plot all sorts of things on your chart that give you “confidence through confluence,” but what are we really trying to understand when we look at a chart? It's merely human emotions plotted on a grid.

A trip through greed and fear

Here's how it happens. You turn on your computer, and first thing look at your charts. You stare at them, you zoom in, zoom out, add/remove indicators until you see it. An opportunity! "I have to get in right now, because the price is running away from me. If I just chase it just this one time, it should be OK because I see the price going up, and I am convinced that I can make a killing on this one. Why should I wait for the pullback? Maybe it won't pullback at all, and then I will have missed it. "

Your dopamine brain pathways, activated by potential for reward, kick into high gear. The dopamine neurons are firing on all cylinders. It's all good and wonderful—until it isn't. Suddenly, the position starts to turn against you. Drawdown is loss. Loss hurts. The brain registers losses 2.5 times more intensely than it feels gains. Chasing caused pain, and now the pain is financial, physical and psychological. Now what?

The dopamine and other reward pathways of the brain shut down, and the brain connections that mediate fear begin to activate. This is your emotional volatility. The end result is confusion, frustration, blaming, self-sabotage, addiction and systemic toxicity. All of these drain the trader and leave him feeling empty, confused, disillusioned and just plain worn out.

Losing makes people physically ill. A study by Joseph Engelberg and Christopher Parsons from the University of California at San Diego showed that a one-day drop in equities of approximately 1.5% is followed by a 0.26% increase in hospital admissions on average over the next two days. Additionally, the impact on psychiatric conditions such as anxiety or panic disorders is even stronger, with hospital admissions nearly doubling in one day. Losing money makes people sick and sick people even sicker!

But addicts – even successful ones like Mr.Not Average Joe - don’t know when to stop trading. They lie to themselves, cheat, and steal to do this. Eventually, they fail. And it’s a whole lot more than money. It’s psychological, physical, emotional and spiritual. They are lost and floundering. When a trader is stressed, sleep-deprived, contaminated with continual worrisome thoughts or in a toxic state because of bad trades, there is nothing but despair, self-loathing, anger or depression.

Even if we assume that traders do not have more frequent addictive behaviors than the general population, the statistics tell us that, in all likelihood, nearly one trader in every ten has a diagnosable addictive problem.

- for those that have attention deficits → trading provides action and you can buy a dozen screens;

- for those who cannot tolerate boredom → trading provides action;

- for the trader who is depressed (like Not Average Joe) → trading can provide an escape from the self and a sense of immediate gratification.

Such traders need to trade and keep trading whether they have an edge or not. They frequently lose their money, generate failure experiences for themselves, and create hardships for their families.

What to do?
For those that have an addiction to trading – for whatever reason - it's not about "discipline" and following trading rules anymore. It's about getting their lives back, getting the right kind of help. If you see any aspect of yourself in this portrait, do the right thing. For you, and also for those who love you. Trading should expand your control and self-mastery, not become an instrument for its destruction.


To sum up: people hardly ever talk about the negative impact that trading can have on you. Trading can become a way to escape from reality; trading can turn into the ultimate tool with which to channel personal problems. It's not always easy to understand whether this is the case or not, because it happens to profitable traders as well as losing traders. Here is where it's good to have some sort of confrontation, whether with a spouse/partner or with a support group like fellow traders on our Trading Floor. If you lose contact with society/reality, then it's much easier to lose yourself in the markets. Keeping in touch with loved ones and/or with fellow traders can help you identify personal issues if they may arise – but only if you're totally honest with yourself.

Good Luck!

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 mfbreakout 
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 PandaWarrior 
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Problem identification is one part of the equation. Does the author suggest alternate behavior patterns one can take to mitigate these issues?

