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Worldwary's Gold Plated Journal


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Worldwary's Gold Plated Journal

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  #1 (permalink)
 worldwary 
Williamsburg, VA
 
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Posts: 523 since Mar 2010
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The October journal contest has given me the kick in the pants I needed to get my trade journal up and running again. Thank you Big Mike for putting this contest together!

A quick bit of background: I have been trading as a hobby for several years now and have experimented with various instruments and methods. About two years ago I passes the TST combine but then quickly failed the live trader prep session, so never earned a funded account. That was discouraging to me and caused me to take a break from trading for a while.

Last year I left my private law practice for a job in the public sector, which came with a hefty pay cut. This move helped me get more serious and methodical about my trading since I now have a real need for some supplemental trading income.

The major flaws in my trading that I have identified in the past have been:

1. Overtrading. I need to fight the urge to always be in the market.

2. Revenge trading. After a series of losses, I have hurt myself several times by increasing trade size in an effort to win the losses back. This is the worst flaw a trader can have, and I am aware that I can't expect to succeed if I can't get this under control.

3. Identifying targets. I am confident with my entries and stops but have always had a hard time identifying good spots to take profits.

Through the course of this journal, I hope to work on all three of these shortcomings. I hope I can provide something of value to readers in the meantime.

-----------------------------------------------------

"If you must forecast, forecast often."

-- Edgar Fiedler
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  #3 (permalink)
 worldwary 
Williamsburg, VA
 
Experience: Intermediate
Platform: ThinkorSwim
Trading: Stocks
 
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Posts: 523 since Mar 2010
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A bit about my method: This is a very simple method without many frills. I am trying to capitalize on gold's tendency to make sudden moves in the direction of an established or establishing trend. Stops are kept tight so the size of the average losing trade is substantially smaller than the size of the average winning trade.

Instrument: Gold futures (/GC). Gold is my preferred instrument because it is "trendy" and is prone to sudden outsized moves.

Trading Timeframe: 5-minute chart.

Indicators: VWAP (regular trading hours only); volume.

Entry Trigger for Longs: Price trading above VWAP, with no evidence of a confirmed downtrend; enter on break of high of preceding 5-minute bar.

Entry Trigger for Shorts: Price trading below VWAP, with no evidence of a confirmed uptrend; enter on break of low of preceding 5-minute bar.

Stop Placement: Initial stop is placed just beyond the low/high of the trigger bar (the bar preceding entry); stop is then trailed to follow areas of support/resistance as the trade develops.

Profit Taking: Most exits occur through stops; trades may be exited early upon significant move in direction of trade corresponding with surge in volume.

Adding to Trades: May add to winning trades; may not add to losing trades.

Chop: Stop trading if price has passed through VWAP several times without establishing clear direction; resume trading only after trend has established and then pulled back to create a new entry signal.

Those are the basic parameters; I'm sure I am forgetting something but will supplement as necessary.

-----------------------------------------------------

"If you must forecast, forecast often."

-- Edgar Fiedler
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 PandaWarrior 
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Nice to have you back!

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 worldwary 
Williamsburg, VA
 
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Thank you, sir! Good to see you again!

-----------------------------------------------------

"If you must forecast, forecast often."

-- Edgar Fiedler
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 Big Mike 
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Nice job journaling @worldwary.

I want to let you and all your readers know that in October futures.io (formerly BMT) has a Trading Journal contest w/prizes. The contest runs October 1 to October 31, and the three best journals (as decided by futures.io (formerly BMT) members) will receive a 150K combine from TopstepTrader.

The contest thread is here:



That thread will be open for posting starting Wednesday, October 1. As the author of your journal, you need to make a post in that thread linking to your journal, and then ask users to press the "Thanks" button on that post if they want to vote for your journal to win the contest.

Members can vote for as many different journals as they want. Votes are cast in the Contest thread only, and only on the first post made by the author of the journal that contains a link to their journal. This is done so I can easily count the "Thanks Received" by author/journal, and award the three prizes.

Mike

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  #7 (permalink)
 worldwary 
Williamsburg, VA
 
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I always keep the "big picture" in mind when trading an asset like gold. While I do not trade directly from a longer-term chart, I like to know where larger areas of support and resistance may be and I also like to know if a clear longer-term directional trend is in play.