For instance, I rarely actively trade for more than 2-2.5 hours in the morning....I may watch a bit longer than that, but I rarely trade past that....for one specific reason, I do not wish to become addicted to this thing. I want a life, I have things to do....my personal philosophy is trade to live, not live to trade. I've caught some flack over this by so called professionals that say you need to live and breath this trading game if you are to survive....and yet I know several professional traders that do exactly the opposite of that. They trade in the morning, take the results of their trades and leave the screens for the rest of the day.

what are your personal thoughts on this?




mfbreakout View Post
BY JupaFX.


The story of Mr. Not Average Joe

This is the real story of Not Average Joe. I had the opportunity, a few years back, of having a direct contact with this fellow, who was a successful former FX dealer that had also managed other people's money and had eventually settled for trading his own (immense) capital. Just to put things into perspective, his account was populated by over 250 thousand Euros. After all, he was Not Average Joe. He had demonstrated the capability to make money and work the FX markets for years on end. Now, in his late 40s, he was at home trading for himself from his 1 screen computer (a vision that many of us aspire to, no doubt).

The story is not about that he used to be profitable. As you can imagine, he was profitable because of his background and experience. He worked the USD desk, which was the most complex operation going. So he knew his way around the FX markets like few others did. However he did always say that he had to work a lot harder ever since he left the bank.

Mr. Not Average Joe had no trouble speaking of his trades. He took around 15-20 trades per day, and used a low amount of leverage per each trade. Each single position was a 1-lot position (100K). And this fellow was making around 3-4% per month. So he was successful. Very successful! But as time went by, I started understanding that he had a problem. Why was such a successful person always upset with the world (he was very negative in his world view and always referred to his gains as “peanuts”), and why was he not happy with his life?

I started to observe when he would answer my questions, and how long he would stay connected to Skype. It turns out that his habits were awkward. He was trading around-the-clock. He took some naps obviously but he could trade basically anywhere from 7AM in the morning to 3AM the next morning. This was the first tell-tail. He was evidently NOT working smart. He was working HARD. And he was not happy about it. Also, taking all that risk (20 trades/day is a LOT of market risk) and making 3-4% per month seemed questionable. He had a very high win rate – around 84% - so basically he could trade for less hours, adding a little more risk to each trade, and come out with the same %-return or even more. But he didn't.

Then I saw another pattern, that emerged from his comments and from his equity curve.


The pattern was always the same: he would be as consistent as a machine, trade away and then after a while make a bigger bet and wipe out a lot of gains. And then he started over. For some reason, he held onto losers because of his experience as a dealer, and would hedge them or rotate the position onto some other currency pair. For example, if he was long USDCAD and the market started going south, he would frequently hedge the problem. If it was an adverse USD-move, then he would sell USDCHF and hence transform the position into a short CADCHF. Other times, when he just didn't like the position, he would use the triangular relationships in FX to transfrom his position into something more interesting. For example he was long USDCAD and started to dislike the position over a period of hours, he might decide to rotate it into USDJPY by buying CADJPY.

So while he was good at what he did, he also had this inherent bias towards not taking a loss. He would rotate his position, rather than take a loss. When he DID take a loss, it was around 1.5 times his average gain. So obviously his profitability came from his insane hit rate. While he was profitable and he had been a professional trader for years, it's not really a good practice to hang your hat on a high win rate at the cost of much larger losses.

But despite all these technicalities, the worst part of Not Average Joe's trading habits was the recurrence of large hits. He would fight for weeks on end and then shift his thinking from a short term perspective to a more longer term swing, ultimately losing large sums. This of course was affecting his psyche. He would reduce his stake, take a couple of days off, and then come back and work his way back up the equity curve...until the next big hit. He was not able to control this self-destructing habit of his. When I inquired as to how he could let himself get into such a mess, he said that he had a natural habit of not respecting his risk parameters. This apparently “came from the days at the bank where I could hold onto positions for quite some time, because I knew that the market would come back sooner or later”. So you see, even experienced traders get caught in some of the bad habits that novice traders frequently display:

1) falling into the overconfidence trap: “I know it will go my way” mentality

2) holding onto lo losing propositions because they “fall into the swing category and not the scalping/short term trading category”.

3) Overestimating our capability to understand what's going on (sentiment/intermarket correlations)

4) incapacity to identify and eliminate bad habits

clip_image004

What eventually happened to Not Average Joe? He kept trading 16 hours a day...he had a wife that was not able to help him...he started running low on energy and finally got himself tangled up in a long USDCHF position that cost him 80% of his entire trading account. He still trades, but very small and very infrequently.

Not Average Joe had a sickness. He was not satisfied with his life, and with what he was doing. He was “hiding” inside his trading habits, because it made him feel like he was “doing the right thing, doing something useful”. But his habits eventually brought out the truth: he was unable to let go. He was unable to have fun with his accumulated capital and take his trading less seriously.

You can suffer even if you're winning


Mr. Not Average Joe had become addicted to his trading. He was hiding from real life, inside his trading endeavors. And yes, these things happen to skilled professionals as well as novice traders. As long as you have some sort of unresolved issue in your life, trading will bring it out. Trading will force you to face your inner demons.

What goes on in the brains and bodies of people like Not Average Joe (approximately 1 in 10 traders) who are addicted to trading? The researchers from UCLA Gambling Studies Program have gone in-depth and their insight is quite fascinating. Addicted traders feel the need to be in the markets at all times and feel the need to be trading. At one level, this is a type of addiction to excitement, mediated in part by a neurochemical called dopamine. It is the thrill of the game, and the rush that comes from the anticipation of reward. But a 2013 study from The Imperial College, London and the University of Cambridge has discovered that there's more than just dopamine involved. Dr. Tim Fong, Co-Director of the UCLA Gambling Studies Program says, “The brain of a pathological gambler is very different than that of a social gambler while they play," he said. "The neurotransmitters dopamine, serotonin and norepinephrine play an important role in all addictions. In pathological gamblers, certain dysfunctions are present prior to addiction, and put people at higher risk of developing such behavior.”

MRI (Magnetic Resonance Imaging) scans show areas of the brain that activate or “light up” when a person believes he or she is about to get a monetary reward. There is a social stigma around money. It may, in fact, be the last great taboo of our culture. People will tell you everything about the most intimate details of their lives, but they will not tell you about their money: How much they have. How much they want. What they think about others who have more or less money than they do. What money really means to them.

Traders and others suffering from addiction are sick because of their secrets. In order to conceal their secrets, they lie and deny. But the brain can’t lie when it is placed in an MRI Scan. The brain images tell secrets that the addict can't or won’t express. Money is the biggest secret of all. It’s more secret than drugs or alcohol. People have more emotions of shame, guilt, greed and lust around money than perhaps any other singular thing.

clip_image006The-importance-of-information-in-Selling-shares

What is he doing? He might be hiding from his secrets or from reality, behind all these screens...

And so it goes. Traders boot up their computers, turn on their trading platforms and become hypnotized by the flickering ticks. Each tick of the market represents the sum total of the greed and fear of every single one of the millions of people trading at that time. We also know that the majority of people that are attracted to the “game” look for certainty and “excuses” to get active in the market through Technical Analysis. We go through great lengths, at Orderflowtrading, to stop people from putting their faith into some magic lines.

Sure, technical analysis sounds good and looks professional when you plot all sorts of things on your chart that give you “confidence through confluence,” but what are we really trying to understand when we look at a chart? It's merely human emotions plotted on a grid.

A trip through greed and fear

Here's how it happens. You turn on your computer, and first thing look at your charts. You stare at them, you zoom in, zoom out, add/remove indicators until you see it. An opportunity! "I have to get in right now, because the price is running away from me. If I just chase it just this one time, it should be OK because I see the price going up, and I am convinced that I can make a killing on this one. Why should I wait for the pullback? Maybe it won't pullback at all, and then I will have missed it. "

Your dopamine brain pathways, activated by potential for reward, kick into high gear. The dopamine neurons are firing on all cylinders. It's all good and wonderful—until it isn't. Suddenly, the position starts to turn against you. Drawdown is loss. Loss hurts. The brain registers losses 2.5 times more intensely than it feels gains. Chasing caused pain, and now the pain is financial, physical and psychological. Now what?