Here is a daily chart showing the past several years in gold. The all-time high of 1923.7 occured in 2010 (this is about when my father sold most of his stock investments and put his money in gold coins; good contrarian indicator!). Gold made a few attempts to bounce back and retest the high over the next year or two but got rejected at the 1800 level, and then collapsed to a multi-year low around the 1200 level in the summer of 2012.

In early 2014, after a retest of that low, it looked like price might be headed up again. But that rally failed around the 1400 level, and has managed only a lower high since then. Currently we are again trading near the multi-year lows.

Lessons I draw from this chart:

1. Price is currently near a clear support level. A bounce from these levels seems to be the likeliest scenario.

2. However, if price were to fall below the 1200 level on strong volume, longer-term stops will be triggered and that could precipitate a violent move lower.

3. This is a key time for gold, and I think other traders are aware of this as well. Does support hold or does it fail? We can probably expect a lot of churn and back-and-forth in coming days before the answer becomes clear, then a larger move upward (if support holds) or downward (if support fails).

In terms of my day-trading strategy, I am not entering the day with any directional bias. This is a battleground area and longer term direction will not be determinable until we see whether support holds.

-----------------------------------------------------

"If you must forecast, forecast often."

-- Edgar Fiedler
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 worldwary 
Williamsburg, VA
 
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To grade my performance at the end of the day, I like to look at the price action of the day as a whole and determine how a system like the one I'm trading theoretically should have performed under those conditions. Then I compare this with my actual trading results and try to determine the reasons for any underperformance.



The method I am trading is a continuation method rather than a range-trading or reversion to the mean method. This means that I am looking for price to continue to move in one direction rather than betting on a reversal. My system works best on days when there are large moves in the same direction through the day, and works worst when price is rangebound.

Today's action, in retrospect, was rangebound. There were three places where my system generated entry signals, marked in gray rectangles in the chart above. In only one of these (number 3) did price make a substantial move in the direction of the signal before reversing. On a day like this, I would expect to come out slightly ahead, assuming that I took small losses in places where the signals quickly reversed and managed to catch the one decent move of the day for a profit.

My actual result for the day was a net loss of 3 ticks. On the positive side, I did catch the decent move of the day and added to it on the way up before taking profits as price approached the previous high of the day. On the negative side, I feel that I overtraded the other entry signals, keeping stops too tight and taking a couple of unnecessary stops before the moves had played themselves out.

Overall my performance was not terrible for a day like this; I am pleased that I offset the losing trades with a profitable trade on double size. I am also pleased that I followed my entry system well. Major lesson of the day is to keep stops a bit looser to avoid unnecessary stop-and-reenter situations during a move that is still developing.

Grade: B

-----------------------------------------------------

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-- Edgar Fiedler
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 worldwary 
Williamsburg, VA
 
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Today saw a signficant move in the price of gold right after the open, triggered by the non-farm payroll release.



Today was a good downward trending day with several opportunities to catch decent sized moves. There were also a few "false starts," that is, places where price briefly dipped below of the preceding bar as if the downtrend were resuming but then bounced back up again. Those places would produce some stops, but the size of the available gains should make this kind of day solidly profitable.

My actual result on the day was a net gain of 46 ticks. I traded well for the most part. I was able to catch most of the initial drop by putting in a stop below the low of the second bar. I took profits at a pretty good place, but then gave some back by trying to reenter too soon. That was my major mistake of the day: looking to jump in too soon after a big move had already happened.

Anyway, won't beat myself up about it. I traded what the market gave me, stayed on the right side of the trend, and came away with a decent profit.

Grade: A-

Weekly results (2 days):

+43 ticks

-----------------------------------------------------

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-- Edgar Fiedler
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 xelaar 
prague, czech republic
 
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Excellent to see you back! Interesting method, have you considered taking entries only close to the range borders pre breakout?

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 worldwary 
Williamsburg, VA
 
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xelaar View Post
Excellent to see you back! Interesting method, have you considered taking entries only close to the range borders pre breakout?

Hello xelaar, thanks for visiting my journal! In general, I have found that I prefer earlier entries in anticipation of a breakout rather than later entries right around the area of the breakout. This is mainly a function of risk control; looking to keep losses manageable. The downside is getting chopped around sometimes.