The dopamine and other reward pathways of the brain shut down, and the brain connections that mediate fear begin to activate. This is your emotional volatility. The end result is confusion, frustration, blaming, self-sabotage, addiction and systemic toxicity. All of these drain the trader and leave him feeling empty, confused, disillusioned and just plain worn out.

Losing makes people physically ill. A study by Joseph Engelberg and Christopher Parsons from the University of California at San Diego showed that a one-day drop in equities of approximately 1.5% is followed by a 0.26% increase in hospital admissions on average over the next two days. Additionally, the impact on psychiatric conditions such as anxiety or panic disorders is even stronger, with hospital admissions nearly doubling in one day. Losing money makes people sick and sick people even sicker!

But addicts – even successful ones like Mr.Not Average Joe - don’t know when to stop trading. They lie to themselves, cheat, and steal to do this. Eventually, they fail. And it’s a whole lot more than money. It’s psychological, physical, emotional and spiritual. They are lost and floundering. When a trader is stressed, sleep-deprived, contaminated with continual worrisome thoughts or in a toxic state because of bad trades, there is nothing but despair, self-loathing, anger or depression.

Even if we assume that traders do not have more frequent addictive behaviors than the general population, the statistics tell us that, in all likelihood, nearly one trader in every ten has a diagnosable addictive problem.

- for those that have attention deficits → trading provides action and you can buy a dozen screens;

- for those who cannot tolerate boredom → trading provides action;

- for the trader who is depressed (like Not Average Joe) → trading can provide an escape from the self and a sense of immediate gratification.

Such traders need to trade and keep trading whether they have an edge or not. They frequently lose their money, generate failure experiences for themselves, and create hardships for their families.

What to do?
For those that have an addiction to trading – for whatever reason - it's not about "discipline" and following trading rules anymore. It's about getting their lives back, getting the right kind of help. If you see any aspect of yourself in this portrait, do the right thing. For you, and also for those who love you. Trading should expand your control and self-mastery, not become an instrument for its destruction.


To sum up: people hardly ever talk about the negative impact that trading can have on you. Trading can become a way to escape from reality; trading can turn into the ultimate tool with which to channel personal problems. It's not always easy to understand whether this is the case or not, because it happens to profitable traders as well as losing traders. Here is where it's good to have some sort of confrontation, whether with a spouse/partner or with a support group like fellow traders on our Trading Floor. If you lose contact with society/reality, then it's much easier to lose yourself in the markets. Keeping in touch with loved ones and/or with fellow traders can help you identify personal issues if they may arise – but only if you're totally honest with yourself.

Good Luck!


Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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 Luis Orinco 
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PandaWarrior View Post
Problem identification is one part of the equation. Does the author suggest alternate behavior patterns one can take to mitigate these issues?

For instance, I rarely actively trade for more than 2-2.5 hours in the morning....I may watch a bit longer than that, but I rarely trade past that....for one specific reason, I do not wish to become addicted to this thing. I want a life, I have things to do....my personal philosophy is trade to live, not live to trade. I've caught some flack over this by so called professionals that say you need to live and breath this trading game if you are to survive....and yet I know several professional traders that do exactly the opposite of that. They trade in the morning, take the results of their trades and leave the screens for the rest of the day.

what are your personal thoughts on this?


I have an issue with what is being called Common Sense on this thread, and some of the easily refutable biases of the OP. And his judgement of "other" traders. Try being more detached. Do you know all the traders in the world? No.

But that's a different issue (also I have zero inclination to discuss this with him). I already understand his point of view and reject it almost 100%


But PandaWarrior has a better point. How far does a retail trader go down the rabbit hole? It's all well and good (even sunshine and rainbows) to say we trade to live and not the other way around. An of course, that's undeniable, rather than letting it become an addiction.

Only thing to keep in mind is that, this is an ultra competitive world - retail traders fool themselves into believing that pros in Goldman, Renaissance and other far more anonymous trading groups agree with that.

I certainly don't. I am dedicated to my craft, and I pour my heart and soul into it. Yet, I sleep 9hrs a day on average very week day and have plenty of time to do other things. And while I watch charts during the entire session (almost without fail), I certainly don't trade all day. Anyone looking for asymmetric opportunities simply cannot trade all day (that's illogical)

But make no mistake about it, You get out what you pour in, its a matter of perspective. And time management.

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 mfbreakout 
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GM Panda Warrior,

" Problem identification is one part of the equation. Does the author suggest alternate behavior patterns one can take to mitigate these issues?"

I am not aware if author has addressed this issue. This is due to the fact that i have not serached author other writings.

Best source i have found to get answer to your question and many other questions raised in JupaFx article is in a
book by Charles Duhigg " The Power of Habit".

My conclusion after reading "The Power of Habit", many other similar books and extensive reading of everything by
Dr. Brett Steenbarger is that certian people should never be engaged in certain activities. But as happens in life same people end up engaged in activities they should not be part of.

Problems in activities like trading, gambling etc. can only be REALLY addressed if

1) Trader comes to his/her senses on his own ( luck factor) and seek out professional help
2) Have someone in his/her life ( family member, friend, mentor etc..) who really cares for the person ( luck factor again)
3) Impilicitly trust the loved ones and the therapist.

I try to look at following chart as often as possible and is always in the back of my mind.

NOTE: I do not use orderflow trading- the service mentioned in JupaFx artice. I have no experience with them and i am neutral to orderflow trading service at best.

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  #79 (permalink)
 mfbreakout 
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My story in a nutshell.

I keep score of my mental state on a scale. Everthing is in blue box and now the work is towards moving from ( Scale 1= lowest rating, 10= highest rating) 1 to 2, 2 to 3 and so on. Work never ends.

I used to wonder how some of these 22 years old just out of college graduates reach the height of trading career within 3-4 years? My thinking was well they are gifted with brain power, analysis on and on.
But i have plenty of brain power, analysis etc. how come after 3 years i can not even get out of my own way?

Finally, i realized it all have to with STATE OF MIND. Wheter someone is 16 years old or 50 years old- the ONLY thing which really differentiate one trader from the other is one's STATE OF MIND. I was lucky enough to have some very technically gifted traders share with me some of the their work regarding order flow etc. They could not trade their own indicators. They asked me to see if they make sense to me. I tried them and with my input they made some changes and results were very impressive for CL.

I also got caught in this excitement. But they will work for CL and not for ES etc. I gave them up and just focus on MY MENTAL STATE becuase it works on every trading instruement.

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 mfbreakout 
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Common Problems.


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 Bsinks 
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 mfbreakout 
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CL and TF. Direction for TF is very clear not sure about CL. It's been stuck around 101.30 for an hour but i am not trying long without evidence of buyers.

As usual took some off from TF short prematurely. Constant improvement is needed in this area.

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 mfbreakout 
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Maybe GS has something to do with some of the pullback. Even without this call market internals for the day are right

in front of us Goldamn or No Goldman.

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Thxo
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Maybe GS has something to do with some of the pullback. Even without this call market internals for the day are right

in front of us Goldamn or No Goldman.

Here's the complete pic ...

Enjoy ...


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 mfbreakout 
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Here's the complete pic ...

Enjoy ...


A good example of paying forward and sharing.

Thx

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 mfbreakout 
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Out of TF short 1129, CL in a la la land but NG gave a set up. Nothing in GC, HG, ZS.

TF 1143 ( Globex high) to 1127, 14 handles move fits within ATR and thats why covered short but no longs, yet.

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 mfbreakout 
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NG keeps on giving but CL took it all away. Luckily, TF gains for the day remian intact.