If I get into a move early, I will usually use the breakout of the trading range as a place to add to the position. This way if I do catch a decent sized move I do it on double size whereas the majority of the losing trades are on single size.

-----------------------------------------------------

"If you must forecast, forecast often."

-- Edgar Fiedler
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 worldwary 
Williamsburg, VA
 
Experience: Intermediate
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Posts: 523 since Mar 2010
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Today had an upward bias, with a slow-moving trend that lasted most of the trading day followed by a quick breakout move that I managed to miss.



The morning session was choppy, with failed breakouts to both the upside and downside. Around 10:20 a move to the upside finally gained some traction, and then price traded in a narrow range with a few opportunities for reentry into the trend. Finally just before 1:00 p.m. price finally popped to the upside, with a huge volume bar that is typically associated with the end of a move in gold. This day, in the abstract, should have been solidly profitable, with any losses from the choppy period offset by long trades later in the day.

My actual result was a net gain of 19 ticks. This was disappointing and the main reason for the underperformance was that I simply did not take the trade that would have led to the one good quick move of the day. If I had been in that trade, I would have known to take profits at some point during that bar due to the surge in volume. So that one move that I missed would have turned an average day into a big day.

I have no real excuse for missing that trade. I just took my eyes off the screen and wasn't focused, and by the time I looked back it was over. Lapse in concentration.

Grade: C-.

-----------------------------------------------------

"If you must forecast, forecast often."

-- Edgar Fiedler
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 worldwary 
Williamsburg, VA
 
Experience: Intermediate
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Posts: 523 since Mar 2010
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This was a rough trading day for me, and has been difficult to post because I felt a really crappy trader by the end of the day. I had to fight the urge to pretend that the day never happened. Avoidance gets you nowhere in trading. So after taking the night to calm down I took another look at the day's trading to come up with some constructive lessons.



The day's price action was fairly choppy, with only one decent sized move. If traded properly, my system would have caught that move, so profitability on the day would depend on (1) whether I took that trade; (2) whether I took profits at an appropriate time; and (3) how badly I got chopped up in the ensuing price action.

My actual result on the day was a net loss of 44 ticks. This poor result is especially troubling given that I did in fact take the profitable long trade in the morning and also took profits during the exhaustion bar. At that point I was solidly up on the day.

But then I proceeded to give the profits away bit by bit on several unsuccessful attempts to get in on a resumption of the trend. These losses to some extent are forgivable; however, I also flipped to a short trade during the mid-day chop, with really no justification. So that was a bad call.

My worst mistake, however, was overtrading after it became clear that conditions were choppy. I could feel myself starting to go on "tilt"; I consciously tracked my thinking as it became distorted. I kept thinking, "I just missed that move; need to get in early on the next one." I became so hyper-focused on every tick in the current price bar that I lost perspective on the bigger picture, which was that price was consolidating and basically directionless for most of the day. So I would get in just in time for price to reverse on me, again and again, with only a few small profitable trades to offest the chop.

I need to be much more disciplined about stopping myself from trading when I can feel myself going on tilt. Should just walk away at that point, take a break if not quit for the day. It is very difficult to trade well when angry about previous losses and missed opportunities.

Here's to better trading tomorrow!

Grade: D-

-----------------------------------------------------

"If you must forecast, forecast often."

-- Edgar Fiedler
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 worldwary 
Williamsburg, VA
 
Experience: Intermediate
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Posts: 523 since Mar 2010
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Today was a better day in terms of process as well as results. I can breathe a bit easier after my awful performance yesterday.



This morning started out with a gap up and some price action that seemed to want to continue higher. After a brief false breakout, price instead collapsed, filled the gap, and produced a few opportunities for re-entry in the downtrend. I would expect a day like this to be solidly profitable, with a large gain in the big down move perhaps offset by losses on a long trade at the beginning of the day and some chop during reentry.

My results pretty much came in line with expectations today, with a net gain of 29 ticks. I took the available signals and rode the winners much farther than the losers, which is consistent with my plan. One criticism is that I exited fully out of the large down move too early and missed another 20-30 potential ticks.

Grade: A-

-----------------------------------------------------

"If you must forecast, forecast often."

-- Edgar Fiedler
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