Set up and position size need to match. It's not easy. I am not advocating anyone to use my risk management style. My profile is different from you. I try to take intra day draw downs or end of the day loss as a tool for improvement etc. It's different from changing the method. There is no change in the method. Just execution fine tuning.

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 mfbreakout 
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NG keeps on giving but CL took it all away. Luckily, TF gains for the day remian intact.


SEt up and position size need to match. It's not easy. I am not advocating anyone to use my risk management style. My profile is different from you. I try to take intra day draw downs or end of the day loss as a tool for improvement etc. It's different from changing the method. There is no change in the method. Just execution fine tuning.


Finally Fat lady sings. Not the ideal way to trade but that's the way it is sometimes.

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 mfbreakout 
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Luis Orinco ( with a distinction of couple of posts at futures.io (formerly BMT) over 6 months period) who puts his heart and soul into his craft ( per his post in my journal) but keeps his SECRETS close to his chest posted in my journal last week.

I honestly could not tell what he is talking about. I sent him a private message asking for clarification. He decided
to answer in a manner which gave me a set up.

Per this set up i could only do ONE trade. Short him and thus he is on ignore list.

Over a period of 4 years with 1,000 of posts , i had to put 2 people on my ignore list. Luis Orinco is the 3rd one.
That's a distinction on itself in my book.

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 PandaWarrior 
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GM Panda Warrior,

" Problem identification is one part of the equation. Does the author suggest alternate behavior patterns one can take to mitigate these issues?"

I am not aware if author has addressed this issue. This is due to the fact that i have not serached author other writings.

Best source i have found to get answer to your question and many other questions raised in JupaFx article is in a
book by Charles Duhigg " The Power of Habit".

My conclusion after reading "The Power of Habit", many other similar books and extensive reading of everything by
Dr. Brett Steenbarger is that certian people should never be engaged in certain activities. But as happens in life same people end up engaged in activities they should not be part of.

Problems in activities like trading, gambling etc. can only be REALLY addressed if

1) Trader comes to his/her senses on his own ( luck factor) and seek out professional help
2) Have someone in his/her life ( family member, friend, mentor etc..) who really cares for the person ( luck factor again)
3) Impilicitly trust the loved ones and the therapist.

I try to look at following chart as often as possible and is always in the back of my mind.

NOTE: I do not use orderflow trading- the service mentioned in JupaFx artice. I have no experience with them and i am neutral to orderflow trading service at best.



Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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 mfbreakout 
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Risk Adjusted returns Vs Absolute Returns.

" Traders who worry about their positions and focus on what could go wrong in their trades might be successful by tightly managing risk and achieving superior risk-adjusted returns. That would be different from more volatile, risk-taking traders, who sacrifice Sharpe ratio to achieve superior absolute returns."

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 mfbreakout 
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From Brett Steenbarger

" Personality traits did not predict performance, but the intensity of emotionality during trading did--in a negative way. It didn't matter whether the emotion was positive or negative: intensity of experience was disruptive of performance.


a study I conducted with Andrew Lo and Dmitry Repin with traders studying with Linda Raschke found that high levels of emotional reactivity were associated with worse trading performance. Personality traits did not predict performance, but the intensity of emotionality during trading did--in a negative way. It didn't matter whether the emotion was positive or negative: intensity of experience was disruptive of performance.

Still, the research of Lo and Repin suggests that emotions do play an important role in trading decisions. Even experienced traders, hooked up to biofeedback units while trading, display patterns of emotional arousal in the context of their trading. That research also found, however, that experienced traders displayed less intense emotional reactivity than inexperienced traders. Once again, we see an important distinction between emotional intensity and frequency. Perhaps one valuable aspect of training and experience is that they enable us to dampen the intensity of our emotional reactions within whatever temperament we might have. Once we've been there, done that, it's easier to not overreact to situations.

We gravitate toward particular trading approaches for many reasons: our cognitive strengths, personality traits, and emotional temperament all likely play a role in determining whether we seek success as systems traders, investors, daytraders, or active portfolio managers. Ultimately, our trading reflects who we are and either generates emotional experiences that suit or frustrate our temperaments. That fit of trading experience and personal temperament may well be an important mediator of sustained trading success. "

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 mfbreakout 
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My short of 101.50 area this morning and then adding all the way upto 102 ONLY makes sense if " INTENSITY"
of emotions are under control.

As Brett Steenbarger said " Personality traits did not predict performance, but the intensity of emotionality during trading did--in a negative way. It didn't matter whether the emotion was positive or negative: intensity of experience was disruptive of performance."

I bet these pilots will make good traders. They keep INTENSITY of their emotions under control.


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 mfbreakout 
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Longs and longs in TF.

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 mfbreakout 
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Out of short 100.48 on failed A down.

Long 100.67 off ORL on daily failed A down. Out some 101.14. Need to break 100.60 with CONVICTION area for more down moves today otherwise stuck in a box.

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 mfbreakout 
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short. seems like 1293 to 1320 is the box for GC till some change comes up.

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 mfbreakout 
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INTENSITY OF EMOTIONS .

No control = No trading or driving/riding fast cars. Nothing personal but that's the way it is.



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 PandaWarrior 
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INTENSITY OF EMOTIONS .

No control = No trading or driving/riding fast cars. Nothing personal but that's the way it is.




That was awesome....

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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 mfbreakout 
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" Need to break 100.60 with CONVICTION area for more down moves today otherwise stuck in a box."

long 100.66 Out flat 100.93 . Do not want to trade 2.15 to 2.30 pm time period. Will tarde API news which comes out today at 4.30 pm.

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 mfbreakout 
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Q) Are there any educational programs i can recommend?


A) 5 years ago i took some training programs ( SMB capital $5400 and $2500 on Fibs. and Geometric patterns etc)
I did not get much out of these programs. These approaches just did not appeal to me. Oh i forgot, i also paid $1200 or so to Don Miller recorded traing program. Since it was recorded it was offered at discount from live program which cost like 10K or something like that. It was full of fire side BS chit chat.

Since then i have not taken any more courses. Took some $200 type of courses in options etc. to understand them.
I have looked at many programs - when someone asked me to look at them or on my own. I have not found a single
offering which i will participate.

Key reason being i have no way to make a judgement about the programs. For example, someone asked me to look at Proprietary Trading Training Programs | Online Trading Courses and Certification | Prop Trading Education | Alpha 7 Trading Academy. The site is professional and resume of presntor is good enough. I go under webinar section. I listened to 2 1 hour webinar of their teacher. It is full of fireside chit chat. Lot of general guidelines which one can find from 100's of webinars spread across futures.io (formerly BMT) and other forums etc. In 2 hours of chit chat, if presenter had spent 20-30 minutes of trading set ups, execution etc i could have made an assessment.

They are promoting courses ranging from $3000 and on. Courses include hours of videos, detail charts etc.
I would like to see 10% of recorded videos of the actual course before deciding. I have not found a single source/program which offers that and thus i remain NEUTRAL at best.


NOTE: I have no problem if some vendor gets something from my journal. It's a public journal and free. Previous journal alone had around 5,000 attachements ( 95% of them charts). What gets under my skin from time to time that they do not have decency to hit Thanks tab. There are some vendors or regular readers who been coming to my journal for 4 years ( and still do) and has never ht a THANKS tab once. To top it off they do not contribute to rest of futures.io (formerly BMT) in terms of journal, informative posts etc. They just scratch their -------.


Fire Side BS= Basically everything presenter talks about listener can not help agreeing with the presenter. Everything makes sense. After all these universal truths are not only helpful in trading but alomost everything in life. For example, do not use leverage, focus, wait for ideal opportunity and on and on. However, after fire side BS is over, a trader stays right where he started. Full of wisdom but nothing practical.

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